MJ (MJNE) 10-Q 12 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 01, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	MJ Holdings, Inc.
Entity Central Index Key	1,456,857
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		12,227,939

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash	$ 300,190	$ 463,773
Accounts receivable	34,828	30,187
Prepaid assets		6,862
Current assets held for disposition		54,419
Total current assets	335,018	555,241
Property and equipment, net of accumulated depreciation of $944 and $778	1,056	1,222
Noncurrent assets held for disposition		3,807,782
Total Assets	336,074	4,364,245
Current liabilities:
Accounts payable and accrued liabilities	35,567	130,889
Accrued liabilities due to related party		2,132
Current liabilities held for disposition		2,722,865
Total current liabilities	35,567	2,855,886
Security deposits		70,168
Total Liabilities	35,567	2,926,054
Stockholders' Equity
Preferred stock, par value $0.001, 5,000,000 shares authorized; 0 shares issued and outstanding
Common stock, par value $0.001, 95,000,000 shares authorized; 14,027,939 shares issued; 12,227,939 and 14,027,939 shares outstanding at March 31, 2017, and December 31, 2016, respectively	14,028	14,028
Additional paid-in capital	3,200,998	2,779,105
Accumulated deficit	(1,366,519)	(1,354,942)
Less: treasury stock, at cost; 1,800,000 shares at March 31, 2017	(1,548,000)
Total Stockholders' Equity	300,507	1,438,191
Total Liabilities and Stockholders' Equity	$ 336,074	$ 4,364,245

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Property and equipment, accumulated depreciation	$ 944	$ 778
Preferred stock, par value per share	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value per share	$ 0.001	$ 0.001
Common stock, shares authorized	95,000,000	95,000,000
Common stock, shares issued	14,027,939	14,027,939
Common stock, shares outstanding	12,227,939	14,027,939
Treasury stock, shares	1,800,000

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenues:
Revenues
Operating Expenses:
General and administrative expenses	26,711	18,097
Depreciation expense	167	167
Total operating expenses	26,878	18,264
Operating loss	(26,878)	(18,264)
Other income		34
Loss before income taxes	(26,878)	(18,230)
Provision for income taxes
Loss from continuing operations, net of tax	(26,878)	(18,230)
Income from discontinued operations, net of tax	15,301	43,681
Net income (loss)	$ (11,577)	$ 25,451
Basic and diluted net income (loss) per common share:
Continuing operations	$ (0.002)	$ (0.001)
Discontinued operations	0.001	0.003
Net income (loss) per common share	$ (0.001)	$ 0.002
Weighted average shares outstanding, basic and diluted	12,427,939	14,027,939

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flow from operating activities:
Net income (loss)	$ (11,577)	$ 25,451
Less: income from discontinued operations, net of tax	(15,301)	(43,681)
Loss from continuing operations, net of tax	(26,878)	(18,230)
Adjustments to reconcile loss from continuing operations to net cash provided by operating activities:
Depreciation	167	167
Changes in operating assets and liabilities:
Accounts receivables and other receivables	(4,641)
Accounts payable and accrued liabilities	18,034	15,050
Net cash used in operating activities, continuing operations	(13,318)	(3,013)
Net cash provided by (used in) operating activities, discontinued operations	(15,232)	11,377
Net Cash Provided by (Used in) Operating Activities	(28,550)	8,364
Cash flow from investing activities:
Payment of cash through exchange offer (see Note 3)	(135,033)
Net cash used in investing activities, continuing operations	(135,033)
Net cash used in investing activities, discontinued operations
Net Cash Used in Investing Activities	(135,033)
Cash flow from financing activities:
Net Cash Provided by Financing Activities
Net increase (decrease) in cash	(163,583)	8,364
Cash at beginning of period	463,773	303,368
Cash at end of period	300,190	311,732
Supplemental disclosure of cash flow information:
Cash paid for interest to related party	45,417	68,125
Supplemental schedule of non-cash investing activities:
Disposition of real estate business through exchange offer (see Note 3)	$ 1,126,107

Interim Financial Statements

Interim Financial Statements	3 Months Ended
	Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business	Note 1 — Interim Financial Statements The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, these condensed consolidated financial statements do not include all of the information and footnotes required for audited annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the condensed consolidated financial statements not misleading have been included. The balance sheet at December 31, 2016, has been derived from the Company’s audited consolidated financial statements as of that date. The unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and the notes thereto that are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, that was filed with the SEC on March 30, 2017. The results of operations for the three months ended March 31, 2017, are not necessarily indicative of the results to be expected for the full year. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, 5353 Joliet, LLC, MJ Havana, LLC, and MJ Sheridan, LLC. Intercompany balances and transactions have been eliminated in consolidation.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Note 2 — Summary of Significant Accounting Policies The significant accounting policies followed by the Company for interim reporting are consistent with those included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. There were no material changes to our significant accounting policies during the interim period ended March 31, 2017. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued guidance to clarify the principles for recognizing revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a comprehensive framework for revenue recognition that supersedes current general revenue guidance and most industry-specific guidance. In addition, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. An entity should apply the guidance either retrospectively to each prior reporting period presented or retrospectively with the cumulative adjustment at the date of the initial application. In July 2015, the FASB delayed the effective date of the new guidance to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is now permitted after the original effective date of December 15, 2016. The Company is still evaluating the impact of adopting the new accounting guidance, but does not expect the adoption to have a material impact on its consolidated financial statements.

Disposition of Real Estate Busi

Disposition of Real Estate Business	3 Months Ended
	Mar. 31, 2017
Discontinued Operations and Disposal Groups [Abstract]
Disposition of Real Estate Business	Note 3 — Disposition of Real Estate Business On November 22, 2016 in connection with a plan to divest its real estate business, the Company submitted to its shareholders an offer to exchange (the “Exchange Offer”) the Company’s common stock for shares in MJ Real Estate Partners, LLC, (“MJRE”) a newly formed LLC formed for the sole purpose of effecting the Exchange Offer. On January 10, 2017, the Company accepted for exchange 1,800,000 shares of the Company’s common stock in exchange for 1,800,000 shares of MJRE’s common units, representing membership interests in MJRE. Effective February 1, 2017, the Company transferred its ownership interests in the real estate properties and its subsidiaries, through which the Company holds ownership of the real estate properties, to MJRE. MJRE will also assume the senior notes and any and all obligations associated with the real estate properties and business, effective February 1, 2017. On February 1, 2017, the 1,800,000 shares of the Company’s common stock acquired in the Exchange Offer was recorded as an acquisition of treasury stock at a cost equal to the market value of the shares of the Company’s common stock accepted in the exchange offer. The difference of $421,893 between the market value of the treasury stock acquired in the Exchange Offer and the net book value of the assets and liabilities exchanged was recorded as additional paid-in capital due to the common controlling interests between the two entities involved with the Exchange Offer. In addition, $135,033 of cash was transferred to MJRE to cover accrued property taxes and security deposits, less prepaid property insurance premiums, held by the Company that were previously collected from the tenants of the real estate properties exchanged. The historical results of the disposed assets and liabilities are shown in the Company’s financial statements as discontinued operations for periods presented before the exchange. In subsequent periods, the Company’s financial statements will no longer reflect the assets, liabilities, results of operations or cash flows attributable to the disposed assets and liabilities. A summary of the difference between the market value of the treasury stock acquired in the Exchange Offer and the net book value of the assets and liabilities exchanged that was recorded as additional paid-in capital on February 1, 2017, is as follows: February 1, 2017 Treasury stock acquired via exchange 1,800,000 shares at $0.86 per share (market value as of 1/10/2017) $ 1,548,000 Net book value of assets and liabilities exchanged: Land $ 747,389 Building and improvements 3,145,167 Less: accumulated depreciation (266,406 ) Real estate property, net 3,626,150 Deferred rent receivable 99,359 Deferred leasing costs 127,360 Total assets exchanged 3,852,869 Notes payable, net of unamortized debt issuance costs (2,723,292 ) Other accrued liabilities (3,470 ) Net book value of assets and liabilities exchanged $ 1,126,107 Change in additional paid-in capital $ 421,893 A summary of the results of operations reported as discontinued operations for the three months ended March 31, 2017 and 2016: For the three months ended March 31, 2017 2016 Net revenues $ 57,978 $ 168,873 Operating expenses: Property expenses 9,883 24,456 Depreciation expense 9,659 28,871 Total operating expenses 19,542 53,327 Operating income 38,436 115,546 Interest expense, net - related party (22,708 ) (68,125 ) Interest expense, net (427 ) (3,740 ) Income before income taxes 15,301 43,681 Provision for income taxes — — Income from discontinued operations, net of tax $ 15,301 $ 43,681

Going Concern

Going Concern	3 Months Ended
	Mar. 31, 2017
Going Concern [Abstract]
Going Concern	Note 4 — Going Concern The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. During the first quarter of 2017, the Company divested their real estate properties and associated business. During the three months ended March 31, 2017, the Company generated a loss from continuing operations of $26,878 and used $13,318 of cash for operating activities. Subsequent to the divestiture of its real estate business, the Company does not expect to generate revenues for the next six to nine months. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The Company is developing mobile and computer based applications focused on providing cannabis for medical use content and educational materials to licensed medical professionals, in addition to matching patients with medical professionals who are familiar with the therapeutic effects and indications of cannabinoids and making social connections by and between cannabis users. Our goal is to develop a “freemium” based business model, where we offer our services for free in an effort to build and develop a user-base. We expect to generate revenues in the future through advertising and by marketing premium products and services to our growing user-base. Although we can provide no assurances, we believe our cash on hand will provide sufficient liquidity and capital resources to fund our business for the next twelve months. In the event the Company experiences liquidity and capital resource constraints because of unanticipated operating losses, we may need to raise additional capital in the form of equity and/or debt financing. If such additional capital is not available on terms acceptable to us or at all, then we may need to curtail our operations and/or take additional measures to conserve and manage our liquidity and capital resources, any of which would have a material adverse effect on our financial position, results of operations, and our ability to continue in existence. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2017
Related Party Transactions [Abstract]
Related Party Transactions	Note 5 — Related Party Transactions During the three months ended March 31, 2017 and 2016, the Company paid $45,417 and $68,125, respectively, for interest due pursuant to $2,725,000 of promissory notes held by CMG, wholly-owned by the Company’s co-CEO and shareholder, Shawn Chemtov. On February 1, 2017, the promissory notes held by CMG were exchanged as part of the Exchange Offer discussed above in Note 3.

Outstanding Warrants

Outstanding Warrants	3 Months Ended
	Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Outstanding Warrants	Note 6 — Outstanding Warrants A summary of warrants issued, exercised and expired during the three months ended March 31, 2017, is as follows: Weighted Avg. Exercise Warrants: Shares Price Balance at January 1, 2017 166,665 $ 5.88 Issued — — Exercised — — Expired — — Balance at March 31, 2017 166,665 $ 5.88

Basic and Diluted Earnings (Los

Basic and Diluted Earnings (Loss) per Common Share	3 Months Ended
	Mar. 31, 2017
Earnings Per Share [Abstract]
Basic and Diluted Earnings (Loss) per Common Share	Note 7 — Basic and Diluted Earnings (Loss) per Common Share Basic earnings (loss) per share is computed by dividing the net income or net loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated using the treasury stock method and reflects the potential dilution that could occur if warrants were exercised and were not anti-dilutive. For the three months ended March 31, 2017 and 2016, basic and diluted earnings (loss) per common share were the same since there were no potentially dilutive shares outstanding during the respective periods. Outstanding warrants as of March 31, 2017 and 2016, to purchase 166,665 shares of common stock were not included in the calculations of diluted income per share because the impact would have been anti-dilutive for each of the periods presented.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2017
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	Note 8 — Subsequent Event On April 24, 2017, the Company entered into an employment agreement with Mr. Laufer and Mr. Chemtov, whereby Mr. Laufer and Mr. Chemtov will serve as its co-Chief Executive Officer and members of the board of directors for a term that shall begin on April 24, 2017, and, unless sooner terminated as provided therein, shall end on April 24, 2018; provided that such term of employment shall automatically extend for successive one-year periods unless either party gives at least six months’ advance written notice of its intention not to extend the term of employment. Messrs. Laufer and Chemtov will each receive a base salary of $75,000 salary and a one-time retention bonus of $75,000. Mr. Laufer and Mr. Chemtov shall be eligible to participate in the Company’s annual performance based bonus program, as the same may be established from time to time by the Company’s Board of Directors for executive officers of the Company.

Summary of Significant Accoun14

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued guidance to clarify the principles for recognizing revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a comprehensive framework for revenue recognition that supersedes current general revenue guidance and most industry-specific guidance. In addition, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. An entity should apply the guidance either retrospectively to each prior reporting period presented or retrospectively with the cumulative adjustment at the date of the initial application. In July 2015, the FASB delayed the effective date of the new guidance to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is now permitted after the original effective date of December 15, 2016. The Company is still evaluating the impact of adopting the new accounting guidance, but does not expect the adoption to have a material impact on its consolidated financial statements.

Disposition of Real Estate Bu15

Disposition of Real Estate Business (Tables)	3 Months Ended
	Mar. 31, 2017
Discontinued Operations and Disposal Groups [Abstract]
Schedule of Summary of Assets and Liabilities Held for Disposition	A summary of the difference between the market value of the treasury stock acquired in the Exchange Offer and the net book value of the assets and liabilities exchanged that was recorded as additional paid-in capital on February 1, 2017, is as follows: February 1, 2017 Treasury stock acquired via exchange 1,800,000 shares at $0.86 per share (market value as of 1/10/2017) $ 1,548,000 Net book value of assets and liabilities exchanged: Land $ 747,389 Building and improvements 3,145,167 Less: accumulated depreciation (266,406 ) Real estate property, net 3,626,150 Deferred rent receivable 99,359 Deferred leasing costs 127,360 Total assets exchanged 3,852,869 Notes payable, net of unamortized debt issuance costs (2,723,292 ) Other accrued liabilities (3,470 ) Net book value of assets and liabilities exchanged $ 1,126,107 Change in additional paid-in capital $ 421,893
Schedule of Summary of Results of Operations Reported as Discontinued Operations	A summary of the results of operations reported as discontinued operations for the three months ended March 31, 2017 and 2016: For the three months ended March 31, 2017 2016 Net revenues $ 57,978 $ 168,873 Operating expenses: Property expenses 9,883 24,456 Depreciation expense 9,659 28,871 Total operating expenses 19,542 53,327 Operating income 38,436 115,546 Interest expense, net - related party (22,708 ) (68,125 ) Interest expense, net (427 ) (3,740 ) Income before income taxes 15,301 43,681 Provision for income taxes — — Income from discontinued operations, net of tax $ 15,301 $ 43,681

Outstanding Warrants (Tables)

Outstanding Warrants (Tables)	3 Months Ended
	Mar. 31, 2017
Outstanding Warrants Tables
Summary of warrants issued, exercised and expired	A summary of warrants issued, exercised and expired during the three months ended March 31, 2017, is as follows: Weighted Avg. Exercise Warrants: Shares Price Balance at January 1, 2017 166,665 $ 5.88 Issued — — Exercised — — Expired — — Balance at March 31, 2017 166,665 $ 5.88

Disposition of Real Estate Bu17

Disposition of Real Estate Business (Narrative) (Details) - USD ($)	Jan. 10, 2017	Feb. 01, 2017
Disposition Of Real Estate Business Narrative Details
Treasury stock, cost per share	$ 0.86
Additional paid-in capital		$ 421,893
Cash transferred for acrrued taxes		$ 135,033
Number of shares issued in exchange for same number of MJRE's common units	1,800,000
Treasury stock shares acquired	1,800,000

Disposition of Real Estate Bu18

Disposition of Real Estate Business (Schedule of Summary of Assets and Liabilities Held for Disposition) (Details) - USD ($)	Mar. 31, 2017	Feb. 01, 2017	Dec. 31, 2016
Treasury stock acquired via exchange
1,800,000 shares at $0.86 per share (market value as of 1/10/2017)	$ 1,548,000	$ 1,548,000
Net book value of assets and liabilities exchanged:
Land		747,389
Building and improvements		3,145,167
Less: accumulated depreciation		(266,406)
Real estate property, net		3,626,150
Deferred rent receivable		99,359
Deferred leasing costs		127,360
Total assets exchanged		3,852,869
Notes payable, net of unamortized debt issuance costs		(2,723,292)
Other accrued liabilities		(3,470)
Net book value of assets and liabilities exchanged		1,126,107
Change in additional paid-in capital		$ 421,893

Disposition of Real Estate Bu19

Disposition of Real Estate Business (Schedule of Summary of Results of Operations Reported) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Discontinued Operations and Disposal Groups [Abstract]
Net revenues	$ 57,978	$ 168,873
Operating expenses:
Property expenses	9,883	24,456
Depreciation expense	9,659	28,871
Total operating expenses	19,542	53,327
Operating income	38,436	115,546
Interest expense, net - related party	(22,708)	(68,125)
Interest expense, net	(427)	(3,740)
Income before income taxes	15,301	43,681
Provision for income taxes
Income from discontinued operations, net of tax	$ 15,301	$ 43,681

Going Concern (Details)

Going Concern (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Going Concern [Abstract]
Loss before income taxes	$ 26,878	$ 18,230
Cash used for operating activities	$ 13,318	$ 3,013

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Related Party Transaction [Line Items]
Promissory note held by related party			$ 2,132
Chemtov Mortgage Group [Member]
Related Party Transaction [Line Items]
Interest paid to the promissory note held by CMG	45,417	$ 68,125
Promissory note held by related party	$ 2,725,000

Outstanding Warrants (Schedule

Outstanding Warrants (Schedule of Warrants Issued, Exercised and Expired) (Details) - Warrant [Member]	3 Months Ended
	Mar. 31, 2017$ / sharesshares
Warrants:
Balance at the beginning of the period | shares	166,665
Issued | shares
Exercised | shares
Expired | shares
Balance at the end of the period | shares	166,665
Weighted Avg. Exercise Price
Balance at the beginning of the period | $ / shares	$ 5.88
Issued | $ / shares
Exercised | $ / shares
Expired | $ / shares
Balance at the end of the period | $ / shares	$ 5.88

Basic and Diluted Earnings (L23

Basic and Diluted Earnings (Loss) per Common Share (Details) - shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Earnings Per Share [Abstract]
Warrants excluded from calculation of of diluted income per share	166,665	166,665

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent Event [Member]	1 Months Ended
	Apr. 24, 2017USD ($)
Messr Laufer [Member]
Subsequent Event [Line Items]
Salary	$ 75,000
One time retention bonus	75,000
Messr Chemtov [Member]
Subsequent Event [Line Items]
Salary	75,000
One time retention bonus	$ 75,000