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 |