July 19, 2019
Donald Steinberg
Chief Executive Officer
Marijuana Co of America, Inc.
1340 West Valley Parkway, Suite 205
Escondido, California 92029
Re: Marijuana Co of America, Inc.
Amendment No. 1 to Form 10-K for period ended December 31, 2018
Filed June 25, 2019
Current Report on Form 8-K
Filed July 3, 2019
File No. 000-27039
Dear Mr. Steinberg:
We have reviewed the above filings and your June 25, 2019 response to
our comment
letter and have the following comments. In some of our comments, we may ask you
to provide
us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have additional
comments. Unless we note otherwise, our references to prior comments are to
comments in our
May 28, 2019 letter.
Amendment No. 1 to Form 10-K for period ended December 31, 2018 filed June 25,
2019
Results of Operations, page 31
1. We note your response to prior comment 3 and your revised disclosure on
page 33
showing that $17.1 million of the total $17.3 million SG&A decrease in
2018 is from
lower stock compensation expense. We also note your disclosure on page 35
that the
decrease was related to you issuing less stock-based compensation for
consulting
services. Please revise your disclosure on page 33 to address the
following:
Revise your tabular disclosure to also more clearly label the stock
based compensation
by the nature of the expense rather than solely the payment method.
Expand your disclosure to identify the nature of various consulting
services received
Donald Steinberg
FirstName Co of America, Inc.
Marijuana LastNameDonald Steinberg
Comapany NameMarijuana Co of America, Inc.
July 19, 2019
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that comprised the $18.1 million in 2017, providing the respective
quantification.
Clearly identify the objective outcomes resulting from the
consulting services.
To the extent a portion of the stock based compensation is paid to
officers and
directors, separately identify those amounts and label them as
such.
More clearly explain the reasons for the decreases in these
amounts and your
expectations for the future trends of the various types of
expenses paid for with stock
based compensation.
Item 9A. Controls and Procedures, page 44
2. We note your response to prior comment 8. Please revise to provide the
following:
Disclose your evaluation of the disclosure controls and procedures
(DCP) as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as
amended, including your conclusion as of the period covered by this
report. Your
revised disclosures gives two separate conclusions on the
effectiveness of internal
controls over financial reporting (ICFR) but omits a conclusion on
DCP.
Regarding the two material weaknesses that you have identified,
please revise to
identify the extent to which material weaknesses have been resolved.
Certifications, page 51
3. We note your response to prior comment 19 and reissue our comment in
its entirety.
Your certifications filed as Exhibits 31.1 and 31.2, with both the
original 10-K on April
15, 2019 and this amendment number one to the 10-K on June 25, 2019,
are
each missing the introductory language in paragraph 4 referring to
internal control over
financial reporting. You also continue to omit the paragraph regarding
the design of
internal control over financial reporting. Accordingly, please file an
amendment to your
Form 10-K that includes the entire filing together with the
certifications of each of your
current CEO and CFO in the form currently set forth in Item 601(b)(31)
of Regulation S-
K.
Report of Independent Registered Public Accounting Firm, page F-1
4. We note your response to prior comment 11 regarding the audit report
accompanying your
financial statements. Please address the following:
As previously requested, please ensure that your auditors provide
reports that are fully
compliant with PCAOB AS 3101. In response to this comment, please
ensure that the
audit opinion is addressed to both the board of directors and
shareholders. Further,
please ensure the opinion specifically includes a positive
statement indicating that the
financial statements subjected to audit include the related notes
and any related
schedules, if applicable.
Revise to ensure that the auditor's city and state reflected in both
this audit report and
the auditor's consent in exhibit 23 are consistent. As noted in
our previous comment,
the opinion in your Form 10-K is signed out of Plantation,
Florida. However, the
Donald Steinberg
FirstName Co of America, Inc.
Marijuana LastNameDonald Steinberg
Comapany NameMarijuana Co of America, Inc.
July 19, 2019
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auditor's consent in the Form S-1 is signed out of Cornelius,
North Carolina. Please
revise one or the other to ensure the location is identified
consistently.
Stock Based Compensation, page F-8
5. We note your response to prior comment 13, including your revisions to
clarify that you
cancelled options to purchase 1,000,000,000 shares on February 27,
2019. You still
disclose on page F-8 that "As of December 31, 2018 and 2017, the
number of outstanding
stock options to purchase shares of common stock was 0 and
1,000,000,000 shares,
respectively. 0 and 750,000,000 shares were vested as of December 31,
2018 and 2017,
respectively." However, elsewhere you disclose that there were options
exercisable into
one million shares outstanding as of December 31, 2018. Revise to
reconcile this apparent
inconsistency.
Adoption of Accounting Standards, page F-11
6. We note your response to prior comment 14 regarding the adoption of
ASU 2014-09
"Revenue from Contracts with Customers" and the revisions to your
revenue recognition
disclosures. Please address the following:
Please revise to provide the transition disclosures required upon
adoption, including
the following:
o Revise to disclose the date you adopted this guidance, which
transition method
was used, which of of your contracts were included and
excluded, and why.
o Revise to disclose any of the following judgments and changes
in judgments made
in applying the new standard that affected your determination
of the amount and
timing of revenue recognition, including a description of
performance obligations
identified, the composition of the transaction price, your
basis for allocating the
transaction price to performance obligations, and the factors
you considered in
establishing revenue recognition to be either at a point in
time or over time.
o Please address the following in your response as well as your
revised disclosure,
referring to the specific guidance of ASU 2014-09 on which you
relied:
In the last paragraph on page F-6, you disclose that you
will recognize revenue
when persuasive evidence of a significant financing
component exists in your
contracts. Tell us what you mean here, and revise to
clarify whether you
believe you have significant financing component in any of
your contracts. If
so, explain how your transaction price and variable
consideration is impacted
by the significant financing components of consulting and
product sales
contracts.
You disclose on F-7 that you record revenue from product
sales upon delivery
of goods and payment for product. Explain what you mean
here and whether
your receipt of payment for product sales is always
simultaneous with the
completion of the performance obligations required for
recognition of revenue.
Revise to clearly identify the performance obligations in
these arrangements.
Donald Steinberg
Marijuana Co of America, Inc.
July 19, 2019
Page 4
For each of your major revenue streams, describe and quantify the
extent to which the
adoption of the new guidance altered the timing of revenue
recognition as determined
under the prior guidance.
Note 4 - Investments, page F-17
7. We note your response to prior comment 15. As previously requested,
please revise your
debt roll-forward to clearly show how it reconciles to the amounts
presented on your
Balance Sheet and Statements of Operations. Revise to clarify that the
table includes the
current portion of your convertible notes payable, but explain why the
table excludes the
long term convertible notes payable of $172,856 as of December 31,
2017.
Note 15 - Subsequent Events, page F-31
8. We note your response to prior comment 18 regarding your definitive
agreement
with Natural Plant Extract of California, Inc. Please provide us with
your quantified
significance tests for this investment for purposes of both Rule 8-04
Regulation S-X and
ASC 323-10-50-3. Tell us how you have accounted for the consummation
of the
definitive agreement.
Current Report on Form 8-K filed July 3, 2019
Item 3.03 Material Modification to Rights of Security Holders, page 2
9. We note your disclosure that on July 1, 2019, your stockholders holding
a majority of the
shares eligible to vote met in a Special Meeting to approve an amendment
to your articles
of incorporation to affect a sixty for one reverse stock split of your
issued and outstanding
common stock. However, Exhibit 4.2 indicates a majority of your
stockholders acted to
approve the amendment by written consent waiving all notice of, and the
holding of, a
meeting of the stockholders. Please reconcile your disclosure to clarify
whether a
stockholder meeting was held. Additionally, as no proxy or information
statement was
filed relating to this meeting or action by written consent, please tell
us how you complied
FirstName LastNameDonald Steinbergin adopting this amendment to your articles.
Please refer to
with the applicable proxy rules
Comapany NameMarijuana 14a-3 and 14a-6 Inc. the 20-day period referenced in
Exchange Act
Exchange Act Rules Co of America, and
Rule 14c-2(b).
July 19, 2019 Page 4
FirstName LastName
Donald Steinberg
FirstName Co of America, Inc.
Marijuana LastNameDonald Steinberg
Comapany NameMarijuana Co of America, Inc.
July 19, 2019
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July 19, 2019 Page 5
FirstName LastName
You may contact Bonnie Baynes at 202-551-4924 or Kevin Vaughn at
202-551-3494 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Jeffrey Gabor at 202-551-2544 or Mary Beth Breslin at 202-551-3625 with
any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Healthcare
& Insurance
cc: Tad Mailander, Esq.