10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549   

FORM 10-Q

(Mark One)
☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2019
☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
	For the transition period from __________________ to ______________

Commission file number: 001-14088

Acacia Diversified Holdings, Inc.

(Exact name of small business issuer as specified in its charter)

Texas	75-2095676
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
13575 58th St. North #138 Clearwater, FL	33760
(Address of principal executive offices)	(Zip Code)

(727) 678-4420

(Registrant’s telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	ACCA	OTCQB

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (1) Yes ☒  No ☐   (2) Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller Reporting Company ☒
Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒    

APPLICABLE ONLY TO CORPORATE ISSUERS  

State the number of shares outstanding of each of the issuer's classes of common equity, as of May 5, 2019 is 24,083,755 common shares.

TABLE OF CONTENTS

		Page
PART I. Financial Information
Item 1.	Financial Statements	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	6
Item 4.	Controls and Procedures	6
PART II. Other Information
Item 1.	Legal Proceedings	7
Item 1A.	Risk Factors	7
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7
Item 3.	Defaults Upon Senior Securities	7
Item 4.	Mine Safety Disclosures	7
Item 5.	Other Information	7
Item 6.	Exhibits	8
Signatures		9

PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements

ACACIA DIVERSIFIED HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2019			2018
	(UNAUDITED)			(AUDITED)
ASSETS
CURRENT ASSETS:
Cash	$	55,806		$	51,797
Accounts receivable, net of allowance for doubtful accounts of $25,000 in 2019 and 2018		117,498			135,970
Inventories		41,951			43,550
Prepaid expenses and other current assets		16,023			7,815
Total Current Assets		231,278			239,132
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $314,244 and $277,343 in 2019 and 2018, respectively		440,763			453,562
OTHER ASSETS
Deposits		4,201			4,201
Right of use asset - finance lease, net of accumulated amortization of $3,720 in 2019		173,919			-
Right of use asset - operating lease		22,177			-
		200,297			4,201
TOTAL ASSETS	$	872,338		$	696,895
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	372,444		$	289,805
Current portion of long-term debt		4,359			4,359
Current portion of lease liability - finance lease		8,321			-
Current portion of lease liability - operating lease		22,402			-
Convertible notes payable		154,100			199,100
Notes payable to related party		812,400			812,400
Accrued interest on notes payable to related party		81,800			65,774
Payable to related parties		68,150			66,500
Total Current Liabilities		1,523,976			1,437,938
LONG-TERM LIABILITY:
Long-term debt, net of current portion		14,129			15,219
Derivative liability		127,405			196,518
Lease liability - finance lease, net of current portion		171,616			-
Total Long-term Liability		313,150			211,737
Total Liabilities		1,837,126			1,649,675
Commitments and contingencies		-			-
STOCKHOLDERS' DEFICIT
Common stock, $0.001 par value; 150,000,000 shares authorized; 23,080,763 and 21,813,625 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively		23,081			21,814
Additional paid-in capital		5,881,207			5,692,055
Accumulated deficit		(6,869,076	)		(6,666,649	)
Total Stockholders' Deficit		(964,788	)		(952,780	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	872,338		$	696,895

The accompanying notes are an integral part of these consolidated financial statements.

F-1

ACACIA DIVERSIFIED HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018

(UNAUDITED)

	Three Months Ended March 31,
	2019			2018
REVENUE	$	163,505		$	91,914
COSTS OF GOODS SOLD
Costs of goods sold		48,742			31,970
Depreciation expense		23,457			17,806
		72,199			49,776
GROSS PROFIT (LOSS)		91,306			42,138
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Employee compensation expenses		158,240			142,369
General and administrative expenses		119,786			320,416
Depreciation and amortization expense		17,163			616
		295,189			463,401
LOSS FROM OPERATIONS		(203,883	)		(421,263	)
OTHER INCOME (EXPENSE)
Derivative income (expense)		27,180
Interest expense		(23,405	)		(11,527	)
Other income (expense)		2,083
TOTAL OTHER EXPENSE		5,858			(11,527	)
NET LOSS BEFORE INCOME TAXES		(198,025	)		(432,790	)
Income taxes		-			-
NET LOSS	$	(198,025	)	$	(432,790	)
NET LOSS PER COMMON SHARE, BASIC AND DILUTED	$	(0.01	)	$	(0.02	)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING, BASIC AND DILUTED		22,130,410			17,818,766

The accompanying notes are an integral part of these consolidated financial statements.

F-2

ACACIA DIVERSIFIED HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018

(UNAUDITED) 

	Common Stock
	Shares		Par Value		Additional Paid-in Capital		Accumulated Deficit			Total
Balance December 31, 2017 (audited)		17,539,982	$	17,540	$	4,451,038	$	(4,953,946	)	$	(485,368	)
Common stock issued for services		517,000		517		254,353					254,870
Common stock issued to related party for leasehold improvement		36,018		36		17,613					17,649
Employee stock plan compensation		-		-		14,003					14,003
Net loss								(432,790	)		(432,790	)
Balance March 31, 2018 (unaudited)		18,093,000	$	18,093	$	4,737,007	$	(5,386,736	)	$	(631,636	)

	Common Stock
	Shares		Par Value		Additional Paid-in Capital		Accumulated Deficit			Total
Balance December 31, 2018 (audited)		21,813,625	$	21,814	$	5,692,055	$	(6,666,649	)	$	(952,780	)
Common stock issued for services		2,000		2		3,182					3,184
Common stock issued for conversion of convertible note		505,138		505		44,495					45,000
Settlement of derivative liability from conversion of convertible note		-		-		41,933					41,933
Employee stock plan compensation		-		-		9,102					9,102
Common stock issued for cash		760,000		760		90,440					91,200
Cumulative adjustments from adoption of ASC 842								(4,402	)		(4,402	)
Net loss								(198,025	)		(198,025	)
Balance March 31, 2019 (unaudited)		23,080,763	$	23,081	$	5,881,207	$	(6,869,076	)	$	(964,788	)

The accompanying notes are an integral part of these consolidated financial statements.

F-3

ACACIA DIVERSIFIED HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018

(UNAUDITED)

	Three Months Ended March 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(198,025	)	$	(432,790	)
Adjustments to reconcile net loss to net cash and cash equivalents used by operating activities:
Depreciation and amortization		48,099			18,422
Common stock issued for services		3,184			254,870
Common stock issued from employee stock plan		9,102			14,003
Derivative expense (income)		(27,180	)		-
(Increase) decrease in:
Accounts receivable		18,472			21,270
Inventories		1,599			2,795
Prepaid expenses and other current assets		(8,208	)		312
Increase (decrease) in:
Accounts payable and accrued expenses		82,639			29,151
Payable to related parties		1,650			25,506
Net cash used by operating activities		(68,668	)		(66,461	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment to related party for leasehold improvement		-			(6,000	)
Acquisition of property and equipment		(24,102	)		(1,486	)
Net cash provided (used) by investing activities		(24,102	)		(7,486	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Accrued interest on notes payable to related party		16,026			-
Proceeds from issuance of common stock		91,200			-
Payment on long-term debt		(1,090	)		-
Payments on lease liability - finance lease		(2,104	)		-
Payments on lease liability - operating lease		(7,253	)
Proceeds from issuance of notes payable to related party		-			72,000
Net cash provided by financing activities		96,779			72,000
Net change in cash and cash equivalents		4,009			(1,947	)
Cash and cash equivalents, beginning of the year		51,797			28,417
Cash and cash equivalents, end of the year	$	55,806		$	26,470
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Common stock issued to related party for leasehold improvement	$	-		$	17,649
Common stock issued for conversion of convertible notes payable	$	45,000		$	-
Acquisition of right of use asset - finance lease	$	182,041		$	-
Acquisition of right of use asset - operating lease	$	29,655		$	-

The accompanying notes are an integral part of these consolidated financial statements.

F-4

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

NOTE 1 – THE COMPANY

Acacia Diversified Holdings, Inc. (“Acacia” or the “Company”) has four wholly-owned subsidiaries, MariJ Pharmaceuticals, Inc. (“MariJ Pharma”), Canna-Cures Research & Development Center, Inc. (“Canna-Cures”), and Eufloria Medical of Tennessee, Inc. (“EMT”), a company incorporated in the state of Tennessee. In July 2018, the Company also announced the completion of its acquisition of Medahub Operations Group, Inc. and Medahub, Inc., technology companies (“Medahub”), complete with a current compounding pharmacy license in Florida. The Medahub acquisition allows the Company to be fully HIPAA compliant and cloud based on an HL7 platform. The Company can now offer licensing agreements for other cannabis companies wanting to be HIPAA compliant from left to right or seed to sale and Doctor to Patient.

The Company’s primary source of revenue is from the extraction of medicinal hemp oil, from a non-psychoactive cannabis plant. All extraction services are currently provided in states where such services are deemed legal. The Company's subsidiary EMT has been invited to be part of the hemp pilot program in Tennessee. This program provides the Company the license to grow, manufacture, and dispense organic hemp oil in Tennessee. The Company plans on participating in this pilot program through this new, wholly-owned subsidiary.

The Company also opened its retail store in Tennessee. Revenue generated from retail sales is not expected to be material to the Company based on current operating model.

NOTE 2 – GOING CONCERN

The Company has not generated profit to date. The Company expects to continue to incur operating losses as it proceeds with its extraction, growing and manufacturing activities in Tennessee and research and development activities and continues to navigate through the regulatory process. The Company expects general and administrative costs to increase, as the Company adds personnel and other administrative expenses associated with its current efforts. As such, and without substantially increasing revenue or finding new sources of capital, the Company will find it difficult to continue to meet its obligations as they come due.  The Company continues to seek working capital but there can be no assurance that the Company will be successful in its efforts to raise capital, or if it were successful in raising capital, that it would be successful in meeting its business plans.  These factors raise substantial doubt as to the ability of the Company to continue as a going concern.  Management’s plans include securing additional extraction contracts and increasing sales at the retail store in Tennessee, attempting to start new businesses outside of Colorado, finding additional operational businesses to buy, and attempting to raise funds from the public through an equity offering of the Company’s common stock. Management intends to make every effort to identify and develop all these sources of funds, but there can be no assurance that Management’s plans will be successful.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred losses for all periods presented and has a substantial accumulated deficit. As of March 31, 2019, these factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect all adjustments, which consist solely of normal recurring adjustments, needed to fairly present the financial results for these periods. The consolidated financial statements and notes thereto are presented as prescribed by Form 10-Q. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted. The accompanying consolidated financial statements should be read in conjunction with the financial statements for the fiscal year ended December 31, 2018 and notes thereto in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the Securities and Exchange Commission on April 1, 2019. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the entire fiscal year. In the opinion of management, all adjustments have been made, which consist only of normal recurring adjustments necessary for a fair statement of (a) the results of operations for the three-month periods ended March 31, 2019 and 2018, (b) the financial position at March 31, 2019 and (c) cash flows for the three-month periods ended March 31, 2019 and 2018.

F-5

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Acacia Diversified Holdings, Inc. and its wholly-owned subsidiaries, MariJ Pharmaceuticals, Inc, Canna-Cures Research & Development Center, Inc., Eufloria Medical of Tennessee, Inc., Medahub Operations Group, Inc. and Medahub, Inc. All significant intercompany accounts and transactions are eliminated in consolidation.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The actual results may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

MEDAHUB ACQUISITION

In July 2018, the Company announced the completion of its acquisition of Medahub Operations Group, Inc. and Medahub, Inc., technology companies (“Medahub”), which includes a current compounding pharmacy license in Florida. The Medahub acquisition allows the Company to be fully HIPAA compliant and cloud based on an HL7 platform. The Company can now offer licensing agreements for other cannabis companies wanting to be HIPAA compliant from left to right or seed to sale and Doctor to Patient. The Company issued 600,000 shares of its restricted common stock to the principal of Medahub as consideration of the acquisition, valued at $126,000.

When determining the accounting of the acquisition, the Company concluded that the acquisition does not constitute the acquisition of a business since there was no inputs, processes or outputs within Medahub. In addition, although the Company acquired certain software and technology from Medahub, the most significant asset it acquired was Medahub's principal's commitment to provide support, guidance and direction for implementing this technology. Without the principal's commitment of his time, the Company will not be able to implement the technology and begin generating cash flows. Therefore, the Company believes that the value of the purchase is concentrated on the service provided by Medahub's principal. As a result, the Company allocated the entire purchase price to the service provided and accounted for it as professional fee expense.

LEASES

In February 2016, the FASB issued ASU 2016-02, Leases, which aims to make leasing activities more transparent and comparable and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. The new guidelines are contained in Accounting Standards Codification ASC Topic 842 - Leases ("ASC 842"). This ASU is effective for all interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Company applied this standard retrospectively on January 1, 2019 through a cumulative effect adjustment recognized as of January 1, 2019. In applying this standard, the Company elects to apply all practical expedients to not reassess the followings:

1. Whether a pre-existing contract is or contain a lease

2. Whether a pre-existing lease should be classified as an operating or finance lease, and

3. Whether the initial direct costs capitalized for a pre-existing lease under the previously lease accounting standard ASC Topic 840 qualify for capitalization

In addition, in the applying ASC 842, the Company does not elect the hindsight practical expedient.

As a result, the Company recorded its right-of-use assets and corresponding lease liabilities on its March 31, 2019 balance sheet.

F-6

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

REVENUE RECOGNITION

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which replaces numerous requirements in U.S. GAAP, including industry specific requirements, and provides a single revenue recognition model for recognizing revenue from contracts with customers. The Company adopted this standard effective January 1, 2018.

The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This requires companies to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The Company’s revenues from extraction activities and from retail sales are recognized at a point in time.

The ASU requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenues.

The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application to accumulated deficit. Additionally, incremental footnote disclosures are required to present the 2018 revenues under the prior standard. Under the modified retrospective method, an entity may also elect to apply the standard to either (i) all contracts as of January 1, 2018, or (ii) only to contracts that are not completed as of January 1, 2018. The Company elected to adopt this guidance using the modified retrospective method at January 1, 2018 which did not result in an adjustment to accumulated deficit. Additionally, upon adoption, the Company evaluated its revenue recognition policy for all revenue streams within the scope of the ASU under previous standards and using the five-step model under the new guidance and confirmed that there were no differences in the pattern of revenue recognition.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company’s accounts receivable represents amounts due from customers for extraction services performed. Allowance for uncollectible accounts receivable is estimated based on the aging of the accounts receivable and management estimate of uncollectible amounts.  At March 31, 2019 and December 31, 2018, the Company provided for $25,000 of allowance for doubtful accounts.

INVENTORIES

Inventories are stated at the lower of cost or market.  Cost is determined using the average cost method. The Company’s inventory consists of raw materials and finished goods. Cost of inventory includes cost of ingredients, labor, quality control and all other costs incurred to bring our inventories to condition ready to be sold.

DEFERRED FARM EXPENSE

The Company's subsidiary EMT grows hemp plants in both its indoor and outdoor facility. In accordance with Accounting Standards Codification 905 - Agriculture, all direct and indirect costs of growing the plants are accumulated until the time of harvest. These deferred cost cannot exceed the realizable value of the oil processed from the hemp plants. Crop costs such as soil preparation incurred before planting are deferred and allocated to the growing crop. Deferred farm expense is included as inventory costs.

DEBT DISCOUNT

During the year ended December 31, 2018, the Company incurred debt discount related to the issuance of convertible promissory notes, as described in Note 9. The discount was recognized in its entirety as interest expense rather than amortized over the life of the convertible promissory note. The immediate recognition did not yield materially different result.

F-7

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

DEBT ISSUANCE COSTS

During the year ended December 31, 2018, the Company incurred direct costs associated with the issuance of convertible promissory notes, as described in Note 9. The Company recognized these costs as interest expense.

STOCK BASED COMPENSATION

The Company accounts for stock-based compensation under Accounting Standards Codification 718 - Compensation-Stock Compensation (“ASC 718”). ASC 718 requires that all stock-based compensation be recognized as expense in the financial statements and that such cost be measured at the fair value of the award at the grant date and recognized over the period during which an employee is required to provide services (requisite service period). An additional requirement of ASC 718 is that estimated forfeitures be considered in determining compensation expense. Estimating forfeitures did not have a material impact on the determination of compensation expense during the three months ended March 31, 2019 and 2018.  

The Company accounts for stock based awards based on the fair market value of the instrument using a 10-day volume weighted adjusted price (VWAP) and accounts for stock options issued using the Black-Scholes option pricing model and utilizing certain assumptions including the followings:

Risk-free interest rate – This is the yield on U.S. Treasury Securities posted at the date of grant (or date of modification) having a term equal to the expected life of the option. An increase in the risk-free interest rate will increase compensation expense.

Expected life—years – This is the period of time over which the options granted are expected to remain outstanding. Options granted by the Company had a maximum term of ten years. An increase in the expected life will increase compensation expense.

Expected volatility – Actual changes in the market value of stock are used to calculate the volatility assumption.  An increase in the expected volatility will increase compensation expense.

Dividend yield – This is the annual rate of dividends per share over the exercise price of the option. An increase in the dividend yield will decrease compensation expense.  The Company does not currently pay dividends and has no immediate plans to do so in the near future.

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of Accounting Standards Codification 505-50, Equity – Based Payments to Non-Employees.  Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued.  The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty’s performance is complete. 

During the three months ended March 31, 2019, the board of directors approved issuances of the Company’s restricted common stock to consultants, employees, and directors for services rendered:

1. 2,000 shares to a consultant for services rendered, valued at $3,184.

3. Shares to be issued to an employee and a director from the restricted stock plan valued at $9,102.

F-8

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

FAIR VALUE ESTIMATES – The Company measures assets and liabilities it acquires at fair value in accordance with Accounting Standards Codification 820 – Fair Value Measurement (“ASC 820”). The objective of ASC 820 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 specifies a valuation hierarchy based on whether the inputs to those valuation techniques are observable or unobservable.

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s own assumptions. These two types of inputs have created the following fair value hierarchy:

● Level 1 – Quoted prices for identical instruments in active markets;

● Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and 

● Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

This hierarchy requires the Company to minimize the use of unobservable inputs and to use observable market data, if available, when estimating fair value. The Company has liability measured at fair value on a recurring basis due to the issuance of convertible note payable as described in Note 6.

NOTE 4 – RELATED PARTY TRANSACTIONS

Notes Payable to Related Party

The Company entered into the following promissory notes payable to its CEO during the year ended December 31, 2018 and during the three months ended March 31, 2019:

Note Date	Note Amount		Accrued Interest through December 31, 2018		Accrued Interest for three months ended March 31, 2019		Total Accrued Interest
Total notes payable and accrued interest due to related party at December 31, 2017	$	558,400	$	56,544	$	11,015	$	67,559
March 2018 (1)		72,000		4,402		1,421		5,823
April 2018 (2)		42,000		2,333		828		3,161
August 2018 (3)		70,000		2,169		1,381		3,550
November 2018 (4)		20,000		184		395		579
December 2018 (5)		50,000		142		986		1,128
		254,000		9,230		5,011		14,241
Total notes payable and accrued interest due to related party at March 31, 2019	$	812,400	$	65,774	$	16,026	$	81,800

F-9

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

(1) In March 2018, the Company entered into three separate unsecured promissory note agreements with its CEO and his spouse, in the amounts of $12,000, $40,000 and $20,000, totaled $72,000. Each of these promissory notes bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 60 days from the date of the note. The Company accrued interest on these notes in the amount of $5,823 through March 31, 2019.

(2) In April 2018, the Company entered into two separate unsecured promissory note agreements with its CEO and his spouse, in the amounts of $10,000 and $32,000, totaled $42,000. Each of these promissory notes bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 60 days from the date of the note. The Company accrued interest on these notes in the amount of $3,161 through March 31, 2019.

In May 2018, the board of directors approved the Company to enter into a promissory note agreement with the Company's CEO and his spouse to consolidate notes (1) and (2). The total amount of the principle consolidated was $114,000. The amount of interest accrued from the note dates to the date of the consolidation was minimal and therefore was not included in the consolidation. The promissory note accrues interest at 8% from the date of consolidation and is due within 120 days of the note date. 

(3) In August 2018, the Company entered into three separate unsecured promissory note agreements with its CEO and his spouse, in the amounts of $25,000, $25,000, and $20,000, totaled $70,000. Each of these promissory notes bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 60 days from the date of the note. The Company accrued interest on these notes in the amount of $3,550 through March 31, 2019.

(4) In November 2018, the Company entered into an unsecured promissory note agreements with its CEO and his spouse, in the amounts of $20,000. The promissory note bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 30 days from the date of the note. The Company accrued interest on these notes in the amount of $579 through March 31, 2019.

(5) In December 2018, the Company entered into an unsecured promissory note agreements with its CEO and his spouse, in the amounts of $50,000. The promissory note bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 90 days from the date of the note. The Company accrued interest on these notes in the amount of $1,128 through March 31, 2019.

As a result, the total principle amount of notes payable to related party was $812,400 at March 31, 2019 and December 31, 2018.

Payable to Related Parties

Payable to related parties consisted of the followings at September March 31, 2019 and December 31, 2018:

	March 31,		December 31,
	2019		2018
Short term loan from related entity (1)	$	60,150	$	61,500
Auto allowances owed to CEO (2)		8,000		5,000
	$	68,150	$	66,500

(1) In 2017, the Company received a working capital advance of $74,348 from a related entity. These advances are non-interest bearing and were intended as short term capital advances. The remaining balances have been included in payable to related parties on the consolidated balance sheet as current liabilities at March 31, 2019 and December 31, 2018. 

(2) On May 1, 2016, the Company entered into an employment agreement with its CEO. The term of the employment is through December 31, 2019. The agreement provides for a monthly storage and corporate housing allowance of $1,000 for a property owned by the CEO and a monthly automobile allowance of $1,000.

In May 2018, the board of directors approved to discontinue payment of the storage and corporate housing allowance of $1,000 per month, retroactively to January 1, 2018. As a result, expenses accrued during the three months ended March 31, 2018 was reversed during the three months ended June 30, 2018. The automobile allowance remains unchanged at $1,000 per month.

F-10

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

In July 2018, the board of directors approved issuance of 85,000 shares of the Company's restricted common stock to the Company's CEO to settle the accrued storage and corporate housing allowance and automobile allowance in the amount of $17,000. As a result, $8,000 and $5,000 remained owed to the Company’s CEO at March 31, 2019 and December 31, 2018, respectively.

During the three months ended March 31, 2019, expenses related to the automobile allowances totaled $3,000.

Other Related Party Transactions

In May 2018, the Company's CEO personally financed the purchase, with the Company's board of directors' approval, a piece of property in Tennessee for the benefit of the Company. The property consists of a 14 acre farm and an indoor growing area. The Company's CEO personally funded the purchase price of the property at $185,000 and closing costs. The board of directors also granted the Company the right to purchase the farm from the Company's CEO at his cost plus 6.09% interest when the Company has sufficient cash flows to do so. At the time of the filing, the Company has not exercised such right.

The board of directors also approved for the Company to enter into a lease to lease this property from the Company's CEO, effective June 1, 2018. The term of the lease is for one year with an automatic renewal term of one year. The lease requires the Company to pay all expenses related to the acquisition and operation of the property, including but not limited to the Company's CEO's personal incremental borrowing costs, repairs and maintenance, real estate taxes, licenses and permits, etc. For the three months ended March 31, 2019, the Company incurred $7,720 in operating expenses for this property.

NOTE 5 – INVENTORIES

The Company’s inventories consisted of the followings at March 31, 2019 and December 31, 2018:

	March 31, 2019		December 31, 2018
Raw materials	$	23,810	$	23,810
Finished goods (isolates, tinctures, capsules, etc.)		11,006		12,605
Deferred farm expense		7,135		7,135
	$	41,951	$	43,550

NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

Short term lease

The Company recognizes its office lease in Florida with an initial term of 12 months or less as a short-term lease. Lease payments associated with short-term lease are expensed as incurred in operating lease expense and are not included in our calculation of right-of-use assets or lease liabilities. Operating lease expense related to short-term lease was $2,895 for the three months ended March 31, 2019.

Operating lease

The Company entered into a lease agreement to lease its retail space in Tennessee in October 2017 with a lease term of 24 months. The lease contains a renewal option to extend the term for two additional years. The Company does not plan on renewing the lease when it expires. Rent for the first twelve months was $2,500 per month and $2,550 for the next twelve months. In applying ASC 842, the Company uses a lease term of 24 months and an incremental borrowing rate of 5.99% which was the borrowing rate on a finance lease (discussed below).

F-11

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

Right of use (ROU) asset  - operating lease obtained in exchange for lease liability - operating lease
	$	29,355
Lease liability - operating lease on adoption date	$	29,655
Payments on lease liability - operating lease		(7,253	)
Lease liability - operating lease on March 31, 2019	$	22,402
This entire lease liability matures prior to December 31, 2019.
Operating lease expense for the three months ended March 31, 2019	$	7,875
Weighted average remaining lease term	9 months
Weighted average discount rate		5.99	%

Finance lease

In May 2018, the Company's CEO personally financed the purchase, with the Company's board of directors' approval, a piece of property in Tennessee for the benefit of the Company. The property consists of a 14 acre farm and an indoor growing area. The Company's CEO personally funded the purchase price of the property at $185,000 and closing costs. The board of directors also granted the Company the right to purchase the farm from the Company's CEO at his cost plus 6.09% interest when the Company has sufficient cash flows to do so. At the time of the filing, the Company has not exercised such right.

The board of directors also approved for the Company to enter into a lease to lease this property from the Company's CEO, effective June 1, 2018. The term of the lease is for one year with an automatic renewal term of one year. The lease also contains an option for the Company to purchase the property from the Company's CEO. The lease requires the Company to pay all expenses related to the acquisition and operation of the property, including but not limited to the Company's CEO's personal incremental borrowing costs, repairs and maintenance, real estate taxes, licenses and permits, utilities, etc.

In applying ASC 842 on adoption date, the Company considered the followings:

1. The lease is with a related party of the Company.

2. Although the initial lease term is for one year, the Company is reasonably certain to acquire the property from the related party.

3. Contrary to leases with fixed lease payments, this lease requires the Company to pay all expenses related to the acquisition and operations of the property which are variable. Although the Company can exclude variable lease payments in applying ASC 842, the lease provides the necessary cash flows for the related party to service his debt. Therefore, the Company estimates future incremental borrowing costs to be incurred by the related party when measuring the initial finance lease liability. This amounts to approximately $1,600 per month.

4. The related party's debt term was 15 years at a borrowing rate of 5.99%

5. The Company considered the most objective measure of the right-of-use asset to be the purchase price paid by the related party for the property. The purchase price is then allocated among land and improvement and the Company amortizes the improvement over the estimated useful life of 10 years.

F-12

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

ROU asset - finance lease - land	$	37,530
ROU asset  - finance lease - improvement		148,788
ROU asset  - finance lease obtained in exchange for lease liability - finance lease		186,318
Cumulative effect adjustment to ROU asset - finance lease on adoption date		(8,679	)
Amortization of ROU asset - finance lease		(3,720	)
ROU asset - finance lease at March 31, 2019	$	173,919
Lease liability - finance lease on adoption date	$	186,318
Cumulative effect adjustment to ROU lease liability - finance lease on adoption date		(4,277	)
Payments on lease liability - finance lease		(2,103	)
Lease liability - finance lease on March 31, 2019	$	179,937

Interest expense related to lease liability - finance lease was $2,643 for the three months ended March 31, 2019.

Amounts of lease liability - finance lease matures over the next five years:
Twelve Months Ended March 31,
2020	$	8,321
2021		9,124
2022		9,670
2023		10,249
2024 and thereafter		142,573
	$	179,937
The amount of variable lease expense was	$	7,720
Weighted average remaining lease term	14 years
Weighted average discount rate		5.99	%

NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the followings at March 31, 2019 and December 31, 2018:

	March 31, 2019		December 31, 2018
Accounts payable to vendors	$	101,500	$	83,037
Payroll taxes payable		51,191		46,832
Accrued salaries and bonuses		208,621		153,542
Accrued interest on notes payable		11,132		6,394
	$	372,444	$	289,805

NOTE 8 – LONG-TERM DEBT

In June 2018, the Company entered into a financing agreement to finance the purchase of a farm tractor. The financing agreement is secured by the tractor. The total amount financed was $21,794 at 0% interest per annum. The first monthly payment of $363 began in July 2018 and continues for 60 months. The following is the total payment amounts for the next five years:

Periods ending December 31,
2019	$	3,267
2020		4,359
2021		4,359
2022		4,359
2023		2,144
	$	18,488

F-13

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

The current and long-term portions of principle amounts due are as follow:

Amount of principle due in the next 12 months	$	4,359
Long term portion of principle due		14,129
	$	18,488

NOTE 9 – CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY

On August 22, 2018, the Company issued a convertible promissory note ("Note 1") for $140,800. Note 1 was discounted at $128,000 and the Company received net proceeds of $125,000 after incurring $3,000 of debt issuance costs. The note bears an interest rate at 8% per annum, and principal and accrued interest is due on the maturity date of August 22, 2019. The conversion option price associated with the note has a 25% discount to the market price of the stock. The market price is based on the average of the two lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the Black Scholes valuation model to determine the fair value of the conversion option. At the issuance date, the Company recorded a derivative expense and derivative liability of $148,211. At the end of each reporting period, the Company revalued the derivative liability and recorded the change in this value as additional derivative expense. The derivative liability was valued at $76,608 and $138,218 at March 31, 2019 and December 31, 2018, respectively. 

On October 8, 2018, the Company issued a convertible promissory note ("Note 2") for $58,300. Note 2 was discounted at $53,000 and the Company received net proceeds of $50,000 after incurring $3,000 of debt issuance costs. The note bears an interest rate at 8% per annum, and principal and accrued interest is due on the maturity date of October 8, 2019. The conversion option price associated with the note has a 25% discount to the market price of the stock. The market price is based on the average of the two lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the Black Scholes valuation model to determine the fair value of the conversion option. At the issuance date, the Company recorded a derivative expense and derivative liability of $57,272. At the end of each reporting period, the Company revalued the derivative liability and recorded the change in this value as additional derivative expense. The derivative liability was valued at $50,797 and $58,300 at March 31, 2019 and December 31, 2018, respectively. 

Liability measured at fair value on a recurring basis by level within the fair value hierarchy as of March 31, 2019 and December 31, 2018 is as follows: 

Fair Value Measurement at March 31, 2019 (1) Using

	Note 1 - Level 2		Note 2 - Level 2		Total
Liability:
Derivative liability	$	76,608	$	50,797	$	127,405
Total liability	$	76,608	$	50,797	$	127,405

Fair Value Measurement at December 31, 2018 (1) Using

	Note 1 - Level 2		Note 2 - Level 2		Total
Liability:
Derivative liability	$	138,218	$	58,300	$	196,518
Total liability	$	138,218	$	58,300	$	196,518

(1) The Company did not have any assets or liabilities measured at fair value using Level 1 or 3 of the fair value hierarchy as of March 31, 2019 and December 31, 2018.

F-14

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

The Company’s derivative liabilities are classified within Level 2 of the fair value hierarchy. The Company utilizes the Black-Scholes valuation model to value the derivative liabilities utilizing observable inputs such as the Company’s common stock price, the conversion price of the conversion option, and expected volatility, which is based on historical volatility. The Black-Scholes valuation model employs the market approach in determining fair value.

The following is a reconciliation of the beginning and ending balances for liabilities measured at fair value on a recurring basis during the three months ended March 31, 2019 and the year ended December 31, 2018: 

	Note 1			Note 2			Total
Balance at December 31, 2018	$	138,218		$	58,300		$	196,518
Change in fair value		(19,677	)		(7,503	)		(27,180	)
Conversion of derivative liability to equity from note conversion		(41,933	)		-			(41,933	)
Balance at March 31, 2019	$	76,608		$	50,797		$	127,405

During the three months ended March 31, 2019, the note holder elected to convert the principle amount of $45,000 into the Company's common stock on the following dates, at the respective conversion prices and the resulting number of shares issued to the note holder:

Date of Conversion	Principle Converted		Conversion Price		Number of Shares Issued
March 5, 2019	$	15,000	$	0.09		158,730
March 19, 2019	$	15,000	$	0.10		157,729
March 27, 2019	$	15,000	$	0.08		188,679
Totals	$	45,000				505,138

NOTE 10 – STOCKHOLDERS’ DEFICIT

Common Stock

The Company has been authorized to issue 150,000,000 shares of common stock, $.001 par value.  Each share of issued and outstanding common stock shall entitle the holder thereof to fully participate in all shareholder meetings, to cast one vote on each matter with respect to which shareholders have the right to vote, and to share ratably in all dividends and other distributions declared and paid with respect to common stock, as well as in the net assets of the corporation upon liquidation or dissolution.

During the three months ended March 31, 2019, the Company issue 1,267,138 shares of its restricted common stock as follows:

1. 2,000 shares to a consultant for services rendered, valued at $3,184.

2. 505,138 shares to a note holder for conversion of principle amount of $45,000 of a convertible note into common stock and to settle related derivative liability, valued at $41,933.

3. 4. Shares to be issued to an employee and a director from the restricted stock plan valued at $9,102. 2.760,000 shares to three directors for cash, valued at $91,200.

Warrants and Options

At March 31, 2019, 50,000 options were outstanding and there were no warrants outstanding. The Company did not issue any common stock purchase warrants or options during the three months ended March 31, 2019 and 2018.

F-15

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

Restricted Stock Awards to Key Employees

In  March 2017, the board of directors approved issuance of 100,000 shares of the Company’s restricted common stock to its key employees. The award is subject to a four or five-year vesting requirements, i.e. the requisite service period. The shares are issued as the vesting restriction lapses. The Company valued these shares at fair value on commitment date which is the date on which the employee accepted the award and recorded stock based compensation expense over the requisite service period. Stock based compensation expense for these awards for the three months ended March 31, 2019 and 2018 was $9,102 and $14,003, respectively.

NOTE 11 – SUBSEQUENT EVENTS

The Company evaluated subsequent events through the date the financial statements were issued, and determined that there were no other material events to disclose, other than the followings:

On April 2, 2019, the Company engaged an independent contractor to review its compliance related to its industrial hemp operations in Tennessee. The term of the engagement is for four months at $2,500 per month and 2,500 shares of unrestricted common stock of the Company per month, valued at commitment date, to be paid at the end of the engagement term.

On April 23, 2019, our convertible note holder (See Note 9) elected to convert $12,000 of principle balance of Note 1 at $0.0254 per share, resulting in 472,441 shares issued as a result of the conversion. On April 29, 2019, our convertible note holder (See Note 9) elected to convert $15,000 of principle balance of Note 1 at $0.0254 per share, resulting in 590,551 shares issued as a result of the conversion. On May 8, 2019, our convertible note holder (See Note 9) elected to convert $15,000 of principle balance of Note 1 at $0.0375 per share, resulting in 400,000 shares issued as a result of the conversion.

NOTE 12 – RECENT ACCOUNTING PRONOUNCEMENTS

The Security and Exchange Commission ("SEC") recently amended its rules to require an analysis of changes in stockholders’ equity in the financial statements included in quarterly reports on Form 10-Q. The analysis, which can be presented as a note or separate statement, is required for the current and comparative quarter and year-to-date interim periods. The amended rules will become effective 30 days after they are published in the Federal Register. The SEC's transition guidance states that the amendments are effective for all filings made on or after the effective date; however, it also states the SEC staff would not object if a filer’s first presentation of the changes in stockholders’ equity was included in its Form 10-Q for the quarter that begins after the effective date of the amendments. As such, the Company presented an analysis of changes in stockholders' deficit as a separate statement in this Form 10-Q.

Except as noted above and in our Form 10-K, the Company’s management does not believe that recent codified pronouncements by the Financial Accounting Standards Board (“FASB”) (including its EITF), the AICPA or the SEC will have a material impact on the Company’s current or future consolidated financial statements.

F-16

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Information

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements within the meaning of the Private Litigation Reform Act of 1995 that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements.  You can identify forward-looking statements by the use of the words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “may”, “will”, “should”, “could”, “predicts”, “potential”, “proposed”, or “continue” or the negative of those terms.  These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements.  Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements due to numerous factors, including, but not limited to, availability of financing for operations, successful performance of operations, impact of competition and other risks detailed below as well as those discussed elsewhere in this Form 10-Q and from time to time in the Company’s Securities and Exchange Commission filings and reports.  In addition, general economic and market conditions and growth rates could affect such statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

General

These unaudited interim consolidated financial statements should be read in conjunction with the annual financial statements for the Company most recently completed fiscal year ended December 31, 2018. These unaudited interim consolidated financial statements do not include all disclosures required in annual financial statements, but rather are prepared in accordance with recommendations for interim financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). These unaudited interim consolidated financial statements have been prepared using the same accounting policies and methods as those used by the Company in the annual audited financial statements for the year ended December 31, 2018.

Discussion on the Company’s Operations and Recent Event

MariJ Pharmaceuticals, Inc.  ("MariJ Pharma")

MariJ Pharma engages in the extraction and processing of very high quality, high-CBD/low-THC content medical grade hemp oils from medical hemp plants.  MariJ Pharma specializes in utilizing organic strains of the hemp plant, setting itself apart from the general producers of non-organic products.  In addition, MariJ Pharma has the technical expertise and capability to process and formulate the oils and to employ them in its compounding operations.  MariJ Pharma will seek to become engaged as owner or co-owner of a grow facility such as to produce its own plants for processing. The Company intends to acquire, through its MariJ Pharma subsidiary, portions or complete ownership of licenses and grow operations in one or more states and seeks to cultivate, organically extract and process its medicinal hemp crops year around in indoor facilities.  The acquisition of these licenses is anticipated to provide the Company with the opportunity to compound medicinal products using mixtures of high cannabinoid profile oils that have very little hallucinogenic properties but have significantly improved medicinal properties. This GeoTraking Technology is designed to provide a full-channel patient care tracking system that is fully compliant under today’s strict HIPAA regulations that require privacy and security of the patient’s information. Beginning with RFID labeling and tracking of every single seed employed in the grow program and continuing through the sale of medicinal products in a sophisticated retail Point of Sale delivery system.

1

MariJ Pharma’s revenues are anticipated to be generated primarily from several activities, including but not limited to the following:

a.   Hemp oil extraction and processing. MariJ Pharma has a unique mobile hemp oil processing and extraction unit designed into a heavy-duty trucks.  That unit has already begun performing extractions and processing of medical hemp oils at various sites and is currently developing additional contracts for services.

b.   Wholesale sale of raw and processed medical hemp oils.

c.   Compounding and manufacturing.  MariJ Pharma has begun construction of a mobile laboratory and testing unit, also on a heavy-duty truck chassis, intended to address the growing demand for these services in the medical cannabis industry.

d.   Licensing and support of the Company’s GeoTraking Technology systems

e.   Processing and compounding services for medical grade hemp oils

On September 28, 2016, MariJ Pharmaceuticals, Inc. received an Organic Certification under the U.S. National Organic Program (7 CFR Part 205) for its proprietary CO2 mobile oil extraction process and handling from OneCert, Inc., the issuing authority for that certification. As such, MariJ is now authorized to process directly for certified organic farms and is able to produce certified organic oils.

The Company is preparing to seek additional investments and financing to pay the costs of building its second mobile oil extraction and processing unit, to finance final construction of its mobile compounding and manufacturing unit for the same industry, and to complete the roll-out of its GeoTraking Technology system. There can be no assurance the Company will be successful in its plans to generate the required capital.

Canna-Cures Research and Development Center, Inc.  ("Canna-Cures")

The Company acquired the assets and the business of Canna-Cures Research & Development Center, LLC, a Florida limited liability company, on January 15, 2016.  The Company utilizes this subsidiary to engage in research and development activities as well as retail and wholesale distribution of medicinal hemp products and dietary supplements in the state of Colorado, depending upon our ability to comply in each instance with FDA rules and other regulations.  Canna-Cures closed its retail operations in 2017 and began to focus its efforts in its development activities in Tennessee.

Eufloria Medical of Tennessee, Inc.  ("EMT")

In addition to our current extraction operations, the Company has been invited to be part of the hemp pilot program in Tennessee. This program provides the Company the license to grow, manufacture, and dispense USDA organic hemp oil in Tennessee and represents the first step in moving its operations to the east coast of the United States. The Company plans on participating in this pilot program through this new, wholly-owned subsidiary.

In July 2018, the Company announced that its wholly-owned subsidiary, Eufloria Medical of Tennessee, Inc. (“EMT”), an entity focused on the growing and distribution of new and proprietary medicinal hemp products for patients. EMT intends to utilize MariJ Pharma's USDA certified organic mobile processing and handling solutions for its customers, and technology solutions for the expanding physician market, has leased a 14-acre farm with 32,000 square feet of indoor growing area in southern Tennessee.  EMT also acquired an option to purchase the farm upon favorable terms, which option, EMT intends to exercise as soon as possible.  The farm will provide the Company’s first grow facility, allowing for improved efficiencies through growing, processing and manufacturing the Company’s own product line and building sales through dedicated distributors.  The Company will grow its own plant material, process that plant material through another wholly owned subsidiary, MariJ Pharmaceuticals, Inc. (“MariJ”) and manufacture consumer products with the “EUFLORIA” branding for the dedicated distribution channels.

2

EMT will seek to align itself with institutions of higher learning in working to develop new products and to identify and develop additional uses for its medical hemp products. It is anticipated that EMT could generate revenues from the following activities:

1) EMT will seek to enter into product development projects with institutions of higher learning in efforts to develop new and better strains of medical hemp related products for dispensing as medications, nutraceuticals, cosmeceuticals, and probably dietary supplements.  EMT anticipates participating in state and federal grants in conjunction with one or more universities as a means to defray part of its costs in these efforts.

2) Private label packaging services - the Company has obtained a majority of the equipment required to engage in the business of packaging and labeling of medical hemp oils, oil-infused products, and related items.

3) Retail sales of medical hemp oils, oil-infused products, and other merchandise through its web-based portal or retail dispensaries planned for that purpose.  These activities are dependent in large part upon meeting FDA regulations and criteria relating to the sale and distribution of hemp-infused products, and the Company is currently in the process of determining the status of those criteria.

4) Retail and wholesale sales of cosmeceutical and nutraceutical products and dietary supplements containing its high-quality hemp oil extracts, subject to compliance with FDA and other regulations.

5) Growing high quality hemp plants and extracting oil for sale or for manufacturing of oil-infused products.

The Company will require additional capital to execute these plans and there can be no assurance that the Company will be successful in its plans to generate that capital.

Medahub, Inc. (“Medahub”)

In July 2018, the Company announced the completion of its acquisition of Medahub Operations Group, Inc. and Medahub, Inc., technology companies (“Medahub”), complete with a current compounding pharmacy license in Florida. The Medahub acquisition allows the Company to be fully HIPAA compliant and cloud based on an HL7 platform. The Company can now offer licensing agreements for other cannabis companies wanting to be HIPAA compliant from left to right or seed to sale and Doctor to Patient. The Company is continuing to develop the capabilities of this technology ahead of marketing this platform to users.

Operating results for the three months ended March 31, 2019 and 2018:

For the three months ended March 31, 2019, the Company generated revenues of $163,505 from operations, compared to $91,914 for the three months ended March 31, 2018, an increase of $71,591 or 78%. The increase in revenues was due to having more extraction contracts at higher prices. To a lesser degree, the Company's retail sales also improved compared to the same period last year. The Company employed a sales force of distributors to market and sell its products and plans on expanding its sales force in the near future.

For the three months ended March 31, 2019, costs of goods sold was $72,199, compared to $49,776 for the three months ended March 31, 2018, an increase of $22,423, or 45%. Costs of goods sold was higher during the three months ended March 31, 2019 primarily due to having more extraction contracts.

As a result of the changes in revenues and costs of goods sold discussed above, the Company’s gross profit increased from $42,138, or 46% of revenue for the three months ended March 31, 2018 to $91,306, or 56% of revenue for the three months ended March 31, 2019. The increase in gross profit is primarily due to higher prices on our extraction contracts.

For the three months ended March 31, 2019, selling, general and administrative expenses were $295,189, compared to $463,401 during the three months ended March 31, 2018, a decrease of $168,212, or 36%. The decrease in these expenses is primarily attributable to a decrease in stock based compensation to a consultant in the prior period.

During the three months ended March 31, 2019, the Company incurred interest expense of $23,405, compared to $11,527 for the three months ended March 31, 2018, an increase of $11,878, or 103%. During the three months ended March 31, 2019, interest expense was primarily related to the notes payable to related party and on convertible notes payable. At March 31, 2018, interest expense was related to the notes payable to related party. There was no convertible notes payable at March 31, 2018.

3

As a result of the changes in revenues, costs and expenses, the Company incurred a net loss of $198,025 for the three months ended March 31, 2019, compared to a net loss of $432,790 for the three months ended March 31, 2018, a decrease of $234,765, or 54%.

The future trends of all expenses are expected to be primarily driven by the Company’s ability to execute its business plans and the future outcome of its application to obtain operating licenses in other states. As the industry grows, additional expenses are anticipated to be incurred in complying with various state and federal regulatory requirements. The Company’s ability to continue to fund operating expenses will depend on its ability to raise additional capital. There can be no assurance that the Company will be successful in doing so.

 Liquidity and Capital Resources

The Company’s cash position at March 31, 2019 increased by $4,009 to $55,806, as compared to a balance of $51,797, as of December 31, 2018. The net increase in cash for the three months ended March 31, 2019 was attributable to net cash used in operating activities of $68,668, net cash used by investing activities of $24,102, offset by net cash provided by financing activities of $96,779.

As of March 31, 2019, the Company had negative working capital of $1,292,698 compared to negative working capital of $1,198,806, at December 31, 2018, a decrease of $93,893, attributable primarily to increase in its accounts payable and accrued expenses, and recognition of lease liabilities related to its right-of-use finance and operating leases.

Net cash used in operating activities of $68,668 during the three months ended March 31, 2019, was higher compared to the prior period of $66,461, primarily due to decrease in working capital during the period.

Net cash used by investing activities of $24,102 for the three months ended March 31, 2019 was higher compared to $7,486 of cash used by investing activities for the three months ended March 31, 2018. This is primarily attributable to the construction of a greenhouse in the Company's farm in Tennessee.

Net cash provided by financing activities of $96,779 during the three months ended March 31, 2019 increased by $24,779 compared to $72,000 during the three months ended March 31, 2018. In the current period, the Company's obtained financing through issuance of common stock to investors compared to issuing notes payable to a related party in the prior period.

During the three months ended March 31, 2019, the Company issued shares of its common stock to settle $45,000 of principle of its convertible note and the related derivative liability of $41,933. It also acquired a finance lease by assuming a lease liability in the amount of $182,041. In addition, it acquired an operating lease by assuming a lease liability in the amount of $29,655. During the three months ended March 31, 2018, the Company issued shares valued at $17,649 to settle a related party liability.

As reported in the accompanying consolidated financial statements, for the three months ended March 31, 2019 and 2018, the Company incurred net losses of $198,025 and $432,790, respectively. The Company did not produce significant revenues in the periods presented and has sustained operating losses since inception. The Company’s ability to continue as a going concern is dependent upon its ability to raise additional capital, successfully generate cash flows from its operations in Tennessee and achieve a level of profitability. Until recently where the Company obtained working capital from convertible notes financing and equity purchase agreement with an outside investor, the Company has financed its activities principally from working capital advances from related parties and issuing notes payable to its CEO. It intends to finance its future operating activities and its working capital needs largely from proceeds from the sale of equity securities, if any, combined with additional funding from its CEO. The sale of equity and convertible notes financing agreements may result in dilution to stockholders and those securities may have rights senior to those of common shares. If the Company raises additional funds through the issuance of convertible notes or other debt financing, these activities or other debt could contain covenants that would restrict the Company’s operations. Any other third-party funding arrangements could require the Company to relinquish valuable rights. The Company will require additional capital beyond its currently anticipated needs. Additional capital, if available, may not be available on reasonable terms or at all.

The Company has not generated significant revenue to date, and will not generate significant revenue in the foreseeable future. The Company expects to continue to incur operating losses as it proceeds with its pursuit of operating licenses in various states. The future trends of all expenses are expected to be primarily driven by the Company’s ability to execute its business plans and the future outcome of its application to obtain operating licenses in other states. As the industry grows, additional expenses are anticipated to be incurred in complying with various regulatory requirements. The Company’s ability to continue to fund operating expenses will depend on its ability to raise additional capital. There can be no assurance that the Company will be successful in doing so.

4

Financial Condition

The Company’s total assets at March 31, 2019 and December 31, 2018 were $872,338 and $696,895, respectively, an increase of $175,443, or 25%. Total liabilities at March 31, 2019 and December 31, 2018 were $1,837,126 and $1,649,675, respectively, an increase of $187,451, or 11%. The significant change in the Company’s financial condition is attributable to (i) increase in its accounts payable and accrued expenses, (ii) acquiring a finance lease and an operating lease by assuming the corresponding lease liabilities, offset by (iii) the note holder's of a portion of the convertible notes payable. As a result of these transactions, the Company’s cash position increased from $51,797 to $55,806 during the three months ended March 31, 2019.

Off-Balance Sheet Arrangements

We have made no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

5

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a Smaller Reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2019. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2019, the Company’s disclosure controls and procedures were not effective. The controls were determined to be ineffective due to the lack of segregation of duties. In January 2017, the Company hired a part-time financial controller to assist with technical accounting issues and the preparation of the filings. However, until the Company begins generating sufficient revenues, it is unable to remediate the weakness. Despite the existence of material weaknesses, management believes the financial information presented herein is materially correct and fairly presents the financial position and operating results of the three months ended March 31, 2019, in accordance with U.S. GAAP.

Changes in Internal Control Over Financial Reporting

No change in the Company’s internal control over financial reporting occurred during the three months ended March 31, 2019, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

6

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.

None.

Item 1A.  Risk Factors

The Company is a Smaller Reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

During the three months ended March 31, 2019, the Company issue 1,267,138 shares of its restricted common stock as follows:

1. 2,000 shares to a consultant for services rendered, valued at $3,184.

2. 505,138 shares to a note holder for conversion of principle amount of $45,000 of a convertible note into common stock and to settle related derivative liability, valued at $86,933.

3. 4. Shares to be issued to an employee and a director from the restricted stock plan valued at $9,102. 3.760,000 shares to three directors for cash, valued at $91,200.

The shares of our common stock were issued pursuant to an exemption from registration in Section 4(a)(2) of the Securities Act of 1933.  These shares of our common stock qualified for exemption under Section 4(a)(2) of the Securities Act of 1933 since the issuance of shares by us did not involve a public offering.  The offering was not a “public offering” as defined in Section 4(a)(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered.  We did not undertake an offering in which we sold a high number of shares to a high number of investors.  In addition, these shareholders had necessary investment intent as required by Section 4(a)(2) since they agreed to receive share certificates bearing a legend stating that such shares are restricted pursuant to Rule 144 of the 1933 Act.  This restriction ensures that these shares would not be immediately redistributed into the market and therefore not be part of a “public offering.”  All shareholders are “sophisticated investors” and are business acquaintances of our officers and directors.  Based on an analysis of the above factors, we believe we have met the requirements to qualify for exemption under section 4(a)(2) of the Securities Act of 1933 for this transaction.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5. Other Information.

None.

7

Item 6. Exhibits

Exhibits required by Item 601, Regulation S-K;

Exhibit Number and Description				Location Reference
	(3.0)	Articles of Incorporation
		(3.1)	Articles Of Amendment And Restated Articles Of Incorporation of Acacia Diversified Holdings, Inc. dated June 9, 2015	See Exhibit Key
		(3.2)	Restated Bylaws Of Acacia Diversified Holdings, Inc. dated June 29, 2015	See Exhibit Key
	(9.0)	Voting Proxy Agreement between Rick Pertile and Steven L. Sample		See Exhibit Key
	(10.1)	Consolidated Loan Agreement		See Exhibit Key
	(10.2)	Consolidated Promissory Note		See Exhibit Key
	(10.3)	Security Agreement – Acacia Diversified Holdings, Inc.		See Exhibit Key
	(10.4)	Security Agreement -- Marij Agriculture, Inc.		See Exhibit Key
	(10.5)	Security Agreement – Marij Pharmaceuticals, Inc.		See Exhibit Key
	(10.6)	Security Agreement – CannaCures Research & Development Center, Inc.		See Exhibit Key
	(10.7)	Definitive Asset Purchase Agreement between Acacia Diversified Holdings, Inc. and the Medahub Companies		See Exhibit Key
	(14.0)	Code of Ethics		See Exhibit Key
	(21.0)	List of Subsidiaries		See Exhibit Key
	(31.1)	Certificate of Chief Executive Officer And Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002		Filed herewith
	(32.1)	Certification of Chief Executive Officer And Chief Financial Officer Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		Filed herewith
	101.INS	XBRL Instance Document
	101.SCH	XBRL Taxonomy Extension Schema Document
	101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB	XBRL Taxonomy Extension Label Linkbase Document
	101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

Exhibit Key

3.1 Incorporated by reference herein from the Company’s Form 8-K filed on July 16, 2015.

3.2 Incorporated by reference herein from the Company’s Form 8-K filed on July 16, 2015.

9.0 Incorporated by reference herein from the Company’s Form 10-K filed on April 2, 2018.

10.1 Incorporated by reference herein from the Company’s Form 8-K filed on November 3, 2017.

10.2 Incorporated by reference herein from the Company’s Form 8-K filed on November 3, 2017.

10.3 Incorporated by reference herein from the Company’s Form 8-K filed on November 3, 2017.

10.4 Incorporated by reference herein from the Company’s Form 8-K filed on November 3, 2017.

10.5 Incorporated by reference herein from the Company’s Form 8-K filed on November 3, 2017.

10.6 Incorporated by reference herein from the Company’s Form 8-K filed on November 3, 2017.

10.7 Incorporated by reference herein from the Company’s Form 10-Q filed on November 5, 2018.

14.0 Incorporated by reference herein from the Company’s Form 10-Q filed on November 13, 2017.

21.0 Incorporated by reference herein from the Company’s Form 10-Q filed on August 7, 2017.

8

SIGNATURES

Pursuant to the requirements of the Securities exchange Act of 1934, registrant has duly caused this report to be signed on its behalf by the undersigned.

	Acacia Diversified Holdings, Inc.
Date: May 15, 2019	By:	/s/ Richard K. Pertile
		Richard K. Pertile
		Principal Executive Officer
		Principal Financial Officer Principle Accounting Officer

9

EX-31.1

EXHIBIT 31.1

Rule 13a-14(a)/15d-14(a) Certifications

 I, Richard K. Pertile, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Acacia Diversified Holdings, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based upon such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:    May 15, 2019

By:  /s/ Richard K. Pertile                               

Richard K. Pertile

Principal Executive Officer

Principal Financial Officer

Principle Accounting Officer

EX-32.1

EXHIBIT 32.1

Certification of Chief Executive Officer and Chief Financial Officer

pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

regarding Quarterly Report on Form 10-Q for the quarter ended March 31, 2019

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Acacia Diversified Holdings, Inc., a Texas corporation (the "Company"), does hereby certify that:

1.  The Company's Quarterly Report on Form 10-Q for the fiscal period ended March 31, 2019, (the Form 10-Q) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.  Information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  May 15, 2019	By:	/s/ Richard K. Pertile
		Richard K. Pertile
		Principal Executive Officer
		Principal Financial Officer Principle Accounting Officer

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 05, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	Acacia Diversified Holdings, Inc.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		24,083,755
Amendment Flag	false
Entity Central Index Key	0001001463
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2019	Dec. 31, 2018
CURRENT ASSETS:
Cash	$ 55,806	$ 51,797
Accounts receivable, net of allowance for doubtful accounts of $25,000 in 2019 and 2018	117,498	135,970
Inventories	41,951	43,550
Prepaid expenses and other current assets	16,023	7,815
Total Current Assets	231,278	239,132
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $314,244 and $277,343 in 2019 and 2018, respectively	440,763	453,562
OTHER ASSETS
Deposits	4,201	4,201
Right of use asset - finance lease, net of accumulated amortization of $3,720 in 2019	173,919	0
Right of use asset - operating lease	22,177	0
	200,297	4,201
TOTAL ASSETS	872,338	696,895
CURRENT LIABILITIES:
Accounts payable and accrued expenses	372,444	289,805
Current portion of long-term debt	4,359	4,359
Current portion of lease liability - finance lease	8,321	0
Current portion of lease liability - operating lease	22,402	0
Convertible notes payable	154,100	199,100
Notes payable to related party	812,400	812,400
Accrued interest on notes payable to related party	81,800	65,774
Payable to related parties	68,150	66,500
Total Current Liabilities	1,523,976	1,437,938
LONG-TERM LIABILITY:
Long-term debt, net of current portion	14,129	15,219
Derivative liability	127,405	196,518
Lease liability - finance lease, net of current portion	171,616	0
Total Long-term Liability	313,150	211,737
Total Liabilities	1,837,126	1,649,675
Commitments and contingencies
STOCKHOLDERS' DEFICIT
Common stock, $0.001 par value; 150,000,000 shares authorized; 23,080,763 and 21,813,625 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively	23,081	21,814
Additional paid-in capital	5,881,207	5,692,055
Accumulated deficit	(6,869,076)	(6,666,649)
Total Stockholders' Deficit	(964,788)	(952,780)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 872,338	$ 696,895

XML

CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Accounts receivable, allowance for doubtful accounts (in Dollars)	$ 25,000	$ 25,000
Accumulated depreciation (in Dollars)	314,244	$ 277,343
Right of use asset - finance lease, accumulated amortization (in Dollars)	$ 3,720
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	23,080,763	21,813,625
Common stock, shares outstanding	23,080,763	21,813,625

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
REVENUE	$ 163,505	$ 91,914
COSTS OF GOODS SOLD
Costs of goods sold	48,742	31,970
Depreciation expense	23,457	17,806
	72,199	49,776
GROSS PROFIT (LOSS)	91,306	42,138
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Employee compensation expenses	158,240	142,369
General and administrative expenses	119,786	320,416
Depreciation and amortization expense	17,163	616
	295,189	463,401
LOSS FROM OPERATIONS	(203,883)	(421,263)
OTHER INCOME (EXPENSE)
Derivative income (expense)	27,180	0
Interest expense	(23,405)	(11,527)
Other income (expense)	2,083
TOTAL OTHER EXPENSE	5,858	(11,527)
NET LOSS BEFORE INCOME TAXES	(198,025)	(432,790)
Income taxes	0	0
NET LOSS	$ (198,025)	$ (432,790)
NET LOSS PER COMMON SHARE, BASIC AND DILUTED (in Dollars per share)	$ (0.01)	$ (0.02)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING, BASIC AND DILUTED (in Shares)	22,130,410	17,818,766

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2017	$ 17,540	$ 4,451,038	$ (4,953,946)	$ (485,368)
Balance (in Shares) at Dec. 31, 2017	17,539,982
Stock issued for consulting services	$ 517	254,353		254,870
Stock issued for consulting services (in Shares)	517,000
Common stock issued to related party for leasehold improvement	$ 36	17,613		17,649
Common stock issued to related party for leasehold improvement (in Shares)	36,018
Employee stock plan compensation		14,003		14,003
Net loss			(432,790)	(432,790)
Balance at Mar. 31, 2018	$ 18,093	4,737,007	(5,386,736)	(631,636)
Balance (in Shares) at Mar. 31, 2018	18,093,000
Balance at Dec. 31, 2018	$ 21,814	5,692,055	(6,666,649)	(952,780)
Balance (in Shares) at Dec. 31, 2018	21,813,625
Stock issued for consulting services	$ 2	3,182		$ 3,184
Stock issued for consulting services (in Shares)	2,000			2,000
Common stock issued for conversion of convertible note	$ 505	44,495		$ 45,000
Common stock issued for conversion of convertible note (in Shares)	505,138
Settlement of derivative liability from conversion of convertible note		41,933		41,933
Common stock issued to related party for leasehold improvement				0
Employee stock plan compensation		9,102		9,102
Common stock issued for cash	$ 760	90,440		91,200
Common stock issued for cash (in Shares)	760,000
Cumulative adjustments from adoption of ASC 842			(4,402)	(4,402)
Net loss			(198,025)	(198,025)
Balance at Mar. 31, 2019	$ 23,081	$ 5,881,207	$ (6,869,076)	$ (964,788)
Balance (in Shares) at Mar. 31, 2019	23,080,763

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (198,025)	$ (432,790)
Adjustments to reconcile net loss to net cash and cash equivalents used by operating activities:
Depreciation and amortization	48,099	18,422
Common stock issued for services	3,184	254,870
Common stock issued from employee stock plan	9,102	14,003
Derivative expense (income)	(27,180)	0
(Increase) decrease in:
Accounts receivable	18,472	21,270
Inventories	1,599	2,795
Prepaid expenses and other current assets	(8,208)	312
Increase (decrease) in:
Accounts payable and accrued expenses	82,639	29,151
Payable to related parties	1,650	25,506
Net cash used by operating activities	(68,668)	(66,461)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment to related party for leasehold improvement	0	(6,000)
Acquisition of property and equipment	(24,102)	(1,486)
Net cash provided (used) by investing activities	(24,102)	(7,486)
CASH FLOWS FROM FINANCING ACTIVITIES:
Accrued interest on notes payable to related party	16,026	0
Proceeds from issuance of common stock	91,200	0
Payment on long-term debt	(1,090)	0
Payments on lease liability - finance lease	(2,104)	0
Payments on lease liability - operating lease	(7,253)	0
Proceeds from issuance of notes payable to related party	0	72,000
Net cash provided by financing activities	96,779	72,000
Net change in cash and cash equivalents	4,009	(1,947)
Cash and cash equivalents, beginning of the year	51,797	28,417
Cash and cash equivalents, end of the year	55,806	26,470
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	0	0
Cash paid for income taxes	0	0
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Common stock issued to related party for leasehold improvement	0	17,649
Common stock issued for conversion of convertible notes payable	45,000	0
Acquisition of right of use asset - finance lease	182,041	0
Acquisition of right of use asset - operating lease	$ 29,655	$ 0

XML

NOTE 1 - THE COMPANY

3 Months Ended

Mar. 31, 2019

Disclosure Text Block [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE 1 – THE COMPANY

Acacia Diversified Holdings, Inc. (“Acacia” or the “Company”) has four wholly-owned subsidiaries, MariJ Pharmaceuticals, Inc. (“MariJ Pharma”), Canna-Cures Research & Development Center, Inc. (“Canna-Cures”), and Eufloria Medical of Tennessee, Inc. (“EMT”), a company incorporated in the state of Tennessee. In July 2018, the Company also announced the completion of its acquisition of Medahub Operations Group, Inc. and Medahub, Inc., technology companies (“Medahub”), complete with a current compounding pharmacy license in Florida. The Medahub acquisition allows the Company to be fully HIPAA compliant and cloud based on an HL7 platform. The Company can now offer licensing agreements for other cannabis companies wanting to be HIPAA compliant from left to right or seed to sale and Doctor to Patient.

The Company’s primary source of revenue is from the extraction of medicinal hemp oil, from a non-psychoactive cannabis plant. All extraction services are currently provided in states where such services are deemed legal. The Company's subsidiary EMT has been invited to be part of the hemp pilot program in Tennessee. This program provides the Company the license to grow, manufacture, and dispense organic hemp oil in Tennessee. The Company plans on participating in this pilot program through this new, wholly-owned subsidiary.

The Company also opened its retail store in Tennessee. Revenue generated from retail sales is not expected to be material to the Company based on current operating model.

XML

NOTE 2 - GOING CONCERN

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Substantial Doubt about Going Concern [Text Block]

NOTE 2 – GOING CONCERN

The Company has not generated profit to date. The Company expects to continue to incur operating losses as it proceeds with its extraction, growing and manufacturing activities in Tennessee and research and development activities and continues to navigate through the regulatory process. The Company expects general and administrative costs to increase, as the Company adds personnel and other administrative expenses associated with its current efforts. As such, and without substantially increasing revenue or finding new sources of capital, the Company will find it difficult to continue to meet its obligations as they come due.  The Company continues to seek working capital but there can be no assurance that the Company will be successful in its efforts to raise capital, or if it were successful in raising capital, that it would be successful in meeting its business plans.  These factors raise substantial doubt as to the ability of the Company to continue as a going concern.  Management’s plans include securing additional extraction contracts and increasing sales at the retail store in Tennessee, attempting to start new businesses outside of Colorado, finding additional operational businesses to buy, and attempting to raise funds from the public through an equity offering of the Company’s common stock. Management intends to make every effort to identify and develop all these sources of funds, but there can be no assurance that Management’s plans will be successful.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred losses for all periods presented and has a substantial accumulated deficit. As of March 31, 2019, these factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

XML

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect all adjustments, which consist solely of normal recurring adjustments, needed to fairly present the financial results for these periods. The consolidated financial statements and notes thereto are presented as prescribed by Form 10-Q. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted. The accompanying consolidated financial statements should be read in conjunction with the financial statements for the fiscal year ended December 31, 2018 and notes thereto in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the Securities and Exchange Commission on April 1, 2019. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the entire fiscal year. In the opinion of management, all adjustments have been made, which consist only of normal recurring adjustments necessary for a fair statement of (a) the results of operations for the three-month periods ended March 31, 2019 and 2018, (b) the financial position at March 31, 2019 and (c) cash flows for the three-month periods ended March 31, 2019 and 2018.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Acacia Diversified Holdings, Inc. and its wholly-owned subsidiaries, MariJ Pharmaceuticals, Inc, Canna-Cures Research & Development Center, Inc., Eufloria Medical of Tennessee, Inc., Medahub Operations Group, Inc. and Medahub, Inc. All significant intercompany accounts and transactions are eliminated in consolidation.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The actual results may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

MEDAHUB ACQUISITION

In July 2018, the Company announced the completion of its acquisition of Medahub Operations Group, Inc. and Medahub, Inc., technology companies (“Medahub”), which includes a current compounding pharmacy license in Florida. The Medahub acquisition allows the Company to be fully HIPAA compliant and cloud based on an HL7 platform. The Company can now offer licensing agreements for other cannabis companies wanting to be HIPAA compliant from left to right or seed to sale and Doctor to Patient. The Company issued 600,000 shares of its restricted common stock to the principal of Medahub as consideration of the acquisition, valued at $126,000.

When determining the accounting of the acquisition, the Company concluded that the acquisition does not constitute the acquisition of a business since there was no inputs, processes or outputs within Medahub. In addition, although the Company acquired certain software and technology from Medahub, the most significant asset it acquired was Medahub's principal's commitment to provide support, guidance and direction for implementing this technology. Without the principal's commitment of his time, the Company will not be able to implement the technology and begin generating cash flows. Therefore, the Company believes that the value of the purchase is concentrated on the service provided by Medahub's principal. As a result, the Company allocated the entire purchase price to the service provided and accounted for it as professional fee expense.

LEASES

In February 2016, the FASB issued ASU 2016-02, Leases, which aims to make leasing activities more transparent and comparable and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. The new guidelines are contained in Accounting Standards Codification ASC Topic 842 - Leases ("ASC 842"). This ASU is effective for all interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Company applied this standard retrospectively on January 1, 2019 through a cumulative effect adjustment recognized as of January 1, 2019. In applying this standard, the Company elects to apply all practical expedients to not reassess the followings:

1. Whether a pre-existing contract is or contain a lease

2. Whether a pre-existing lease should be classified as an operating or finance lease, and

3. Whether the initial direct costs capitalized for a pre-existing lease under the previously lease accounting standard ASC Topic 840 qualify for capitalization

In addition, in the applying ASC 842, the Company does not elect the hindsight practical expedient.

As a result, the Company recorded its right-of-use assets and corresponding lease liabilities on its March 31, 2019 balance sheet.

REVENUE RECOGNITION

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which replaces numerous requirements in U.S. GAAP, including industry specific requirements, and provides a single revenue recognition model for recognizing revenue from contracts with customers. The Company adopted this standard effective January 1, 2018.

The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This requires companies to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The Company’s revenues from extraction activities and from retail sales are recognized at a point in time.

The ASU requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenues.

The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application to accumulated deficit. Additionally, incremental footnote disclosures are required to present the 2018 revenues under the prior standard. Under the modified retrospective method, an entity may also elect to apply the standard to either (i) all contracts as of January 1, 2018, or (ii) only to contracts that are not completed as of January 1, 2018. The Company elected to adopt this guidance using the modified retrospective method at January 1, 2018 which did not result in an adjustment to accumulated deficit. Additionally, upon adoption, the Company evaluated its revenue recognition policy for all revenue streams within the scope of the ASU under previous standards and using the five-step model under the new guidance and confirmed that there were no differences in the pattern of revenue recognition.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company’s accounts receivable represents amounts due from customers for extraction services performed. Allowance for uncollectible accounts receivable is estimated based on the aging of the accounts receivable and management estimate of uncollectible amounts.  At March 31, 2019 and December 31, 2018, the Company provided for $25,000 of allowance for doubtful accounts.

INVENTORIES

Inventories are stated at the lower of cost or market.  Cost is determined using the average cost method. The Company’s inventory consists of raw materials and finished goods. Cost of inventory includes cost of ingredients, labor, quality control and all other costs incurred to bring our inventories to condition ready to be sold.

DEFERRED FARM EXPENSE

The Company's subsidiary EMT grows hemp plants in both its indoor and outdoor facility. In accordance with Accounting Standards Codification 905 - Agriculture, all direct and indirect costs of growing the plants are accumulated until the time of harvest. These deferred cost cannot exceed the realizable value of the oil processed from the hemp plants. Crop costs such as soil preparation incurred before planting are deferred and allocated to the growing crop. Deferred farm expense is included as inventory costs.

DEBT DISCOUNT

During the year ended December 31, 2018, the Company incurred debt discount related to the issuance of convertible promissory notes, as described in Note 9. The discount was recognized in its entirety as interest expense rather than amortized over the life of the convertible promissory note. The immediate recognition did not yield materially different result.

DEBT ISSUANCE COSTS

During the year ended December 31, 2018, the Company incurred direct costs associated with the issuance of convertible promissory notes, as described in Note 9. The Company recognized these costs as interest expense.

STOCK BASED COMPENSATION

The Company accounts for stock-based compensation under Accounting Standards Codification 718 - Compensation-Stock Compensation (“ASC 718”). ASC 718 requires that all stock-based compensation be recognized as expense in the financial statements and that such cost be measured at the fair value of the award at the grant date and recognized over the period during which an employee is required to provide services (requisite service period). An additional requirement of ASC 718 is that estimated forfeitures be considered in determining compensation expense. Estimating forfeitures did not have a material impact on the determination of compensation expense during the three months ended March 31, 2019 and 2018.  

The Company accounts for stock based awards based on the fair market value of the instrument using a 10-day volume weighted adjusted price (VWAP) and accounts for stock options issued using the Black-Scholes option pricing model and utilizing certain assumptions including the followings:

Risk-free interest rate – This is the yield on U.S. Treasury Securities posted at the date of grant (or date of modification) having a term equal to the expected life of the option. An increase in the risk-free interest rate will increase compensation expense.

Expected life—years – This is the period of time over which the options granted are expected to remain outstanding. Options granted by the Company had a maximum term of ten years. An increase in the expected life will increase compensation expense.

Expected volatility – Actual changes in the market value of stock are used to calculate the volatility assumption.  An increase in the expected volatility will increase compensation expense.

Dividend yield – This is the annual rate of dividends per share over the exercise price of the option. An increase in the dividend yield will decrease compensation expense.  The Company does not currently pay dividends and has no immediate plans to do so in the near future.

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of Accounting Standards Codification 505-50, Equity – Based Payments to Non-Employees.  Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued.  The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty’s performance is complete. 

During the three months ended March 31, 2019, the board of directors approved issuances of the Company’s restricted common stock to consultants, employees, and directors for services rendered:

1. 2,000 shares to a consultant for services rendered, valued at $3,184.

3. Shares to be issued to an employee and a director from the restricted stock plan valued at $9,102.

FAIR VALUE ESTIMATES – The Company measures assets and liabilities it acquires at fair value in accordance with Accounting Standards Codification 820 – Fair Value Measurement (“ASC 820”). The objective of ASC 820 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 specifies a valuation hierarchy based on whether the inputs to those valuation techniques are observable or unobservable.

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s own assumptions. These two types of inputs have created the following fair value hierarchy:

● Level 1 – Quoted prices for identical instruments in active markets;

● Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and 

● Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

This hierarchy requires the Company to minimize the use of unobservable inputs and to use observable market data, if available, when estimating fair value. The Company has liability measured at fair value on a recurring basis due to the issuance of convertible note payable as described in Note 6.

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NOTE 4 - RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2019

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 4 – RELATED PARTY TRANSACTIONS

Notes Payable to Related Party

The Company entered into the following promissory notes payable to its CEO during the year ended December 31, 2018 and during the three months ended March 31, 2019:

Note Date	Note Amount		Accrued Interest through December 31, 2018		Accrued Interest for three months ended March 31, 2019		Total Accrued Interest
Total notes payable and accrued interest due to related party at December 31, 2017	$	558,400	$	56,544	$	11,015	$	67,559
March 2018 (1)		72,000		4,402		1,421		5,823
April 2018 (2)		42,000		2,333		828		3,161
August 2018 (3)		70,000		2,169		1,381		3,550
November 2018 (4)		20,000		184		395		579
December 2018 (5)		50,000		142		986		1,128
		254,000		9,230		5,011		14,241
Total notes payable and accrued interest due to related party at March 31, 2019	$	812,400	$	65,774	$	16,026	$	81,800

(1) In March 2018, the Company entered into three separate unsecured promissory note agreements with its CEO and his spouse, in the amounts of $12,000, $40,000 and $20,000, totaled $72,000. Each of these promissory notes bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 60 days from the date of the note. The Company accrued interest on these notes in the amount of $5,823 through March 31, 2019.

(2) In April 2018, the Company entered into two separate unsecured promissory note agreements with its CEO and his spouse, in the amounts of $10,000 and $32,000, totaled $42,000. Each of these promissory notes bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 60 days from the date of the note. The Company accrued interest on these notes in the amount of $3,161 through March 31, 2019.

In May 2018, the board of directors approved the Company to enter into a promissory note agreement with the Company's CEO and his spouse to consolidate notes (1) and (2). The total amount of the principle consolidated was $114,000. The amount of interest accrued from the note dates to the date of the consolidation was minimal and therefore was not included in the consolidation. The promissory note accrues interest at 8% from the date of consolidation and is due within 120 days of the note date. 

(3) In August 2018, the Company entered into three separate unsecured promissory note agreements with its CEO and his spouse, in the amounts of $25,000, $25,000, and $20,000, totaled $70,000. Each of these promissory notes bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 60 days from the date of the note. The Company accrued interest on these notes in the amount of $3,550 through March 31, 2019.

(4) In November 2018, the Company entered into an unsecured promissory note agreements with its CEO and his spouse, in the amounts of $20,000. The promissory note bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 30 days from the date of the note. The Company accrued interest on these notes in the amount of $579 through March 31, 2019.

(5) In December 2018, the Company entered into an unsecured promissory note agreements with its CEO and his spouse, in the amounts of $50,000. The promissory note bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 90 days from the date of the note. The Company accrued interest on these notes in the amount of $1,128 through March 31, 2019.

As a result, the total principle amount of notes payable to related party was $812,400 at March 31, 2019 and December 31, 2018.

Payable to Related Parties

Payable to related parties consisted of the followings at September March 31, 2019 and December 31, 2018:

	March 31,		December 31,
	2019		2018
Short term loan from related entity (1)	$	60,150	$	61,500
Auto allowances owed to CEO (2)		8,000		5,000
	$	68,150	$	66,500

(1) In 2017, the Company received a working capital advance of $74,348 from a related entity. These advances are non-interest bearing and were intended as short term capital advances. The remaining balances have been included in payable to related parties on the consolidated balance sheet as current liabilities at March 31, 2019 and December 31, 2018. 

(2) On May 1, 2016, the Company entered into an employment agreement with its CEO. The term of the employment is through December 31, 2019. The agreement provides for a monthly storage and corporate housing allowance of $1,000 for a property owned by the CEO and a monthly automobile allowance of $1,000.

In May 2018, the board of directors approved to discontinue payment of the storage and corporate housing allowance of $1,000 per month, retroactively to January 1, 2018. As a result, expenses accrued during the three months ended March 31, 2018 was reversed during the three months ended June 30, 2018. The automobile allowance remains unchanged at $1,000 per month.

In July 2018, the board of directors approved issuance of 85,000 shares of the Company's restricted common stock to the Company's CEO to settle the accrued storage and corporate housing allowance and automobile allowance in the amount of $17,000. As a result, $8,000 and $5,000 remained owed to the Company’s CEO at March 31, 2019 and December 31, 2018, respectively.

During the three months ended March 31, 2019, expenses related to the automobile allowances totaled $3,000.

Other Related Party Transactions

In May 2018, the Company's CEO personally financed the purchase, with the Company's board of directors' approval, a piece of property in Tennessee for the benefit of the Company. The property consists of a 14 acre farm and an indoor growing area. The Company's CEO personally funded the purchase price of the property at $185,000 and closing costs. The board of directors also granted the Company the right to purchase the farm from the Company's CEO at his cost plus 6.09% interest when the Company has sufficient cash flows to do so. At the time of the filing, the Company has not exercised such right.

The board of directors also approved for the Company to enter into a lease to lease this property from the Company's CEO, effective June 1, 2018. The term of the lease is for one year with an automatic renewal term of one year. The lease requires the Company to pay all expenses related to the acquisition and operation of the property, including but not limited to the Company's CEO's personal incremental borrowing costs, repairs and maintenance, real estate taxes, licenses and permits, etc. For the three months ended March 31, 2019, the Company incurred $7,720 in operating expenses for this property.

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NOTE 5 - INVENTORIES

3 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

NOTE 5 – INVENTORIES

The Company’s inventories consisted of the followings at March 31, 2019 and December 31, 2018:

	March 31, 2019		December 31, 2018
Raw materials	$	23,810	$	23,810
Finished goods (isolates, tinctures, capsules, etc.)		11,006		12,605
Deferred farm expense		7,135		7,135
	$	41,951	$	43,550

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NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

Short term lease

The Company recognizes its office lease in Florida with an initial term of 12 months or less as a short-term lease. Lease payments associated with short-term lease are expensed as incurred in operating lease expense and are not included in our calculation of right-of-use assets or lease liabilities. Operating lease expense related to short-term lease was $2,895 for the three months ended March 31, 2019.

Operating lease

The Company entered into a lease agreement to lease its retail space in Tennessee in October 2017 with a lease term of 24 months. The lease contains a renewal option to extend the term for two additional years. The Company does not plan on renewing the lease when it expires. Rent for the first twelve months was $2,500 per month and $2,550 for the next twelve months. In applying ASC 842, the Company uses a lease term of 24 months and an incremental borrowing rate of 5.99% which was the borrowing rate on a finance lease (discussed below).

Right of use (ROU) asset  - operating lease obtained in exchange for lease liability - operating lease
	$	29,355
Lease liability - operating lease on adoption date	$	29,655
Payments on lease liability - operating lease		(7,253	)
Lease liability - operating lease on March 31, 2019	$	22,402
This entire lease liability matures prior to December 31, 2019.
Operating lease expense for the three months ended March 31, 2019	$	7,875
Weighted average remaining lease term	9 months
Weighted average discount rate		5.99	%

Finance lease

In May 2018, the Company's CEO personally financed the purchase, with the Company's board of directors' approval, a piece of property in Tennessee for the benefit of the Company. The property consists of a 14 acre farm and an indoor growing area. The Company's CEO personally funded the purchase price of the property at $185,000 and closing costs. The board of directors also granted the Company the right to purchase the farm from the Company's CEO at his cost plus 6.09% interest when the Company has sufficient cash flows to do so. At the time of the filing, the Company has not exercised such right.

The board of directors also approved for the Company to enter into a lease to lease this property from the Company's CEO, effective June 1, 2018. The term of the lease is for one year with an automatic renewal term of one year. The lease also contains an option for the Company to purchase the property from the Company's CEO. The lease requires the Company to pay all expenses related to the acquisition and operation of the property, including but not limited to the Company's CEO's personal incremental borrowing costs, repairs and maintenance, real estate taxes, licenses and permits, utilities, etc.

In applying ASC 842 on adoption date, the Company considered the followings:

1. The lease is with a related party of the Company.

2. Although the initial lease term is for one year, the Company is reasonably certain to acquire the property from the related party.

3. Contrary to leases with fixed lease payments, this lease requires the Company to pay all expenses related to the acquisition and operations of the property which are variable. Although the Company can exclude variable lease payments in applying ASC 842, the lease provides the necessary cash flows for the related party to service his debt. Therefore, the Company estimates future incremental borrowing costs to be incurred by the related party when measuring the initial finance lease liability. This amounts to approximately $1,600 per month.

4. The related party's debt term was 15 years at a borrowing rate of 5.99%

5. The Company considered the most objective measure of the right-of-use asset to be the purchase price paid by the related party for the property. The purchase price is then allocated among land and improvement and the Company amortizes the improvement over the estimated useful life of 10 years.

ROU asset - finance lease - land	$	37,530
ROU asset  - finance lease - improvement		148,788
ROU asset  - finance lease obtained in exchange for lease liability - finance lease		186,318
Cumulative effect adjustment to ROU asset - finance lease on adoption date		(8,679	)
Amortization of ROU asset - finance lease		(3,720	)
ROU asset - finance lease at March 31, 2019	$	173,919
Lease liability - finance lease on adoption date	$	186,318
Cumulative effect adjustment to ROU lease liability - finance lease on adoption date		(4,277	)
Payments on lease liability - finance lease		(2,103	)
Lease liability - finance lease on March 31, 2019	$	179,937

Interest expense related to lease liability - finance lease was $2,643 for the three months ended March 31, 2019.

Amounts of lease liability - finance lease matures over the next five years:
Twelve Months Ended March 31,
2020	$	8,321
2021		9,124
2022		9,670
2023		10,249
2024 and thereafter		142,573
	$	179,937
The amount of variable lease expense was	$	7,720
Weighted average remaining lease term	14 years
Weighted average discount rate		5.99	%

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NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

3 Months Ended

Mar. 31, 2019

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the followings at March 31, 2019 and December 31, 2018:

	March 31, 2019		December 31, 2018
Accounts payable to vendors	$	101,500	$	83,037
Payroll taxes payable		51,191		46,832
Accrued salaries and bonuses		208,621		153,542
Accrued interest on notes payable		11,132		6,394
	$	372,444	$	289,805

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NOTE 8 - LONG-TERM DEBT

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

NOTE 8 – LONG-TERM DEBT

In June 2018, the Company entered into a financing agreement to finance the purchase of a farm tractor. The financing agreement is secured by the tractor. The total amount financed was $21,794 at 0% interest per annum. The first monthly payment of $363 began in July 2018 and continues for 60 months. The following is the total payment amounts for the next five years:

Periods ending December 31,
2019	$	3,267
2020		4,359
2021		4,359
2022		4,359
2023		2,144
	$	18,488

The current and long-term portions of principle amounts due are as follow:

Amount of principle due in the next 12 months	$	4,359
Long term portion of principle due		14,129
	$	18,488

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NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY

3 Months Ended

Mar. 31, 2019

Disclosure Text Block [Abstract]

Derivatives and Fair Value [Text Block]

NOTE 9 – CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY

On August 22, 2018, the Company issued a convertible promissory note ("Note 1") for $140,800. Note 1 was discounted at $128,000 and the Company received net proceeds of $125,000 after incurring $3,000 of debt issuance costs. The note bears an interest rate at 8% per annum, and principal and accrued interest is due on the maturity date of August 22, 2019. The conversion option price associated with the note has a 25% discount to the market price of the stock. The market price is based on the average of the two lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the Black Scholes valuation model to determine the fair value of the conversion option. At the issuance date, the Company recorded a derivative expense and derivative liability of $148,211. At the end of each reporting period, the Company revalued the derivative liability and recorded the change in this value as additional derivative expense. The derivative liability was valued at $76,608 and $138,218 at March 31, 2019 and December 31, 2018, respectively. 

On October 8, 2018, the Company issued a convertible promissory note ("Note 2") for $58,300. Note 2 was discounted at $53,000 and the Company received net proceeds of $50,000 after incurring $3,000 of debt issuance costs. The note bears an interest rate at 8% per annum, and principal and accrued interest is due on the maturity date of October 8, 2019. The conversion option price associated with the note has a 25% discount to the market price of the stock. The market price is based on the average of the two lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the Black Scholes valuation model to determine the fair value of the conversion option. At the issuance date, the Company recorded a derivative expense and derivative liability of $57,272. At the end of each reporting period, the Company revalued the derivative liability and recorded the change in this value as additional derivative expense. The derivative liability was valued at $50,797 and $58,300 at March 31, 2019 and December 31, 2018, respectively. 

Liability measured at fair value on a recurring basis by level within the fair value hierarchy as of March 31, 2019 and December 31, 2018 is as follows: 

Fair Value Measurement at March 31, 2019 (1) Using

	Note 1 - Level 2		Note 2 - Level 2		Total
Liability:
Derivative liability	$	76,608	$	50,797	$	127,405
Total liability	$	76,608	$	50,797	$	127,405

Fair Value Measurement at December 31, 2018 (1) Using

	Note 1 - Level 2		Note 2 - Level 2		Total
Liability:
Derivative liability	$	138,218	$	58,300	$	196,518
Total liability	$	138,218	$	58,300	$	196,518

(1) The Company did not have any assets or liabilities measured at fair value using Level 1 or 3 of the fair value hierarchy as of March 31, 2019 and December 31, 2018.

The Company’s derivative liabilities are classified within Level 2 of the fair value hierarchy. The Company utilizes the Black-Scholes valuation model to value the derivative liabilities utilizing observable inputs such as the Company’s common stock price, the conversion price of the conversion option, and expected volatility, which is based on historical volatility. The Black-Scholes valuation model employs the market approach in determining fair value.

The following is a reconciliation of the beginning and ending balances for liabilities measured at fair value on a recurring basis during the three months ended March 31, 2019 and the year ended December 31, 2018: 

	Note 1			Note 2			Total
Balance at December 31, 2018	$	138,218		$	58,300		$	196,518
Change in fair value		(19,677	)		(7,503	)		(27,180	)
Conversion of derivative liability to equity from note conversion		(41,933	)		-			(41,933	)
Balance at March 31, 2019	$	76,608		$	50,797		$	127,405

During the three months ended March 31, 2019, the note holder elected to convert the principle amount of $45,000 into the Company's common stock on the following dates, at the respective conversion prices and the resulting number of shares issued to the note holder:

Date of Conversion	Principle Converted		Conversion Price		Number of Shares Issued
March 5, 2019	$	15,000	$	0.09		158,730
March 19, 2019	$	15,000	$	0.10		157,729
March 27, 2019	$	15,000	$	0.08		188,679
Totals	$	45,000				505,138

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NOTE 10 - STOCKHOLDERS' (DEFICIT)

3 Months Ended

Mar. 31, 2019

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

NOTE 10 – STOCKHOLDERS’ DEFICIT

Common Stock

The Company has been authorized to issue 150,000,000 shares of common stock, $.001 par value.  Each share of issued and outstanding common stock shall entitle the holder thereof to fully participate in all shareholder meetings, to cast one vote on each matter with respect to which shareholders have the right to vote, and to share ratably in all dividends and other distributions declared and paid with respect to common stock, as well as in the net assets of the corporation upon liquidation or dissolution.

During the three months ended March 31, 2019, the Company issue 1,267,138 shares of its restricted common stock as follows:

1. 2,000 shares to a consultant for services rendered, valued at $3,184.

2. 505,138 shares to a note holder for conversion of principle amount of $45,000 of a convertible note into common stock and to settle related derivative liability, valued at $41,933.

3. 4. Shares to be issued to an employee and a director from the restricted stock plan valued at $9,102. 2.760,000 shares to three directors for cash, valued at $91,200.

Warrants and Options

At March 31, 2019, 50,000 options were outstanding and there were no warrants outstanding. The Company did not issue any common stock purchase warrants or options during the three months ended March 31, 2019 and 2018.

Restricted Stock Awards to Key Employees

In  March 2017, the board of directors approved issuance of 100,000 shares of the Company’s restricted common stock to its key employees. The award is subject to a four or five-year vesting requirements, i.e. the requisite service period. The shares are issued as the vesting restriction lapses. The Company valued these shares at fair value on commitment date which is the date on which the employee accepted the award and recorded stock based compensation expense over the requisite service period. Stock based compensation expense for these awards for the three months ended March 31, 2019 and 2018 was $9,102 and $14,003, respectively.

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NOTE 11 - SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE 11 – SUBSEQUENT EVENTS

The Company evaluated subsequent events through the date the financial statements were issued, and determined that there were no other material events to disclose, other than the followings:

On April 2, 2019, the Company engaged an independent contractor to review its compliance related to its industrial hemp operations in Tennessee. The term of the engagement is for four months at $2,500 per month and 2,500 shares of unrestricted common stock of the Company per month, valued at commitment date, to be paid at the end of the engagement term.

On April 23, 2019, our convertible note holder (See Note 9) elected to convert $12,000 of principle balance of Note 1 at $0.0254 per share, resulting in 472,441 shares issued as a result of the conversion. On April 29, 2019, our convertible note holder (See Note 9) elected to convert $15,000 of principle balance of Note 1 at $0.0254 per share, resulting in 590,551 shares issued as a result of the conversion. On May 8, 2019, our convertible note holder (See Note 9) elected to convert $15,000 of principle balance of Note 1 at $0.0375 per share, resulting in 400,000 shares issued as a result of the conversion.

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NOTE 12 - RECENT ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Mar. 31, 2019

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE 12 – RECENT ACCOUNTING PRONOUNCEMENTS

The Security and Exchange Commission ("SEC") recently amended its rules to require an analysis of changes in stockholders’ equity in the financial statements included in quarterly reports on Form 10-Q. The analysis, which can be presented as a note or separate statement, is required for the current and comparative quarter and year-to-date interim periods. The amended rules will become effective 30 days after they are published in the Federal Register. The SEC's transition guidance states that the amendments are effective for all filings made on or after the effective date; however, it also states the SEC staff would not object if a filer’s first presentation of the changes in stockholders’ equity was included in its Form 10-Q for the quarter that begins after the effective date of the amendments. As such, the Company presented an analysis of changes in stockholders' deficit as a separate statement in this Form 10-Q.

Except as noted above and in our Form 10-K, the Company’s management does not believe that recent codified pronouncements by the Financial Accounting Standards Board (“FASB”) (including its EITF), the AICPA or the SEC will have a material impact on the Company’s current or future consolidated financial statements.

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Accounting Policies, by Policy (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Acacia Diversified Holdings, Inc. and its wholly-owned subsidiaries, MariJ Pharmaceuticals, Inc, Canna-Cures Research & Development Center, Inc., Eufloria Medical of Tennessee, Inc., Medahub Operations Group, Inc. and Medahub, Inc. All significant intercompany accounts and transactions are eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The actual results may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Business Combinations Policy [Policy Text Block]

MEDAHUB ACQUISITION

In July 2018, the Company announced the completion of its acquisition of Medahub Operations Group, Inc. and Medahub, Inc., technology companies (“Medahub”), which includes a current compounding pharmacy license in Florida. The Medahub acquisition allows the Company to be fully HIPAA compliant and cloud based on an HL7 platform. The Company can now offer licensing agreements for other cannabis companies wanting to be HIPAA compliant from left to right or seed to sale and Doctor to Patient. The Company issued 600,000 shares of its restricted common stock to the principal of Medahub as consideration of the acquisition, valued at $126,000.

When determining the accounting of the acquisition, the Company concluded that the acquisition does not constitute the acquisition of a business since there was no inputs, processes or outputs within Medahub. In addition, although the Company acquired certain software and technology from Medahub, the most significant asset it acquired was Medahub's principal's commitment to provide support, guidance and direction for implementing this technology. Without the principal's commitment of his time, the Company will not be able to implement the technology and begin generating cash flows. Therefore, the Company believes that the value of the purchase is concentrated on the service provided by Medahub's principal. As a result, the Company allocated the entire purchase price to the service provided and accounted for it as professional fee expense.

Revenue [Policy Text Block]

REVENUE RECOGNITION

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which replaces numerous requirements in U.S. GAAP, including industry specific requirements, and provides a single revenue recognition model for recognizing revenue from contracts with customers. The Company adopted this standard effective January 1, 2018.

The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This requires companies to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The Company’s revenues from extraction activities and from retail sales are recognized at a point in time.

The ASU requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenues.

The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application to accumulated deficit. Additionally, incremental footnote disclosures are required to present the 2018 revenues under the prior standard. Under the modified retrospective method, an entity may also elect to apply the standard to either (i) all contracts as of January 1, 2018, or (ii) only to contracts that are not completed as of January 1, 2018. The Company elected to adopt this guidance using the modified retrospective method at January 1, 2018 which did not result in an adjustment to accumulated deficit. Additionally, upon adoption, the Company evaluated its revenue recognition policy for all revenue streams within the scope of the ASU under previous standards and using the five-step model under the new guidance and confirmed that there were no differences in the pattern of revenue recognition.

Receivable [Policy Text Block]

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company’s accounts receivable represents amounts due from customers for extraction services performed. Allowance for uncollectible accounts receivable is estimated based on the aging of the accounts receivable and management estimate of uncollectible amounts.  At March 31, 2019 and December 31, 2018, the Company provided for $25,000 of allowance for doubtful accounts.

Inventory, Policy [Policy Text Block]

INVENTORIES

Inventories are stated at the lower of cost or market.  Cost is determined using the average cost method. The Company’s inventory consists of raw materials and finished goods. Cost of inventory includes cost of ingredients, labor, quality control and all other costs incurred to bring our inventories to condition ready to be sold.

Agriculture, Policy [Policy Text Block]

DEFERRED FARM EXPENSE

The Company's subsidiary EMT grows hemp plants in both its indoor and outdoor facility. In accordance with Accounting Standards Codification 905 - Agriculture, all direct and indirect costs of growing the plants are accumulated until the time of harvest. These deferred cost cannot exceed the realizable value of the oil processed from the hemp plants. Crop costs such as soil preparation incurred before planting are deferred and allocated to the growing crop. Deferred farm expense is included as inventory costs.

Debt Discount Policy [Policy Text Block]

DEBT DISCOUNTDuring the year ended December 31, 2018, the Company incurred debt discount related to the issuance of convertible promissory notes, as described in Note 9. The discount was recognized in its entirety as interest expense rather than amortized over the life of the convertible promissory note. The immediate recognition did not yield materially different result.

Share-based Payment Arrangement [Policy Text Block]

STOCK BASED COMPENSATION

The Company accounts for stock-based compensation under Accounting Standards Codification 718 - Compensation-Stock Compensation (“ASC 718”). ASC 718 requires that all stock-based compensation be recognized as expense in the financial statements and that such cost be measured at the fair value of the award at the grant date and recognized over the period during which an employee is required to provide services (requisite service period). An additional requirement of ASC 718 is that estimated forfeitures be considered in determining compensation expense. Estimating forfeitures did not have a material impact on the determination of compensation expense during the three months ended March 31, 2019 and 2018.  

The Company accounts for stock based awards based on the fair market value of the instrument using a 10-day volume weighted adjusted price (VWAP) and accounts for stock options issued using the Black-Scholes option pricing model and utilizing certain assumptions including the followings:

Risk-free interest rate – This is the yield on U.S. Treasury Securities posted at the date of grant (or date of modification) having a term equal to the expected life of the option. An increase in the risk-free interest rate will increase compensation expense.

Expected life—years – This is the period of time over which the options granted are expected to remain outstanding. Options granted by the Company had a maximum term of ten years. An increase in the expected life will increase compensation expense.

Expected volatility – Actual changes in the market value of stock are used to calculate the volatility assumption.  An increase in the expected volatility will increase compensation expense.

Dividend yield – This is the annual rate of dividends per share over the exercise price of the option. An increase in the dividend yield will decrease compensation expense.  The Company does not currently pay dividends and has no immediate plans to do so in the near future.

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of Accounting Standards Codification 505-50, Equity – Based Payments to Non-Employees.  Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued.  The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty’s performance is complete. 

During the three months ended March 31, 2019, the board of directors approved issuances of the Company’s restricted common stock to consultants, employees, and directors for services rendered:

1. 2,000 shares to a consultant for services rendered, valued at $3,184.

3. Shares to be issued to an employee and a director from the restricted stock plan valued at $9,102.

Fair Value Measurement, Policy [Policy Text Block]

FAIR VALUE ESTIMATES – The Company measures assets and liabilities it acquires at fair value in accordance with Accounting Standards Codification 820 – Fair Value Measurement (“ASC 820”). The objective of ASC 820 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 specifies a valuation hierarchy based on whether the inputs to those valuation techniques are observable or unobservable.

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s own assumptions. These two types of inputs have created the following fair value hierarchy:

● Level 1 – Quoted prices for identical instruments in active markets;

● Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and 

● Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

This hierarchy requires the Company to minimize the use of unobservable inputs and to use observable market data, if available, when estimating fair value.

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NOTE 4 - RELATED PARTY TRANSACTIONS (Tables)

3 Months Ended

Mar. 31, 2019

Related Party Transactions [Abstract]

Schedule of Debt [Table Text Block]

The Company entered into the following promissory notes payable to its CEO during the year ended December 31, 2018 and during the three months ended March 31, 2019:

Note Date	Note Amount		Accrued Interest through December 31, 2018		Accrued Interest for three months ended March 31, 2019		Total Accrued Interest
Total notes payable and accrued interest due to related party at December 31, 2017	$	558,400	$	56,544	$	11,015	$	67,559
March 2018 (1)		72,000		4,402		1,421		5,823
April 2018 (2)		42,000		2,333		828		3,161
August 2018 (3)		70,000		2,169		1,381		3,550
November 2018 (4)		20,000		184		395		579
December 2018 (5)		50,000		142		986		1,128
		254,000		9,230		5,011		14,241
Total notes payable and accrued interest due to related party at March 31, 2019	$	812,400	$	65,774	$	16,026	$	81,800

(1) In March 2018, the Company entered into three separate unsecured promissory note agreements with its CEO and his spouse, in the amounts of $12,000, $40,000 and $20,000, totaled $72,000. Each of these promissory notes bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 60 days from the date of the note. The Company accrued interest on these notes in the amount of $5,823 through March 31, 2019.

(2) In April 2018, the Company entered into two separate unsecured promissory note agreements with its CEO and his spouse, in the amounts of $10,000 and $32,000, totaled $42,000. Each of these promissory notes bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 60 days from the date of the note. The Company accrued interest on these notes in the amount of $3,161 through March 31, 2019.

In May 2018, the board of directors approved the Company to enter into a promissory note agreement with the Company's CEO and his spouse to consolidate notes (1) and (2). The total amount of the principle consolidated was $114,000. The amount of interest accrued from the note dates to the date of the consolidation was minimal and therefore was not included in the consolidation. The promissory note accrues interest at 8% from the date of consolidation and is due within 120 days of the note date. 

(3) In August 2018, the Company entered into three separate unsecured promissory note agreements with its CEO and his spouse, in the amounts of $25,000, $25,000, and $20,000, totaled $70,000. Each of these promissory notes bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 60 days from the date of the note. The Company accrued interest on these notes in the amount of $3,550 through March 31, 2019.

(4) In November 2018, the Company entered into an unsecured promissory note agreements with its CEO and his spouse, in the amounts of $20,000. The promissory note bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 30 days from the date of the note. The Company accrued interest on these notes in the amount of $579 through March 31, 2019.

(5) In December 2018, the Company entered into an unsecured promissory note agreements with its CEO and his spouse, in the amounts of $50,000. The promissory note bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 90 days from the date of the note. The Company accrued interest on these notes in the amount of $1,128 through March 31, 2019.

Schedule of Related Party Transactions [Table Text Block]

Payable to related parties consisted of the followings at September March 31, 2019 and December 31, 2018:

	March 31,		December 31,
	2019		2018
Short term loan from related entity (1)	$	60,150	$	61,500
Auto allowances owed to CEO (2)		8,000		5,000
	$	68,150	$	66,500

(1) In 2017, the Company received a working capital advance of $74,348 from a related entity. These advances are non-interest bearing and were intended as short term capital advances. The remaining balances have been included in payable to related parties on the consolidated balance sheet as current liabilities at March 31, 2019 and December 31, 2018. 

(2) On May 1, 2016, the Company entered into an employment agreement with its CEO. The term of the employment is through December 31, 2019. The agreement provides for a monthly storage and corporate housing allowance of $1,000 for a property owned by the CEO and a monthly automobile allowance of $1,000.

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NOTE 5 - INVENTORIES (Tables)

3 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

The Company’s inventories consisted of the followings at March 31, 2019 and December 31, 2018:

	March 31, 2019		December 31, 2018
Raw materials	$	23,810	$	23,810
Finished goods (isolates, tinctures, capsules, etc.)		11,006		12,605
Deferred farm expense		7,135		7,135
	$	41,951	$	43,550

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NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Lessee, Operating Lease, Disclosure [Table Text Block]

The Company entered into a lease agreement to lease its retail space in Tennessee in October 2017 with a lease term of 24 months. The lease contains a renewal option to extend the term for two additional years. The Company does not plan on renewing the lease when it expires. Rent for the first twelve months was $2,500 per month and $2,550 for the next twelve months. In applying ASC 842, the Company uses a lease term of 24 months and an incremental borrowing rate of 5.99% which was the borrowing rate on a finance lease (discussed below).

Right of use (ROU) asset  - operating lease obtained in exchange for lease liability - operating lease
	$	29,355
Lease liability - operating lease on adoption date	$	29,655
Payments on lease liability - operating lease		(7,253	)
Lease liability - operating lease on March 31, 2019	$	22,402
This entire lease liability matures prior to December 31, 2019.
Operating lease expense for the three months ended March 31, 2019	$	7,875
Weighted average remaining lease term	9 months
Weighted average discount rate		5.99	%

Lessee, Finance Lease, Disclosure [Table Text Block]

ROU asset - finance lease - land	$	37,530
ROU asset  - finance lease - improvement		148,788
ROU asset  - finance lease obtained in exchange for lease liability - finance lease		186,318
Cumulative effect adjustment to ROU asset - finance lease on adoption date		(8,679	)
Amortization of ROU asset - finance lease		(3,720	)
ROU asset - finance lease at March 31, 2019	$	173,919
Lease liability - finance lease on adoption date	$	186,318
Cumulative effect adjustment to ROU lease liability - finance lease on adoption date		(4,277	)
Payments on lease liability - finance lease		(2,103	)
Lease liability - finance lease on March 31, 2019	$	179,937

Finance Lease, Liability, Maturity [Table Text Block]

Interest expense related to lease liability - finance lease was $2,643 for the three months ended March 31, 2019.

Amounts of lease liability - finance lease matures over the next five years:
Twelve Months Ended March 31,
2020	$	8,321
2021		9,124
2022		9,670
2023		10,249
2024 and thereafter		142,573
	$	179,937
The amount of variable lease expense was	$	7,720
Weighted average remaining lease term	14 years
Weighted average discount rate		5.99	%

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NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables)

3 Months Ended

Mar. 31, 2019

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities [Table Text Block]

Accounts payable and accrued expenses consisted of the followings at March 31, 2019 and December 31, 2018:

	March 31, 2019		December 31, 2018
Accounts payable to vendors	$	101,500	$	83,037
Payroll taxes payable		51,191		46,832
Accrued salaries and bonuses		208,621		153,542
Accrued interest on notes payable		11,132		6,394
	$	372,444	$	289,805

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NOTE 8 - LONG-TERM DEBT (Tables)

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Schedule of Maturities of Long-term Debt [Table Text Block]

The following is the total payment amounts for the next five years:

Periods ending December 31,
2019	$	3,267
2020		4,359
2021		4,359
2022		4,359
2023		2,144
	$	18,488

Schedule of Long-term Debt Instruments [Table Text Block]

The current and long-term portions of principle amounts due are as follow:

Amount of principle due in the next 12 months	$	4,359
Long term portion of principle due		14,129
	$	18,488

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NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Tables)

3 Months Ended

Mar. 31, 2019

Disclosure Text Block [Abstract]

Schedule of Derivative Liabilities at Fair Value [Table Text Block]

Liability measured at fair value on a recurring basis by level within the fair value hierarchy as of March 31, 2019 and December 31, 2018 is as follows:

	Note 1 - Level 2		Note 2 - Level 2		Total
Liability:
Derivative liability	$	76,608	$	50,797	$	127,405
Total liability	$	76,608	$	50,797	$	127,405

	Note 1 - Level 2		Note 2 - Level 2		Total
Liability:
Derivative liability	$	138,218	$	58,300	$	196,518
Total liability	$	138,218	$	58,300	$	196,518

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

The following is a reconciliation of the beginning and ending balances for liabilities measured at fair value on a recurring basis during the three months ended March 31, 2019 and the year ended December 31, 2018:

	Note 1			Note 2			Total
Balance at December 31, 2018	$	138,218		$	58,300		$	196,518
Change in fair value		(19,677	)		(7,503	)		(27,180	)
Conversion of derivative liability to equity from note conversion		(41,933	)		-			(41,933	)
Balance at March 31, 2019	$	76,608		$	50,797		$	127,405

Schedule of Debt Conversions [Table Text Block]

During the three months ended March 31, 2019, the note holder elected to convert the principle amount of $45,000 into the Company's common stock on the following dates, at the respective conversion prices and the resulting number of shares issued to the note holder:

Date of Conversion	Principle Converted		Conversion Price		Number of Shares Issued
March 5, 2019	$	15,000	$	0.09		158,730
March 19, 2019	$	15,000	$	0.10		157,729
March 27, 2019	$	15,000	$	0.08		188,679
Totals	$	45,000				505,138

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NOTE 1 - THE COMPANY (Details)	3 Months Ended
	Mar. 31, 2019
Disclosure Text Block [Abstract]
Number of Wholly Owned Subsidiaries	4

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NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2017
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Accounts Receivable, Allowance for Credit Loss	$ 25,000		$ 25,000
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term	10 years
Stock Issued During Period, Shares, Issued for Services (in Shares)	2,000
Stock Issued During Period, Value, Issued for Services	$ 3,184	$ 254,870
Shares Granted, Value, Share-based Payment Arrangement, before Forfeiture	$ 9,102
Medahub [Member]
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Stock Issued During Period, Shares, Acquisitions (in Shares)	600,000
Stock Issued During Period, Value, Acquisitions	$ 126,000

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NOTE 4 - RELATED PARTY TRANSACTIONS (Details)	1 Months Ended							3 Months Ended			12 Months Ended
	Dec. 31, 2018 USD ($)	Nov. 30, 2018 USD ($)	Aug. 31, 2018 USD ($)	Jul. 31, 2018 USD ($) shares	May 31, 2018 USD ($) a	Apr. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Mar. 31, 2019 USD ($) shares	Sep. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Debt Instrument, Face Amount								$ 21,794
Debt Instrument, Interest Rate, Stated Percentage								0.00%
Debt Instrument, Term								60 years
Notes Payable, Related Parties, Current	$ 812,400							$ 812,400
Proceeds from Related Party Debt								$ 0		$ 72,000
Stock Issued During Period, Shares, Restricted Stock Award, Gross (in Shares) | shares								1,267,138
Due to Related Parties, Current	66,500							$ 68,150
Operating Lease, Expense								$ 7,875
Housing and Automobile [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Related Party Transaction, Amounts of Transaction									$ 3,000
Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Number of Notes			3			2	3
Debt Instrument, Face Amount	$ 50,000	$ 20,000	$ 70,000			$ 42,000	$ 72,000			$ 72,000
Debt Instrument, Interest Rate, Stated Percentage	8.00%	8.00%	8.00%			8.00%	8.00%	5.99%		8.00%
Debt Instrument, Term	90 days	30 days	60 days			60 days	60 days	15 years
Due to Related Parties, Current	$ 5,000							$ 8,000
Chief Executive Officer [Member] | Storage and Corporate Housing Allowance [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Related Party Transaction, Description of Transaction					In May 2018, the board of directors approved to discontinue payment of the storage and corporate housing allowance of $1,000 per month, retroactively to January 1, 2018. As a result, expenses accrued during the three months ended March 31, 2018 was reversed during the three months ended June 30, 2018.
Chief Executive Officer [Member] | Settlement of Storage, Corporate Housing and Automobile Allowances [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Stock Issued During Period, Shares, Restricted Stock Award, Gross (in Shares) | shares				85,000
Stock Issued During Period, Value, Restricted Stock Award, Gross				$ 17,000
Chief Executive Officer [Member] | Property Purchased by Related Party [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Related Party Transaction, Description of Transaction					The board of directors also granted the Company the right to purchase the farm from the Company's CEO at his cost plus 6.09% interest when the Company has sufficient cash flows to do so. At the time of the filing, the Company has not exercised such right.
Related Party Transaction, Amounts of Transaction					$ 185,000
Area of Land (in Acres) | a					14
Lessee, Operating Lease, Term of Contract					1 year
Lessee, Operating Lease, Renewal Term					1 year
Operating Lease, Expense								7,720
Chief Executive Officer [Member] | Building [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Employment Agreement, Reimbursement								1,000
Chief Executive Officer [Member] | Vehicles [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Employment Agreement, Reimbursement								1,000
Other Commitment, Due in Next Twelve Months								1,000
Affiliated Entity [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Proceeds from Related Party Debt											$ 74,348
Promissory Note #1 [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Debt Instrument, Face Amount			$ 25,000			$ 10,000	$ 12,000			$ 12,000
Promissory Note #2 [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Debt Instrument, Face Amount			25,000			$ 32,000	40,000			40,000
Promissory Note #3 [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Debt Instrument, Face Amount			$ 20,000				$ 20,000			$ 20,000
March 2018 [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Interest Expense, Debt								5,823
April 2018 [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Interest Expense, Debt								3,161
Consolidated Principal and Interest of March and April 2018 Notes [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Debt Instrument, Face Amount					$ 114,000
Debt Instrument, Interest Rate, Stated Percentage					8.00%
Debt Instrument, Term					120 days
August 2018 [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Interest Expense, Debt								3,550
November 2018 [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Interest Expense, Debt								579
December 2018 [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Interest Expense, Debt								$ 1,128

XML

NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt - Chief Executive Officer [Member] - USD ($)		Mar. 31, 2019	Dec. 31, 2018
Principal [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Total notes payable and accrued interest due to related party		$ 812,400	$ 558,400
Notes and accrued interest		254,000
Principal [Member] | March 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[1]	72,000
Principal [Member] | April 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[2],[3]	42,000
Principal [Member] | August 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[4]	70,000
Principal [Member] | November 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[5]	20,000
Principal [Member] | December 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[3]	50,000
Accrued Interest through December 31, 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Total notes payable and accrued interest due to related party		65,774	56,544
Notes and accrued interest		9,230
Accrued Interest through December 31, 2018 [Member] | March 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[1]	4,402
Accrued Interest through December 31, 2018 [Member] | April 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[2],[3]	2,333
Accrued Interest through December 31, 2018 [Member] | August 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[4]	2,169
Accrued Interest through December 31, 2018 [Member] | November 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[5]	184
Accrued Interest through December 31, 2018 [Member] | December 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[3]	142
Accrued Interest through March 31, 2019 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Total notes payable and accrued interest due to related party		16,026	11,015
Notes and accrued interest		5,011
Accrued Interest through March 31, 2019 [Member] | March 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[1]	1,421
Accrued Interest through March 31, 2019 [Member] | April 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[2],[3]	828
Accrued Interest through March 31, 2019 [Member] | August 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[4]	1,381
Accrued Interest through March 31, 2019 [Member] | November 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[5]	395
Accrued Interest through March 31, 2019 [Member] | December 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[3]	986
Accrued Interest [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Total notes payable and accrued interest due to related party		81,800	$ 67,559
Notes and accrued interest		14,241
Accrued Interest [Member] | March 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[1]	5,823
Accrued Interest [Member] | April 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[2]	3,161
Accrued Interest [Member] | August 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[4]	3,550
Accrued Interest [Member] | November 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[5]	579
Accrued Interest [Member] | December 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[3]	$ 1,128

[1] In March 2018, the Company entered into three separate unsecured promissory note agreements with its CEO and his spouse, in the amounts of $12,000, $40,000 and $20,000, totaled $72,000. Each of these promissory notes bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 60 days from the date of the note. The Company accrued interest on these notes in the amount of $5,823 through March 31, 2019.

[2] In April 2018, the Company entered into two separate unsecured promissory note agreements with its CEO and his spouse, in the amounts of $10,000 and $32,000, totaled $42,000. Each of these promissory notes bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 60 days from the date of the note. The Company accrued interest on these notes in the amount of $3,161 through March 31, 2019.

[3] In December 2018, the Company entered into an unsecured promissory note agreements with its CEO and his spouse, in the amounts of $50,000. The promissory note bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 90 days from the date of the note. The Company accrued interest on these notes in the amount of $1,128 through March 31, 2019.

[4] In August 2018, the Company entered into three separate unsecured promissory note agreements with its CEO and his spouse, in the amounts of $25,000, $25,000, and $20,000, totaled $70,000. Each of these promissory notes bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 60 days from the date of the note. The Company accrued interest on these notes in the amount of $3,550 through March 31, 2019.

[5] In November 2018, the Company entered into an unsecured promissory note agreements with its CEO and his spouse, in the amounts of $20,000. The promissory note bears interest at a rate of 8% per annum. The principle balance and accrued interest is due 30 days from the date of the note. The Company accrued interest on these notes in the amount of $579 through March 31, 2019.

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NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Related Party Transactions - USD ($)		Mar. 31, 2019	Dec. 31, 2018
Related Party Transaction [Line Items]
Payable to Related Parties		$ 68,150	$ 66,500
Related Party Note #2 [Member] | Affiliated Entity [Member]
Related Party Transaction [Line Items]
Payable to Related Parties	[1]	60,150	61,500
Storage and Corporate Housing Allowance [Member] | Chief Executive Officer [Member]
Related Party Transaction [Line Items]
Payable to Related Parties	[2]	$ 8,000	$ 5,000

[1] In 2017, the Company received a working capital advance of $74,348 from a related entity. These advances are non-interest bearing and were intended as short term capital advances. The remaining balances have been included in payable to related parties on the consolidated balance sheet as current liabilities at March 31, 2019 and December 31, 2018.

[2] On May 1, 2016, the Company entered into an employment agreement with its CEO. The term of the employment is through December 31, 2019. The agreement provides for a monthly storage and corporate housing allowance of $1,000 for a property owned by the CEO and a monthly automobile allowance of $1,000.

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NOTE 5 - INVENTORIES (Details) - Schedule of Inventory, Current - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Schedule of Inventory, Current [Abstract]
Raw materials	$ 23,810	$ 23,810
Finished goods (isolates, tinctures, capsules, etc.)	11,006	12,605
Deferred farm expense	7,135	7,135
	$ 41,951	$ 43,550

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NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details)	1 Months Ended							3 Months Ended
	Dec. 31, 2018	Nov. 30, 2018	Aug. 31, 2018	May 31, 2018 USD ($) m²	Apr. 30, 2018	Mar. 31, 2018	Oct. 31, 2017 USD ($)	Mar. 31, 2019 USD ($)	Mar. 31, 2018 USD ($)	Jun. 01, 2018
NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) [Line Items]
Operating Lease, Weighted Average Discount Rate, Percent								5.99%
Finance Lease, Principal Payments (in Dollars)								$ 2,104	$ 0
Debt Instrument, Term								60 years
Debt Instrument, Interest Rate, Stated Percentage								0.00%
Finance Lease, Interest Expense (in Dollars)								$ 2,643
Chief Executive Officer [Member]
NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) [Line Items]
Debt Instrument, Term	90 days	30 days	60 days		60 days	60 days		15 years
Debt Instrument, Interest Rate, Stated Percentage	8.00%	8.00%	8.00%		8.00%	8.00%		5.99%	8.00%
Land and Building [Member]
NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) [Line Items]
Area of Land (in Square Meters) | m²				14
Direct Financing Lease, Net Investment in Lease (in Dollars)				$ 185,000
Sale Leaseback Transaction, Imputed Interest Rate				6.09%
Lessee, Finance Lease, Term of Contract										1 year
Lessee, Finance Lease, Renewal Term										1 year
Finance Lease, Principal Payments (in Dollars)								$ 1,600
Use Rights [Member]
NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) [Line Items]
Property, Plant and Equipment, Useful Life								10 years
FLORIDA | Building [Member]
NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) [Line Items]
Lessee, Operating Lease, Term of Contract								12 years
Operating Leases, Rent Expense (in Dollars)								$ 2,895
TENNESSEE | Building [Member]
NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) [Line Items]
Lessee, Operating Lease, Term of Contract							24 years
Lessee, Operating Lease, Renewal Term							2 years
Operating Lease, Weighted Average Discount Rate, Percent							5.99%
TENNESSEE | Rent Expense for the First Twelve Months [Member] | Building [Member]
NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) [Line Items]
Operating Leases, Rent Expense, Minimum Rentals (in Dollars)							$ 2,500
TENNESSEE | Rent Expense for the Next Twelve Months [Member] | Building [Member]
NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) [Line Items]
Operating Leases, Rent Expense, Minimum Rentals (in Dollars)							$ 2,550

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NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) - Lessee, Operating Lease, Disclosure - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Jan. 01, 2019	Dec. 31, 2018
Lessee, Operating Lease, Disclosure [Abstract]
Right of use (ROU) asset - operating lease obtained in exchange for lease liability - operating lease	$ 22,177		$ 29,355	$ 0
Lease liability - operating lease on adoption date			$ 29,655
Payments on lease liability - operating lease	(7,253)	$ 0
Lease liability - operating lease on March 31, 2019	22,402			$ 0
Operating lease expense for the three months ended March 31, 2019	$ 7,875
Weighted average remaining lease term	9 years
Weighted average discount rate	5.99%

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NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) - Lessee, Finance Lease, Disclosure - USD ($)		3 Months Ended
	Jan. 01, 2019	Mar. 31, 2019	Jan. 01, 2019
Right of Use Asset [Member]
NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) - Lessee, Finance Lease, Disclosure [Line Items]
ROU asset - finance lease		$ 173,919
ROU asset - finance lease obtained in exchange for lease liability - finance lease	$ 186,318
Cumulative effect adjustment to ROU asset - finance lease on adoption date			$ (8,679)
Amortization of ROU asset - finance lease		(3,720)
ROU asset - finance lease at March 31, 2019		173,919
Cumulative effect adjustment to ROU lease liability - finance lease on adoption date			(8,679)
Finance Lease Liability [Member]
NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) - Lessee, Finance Lease, Disclosure [Line Items]
Cumulative effect adjustment to ROU asset - finance lease on adoption date			(4,277)
Lease liability - finance lease on adoption date	186,318	186,318
Cumulative effect adjustment to ROU lease liability - finance lease on adoption date			(4,277)
Payments on lease liability - finance lease		(2,103)
Lease liability - finance lease on March 31, 2019		$ 179,937
Land [Member] | Right of Use Asset [Member]
NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) - Lessee, Finance Lease, Disclosure [Line Items]
ROU asset - finance lease	37,530		37,530
ROU asset - finance lease at March 31, 2019	37,530
Leasehold Improvements [Member] | Right of Use Asset [Member]
NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) - Lessee, Finance Lease, Disclosure [Line Items]
ROU asset - finance lease	148,788		$ 148,788
ROU asset - finance lease at March 31, 2019	$ 148,788

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NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) - Finance Lease, Liability, Maturity	Mar. 31, 2019 USD ($)
Finance Lease, Liability, Maturity [Abstract]
2020	$ 8,321
2021	9,124
2022	9,670
2023	10,249
2024 and thereafter	142,573
	179,937
The amount of variable lease expense was	$ 7,720
Weighted average remaining lease term	14 years
Weighted average discount rate	5.99%

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NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - Schedule of Accrued Liabilities - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Schedule of Accrued Liabilities [Abstract]
Accounts payable to vendors	$ 101,500	$ 83,037
Payroll taxes payable	51,191	46,832
Accrued salaries and bonuses	208,621	153,542
Accrued interest on notes payable	11,132	6,394
	$ 372,444	$ 289,805

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NOTE 8 - LONG-TERM DEBT (Details)	3 Months Ended
	Mar. 31, 2019 USD ($)
Debt Disclosure [Abstract]
Debt Instrument, Face Amount	$ 21,794
Debt Instrument, Interest Rate, Stated Percentage	0.00%
Debt Instrument, Periodic Payment, Principal	$ 363
Debt Instrument, Term	60 years

XML

NOTE 8 - LONG-TERM DEBT (Details) - Schedule of Maturities of Long-term Debt	Mar. 31, 2019 USD ($)
Schedule of Maturities of Long-term Debt [Abstract]
2019	$ 3,267
2020	4,359
2021	4,359
2022	4,359
2023	2,144
	$ 18,488

XML

NOTE 8 - LONG-TERM DEBT (Details) - Schedule of Long-term Debt Instruments - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Schedule of Long-term Debt Instruments [Abstract]
Amount of principle due in the next 12 months	$ 4,359	$ 4,359
Long term portion of principle due	14,129	$ 15,219
	$ 18,488

XML

NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - USD ($)						3 Months Ended
	Mar. 27, 2019	Mar. 19, 2019	Mar. 05, 2019	Oct. 08, 2018	Aug. 22, 2018	Mar. 31, 2019	Dec. 31, 2018
NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) [Line Items]
Debt Instrument, Face Amount						$ 21,794
Debt Instrument, Interest Rate, Stated Percentage						0.00%
Derivative Liability, Current						$ 127,405	$ 196,518
Debt Conversion, Original Debt, Amount	$ 15,000	$ 15,000	$ 15,000			45,000
Note 1 [Member]
NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) [Line Items]
Debt Instrument, Face Amount					$ 140,800
Debt Instrument, Unamortized Discount					128,000
Proceeds from Debt, Net of Issuance Costs					125,000
Debt Issuance Costs, Gross					$ 3,000
Debt Instrument, Interest Rate, Stated Percentage					8.00%
Debt Instrument, Convertible, Terms of Conversion Feature					August 22, 2019
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Inputs Reconciliation, Issues					$ 148,211
Derivative Liability, Current						76,608	138,218
Debt Conversion, Description					The conversion option price associated with the note has a 25% discount to the market price of the stock. The market price is based on the average of the two lowest trading prices during a ten day period prior to conversion. The note is convertible at any time.
Note 2 [Member]
NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) [Line Items]
Debt Instrument, Face Amount				$ 58,300
Debt Instrument, Unamortized Discount				53,000
Proceeds from Debt, Net of Issuance Costs				$ 50,000
Debt Instrument, Interest Rate, Stated Percentage				8.00%
Derivative Liability, Current						$ 50,797	$ 58,300
Payments of Debt Issuance Costs				$ 3,000
Debt Conversion, Description				The conversion option price associated with the note has a 25% discount to the market price of the stock. The market price is based on the average of the two lowest trading prices during a ten day period prior to conversion. The note is convertible at any time.
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings				$ 57,272

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NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - Schedule of Derivative Liabilities at Fair Value - USD ($)	Mar. 31, 2019	Dec. 31, 2018
NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - Schedule of Derivative Liabilities at Fair Value [Line Items]
Derivative liability	$ 127,405	$ 196,518
Total liability	127,405	196,518
Promissory Note #1 [Member] | Fair Value, Inputs, Level 2 [Member]
NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - Schedule of Derivative Liabilities at Fair Value [Line Items]
Derivative liability	76,608	138,218
Total liability	76,608	138,218
Promissory Note #2 [Member] | Fair Value, Inputs, Level 2 [Member]
NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - Schedule of Derivative Liabilities at Fair Value [Line Items]
Derivative liability	50,797	58,300
Total liability	$ 50,797	$ 58,300

XML

NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis - Promissory Note #1 [Member]	3 Months Ended
	Mar. 31, 2019 USD ($)
NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Balance at	$ 58,300
Change in fair value	(7,503)
Conversion of derivative liability to equity from note conversion	0
Balance at	$ 50,797

XML

NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - Schedule of Debt Conversions - USD ($)				3 Months Ended
	Mar. 27, 2019	Mar. 19, 2019	Mar. 05, 2019	Mar. 31, 2019
Schedule of Debt Conversions [Abstract]
Principle Converted	$ 15,000	$ 15,000	$ 15,000	$ 45,000
Conversion Price	$ 0.08	$ 0.10	$ 0.09
Number of Shares Issued	188,679	157,729	158,730	505,138

XML

NOTE 10 - STOCKHOLDERS' (DEFICIT) (Details) - USD ($)				1 Months Ended	3 Months Ended
	Mar. 27, 2019	Mar. 19, 2019	Mar. 05, 2019	Mar. 31, 2017	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
NOTE 10 - STOCKHOLDERS' (DEFICIT) (Details) [Line Items]
Common Stock, Shares Authorized					150,000,000		150,000,000
Stock Issued During Period, Shares, Restricted Stock Award, Gross					1,267,138
Stock Issued During Period, Shares, Issued for Services					2,000
Stock Issued During Period, Value, Issued for Services (in Dollars)					$ 3,184	$ 254,870
Debt Conversion, Converted Instrument, Shares Issued	188,679	157,729	158,730		505,138
Debt Conversion, Original Debt, Amount (in Dollars)	$ 15,000	$ 15,000	$ 15,000		$ 45,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number					50,000
Class of Warrant or Right, Outstanding					0
Common Stock, Par or Stated Value Per Share (in Dollars per share)					$ 0.001		$ 0.001
Restricted Stock [Member]
NOTE 10 - STOCKHOLDERS' (DEFICIT) (Details) [Line Items]
Stock Issued During Period, Shares, Restricted Stock Award, Gross				100,000
Share-based Payment Arrangement, Noncash Expense (in Dollars)					$ 9,102	$ 14,003
Three Directors [Member]
NOTE 10 - STOCKHOLDERS' (DEFICIT) (Details) [Line Items]
Shares Issued, Shares, Share-based Payment Arrangement, before Forfeiture					2.760000
Shares Issued, Value, Share-based Payment Arrangement, before Forfeiture (in Dollars)					$ 91,200
Convertible Note into Common Stock and to Settle Related Derivative Liability [Member]
NOTE 10 - STOCKHOLDERS' (DEFICIT) (Details) [Line Items]
Debt Conversion, Converted Instrument, Shares Issued					505,138
Convertible Note into Common Stock and to Settle Related Derivative Liability [Member] | Principal [Member]
NOTE 10 - STOCKHOLDERS' (DEFICIT) (Details) [Line Items]
Debt Conversion, Original Debt, Amount (in Dollars)					$ 45,000
Convertible Note into Common Stock and to Settle Related Derivative Liability [Member] | Settle Debt Related Derivative Liability [Member]
NOTE 10 - STOCKHOLDERS' (DEFICIT) (Details) [Line Items]
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Inputs Reconciliation, Settlements (in Dollars)					$ 41,933
Shares Issued for Services #4 [Member]
NOTE 10 - STOCKHOLDERS' (DEFICIT) (Details) [Line Items]
Stock Issued During Period, Shares, Issued for Services					2,000
Stock Issued During Period, Value, Issued for Services (in Dollars)					$ 3,184
Restricted Stock Plan [Member] | Director [Member]
NOTE 10 - STOCKHOLDERS' (DEFICIT) (Details) [Line Items]
Stock Issued During Period, Shares, Restricted Stock Award, Gross					9,102

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NOTE 11 - SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] - USD ($)	May 08, 2019	Apr. 29, 2019	Apr. 23, 2019	Apr. 02, 2019
NOTE 11 - SUBSEQUENT EVENTS (Details) [Line Items]
Independent Contractor Term				4 years
Independent Contractor Fee per Month				$ 2,500
Debt Conversion, Original Debt, Amount	$ 15,000	$ 15,000	$ 12,000
Debt Instrument, Convertible, Conversion Price	$ 0.0375	$ 0.0254	$ 0.0254
Debt Conversion, Converted Instrument, Shares Issued	400,000	590,551	472,441
Independent Contractor [Member]
NOTE 11 - SUBSEQUENT EVENTS (Details) [Line Items]
Stock Issued During Period, Shares, Issued for Services				2,500