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 June 30, 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 every Interactive Data File required to be submitted 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 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 August 6, 2019 is  38,133,550 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

	June 30,			December 31,
	2019			2018
	(UNAUDITED)			(AUDITED)
ASSETS
CURRENT ASSETS:
Cash	$	78,766		$	51,797
Accounts receivable, net of allowance for doubtful accounts of $25,000 in 2019 and 2018		100,718			135,970
Inventories		39,541			43,550
Prepaid expenses and other current assets		9,998			7,815
Total Current Assets		229,023			239,132
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $351,608 and $277,343 in 2019 and 2018, respectively		411,868			453,562
OTHER ASSETS
Deposits		4,201			4,201
ROU asset - finance lease, net of accumulated amortization of $7,440 in 2019		170,199			-
ROU asset - operating lease		14,894			-
		189,294			4,201
TOTAL ASSETS	$	830,185		$	696,895
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	277,257		$	289,805
Current portion of long-term debt		4,359			4,359
Current portion of lease liability - finance lease		8,738			-
Current portion of lease liability - operating lease		15,043			-
Convertible notes payable		124,800			199,100
Notes payable to related party		733,400			812,400
Accrued interest on notes payable to related party		86,977			65,774
Payable to related parties		66,150			66,500
Total Current Liabilities		1,316,724			1,437,938
LONG-TERM LIABILITY:
Long-term debt		13,040			15,219
Derivative liability		152,707			196,518
Lease liability - finance lease		169,037			-
Total Long-term Liability		334,784			211,737
Total Liabilities		1,651,508			1,649,675
Commitments and contingencies		-			-
STOCKHOLDERS' DEFICIT
Common stock, $0.001 par value; 150,000,000 shares authorized; 36,339,982 and 21,813,625 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively		36,341			21,814
Additional paid-in capital		6,521,326			5,692,055
Accumulated deficit		(7,378,990	)		(6,666,649	)
Total Stockholders' Deficit		(821,323	)		(952,780	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	830,185		$	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 AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018

(UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
REVENUE	$	140,724		$	12,671		$	304,229		$	104,585
COSTS OF GOODS SOLD
Costs of goods sold		132,569			34,143			181,311			66,113
Depreciation expense		36,844			18,082			73,229			35,888
		169,413			52,225			254,540			102,001
GROSS PROFIT (LOSS)		(28,689	)		(39,554	)		49,689			2,584
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Employee compensation expenses		164,585			126,409			322,825			268,778
General and administrative expenses		73,653			344,262			193,439			664,678
Depreciation and amortization expense		4,241			422			8,476			1,038
		242,479			471,093			524,740			934,494
LOSS FROM OPERATIONS		(271,168	)		(510,647	)		(475,051	)		(931,910	)
OTHER INCOME (EXPENSE)
Bad debt recovery		-			7,000			-			7,000
Derivative income (expense)		(214,308	)		-			(187,128	)		-
Loss on sale of assets		-			(12,362	)		-			(12,362	)
Interest expense		(28,157	)		(14,486	)		(51,562	)		(26,013	)
Other income (expense)		3,719						5,802			-
TOTAL OTHER EXPENSE		(238,746	)		(19,848	)		(232,888	)		(31,375	)
NET LOSS BEFORE INCOME TAXES		(509,914	)		(530,495	)		(707,939	)		(963,285	)
Income taxes		-			-			-			-
NET LOSS	$	(509,914	)	$	(530,495	)	$	(707,939	)	$	(963,285	)
NET LOSS PER COMMON SHARE, BASIC AND DILUTED	$	(0.02	)	$	(0.03	)	$	(0.04	)	$	(0.06	)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING, BASIC AND DILUTED		28,008,747			18,240,314			25,353,695			17,505,806

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 SIX MONTHS ENDED JUNE 30, 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		1,047,000		1,047		506,861				$	507,908
Common stock issued to related party for leasehold improvement		36,018		36		17,613				$	17,649
Employee stock plan compensation		7,500		-		26,029				$	26,029
Common stock issued for cash		200,000		200		69,800				$	70,000
Net loss								(963,285	)	$	(963,285	)
Balance June 30, 2018 (unaudited)		18,830,500	$	18,823	$	5,071,341	$	(5,917,231	)	$	(827,067	)

	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		4,198,825		4,199		166,858					171,057
Common stock issued for conversion of convertible note		6,252,940		6,253		167,947					174,200
Settlement of derivative liability from conversion of convertible note		-		-		230,939
Employee stock plan compensation		40,000		40		45,378					45,418
Common stock issued for cash		760,000		760		90,440					91,200
Settlement of payable to related party		200,000		200		7,800					8,000
Settlement of notes payable and accrued interest with related party		3,074,592		3,075		119,909					122,984
Cumulative adjustments from adoption of ASC 842								(4,402	)		(4,402	)
Net loss								(707,939	)		(707,939	)
Balance June 30, 2019 (unaudited)		36,339,982	$	36,341	$	6,521,326	$	(7,378,990	)	$	(821,323	)

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 SIX MONTHS ENDED JUNE 30, 2019 AND 2018

(UNAUDITED)

	Six Months Ended June 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(707,939	)	$	(963,285	)
Adjustments to reconcile net loss to net cash and cash equivalents used by operating activities:
Depreciation and amortization		81,705			36,926
Common stock issued for services		171,057			507,908
Common stock issued from employee stock plan		45,418			26,029
Original issue discount on convertible note payable		8,500			-
Amortization of debt discount		3,000			-
Accrued interest on notes payable to related party		30,187			-
Derivative expense (income)		187,128			-
Loss on sale of equipment		-			12,362
(Increase) decrease in:
Accounts receivable		35,252			21,270
Inventories		4,009			3,172
Prepaid expenses and other current assets		(2,183	)		(621	)
ROU asset - operating lease		14,762			-
Increase (decrease) in:
Accounts payable and accrued expenses		(6,148	)		144,587
Payable to related parties		7,650			25,506
Lease liability - operating lease		(14,612	)		-
Net cash used by operating activities		(142,214	)		(186,146	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment to related party for leasehold improvement		-			(6,000	)
Proceeds from sale of equipment		-			38,361
Acquisition of property and equipment		(32,572	)		(9,545	)
Net cash provided (used) by investing activities		(32,572	)		22,816
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		91,200			70,000
Proceeds from convertible note payable		82,000			-
Payment on long-term debt		(2,179	)		-
Payments on lease liability - finance lease		(4,266	)		-
Proceeds from issuance of notes payable to related party		35,000			114,000
Net cash provided by financing activities		201,755			184,000
Net change in cash and cash equivalents		26,969			20,670
Cash and cash equivalents, beginning of the year		51,797			28,417
Cash and cash equivalents, end of the year	$	78,766		$	49,087
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
Acquisition of equipment with long-term debt	$	-		$	21,794
Common stock issued to related party to settle accrued expenses	$	8,000		$	-
Common stock issued to related party to settle notes payable and accrued interest	$	122,984		$	-
Common stock issued for conversion of convertible notes payable and related interest	$	174,200		$	-
Settlement of derivative liability from conversion of convertible notes payable	$	230,938		$	-
Acquisition of ROU asset - finance lease	$	182,041		$	-
Acquisition of ROU 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

JUNE 30, 2019

(UNAUDITED)

NOTE 1 – THE COMPANY

Acacia Diversified Holdings, Inc. (“Acacia” or the “Company”) has five 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 June 30, 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 six months ended June 30, 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 and six-month periods ended June 30, 2019 and 2018, (b) the financial position at June 30, 2019 and (c) cash flows for the six-month periods ended June 30, 2019 and 2018.

F-5

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 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 balance sheet beginning January 1, 2019.

F-6

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 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 June 30, 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

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

JUNE 30, 2019

(UNAUDITED)

DEBT ISSUANCE COSTS

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 and six months ended June 30, 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 six months ended June 30, 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.

2. 4,196,825 shares to the Company's CEO and COO for services rendered, valued at $167,873.

3. 40,000 shares issued to employees and a director from the employee stock plan valued at $45,418.

F-8

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 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 six months ended June 30, 2019:

Note Date	Note Amount		Accrued Interest through December 31, 2018		Accrued Interest for six months ended June 30, 2019		Total Accrued Interest
Total notes payable and accrued interest due to related party at December 31, 2017	$	558,400	$	56,544	$	22,152	$	78,696
March 2018 (1)		-		-		-		-
April 2018 (2)		-		-		-		-
August 2018 (3)		70,000		2,170		2,777		4,947
November 2018 (4)		20,000		184		793		977
December 2018 (5)		50,000		142		1,984		2,126
May 2019 (6)		10,000		-		105		105
June 2019 (7)		25,000		-		126		126
		175,000		2,496		5,785		8,281
Total notes payable and accrued interest due to related party at June 30, 2019	$	733,400	$	59,040	$	27,937	$	86,977

F-9

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 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 principle amount of these notes as well as accrued interest of $5,822 was converted into 1,945,556 shares of the Company's common stock in May 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 principle amount of these notes as well as accrued interest of $3,161 was converted into 1,129 036 shares of the Company's common stock in May 2019.

(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 $4,947 through June 30, 2019.

(4) In November 2018, the Company entered into an unsecured promissory note agreement with its CEO and his spouse, in the amount 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 $977 through June 30, 2019.

(5) In December 2018, the Company entered into an unsecured promissory note agreement with its CEO and his spouse, in the amount 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 $2,126 through June 30, 2019.

(6) In May 2019, the Company entered into an unsecured promissory note agreement with its CEO and his spouse, in the amount of $10,000. 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 $105 through June 30, 2019.

(7) In June 2019, the Company entered into an unsecured promissory note agreement with its CEO and his spouse, in the amount of $25,000. 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 $126 through June 30, 2019.

As a result, the total principle amount of notes payable to related party was $733,400 at June 30, 2019 and $812,400 at December 31, 2018. The amount of accrued interest on these notes due to related party was $86,977 at June 30, 2019 and $65,774 at December 31, 2018.

Payable to Related Parties

Payable to related parties consisted of the followings at June 30, 2019 and December 31, 2018:

	June 30,		December 31,
	2019		2018
Short term loan from related entity (1)	$	63,150	$	61,500
Auto allowances owed to CEO (2)		3,000		5,000
	$	66,150	$	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 June 30, 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.

F-10

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2019

(UNAUDITED)

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. In addition, in May 2019, the board of directors approved issuance of 200,000 shares of the Company's restricted common stock to the Company's CEO to settle the accrued automobile allowance expense in the amount of $8,000. As a result, $3,000 and $5,000 remained owed to the Company’s CEO at June 30, 2019 and December 31, 2018, respectively.

During the three and six months ended June 30, 2019, expenses related to the automobile allowances totaled $3,000 and $6,000, respectively.

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 and six months ended June 30, 2019, the Company incurred $11,513 and $19,233, respectively, in operating expenses for this property.

NOTE 5 – INVENTORIES

The Company’s inventories consisted of the followings at June 30, 2019 and December 31, 2018:

	June 30, 2019		December 31, 2018
Raw materials	$	22,770	$	23,810
Finished goods (isolates, tinctures, capsules, etc.)		16,771		12,605
Deferred farm expense		-		7,135
	$	39,541	$	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 $2,899 and $5,794 for the three and six months ended June 30, 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

JUNE 30, 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		(14,612	)
Lease liability - operating lease on June 30, 2019	$	15,043
This entire lease liability matures prior to December 31, 2019.
Operating lease expense for the three months ended June 30, 2019	$	7,575
Operating lease expense for the six months ended June 30, 2019	$	15,450
Weighted average remaining lease term	6 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

JUNE 30, 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		(7,440	)
ROU asset - finance lease at June 30, 2019	$	170,199
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		(4,266	)
Lease liability - finance lease on June 30, 2019	$	177,775

Interest expense related to lease liability - finance lease was $2,633 and $5,256 for the three and six months ended June 30, 2019, respectively.

Amounts of lease liability - finance lease matures over the next five years:
Twelve Months Ended June 30,
2020	$	8,738
2021		9,261
2022		9,816
2023		10,404
2024 and thereafter		139,557
	$	177,776
Variable lease expense was $11,513 and $19,233, for the three and six months ended June 30, 2019, respectively.
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 June 30, 2019 and December 31, 2018:

	June 30, 2019		December 31, 2018
Accounts payable to vendors	$	113,704	$	83,037
Payroll taxes payable		56,046		46,832
Accrued salaries and bonuses		107,507		153,542
Accrued interest on notes payable		-		6,394
	$	277,257	$	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:

Twelve Months ending June 30,
2020	$	4,359
2021		4,359
2022		4,359
2023		4,322
	$	17,399

F-13

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 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		13,040
	$	17,399

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 10% 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 Company recognized $78,180 and $58,503 as derivative expense for the three and six months ended June 30, 2019, respectively. During the six months ended June 30, 2019, the note holder elected to convert principle in the amount of $140,800 and accrued interest in the amount of $6,400 into the Company's common stock. This resulted in the issuance of 4,899,785 shares of the Company's common stock being issued to the note holder. As a result of the conversion, the derivative liability was extinguished at June 30, 2019 and was valued at $138,218 at December 31, 2018. 

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 10% 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 Company recognized $15,555 and $8,052 as derivative expense for the three and six months ended June 30, 2019, respectively. During June 2019, the note holder elected to convert principle in the amount of $27,000 into the Company's common stock. This resulted in the issuance of 1,353,155 shares of the Company's common stock being issued to the note holder. The derivative liability was valued at $32,134 and $58,300 at June 30, 2019 and December 31, 2018, respectively. 

On June 13, 2019, the Company issued a convertible promissory note ("Note 3") for $93,500. Note 3 was discounted at $85,000 and the Company received net proceeds of $82,000 after incurring $3,000 of debt issuance costs. The note bears an interest rate at 10% per annum, and principal and accrued interest is due on the maturity date of June 13, 2020. 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 $151,264. 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 Company recognized $120,573 as derivative expense for the three and six months ended June 30, 2019. The derivative liability was valued at $120,573 at June 30, 2019. 

Liability measured at fair value on a recurring basis by level within the fair value hierarchy as of June 30, 2019 and December 31, 2018 is as follows: 

F-14

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2019

(UNAUDITED)

Fair Value Measurement at June 30, 2019 (1) Using

	Note 1				Note 2				Note 3
	Level 2		Total		Level 2		Total		Level 2		Total
Liability:
Derivative liability	$	-	$	-	$	32,134	$	32,134	$	120,573	$	120,573
Total liability	$	-	$	-	$	32,134	$	32,134	$	120,573	$	120,573

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 June 30, 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 six months ended June 30, 2019 and the year ended December 31, 2018: 

	Note 1			Note 2			Note 3			Total
Balance at December 31, 2018	$	138,218		$	58,300		$	-		$	196,518
Variable conversion feature in convertible notes payable		-			-			151,264			151,264
Change in fair value		58,502			8,052			(30,691	)		35,862
Conversion of derivative liability to equity from note conversion		(196,719	)		(34,218	)		-			(230,938	)
Balance at June 30, 2019	$	-		$	32,134		$	120,573		$	152,707

During the six months ended June 30, 2019, the note holder elected to convert the principle amount of $140,800 and accrued interest of $6,400 of Note 1 and principle amount of $27,000 of Note 2 into the Company's common stock on the following dates, at the respective conversion prices, resulting in the following number of shares issued to the note holder: 

F-15

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2019

(UNAUDITED)

Date of Conversion of Note 1	Amounts Converted		Conversion Price		Number of Shares Issued
Principle conversion
March 5, 2019	$	15,000	$	0.0945		158,730
March 19, 2019	$	15,000	$	0.0951		157,729
March 27, 2019	$	15,000	$	0.0795		188,679
April 23, 2019	$	12,000	$	0.0254		472,441
April 29, 2019	$	15,000	$	0.0254		590,551
May 8, 2019	$	15,000	$	0.0375		400,000
May 21, 2019	$	15,000	$	0.0263		570,342
May 30, 2019	$	12,000	$	0.0169		710,059
June 6, 2019	$	12,000	$	0.0169		710,059
June 11, 2019	$	14,800	$	0.0218		678,899
	$	140,800				4,637,490
Accrued interest conversion
June 18, 2019	$	6,400	$	0.0244		262,295
Total amount converted	$	147,200				4,899,785

Date of Conversion of Note 2	Amounts Converted		Conversion Price		Number of Shares Issued
Principle conversion
June 21, 2019	$	15,000	$	0.0206		728,155
June 25, 2019	$	12,000	$	0.0192		625,000
Total amount converted	$	27,000				1,353,155

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 six months ended June 30, 2019, the Company issue 14,526,357 shares of its restricted common stock as follows:

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

2. 4,196,825 shares to the Company's CEO and COO for services rendered, valued at $167,873.

3. 40,000 shares issued to employees and a director from the restricted stock plan valued at $45,418.

4. 6,252,940 shares issued to the convertible notes holder who elected to convert principle and accrued interest, totaled $174,200, into the Company's common stock.

5. 760,000 shares to investors for $91,200 of working capital.

6. 200,000 shares issued to the Company's CEO to settle accrued expenses valued at $8,000.

7. 3,074,592 shares issued to the Company's CEO to settle notes payable and accrued interest in the amount of $122,984.

F-16

ACACIA DIVERSIFIED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2019

(UNAUDITED)

Warrants and Options

At June 30, 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 and six months ended June 30, 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 June 30, 2019 and 2018 was $8,116 and $12,026, respectively. Stock based compensation expense for these awards for the six months ended June 30, 2019 and 2018 was $20,402 and $26,029.

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:

In July 2019, our convertible note holder (See Note 9) elected to convert the remaining principle of $31,300 of Note 2 and related accrued interest of $2,650 into the Company's common stock, resulting in 1,793,561 shares issued to the note holder. As a result, the related derivative liability was extinguished at the completion of the conversion of Note 2.

On July 12, 2019, the Company issued a convertible promissory note ("Note 4") for $91,300. Note 4 was discounted at $83,000 and the Company received net proceeds of $80,000 after incurring $3,000 of debt issuance costs. The note bears an interest rate at 10% per annum, and principal and accrued interest is due on the maturity date of July 12, 2020. 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 will bifurcate the conversion option, and utilize the Black Scholes valuation model to determine the fair value of the conversion option.

In July 2019, the board of directors approved issuance of Class A preferred stock in exchange for common stock held by certain employees, contractors, management and board of directors, with super voting rights, anti-dilution and certain protections. These preferred stock will be converted back into common stock at a later, predetermined date. The terms of the Class A preferred stock are not yet determined at the present time.

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-17

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 June 30, 2019 and 2018:

For the three months ended June 30, 2019, the Company generated revenues of $140,724 from operations, compared to $12,671 for the three months ended June 30, 2018, an increase of $128,053 or 1,011%. The increase in revenues was due to having more extraction contracts in the current period.

For the three months ended June 30, 2019, costs of goods sold was $169,413, compared to $52,225 for the three months ended June 30, 2018, an increase of $117,188, or 224%. Costs of goods sold was higher during the three months ended June 30, 2019 primarily due to incurring more technician hours and paying bonuses to serve the increased number of extraction contracts.

As a result of the changes in revenues and costs of goods sold discussed above, the Company’s gross loss decreased from a loss of $39,554, or (312%) of revenue for the three months ended June 30, 2018 to a loss of $28,689, or (20%) of revenue for the three months ended June 30, 2019. The decrease in gross profit is primarily due to lower margin earned on our extraction contracts, despite increase in volume, to offset the loss incurred in our retail and farm operations.

For the three months ended June 30, 2019, selling, general and administrative expenses were $242,479, compared to $471,093 during the three months ended June 30, 2018, a decrease of $228,614, or 49%. The decrease in these expenses is primarily attributable to a decrease in stock based compensation in the current period and increase in compensation expense related to our farm operations that commenced this year.

During the three months ended June 30, 2019, the Company incurred interest expense of $28,157, compared to $14,486 for the three months ended June 30, 2018, an increase of $13,671, or 94%. During the three months ended June 30, 2019, interest expense was primarily related to the notes payable to related party and on convertible notes payable. During the three months ended June 30, 2018, interest expense was related to the notes payable to related party. There was no convertible notes payable at June 30, 2018.

3

During the three months ended June 30, 2019, the Company recognized $214,308 of derivative expense, compared to $0 derivative expense for the three months ended June 30, 2018, an increase of $214,308. The variable conversion feature of the convertible notes payable gave rise to derivative liability. There was no convertible note at June 30, 2018.

As a result of the changes in revenues, costs and expenses, the Company incurred a net loss of $509,914 for the three months ended June 30, 2019, compared to a net loss of $530,495 for the three months ended June 30, 2018, a decrease of $20,581, or 4%.

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.

Operating results for the six months ended June 30, 2019 and 2018:

For the six months ended June 30, 2019, the Company generated revenues of $304,229 from operations, compared to $104,585 for the six months ended June 30, 2018, an increase of $199,644, or 191%.  The increase in revenues was due to having more extraction contracts.

For the six months ended June 30, 2019, costs of goods sold was $254,540, compared to $102,001 for the six months ended June 30, 2018, an increase of $152,539, or 150%. Costs of goods sold was higher during the six months ended June 30, 2019 primarily due to incurring more technician hours and paying bonuses to serve the increased number of extraction contracts.

As a result of the changes in revenues and costs of goods sold discussed above, the Company’s gross profit increased from $2,584, or 2% of revenues, for the six months ended June 30, 2018 to $49,689, or 16% of revenues, for the six months ended June 30, 2019. The increase in gross profit is primarily due to higher volume of our extraction contracts, despite lower margin, to offset the loss incurred in our retail and farm operations.

For the six months ended June 30, 2019, selling, general and administrative expenses were $524,740, compared to $934,494 during the six months ended June 30, 2018, a decrease of $109,754, or 44%. The decrease in these expenses is primarily attributable to a decrease in stock based compensation in the current period and increase in compensation expense related to our farm operations that commenced this year.

During the six months ended June 30, 2019, the Company incurred interest expense of $51,562, compared to $26,013 for the six months ended June 30, 2018. During the six months ended June 30, 2019, the Company accrued interest on its notes payable to related party as well as interest incurred on its outstanding convertible notes payable. During the six months ended June 30, 2018, the Company only incurred interest expense on its notes payable to related party. 

As a result of the changes in revenues, costs and expenses, the Company incurred a net loss of $707,939 for the six months ended June 30, 2019, compared to a net loss of $963,285 for the six months ended June 30, 2018.

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 cannabis 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 June 30, 2019 increased by $26,969 to $78,766, as compared to a balance of $51,797, as of December 31, 2018. The net increase in cash for the six months ended June 30, 2019 was attributable to net cash used in operating activities of $142,214, net cash used by investing activities of $32,572, offset by net cash provided by financing activities of $201,755.

As of June 30, 2019, the Company had negative working capital of $1,087,701 compared to negative working capital of $1,198,806, at December 31, 2018, a decrease of $111,105, attributable primarily to a decrease in its outstanding amounts of notes payable and accrued interest due to related party and outstanding amount of convertible notes payable, offset by the recognition of lease liabilities related to its right-of-use finance and operating leases.

4

Net cash used in operating activities of $142,214 during the six months ended June 30, 2019, was lower compared to the prior period of $186,146, primarily due to increase in working capital during the period.

Net cash used by investing activities was $32,572 for the six months ended June 30, 2019, compared to $22,816 of cash provided by investing activities for the six months ended June 30, 2018. This is primarily attributable to acquiring certain equipment for the Company's farm in Tennessee, whereas prior period's investing activities was offset by proceeds from sale of equipment.

Net cash provided by financing activities of $201,755 during the six months ended June 30, 2019 increased by $17,755 compared to $184,000 during the six months ended June 30, 2018. In the current period, the Company's obtained financing through issuance of common stock to investors and issuing convertible note compared to issuing notes payable to a related party in the prior period.

During the six months ended June 30, 2019, the Company issued shares of its common stock to settle $174,200 of principle and accrued interest of its convertible notes payable and the related derivative liability of $230,939. It also issued common stock to settle accrued expenses owed to a related party in the amount of $8,000 and to settle notes payable and accrued interest due to a related party in the amount of $122,984. 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 six months ended June 30, 2018, the Company issued shares valued at $17,649 to settle a related party liability and acquired equipment by assuming long-term debt of $21,794.

As reported in the accompanying consolidated financial statements, for the six months ended June 30, 2019 and 2018, the Company incurred net losses of $707,939 and $963,285, respectively. The Company did not produce sufficient revenues in the periods presented to cover its operating expenses 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.

Financial Condition

The Company’s total assets at June 30, 2019 and December 31, 2018 were $830,185 and $696,895, respectively, an increase of $133,290, or 19%. Total liabilities at June 30, 2019 and December 31, 2018 were $1,651,508 and $1,649,675, respectively, an increase of $1,833, or less than 1%. The significant change in the Company’s financial condition is attributable to (i) acquiring a finance lease and an operating lease by assuming the corresponding lease liabilities, offset by (ii) settlement of notes payable and related accrued interest due to a related party, and (iii) settlement of convertible notes payable by converting principle and related accrued interest into the Company's common stock. As a result of these transactions, the Company’s cash position increased from $51,797 to $78,766 during the six months ended June 30, 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 June 30, 2019. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 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 June 30, 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 June 30, 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 six months ended June 30, 2019, the Company issue 14,526,357 shares of its restricted common stock as follows:

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

2. 4,196,825 shares to the Company's CEO and COO for services rendered, valued at $167,873.

3. 40,000 shares issued to employees and a director from the employee stock plan valued at $45,418.

4. 6,252,940 shares issued to the convertible notes holder who elected to convert principle and accrued interest, totaled $174,200, into the Company's common stock.

5. 760,000 shares to investors for $91,200 of working capital.

6. 200,000 shares issued to the Company's CEO to settle accrued expenses valued at $8,000.

7. 3,074,592 shares issued to the Company's CEO to settle notes payable and accrued interest in the amount of $122,984.

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: August 9, 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:    August 9, 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 June 30, 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 June 30, 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:  August 9, 2019	By:	/s/ Richard K. Pertile
		Richard K. Pertile
		Principal Executive Officer
		Principal Financial Officer Principle Accounting Officer

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 06, 2019
Document Information Line Items
Entity Registrant Name	Acacia Diversified Holdings, Inc.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		38,133,550
Amendment Flag	false
Entity Central Index Key	0001001463
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Ex Transition Period	false
Entity Interactive Data Current	Yes

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2019	Dec. 31, 2018
CURRENT ASSETS:
Cash	$ 78,766	$ 51,797
Accounts receivable, net of allowance for doubtful accounts of $25,000 in 2019 and 2018	100,718	135,970
Inventories	39,541	43,550
Prepaid expenses and other current assets	9,998	7,815
Total Current Assets	229,023	239,132
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $351,608 and $277,343 in 2019 and 2018, respectively	411,868	453,562
OTHER ASSETS
Deposits	4,201	4,201
ROU asset - finance lease, net of accumulated amortization of $7,440 in 2019	170,199	0
ROU asset - operating lease	14,894	0
	189,294	4,201
TOTAL ASSETS	830,185	696,895
CURRENT LIABILITIES:
Accounts payable and accrued expenses	277,257	289,805
Current portion of long-term debt	4,359	4,359
Current portion of lease liability - finance lease	8,738	0
Current portion of lease liability - operating lease	15,043	0
Convertible notes payable	124,800	199,100
Notes payable to related party	733,400	812,400
Accrued interest on notes payable to related party	86,977	65,774
Payable to related parties	66,150	66,500
Total Current Liabilities	1,316,724	1,437,938
LONG-TERM LIABILITY:
Long-term debt	13,040	15,219
Derivative liability	152,707	196,518
Lease liability - finance lease	169,037	0
Total Long-term Liability	334,784	211,737
Total Liabilities	1,651,508	1,649,675
Commitments and contingencies
STOCKHOLDERS' DEFICIT
Common stock, $0.001 par value; 150,000,000 shares authorized; 36,339,982 and 21,813,625 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively	36,341	21,814
Additional paid-in capital	6,521,326	5,692,055
Accumulated deficit	(7,378,990)	(6,666,649)
Total Stockholders' Deficit	(821,323)	(952,780)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 830,185	$ 696,895

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CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Accounts receivable, allowance for doubtful accounts (in Dollars)	$ 25,000	$ 25,000
Accumulated depreciation (in Dollars)	351,608	$ 277,343
ROU asset - finance lease, accumulated amortization (in Dollars)	$ 7,440
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	36,339,982	21,813,625
Common stock, shares outstanding	36,339,982	21,813,625

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
REVENUE	$ 140,724	$ 12,671	$ 304,229	$ 104,585
COSTS OF GOODS SOLD
Costs of goods sold	132,569	34,143	181,311	66,113
Depreciation expense	36,844	18,082	73,229	35,888
	169,413	52,225	254,540	102,001
GROSS PROFIT (LOSS)	(28,689)	(39,554)	49,689	2,584
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Employee compensation expenses	164,585	126,409	322,825	268,778
General and administrative expenses	73,653	344,262	193,439	664,678
Depreciation and amortization expense	4,241	422	8,476	1,038
	242,479	471,093	524,740	934,494
LOSS FROM OPERATIONS	(271,168)	(510,647)	(475,051)	(931,910)
OTHER INCOME (EXPENSE)
Bad debt recovery	0	7,000	0	7,000
Derivative income (expense)	(214,308)	0	(187,128)	0
Loss on sale of assets	0	(12,362)	0	(12,362)
Interest expense	(28,157)	(14,486)	(51,562)	(26,013)
Other income (expense)	3,719	0	5,802	0
TOTAL OTHER EXPENSE	(238,746)	(19,848)	(232,888)	(31,375)
NET LOSS BEFORE INCOME TAXES	(509,914)	(530,495)	(707,939)	(963,285)
Income taxes	0	0	0	0
NET LOSS	$ (509,914)	$ (530,495)	$ (707,939)	$ (963,285)
NET LOSS PER COMMON SHARE, BASIC AND DILUTED (in Dollars per share)	$ (0.02)	$ (0.03)	$ (0.04)	$ (0.06)
COMMON SHARES OUTSTANDING, BASIC AND DILUTED (in Shares)	28,008,747	18,240,314	25,353,695	17,505,806

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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	$ 1,047	506,861		507,908
Stock issued for consulting services (in Shares)	1,047,000
Settlement of derivative liability from conversion of convertible note				0
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		26,029		26,029
Employee stock plan compensation (in Shares)	7,500
Common stock issued for cash	$ 200	69,800		70,000
Common stock issued for cash (in Shares)	200,000
Net loss			(963,285)	(963,285)
Balance at Jun. 30, 2018	$ 18,823	5,071,341	(5,917,231)	(827,067)
Balance (in Shares) at Jun. 30, 2018	18,830,500
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	$ 4,199	166,858		171,057
Stock issued for consulting services (in Shares)	4,198,825
Common stock issued for conversion of convertible note	$ 6,253	167,947		174,200
Common stock issued for conversion of convertible note (in Shares)	6,252,940
Settlement of derivative liability from conversion of convertible note		230,939		230,938
Common stock issued to related party for leasehold improvement				0
Employee stock plan compensation	$ 40	45,378		45,418
Employee stock plan compensation (in Shares)	40,000
Common stock issued for cash	$ 760	90,440		$ 91,200
Common stock issued for cash (in Shares)	760,000			760,000
Settlement of payable to related party	$ 200	7,800		$ 8,000
Settlement of payable to related party (in Shares)	200,000			200,000
Settlement of notes payable and accrued interest with related party	$ 3,075	119,909		$ 122,984
Settlement of notes payable and accrued interest with related party (in Shares)	3,074,592			3,074,592
Cumulative adjustments from adoption of ASC 842			(4,402)	$ (4,402)
Net loss			(707,939)	(707,939)
Balance at Jun. 30, 2019	$ 36,341	$ 6,521,326	$ (7,378,990)	$ (821,323)
Balance (in Shares) at Jun. 30, 2019	36,339,982

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (707,939)	$ (963,285)
Adjustments to reconcile net loss to net cash and cash equivalents used by operating activities:
Depreciation and amortization	81,705	36,926
Common stock issued for services	171,057	507,908
Common stock issued from employee stock plan	45,418	26,029
Original issue discount on convertible note payable	8,500	0
Amortization of debt discount	3,000	0
Accrued interest on notes payable to related party	30,187	0
Derivative expense (income)	187,128	0
Loss on sale of equipment	0	12,362
(Increase) decrease in:
Accounts receivable	35,252	21,270
Inventories	4,009	3,172
Prepaid expenses and other current assets	(2,183)	(621)
ROU asset - operating lease	14,762	0
Increase (decrease) in:
Accounts payable and accrued expenses	(6,148)	144,587
Payable to related parties	7,650	25,506
Lease liability - operating lease	(14,612)	0
Net cash used by operating activities	(142,214)	(186,146)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment to related party for leasehold improvement	0	(6,000)
Proceeds from sale of equipment	0	38,361
Acquisition of property and equipment	(32,572)	(9,545)
Net cash provided (used) by investing activities	(32,572)	22,816
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock	91,200	70,000
Proceeds from convertible note payable	82,000	0
Payment on long-term debt	(2,179)	0
Payments on lease liability - finance lease	(4,266)	0
Proceeds from issuance of notes payable to related party	35,000	114,000
Net cash provided by financing activities	201,755	184,000
Net change in cash and cash equivalents	26,969	20,670
Cash and cash equivalents, beginning of the year	51,797	28,417
Cash and cash equivalents, end of the year	78,766	49,087
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
Acquisition of equipment with long-term debt	0	21,794
Common stock issued to related party to settle accrued expenses	8,000	0
Common stock issued to related party to settle notes payable and accrued interest	122,984	0
Common stock issued for conversion of convertible notes payable and related interest	174,200	0
Settlement of derivative liability from conversion of convertible notes payable	230,938	0
Acquisition of ROU asset - finance lease	182,041	0
Acquisition of ROU asset - operating lease	$ 29,655	$ 0

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NOTE 1 - THE COMPANY

6 Months Ended

Jun. 30, 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 five 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.

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NOTE 2 - GOING CONCERN

6 Months Ended

Jun. 30, 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 June 30, 2019, these factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

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NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 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 six months ended June 30, 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 and six-month periods ended June 30, 2019 and 2018, (b) the financial position at June 30, 2019 and (c) cash flows for the six-month periods ended June 30, 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 balance sheet beginning January 1, 2019.

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 June 30, 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

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

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 and six months ended June 30, 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 six months ended June 30, 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.

2. 4,196,825 shares to the Company's CEO and COO for services rendered, valued at $167,873.

3. 40,000 shares issued to employees and a director from the employee stock plan valued at $45,418.

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

6 Months Ended

Jun. 30, 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 six months ended June 30, 2019:

Note Date	Note Amount		Accrued Interest through December 31, 2018		Accrued Interest for six months ended June 30, 2019		Total Accrued Interest
Total notes payable and accrued interest due to related party at December 31, 2017	$	558,400	$	56,544	$	22,152	$	78,696
March 2018 (1)		-		-		-		-
April 2018 (2)		-		-		-		-
August 2018 (3)		70,000		2,170		2,777		4,947
November 2018 (4)		20,000		184		793		977
December 2018 (5)		50,000		142		1,984		2,126
May 2019 (6)		10,000		-		105		105
June 2019 (7)		25,000		-		126		126
		175,000		2,496		5,785		8,281
Total notes payable and accrued interest due to related party at June 30, 2019	$	733,400	$	59,040	$	27,937	$	86,977

(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 principle amount of these notes as well as accrued interest of $5,822 was converted into 1,945,556 shares of the Company's common stock in May 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 principle amount of these notes as well as accrued interest of $3,161 was converted into 1,129 036 shares of the Company's common stock in May 2019.

(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 $4,947 through June 30, 2019.

(4) In November 2018, the Company entered into an unsecured promissory note agreement with its CEO and his spouse, in the amount 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 $977 through June 30, 2019.

(5) In December 2018, the Company entered into an unsecured promissory note agreement with its CEO and his spouse, in the amount 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 $2,126 through June 30, 2019.

(6) In May 2019, the Company entered into an unsecured promissory note agreement with its CEO and his spouse, in the amount of $10,000. 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 $105 through June 30, 2019.

(7) In June 2019, the Company entered into an unsecured promissory note agreement with its CEO and his spouse, in the amount of $25,000. 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 $126 through June 30, 2019.

As a result, the total principle amount of notes payable to related party was $733,400 at June 30, 2019 and $812,400 at December 31, 2018. The amount of accrued interest on these notes due to related party was $86,977 at June 30, 2019 and $65,774 at December 31, 2018.

Payable to Related Parties

Payable to related parties consisted of the followings at June 30, 2019 and December 31, 2018:

	June 30,		December 31,
	2019		2018
Short term loan from related entity (1)	$	63,150	$	61,500
Auto allowances owed to CEO (2)		3,000		5,000
	$	66,150	$	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 June 30, 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. In addition, in May 2019, the board of directors approved issuance of 200,000 shares of the Company's restricted common stock to the Company's CEO to settle the accrued automobile allowance expense in the amount of $8,000. As a result, $3,000 and $5,000 remained owed to the Company’s CEO at June 30, 2019 and December 31, 2018, respectively.

During the three and six months ended June 30, 2019, expenses related to the automobile allowances totaled $3,000 and $6,000, respectively.

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 and six months ended June 30, 2019, the Company incurred $11,513 and $19,233, respectively, in operating expenses for this property.

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NOTE 5 - INVENTORIES

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

NOTE 5 – INVENTORIES

The Company’s inventories consisted of the followings at June 30, 2019 and December 31, 2018:

	June 30, 2019		December 31, 2018
Raw materials	$	22,770	$	23,810
Finished goods (isolates, tinctures, capsules, etc.)		16,771		12,605
Deferred farm expense		-		7,135
	$	39,541	$	43,550

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

6 Months Ended

Jun. 30, 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 $2,899 and $5,794 for the three and six months ended June 30, 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		(14,612	)
Lease liability - operating lease on June 30, 2019	$	15,043
This entire lease liability matures prior to December 31, 2019.
Operating lease expense for the three months ended June 30, 2019	$	7,575
Operating lease expense for the six months ended June 30, 2019	$	15,450
Weighted average remaining lease term	6 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		(7,440	)
ROU asset - finance lease at June 30, 2019	$	170,199
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		(4,266	)
Lease liability - finance lease on June 30, 2019	$	177,775

Interest expense related to lease liability - finance lease was $2,633 and $5,256 for the three and six months ended June 30, 2019, respectively.

Amounts of lease liability - finance lease matures over the next five years:
Twelve Months Ended June 30,
2020	$	8,738
2021		9,261
2022		9,816
2023		10,404
2024 and thereafter		139,557
	$	177,776
Variable lease expense was $11,513 and $19,233, for the three and six months ended June 30, 2019, respectively.
Weighted average remaining lease term	14 years
Weighted average discount rate		5.99	%

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NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

6 Months Ended

Jun. 30, 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 June 30, 2019 and December 31, 2018:

	June 30, 2019		December 31, 2018
Accounts payable to vendors	$	113,704	$	83,037
Payroll taxes payable		56,046		46,832
Accrued salaries and bonuses		107,507		153,542
Accrued interest on notes payable		-		6,394
	$	277,257	$	289,805

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NOTE 8 - LONG-TERM DEBT

6 Months Ended

Jun. 30, 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:

Twelve Months ending June 30,
2020	$	4,359
2021		4,359
2022		4,359
2023		4,322
	$	17,399

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		13,040
	$	17,399

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NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY

6 Months Ended

Jun. 30, 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 10% 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 Company recognized $78,180 and $58,503 as derivative expense for the three and six months ended June 30, 2019, respectively. During the six months ended June 30, 2019, the note holder elected to convert principle in the amount of $140,800 and accrued interest in the amount of $6,400 into the Company's common stock. This resulted in the issuance of 4,899,785 shares of the Company's common stock being issued to the note holder. As a result of the conversion, the derivative liability was extinguished at June 30, 2019 and was valued at $138,218 at December 31, 2018. 

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 10% 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 Company recognized $15,555 and $8,052 as derivative expense for the three and six months ended June 30, 2019, respectively. During June 2019, the note holder elected to convert principle in the amount of $27,000 into the Company's common stock. This resulted in the issuance of 1,353,155 shares of the Company's common stock being issued to the note holder. The derivative liability was valued at $32,134 and $58,300 at June 30, 2019 and December 31, 2018, respectively. 

On June 13, 2019, the Company issued a convertible promissory note ("Note 3") for $93,500. Note 3 was discounted at $85,000 and the Company received net proceeds of $82,000 after incurring $3,000 of debt issuance costs. The note bears an interest rate at 10% per annum, and principal and accrued interest is due on the maturity date of June 13, 2020. 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 $151,264. 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 Company recognized $120,573 as derivative expense for the three and six months ended June 30, 2019. The derivative liability was valued at $120,573 at June 30, 2019. 

Liability measured at fair value on a recurring basis by level within the fair value hierarchy as of June 30, 2019 and December 31, 2018 is as follows: 

Fair Value Measurement at June 30, 2019 (1) Using

	Note 1				Note 2				Note 3
	Level 2		Total		Level 2		Total		Level 2		Total
Liability:
Derivative liability	$	-	$	-	$	32,134	$	32,134	$	120,573	$	120,573
Total liability	$	-	$	-	$	32,134	$	32,134	$	120,573	$	120,573

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 June 30, 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 six months ended June 30, 2019 and the year ended December 31, 2018: 

	Note 1			Note 2			Note 3			Total
Balance at December 31, 2018	$	138,218		$	58,300		$	-		$	196,518
Variable conversion feature in convertible notes payable		-			-			151,264			151,264
Change in fair value		58,502			8,052			(30,691	)		35,862
Conversion of derivative liability to equity from note conversion		(196,719	)		(34,218	)		-			(230,938	)
Balance at June 30, 2019	$	-		$	32,134		$	120,573		$	152,707

During the six months ended June 30, 2019, the note holder elected to convert the principle amount of $140,800 and accrued interest of $6,400 of Note 1 and principle amount of $27,000 of Note 2 into the Company's common stock on the following dates, at the respective conversion prices, resulting in the following number of shares issued to the note holder: 

Date of Conversion of Note 1	Amounts Converted		Conversion Price		Number of Shares Issued
Principle conversion
March 5, 2019	$	15,000	$	0.0945		158,730
March 19, 2019	$	15,000	$	0.0951		157,729
March 27, 2019	$	15,000	$	0.0795		188,679
April 23, 2019	$	12,000	$	0.0254		472,441
April 29, 2019	$	15,000	$	0.0254		590,551
May 8, 2019	$	15,000	$	0.0375		400,000
May 21, 2019	$	15,000	$	0.0263		570,342
May 30, 2019	$	12,000	$	0.0169		710,059
June 6, 2019	$	12,000	$	0.0169		710,059
June 11, 2019	$	14,800	$	0.0218		678,899
	$	140,800				4,637,490
Accrued interest conversion
June 18, 2019	$	6,400	$	0.0244		262,295
Total amount converted	$	147,200				4,899,785

Date of Conversion of Note 2	Amounts Converted		Conversion Price		Number of Shares Issued
Principle conversion
June 21, 2019	$	15,000	$	0.0206		728,155
June 25, 2019	$	12,000	$	0.0192		625,000
Total amount converted	$	27,000				1,353,155

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NOTE 10 - STOCKHOLDERS' DEFICIT

6 Months Ended

Jun. 30, 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 six months ended June 30, 2019, the Company issue 14,526,357 shares of its restricted common stock as follows:

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

2. 4,196,825 shares to the Company's CEO and COO for services rendered, valued at $167,873.

3. 40,000 shares issued to employees and a director from the restricted stock plan valued at $45,418.

4. 6,252,940 shares issued to the convertible notes holder who elected to convert principle and accrued interest, totaled $174,200, into the Company's common stock.

5. 760,000 shares to investors for $91,200 of working capital.

6. 200,000 shares issued to the Company's CEO to settle accrued expenses valued at $8,000.

7. 3,074,592 shares issued to the Company's CEO to settle notes payable and accrued interest in the amount of $122,984.

Warrants and Options

At June 30, 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 and six months ended June 30, 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 June 30, 2019 and 2018 was $8,116 and $12,026, respectively. Stock based compensation expense for these awards for the six months ended June 30, 2019 and 2018 was $20,402 and $26,029.

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NOTE 11 - SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 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:

In July 2019, our convertible note holder (See Note 9) elected to convert the remaining principle of $31,300 of Note 2 and related accrued interest of $2,650 into the Company's common stock, resulting in 1,793,561 shares issued to the note holder. As a result, the related derivative liability was extinguished at the completion of the conversion of Note 2.

On July 12, 2019, the Company issued a convertible promissory note ("Note 4") for $91,300. Note 4 was discounted at $83,000 and the Company received net proceeds of $80,000 after incurring $3,000 of debt issuance costs. The note bears an interest rate at 10% per annum, and principal and accrued interest is due on the maturity date of July 12, 2020. 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 will bifurcate the conversion option, and utilize the Black Scholes valuation model to determine the fair value of the conversion option.

In July 2019, the board of directors approved issuance of Class A preferred stock in exchange for common stock held by certain employees, contractors, management and board of directors, with super voting rights, anti-dilution and certain protections. These preferred stock will be converted back into common stock at a later, predetermined date. The terms of the Class A preferred stock are not yet determined at the present time.

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NOTE 12 - RECENT ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Jun. 30, 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)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

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 six months ended June 30, 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 and six-month periods ended June 30, 2019 and 2018, (b) the financial position at June 30, 2019 and (c) cash flows for the six-month periods ended June 30, 2019 and 2018.

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.

Lessee, Leases [Policy Text Block]

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 balance sheet beginning January 1, 2019.

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 June 30, 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 DISCOUNTThe 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.

Deferred Charges, Policy [Policy Text Block]

DEBT ISSUANCE COSTS

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.

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 and six months ended June 30, 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 six months ended June 30, 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.

2. 4,196,825 shares to the Company's CEO and COO for services rendered, valued at $167,873.

3. 40,000 shares issued to employees and a director from the employee stock plan valued at $45,418.

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)

6 Months Ended

Jun. 30, 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 six months ended June 30, 2019:

Note Date	Note Amount		Accrued Interest through December 31, 2018		Accrued Interest for six months ended June 30, 2019		Total Accrued Interest
Total notes payable and accrued interest due to related party at December 31, 2017	$	558,400	$	56,544	$	22,152	$	78,696
March 2018 (1)		-		-		-		-
April 2018 (2)		-		-		-		-
August 2018 (3)		70,000		2,170		2,777		4,947
November 2018 (4)		20,000		184		793		977
December 2018 (5)		50,000		142		1,984		2,126
May 2019 (6)		10,000		-		105		105
June 2019 (7)		25,000		-		126		126
		175,000		2,496		5,785		8,281
Total notes payable and accrued interest due to related party at June 30, 2019	$	733,400	$	59,040	$	27,937	$	86,977

(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 principle amount of these notes as well as accrued interest of $5,822 was converted into 1,945,556 shares of the Company's common stock in May 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 principle amount of these notes as well as accrued interest of $3,161 was converted into 1,129 036 shares of the Company's common stock in May 2019.

(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 $4,947 through June 30, 2019.

(4) In November 2018, the Company entered into an unsecured promissory note agreement with its CEO and his spouse, in the amount 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 $977 through June 30, 2019.

(5) In December 2018, the Company entered into an unsecured promissory note agreement with its CEO and his spouse, in the amount 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 $2,126 through June 30, 2019.

(6) In May 2019, the Company entered into an unsecured promissory note agreement with its CEO and his spouse, in the amount of $10,000. 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 $105 through June 30, 2019.

(7) In June 2019, the Company entered into an unsecured promissory note agreement with its CEO and his spouse, in the amount of $25,000. 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 $126 through June 30, 2019.

Schedule of Related Party Transactions [Table Text Block]

Payable to related parties consisted of the followings at June 30, 2019 and December 31, 2018:

	June 30,		December 31,
	2019		2018
Short term loan from related entity (1)	$	63,150	$	61,500
Auto allowances owed to CEO (2)		3,000		5,000
	$	66,150	$	66,500

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NOTE 5 - INVENTORIES (Tables)

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

The Company’s inventories consisted of the followings at June 30, 2019 and December 31, 2018:

	June 30, 2019		December 31, 2018
Raw materials	$	22,770	$	23,810
Finished goods (isolates, tinctures, capsules, etc.)		16,771		12,605
Deferred farm expense		-		7,135
	$	39,541	$	43,550

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

6 Months Ended

Jun. 30, 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		(14,612	)
Lease liability - operating lease on June 30, 2019	$	15,043
This entire lease liability matures prior to December 31, 2019.
Operating lease expense for the three months ended June 30, 2019	$	7,575
Operating lease expense for the six months ended June 30, 2019	$	15,450
Weighted average remaining lease term	6 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		(7,440	)
ROU asset - finance lease at June 30, 2019	$	170,199
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		(4,266	)
Lease liability - finance lease on June 30, 2019	$	177,775

Finance Lease, Liability, Maturity [Table Text Block]

Interest expense related to lease liability - finance lease was $2,633 and $5,256 for the three and six months ended June 30, 2019, respectively.

Amounts of lease liability - finance lease matures over the next five years:
Twelve Months Ended June 30,
2020	$	8,738
2021		9,261
2022		9,816
2023		10,404
2024 and thereafter		139,557
	$	177,776
Variable lease expense was $11,513 and $19,233, for the three and six months ended June 30, 2019, respectively.
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)

6 Months Ended

Jun. 30, 2019

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities [Table Text Block]

Accounts payable and accrued expenses consisted of the followings at June 30, 2019 and December 31, 2018:

	June 30, 2019		December 31, 2018
Accounts payable to vendors	$	113,704	$	83,037
Payroll taxes payable		56,046		46,832
Accrued salaries and bonuses		107,507		153,542
Accrued interest on notes payable		-		6,394
	$	277,257	$	289,805

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NOTE 8 - LONG-TERM DEBT (Tables)

6 Months Ended

Jun. 30, 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:

Twelve Months ending June 30,
2020	$	4,359
2021		4,359
2022		4,359
2023		4,322
	$	17,399

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		13,040
	$	17,399

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

6 Months Ended

Jun. 30, 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 June 30, 2019 and December 31, 2018 is as follows:

	Note 1				Note 2				Note 3
	Level 2		Total		Level 2		Total		Level 2		Total
Liability:
Derivative liability	$	-	$	-	$	32,134	$	32,134	$	120,573	$	120,573
Total liability	$	-	$	-	$	32,134	$	32,134	$	120,573	$	120,573

	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 six months ended June 30, 2019 and the year ended December 31, 2018:

	Note 1			Note 2			Note 3			Total
Balance at December 31, 2018	$	138,218		$	58,300		$	-		$	196,518
Variable conversion feature in convertible notes payable		-			-			151,264			151,264
Change in fair value		58,502			8,052			(30,691	)		35,862
Conversion of derivative liability to equity from note conversion		(196,719	)		(34,218	)		-			(230,938	)
Balance at June 30, 2019	$	-		$	32,134		$	120,573		$	152,707

Schedule of Debt Conversions [Table Text Block]

During the six months ended June 30, 2019, the note holder elected to convert the principle amount of $140,800 and accrued interest of $6,400 of Note 1 and principle amount of $27,000 of Note 2 into the Company's common stock on the following dates, at the respective conversion prices, resulting in the following number of shares issued to the note holder:

Date of Conversion of Note 1	Amounts Converted		Conversion Price		Number of Shares Issued
Principle conversion
March 5, 2019	$	15,000	$	0.0945		158,730
March 19, 2019	$	15,000	$	0.0951		157,729
March 27, 2019	$	15,000	$	0.0795		188,679
April 23, 2019	$	12,000	$	0.0254		472,441
April 29, 2019	$	15,000	$	0.0254		590,551
May 8, 2019	$	15,000	$	0.0375		400,000
May 21, 2019	$	15,000	$	0.0263		570,342
May 30, 2019	$	12,000	$	0.0169		710,059
June 6, 2019	$	12,000	$	0.0169		710,059
June 11, 2019	$	14,800	$	0.0218		678,899
	$	140,800				4,637,490
Accrued interest conversion
June 18, 2019	$	6,400	$	0.0244		262,295
Total amount converted	$	147,200				4,899,785

Date of Conversion of Note 2	Amounts Converted		Conversion Price		Number of Shares Issued
Principle conversion
June 21, 2019	$	15,000	$	0.0206		728,155
June 25, 2019	$	12,000	$	0.0192		625,000
Total amount converted	$	27,000				1,353,155

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NOTE 1 - THE COMPANY (Details)	6 Months Ended
	Jun. 30, 2019
Disclosure Text Block [Abstract]
Number of Wholly Owned Subsidiaries	5

XML

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Accounts Receivable, Allowance for Credit Loss	$ 25,000
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term	10 years
Stock Issued During Period, Value, Issued for Services	$ 171,057	$ 507,908
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted (in Shares)	40,000
Shares Granted, Value, Share-based Payment Arrangement, before Forfeiture	$ 45,418
CEO and COO [Member]
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Stock Issued During Period, Shares, Issued for Services (in Shares)	4,196,825
Stock Issued During Period, Value, Issued for Services	$ 167,873
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
Shares Issued for Services #2 [Member]
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Stock Issued During Period, Shares, Issued for Services (in Shares)	2,000
Stock Issued During Period, Value, Issued for Services	$ 3,184

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NOTE 4 - RELATED PARTY TRANSACTIONS (Details)	1 Months Ended									3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 30, 2019 USD ($)	May 31, 2019 USD ($) shares	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 ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2019 USD ($) shares	Jun. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Mar. 31, 2019 USD ($)
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Debt Instrument, Face Amount	$ 21,794									$ 21,794	$ 21,794
Debt Instrument, Interest Rate, Stated Percentage	0.00%									0.00%	0.00%
Debt Instrument, Term											60 years
Debt Conversion, Original Debt, Amount											$ 174,200
Debt Conversion, Converted Instrument, Shares Issued (in Shares) | shares											6,252,940
Notes Payable, Related Parties, Current	$ 733,400		$ 812,400							$ 733,400	$ 733,400
Interest Payable	86,977		65,774							86,977	86,977
Proceeds from Related Party Debt											$ 35,000	$ 114,000
Stock Issued During Period, Shares, Restricted Stock Award, Gross (in Shares) | shares											14,526,357
Increase (Decrease) in Due to Related Parties											$ 7,650	$ 25,506
Due to Related Parties, Current	$ 66,150		66,500							66,150	66,150
Operating Lease, Expense										7,575	15,450
Housing and Automobile [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Related Party Transaction, Amounts of Transaction										$ 3,000	$ 6,000
Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Number of Notes					3			2	3
Debt Instrument, Face Amount		$ 10,000	$ 50,000	$ 20,000	$ 70,000				$ 72,000
Debt Instrument, Interest Rate, Stated Percentage	5.99%	8.00%	8.00%	8.00%	8.00%					5.99%	5.99%
Debt Instrument, Term		90 days	90 days	30 days	60 days						15 years
Stock Issued During Period, Shares, Restricted Stock Award, Gross (in Shares) | shares		200,000
Increase (Decrease) in Due to Related Parties		$ (8,000)
Due to Related Parties, Current	$ 3,000		$ 5,000							$ 3,000	$ 3,000
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										11,513	19,233
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
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
Promissory Note #3 [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Debt Instrument, Face Amount					$ 20,000				$ 20,000
April 2018 [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Debt Instrument, Face Amount								$ 42,000
Debt Instrument, Interest Rate, Stated Percentage								8.00%
Debt Instrument, Term								60 days
Debt Conversion, Original Debt, Amount		$ 3,161
Debt Conversion, Converted Instrument, Shares Issued (in Shares) | shares		1,129
August 2018 [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Interest Expense, Debt											4,947
November 2018 [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Interest Expense, Debt											977
December 2018 [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Interest Expense, Debt											2,126
May 2019 [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Interest Expense, Debt											105
June 2019 [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Debt Instrument, Face Amount	$ 25,000									$ 25,000	$ 25,000
Debt Instrument, Interest Rate, Stated Percentage	8.00%									8.00%	8.00%
Debt Instrument, Term	90 days
Interest Expense, Debt											$ 126
March 2018 [Member] | Chief Executive Officer [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Debt Instrument, Interest Rate, Stated Percentage									8.00%
Debt Instrument, Term									60 days
Debt Conversion, Original Debt, Amount		$ 5,822
Debt Conversion, Converted Instrument, Shares Issued (in Shares) | shares		1,945,556

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NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt - Chief Executive Officer [Member] - USD ($)		Jun. 30, 2019	Dec. 31, 2017
Principal [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Total notes payable and accrued interest due to related party		$ 733,400	$ 558,400
Notes and accrued interest		175,000
Principal [Member] | March 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[1]	0
Principal [Member] | April 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[2]	0
Principal [Member] | August 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[3]	70,000
Principal [Member] | November 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[4]	20,000
Principal [Member] | December 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[5]	50,000
Principal [Member] | May 2019 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[6]	10,000
Principal [Member] | June 2019 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[7]	25,000
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		59,040	56,544
Notes and accrued interest		2,496
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]	0
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]	0
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	[3]	2,170
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	[4]	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	[5]	142
Accrued Interest through December 31, 2018 [Member] | May 2019 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[6]	0
Accrued Interest through December 31, 2018 [Member] | June 2019 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[7]	0
Accrued Interest throught June 30, 2019 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Total notes payable and accrued interest due to related party		27,937	22,152
Notes and accrued interest		5,785
Accrued Interest throught June 30, 2019 [Member] | March 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[1]	0
Accrued Interest throught June 30, 2019 [Member] | April 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[2]	0
Accrued Interest throught June 30, 2019 [Member] | August 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[3]	2,777
Accrued Interest throught June 30, 2019 [Member] | November 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[4]	793
Accrued Interest throught June 30, 2019 [Member] | December 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[5]	1,984
Accrued Interest throught June 30, 2019 [Member] | May 2019 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[6]	105
Accrued Interest throught June 30, 2019 [Member] | June 2019 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[7]	126
Accrued Interest [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Total notes payable and accrued interest due to related party		86,977	$ 78,696
Notes and accrued interest		8,281
Accrued Interest [Member] | March 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[1]	0
Accrued Interest [Member] | April 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[2]	0
Accrued Interest [Member] | August 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[3]	4,947
Accrued Interest [Member] | November 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[4]	977
Accrued Interest [Member] | December 2018 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[5]	2,126
Accrued Interest [Member] | May 2019 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[6]	105
Accrued Interest [Member] | June 2019 [Member]
NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Debt [Line Items]
Notes and accrued interest	[7]	$ 126

[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 principle amount of these notes as well as accrued interest of $5,822 was converted into 1,945,556 shares of the Company's common stock in May 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 principle amount of these notes as well as accrued interest of $3,161 was converted into 1,129 036 shares of the Company's common stock in May 2019.

[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 $4,947 through June 30, 2019.

[4] In November 2018, the Company entered into an unsecured promissory note agreement with its CEO and his spouse, in the amount 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 $977 through June 30, 2019.

[5] In December 2018, the Company entered into an unsecured promissory note agreement with its CEO and his spouse, in the amount 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 $2,126 through June 30, 2019.

[6] In May 2019, the Company entered into an unsecured promissory note agreement with its CEO and his spouse, in the amount of $10,000. 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 $105 through June 30, 2019.

[7] In June 2019, the Company entered into an unsecured promissory note agreement with its CEO and his spouse, in the amount of $25,000. 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 $126 through June 30, 2019.

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NOTE 4 - RELATED PARTY TRANSACTIONS (Details) - Schedule of Related Party Transactions - USD ($)		Jun. 30, 2019	Dec. 31, 2018
Related Party Transaction [Line Items]
Payable to Related Parties		$ 66,150	$ 66,500
Related Party Note #2 [Member] | Affiliated Entity [Member]
Related Party Transaction [Line Items]
Payable to Related Parties	[1]	63,150	61,500
Storage and Corporate Housing Allowance [Member] | Chief Executive Officer [Member]
Related Party Transaction [Line Items]
Payable to Related Parties	[2]	$ 3,000	$ 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 June 30, 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.

XML

NOTE 5 - INVENTORIES (Details) - Schedule of Inventory, Current - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Schedule of Inventory, Current [Abstract]
Raw materials	$ 22,770	$ 23,810
Finished goods (isolates, tinctures, capsules, etc.)	16,771	12,605
Deferred farm expense	0	7,135
	$ 39,541	$ 43,550

XML

NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details)	1 Months Ended						3 Months Ended	6 Months Ended
	May 31, 2019	Dec. 31, 2018	Nov. 30, 2018	Aug. 31, 2018	May 31, 2018 USD ($) m²	Oct. 31, 2017 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 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%	5.99%
Finance Lease, Principal Payments								$ 4,266	$ 0
Debt Instrument, Term								60 years
Debt Instrument, Interest Rate, Stated Percentage							0.00%	0.00%
Finance Lease, Interest Expense							$ 2,633	$ 5,256
Chief Executive Officer [Member]
NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) [Line Items]
Debt Instrument, Term	90 days	90 days	30 days	60 days				15 years
Debt Instrument, Interest Rate, Stated Percentage	8.00%	8.00%	8.00%	8.00%			5.99%	5.99%
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					$ 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								$ 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	12 years
Operating Leases, Rent Expense							$ 2,899	$ 5,794
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						$ 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						$ 2,550

XML

NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) - Lessee, Operating Lease, Disclosure - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	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	$ 14,894	$ 14,894	$ 29,355	$ 0
Lease liability - operating lease on adoption date			$ 29,655
Payments on lease liability - operating lease		(14,612)
Lease liability - operating lease on June 30, 2019	15,043	15,043		$ 0
Operating lease expense	$ 7,575	$ 15,450
Weighted average remaining lease term	6 years	6 years
Weighted average discount rate	5.99%	5.99%

XML

NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) - Lessee, Finance Lease, Disclosure - USD ($)		6 Months Ended
	Jan. 01, 2019	Jun. 30, 2019	Jun. 30, 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		$ 170,199	$ 170,199
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		(7,440)
ROU asset - finance lease at June 30, 2019		170,199
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		(4,266)
Lease liability - finance lease on June 30, 2019		$ 177,775
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 June 30, 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 June 30, 2019	$ 148,788

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NOTE 6 - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (Details) - Finance Lease, Liability, Maturity	Jun. 30, 2019 USD ($)
Finance Lease, Liability, Maturity [Abstract]
2020	$ 8,738
2021	9,261
2022	9,816
2023	10,404
2024 and thereafter	139,557
	$ 177,776
Weighted average remaining lease term	14 years
Weighted average discount rate	5.99%

XML

NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - Schedule of Accrued Liabilities - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Schedule of Accrued Liabilities [Abstract]
Accounts payable to vendors	$ 113,704	$ 83,037
Payroll taxes payable	56,046	46,832
Accrued salaries and bonuses	107,507	153,542
Accrued interest on notes payable	0	6,394
	$ 277,257	$ 289,805

XML

NOTE 8 - LONG-TERM DEBT (Details)	6 Months Ended
	Jun. 30, 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 - USD ($)	Jun. 30, 2019	Mar. 31, 2019
Schedule of Maturities of Long-term Debt [Abstract]
2019		$ 4,359
2020		4,359
2021		4,359
2022		4,322
	$ 17,399	$ 17,399

XML

NOTE 8 - LONG-TERM DEBT (Details) - Schedule of Long-term Debt Instruments - USD ($)	Jun. 30, 2019	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	13,040		$ 15,219
	$ 17,399	$ 17,399

XML

NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - USD ($)																	3 Months Ended	6 Months Ended
	Jun. 25, 2019	Jun. 21, 2019	Jun. 18, 2019	Jun. 13, 2019	Jun. 11, 2019	Jun. 06, 2019	May 30, 2019	May 21, 2019	May 08, 2019	Apr. 29, 2019	Apr. 23, 2019	Mar. 27, 2019	Mar. 19, 2019	Mar. 05, 2019	Oct. 08, 2018	Aug. 22, 2018	Jun. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
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																10.00%
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, Gain (Loss) on Derivative, Net																	$ 78,180	$ 58,503
Debt Conversion, Original Debt, Amount			$ 6,400		$ 14,800	$ 12,000	$ 12,000	$ 15,000	$ 15,000	$ 15,000	$ 12,000	$ 15,000	$ 15,000	$ 15,000				$ 147,200
Debt Conversion, Converted Instrument, Shares Issued (in Shares)			262,295		678,899	710,059	710,059	570,342	400,000	590,551	472,441	188,679	157,729	158,730				4,899,785
Derivative Liability																	0	$ 0	$ 138,218
Derivative Liability, Current																	0	0
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.
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															10.00%
Derivative, Gain (Loss) on Derivative, Net																	15,555	8,052
Debt Conversion, Original Debt, Amount	$ 12,000	$ 15,000																$ 27,000
Debt Conversion, Converted Instrument, Shares Issued (in Shares)	625,000	728,155																1,353,155
Derivative Liability																	32,134	$ 32,134
Payments of Debt Issuance Costs															$ 3,000
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings															$ 57,272
Derivative Liability, Current																	32,134	32,134	$ 58,300
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.
Note 3 [Member]
NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) [Line Items]
Debt Instrument, Face Amount				$ 93,500
Debt Instrument, Unamortized Discount				85,000
Proceeds from Debt, Net of Issuance Costs				$ 82,000
Debt Instrument, Interest Rate, Stated Percentage				10.00%
Derivative, Gain (Loss) on Derivative, Net																	120,573	120,573
Derivative Liability																	120,573	120,573
Payments of Debt Issuance Costs				$ 3,000
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings				$ 151,264
Derivative Liability, Current																	$ 120,573	120,573
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.
Principal [Member] | Note 1 [Member]
NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) [Line Items]
Debt Conversion, Original Debt, Amount																		$ 140,800
Debt Conversion, Converted Instrument, Shares Issued (in Shares)																		4,637,490
Accrued Interest [Member] | Note 1 [Member]
NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) [Line Items]
Debt Conversion, Original Debt, Amount																		$ 6,400

XML

NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - Schedule of Derivative Liabilities at Fair Value - USD ($)	Jun. 30, 2019	Dec. 31, 2018
NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - Schedule of Derivative Liabilities at Fair Value [Line Items]
Derivative liability		$ 196,518
Total liability		196,518
Note 1 [Member]
NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - Schedule of Derivative Liabilities at Fair Value [Line Items]
Derivative liability	$ 0
Total liability	0	138,218
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	0	138,218
Total liability	0	138,218
Note 2 [Member]
NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - Schedule of Derivative Liabilities at Fair Value [Line Items]
Derivative liability	32,134	58,300
Total liability	32,134
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	32,134	58,300
Total liability	32,134	$ 58,300
Note 3 [Member]
NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - Schedule of Derivative Liabilities at Fair Value [Line Items]
Derivative liability	120,573
Total liability	120,573
Note 3 [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	120,573
Total liability	$ 120,573

XML

NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Balance	$ 196,518
Variable conversion feature in convertible notes payable	151,264
Change in fair value	35,862
Conversion of derivative liability to equity from note conversion	(230,938)	$ 0
Balance	152,707
Promissory Note #1 [Member]
NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Balance	58,300
Variable conversion feature in convertible notes payable	0
Change in fair value	8,052
Conversion of derivative liability to equity from note conversion	(34,218)
Balance	$ 32,134

XML

NOTE 9 - CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY (Details) - Schedule of Debt Conversions - USD ($)														6 Months Ended
	Jun. 25, 2019	Jun. 21, 2019	Jun. 18, 2019	Jun. 11, 2019	Jun. 06, 2019	May 30, 2019	May 21, 2019	May 08, 2019	Apr. 29, 2019	Apr. 23, 2019	Mar. 27, 2019	Mar. 19, 2019	Mar. 05, 2019	Jun. 30, 2019
Note 1 [Member]
Debt Conversion [Line Items]
Principle Converted			$ 6,400	$ 14,800	$ 12,000	$ 12,000	$ 15,000	$ 15,000	$ 15,000	$ 12,000	$ 15,000	$ 15,000	$ 15,000	$ 147,200
Conversion Price			$ 0.0244	$ 0.0218	$ 0.0169	$ 0.0169	$ 0.0263	$ 0.0375	$ 0.0254	$ 0.0254	$ 0.0795	$ 0.0951	$ 0.0945
Number of Shares Issued			262,295	678,899	710,059	710,059	570,342	400,000	590,551	472,441	188,679	157,729	158,730	4,899,785
Note 2 [Member]
Debt Conversion [Line Items]
Principle Converted	$ 12,000	$ 15,000												$ 27,000
Conversion Price	$ 0.0192	$ 0.0206
Number of Shares Issued	625,000	728,155												1,353,155
Principal [Member] | Note 1 [Member]
Debt Conversion [Line Items]
Principle Converted														$ 140,800
Number of Shares Issued														4,637,490

XML

NOTE 10 - STOCKHOLDERS' DEFICIT (Details) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
NOTE 10 - STOCKHOLDERS' DEFICIT (Details) [Line Items]
Common Stock, Shares Authorized		150,000,000		150,000,000		150,000,000
Common Stock, Par or Stated Value Per Share (in Dollars per share)		$ 0.001		$ 0.001		$ 0.001
Stock Issued During Period, Shares, Restricted Stock Award, Gross				14,526,357
Stock Issued During Period, Value, Issued for Services (in Dollars)				$ 171,057	$ 507,908
Debt Conversion, Converted Instrument, Shares Issued				6,252,940
Debt Conversion, Original Debt, Amount (in Dollars)				$ 174,200
Stock Issued During Period, Shares, New Issues				760,000
Stock Issued During Period, Value, New Issues (in Dollars)				$ 91,200	70,000
Stock Issued During Period, Shares, Other				200,000
Stock Issued During Period, Value, Other (in Dollars)				$ 8,000
Stockholders' Equity, Other Shares				3,074,592
Stockholders' Equity, Other (in Dollars)				$ 122,984
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number		50,000		50,000
Class of Warrant or Right, Outstanding		0		0
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)		$ 8,116	$ 12,026	$ 20,402	$ 26,029
CEO and COO [Member]
NOTE 10 - STOCKHOLDERS' DEFICIT (Details) [Line Items]
Stock Issued During Period, Shares, Issued for Services				4,196,825
Stock Issued During Period, Value, Issued for Services (in Dollars)				$ 167,873
Shares Issued for Services #2 [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				40,000
Stock Issued During Period, Value, Restricted Stock Award, Gross (in Dollars)				$ 45,418

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NOTE 11 - SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] - USD ($)		1 Months Ended
	Jul. 12, 2019	Jul. 31, 2019
NOTE 11 - SUBSEQUENT EVENTS (Details) [Line Items]
Debt Conversion, Converted Instrument, Shares Issued (in Shares)		1,793,561
Debt Instrument, Face Amount	$ 91,300
Debt Instrument, Unamortized Discount	83,000
Proceeds from Convertible Debt	80,000
Debt Issuance Costs, Net	$ 3,000
Debt Instrument, Interest Rate, Stated Percentage	10.00%
Debt Instrument, Maturity Date	Jul. 12, 2020
Debt Instrument, Convertible, Terms of Conversion Feature	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.
Principal [Member]
NOTE 11 - SUBSEQUENT EVENTS (Details) [Line Items]
Debt Conversion, Original Debt, Amount		$ 31,300
Accrued Interest [Member]
NOTE 11 - SUBSEQUENT EVENTS (Details) [Line Items]
Debt Conversion, Original Debt, Amount		$ 2,650