10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 000-55900

 

MJ HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

nevada	20-8235905
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2580 S. Sorrel St., Las Vegas, NV 89146

(Address of principal executive offices) (Zip Code)

(702) 879-4440

(Registrant’s telephone number, including area code)

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. 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). 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 the definitions 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 ☒

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	MJNE	OTC Markets “PINK”

As of August 25, 2021, there were 71,078,333 shares of our Common Stock, par value $0.001 per share, outstanding.

MJ HOLDINGS, INC.

FORM 10-Q

FOR THE SIX MONTHS ENDED JUNE 30, 2021

INDEX

	PAGE
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of June 30, 2021 (Unaudited) and December 31, 2020	1
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020 (Unaudited)	2
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2021 and 2020 (Unaudited)	3
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (Unaudited)	4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3. Quantitative and Qualitative Disclosure About Market Risk	25
Item 4. Controls and Procedures	26
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	27
Item 1A. Risk Factors	27
Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities	27
Item 3. Defaults Upon Senior Securities	27
Item 4. Mine Safety Disclosures	27
Item 5. Other Information	27
Item 6. Exhibits	28
EXHIBIT INDEX	28
SIGNATURES	29

i

USE OF MARKET AND INDUSTRY DATA

This Quarterly Report on Form 10-Q includes market and industry data that we have obtained from third-party sources, including industry publications, as well as industry data prepared by our management on the basis of its knowledge of and experience in the industries in which we operate (including our management’s estimates and assumptions relating to such industries based on that knowledge). Management has developed its knowledge of such industries through its experience and participation in these industries. While our management believes the third-party sources referred to in this Quarterly Report on Form 10-Q are reliable, neither we nor our management have independently verified any of the data from such sources referred to in this Quarterly Report on Form 10-Q or ascertained the underlying economic assumptions relied upon by such sources. Furthermore, internally prepared and third-party market prospective information, in particular, are estimates only and there will usually be differences between the prospective and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. Also, references in this Quarterly Report on Form 10-Q to any publications, reports, surveys or articles prepared by third parties should not be construed as depicting the complete findings of the entire publication, report, survey or article. The information in any such publication, report, survey or article is not incorporated by reference in this Quarterly Report on Form 10-Q.

Solely for convenience, we refer to trademarks in this Quarterly Report on Form 10-Q without the ® or the ™ or symbols, but such references are not intended to indicate that we will not assert, to the fullest extent under applicable law, our rights to our own trademarks. Other service marks, trademarks and trade names referred to in this Quarterly Report on Form 10-Q, if any, are the property of their respective owners, although for presentational convenience we may not use the ® or the ™ symbols to identify such trademarks.

OTHER PERTINENT INFORMATION

Unless the context otherwise indicates, when used in this Quarterly Report on Form 10-Q, the terms “MJ Holdings” “we,” “us,” “our,” the “Company” and similar terms refer to MJ Holdings, Inc., a Nevada corporation, and all of our subsidiaries and affiliates.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the period ended June 30, 2021 contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to future events including, without limitation, the terms, timing and closing of our proposed acquisitions or our future financial performance. We have attempted to identify forward-looking statements by using terminology such as “anticipates,” “believes,” “expects,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predict,” “should” or “will” or the negative of these terms or other comparable terminology. These statements are only predictions; uncertainties and other factors may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels or activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Our expectations are as of the date this Quarterly Report on Form 10-Q is filed, and we do not intend to update any of the forward-looking statements after the date this Quarterly Report on Form 10-Q is filed to confirm these statements to actual results, unless required by law.

You should not place undue reliance on forward looking statements. The cautionary statements set forth in this Quarterly Report on Form 10-Q identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:

● Our ability to effectively execute our business plan;

● Our ability to manage our expansion, growth and operating expenses;

● Our ability to protect our brands and reputation;

● Our ability to repay our debts;

● Our ability to rely on third-party suppliers outside of the United States;

● Our ability to evaluate and measure our business, prospects and performance metrics;

● Our ability to compete and succeed in a highly competitive and evolving industry;

● Our ability to respond and adapt to changes in technology and customer behavior;

● Risks in connection with completed or potential acquisitions, dispositions and other strategic growth opportunities and initiatives;

● Risks related to the anticipated timing of the closing of any potential acquisitions;

● Risks related to the integration with regards to potential or completed acquisitions; and

● Various risks related to health epidemics, pandemics and similar outbreaks, such as the coronavirus disease 2019 (“COVID-19”) pandemic, which may have material adverse effects on our business, financial position, results of operations and/or cash flows.

This Quarterly Report on Form 10-Q also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other industry data. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have not independently verified the statistical and other industry data generated by independent parties and contained in this Quarterly Report on Form 10-Q and, accordingly, we cannot guarantee their accuracy or completeness, though we do generally believe the data to be reliable. In addition, projections, assumptions and estimates of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including, but not limited to, the possibility that we may fail to preserve our expertise in consumer product development; that existing and potential distribution partners may opt to work with, or favor the products of, competitors if our competitors offer more favorable products or pricing terms; that we may be unable to maintain or grow sources of revenue; that we may be unable maintain profitability; that we may be unable to attract and retain key personnel; or that we may not be able to effectively manage, or to increase, our relationships with customers; that we may have unexpected increases in costs and expenses. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

ii

PART I

INDEX TO FINANCIAL STATEMENTS

	Page Number
Condensed Consolidated Balance Sheets as of June 30, 2021 (Unaudited) and December 31, 2020	1
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020 (Unaudited)	2
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2021 and 2020 (Unaudited)	3
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (Unaudited)	4
Notes to Condensed Consolidated Financial Statements	5

iii

MJ HOLDINGS, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2021			December 31, 2020
	(Unaudited)
ASSETS
Current assets
Cash	$	5,899,684		$	117,536
Accounts receivable		18,254			9,461
Prepaid expenses		755,290			713,782
Marketable securities – available for sale		-			150,000
Convertible note receivable		500,000			-
Total current assets		7,173,228			990,779
Property and equipment, net		2,719,136			4,155,675
Intangible assets		300,000			300,000
Deposits		1,074,817			64,817
Operating lease - right-of-use asset		1,915,507			1,979,181
Total non-current assets		6,009,460			6,499,673
Total assets	$	13,182,688		$	7,490,452
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued expenses	$	1,711,665		$	2,382,779
Deposits		538,921			538,921
Other current liabilities		-			1,328,438
Contract liabilities		1,270,000			-
Income taxes payable		277,000			-
Current portion of notes payable – related party		-			300,405
Current portion of long-term notes payable		770,135			1,185,273
Current portion of operating lease obligation		211,427			241,466
Total current liabilities		4,779,148			5,977,282
Non-current liabilities
Long-term notes payable, net of current portion		108,891			921,723
Operating lease obligation, net of current portion		1,850,313			1,889,575
Total non-current liabilities		1,959,204			2,811,298
Total liabilities		6,738,352			8,788,580
Commitments and contingencies (Note 8)
Stockholders’ equity (deficit)
Preferred stock, $0.001 par value, 5,000,000 shares authorized, 0 shares issued; Series A convertible Preferred stock $1,000 stated value, 2,500 authorized, 0 shares issued and outstanding		-			-
Common stock, $0.001 par value, 95,000,000 shares authorized, 70,660,015 and 68,613,541 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		70,660			68,613
Additional paid-in capital		20,084,895			18,748,688
Common stock issuable		199			-
Accumulated deficit		(13,598,949	)		(20,002,960	)
Total stockholders’ equity (deficit) attributable to MJ Holdings, Inc.		6,556,805			(1,185,659	)
Noncontrolling interests		(112,469	)		(112,469	)
Total shareholders’ equity (deficit)		6,444,336			(1,298,128	)
Total liabilities and stockholders’ equity (deficit)	$	13,182,688		$	7,490,452

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

1

MJ HOLDINGS, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the three months ended						For the six months ended
	June 30,						June 30,
	2021			2020			2021			2020
Revenue, net	$	209,006		$	66,914		$	516,381		$	523,072
Operating expenses
Direct costs of revenue		40,590			67,428			40,590			540,198
General and administrative		1,967,097			459,046			4,773,024			1,497,727
Depreciation		96,787			111,743			194,257			223,489
Marketing and selling		7,880			7,700			7,880			6,792
Total operating expenses		2,112,354			645,917			5,015,751			2,268,206
Operating loss		(1,903,348	)		(579,003	)		(4,499,370	)		(1,745,134	)
Other income (expense)
Interest expense		(15,081	)		(49,390	)		(32,308	)		(98,377	)
Interest income		4,636			4,587			9,298			9,173
Miscellaneous expense		(4,587	)		(9,173	)		(9,173	)		(9,173	)
Loss on conversion of related party note payable		-			-			(310,526	)		-
Gain on sale of marketable securities		-			-			9,857,429			-
Gain on sale of commercial building		-			-			260,141			-
Other income		1,359,208			-			1,405,520			-
Total other income (expense)		1,344,176			(53,976	)		11,180,381			(98,377	)
Net income (loss) before income taxes		(559,172	)		(632,979	)		6,681,011			(1,843,511	)
Provision for income taxes		277,000			-			277,000			-
Net income (loss)	$	(836,172	)	$	(632,979	)	$	6,404,011		$	(1,843,511	)
Loss (gain) attributable to non-controlling interest		-			(2,867	)		-			(5,129	)
Net income (loss) attributable to common stockholders	$	(836,172	)	$	(630,112	)	$	6,404,011		$	(1,838,382	)
Net income (loss) attributable to common stockholders per share - basic and diluted	$	(0.01	)	$	(0.10	)	$	0.09		$	(0.03	)
Weighted average number of shares outstanding:
Basic		70,632,612			65,754,724			69,580,992			65,662,894
Diluted		70,632,612			65,754,724			69,969,539			65,662,894

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

2

MJ HOLDINGS, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

For three and six months ended June 30, 2021 (Unaudited):

	Common Stock Issuable						Common Stock				Additional paid-in		Subscription		Non Controlling			Accumulated
	Shares			Amount			Shares		Amount		Capital		Payable		Interest			Deficit			Total
Balance at January 1, 2021		-		$	-			68,613,541	$	68,613	$	18,748,688		-	$	(112,469	)	$	(20,002,960	)	$	(1,298,128	)
Common stock to be issued for termination of rights participation agreement		1,000,000			1,000			-		-		629,000		-		-			-			630,000
Issuance of common stock for services		-			-			225,000		225		134,775		-		-			-			135,000
Issuance of common stock for cash		-			-			263,158		263		49,737		-		-			-			50,000
Issuance of common stock for loan payable conversion		-			-			526,316		526		410,000		-		-			-			410,526
Stock based compensation		-			-			-		-		7,841		-		-			-			7,841
Net income for the period ended March 31, 2021		-			-			-		-		-		-		-			7,240,183			7,240,183
Balance at March 31, 2021		1,000,000			1,000			69,628,015		69,627		19,980,041		-		(112,469	)		(12,762,777	)		7,175,422
Issuance of common stock as per terms of Termination Agreement		(1,000,000	)		(1,000	)		1,000,000		1,000		-		-		-			-			-
Issuance of common stock for services		-						32,000		33		14,367		-		-			-			14,400
Common stock to be issued for director compensation		198,539			199			-		-		90,487		-		-			-			90,685
Net loss for the period ended June 30, 2021		-			-			-		-		-		-		-			(836,172	)		(836,172	)
Balance at June 30, 2021		198,539		$	199			70,660,015	$	70,660	$	20,084,895		-	$	(112,469	)	$	(13,598,949	)	$	6,444,336

For three and six months ended June 30, 2020 (Unaudited):

	Common Stock Issuable						Common Stock				Additional paid-in		Subscription			Non Controlling			Accumulated
	Shares			Amount			Shares		Amount		Capital		Payable			Interest			Deficit			Total
Balance at January 1, 2020		18,562		$	19			65,436,449	$	65,436	$	18,177,723	$	10,000		$	(103,956	)	$	(16,038,345	)	$	2,110,877
Issuance of common stock for services		-			-			281,251		281		55,969		-						-			56,250
Issuance of common stock for conversion of debt and interest		(18,562	)		(19	)		18,562		19		-		-			-			-			-
Net loss for the period ended March 31, 2020		-			-			-		-		-		-			(2,262	)		(1,208,270	)		(1,210,532	)
Balance at March 31, 2020		-			-			65,736,262		65,736		18,233,692		10,000			(106,218	)		(17,246,615	)		956,595
Issuance of common stock for stock subscriptions payable		-			-			20,000		20		9,980		(10,000	)		-			-			-
Net loss for the period ended June 30, 2020		-			-			-		-		-		-			(2,867	)		(630,112	)		(632,979	)
Balance at June 30, 2020		-		$	-			65,756,262	$	65,756	$	18,243,672	$	-		$	(109,085	)	$	(17,876,727	)	$	323,616

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

3

MJ HOLDINGS, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the six months ended June 30,
	2021			2020
Cash Flows from Operating Activities
Net income (loss)	$	6,404,011		$	(1,843,511	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of right to use asset		63,674			106,067
Common stock issued for prepaid services		135,000			56,250
Depreciation		194,257			223,489
Gain on sale of marketable securities		(9,857,429	)		-
Provision for income taxes		277,000			-
Gain on sale of commercial building		(260,141	)		-
Stock based compensation		98,361			-
Common stock issued for services		14,367
Common stock to be issued for wages payable		199			-
Common stock to be issued for termination of rights participation agreement		630,000			-
Expenses paid on behalf of Company		-			36,405
Loss on conversion of related party note payable		310,526			-
Reserve on impairment		-			9,173
Changes in operating assets and liabilities:
Accounts receivable		(8,793	)		(4,975	)
Prepaid expenses		(41,508	)		137,460
Deposits		(1,010,000	)		125,212
Accounts payable and accrued liabilities		(671,112	)		543,829
Contract liabilities		1,270,000			-
Other current assets		-			156,229
Other current liabilities		(1,328,438	)		532,789
Operating lease liability		(69,301	)		(117,321	)
Net cash used in operating activities		(3,849,327	)		(38,904	)
Cash Flows from Investing Activities
Purchase of property and equipment		(125,077	)		-
Proceeds from sale of commercial building		1,627,500			-
Purchase of marketable securities		(200,000	)
Issuance of convertible note receivable		(500,000	)		-
Proceeds from the sale of marketable securities		10,207,429			-
Net cash provided by investing activities		11,009,852			-
Financing activities
Proceeds from notes payable		300,000			-
Proceeds from notes payable – related party		-			164,000
Repayment of notes payable		(1,728,377	)		(10,669	)
Proceeds from common stock issued for cash		50,000			-
Net cash provided by (used in) financing activities		(1,378,377	)		153,331
Net change in cash		5,782,148			114,427
Cash, beginning of period		117,536			22,932
Cash, end of period	$	5,899,684		$	137,359
Supplemental disclosure of cash flow information:
Interest paid	$	98,716		$	32,356
Income taxes paid	$	-		$	-
Non-cash investing and financing activities:
Common stock issued for prior period debt conversion	$	-		$	19
Issuance of stock for conversion of related party note payable	$	100,000		$	-
Common stock issued for stock subscriptions payable	$	-		$	10,000

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

4

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 1 — Nature of the Business

MJ Holdings, Inc. (OTCPK: MJNE) is a highly-diversified cannabis holding company providing cultivation management, asset and infrastructure development – currently concentrated in the Las Vegas market. It is the Company’s intention to grow its business and provide a 360-degree spectrum of infrastructure, including, cannabis cultivation, production of cannabis related products, management services, dispensaries and consulting services. The Company intends to grow its business through joint ventures with existing companies possessing complementary subject matter expertise, acquisition of existing companies and through the development of new opportunities. The Company intends to “prove the concept” profitably in the rapidly expanding Las Vegas market and then use that anticipated success as a template for replicating the concept in other developing states through a combination of strategic partnerships, acquisitions and opening new operations.

The Company was incorporated on November 17, 2006, as Securitas EDGAR Filings, Inc. under the laws of the State of Nevada. Prior to the formation of Securitas EDGAR Filings Inc., the business was operated as Xpedient EDGAR Filings, LLC, a Florida Limited Liability Company, formed on October 31, 2005. On November 21, 2005, Xpedient EDGAR Filings LLC amended its Articles of Organization to change its name to Securitas EDGAR Filings, LLC. On January 21, 2009, Securitas EDGAR Filings LLC merged into Securitas EDGAR Filings, Inc., a Nevada corporation. On February 14, 2014, the Company amended and restated its Articles of Incorporation and changed its name to MJ Holdings, Inc.

On November 22, 2016, in connection with a plan to divest the Company of its real estate business, the Company submitted to its stockholders an offer to exchange (the “Exchange Offer”) its common stock for shares in MJ Real Estate Partners, LLC, (“MJRE”) a newly formed LLC formed for the sole purpose of effecting the Exchange Offer. On January 10, 2017, the Company accepted for exchange 1,800,000 shares of its Common Stock in exchange for 1,800,000 shares of MJRE’s common units, representing membership interests in MJRE. Effective February 1, 2017, the Company transferred its ownership interests in the real estate properties and its subsidiaries, through which the Company held ownership of the real estate properties, to MJRE. MJRE also assumed the senior notes and any and all obligations associated with the real estate properties and business, effective February 1, 2017.

Acquisition of Red Earth

On December 15, 2017, the Company acquired all of the issued and outstanding membership interests of Red Earth, LLC, a Nevada limited liability company (“Red Earth”) established in October 2016, in exchange for 52,732,969 shares of its Common Stock and a promissory note in the amount of $900,000. The acquisition was accounted for as a “Reverse Merger”, whereby Red Earth was considered the accounting acquirer and became its wholly owned subsidiary. Upon the consummation of the acquisition, the now former members of Red Earth became the beneficial owners of approximately 88% of the Company’s Common Stock, obtained controlling interest of the Company, and retained certain of its key management positions. In accordance with the accounting treatment for a “reverse merger” or a “reverse acquisition”, the Company’s historical financial statements prior to the reverse merger will be replaced with the historical financial statements of Red Earth prior to the reverse merger in all future filings with the SEC. Red Earth is the holder of a Nevada Marijuana Establishment Certificate for the cultivation of marijuana.

On or about May 7, 2021, the Company’s wholly owned subsidiary, Red Earth, LLC (the “Subsidiary”), received an inquiry from the State of Nevada Cannabis Compliance Board (“CCB”) regarding the transfer of ownership of the Subsidiary from its previous owners to the Company. The CCB has determined that the transfer was not formally approved, thus a Category II violation.

On July 27, 2021, the Subsidiary entered into a Stipulation and Order for Settlement of Disciplinary Action (the “Stipulation Order”) with the CCB. Under the terms of the Stipulation Order, the Subsidiary has agreed to present to the CCB, by not later than August 31, 2021, a plan pursuant to which the ownership of the Subsidiary will be returned to the original owners. The Parties to the Stipulation Order resolved the matter without the necessity of taking formal action. The Subsidiary agreed to pay a civil penalty of $10,000, which was paid on July 29, 2021.

COVID-19

COVID-19 has caused and continues to cause significant loss of life and disruption to the global economy, including the curtailment of activities by businesses and consumers in much of the world as governments and others seek to limit the spread of the disease, and through business and transportation shutdowns and restrictions on people’s movement and congregation.

As a result of the pandemic, the Company has experienced, and continues to experience, weakened demand for its products. Many of its customers have been unable to sell its products in customer stores due to government-mandated closures and have deferred or significantly reduced orders for the Company’s products. The Company expects these trends to continue until such closures are significantly curtailed or lifted. In addition, the pandemic has reduced foot traffic in the stores where its products are sold that remain open, and the global economic impact of the pandemic has temporarily reduced consumer demand for its products as they focus on purchasing essential goods.

Given these factors, the Company anticipates that the greatest impact from the COVID-19 pandemic in 2020 occurred in the second and third quarters and resulted in a significant net sales decline in its quarterly results.

In addition, certain of its suppliers and the manufacturers of certain of its products were adversely impacted by COVID-19. As a result, the Company faced delays or difficulty sourcing products, which negatively affected its business and financial results. Even if the Company were able to find alternate sources for such products, it may cost more and cause delays in its supply chain, which could adversely impact its profitability and financial condition.

The Company has taken actions to protect its employees in response to the pandemic, including closing its corporate offices and requiring its office employees to work from home. At its grow facilities, certain practices are in effect to safeguard workers, including a staggered work schedule, and the Company is continuing to monitor direction from local and national governments carefully.

As a result of the impact of COVID-19 on its financial results, and the anticipated future impact of the pandemic, the Company has implemented cost control measures and cash management actions, including:

● Furloughing a significant portion of its employees; and

● Implementing 20% salary reductions across its executive team and other members of upper-level management; and

● Executing reductions in operating expenses, planned inventory levels and non-product development capital expenditures; and

● Proactively managing working capital, including reducing incoming inventory to align with anticipated sales.

Note 2 — Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Red Earth, LLC, HDGLV, LLC, Icon Management, LLC, Alternative Hospitality, Inc., Condo Highrise Management, LLC and Prescott Management, LLC. Inter-company balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates and assumptions are required in the determination of the fair value of financial instruments and the valuation of stock-based compensation. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates.

Cash

Cash includes cash on hand and deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal and use and with an original maturity of three months or less. The Company maintains its cash in bank deposit accounts.

The Company, at various times throughout the year, had cash in financial institutions in excess of Federally insured limits. At June 30, 2021, the Company had $5,755,000 in excess. However, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on its credit balances.

Fair Value of Financial Instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2021 and December 31, 2020. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market.

5

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 2 — Summary of Significant Accounting Policies (continued)

Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.

Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in these situations.

Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. The FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.

As of June 30, 2021 and December 31, 2020, the Company’s investment in marketable securities – available for sale was determined to be a level 1 investment.

	June 30, 2021		December 31, 2020
Marketable securities		-		150,000
Total	$	-	$	150,000

On February 17, 2021, the Company entered into a Stock Purchase Agreement (the “Agreement”) with ATG Holdings, LLC (the “ATG”). Under the terms of the Agreement, the Company purchased 1,500,000,000 shares of common stock of Healthier Choices Management Corp (“HCMC”) from ATG for the purchase price of $200,000. The transaction closed on February 19, 2021.

During the six months ended June 30, 2021, the Company liquidated its marketable securities that it received in the Stock Exchange Agreement with HCMC dated August 13, 2018 and the shares of HCMC that it received under the Agreement with ATG.

The net proceeds received by the Company for the sale of the marketable securities were $9,857,429.

Accounts Receivable and Allowance for Doubtful Accounts:

Accounts receivable are recorded at invoiced amount and generally do not bear interest. An allowance for doubtful accounts is established, as necessary, based on past experience and other factors which, in management’s judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable and current economic conditions. The determination of the collectability of amounts due from customer accounts requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer accounts, and the financial condition of the Company’s customers. Based on a review of these factors, the Company establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole.

	June 30, 2021			December 31, 2020
Accounts receivable	$	57,772		$	23,675
Less allowance		(39,518	)		(12,000	)
Net accounts receivable	$	18,254		$	11,675

Debt Issuance Costs

Costs associated with obtaining, closing, and modifying loans and/or debt instruments are netted against the carrying amount of the debt instrument, and charged to interest expense over the term of the loan.

Inventory

Inventories consist of finished goods as of June 30, 2021 and December 31, 2020. Inventories are valued at the lower of cost or net realizable value. The Company determines cost on the basis of the first in first out method. The Company periodically reviews inventories for obsolescence and any inventories identified as obsolete are reserved or written off. The Company has performed a valuation and has established a reserve against its finished goods inventory.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and any impairment losses. Depreciation is computed using the straight-line method over the useful lives of the assets. Major renewals and betterments are capitalized and depreciated; maintenance and repairs that do not extend the life of the respective assets are expensed as incurred. Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in the consolidated statements of operations.

Construction in progress primarily represents the construction or the renovation costs stated at cost less any accumulated impairment loss, which is not depreciated. Costs incurred are capitalized and transferred to property and equipment upon completion, at which time depreciation commences.

6

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 2 — Summary of Significant Accounting Policies (continued)

Property and equipment are depreciated over their estimated useful lives as follows:

Buildings	12 years
Land	Not depreciated
Leasehold Improvements	Lessor of lease term or 5 years
Machinery and Equipment	5 years
Furniture and Fixtures	5 years

Long–lived Assets

Long-lived assets, including real estate property and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If the assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value.

Impairment of Long-lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC 360-10-15, “Impairment or Disposal of Long-Lived Assets.” ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals. The Company recorded an impairment of its long-lived assets in the amount of $9,173 and $18,345 for the six months ended June 30, 2021 and year ended December 31, 2020, respectively.

Other Current Liabilities

The Company’s other current liabilities consisted of amounts due under the management agreement and performance guarantee with Acres Cultivation, LLC. As of June 30, 2021 and December 31, 2020, other current liabilities were $- and $1,328,438, respectively.

Non- Controlling Interest

The Company’s non-controlling interest represents the minority shareholder’s ownership interest related to the Company’s subsidiary, Alternative Hospitality, Inc. The Company reports its non-controlling interest in subsidiaries as a separate component of equity in the Consolidated Balance Sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common shareholders on the face of the Consolidated Statements of Operations. The Company’s equity interest in Alternative Hospitality, Inc. is 51% and the non-controlling stockholder’s interest is 49%. This is reflected in the Consolidated Statements of Equity.

Revenue Recognition

On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers using the modified retrospective method. There was no impact upon adoption of ASC 606 on our consolidated financial statements. The new revenue standard was applied prospectively in the Company’s consolidated financial statements from January 1, 2018 forward and reported financial information for historical comparable periods will not be revised and will continue to be reported under the accounting standards in effect during those historical periods.

Generally, the Company considers all revenues as arising from contracts with customers. Revenue is recognized based on the five-step process outlined in the Accounting Standards Codification (“ASC”) 606:

Step 1 – Identify the Contract with the Customer – A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and it is probably that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

Step 2 – Identify Performance Obligations in the Contract – Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct, or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation.

Step 3 – Determine the Transaction Price – When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur.

Step 4 – Allocate the Transaction Price – After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price (SSP) at contract inception.

Step 5 – Satisfaction of the Performance Obligations (and Recognize Revenue) – Revenue is recognized when (or as) goods or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use of and obtain substantially all of the remaining benefits from an asset. It includes the ability to prevent other entities from directing the use of and obtaining the benefits from an asset. Indicators that control has passed to the customer include: a present obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset(s). Performance obligations can be satisfied at a point in time or over time.

7

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 2 — Summary of Significant Accounting Policies (continued)

The majority of the Company’s revenue was derived under the agreements, Consulting Agreement and Equipment Lease Agreement, entered into with Acres Cultivation, LLC. Revenue derived from consulting services fees are recognized over the term of the arrangement as services are provided. Revenue is presented net of discounts, fees and other related taxes. Revenue derived from equipment leases is recognized when the lease agreement is entered into and control of the equipment has passed to the customer. The Company’s remaining revenue is derived from its rental property in Nye County, Nevada. Rental revenue for operating leases is recognized on a straight-line basis over the term of the lease. Rental revenue recognition commences when the leased space is available for use by the lessee.

	For the six months ended
	June 30,
	2021		2020
Revenues:
Rental income (i)	$	40,169	$	57,963
Management income (ii)		341,398		328,313
Equipment lease income (ii)		134,814		136,796
Total	$	516,381	$	523,072

(i)

The rental income is from the Company’s THC Park.

(ii)

In April 2018, the Company entered into a management agreement with Acres Cultivation, LLC, a Nevada limited liability company (the “Licensed Operator”) that holds a license for the legal cultivation of marijuana for sale under the laws of the State of Nevada. In January of 2019, the Company entered into a revised agreement, which replaced the April 2018 agreement, with the Licensed Operator in order to be more stringently aligned with Nevada marijuana laws. The material terms of the agreement remain unchanged. The Licensed Operator is contractually obligated to pay over to the Company eighty-five (85%) percent of gross revenues defined as gross proceeds from sales of marijuana products minus applicable state excise taxes and local sales tax. The agreement is to remain in force until April 2026. In April 2019, the Licensed Operator was acquired by Curaleaf Holdings, Inc., a publicly traded Canadian cannabis company. On January 21, 2021, the Company received a Notice of Termination, effective immediately, from Acres Cultivation, LLC. The Company does not anticipate that it will generate any further revenue under the Acres relationship.

Contract Balances

The Company receives payments for new Cultivation and Sales Agreements (the “Agreements”) upon signing and defers revenue recognition for these payments until certain milestones are met as per the terms of the Agreements. These payments represent contract liabilities and are recorded as such on the balance sheet. As of June 30, 2021 and December 31, 2020, the Company had $1,270,000 and $0 contract liabilities, respectively.

Stock-Based Compensation

The Company’s share-based payment awards principally consist of grants of common stock. In accordance with the applicable accounting guidance, stock-based payment awards are classified as either equity or liabilities. For equity-classified awards, the Company measures compensation cost based on the grant date fair value and recognizes compensation expense in the consolidated statements of operations over the requisite service or performance period the award is expected to vest. The fair value of liability-classified awards is at each reporting date through the settlement date. Change in fair value during the requisite service period will be remeasured as compensation cost over that period.

The Company utilizes its historical stock price to determine the volatility of any stock-based compensation.

The expected dividend yield is 0% as the Company has not paid any dividends on its common stock and does not anticipate it will pay any dividends in the foreseeable future.

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant date with a term equal to the expected term of the stock-based award.

For stock-based financial instruments issued to parties other than employees, the Company uses the contractual term of the financial instruments as the expected term of the stock-based financial instruments.

The assumptions used in calculating the fair value of stock-based financial instruments represent its best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and it uses different assumptions, its stock-based compensation expense could be materially different in the future.

8

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 2 — Summary of Significant Accounting Policies (continued)

Operating Leases

The Company adopted ASC Topic 842, Leases, on January 1, 2019. The new leasing standard requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company used its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. A number of the lease agreements contain options to renew and options to terminate the leases early. The lease term used to calculate ROU assets and lease liabilities only includes renewal and termination options that are deemed reasonably certain to be exercised.

The Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months. The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, and unamortized lease incentives provided by lessors. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur. The Company has elected not to separate lease and non-lease components for all property leases for the purposes of calculating ROU assets and lease liabilities.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance on deferred tax assets is established when management considers it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income tax expense. The Company has not recognized any tax benefits from uncertain tax positions for any of the reporting periods presented.

Recent Accounting Pronouncements

Stock Based Compensation: In June 2018, FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share Based Payment Accounting.

The amendments in this Update expand the scope of stock compensation to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance in this Update does not apply to transactions involving equity instruments granted to a lender or investor that provides financing to the issuer. The guidance is effective for fiscal years beginning after December 31, 2018 including interim periods within the fiscal year. The Company adopted with an effective date of January 1, 2019.

Note 3 — Going Concern

The Company has recurring net losses, which have resulted in an accumulated deficit of $13,598,949 as of June 30, 2021. The Company had negative cash flows from operations of $3,849,327 for the six months ended June 30, 2021. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements. The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan, raise capital, and generate revenues. The Financial Statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company’s current capital resources include cash. Historically, the Company has financed its operations principally through equity and debt financing.

9

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 4 — Note Receivable

Note receivable at June 30, 2021 and December 31, 2020 consisted of the following:

	June 30, 2021		December 31, 2020
Note receivable- GeneRx (i)		500,000		-
Total	$	500,000	$	-

i.

On March 12, 2021, the Company (the “Holder”) was issued a Convertible Promissory Note (the “Note”) by GeneRx (the “Borrower”), a Delaware corporation, in the amount of $300,000. The Note has a term of one year (March 12, 2022 Maturity Date) and accrues interest at two percent (2%) per annum. The Note is convertible, at the option of the Holder, into shares of common stock of the Borrower at a fixed conversion price of $1.00 per share. Upon an Event of Default, the Conversion Price shall equal the Alternate Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Alternate Conversion Price” shall equal the lesser of (i) 80% multiplied by the average of the three lowest daily volume weighted average prices (“VWAP”) during the previous twenty (20) Trading Days (as defined below) before the Issue Date of this Note (representing a discount rate of 20%) or (ii) 80% multiplied by the Market Price (as defined herein) (representing a discount rate of 20%). “Market Price” means the average of the three lowest daily VWAPs for the Common Stock during the twenty (20) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty-four percent (24%) per annum from the due date thereof until the same is paid (the “Default Interest”). The Company funded $300,000 on March 15, 2021, $150,000 on April 2, 2021 and $50,000 on April 7, 2021.

ii.

The convertible note receivable is considered available for sale debt securities with a private company that is not traded in active markets. Since observable price quotations were not available at acquisition, fair value was estimated based on cost less an appropriate discount upon acquisition. The discount of each instrument is accreted into interest income over the respective term as shown within the Company’s Condensed Consolidated Statements of Operations.

Note 5 — Property and Equipment

Property and equipment at June 30, 2021 and December 31, 2020 consisted of the following:

	June 30, 2021			December 31, 2020
Leasehold Improvements	$	323,281		$	323,281
Machinery and Equipment		1,177,280			1,087,679
Building and Land		1,650,000			3,150,000
Furniture and Fixtures		578,843			543,366
Total property and equipment		3,729,404			5,104,326
Less: Accumulated depreciation		(1,010,268	)		(948,651	)
Property and equipment, net	$	2,719,136		$	4,155,675

Depreciation expense for the six months ended June 30, 2021 and 2020 was $194,255 and $223,489, respectively.

Note 6 — Intangible Assets

In October 2016, Red Earth entered into an Asset Purchase and Sale Agreement with the owner of a provisional Medical Marijuana Establishment Registration Certificate (the “Provisional Grow License”) issued by the state of Nevada for the cultivation of medical marijuana for $300,000. To initiate the purchase and transfer the Provisional Grow License, the Company paid a $25,000 deposit to the seller in October 2016. In February 2017, an investor advanced the Company $350,000.

The Provisional Grow License remains in a provisional status until the Company has completed the build out of a cultivation facility and obtained approval from the state of Nevada to begin cultivation in the approved facility. Once approval from the state of Nevada is received, the Company begins the cultivation process.

On or about May 7, 2021, the Company’s wholly owned subsidiary, Red Earth, LLC (the “Subsidiary”), received an inquiry from the State of Nevada Cannabis Compliance Board (“CCB”) regarding the transfer of ownership of the Subsidiary from its previous owners to the Company. The CCB has determined that the transfer was not formally approved, thus a Category II violation.

On July 27, 2021, the Subsidiary entered into a Stipulation and Order for Settlement of Disciplinary Action (the “Stipulation Order”) with the CCB. Under the terms of the Stipulation Order, the Subsidiary has agreed to present to the CCB, by not later than August 31, 2021, a plan pursuant to which the ownership of the Subsidiary will be returned to the original owners. The Parties to the Stipulation Order resolved the matter without the necessity of taking formal action. The Subsidiary agreed to pay a civil penalty of $10,000, which was paid on July 29, 2021.

10

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 7 — Notes Payable

Notes payable as of June 30, 2021 and December 31, 2020 consist of the following:

	June 30, 2021			December 31, 2020
Note payable bearing interest at 6.50%, originated November 1, 2018, due on October 31, 2023, originally $1,100,000 (i)	$	-		$	1,022,567
Note payable bearing interest at 5.0%, originated January 17, 2019, due on January 31, 2022, originally $750,000 (ii)		750,000			750,000
Note payable bearing interest at 9.0%, originated January 17, 2019, due on January 16, 2020, originally $150,000 (iii)		-			100,000
Note payable bearing interest at 6.5% originated April 1, 2019, due on March 31, 2022, originally $250,000 (iv)		129,026			234,431
Notes payable, related party, bearing interest at 9.0%, originated February 20, 2020, due on February 20, 2021, originally $110,405 (v)		-			110,405
Notes payable, related party, bearing interest at 9.0%, originated April 3, 2020, due on March 30, 2021, originally $90,000 (vi)		-			90,000
Total notes payable	$	879,026		$	2,307,403
Less: current portion		(770,135	)		(1,485,678	)
Long-term notes payable	$	108,891		$	921,725

(i) On September 21, 2018, the Company, through its wholly-owned subsidiary Prescott Management, LLC, entered into a contract to purchase an approximately 10,000 square foot office building located at 1300 South Jones Boulevard, Las Vegas, Nevada 89146 for $1,500,000, subject to seller financing in the amount of $1,100,000, amortizing over 30 years at an interest rate of 6.5% per annum with monthly installments of $6,952.75 beginning on November 1, 2018, and continuing on the same day of each month thereafter until October 31, 2019. Upon the one-year anniversary of the note, a principal reduction payment of $50,000 is due, and provided that the monthly payments and the principal reduction payment have been made, the payments will be recalculated and re-amortized on the same terms with a new scheduled monthly payment of $6,559 beginning on November 1, 2019 and continuing until October 31, 2023, at which time the entire sum of principal in the amount of $986,438, plus any accrued interest, is due and payable. The Company closed the purchase on October 18, 2018. On December 12, 2020, the Company entered into a sales contract with Helping Hands Support, Inc. for the sale of the Company’s commercial building. On January 12, 2021, the Company completed the sale of its commercial building for $1,627,500. As of June 30, 2021, the note was paid in full.

(ii)	On January 17, 2019, the Company executed a promissory note for $750,000 with FR Holdings LLC, a Wyoming limited liability company. The note accrues interest at 5.0% per annum, payable in regular monthly installments of $3,125, due on or before the same day of each month beginning February 1, 2019 until January 31, 2022 at which the entire principal and any then accrued interest thereon shall be due and payable. As of June 30, 2021, $750,000 principal and $0 interest remain due.
(iii)	On January 17, 2019, the Company executed a short-term promissory note for $150,000 with Let’s Roll Holdings, LLC. The note accrues interest at 9.0% per annum and is due on January 16, 2020. Principal payments in the amount of $50,000 were made during the year ended December 31, 2019. As of June 30, 2021, the note was paid in full.
(iv)	On April 1, 2019, the Company executed a promissory note for $250,000 with John T. Jacobs and Teresa D. Jacobs. The note accrues interest at 6.5% per annum, payable in regular monthly installments of $2,178, due on or before the same day of each month beginning May 1, 2019 until March 31, 2020 at which time a principal reduction of $50,000 shall be due, the payments shall be re-amortized (15-year amortization). On or before March 31, 2021, a second principal reduction of $50,000 shall be due, the payments shall be re-amortized (15-year amortization). Payments shall continue to be paid until March 31, 2022, at which time the entire sum of principal and accrued interest shall be due and payable. As of June 30, 2021, $129,026 principal and $1,318 interest remain due.
(v)	On February 20, 2020, the Company’s subsidiary, Alternative Hospitality, Inc. (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $110,405 that matures on February 19, 2021. The Company received cash in the amount of $74,000 and the Holder paid expenses on behalf of the Company in the amount of $36,405. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $825 due on or before the twentieth day of each month commencing on April 20, 2020. The Borrower was required to make an interest and principal reduction payment in the amount of $1,233 on or before March 20, 2020. The Holder is granted a security interest in that certain real property located at 1300 S. Jones Blvd, Las Vegas, NV 89146, which was owned by the Borrower. As of June 30, 2021, the note was paid in full
(vi)	On March 31, 2020, the Company’s subsidiary, Condo Highrise Management, LLC (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $90,000 that matures on March 30, 2021. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $675 due on or before the first day of each month commencing on May 1, 2020. The Holder is granted a security interest in that certain real property located at 4295 Hwy 343, Amargosa, NV 89020, which was owned by the Borrower. The transaction closed on April 3, 2020. As of June 30, 2021, the note was paid in full

	Amount
Fiscal year ending December 31:
2021 (excluding the six months ended June 30, 2021)		13,615
2022		865,411
2023		-
2024		-
2025		-
Thereafter		-
Total minimum loan payments	$	879,026

11

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 8 — Commitments and Contingencies

Employment Agreements

On October 1, 2020, the Company entered into an Employment Agreement (the “Agreement”) with Jim Kelly. The Agreement became effective as of October 1, 2020. Under the terms of the Kelly Agreement, the Employee shall serve as the Company’s Interim Chief Financial Officer for a term of (i) the sooner of six (6) months, or (ii) the completion of all regulatory filings, including but not limited to the Company’s 2019 Annual Report on Form 10-K, the March 31, 2020 Quarterly Report on Form 10-Q, the June 30, 2020 Quarterly Report on Form 10-Q, the September 30, 2020 Quarterly Report on Form 10-Q and all required Current Reports on Form 8-K, with the Securities and Exchange Commission (“SEC”) to bring the Company current with the SEC. The Employee shall receive a base salary of $24,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the C-Suite of the Company in its sole discretion, in an amount equal to up to 400% of the Employee’s base salary for the then current fiscal year, and at commencement of the Term the Employee shall receive a grant of stock of 500,000 restricted shares of the Company’s common stock. On March 16, 2021, Mr. Kelly resigned in his position as Interim Chief Financial Officer.

On September 1, 2020, the Company entered into an Employment Agreement (the “Agreement”) with Paris Balaouras (the “Employee”). Under the terms of the Agreement, the Employee shall serve as the Company’s Chief Cultivation Officer for a term of three (3) years (the “Term”) commencing on September 15, 2020. The Employee shall receive a base salary of $105,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the board of directors of the Company in its sole discretion, in amount equal to up to 100% of Employee’s base salary for the then current fiscal year, shall be eligible to receive an annual discretionary stock grant during the Term which shall be vested in equal increments of 1/3^rd each over a three year period beginning on the first anniversary of employment, shall be eligible to receive a compensatory stock grant of 667,000 shares for and in consideration of past compensation ($224,000 at September 15, 2020) foregone by Employee; such grant exercisable at Employee’s option as such time as Employer is profitable at the NOI level on a trailing twelve (12) month basis or upon other commercial reasonable terms as the Board may determine and shall be awarded options to purchase 500,000 shares of the Company’s common stock, exercisable at a price of $.75 per share.

On September 1, 2020, the Company entered into an Employment Agreement (the “Agreement”) with Roger Bloss. Under the terms of the Agreement, the Employee shall serve as the Company’s Interim Chief Executive Officer for a term of six (6) months and the Chief Executive Officer and for an additional two (2) years and six (6) months as the Chief Executive Officer for a total of three (3) years (the “Term”) commencing on September 15, 2020. The Employee shall receive a base salary of $105,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the board of directors of the Company in its sole discretion, in amount equal to up to 100% of Employee’s base salary for the then current fiscal year, shall be eligible to receive an annual discretionary stock grant during the Term which shall be vested in equal increments of 1/3^rd each over a three year period beginning on the first anniversary of employment and shall be awarded options to purchase 500,000 shares of the Company’s common stock, exercisable at a price of $.75 per share.

On September 1, 2020, the Company entered into an Employment Agreement (the “Agreement”) with Bernard Moyle. Under the terms of the Agreement, the Employee shall serve as the Company’s Secretary/Treasurer for a term of three (3) years (the “Term”) commencing on September 15, 2020. The Employee shall receive a base salary of $60,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the board of directors of the Company in its sole discretion, in amount equal to up to 200% of Employee’s base salary for the then current fiscal year, shall, at commencement of the Term receive a grant of stock of 500,000 shares and shall be eligible to receive an annual discretionary stock grant during the Term which shall be vested in equal increments of 1/3^rd each over a three year period beginning on the first anniversary of employment and shall be awarded options to purchase 500,000 shares of the Company’s common stock, exercisable at a price of $.75 per share. On March 16, 2021, Mr. Moyle assumed the role of interim Chief Financial Officer upon the resignation of Mr. Kelly. The terms of Mr. Moyle’s Agreement did not change.

On May 12, 2021, the Company entered into a Cooperation and Release Agreement (the “Agreement”) with Richard S. Groberg and RSG Advisors, LLC. Under the terms of the Agreement, Mr. Groberg agreed to relinquish all common stock of the Company issued to or owned by him and waived any right to any future stock issuances except for 100,000 shares to be retained by Mr. Groberg.

Board of Directors Services Agreements

On September 15, 2020, the Company entered into a Board of Directors Services Agreement (the “Agreement”) with Messrs. Bloss, Dear and Balaouras (collectively, the “Directors”). Under the terms of the Agreement, each of the Directors shall provide services to the Company as a member of the Board of Directors for a period of not less than one year. Each of the Directors shall receive compensation as follows: (i) Fifteen Thousand and no/100 dollars ($15,000.00), paid in four (4) equal installments on the last calendar day of each quarter, and (ii) Fifteen Thousand (15,000) shares of the Company’s common stock on the last calendar day of each quarter. The Agreement for each of the Directors is effective as of October 1, 2020. On March 26, 2021, the Company’s Board of Directors elected to revise the terms of the Board of Directors Services Agreement for each director. Section 2 (Compensation) was revised such that the directors’ cash compensation was revised to stock compensation in the following manner: $3,750 divided by the closing stock price on the last business day of each quarter multiplied by 1.10. The remainder of Section is unchanged.

12

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 8 — Commitments and Contingencies (continued)

Operating Leases

The Company leases a two production / warehouse facility under a non-cancelable operating lease that expires in June 2027 and September 2029, respectively.

As of June 30, 2021, the Company recorded operating lease liabilities of $2,061,740 and right of use assets for operating leases of $1,915,507. During the six months ended June 30, 2021, operating cash outflows relating to operating lease liabilities was $69,301. As of June 30, 2021, the Company’s operating leases had a weighted-average remaining term of 7.13 years.

Future minimal rental and lease commitments under non-cancelable operating leases with terms in excess of one year as of June 30, 2021, are as follows:

	Amount
Fiscal year ending December 31:
2021 (excluding the six months ended June 30, 2021)		175,320
2022		350,755
2023		350,986
2024		351,333
2025		351,911
Thereafter		799,084
Total minimum lease payments	$	2,379,389

Rent expense, incurred pursuant to operating leases for the six months ended June 30, 2021 and 2020, was $164,066 and $177,003, respectively.

Litigation

From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company will record a liability for the loss. In addition to the estimated loss, the liability includes probable and estimable legal cost associated with the claim or potential claim. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company business.

DGMD Complaint

On March 19, 2021, a Complaint was filed against the Company, Jim Mueller, John Mueller, MachNV, LLC, Acres Cultivation, Paris Balaouras, Dimitri Deslis, ATG Holdings, LLC and Curaleaf, Inc. (collectively, the “Defendants”) by DGMD Real Estate Investments, LLC, ARMPRO, LLC, Zhang Springs LV, LLC, Prodigy Holdings, LLC and Green Organics, LLC (collectively, the “Plaintiffs”) in the District Court of Clark County, Nevada.

In the Complaint, the Plaintiffs allege that the Defendants: (i) intended to fraudulently obtain money from the Plaintiffs in order to put that money towards the Acres dispensary and to make Acres look more appealing to potential buyers as well as pay off Defendants’ agents, and (ii) the Defendants acted together in order to find investors to invest money into the Acres and MJ Holdings “Investment Schemes”, and (iii) the Defendants intended to fraudulently obtain Plaintiffs’ money for the purpose of harming the Plaintiffs to benefit the Defendants, and (iv) the Defendants committed unlawful fraudulent misrepresentation in the furtherance of the agreement to defraud the Plaintiffs. The Plaintiffs allege that damages are in excess of $15,000.

As the complaint pleads only the statutory minimum of damages, the Company is unable to estimate the potential exposure, if any, resulting from this matter but believes it is without merit as to liability and otherwise deminimis as to damages. Thus, the Company does not expect this matter to have a material effect on the Company’s consolidated financial position or its results of operations. The Company will vigorously defend itself against this action and has filed an appropriate and timely answer to the Complaint including a lengthy and comprehensive series of affirmative defenses and liability and damage avoidances.

Tierney Arbitration

On March 9, 2021, Terrence Tierny, the Company’s former President and Secretary, filed for arbitration with the American Arbitration Association for: (i) breach of contract, (i) breach of the implied covenant of good faith and fair dealing, and (iii) NRS 608 wage claim. Mr. Tierney demanded payment in the amount of $501,085 for deferred business compensation, business compensation, expenses paid on behalf of the Company, accrued vacation and severance pay.

On April 7, 2021, the Company made payment against the wage claim in the amount of $62,392, inclusive of $59,583 for wages and $2,854 for accrued vacation.

13

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 9 — Stockholders’ Equity (Deficit)

General

The Company is currently authorized to issue up to 95,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.001 per share.

Common Stock

Of the 95,000,000 shares of Common Stock authorized by the Company’s Articles of Incorporation, 70,660,015 shares of Common Stock are issued and outstanding as of June 30, 2021. Each holder of Common Stock is entitled to one vote per share on all matters to be voted upon by the stockholders and are not entitled to cumulative voting for the election of directors. Holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the board of directors out of funds legally available therefor subject to the rights of preferred stockholders. The Company has not paid any dividends and does not intend to pay any cash dividends to the holders of Common Stock in the foreseeable future. The Company anticipates reinvesting its earnings, if any, for use in the development of its business. In the event of liquidation, dissolution, or winding up of the Company, the holders of Common Stock are entitled, unless otherwise provided by law or the Company’s Articles of Incorporation, including any certificate of designations for a series of preferred stock, to share ratably in all assets remaining after payment of liabilities and the preferences of preferred stockholders. Holders of the Company’s Common Stock do not have preemptive, conversion, or other subscription rights. There are no redemptions or sinking fund provisions applicable to the Company’s Common Stock.

Common Stock Issuances

For the six months ended June 30, 2021

On March 8, 2021, the Company issued 526,216 shares of common stock with a fair market value of $410,448 in satisfaction of $100,000 principal and all accrued interest for a note payable to a related party as per the terms of the Debt Conversion and Stock Purchase Agreement dated January 14, 2021.

On March 8, 2021, the Company issued 263,158 shares of common stock with a fair market value of $205,263 to a related party for the purchase of $50,000 of common stock as per the terms of the Debt Conversion and Stock Purchase Agreement dated January 14, 2021.

On March 29, 2021, the Company issued 225,000 shares of common stock with a fair market value of $135,000 to a consultant as per the terms of the Consulting Agreement dated February 25, 2021.

On April 24, 2021, the Company issued 1,000,000 shares of common stock with a fair market value of $490,000 as per the terms of the Termination Agreement with Blue Sky Companies, LLC and Let’s Roll Nevada, LLC. 

On June 4, 2021, the Company issued 32,000 shares of common stock with a fair market value of $13,514 to its former Chief Financial Officer as final compensation for services previously rendered on behalf of the Company.

Common Stock Issuable

At June 30, 2021, the Company had 198,539 shares of stock issuable to its directors as per the terms of the Board of Directors Services Agreements.

14

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 9 — Stockholders’ Equity (Deficit) (continued)

At June 30, 2021 and December 31, 2020, there are 70,660,015 and 68,613,541 shares of Common Stock issued and outstanding, respectively.

Preferred Stock

The Board is authorized, without further approval from our stockholders, to create one or more series of preferred stock, and to designate the rights, privileges, preferences, restrictions, and limitations of any given series of preferred stock. Accordingly, the Board may, without stockholder approval, issue shares of preferred stock with dividend, liquidation, conversion, voting, or other rights that could adversely affect the voting power or other rights of the holders of Common Stock. The issuance of preferred stock could have the effect of restricting dividends payable to holders of our Common Stock, diluting the voting power of our Common Stock, impairing the liquidation rights of our Common Stock, or delaying or preventing a change in control of us, all without further action by our stockholders. Of the 5,000,000 shares of preferred stock, par value $0.001 per share, authorized in our Articles of Incorporation, 2,500 shares are designated as Series A Convertible Preferred Stock.

Series A Convertible Preferred Stock

Each share of Series A Preferred Stock is convertible, at the option of the holder, into that number of shares of Common Stock determined by dividing the stated value of each share of Series A Preferred Stock (currently, $1,000) by the conversion price (currently, $0.75). The stated value and the conversion price are subject to adjustment as provided for in the Certificate of Designation. We are prohibited from effecting a conversion of the Series A Preferred Stock to the extent that, after giving effect to the conversion, the holder (together with such holder’s affiliates and any persons acting as a group with holder or any of such holder’s affiliates) would beneficially own in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion. A holder, upon notice to us, may increase or decrease this beneficial ownership limitation; provided, that, in no event can the holder increase the beneficial ownership limitation in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon the conversion of the Series A Preferred Stock then held by holder. Such increase of the beneficial ownership limitation cannot be effective until the 61^st day after such notice is given to us and shall apply only to such holder. The Series A Preferred Stock has no voting rights; however, as long as any shares of Series A Preferred Stock are outstanding, we are not permitted, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series A Preferred Stock to (i) alter or change adversely the powers, preferences, or rights given to the Series A Preferred Stock or alter or amend the Series A Preferred Stock Certificate of Designation, (ii) amend our Articles of Incorporation or other charter documents in any manner that adversely affects any rights of the holders, (iii) increase the number of authorized shares of Series A Preferred Stock, or (iv) enter into any agreement with respect to any of the forgoing.

15

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 9 — Stockholders’ Equity (Deficit) (continued)

Preferred Stock Issuances

For the six months ended June 30, 2021

None

At June 30, 2021 and December 31, 2020, there were 0 and 0 shares of Series A Preferred Stock issued and outstanding, respectively.

Note 10 — Basic and Diluted Earnings (Loss) per Common Share

Basic earnings (loss) per share is computed by dividing the net income or net loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated using the treasury stock method and reflects the potential dilution that could occur if warrants were exercised and were not anti-dilutive.

For the three months ended June 30, 2021, basic and diluted loss per common share were the same since there were no potentially dilutive shares outstanding during the respective periods. The outstanding warrants and options as of June 30, 2021, to purchase 760,000 shares of 1,010,000 common stock were not included in the calculations of diluted loss per share because the impact would have been anti-dilutive. 207,479 common stock equivalents were included in the calculation as their impact would have been dilutive.

For the six months ended June 30, 2021, basic and diluted income per common share were based on 69,580,992 and 69,969,539 shares, respectively.

Note 11 — Stock Based Compensation

Warrants and Options

A summary of the warrants and options issued, exercised and expired are below:

Stock Options

On September 15, 2020, the Company issued an option to purchase 500,000 shares of common stock to each of Messrs. Balaouras, Bloss and Moyle as per the terms of their employment agreements. The options have an exercise price of $0.75 and expire on the three-year anniversary date.

A summary of the options issued, exercised and expired are below:

Options:	Shares		Weighted Avg. Exercise Price		Remaining Contractual Life in Years
Balance at December 31, 2020		1,510,000	$	0.75		2.33
Issued		-		-		-
Exercised		-		-		-
Expired		-		-		-
Balance at June 30, 2021		1,510,000	$	0.75		2.20
Exercisable at June 30, 2021		760,000	$	0.76		2.18

Options outstanding as of June 30, 2021 and December 31, 2020 were 1,510,000 and 1,510,000, respectively.

Warrants

In June of 2019, in conjunction with the Company’s offering under Rule 506 of Regulation D of the Securities Act (the “Offering”), the Company granted warrants to each participant in the Offering upon the following terms and conditions: (a) each participant has the right to acquire additional shares of the Company’s Common Stock equal to ten (10%) of the shares purchased in the offering (the “Warrants”); (b) one-half of the Warrants granted to each participant have an exercise price of $0.65 and the other one-half have an exercise price of $1.00, and (c) the Warrants shall be exercisable between June 5, 2019, the date of grant and June 4, 2021 the date of expiration of the Warrants. As of June 30, 2021, all warrants issued in the June 2019 offering had expired.

On January 11, 2021, the Company issued an accredited investor a Common Stock Purchase Warrant Agreement in conjunction with the July 2020 Securities Purchase Agreement granting the holder the right to purchase up to 250,000 shares of the Company’s common stock at an exercise price of $0.10 for a term of 4-years.

A summary of the warrants issued, exercised and expired are below:

Warrants:	Shares		Weighted Avg. Exercise Price		Remaining Contractual Life in Years
Balance at December 31, 2020		1,233,000	$	0.83		0.4
Issued		250,000		0.10		3.5
Exercised		-		-		-
Expired		1,233,000		0.83		-
Balance at June 30, 2021		250,000	$	0.10		3.5

Warrants outstanding as of June 30, 2021 and December 31, 2020 were 250,000 and 1,233,000, respectively.

16

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 12 — Related Party Transactions

On February 20, 2020, the Company’s subsidiary, Alternative Hospitality, Inc. (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $110,405 that matures on February 19, 2021. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $825 due on or before the twentieth day of each month commencing on April 20, 2020. The Borrower was required to make an interest and principal reduction payment in the amount of $1,233 on or before March 20, 2020. The Holder is granted a security interest in that certain real property located at 1300 S. Jones Blvd, Las Vegas, NV 89146, which is owned by the Borrower. The Note was paid in full on March 31, 2021.

On March 31, 2020, the Company’s subsidiary, Condo Highrise Management, LLC (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $90,000 that matures on March 30, 2021. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $675 due on or before the first day of each month commencing on May 1, 2020. The Holder is granted a security interest in that certain real property located at 4295 Hwy 343, Amargosa, NV 89020 which is owned by the Borrower. The transaction closed on April 3, 2020. The Note was paid in full on March 31, 2021.

Note 13 — Subsequent Events

On July 14, 2021, the Company issued 29,495 shares of common stock with a fair market value of $12,093 to a Director as compensation per the terms of the Board of Directors Services Agreement.

On July 14, 2021, the Company issued 43,245 shares of common stock with a fair market value of $17,730 to a director as compensation per the terms of the Board of Directors Services Agreement.

On July 14, 2021, the Company issued 43,245 shares of common stock with a fair market value of $17,730 to a Director as compensation per the terms of the Board of Directors Services Agreement.

On July 21, 2021, the Company issued 62,333 shares of common stock with a fair market value of $25,089 to a consultant for services rendered on behalf of the Company.

On July 21, 2021, the Company issued 30,000 shares of common stock with a fair market value of $12,075 to a consultant for services rendered on behalf of the Company.

On July 21, 2021, the Company issued 120,000 shares of common stock with a fair market value of $48,300 to an employee for past due wages.

On July 21, 2021, the Company issued 60,000 shares of common stock with a fair market value of $24,150 to an employee for past due wages.

On July 21, 2021, the Company issued 30,000 shares of common stock with a fair market value of $12,075 to an employee for past due wages.

On July 27, 2021, the Red Earth, LLC, a wholly owned subsidiary of the Company (the “Subsidiary”), entered into a Stipulation and Order for Settlement of Disciplinary Action (the “Stipulation Order”) with the CCB. Under the terms of the Stipulation Order, the Subsidiary has agreed to present to the CCB, by not later than August 31, 2021, a plan pursuant to which the ownership of the Subsidiary will be returned to the original owners. The Parties to the Stipulation Order resolved the matter without the necessity of taking formal action. The Subsidiary agreed to pay a civil penalty of $10,000, which was paid on July 29, 2021.

On July 30, 2021, the Company returned 300,000 shares of common stock to treasury as per the terms of the Groberg Cooperation and Release Agreement. 

17

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

Our Management’s Discussion and Analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this quarterly report.

Forward-Looking Statements

This Quarterly Report contains forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this report, the words “believe,” “anticipate,” “expect,” “will,” “estimate,” “intend”, “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved. Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and in our subsequent filings with the SEC, and include, among others, the following: marijuana is illegal under federal law, the marijuana industry is subject to strong competition, our business is dependent on laws pertaining to the marijuana industry, the marijuana industry is subject to government regulation, our business model depends on the availability of private funding, we will be subject to general real estate risks, if debt payments to note holder are not made we could lose our investment in our real estate properties, terms and deployment of capital. The terms “MJ Holdings, Inc.,” “MJ Holdings,” “MJ,” “we,” “us,” “our,” and the “Company” refer to MJ Holdings, Inc., individually, or as the context requires, collectively with its subsidiaries on a consolidated basis.

Company Overview

MJ Holdings, Inc. (OTCPK: MJNE) is a highly-diversified cannabis holding company providing cultivation management, asset and infrastructure development – currently concentrated in the Las Vegas market. It is the Company’s intention to grow its business and provide a 360-degree spectrum of infrastructure, including, cannabis cultivation, production of cannabis related products, management services, dispensaries and consulting services. The Company intends to grow its business through joint ventures with existing companies possessing complementary subject matter expertise, acquisition of existing companies and through the development of new opportunities. The Company intends to “prove the concept” profitably in the rapidly expanding Las Vegas market and then use that anticipated success as a template for replicating the concept in other developing states through a combination of strategic partnerships, acquisitions and opening new operations.

Current Initiatives include:

● a three-acre, hybrid, outdoor, marijuana-cultivation facility (the “Cultivation Facility”) located in the Amargosa Valley of Nevada. The Company has the contractual right to manage and cultivate marijuana on this property until 2026, for which it will receive eighty-five percent (85%) of the net revenues realized from its management of this facility. The licensed facility is owned by Acres Cultivation, LLC, a wholly owned subsidiary of Curaleaf Holdings, Inc. The Company completed its second harvest on this property in November of 2019 and had anticipated generating revenue from this harvest until late Q4 of 2020. The impact of COVID-19 greatly impacted the continuing sale of inventory from this harvest. In April of this year, the Company planted a one acre auto-flower crop, which it began harvesting in late June. On January 21, 2021, the Company received a Notice of Termination, effective immediately, from Acres Cultivation, LLC. The Company does not anticipate that it will generate any further revenue under the Acres relationship.

● 260 acres of farmland for the purpose of cultivating additional marijuana (the “260 Acres”) purchased in January of 2019. The Company intends to utilize the state-of-the-art Cravo® cultivation system for growing an additional five acres of marijuana on this property, that is contiguous to the three-acre property that it manages in Amargosa. The Cravo® system will allow multiple harvests per year and should result in higher annual yields per acre. The land has more than 180-acre feet of permitted water rights, which will provide more than sufficient water to markedly increase the Company’s marijuana cultivation capabilities. During the 1^st quarter of 2021, the Company elected to relocate its equipment previously located on the Acres lease to its 260 acres for future grows. The 260 acres will be home to multiple grows from independent growers under multiple Cultivation and Sales Agreements.

● Cultivation and Sales Agreements entered into for multiple grows on the Company’s 260-acre farm located in the Amargosa Valley of Nevada. During the 4^th quarter of 2021 and 1^st quarter of 2021, the Company entered into separate Cultivation and Sales Agreements, whereby the Company shall retain certain independent growers to provide oversight and management of the Company’s cultivation and sale of products at its 260-acre farm. The independent growers shall pay to the Company a royalty of net sales revenue with a minimum royalty after two years.

18

● an agreement to acquire an additional cultivation license and production license, both currently located in Nye County Nevada. On February 5, 2021, the Company (the “Purchaser”) executed a Membership Interest Purchase Agreement (“MIPA3”) with MJ Distributing, Inc. (the “Seller”) to acquire all of the outstanding membership interests of MJ Distributing C202, LLC and MJ Distributing P133, LLC, each the holder of a State of Nevada provisional medical and recreational cultivation license and a provisional medical and recreational production license. In consideration of the sale, transfer, assignment and delivery of the Membership Interests to Purchaser, and the covenants made by Seller under the MIPA3, Purchaser agrees to pay a combination of cash, promissory notes, and stock in the amount of One-Million-Two-Hundred-Fifty Thousand Dollars ($1,250,000.00) in cash and/or promissory notes and 200,000 shares of the Company’s restricted common stock, all of which constitutes the consideration agreed to herein for (the “Purchase Price”), payable as follows: (i) a non-refundable down payment in the amount of $300,000 was made on January 15, 2021, (ii) the second payment in the amount of $200,000 was made on February 5, 2021, (iii) a deposit in the amount of $310,000 was paid on February 22, 2021 ($210,000 was a pre-payment against future compensation due under the MIPA3), (iv) $200,000 was deposited on June 24, 2021, (v) $200,000 shall be deposited on or before June 12, 2021, and (vi) $250,000 shall be deposited within five (5) business days after the Nevada Cannabis Compliance Board (“CCB”) provides notice on its agenda that the Licenses are set for hearing to approve the transfer of ownership from the Seller to the Purchaser.

● indoor cultivation facility build-out in the City of Las Vegas (the “Indoor Facility”). Through its subsidiary, Red Earth, LLC, the Company holds a Medical Marijuana Establishment Registration Certificate, Application No. C012. In August of 2019, the Company entered into a Membership Interest Purchase Agreement (the “Agreement”) with Element NV, LLC (“Element”), to sell a 49% interest in the license. Under the terms of the Agreement, Element was required to invest more than $3,500,000 into this Indoor Facility. Element paid the monthly rent on the facility from December 2019 through March 2020 but failed to make any additional payments. On June 11, 2020, the Company entered into the First Amendment (“First Amendment”) to the Agreement. Under the terms of the First Amendment, the Closing Purchase Price was adjusted to $441,000, and Element was required to make a capital contribution (the “Initial Contribution Payment”) to the Target Company in the amount of $120,000 and was required to make an additional cash contribution (the Final Contribution Payment”) in the amount of $240,000. Due to the ongoing impact of COVID-19 on the Company’s respective business operations, the Company has not been able to pay the monthly rent. As of the date of this filing, the Company is in active negotiations with the landlord to find an acceptable resolution regarding the payment of past due rent. The Company has terminated its discussions with Element regarding its past due payments and has elected to place the Certificate up for sale.

Cultivation and Sales Agreements

MKC Development Group, LLC Agreement

On January 22, 2021 (the “effective Date”), MJ Holdings, Inc. (“MJNE”) entered into a Cultivation and Sales Agreement (the “Agreement”) with MKC Development Group, LLC (the “Company”). Under the terms of the Agreement, MJNE shall retain the Company to provide oversight and management of MJNE’s cultivation and sale of products at MJNE’s Amargosa Valley, NV farm. The Agreement shall commence on the Effective Date, continue for a period of ten (10) years and automatically renew for a period of five (5) years.

As deposits, security and royalty, the Company shall pay to MJNE:

(i)	a $600,000 non-refundable deposit upon execution of the Agreement;
(ii)	a security deposit of $10,000 to be applied against the last month’s obligations and a $10,000 payment to be applied against the first month’s rent;
(iii)	$10,000 on the first of each month for security and compliance;
(iv)	a royalty of 10% of gross revenue less applicable taxes (hereinafter “Net Sales Revenue”) on all sales of product by the Company; and
(v)	the Company shall, after the first two (2) years from execution of the Agreement, be responsible to pay to MJNE a minimum royalty of $83,000.00 per month.

As compensation, MJNE shall pay to the Company:

(i) 90% of Net Sales Revenue to the Company as the Management Fee.

The transaction closed on January 27, 2021.

Natural Green, LLC Agreement

On March 26, 2021 (the “effective Date”), MJ Holdings, Inc. (“MJNE”) entered into a Cultivation and Sales Agreement (the “Agreement”) with Natural Green, LLC (the “Company”). Under the terms of the Agreement, MJNE shall retain the Company to provide oversight and management of MJNE’s cultivation and sale of products at MJNE’s Amargosa Valley, NV farm. The Agreement shall commence on the Effective Date, continue for a period of ten (10) years and automatically renew for a period of five (5) years. The Company shall be responsible for compliance, standard of care, packaging, insurance, labor matters, policies and procedures, testing, record keeping, security and marketing.

As deposits, security and royalty, the Company shall pay to MJNE:

(i)	a $500,000 Product Royalty deposit to be applied to the first Product Royalty or Product Royalties;
(ii)	a deposit of $20,000 to be applied against the first and last month’s Security and Compliance fee;
(iii)	$10,000 on the first of each month for Security and Compliance;
(iv)	a royalty of 10% of gross revenue less applicable taxes (hereinafter “Net Sales Revenue”) on all sales of product by the Company; and
(v)	the Company shall, after the first two (2) years from execution of the Agreement, be responsible to pay to MJNE a minimum royalty of $50,000.00 per month.

As compensation, MJNE shall pay to the Company:

(i) 90% of Net Sales Revenue to the Company as the Management Fee.

On March 26, 2021, MJNE and the Company entered into an Amendment to the Agreement whereby MJNE waived the Company’s requirement to obtain liability insurance and required the Company to pay MJNE $40,000 for capital expenditures costs. The transaction closed on April 7, 2021.

Green Grow Investments Agreement

On May 7, 2021 (the “Effective Date”), MJ Holdings, Inc. (“MJNE”) entered into a Cultivation and Sales Agreement (the “Agreement”) with Green Grow Investments Corporation (the “Company”). Under the terms of the Agreement, MJNE shall retain the Company to provide oversight and management of MJNE’s cultivation and sale of products at MJNE’s Amargosa Valley, NV farm. The Agreement shall commence on the Effective Date, continue for a period of ten (10) years and automatically renew for a period of five (5) years. The Company shall be responsible for compliance, standard of care, packaging, insurance, labor matters, policies and procedures, testing, record keeping, security and marketing.

As deposits, security and royalty, the Company shall pay to MJNE:

(i)	a $600,000 Product Royalty of which $50,000 is due upon signing, $150,000 upon MJNE obtaining the licenses from MJ Distributing, Inc. and affiliates and $200,000 for each of the first and second years’ harvests;
(ii)	a deposit of $20,000 to be applied against the first and last month’s Security and Compliance fee;
(iii)	$10,000 on the first of each month for Security and Compliance;
(iv)	a royalty of 10% of gross revenue less applicable taxes (hereinafter “Net Sales Revenue”) on all sales of product by the Company; and
(v)	the Company shall, after the first two (2) years from execution of the Agreement, be responsible to pay to MJNE a minimum royalty of $50,000.00 per month.

As compensation, MJNE shall pay to the Company:

(i) a Management Fee that is based upon the net sales price (after taxes) and further subject to all contractual expenses.

RK Grow, LLC Agreement

On June 22, 2021 (the “Effective Date”), MJ Holdings, Inc. (“MJNE”) entered into a Cultivation and Sales Agreement (the “Agreement”) with RK Grow, LLC (the “Company”). Under the terms of the Agreement, MJNE shall retain the Company to provide oversight and management of MJNE’s cultivation and sale of products at MJNE’s Amargosa Valley, NV farm. The Agreement shall commence on the Effective Date, continue for a period of fifteen (15) years and automatically renew for one fifteen (15) year period. The Company shall be responsible for compliance, standard of care, packaging, insurance, labor matters, policies and procedures, testing, record keeping, security and marketing. The Agreement is for a designated 40 acres for cultivation.

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As deposits, security and royalty, the Company shall pay to MJNE:

(i)	a Product Royalty Deposit of $3,000,000.00 to be applied to the first Product Royalty or Product Royalties;
(ii)	a deposit of $20,000 to be applied against the first and last month’s Security and Compliance fee;
(iii)	$10,000 on the first of each month for Security and Compliance;
(iv)	a royalty of 10% of gross revenue less applicable taxes (hereinafter “Net Sales Revenue”) on all sales of product by the Company;
(v)	Minimum Monthly Product Royalty: Minimum Monthly Product Royalty (MMPR) shall be calculated on a per annum basis. Therefore, Company will have satisfied all MMPR obligations for the year upon remitting $1,080,000.00 to MJNE; and
(vi)	MJNE agrees to provide access to water for the Designated Acreage without charge to the Company. However, Company will be responsible for any construction required to have the water actually delivered to its Designated Acreage from the source.

As compensation, MJNE shall pay to the Company:

(i) a Management Fee that is based upon the net sales price (after taxes) and further subject to all contractual expenses.

Termination of Acres Cultivation, LLC Agreement

On January 21, 2021, the Company received a Notice of Termination (the “Notice”), effective immediately, from Acres Cultivation, LLC (“Acres”) on the following three (3) agreements (collectively, herein the “Cooperation Agreement”):

(i) The Cultivation and Sales Agreement entered into by and between MJNE and Acres, dated as of January 1, 2019 (the “Cultivation and Sales Agreement” or “CSA”), pursuant to Sections 5.3, and 16.20 (cross-default);

(ii)	The Consulting Agreement, by and between Acres and MJNE, made as of January 1, 2019 (the “Consulting Agreement”), pursuant to Sections 10 and 11.10 (cross-default); and
(iii)	The Equipment Lease Agreement between Acres and MJNE, dated as of January 1, 2019 (the “Equipment Lease Agreement”), pursuant to Sections 8(ii), 8(iv), and 29 (cross-default).

The Company initiated relocating its equipment to its 260-acre farm at the end of the first quarter and does not anticipate that it will generate any further revenue under the Acres relationship.

The Company may also continue to seek to identify potential acquisitions of revenue producing assets and licenses within legalized cannabis markets that can maximize shareholder value.

The Company may face substantial competition in the operation of cultivation facilities in Nevada. Numerous other companies have also been granted cultivation licenses, and, therefore, the Company anticipates that it will face competition from these other companies. The Company’s management team has experience in successfully developing, implementing, and operating marijuana cultivation and related businesses in other legal cannabis markets. The Company believes its experience in outdoor cultivation provides it with a distinct competitive advantage over its competitors, and it will continue to focus on this area of its operations. The Company still faces challenges engaging and retaining senior managers.

The Company presently occupies an office suite located at 7320 S. Rainbow Blvd., Suite 102-210, Las Vegas, NV 89139. On January 12, 2021, the Company closed on the sale of its corporate office building located at 1300 S. Jones Blvd, Las Vegas, NV 89146 for the sale price of $1,627,500. The Company plans on remaining at its current location for the next 3-6 months until it can identify a new corporate office.

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Consulting Agreements

On February 25, 2021, the Company entered into a Consulting Agreement (the “Agreement”) with Sylios Corp (the “Consultant”). Under the terms of the Agreement, the Consultant shall prepare the Company’s filings with the Securities and Exchange Commission (the “SEC”) including its Annual report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Consultant shall receive $50,000 in cash compensation plus 225,000 shares of the Company’s common stock. The Agreement has a term of the latter of one (1) year or until the Company’s Annual Report for the period ended December 31, 2021 is filed with the SEC.

On June 17, 2021, the Company entered into a Consulting Agreement (the “Agreement”) with Wolfpack Consulting, LLC (the “Consultant”). Under the terms of the Agreement, the Consultant shall use its commercially reasonable efforts and adequate business time and attention to identify various properties that may fit into Client’s business model to develop, cultivate, and produce marijuana related products. The Consultant shall receive $25,000 in cash compensation. The Agreement shall begin on the Effective date and end upon the earlier of: (a) the first anniversary of the Effective Date (i.e., one year), or (b) either Party’s receipt of written notice from the other party of its intent to terminate this Agreement after the expiration of the first anniversary (the “Term”).

Corporate Advisory Agreement (Research & Development)

Under the terms of the Research & Development Agreement (the “Research Agreement”), GYB, LLC (the “Advisor”) shall report to Company, in writing, on a quarterly basis beginning on July 1, 2021, on the status of the psychedelics industry including, but not limited to, those areas of importance identified in the Recitals, identify entities operating within the legally regulated psychedelics industry that may be suitable as a potential acquisition or merger candidate and other such services the parties agree upon. The Research Agreement has a term of one year and begins on May 18, 2021. As compensation for the services provided, the Company shall pay the Advisor $310,000 upon execution of the Research Agreement.

Corporate Advisory Agreement (M&A and Funding)

Under the terms of the M&A and Funding Agreement (the “M&A Agreement”), GYB, LLC (the “Advisor”) shall identify prospective funding sources, identify potential companies for acquisition within the cannabis industry, identify pertinent technology companies that drive-up point of sale solutions and other such services the parties agree upon. The M&A Agreement has a term of two years and begins on May 18, 2021. As compensation for the services provided, the Company shall pay the Advisor $290,000 upon execution of the M&A Agreement.

COVID-19

The novel coronavirus commonly referred to as “COVID-19” was identified in December 2019 in Wuhan, China. On January 30, 2020, the World Health Organization declared the outbreak a global health emergency, and on March 11, 2020, the spread of COVID-19 was declared a pandemic by the World Health Organization. On March 13, 2020, the spread of COVID-19 was declared a national emergency by former President Donald Trump. The outbreak has spread throughout Europe, the Middle East and North America, causing companies and various international jurisdictions to impose restrictions such as quarantines, business closures and travel restrictions. While these effects are expected to be temporary, the duration of the business disruptions internationally and related financial impact cannot be reasonably estimated at this time. The rapid development of the COVID-19 pandemic and the measures being taken by governments and private parties to respond to it are extremely fluid. While the Company has continuously sought to assess the potential impact of the pandemic on its financial and operating results, any assessment is subject to extreme uncertainty as to probability, severity and duration of the pandemic as reflected by infection rates at local, state, and regional levels. The Company has attempted to assess the impact of the pandemic by identifying risks in the following principal areas:

● Mandatory Closures. In response to the pandemic, many states and localities implemented mandatory closures of, or limitations to, businesses to prevent the spread of COVID-19; this impacted the Company’s operations. More recently, the mandatory closures that impacted the Company’s operations were lifted and the Company resumed full operations, albeit subject to various COVID-19 related precautions and changes in local infection rates. The Company’s ability to generate revenue would be materially impacted by any future shut down of its operations.

● Customer Impact. While the Company has not experienced an overall downturn in demand for its products in connection with the pandemic, if its customers become ill with COVID-19, are forced to quarantine, decide to self-quarantine or not to visit stores where its products may be sold or distribution points to observe “social distancing”, it may have material negative impact on demand for its products while the pandemic continues. While the Company has implemented measures, to reduce infection risk to its customers, regulators may not permit such measures, or such measures may not prevent a reduction in demand.

● Supply Chain Disruption. The Company relies on third party suppliers for equipment and services to produce its products and keep its operations going. If its suppliers are unable to continue operating due to mandatory closures or other effects of the pandemic, it may negatively impact its own ability to continue operating. At this time, the Company has not experienced any failure to secure critical supplies or services. However, disruptions in the Company’s supply chain may affect its ability to continue certain aspects of the Company’s operations or may significantly increase the cost of operating its business and significantly reduce its margins.

● Staffing Disruption. The Company is, for the time being, implementing among its staff where feasible “social distancing” measures recommended by such bodies as the Centers for Disease Control (CDC), the Presidential Administration, as well as state and local governments. The Company has cancelled non-essential travel by employees, implemented remote meetings where possible, and permitted all staff who can work remotely to do so. For those whose duties require them to work on-site, measures have been implemented to reduce infection risk, such as reducing contact with customers, mandating additional cleaning of workspaces and hand disinfection, providing masks and gloves to certain personnel, and contact tracing following reports of employee infection. Nevertheless, despite such measures, the Company may find it difficult to ensure that its operations remain staffed due to employees falling ill with COVID-19, becoming subject to quarantine, or deciding not to come to come to work on their own volition to avoid infection. At certain locations, the Company has experienced increased absenteeism due to increased COVID-19 infection rates in certain locales. If such absenteeism increases, the Company may not be able, including through replacement and temporary staff, to continue to operate at desired levels in some or all locations.

● Regulatory Backlog. Regulatory authorities, including those that oversee the cannabis industry on the state level, are heavily occupied with their response to the pandemic. These regulators as well as other executive and legislative bodies in the states in which the Company operates may not be able to provide the level of support and attention to day-to-day regulatory functions as well as to needed regulatory development and reform that they would otherwise have provided. Such regulatory backlog may materially hinder the development of the Company’s business by delaying such activities as product launches, facility openings and approval of business acquisitions, thus materially impeding development of its business. The Company is actively addressing the risk to business continuity represented by each of the above factors through the implementation of a broad range of measures throughout its structure and is reassessing its response to the COVID-19 pandemic on an ongoing basis. The above risks individually or collectively may have a material impact on the Company’s ability to generate revenue. Implementing measures to remediate the risks identified above may materially increase the Company’s costs of doing business, reduce its margins and potentially result in losses. While the Company has not to date experienced any overall material negative impact on its operations or financial results related to the impact of the pandemic, so long as the pandemic and measures taken in response to the pandemic are not abated, substantial risk of such impact remains, which could negatively impact the Company’s ability to generate revenue and/or profits, raise capital and complete its development plans.

● Limited availability of vaccine. On December 11, 2020, the federal Food and Drug Administration (FDA) issued an emergency use authorization (EUA) for the Pfizer BioN-Tech COVID-19 vaccine, the first such approval. Additional EUAs were issued on December 18, 2020 for a vaccine created by Moderna, and on February 27, 2021 for a vaccine created by Janssen Biotech (a Johnson & Johnson affiliate). As of April 4, 2021, the CDC reports that approximately 168 million doses of the various vaccines have been administered in the U.S., although both the Pfizer and Moderna vaccines require the administration of two doses for full effectiveness. On March 2, 2021, President Biden stated that the U.S. will have sufficient vaccine supply for all adults by the end of May 2021. Actual delivery of the vaccines to individuals, however, is controlled by state and local governments using various prioritization criteria and states continue to impose activity limitations and other precautions on businesses during this period until the vaccine is widely disseminated. In addition, there can be no assurance of when the Company’s employees in any particular jurisdiction will be able to access the vaccine. Moreover, there can be no assurance that all employees will choose to avail themselves of the vaccine or, if so, when they will choose to do so. The same applies to the Company’s, customers, regulators, and suppliers. Consequently, the COVID-19 risk factors described above continue to be applicable.

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Corporate History

The Company was incorporated on November 17, 2006, as Securitas EDGAR Filings, Inc. under the laws of the State of Nevada. Prior to the formation of Securitas EDGAR Filings Inc., the business was operated as Xpedient EDGAR Filings, LLC, a Florida Limited Liability Company, formed on October 31, 2005. On November 21, 2005, Xpedient EDGAR Filings LLC amended its Articles of Organization to change its name to Securitas EDGAR Filings, LLC. On January 21, 2009, Securitas EDGAR Filings LLC merged into Securitas EDGAR Filings, Inc., a Nevada corporation. On February 14, 2014, the Company amended and restated its Articles of Incorporation and changed its name to MJ Holdings, Inc.

On November 22, 2016, in connection with a plan to divest the Company of its real estate business, the Company submitted to its stockholders an offer to exchange (the “Exchange Offer”) its common stock for shares in MJ Real Estate Partners, LLC, (“MJRE”) a newly-formed LLC formed for the sole purpose of effecting the Exchange Offer. On January 10, 2017, the Company accepted for exchange 1,800,000 shares of its Common Stock in exchange for 1,800,000 shares of MJRE’s common units, representing membership interests in MJRE. Effective February 1, 2017, the Company transferred its ownership interests in the real estate properties and its subsidiaries, through which the Company held ownership of the real estate properties, to MJRE. MJRE also assumed the senior notes and any and all obligations associated with the real estate properties and business, effective February 1, 2017.

Acquisition of Red Earth

On December 15, 2017, the Company acquired all of the issued and outstanding membership interests of Red Earth, LLC, a Nevada limited liability company (“Red Earth”) established in October 2016, in exchange for 52,732,969 shares of its Common Stock and a promissory note in the amount of $900,000. The acquisition was accounted for as a “Reverse Merger”, whereby Red Earth was considered the accounting acquirer and became its wholly owned subsidiary. Upon the consummation of the acquisition, the now former members of Red Earth became the beneficial owners of approximately 88% of the Company’s Common Stock, obtained controlling interest of the Company, and retained certain of its key management positions. In accordance with the accounting treatment for a “reverse merger” or a “reverse acquisition”, the Company’s historical financial statements prior to the reverse merger will be replaced with the historical financial statements of Red Earth prior to the reverse merger in all future filings with the SEC. Red Earth is the holder of a Nevada Marijuana Establishment Certificate for the cultivation of marijuana.

On or about May 7, 2021, the Company’s wholly owned subsidiary, Red Earth, LLC (the “Subsidiary”), received an inquiry from the State of Nevada Cannabis Compliance Board (“CCB”) regarding the transfer of ownership of the Subsidiary from its previous owners to the Company. The CCB has determined that the transfer was not formally approved, thus a Category II violation.

The consolidated financial statements after completion of the reverse merger included: the assets, liabilities, and results of operations of the combined company from and after the closing date of the reverse merger, with only certain aspects of pre-consummation stockholders’ equity remaining in the consolidated financial statements. In February of 2019, the Company repurchased, from the Company’s largest shareholder, 20,000,000 of the 26,366,484 shares of common stock that this shareholder originally received in connection with the Reverse Merger - for a total purchase price of $20,000.

On July 27, 2021, the Subsidiary entered into a Stipulation and Order for Settlement of Disciplinary Action (the “Stipulation Order”) with the CCB. Under the terms of the Stipulation Order, the Subsidiary has agreed to present to the CCB, by not later than August 31, 2021, a plan pursuant to which the ownership of the Subsidiary will be returned to the original owners. The Parties to the Stipulation Order resolved the matter without the necessity of taking formal action. The Subsidiary agreed to pay a civil penalty of $10,000, which was paid on July 29, 2021.

Our Business

We commenced cultivation activities on our three-acre managed cultivation facility in August of 2018, harvesting more than 5400 pounds of marijuana through December of 2018. In the fourth quarter of 2019, we completed our 2019 harvest of approximately 4,800 marijuana plants with expected yield of more than 3,300 pounds of marijuana flower and trim. As of the time of this filing, we have completed our 2020 harvest of approximately 7,600 marijuana plants with expected yield of more than 4,700 pounds of marijuana flower and trim. It is our intention to grow our business through the acquisition of existing companies and/or through the development of new opportunities that can provide a 360-degree spectrum of infrastructure (dispensaries), cultivation and production management, and consulting services in the regulated cannabis industry.

Through Red Earth, we hold a provisional State of Nevada issued cannabis cultivation license, and through HDGLV, we hold a triple-net leasehold, with an option to buy, on a 17,298 square-foot building, which we expect will be home to our indoor cultivation facility.

The Company currently operates through the following entities:

MJ Holdings, Inc.	This entity, the Parent, serves as a holding company for all of the operating businesses/assets.
Prescott Management, LLC	Prescott Management is a wholly owned subsidiary of the Company that provides day-to-day management and operational oversight to the Company’s operating subsidiaries.
Icon Management, LLC	Icon is a wholly owned subsidiary of the Company that provides Human Resource Management (“HR”) services to the Company. Icon is responsible for all payroll activities and administration of employee benefit plans and programs.
Farm Road, LLC	Farm Road, LLC is a wholly owned subsidiary of the Company that owns 260 acres of farmland in Amargosa, NV. The Company acquired all of the membership interests of Farm Road in January of 2019.
Condo Highrise Management, LLC	Condo Highrise Management is a wholly owned subsidiary of the Company that manages the Company owned Trailer Park in Amargosa, Nevada.
Red Earth Holdings, LLC	Red Earth Holdings, LLC is a wholly owned subsidiary of the Company that will eventually be the holder of the Company’s primary cannabis license assets. As of the date of this report, Red Earth Holdings has no operations and holds no assets.

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Red Earth, LLC	Red Earth, established in 2016, was a wholly owned subsidiary of the Company from December 15, 2017 until August 30, 2019 prior to the Company selling a forty-nine percent (49%) interest in Red Earth to Element NV, LLC, an unrelated third party (See further description of the transaction hereinabove). Red Earth’s assets consist of: (i) a cultivation license to grow marijuana within the City of Las Vegas in the State of Nevada, and (ii) all of the outstanding membership interests in HDGLV, which holds a triple net leasehold interest in a 17,298 square-foot building in Las Vegas, Nevada, which it expects to operate as an indoor marijuana cultivation facility. The Company expects to complete construction of this facility in the first quarter of 2021. In July 2018, the Company completed the first phase of construction on this facility, and it received a City of Las Vegas Business License to operate a marijuana cultivation facility. The Company expects to obtain final approval towards perfecting the cultivation license from the State of Nevada regulatory authorities in the second quarter of 2021, but it can provide no assurances on the receipt and/or timing of the final approvals.
HDGLV, LLC	HDGLV is a wholly owned subsidiary of Red Earth, LLC and is the holder of a triple net lease on a commercial building in Las Vegas, Nevada which is being developed to house the Company’s indoor grow facility.
Alternative Hospitality, Inc.	Alternative Hospitality is a Nevada corporation formed in November of 2018. MJ Holdings owns fifty-one percent (51%) of the company and the remaining forty-nine percent (49%) is owned by TVK, LLC, a Florida limited liability company.
MJ International Research Company Limited	MJ International is a wholly owned subsidiary of the Company that is headquartered in Dublin, Ireland. MJ International is the sole shareholder of MJ Holdings International Single Member S.A. and Gioura International Single Member Private Company.

Critical Accounting Policies, Judgments and Estimates

There were no material changes to the Company’s critical accounting policies and estimates during the interim period ended June 30, 2021.

Please see our Annual Report on Form 10-K for the year ended December 31, 2020 filed on April 9, 2021, for a discussion of our critical accounting policies and estimates and their effect, if any, on the Company’s financial results.

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Results of Operations

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

Revenues

The Company’s revenue was $209,006 for the three months ended June 30, 2021, compared to $66,914 for the three months ended June 30, 2020. The increase in revenue for the three months ended June 30, 2021 versus the three months ended June 30, 2020 was largely attributable to revenue generated under the management agreement with Acres Cultivation, LLC. Revenue, by class, is as follows:

	For the three months ended
	June 30,
	2021		2020
Revenues:
Rental income (i)	$	20,308	$	35,464
Management income (ii)		138,446		22,200
Equipment lease income (ii)		50,252		9,250
Total	$	209,006	$	66,914

(i)

The rental income is from the Company’s THC Park.

(ii)

In April 2018, the Company entered into a management agreement with Acres Cultivation, LLC, a Nevada limited liability company (the “Licensed Operator”) that holds a license for the legal cultivation of marijuana for sale under the laws of the State of Nevada. In January of 2019, the Company entered into a revised agreement, which replaced the April 2018 agreement, with the Licensed Operator in order to be more stringently aligned with Nevada marijuana laws. The material terms of the agreement remain unchanged. The Licensed Operator is contractually obligated to pay over to the Company eighty-five (85%) percent of gross revenues defined as gross proceeds from sales of marijuana products minus applicable state excise taxes and local sales tax. The agreement is to remain in force until April 2026. In April 2019, the Licensed Operator was acquired by Curaleaf Holdings, Inc., a publicly traded Canadian cannabis company. On January 21, 2021, the Company received a Notice of Termination, effective immediately, from Acres Cultivation, LLC. The Company does not anticipate that it will generate any further revenue under the Acres relationship.

Operating Expenses

Direct costs of revenues were $40,592 and $67,428 for the three months ended June 30, 2021 and 2020, respectively.

	For the three months ended
Direct costs of revenue:	June 30,
	2021		2020
Management and equipment lease income	$	40,592	$	67,428
Total	$	40,592	$	67,428

The direct costs of revenue of $40,592 for the three months ended June 30, 2021 is attributable to: labor, compliance, testing and others related expenses – all of which are directly related to the Consulting and Equipment Lease Agreements with the Licensed Operator.

General and administrative

For the three months ended June 30, 2021, our general and administrative expenses were $1,967,097 compared to $459,046 for the three months ended June 30, 2020, resulting in an increase of $1,508,051. The increase was largely attributable to expanding employee-related expenses and professional fees associated with the Company’s various business development activities.

Other Income/(Expense)

For the three months ended June 30, 2021, our other income/(expense) were $1,344,176 compared to ($53,976) for the three months ended June 30, 2020, resulting in an increase in other income of $1,398,152. The increase was largely attributable to the Company’s gain on settlement of consulting and management agreement.

Net Income (Loss)

Net income (loss) attributable to common shareholders was ($836,172) for the three months ended June 30, 2021, compared to a net loss of ($632,979) for the three months ended June 30, 2020. The increase in net loss for the three months ended June 30, 2021 as compared to the same period in 2020 is largely attributable to the Company’s provision for income taxes in the amount of $277,000.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Revenues

The Company’s revenue was $516,381 for the six months ended June 30, 2021, compared to $523,072 for the six months ended June 30, 2020. Revenue, by class, is as follows:

	For the six months ended
	June 30,
	2021		2020
Revenues:
Rental income (i)	$	40,169	$	57,963
Management income (ii)		341,398		328,313
Equipment lease income (ii)		134,814		136,796
Total	$	516,381	$	523,072

(i)

The rental income is from the Company’s THC Park.

(ii)

In April 2018, the Company entered into a management agreement with Acres Cultivation, LLC, a Nevada limited liability company (the “Licensed Operator”) that holds a license for the legal cultivation of marijuana for sale under the laws of the State of Nevada. In January of 2019, the Company entered into a revised agreement, which replaced the April 2018 agreement, with the Licensed Operator in order to be more stringently aligned with Nevada marijuana laws. The material terms of the agreement remain unchanged. The Licensed Operator is contractually obligated to pay over to the Company eighty-five (85%) percent of gross revenues defined as gross proceeds from sales of marijuana products minus applicable state excise taxes and local sales tax. The agreement is to remain in force until April 2026. In April 2019, the Licensed Operator was acquired by Curaleaf Holdings, Inc., a publicly traded Canadian cannabis company. On January 21, 2021, the Company received a Notice of Termination, effective immediately, from Acres Cultivation, LLC. The Company does not anticipate that it will generate any further revenue under the Acres relationship.

Operating Expenses

Direct costs of revenues were $40,592 and $540,198 for the six months ended June 2021 and 2020, respectively. Direct costs of revenues, by class, is as follows:

	For the six months ended
	June 30,
Direct costs of revenue:	2021		2020
Management and lease equipment income	$	40,592	$	540,198
Total	$	40,592	$	540,198

The direct costs of revenue of $40,592 is attributable to labor, compliance testing and other related expenses – all of which are directly related to the sale of marijuana pursuant to our Agreements with the Licensed Operator.

General and administrative

For the six months ended June 30, 2021, our general and administrative expenses were $4,773,024 compared to $1,497,727 for the six months ended June 30, 2020, resulting in an increase of $3,275,297. The increase was largely attributable to expanding employee-related expenses and professional fees associated with the Company’s various business development activities.

Other Income/(Expense)

For the six months ended June 30, 2021, our other income (expense) was $11,180,381 compared to ($98,377) for the six months ended June 30, 2020, resulting in an increase of $11,278,758. The increase was largely attributable to the Company’s liquidation of its marketable securities held for sale.

Net Income (Loss)

Net income was $6,404,011 for the six months ended June 30, 2021, compared to net loss of $1,843,511 for the six months ended June 30, 2020. The increase in net income for the six months ended June 30, 2021 as compared to the same period in 2020 is largely attributable to the Company’s liquidation of its marketable securities held for sale.

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Liquidity and Capital Resources

The following table summarizes the cash flows for the six months ended June 30, 2021 and 2020:

	2021			2020
Cash Flows:
Net cash provided by (used in) operating activities		(3,849,327	)		(38,904	)
Net cash provided by investing activities		11,009,852			-
Net cash provided by financing activities		(1,378,377	)		153,331
Net increase (decrease) in cash		5,782,148			114,427
Cash at beginning of period		117,536			22,932
Cash at end of period	$	5,899,684		$	137,359

The Company had cash of $5,899,684 at June 30, 2021 compared with cash of $137,359 at June 30, 2020.

Operating Activities

Net cash used in operating activities for the six months ended June 30, 2021, was $3,849,327 versus $38,904 for the six months ended June 30, 2020. The increase in cash used in operating activities in 2021 included net income of $6,404,011 offset by a gain on sale of marketable securities of $9,857,429 and gain on sale of assets on $260,141.

Investing Activities

Net cash provided by investing activities during the six months ended June 30, 2021, was $11,009,852 as compared to $- for the six months ended June 30, 2020. The increase in cash provided by investing activities in 2021 is attributable to the proceeds from the sale of its marketable securities held for sale related to the sale of the Company’s equity holding in the common stock of Healthier Choice Management Corporation (“HCMC”).

Financing Activities

Net cash (used in) provided by financing activities during the six months ended June 30, 2021, was ($1,378,377) as compared to $153,331 for the six months ended June 30, 2020. The decrease in cash flow from financing activities for the six months ended June 30, 2021 is largely attributable to repayment on notes payable of $1,728,377.

Off-Balance Sheet Arrangements

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

Seasonality

We do not consider our business to be seasonal.

Commitments and Contingencies

We are subject to the legal proceedings described in “Part II, Item 1. Legal Proceedings” of this report. There are no legal proceedings which are pending or have been threatened against us or any of our officers, directors or control persons of which management is aware.

Inflation and Changing Prices

Neither inflation nor changing prices for the six months ended June 30, 2021 had a material impact on our operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not required for smaller reporting companies.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Form 10-Q, management performed, with the participation of our principal executive officer and principal financial officer, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures. Based on the evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2021, our disclosure controls and procedures were not effective.

Due to resource constraints, material weaknesses are evident to management regarding our inability to generate all the necessary disclosure for inclusion in our filings with the Securities and Exchanges Commission, which is due to the lack of resources and segregation of duties. We lack sufficient personnel with the appropriate level of knowledge, experience and training in GAAP to meet the demands for a public company, including the accounting skills and understanding necessary to fulfill the requirements of GAAP-based reporting. This weakness causes us to not fully identify and resolve accounting and disclosure issues that could lead to a failure to perform timely internal control and reviews. In addition, the Company has not established an audit committee, does not have any independent outside directors on the Company’s Board of Directors, and lacks documentation of its internal control processes.

Changes in Internal Control over Financial Reporting

There was no change to our internal controls or in other factors that could affect these controls during the period ended June 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. However, our Board is currently seeking to improve our controls and procedures to remediate the deficiency described above.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company will record a liability for the loss. I addition to the estimated loss, the liability includes probable and estimable legal cost associated with the claim or potential claim. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company business. There is no pending litigation involving the Company at this time.

DGMD Complaint

On March 19, 2021, a Complaint was filed against the Company, Jim Mueller, John Mueller, MachNV, LLC, Acres Cultivation, Paris Balaouras, Dimitri Deslis, ATG Holdings, LLC and Curaleaf, Inc. (collectively, the “Defendants”) by DGMD Real Estate Investments, LLC, ARMPRO, LLC, Zhang Springs LV, LLC, Prodigy Holdings, LLC and Green Organics, LLC (collectively, the “Plaintiffs”) in the District Court of Clark County, Nevada.

In the Complaint, the Plaintiffs allege that the Defendants: (i) intended to fraudulently obtain money from the Plaintiffs in order to put that money towards the Acres dispensary and to make Acres look more appealing to potential buyers as well as pay off Defendants’ agents, and (ii) the Defendants acted together in order to find investors to invest money into the Acres and MJ Holdings “Investment Schemes”, and (iii) the Defendants intended to fraudulently obtain Plaintiffs’ money for the purpose of harming the Plaintiffs to benefit the Defendants, and (iv) the Defendants committed unlawful fraudulent misrepresentation in the furtherance of the agreement to defraud the Plaintiffs. The Plaintiffs allege that damages are in excess of $15,000.

As the complaint pleads only the statutory minimum of damages, the Company is unable to estimate the potential exposure, if any, resulting from this matter but believes it is without merit as to liability and otherwise deminimis as to damages. Thus, the Company does not expect this matter to have a material effect on the Company’s consolidated financial position or its results of operations. The Company will vigorously defend itself against this action and has filed an appropriate and timely answer to the Complaint including a lengthy and comprehensive series of affirmative defenses and liability and damage avoidances.

Tierney Arbitration

On March 9, 2021, Terrence Tierny, the Company’s former President and Secretary, filed for arbitration with the American Arbitration Association for: (i) breach of contract, (i) breach of the implied covenant of good faith and fair dealing, and (iii) NRS 608 wage claim. Mr. Tierney demanded payment in the amount of $501,084.67 for deferred business compensation, business compensation, expenses paid on behalf of the Company, accrued vacation and severance pay. On April 7, 2021, the Company made payment against the wage claim in the amount of $62,392, inclusive of $59,583 for wages and $2,854 for accrued vacation.

Item 1A. Risk Factors

Not required for smaller reporting companies.

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

In connection with the foregoing, the Company relied upon the exemptions from registration provided by Rule 701 and Section 4(a)(2) under the Securities Exchange Act of 1933, as amended:

Issuance of common stock

On March 8, 2021, the Company issued 526,216 shares of common stock in satisfaction of $100,000 principal and all accrued interest for a note payable to a related party as per the terms of the Debt Conversion and Stock Purchase Agreement dated January 14, 2021.

On March 8, 2021, the Company issued 263,158 shares of common stock to a related party for the purchase of $50,000 of common stock as per the terms of the Debt Conversion and Stock Purchase Agreement dated January 14, 2021.

On March 29, 2021, the Company issued 225,000 shares of common stock to a consultant as per the terms of the Consulting Agreement dated February 25, 2021.

On April 24, 2021, the Company issued 1,000,000 shares of common stock as per the terms of the Termination Agreement with Blue Sky Companies, LLC and Let’s Roll Nevada, LLC. 

On June 4, 2021, the Company issued 32,000 shares of common stock to its former Chief Financial Officer as final compensation for services previously rendered on behalf of the Company.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None

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Item 6. Exhibits

The documents set forth below are filed, incorporated by reference or furnished herewith as indicated.

Index to Exhibits

Exhibit No,	Description of Exhibit
10.1	Membership Interest Purchase and Sale Agreement between Farm Road, LLC and MJ Holdings, Inc. dated October 1, 2018 (previously filed on Form 10-K as filed with the SEC on October 16, 2019)
10.2	Cultivation and Sales Agreement, Consulting Agreement and Equipment Lease Agreement by and between MJ Holdings, Inc. and Acres Cultivation, LLC dated January 18, 2019 (previously filed on Form 10-Q as filed with the SEC on November 21, 2019)
10.3	Purchase and Sale Agreement (“PSA”), PSA Amendment #1, PSA Amendment #2 and Promissory Note between MJ Holdings, Inc. and John T. Jacobs and Teresa Jacobs (previously filed on Form 10-Q as filed with the SEC on December 13, 2019)
10.4	Richard S. Groberg Employment Agreement (previously filed on Form 8-K as filed with the SEC on July 18, 2019)
10.5	Purchase and Sale Agreement between Coachill-Inn and Coachillin Holdings, LLC (previously filed on Form 10-Q as filed with the SEC on December 13, 2019)
10.6	Membership Interest Purchase Agreement between MJ Distributing, Inc. and MJ Holdings, Inc. dated April 2, 2019 (previously filed on Form 10-Q as filed with the SEC on December 13, 2019)
10.7	Lease agreement and addendum between Prescott Management, LLC and Oakridge Enterprises, LLC (previously filed on Form 10-Q as filed with the SEC on January 8, 2020)
10.8	Separation Agreement dated January 22, 2020 between the Company and Richard S. Groberg dated January 22, 2020 (previously filed on Form 8-K as filed with the SEC on January 24, 2020)
10.9	Securities Purchase Agreement between MJ Holdings, Inc. and Douglas Brown dated July 22, 2020 (previously filed on Form 10-K as filed with the SEC on December 10, 2020)
10.10	Consulting Agreement between MJ Holdings, Inc. and Sylios Corp dated August 25, 2020 (previously filed on Form 10-K as filed with the SEC on December 10, 2020)
10.11	Board of Directors Services Agreement between MJ Holdings, Inc. and David Dear (previously filed on Form 8-K as filed with the SEC on September 21, 2020)
10.12	Board of Directors Services Agreement between MJ Holdings, Inc. and Paris Balaouras (previously filed on Form 10-K as filed with the SEC on December 10, 2020)
10.13	Board of Directors Services Agreement between MJ Holdings, Inc. and Roger Bloss (previously filed on Form 10-K as filed with the SEC on December 10, 2020)
10.14+	Employment Agreement between MJ Holdings, Inc. and Paris Balaouras dated September 1, 2020 (previously filed on Form 8-K as filed with the SEC on September 23, 2020)
10.15+	Employment Agreement between MJ Holdings, Inc. and Roger Bloss dated September 1, 2020 (previously filed on Form 8-K as filed with the SEC on September 23, 2020)
10.16+	Employment Agreement between MJ Holdings, Inc. and Bernard Moyle dated September 1, 2020 (previously filed on Form 8-K as filed with the SEC on September 23, 2020)
10.17	Termination and Mutual Release Agreement between MJ Holdings, Inc. and Healthier Choices Management Corp dated November 15, 2019 (previously filed on Form 10-K as filed with the SEC on December 10, 2020)
10.18	Short Term Promissory Note between Condo Highrise Management, LLC and Pyrros One, LLC dated March 31, 2020 (previously filed on Form 10-K as filed with the SEC on December 10, 2020)
10.19	Short Term Promissory Note between Alternative Hospitality, Inc. and Pyrros One, LLC dated February 20, 2020 (previously filed on Form 10-K as filed with the SEC on December 10, 2020)
10.20	Series Post Seed Preferred Stock and Series Post Seed Preferred Unit Investment Agreement between MJ Holdings, Inc., Innovation Labs, Ltd and Innovation Shares, LLC dated June 25, 2019 (previously filed on Form 10-K as filed with the SEC on December 10, 2020)
10.21	LV Stadium Events Company, LLC Suites License Agreement dated March 18, 2019 (previously filed on Form 10-K as filed with the SEC on December 10, 2020)
10.22	Convertible Promissory Note between Smile, LLC, Roger Bloss and MJ Holdings, Inc. dated June 7, 2019 (previously filed on Form 10-K as filed with the SEC on December 10, 2020)
10.23	Membership Interest Purchase Agreement between Red Earth, LLC, MJ Holdings, Inc. and Element NV, LLC dated August 28, 2019 (previously filed on Form 10-K as filed with the SEC on December 10, 2020)
10.24	Amended and Restated Operating Agreement of Red Earth, LLC dated August 22, 2019 (previously filed on Form 10-K as filed with the SEC on December 10, 2020)
10.25	First Amendment to Membership Interest Purchase Agreement between Red Earth, LLC, MJ Holdings, Inc. and Element NV, LLC dated June 11, 2020 (previously filed on Form 10-K as filed with the SEC on December 10, 2020)
10.26+	Employment Agreement between MJ Holdings, Inc. and Jim Kelly dated October 1, 2020 (previously filed on Form 8-K as filed with the SEC on October 8, 2020)
10.27	Revenue Participation Rights Agreement between the Company and Let’s Roll NV, LLC and Blue Sky Companies, LLC (previously filed on Form 10-K as filed with the SEC on December 10, 2020)
10.28	License Agreement between the Company and Highland Brothers, LLC dated February 15, 2019 (previously filed on Form 10-K as filed with the SEC on December 10, 2020)
10.29	Revenue Participation Rights Agreement No. 1 dated December 8, 2020 (previously filed on Form 10-Q as filed with the SEC on January 15, 2021)
10.30	Amendment to Consulting Agreement dated December 14, 2020 (previously filed on Form 10-Q as filed with the SEC on January 22, 2021)
10.31	Common Stock Warrant Purchase Agreement between MJ Holdings, Inc. and Douglas Brown dated January 11, 2021 (previously filed on Form 10-Q as filed with the SEC on January 22, 2021)
10.32	Letter of Intent between MJ Holdings, Inc. and MJ Distributing, Inc. dated January 11, 2021 (previously filed on Form 10-Q as filed with the SEC on January 22, 2021)
10.33	Debt Conversion and Stock Purchase Agreement entered into between MJ Holdings, Inc. and David Dear dated January 14, 2021 (previously filed on Form 10-Q as filed with the SEC on January 22, 2021)
10.34	Notice of Termination dated January 21, 2021 (previously filed on Form 8-K as filed with the SEC on January 27, 2021)
10.35	Cultivation and Sales Agreement between MJ Holdings, Inc. and MKC Development Group, LLC dated January 22, 2021 (previously filed on Form 8-K as filed with the SEC on February 1, 2021)
10.36	Membership Interest Purchase Agreement of MJ Distributing C202, LLC and MJ Distributing P133, LLC (previously filed on Form 8-K as filed with the SEC on February 23, 2021)
10.37	Promissory Note between MJ Holdings, Inc. and Pyrros One, LLC dated January 12, 2021 (previously filed on Form 10-K as filed with the SEC on April 15, 2021)
10.38	Stock Purchase Agreement between MJ Holdings, Inc. and ATG Holdings, LLC dated February 17, 2020 (previously filed on Form 10-K as filed with the SEC on April 15, 2021)
10.39	Consulting Agreement between MJ Holdings, Inc. and Sylios Corp dated February 25, 2021 (previously filed on Form 10-K as filed with the SEC on April 15, 2021)
10.40	Convertible Promissory Note between GeneRx and MJ Holdings, Inc. dated March 12, 2021 (previously filed on Form 8-K as filed with the SEC on March 19, 2021)
10.41	Termination Agreement between the Company, Blue Sky Companies, LLC and Let’s Roll Nevada, LLC dated March 24, 2021 (previously filed on Form 10-K as filed with the SEC on April 15, 2021)
10.42	Cultivation and Sales Agreement between MJ Holdings, Inc. and Natural Green, LLC dated March 26, 2021 (previously filed on Form 8-K as filed with the SEC on April 12, 2021)
10.43*	Cultivation and Sales Agreement between MJ Holdings, Inc. and Green Grow Investments Corporation dated May 7, 2021
10.44	Cooperation and Release Agreement Richard S. Groberg, RSG Advisors, LLC and MJ Holdings, Inc. dated May 12, 2021 (previously filed on Form 10-Q as filed with the SEC on May 18, 2021)
10.45	Corporate Advisory Agreement (Research & Development) between the Company and GYB, LLC dated May 18, 2021 (previously filed on Form 8-K as filed with the SEC on May 21, 2021)
10.46	Corporate Advisory Agreement (M&A and Funding) between the Company and GYB, LLC dated May 18, 2021 (previously filed on Form 8-K as filed with the SEC on May 21, 2021)
10.47*	Cultivation and Sales Agreement between MJ Holdings, Inc. and RK Grow LLC dated June 22, 2021
10.48*	Consulting Agreement between MJ Holdings, Inc. and Wolfpack Consulting, LLC dated June 17, 2021
10.49	Stipulation and Order for Settlement of Disciplinary Action (previously filed on Form 8-K as filed with the SEC on August 2, 2021)
21.1	Subsidiaries of the Registrant (previously filed on Form 10-K as filed with the SEC on December 10, 2020)
31.1*	Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*	Filed herewith.
**	Furnished herewith.
+	Denotes a management compensatory plan, contract or arrangement

28

SIGNATURES

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

MJ HOLDINGS, INC.
By:	/s/ Roger Bloss
	Roger Bloss
	Interim Chief Executive Officer
	(Principal Executive Officer)
Date:	August 25, 2021

29

EX-10.43

Exhibit 10.43

CULTIVATION AND SALES AGREEMENT

This CULTIVATION AND SALES AGREEMENT (this “Agreement”) is made and entered into as of the date last signed by either of the Parties (as defined below) (the “Effective Date”) by and between MJ Holdings Inc., a Nevada corporation (“MJNE”) and Green Grow Investments Corporation, a Nevada Corporation (“Company”) (jointly, the “Parties” and, individually, a “Party”).

RECITALS

WHEREAS, pursuant to the Regulations outlined by the Nevada Cannabis Control Board, as amended from time to time (the “Act” and together with the rules and regulations thereunder, the “RTMA”), the State of Nevada Cannabis Control Board (“CCB”) has issued a cultivation facility license pursuant to which MJNE may cultivate (grow), process, and package marijuana; sell marijuana to retail marijuana stores; and operate marijuana product manufacturing facilities and sell to other cultivation facilities, which license MJNE is in the process of moving to the Cultivation Facility (as defined below) (the “Cultivation License”);

WHEREAS, Company represents that it has specialized knowledge, skills, technology, and experience in cultivation, and otherwise has the experience and skill necessary to cultivate and manage the cultivation of marijuana necessary to operate such an operation in the State of Nevada;

WHEREAS, as of the Effective Date, MJNE is in the process of finalizing the Cultivation Facility, as defined herein, and obtaining all approvals required by the CCB and the State of Nevada and will provide Company notice of when it can begin operations pursuant to applicable law and under this Agreement. The Parties agree that Company cannot commence operations at the Cultivation Facility under this Agreement until such time as it has been so notified, in writing, by MJNE (the “Commencement Notice”) and MJNE cannot estimate when the requisite approvals from the CCB and the State of Nevada will be forthcoming; and

WHEREAS, MJNE and Company desire to enter into an agreement whereby MJNE retains Company to provide the cultivation of one or more lines of product (as described on the Summary of Commercial Terms set forth on Exhibit A attached hereto and incorporated herein) for sale in the State of Nevada under the Cultivation License (the “Cultivation Services”) at MJNE’s facility located at 2215 E. Anvil Road Amargosa Valley, Nevada 89020 (the “Cultivation Facility”) on the terms and conditions set forth herein.

AGREEMENT

NOW THEREFORE, in consideration of the foregoing recitals which are incorporated herein and made part of this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, agreeing to be legally bound, hereby agree as follows:

1. Engagement and Cultivation Rights. As of the Effective Date MJNE hereby engages Company, on a non-exclusive basis, and Company hereby accepts such engagement and agrees, upon the terms and conditions set forth herein, to provide the Cultivation Services pursuant to the terms and conditions set forth herein. Company hereby is granted the right to develop, manage, and produce on behalf of MJNE all Company-branded products, including but not limited to those set forth on Exhibit A; provided, however, that (a) Company is authorized by MJNE to produce all products that may be lawfully grown and distributed in Nevada pursuant to applicable law, including CCB guidelines and the RTMA; (b) Company shall use commercially-reasonable efforts to maximize the production and sales of the products grown at the Cultivation Facility under this Agreement, subject to compliance with all applicable laws; (c) Company shall commence making its improvements to the Designated Acreage within 120 calendar days of the date of the Commencement Notice and shall begin cultivation on the Designated Acreage (as evidenced by registration of the first plants with the CCB) by the first day of Spring following the Commencement Notice or when the CCB approves cultivation activities at the Designated Acreage, whichever occurs later; and (d) Company complies with all applicable laws, rules, and regulations, including but not limited to those pertaining to the labeling of product sold hereunder.

2. Term; Renewal; Termination.

(a) Term. This Agreement shall commence on the date of the Commencement Notice and shall continue for a period of 10 years thereafter (the “Initial Term”), unless earlier terminated as provided in Section 2(c).

(b) Renewal. Upon expiration of the Initial Term, this Agreement shall automatically renew for successive five-year terms, or as the Parties otherwise agree in writing prior the expiration of the then-current term (each, a “Renewal Term” and together with the Initial Term, the “Term”), unless either Party provides the other written notice of termination at least sixty (60) days prior to the expiration of the applicable Term. The terms, covenants and conditions of any Renewal Term shall be the same as the terms, covenants, and conditions in effect immediately prior to such renewal unless otherwise agreed by the Parties in writing prior to the commencement of the new Renewal Term.

(c) Termination. This Agreement may be terminated at any time upon the mutual agreement of the Parties or if Company fails to cure any default or breach of the Agreement within 30 business days from notification of such breach/default (or such shorter time as required by applicable law). In addition, upon the occurrence of any one of the following events, either Party may terminate this Agreement prior to the end of the Initial Term or any Renewal Term by providing written notice to the other Party stating the intended date of termination: (i) subject to Section 20, any breach or default of this Agreement by the other Party which remains uncured in accordance with Section 20(a) or Section 20(b) hereof; (ii) any grossly negligent or intentional or willful misconduct by the other Party; (iii) any federal enforcement action of the type described in Section 24 against MJNE, Company, or any of their respective affiliates, employees or independent contractors; (iv) any change or revocation of state or local law, regulation or licensing, that has the effect of prohibiting the legal operation of the Cultivation Facility or the performance of the Cultivation Services; provided, however, that any change that only impacts compliance and/or operation, or causes costs of goods to be more expensive or difficult shall not provide a basis for termination under this clause (iv); and (v) CCB’s refusal to approve an application to renew, or revocation of, the Cultivation License. In the event of any termination of this Agreement, Company personnel shall be denied access to the Cultivation Facility without the express permission of MJNE. The Parties shall use reasonable commercial efforts to wind down operations of Company in an organized and efficient manner. Company shall pay for and be responsible for any and all costs associated with winding down Company operations at the Cultivation Facility.

2

(d) CCB Approval. The Parties acknowledge that this Agreement is subject to the approval of the CCB. The Parties will work together in good faith to provide information to the CCB pursuant to applicable Nevada law. In the event that the CCB does not approve this Agreement or that the Cultivation License is not authorized for use at the Cultivation Facility, the Agreement shall be terminated and neither Party shall have any obligation to the other under this Agreement or arising in connection with this Agreement, including any obligation related to costs or expenses incurred in anticipation of such approval by either Party. Alternatively, if both Parties agree, the Parties may elect to work together in good faith to modify the Agreement to bring it into conformance with CCB guidelines/requests and to further extend the Agreement.

3. Obligations of Company. The following obligations of Company are in addition to any and all obligations set forth elsewhere in this Agreement (including, without limitation, those in Section 1, above), or imposed by applicable law, rule, or regulation, including any orders or policies promulgated by the CCB.

(a) Compliance. Company shall (i) be responsible for the logistics, development, ingredient sourcing, cultivation, preparation and storage at or from the Designated Acreage (as defined below), and sale of the its products and (ii) comply at all times with the RTMA and all applicable rules, regulations and requirements in the provision of the Cultivation Services, subject to MJNE’s good faith assistance and cooperation; provided, that MJNE has the right to require Company to take any and all reasonable actions that MJNE deems necessary or advisable to ensure compliance with RTMA or any other applicable rules, requirements or regulations. The Parties shall cooperate and work together to take any action necessary in furtherance of, in compliance with, or otherwise in any way related to any change whatsoever in any applicable law, rule, statute, regulation, the entitlement and/or approval process, or other process or requirement related to the Cultivation Services that comes into being, occurs, accrues, becomes effective or otherwise becomes applicable or required after the Effective Date. Company shall follow, conform to and abide by any such changes and any regulatory matters. Company shall further address and cure any noncompliance and pay any fines or assessments arising in connection with the failure of the Company or any of its employees or independent contractors to comply with applicable law and all other costs associated therewith.

(b) Standard of Care. Company will perform the Cultivation Services in compliance with best industry practices, applicable law, permits, the terms and conditions of this Agreement (including the Policies and Procedures, as defined below) and otherwise operate in a first-class manner (the “Standard of Care”).

3

(c) Packaging. Company shall comply with all legal requirements pertaining to the labeling of its products grown or produced at the Cultivation Facility, including any regulatory approval of such labels, which labels share bear MJNE’s approved logo in such a manner as shall be directed by MJNE.

(d) Insurance. Prior to commencing operations under this Agreement, Company shall obtain, and thereafter, through the Term, shall maintain industry-standard insurance for an operation comparable to that contemplated, including the Cultivation Services, including workers’ compensation insurance and product liability insurance, the scope and policy limits of which insurance shall be subject to MJNE’s approval. Without limiting the foregoing, during the Term, Company shall maintain a policy of commercial general liability insurance (sometimes known as broad form comprehensive general liability insurance) insuring Company against liability for bodily injury, property damage (including loss of use of property) and personal injury arising out of the operation, use, or occupancy of the Cultivation Facility. Company shall name MJNE and its affiliates, and their respective officers, directors, and employees, as additional insureds under such policy or policies and shall provide a certificate of insurance or policy endorsements acceptable to MJNE prior to commencing operation but no later than 20 calendar days from obtaining its initial coverage and upon each renewal. Coverage shall be for no less than US$1,000,000 per occurrence; shall be provided by a carrier reasonably acceptable to MJNE; and with a deductible or retention amount reasonably acceptable to MJNE. MJNE may require a reasonable increase in coverage amounts during the Term. The amount and scope of coverage of such insurance shall not limit Company’s liability nor relieve Company of any other obligation under this Agreement. MJNE may also obtain comprehensive public liability insurance in an amount and with coverage determined by MJNE insuring MJNE against liability arising out of the ownership, operation, use, or occupancy of the Cultivation Facility, including the Designated Area. Any insurance obtained by MJNE shall not be contributory and shall not provide primary insurance. Company’s insurance policies shall provide that MJNE shall be notified if there is a lapse in coverage, a pending lapse in coverage, or if any claim has been made upon such coverage. MJNE also may require Company to maintain, during the term of this Agreement, a policy of commercial loss of income insurance (business interruption insurance) insuring the Company and MJNE against loss of income resulting from Company’s inability to operate and/or produce product. MJNE shall provide Company a 30-day notice requiring Company to obtain such loss of income insurance.

(e) Labor Matters.

(i) Company may utilize subcontractors to provide any of the Cultivation Services so long as such subcontractors are selected by Company with due care and Company has reasonable assurances that such subcontractors can perform the Cultivation Services pursuant to the requirements of this Agreement, including the Standard of Care; provided, however, that no such utilization will relieve Company of any of its obligations or liabilities under this Agreement. Neither Company nor the employees, contractors, or agents of Company providing Cultivation Services hereunder will be considered employees of MJNE for any purpose. Company will be solely responsible for all matters pertaining to the employment, supervision, compensation, promotion, termination, daily direction, and control of its employees.

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(ii) Company is responsible for payment of all compensation, benefits and employer taxes related to such persons and any fines or other regulatory matters arising in connection with employment matters, including but not limited to the failure of Company or any of its employees or independent contractors to comply with applicable laws. In furtherance and not in limitation of the foregoing, Company represents and warrants to MJNE that it will use the Standard of Care (i) to obtain and maintain all permits, certificates and licenses necessary for Company to provide for the employment of its employees and independent contractors as may be required under the applicable laws of the State of Nevada, and (ii) to comply with (A) all applicable laws relating to hiring practices, workplace safety and health, payment of wages and overtime, employee benefits, and employment discrimination, (B) the Immigration Reform and Control Act of 1986, and (C) all other applicable laws governing the employment relationship between Company and its employees.

(iii) Company shall use the Standard of Care to (A) provide reasonable health protection and safety equipment to all of its employees and independent contractors at the Cultivation Facility; (B) direct its employees and independent contractors to properly dress at the Cultivation Facility, including without limitation wear closed-toe shoes; (C) prohibit horseplay, roughhousing, or sports play in the Cultivation Facility; and (D) train its employees and independent contractors in proper safety procedures and the Policies and Procedures (as described below).

(f) Policies and Procedures. Company shall comply with all policies and procedures, as approved by the CCB, as may be communicated to Company by MJNE from time to time, including, without limitation, the policies and procedures set forth on Exhibit A attached hereto, and the sexual harassment rules adopted by MJNE (collectively, the “Policies and Procedures”). Company shall provide MJNE a copy of any written operations manual including all standard operating procedures for its processes at the Cultivation Facility, and any amendments thereto.

(g) Use and Maintenance of the Cultivation Facility.

(i) MJNE shall permit Company to use the acreage identified as the “Designated Acreage” on Exhibit A for Cultivation Services, subject to any limitations set forth on Exhibit A.

(ii) Company shall be responsible for and pay for all maintenance of the Designated Acreage, which shall be maintained in accordance with the Policies and Procedures (or, if no written Policies and Procedures have been provided by MJNE, in accordance with the directions of MJNE) and applicable laws, rules, and regulations.

(iii) MJNE shall determine the location of the Designated Acreage within the Cultivation Facility, in its sole but reasonable discretion.

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(h) Supplies, Equipment and Tools. Company shall be responsible for the selection, purchase, and acquisition of all supplies, equipment, and tools required to deliver the Cultivation Services (the “Equipment”), which Equipment shall remain the property of Company. Company shall use commercially-reasonable efforts to mark otherwise designate its Equipment as its property and shall maintain (and provide to MJNE from time to time, upon MJNE’s reasonable request) an accurate record identifying its property. Company shall have the right, at its own cost, to install or attach cultivation structures and equipment on the Designated Acreage; provided, however, that (A) such structures and equipment meet the requirements or specifications of the CCB and applicable laws, rules, and regulations; (B) all specifications and plans for structures and equipment be provided in advance to MJNE, along with copies of such documents that are required to be submitted to any applicable regulatory authority; (C) no equipment or structures that are subject to regulatory approval shall be installed or place on the Designated Acreage without the receipt of any necessary regulatory approval; and (D) any structures or equipment that are affixed, meaning attached to the ground permanently, to the Designated Acreage shall become the property of MJNE upon the expiration or termination of this Agreement for any reason (further provided that MJNE, in its sole but reasonable discretion, may require Company to remove such structures or equipment at Company’s sole expense upon the expiration or termination of this Agreement for any reason).

(i) Testing. Company shall cooperate with MJNE to implement all actions necessary for product testing and analytics for all products produced and developed at the Cultivation Facility by or on behalf of Company to ensure compliance with the RTMA and all other applicable rules, regulations, requirements, and laws. MJNE shall facilitate the testing of products by a duly-licensed laboratory or testing provider, provided that Company shall pay all costs and expenses related to that testing. Each Party shall be provided copies of the results of any product testing. No product produced at the Cultivation Facility by or on behalf of Company shall be sold or distributed without such testing and only in compliance with all applicable laws, rules, and regulations pertaining thereto.

(j) Records, Record-Keeping, and Reporting.

(i) Company shall maintain its books and records in accordance with generally accepted account principles and shall maintain accurate records of all product sales and such other business metrics and details as may be required by the CCB and applicable law. At least once per calendar month, on or before the 15^th of the month, Company shall provide MJNE with a detailed report of the immediately preceding month’s sales. Company must use the accounting and tracking system required by the CCB from time to time and as delegated to Company by MJNE (as of the Effective Date, the CCB-designated seed-to-sale tracking compliance system is Metrc Nevada (“Metrc”)). All sales must be accompanied by a sales report, delivery manifest and cash receipts. Product sales and all pertinent data shall be input through Metrc, as directed by MJNE (or such other tracking and compliance system as may be designated by the CCB from time to time) and shall be subjected to audit by MJNE, as set forth below. Company shall maintain sales and cost accounting records and supporting documentation for at least five years after the pertinent period, or such longer period as may be required by applicable law. Company shall maintain its records in readily-accessible electronic format using commercially-available software.

(ii) Company shall maintain at the Designated Acreage, with MJNE’s oversight and input, complete and accurate records related to the provision of Cultivation Services, including, without limitation, financial records, sales reports, sales invoices, maintenance of all required Agent Cards, human resources, and safety records.

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(iii) Upon reasonable advance notice, and during normal business hours, MJNE or an agent designated by MJNE shall have access to such records and supporting documentation to the extent sufficient to audit such materials and to assess and verify gross revenue generated by the Designated Acreage, in accordance with this Agreement. MJNE shall have the right to review the sales records and supporting documentation records with respect to the Cultivation Services. Any such review shall be solely the expense of MJNE and shall not occur more frequently than quarterly; provided, however, that if MJNE determines a material disparity between the results of operation reported by Company and the results of MJNE’s audit, in MJNE’s sole but reasonable determination (it being agreed and understood that a disparity of five percent or greater will be considered material), then MJNE may review Company’s records more frequently (“Additional Audits”) and may require Company to bear the costs of the same. Additional Audits shall be terminated in the event that two sequential audits result in discrepancies less than 5 percent. Notwithstanding the foregoing, Additional Audits may be trigger in the event that a material disparity exists as set forth herein. The access to records that is the subject of this subsection shall be in addition to MJNE’s rights set forth in Section 10 of this Agreement.

(k) Agent Cards. Each employee and independent contractor of Company intended to work at the Cultivation Facility must obtain a state-issued marijuana agent card (“Agent Card”) from the CCB prior to commencing work at the Cultivation Facility and must maintain an active Agent Card in good standing in order to work at the Cultivation Facility at all times. MJNE shall submit all initial applications and renewals, subject to the following: (i) Company must provide MJNE with all applicable information and material necessary to process each initial application, and must ensure that each employee and independent contractor cooperates with the application process; (ii) in the case of renewal filings, Company must provide (and ensure that the applicable employee or independent contract provides) all necessary information and material necessary for MJNE to submit the requisite online filing at least 30 business days before the filing is due; and (iii) Company shall pay all costs, fees, and expenses related to the Agent Card and application/renewal processes, in advance.

(l) Access. MJNE shall provide such access to the Designated Acreage to Company as MJNE deems reasonably necessary and appropriate to allow Company to provide the Cultivation Services. Company shall ensure that guests at the Designated Acreage shall be kept to a minimum. Company shall ensure that all its guests at the Designated Acreage are always escorted by an authorized and appropriate agent of Company. Under no circumstances shall Company personnel, including its management, employees, independent contractors, or guests, enter any portion of the Cultivation Facility other than the Designated Acreage without prior written approval of MJNE.

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(m) Security. Company shall install and maintain at the Designated Acreage, at its sole expense, such fences, walls, doors, locks, security systems, camera systems, fire alarms and other security apparatus, including, without limitation, intrusion and motion detection, panic buttons, duress alarm and internal and external video surveillance as may be necessary to meet the requirements of Nevada laws, or as may be directed by the CCB or any other regulatory body with authority over the Cultivation Facility. Company shall submit its security plan to MJNE for its approval prior to installing any fences, walls, or doors, which approval may be denied or conditioned by MJNE, in its sole discretion. MJNE reserves the right to install fencing and other security measures at the Cultivation Facility (including on and around the Designated Acreage) and to charge Company a pro rata share of the cost thereof, which will be promptly paid by Company upon invoicing.

(n) Marketing. Company shall have the right to develop, direct, maintain, and expand the marketing, branding, and pricing strategies for all products produced by Company at the Cultivation Facility, or otherwise, subject to compliance with applicable rules, regulations, and requirements. The foregoing notwithstanding, MJNE shall have the right to approve in advance all packaging and product representation and claims.

4. Fees and Expenses. As further set forth in Section 5, below, MJNE shall collect revenue from the sale of the products produced by Company hereunder, which revenue shall be for MJNE’s account. As set forth below, Company shall earn a management fee (the “Cultivation Management Fee”) based on the total invoiced amount for the sale of such product (each sale, an “Order”), after the deduction of taxes paid in connection with such Order, as set forth below. If MJNE is owed any fees or expenses hereunder attributable to an Order and funds are not available from the proceeds of such Order (whether because of customer non-payment or otherwise), then MJNE shall invoice Company for such fees and expenses, which invoice will be paid in full by Company within 10 business days of the date of invoice. Alternatively, and in its sole discretion, MJNE may deduct such fees and expenses related to an Order from the Cultivation Management Fee otherwise payable from the proceeds of a prior or subsequent Order.

(a) Deposits. Upon execution of this Agreement, Company shall pay MJNE the sums identified as “Deposits” on Exhibit A. Each of these sums shall be non-refundable except in the event that this Agreement is not approved by the CCB or the Cultivation License shall not be approved for use at the Cultivation Facility.

(b) Security and Compliance Fee. Company shall pay MJNE the Security and Compliance Fee set forth on Exhibit A to compensate MJNE for certain security and regulatory compliance expenses incurred by MJNE. This fee shall be paid monthly by the first of each month throughout the Term commencing with the first of the month immediately following the date of the Commencement Notice and may be deducted from any deposits or other funds of Company (including funds otherwise payable as the Cultivation Management Fee, defined below, then in the possession of MJNE). Amounts unpaid by the 10^th of the month shall be considered past due and shall incur a late fee of $500.00. The Security and Compliance Fee shall be increased by MJNE each year based on an increase in the regional cost of living but not less than 1.5% per year and not more than 10% in any five-year period.

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(c) Royalty. Company shall pay MJNE a percentage of all invoiced Orders less applicable taxes (the “Product Royalty”). The Product Royalty rate is set forth on Exhibit A hereto and is subject to the minimum royalty set forth therein. Such payments are due and payable by Company upon sale of product regardless of whether the purchaser has paid all or any part of the purchase price. Company shall be entitled to a credit or credits for any authorized returns. In the event that Company and MJNE is unable to collect from a purchaser the total amount owed to MJNE and Company for an Order, Company is still obligated to pay the Product Royalty to MJNE for the total amount of the invoiced Order to purchaser.

(d) Cultivation Management Fee. Company shall earn a Cultivation Management Fee based on the Net Sales Revenue, at the rate set forth on Exhibit A. For purposes hereof, “Net Sales Revenue” means gross revenue actually realized from an Order less any returns or credits authorized by MJNE related to such Order and less Order Expenses (as defined in subsection (e)) related to such Order. As stated elsewhere in this Agreement, MJNE may retain the following prior to distributing the Cultivation Management Fee to Company to the extent that MJNE has not otherwise recouped such sums: (i) all Order Expenses related to a prior Order; (ii) the monthly royalty set forth in subsection (c), above, as well as any Product Royalty related to a prior Order; (iii) the security and compliance fee set forth in subsection (b), above related to a prior Order; (iv) any returns or credits authorized by MJNE related to such product; and any other fees, expenses, or other sums of money owed to, or invoiced by MJNE to Company. Further, to the extent that Company separately has paid MJNE for any Order Expenses, such sums will not be included in the determination of Net Sales Revenue (i.e., such sums will not be double counted). For the sake of clarity, MJNE may deduct from the Cultivation Management Fee paid to Company any or all sums owed to it from a prior Order or prior Orders, and any other fees and expenses owed to MJNE by Company.

(e) Order Expenses. Company shall pay MJNE for all direct expenses incurred in connection with the Cultivation Services without limitation, including those described in Section 6, as well as the cost of testing product; delivery of product; pick-up and processing of payments; and any other reasonable cost or fee and, as well any late fee, interest or other obligation due from Company to MJNE. Such expenses that are directly attributable to a specific Order, such as the cost of testing product; delivery of product; pick-up and processing of payments; and taxes payable to the State of Nevada related to a specific order, are the “Order Expenses;” provided, however, that if Company separately has paid Company for such taxes related to a specific order, they will not be included in the term Order Expenses as to that Order.

(f) Build Out Payment. Company shall pay MJNE for any and all reasonable expenses MJNE incurs in building out or assisting with the build out of the Designated Acreage as agreed to between the Parties.

(g) Disbursement. MJNE shall pay Company the Cultivation Management Fee pursuant to Section 4(g), on or before the 10^th of each month, for the preceding month’s fee.

(h) Examples. By way of example only, and without any inference that the sums reflected below are or should be expected or reflect anticipated revenue or expenses,

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( ) The following represents an example of a Product Royalty calculation and a Cultivation Management Fee calculation where (A) the Product Royalty rate is 10%; (B) the Cultivation Management Fee is 90% of Net Sales Revenue:

1. Company sales 100 lbs of flower at Fair Market Value (“FMV”) at $2,100.00 per lbs;

2. Billed amount of Order equals $210,000.00;

3. MJNE collects $210,000.00;

4. Taxes paid to state equal $36,400.00 (At current tax rate based of the FMV of $2,100/lb, NOTE that if the product was sold at $1,800/lb it would still be taxed at the FMV rate of $2,100/lb)

5. Net after taxes equals $173,600.00;

6. Product royalty of 10% paid to MJNE equals $17,360.00

7. Security and Compliance Fee has not yet been paid and is deducted by MJNE from this Order equaling $10,000.00

8. Other order expenses equal $6,250.00: testing ($6,000.00) (based on 20 test @ 5lb batches @ $300.00 per test), ($250.00) (transportation cost).

0. Money owed to Company $139,990.00 paid on the 10^th of the following month.

(ii) The following represents an example of the distribution of the Cultivation Management Fee shown in subsection (i), above, at such time as there are outstanding fees payable to MJNE:

Cultivation Management Fee:	$	139,990.00
Taxes paid to State for prior Order:	$	22,000.00
Order Expenses from prior Order:	$	20,000.00
Final Cultivation Management Fee:	$	97,990.00 ($139,990-$22,000-$20,000)

5. Sales; Collections; and Payments.

(a) Company shall sell product on behalf of MJNE. All sales shall be timely and properly recorded and data entered into the sales tracking system and MJNE will arrange for collection of sales proceeds via a third-party courier; notwithstanding, MJNE is not responsible for such collections in the event of non-payment or dispute. Company acknowledges that MJNE is required to remit taxes as promulgated by the State of Nevada on the sales of all product/cultivation goods and for any product sold, regardless of whether the proceeds of such sale have been remitted, cleared, or paid in full. As such, to the extent that MJNE has paid taxes related to the products that are the subject of this Agreement, Company is responsible to reimburse MJNE. Notwithstanding anything set forth in this Agreement to the contrary, MJNE shall have the right to invoice Company for the reimbursement of taxes attributable to one or more Orders, and Company shall remit such funds to MJNE immediately upon receipt of the invoice.

(b) In addition to any other expenses or fees set forth herein, MJNE may invoice Company for any direct out-of-pocket expenses incurred by MJNE in connection with Company operations plus a 15% administrative charge if these fees are not paid within 20 days. MJNE invoices to Company are due and payable within 14 calendar days of receipt by Company unless such invoice is for an amount in excess of $2,000; in each such case that invoice shall be due and payable within 20 calendar days and, if not then timely paid, may be paid to Company from any Company funds then in the possession of MJNE, including any Cultivation Management Fee that otherwise would be payable to Company.

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(c) Company shall sell product only to a licensed marijuana dispensary, production facility, or cultivation facility, in accordance with the Cultivation License.

6. Company’s Operating and Related Expenses. Without limiting any other provision of this Agreement, Company shall be solely responsible for all costs and expenses necessary to perform the Cultivation Services as contemplated by this Agreement, including, without limitation, all materials, build out costs, electrical, utilities, fencing (which may be prepaid by MJNE and will be reimbursed by Company to MJNE), installation of water piping, trenching, grading, installation of concrete slabs, building construction, soil development, equipment, vehicles, mobile phones, computers, and labor, including, without limitation, all wages, benefits (if any), taxes, withholding, workers’ compensation insurance, payroll processing, uniforms, tools, training and education, and all other employee-related costs and anything else related to Company operations.

7. Confidential Information; Insider Trading.

(a) Definition. “Confidential Information” means nonpublic information that one Party (the “Disclosing Party”) designates as being confidential or which, under the circumstances surrounding disclosure, ought to be treated as confidential, including, but not limited to: all (i) financial, operational, and other information relating to the Disclosing Party; (ii) confidential information and trade secrets of the Disclosing Party; (iii) lists of customers or referral sources; (iv) business, financial, and other information received from a customer or any other third party that the Disclosing Party is obligated to treat as confidential; (v) financial statements and other financial information; (vi) any present or future business or strategic plans, services, trade secrets, designs, recipes, processes, procedures, or other business or technical information of the Disclosing Party; and (vii) any other information designated, either orally, in writing, or by any other means, as confidential. Confidential Information does not include information that: (x) is or becomes generally available to the public other than because of a disclosure by the Party receiving such information (the “Receiving Party”); (y) was in the Receiving Party’s possession prior to disclosure by Disclosing Party as shown by written records of the Receiving Party dated prior to the date of this Agreement.

(b) Confidentiality Obligations. The Receiving Party agrees: (i) to hold all Confidential Information in strict confidence and to take commercially reasonable precautions to protect the confidentiality of such Confidential Information (including, without limitation, all precautions the Receiving Party employs with respect to its own confidential or proprietary materials of any kind); (ii) not to divulge any Confidential Information or any information derived therefrom to any third person without the express prior written consent of the Disclosing Party, which may be granted or withheld at the Disclosing Party’s sole discretion, or unless compelled to do so by a court of competent jurisdiction or regulatory authority, and then only after providing the Disclosing Party, to the extent allowable under law or regulation, with an opportunity to enjoin the disclosure; and (iii) not to encourage or facilitate any third party to do any of the actions prohibited in the foregoing items.

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(c) Return of Confidential Information. It is further understood that all Confidential Information provided by the Disclosing Party to the Receiving Party remains the sole property of Disclosing Party, and upon written request shall immediately be returned by the Receiving Party, together with all copies.

(d) Enforcement. Each Receiving Party agrees that, in the event of any breach of this Agreement by it, such breach will cause irreparable harm to the Disclosing Party, and monetary damages will not be sufficient or may not be adequately quantified, and as such, the Disclosing Party shall be entitled to specific performance, injunctive relief, or other equitable remedies as may be available to it, which remedies shall be cumulative and non-exclusive, and in addition to such other remedies as it may otherwise have at law or in equity.

(d) Insider Trading. Company acknowledges that the stock of MJNE is publicly traded and that MJNE is subject to federal and state securities laws, rules, and regulations, including those under the oversight of the United States Securities and Exchange Commission. Company and its representatives may become aware of material non-public information regarding MJNE in the performance of the Cultivation Services or otherwise in connection with its relationship with MJNE. Company acknowledges that engaging in any transaction in MJNE’s stock while in possession of material nonpublic information, as well as providing material nonpublic information to others who may engage in a transaction in MJNE’s stock while in possession of such information, may subject Company or MJNE or both (as well as their respective officers and directors) to civil and potentially criminal liability. Accordingly, Company and its officers and directors shall ensure that neither the Company, its officers, directors, and members of their respective immediate families, will engage in transactions in MJNE’s stock while in possession of material non-public information and, to the extent that any employees, independent contractors, or other parties associated with Company are or become in possession of material nonpublic information concerning MJNE, Company shall use commercially-reasonable efforts to ensure that they do not engage in such transactions.

8. Representations and Warranties. The Parties respectively represent and warrant to each other that: (a) it is duly organized, validly existing and in good standing as a limited liability company or corporation under the laws of the state of its domicile; (b) it has the full right, power and authority to enter into this Agreement and to perform its obligations hereunder; (c) the execution of this Agreement by its representative whose signature is set forth at the end hereof has been duly authorized by all necessary corporate action of the Party; and (d) when executed and delivered that Party, this Agreement will constitute the legal, valid and binding obligation of that Party, enforceable against that Party in accordance with its terms. MJNE further represents and warrants that: (x) it is, or will be prior to the commencement of any Cultivation Services hereunder, the holder of the Cultivation License; (y) the Cultivation License is duly and validly issued, and shall be maintained during the entire Term; and (z) the Parties’ respective rights and obligations under this Agreement are permitted activities under the Cultivation License, provided Company complies with its obligations under this Agreement and applicable law. Company further represents that (A) it has sufficient financial resources to engage in the operation contemplated hereby; and (B) that none of the persons that owns an interest in Company, directly or beneficially, is a “Specially Designated National” or “Blocked Person.” “Specially Designated National” or “Blocked Person” means (i) a person designated by the U.S. Department of Treasury’s Office of Foreign Assets Control from time to time as such status, (ii) a person described in Section 1 of U.S. Executive Order 13224, issued September 23, 2001, or (iii) a person otherwise identified by government or legal authority as a person with whom we or our affiliates are prohibited from transacting business. Currently a list of such designations is published under the internet website address http://sdnsearch.ofac.treas.gov/. The text of the Executive Order is published at www.ustreas.gov/office/enforcement/ofac.

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9. Indemnification. For purposes of this Agreement, the term “Affiliate” means any person or entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, a Party. Each Party (respectively an “Indemnifying Party”) shall indemnify and save harmless the other Party and its agents, officers, directors, members, managers, directors, employees, and Affiliates (each an “Indemnified Party”) from and against any and all actions, claims, costs (including attorneys’ fees), fines, damages, judgments, and liabilities whatsoever, including without limitation any product liability claims, in law or equity, arising out of or caused by (a) any breach by the Indemnifying Party of this Agreement, (b) the Indemnifying Party’s operations at the Cultivation Facility or performance as contemplated under this Agreement, (c) obligations that either Indemnifying Party is alleged to have or have had with respect to Indemnifying Party’s employees to make payments, contributions or withholdings under any applicable federal, state or local laws pertaining to workers’ compensation, unemployment, social security or income or other taxes, (d) any and all claims against Indemnified Party of whatever nature arising from any act, omission or negligence of Indemnifying Party, its contractors, licensees, agents, servants, employees, invitees, or visitors, arising from any accident, injury, damage or any other reason, (e) any claims, suits, charges, proceedings or actions for workers’ compensation benefits or awards filed against Indemnified Party by or concerning Indemnifying Party’s employees, (f) any grossly negligent acts, omissions or deliberate, willful or intentional misconduct or malfeasance, of Indemnifying Party’s employees while performing services or other obligations contemplated under this Agreement; and (g) any damage to the Cultivation Facility caused by Indemnifying Party’s gross negligence or willful misconduct.

10. Inspections and Audits. The Parties acknowledge and agree that the Cultivation Facility may be subject to inspection by CCB and that CCB may perform audits of all activities licensed under Nevada law. As such, the Parties agree to fully cooperate in good faith with any such inspection or audits. MJNE shall have the right (but not the obligation) to inspect and direct corrections at the Cultivation Facility at any time without prior notice or consent; provided, however, that Company may not rely on the results of any such inspection as evidence that it is in compliance with applicable law.

11. Taxes. Each of the Parties shall be responsible for its own taxes (including all personal property taxes) that are incurred as a result of that Party’s activities pursuant to this Agreement, and no Party shall be liable to any other Party for contribution or otherwise related to the payment of any taxes. Any taxes imposed shall be paid at the level they are imposed.

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12. Limited MJNE License; No Other Intellectual Property Licenses.

(a) MJNE hereby grants Company a non-exclusive limited, royalty free, license to use its name, trademarks, and other trade dress in the performance of the Cultivation Services in the State of Nevada during the Term. Except for the foregoing license, nothing herein shall be construed or interpreted as to give Company any right, title, interest, or license to use any intellectual property of MJNE or any of its affiliates. Apart from the license granted in this section, Company shall not use MJNE’s name or brand in any way without the prior written consent of Company. Any authority granted to Company hereby may be revoked by MJNE upon commercially reasonable notice being given.

(b) Nothing herein shall be construed or interpreted as to give MJNE any right, title, interest, or license to use any intellectual property of Company or any of its affiliates. MJNE shall not use the Company name or brand in any way without the prior written consent of Company, except as may be necessary to perform any of the services undertaken under this Agreement (e.g., the filing of applications for Agent Cards).

(c) Company expressly acknowledges and agrees that in addition to other third parties that may be granted the right to conduct grow operations at the Cultivation Facility, Company or its affiliates, on their own behalf, may engage in grow operations at the Cultivation Facility. Notwithstanding anything set forth in this Agreement to the contrary, Company shall have no right to interfere with or object to any other licenses granted by Company nor any activities conducted by MJNE or its affiliates, including those that may be deemed competitive with Company.

13. Events of Default.

(a) Events of Default by Company. Company shall be in default hereunder if any one or more of the following events happen, and Company fails to cure such default within 15 days following written notice from MJNE (or such lesser period of time required under Nevada laws): (i) Company fails to act in accordance with, or is alleged by a federal, state, or county state regulatory authority or administrative body that it has violated, any law, rule, or regulation, including but not limited to any regulations promulgated by the CCB, including the RTMA; (ii) the filing by Company of a voluntary petition of bankruptcy or a voluntary petition or answer seeking reorganization, rearrangement, or readjustment of its debts, or any relief under any bankruptcy or insolvency act or law, now or hereafter existing, or any agreement by Company indicating consent to, approval of, or acquiescence in, any such petition or proceeding or face involuntary bankruptcy; (iii) the application by Company or the consent or acquiescence of Company in the appointment of a receiver or trustee for all or a substantial part of any of its properties or assets; (iv) the making by Company of a general assignment for the benefit of creditors; (v) the inability of Company or the admission of Company in writing of its inability to pay its debts as they mature; (vi) the filing of an involuntary petition against Company seeking reorganization, rearrangement or readjustment of its debts or for any other relief under any bankruptcy or insolvency act or law, now or hereafter existing, or the involuntary appointment of a receiver or trustee for Company for all or a substantial part of its property or assets, or the issuance of a warrant of attachment, or execution of similar process against a substantial part of the property of Company and the continuance of such for 120 days undismissed or undischarged; or (vii) the failure by Company to perform or comply with any material covenant or agreement in this Agreement. If Company fails to cure the default within 15 days, MJNE has the right to terminate the Agreement pursuant to Section 2(c).

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(b) Events of Default by MJNE. MJNE shall be in default hereunder if any one or more of the following events happen, and MJNE fails to cure such default within 30 days following written notice from Company (or such lesser period of time required under Nevada laws): (i) the revocation of the Cultivation License by the State of Nevada; (ii) the filing by MJNE of a voluntary petition of bankruptcy or a voluntary petition or answer seeking reorganization, rearrangement, or readjustment of its debts, or any relief under any bankruptcy or insolvency act or law, now or hereafter existing, or any agreement by MJNE indicating consent to, approval of, or acquiescence in, any such petition or proceeding or face involuntary bankruptcy; (iii) the application by MJNE or the consent or acquiescence of MJNE in the appointment of a receiver or trustee for all or a substantial part of any of its properties or assets; (iv) the making by MJNE of a general assignment for the benefit of creditors; (v) the inability of MJNE or the admission of MJNE in writing of its inability to pay its debts as they mature; (vi) the filing of an involuntary petition against MJNE seeking reorganization, rearrangement or readjustment of its debts or for any other relief under any bankruptcy or insolvency act or law, now or hereafter existing, or the involuntary appointment of a receiver or trustee for MJNE for all or a substantial part of its property or assets, or the issuance of a warrant of attachment, or execution of similar process against a substantial part of the property of MJNE and the continuance of such for 120 days undismissed or undischarged; or (vii) the failure by MJNE to perform or comply with any material covenant or agreement in this Agreement.

14. Notices. The Parties acknowledge and agree that any notice required under this Agreement shall be given in writing and shall be delivered personally, via overnight delivery service with tracking, email, or by certified mail, postage prepaid, addressed to the Party for whom intended as follows:

(a) To Company, at the address set forth on Exhibit A.

(b) To MJNE:

MJ Holdings, Inc.

2215 E. Anvil Road

Amargosa Valley, Nevada 89020

Attn: Paris Balaouras

Email: Paris@mjholdingsinc.com

with a copy to:

Adam R. Fulton, Esq.

Jennings & Fulton, LTD.

2580 Sorrel Street

Las Vegas, Nevada 89146

afulton@jfnvlaw.com

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15. Amendment and Modification; Waiver. This Agreement may be amended, modified, or supplemented only by an agreement in writing signed by each Party. No waiver by either Part of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

16. Assignment. Neither Party may assign, transfer, or convey this Agreement, in whole or in part, without the express prior written consent of the other Party. Any attempted assignment of this Agreement by a Party without the prior written consent of the other Party shall be considered void. Any such assignment and written consent shall be attached to this Agreement and shall be incorporated herein. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

17. Regulatory Compliance; Severability. It is the intent of the Parties that this Agreement comply in all respects with all applicable state and local laws, regulations, rules and interpretive case decisions, and the Parties have structured their relationship with that specific intent. However, each Party understands that such laws, regulations, and case decisions are complicated and in a state of flux. Therefore, in the event that any provisions of this Agreement is rendered invalid or unenforceable by a court of competent jurisdiction, or the applicable laws and regulations are altered by any legislative or regulatory body, or either party notifies the other party in writing of its reasonable belief that this Agreement or any of its provisions may be declared null, void, unenforceable, or in violation of applicable laws or regulations, the remaining provisions, if any, of this Agreement shall nevertheless continue in full force and effect. Furthermore, in such event the parties agree to negotiate in good faith an amendment to the Agreement to comply with law while remaining consistent with the parties’ original intent to the fullest extent allowable by law.

18. Governing Law. This Agreement shall be governed, interpreted, performed, and enforced solely in accordance with the laws of the State of Nevada, without reference to principles of conflicts of law.

19. Neutral Interpretation. The Parties acknowledge and agree that they have both participated in the negotiation of this Agreement and its terms and have had the opportunity to have this Agreement reviewed by an attorney of their choosing. The Parties agree that no rules of construction or interpretation shall be applied to this Agreement that would favor one party over the other, and that the Agreement shall be interpreted neutrally. All headings and captions are provided for convenience of the reader only and shall not imply any interpretation of the following subject matter in and of themselves.

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20. Dispute Resolution. The Parties agree to discuss in good faith any alleged 16 default or breach described in Section 13 (each generally constituting a failure to abide the terms of this Agreement) telephonically within 48 hours of such time as written notice of the alleged breach is received by the Party alleged to have committed such breach or default. If the alleged issue is not then resolved, then the Parties that authorized representatives of the respective Parties, with settlement authority, will meet in person within seven days to attempt in good faith to resolve the issue. If the issue persists, then the Parties shall resolve the dispute as set forth below. The foregoing shall not preclude any party seeking interim emergency injunctive relief in a court of competent jurisdiction located in Clark County, Nevada or from pursuing injunctive relief under Section 7 hereof. The Parties agree that the Party pursuing injunctive shall not be required to post a bond or shall be required to post the minimum bond required by applicable law, to the extent a bond is not waivable. Nothing contained in this Section 20 precludes MJNE from terminating the Agreement pursuant to Section 2(c).

(a) Mediation. Except if emergency injunctive relief is required, any dispute, controversy, or claim arising out of or relating to this Agreement (a “Dispute”) that cannot be settled through negotiation between the Parties shall be mediated by the Parties before a single mediator in Clark County, Nevada, or any other place agreed to by the Parties. Either Party to this Agreement may invoke the right to mediation set forth in this Section 20 (a) by sending written notice to the other Party of such invocation and setting forth in adequate detail the nature of the matter to be mediated. The Parties to the mediation jointly shall appoint the mediator within 15 calendar days of receipt of the written notice. The mediation proceedings shall commence and be diligently pursued by the Parties to this Agreement within 15 calendar days of the appointment of the mediator. Each Party to the mediation shall bear its own cost and expenses incurred with respect to the mediation. The cost of the mediator and the mediation procedure shall be borne equally by the Parties.

(b) Arbitration. Any Dispute that has not been settled or resolved by negotiation or through mediation to the satisfaction of the Parties within 90 days of the notice of the invocation of mediation pursuant to Section 20(a) above (or such other date as the Parties may agree) shall be resolved through binding arbitration. Either Party shall have the right to submit the Dispute to arbitration set forth in this Section 20(b) by sending written notice to the other Party. The Parties shall name a single arbitrator within 20 calendar days after such written notice. If the Parties fail to select an arbitrator, then each Party shall designate a third-party attorney duly licensed and in good standing in the State of Nevada, which two designees shall together designate a third person, duly licensed as an attorney in the State of Nevada, which person (if he or she accepts such appointment) shall be the arbitrator. If those designees cannot agree on an arbitrator, then the arbitrator shall be selected in accordance with then existing rules and processes of the American Arbitration Association (“AAA”). The arbitrator shall render a decision within 60 calendar days after his or her appointment and shall conduct all proceedings pursuant to the then existing rules of AAA governing commercial transactions, to the extent such rules are not inconsistent with Nevada law and this Agreement. The cost of the arbitration procedure shall be borne by the non-prevailing Party or, if the decision is not clearly in favor of one Party or the other, then such costs shall be borne as determined by the arbitrator. The arbitration procedure provided for in this Agreement shall be binding arbitration and shall be the sole and exclusive dispute resolution mechanism for any applicable Dispute, except to the extent that judicial enforcement proceedings are necessary to give effect to the resulting arbitral award.

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21. Limitations on Damages. MJNE shall not be liable to Company for any action or inaction, whether intentional or not, made any other third party, including but not limited to, other parties that are conducting cultivation activities at the Cultivation Facility, which affects Company’s ability to operate, grow or conduct sales pursuant to this Agreement. MJNE is only responsible to Company for any willful or grossly negligent action on the part of MJNE or its direct employees. Company reserves the right to pursue claims against any third-party vendor or MJNE affiliate.

Company acknowledges and understands that there may be additional cannabis operators conducting grow operations at the Cultivation Facility. As such, there is risk that an additional operator may jeopardize MJNE’s license to operate, thereby impacting Company’s ability to operate. If another operator jeopardizes the license, or causes the license to be revoked or suspended, thereby negatively impacting Company’s ability to conduct operations pursuant to this Agreement, Company agrees that MJNE shall have no liability to Company for the same. Company enters into this Agreement with full knowledge of the foregoing and does so with the understanding and willingness to accept the risk as stated herein.

22. Venue. Any arbitration or other action to enforce or interpret this Agreement shall exclusively be in Clark County, Nevada.

23. Third-Party Beneficiaries. This Agreement is for the sole benefit of the Parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement.

24. Federal Government Action. The Parties acknowledge that they are aware of and fully understand that despite the State of Nevada’s marijuana laws and the terms and conditions of this Agreement, Nevada-licensed marijuana cultivators, transporters, distributors, or possessors may still be arrested by federal officers and prosecuted under federal law. In the event of federal arrest, seizure, or prosecution associated with the activities described in this Agreement, the Parties agree to hold each other harmless and agree to be individually responsible for any attorneys’ fees associated with defending such actions. The Parties also agree to waive illegality as a defense to any contract enforcement action related to this Agreement.

25. Relationship of the Parties. This Agreement does not create any partnership or joint venture between the Parties. Company shall be an independent contractor pursuant to this Agreement. Except as expressly set forth in this Agreement, neither Party shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other Party or to bind the other Party to any contract, agreement, or undertaking with any third party.

26. Further Assurances. Each Party will execute and deliver such further instruments and take such further action as may be required to carry out the intent and purpose of this Agreement.

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27. Entire Agreement. This Agreement represents the entire understanding between the Parties with respect to the subject matter hereof and supersedes all other negotiations, agreements, representations, and covenants, oral or written. All the Recitals and Exhibits hereto are hereby incorporated within the Agreement. In the event of any conflict between this Agreement and any other Agreement between the parties, the terms and provisions of this Agreement shall control, unless specifically varied by a subsequent Agreement. This Agreement may be amended or otherwise modified only by a written documents signed by each of the Parties hereto.

28. Execution. The Parties may execute this Agreement in counterparts, all of which, when considered together, shall constitute one agreement. This Agreement may be executed by DocuSign or any other e-signature method authorized by MJNE.

IN WITNESS WHEREOF, the Parties have caused this Cultivation and Sales Agreement to be duly executed and delivered by their authorized representatives as of the Effective Date.

MJNE		COMPANY
MJ HOLDINGS, INC.		[INSERT NAME]
By:		By:
	Roger Bloss		[INSERT NAME]
	Chief Executive Officer
		Title:
Date:		Date:

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EXHIBIT A

SUMMARY OF COMMERCIAL TERMS

COMPANY LEGAL NAME: Green Grow Investments Corporation

COMPANY ADDRESS: 2660 S. Rainbow Blvd., Suite H-108, Las Vegas, NV 89146

COMPANY NOTICE INFORMATION:

Address: 2660 S. Rainbow Blvd., Suite H-108, Las Vegas, NV 89146

Attention of: Jason Sheng Huang

Email: jhpoa@yahoo.com Phone: 702-683-6188

with a copy to: N/A

DESIGNATED ACREAGE:

For Cultivation: 6 acres, subject to the restrictions set forth in the Deposit section below. Total: 10 acres

PRODUCT: As of the Execution Date, Company anticipates growing on the Designated Acreage and selling in the State of Nevada the following product or products:________________

DEPOSITS*: Company shall only be allowed to utilize two acres of the Designated 6 acres until such time as Company makes the Third deposit as set forth below. Upon payment of the Third deposit, Company shall be allowed to utilize an additional two acres, bringing the total useable acreage to 4 acres. Upon payment of the Fourth Deposit, as set forth below, Company shall be allowed to utilize all 6 acres. The following Deposits shall be made by the Company to MJNE: (i) a First Product Royalty Deposit of $50,000.00 to be applied to the first Product Royalty or Product Royalties that become due and payable to MJNE (all Product Royalty Deposits made pursuant to this section are to be applied to Product Royalties that become due and payable to MJNE) upon execution of this Agreement; (ii) a Second Product Royalty Deposit of $150,000.00 shall be paid to MJNE upon the CCB approving the transfer of the Cultivation License to the Cultivation Facility; (iii) a Third Product Royalty Deposit of $200,000.00 is due to MJNE upon Company completing its first harvest; (iv) a Fourth Product Royalty Deposit of $200,000.00 is due to MJNE upon the Company completing its second harvest. For purpose of this section only, a “harvest” is defined as the Company gathering or picking any of its cannabis crop from the Designated Acreage. Company shall make an additional $20,000.00 Deposit to be applied to the first and last monthly Security and Compliance Fee at the time of the Second Deposit as set forth above.

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Notwithstanding any to the contrary, upon the First Product Royalty Deposit, the Company shall be able to construct the allotted 10 acres according to plan specification agreed between the parties. Further, Company shall be able to utilize the 4 acres not Designated for cultivation.

PRODUCT ROYALTY*: 10%

Minimum Monthly Product Royalty: Beginning with the first calendar month following the second anniversary of the date of the Commencement Notice, $50,000.00 per month minimum Product Royalty is owed to MJNE from Company.

MONTHLY SECURITY AND COMPLIANCE FEE*: $10,000.00

CULTIVATION MANAGEMENT FEE (PAYABLE TO COMPANY)*: 90% of Net Sales Revenue

*All sums payable are shown in and payable in U.S. Dollars.

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EX-10.47

Exhibit 10.47

CULTIVATION AND SALES AGREEMENT

This CULTIVATION AND SALES AGREEMENT (this “Agreement”) is made and entered into as of the date last signed by either of the Parties (as defined below) (the “Effective Date”) by and between MJ Holdings Inc., a Nevada corporation (“MJNE”) and RK GROW LLC, a Nevada limited liability company (“Company”) (jointly, the “Parties” and, individually, a “Party”).

RECITALS

WHEREAS, pursuant to the Regulations outlined by the Nevada Cannabis Control Board, as amended from time to time (the “Act” and together with the rules and regulations thereunder, the “RTMA”), the State of Nevada Cannabis Control Board (“CCB”) has issued a cultivation facility license pursuant to which MJNE may cultivate (grow), process, and package marijuana; sell marijuana to retail marijuana stores; and operate marijuana product manufacturing facilities and sell to other cultivation facilities, which license MJNE is in the process of moving to the Cultivation Facility (as defined below) (the “Cultivation License”);

WHEREAS, Company represents that it has specialized knowledge, skills, technology, and experience in cultivation, and otherwise has the experience and skill necessary to cultivate and manage the cultivation of marijuana necessary to operate such an operation in the State of Nevada;

WHEREAS, as of the Effective Date, MJNE is in the process of finalizing the Cultivation Facility, as defined herein, and obtaining all approvals required by the CCB and the State of Nevada and will provide Company notice of when it can begin operations pursuant to applicable law and under this Agreement. The Parties agree that Company cannot commence operations at the Cultivation Facility under this Agreement until such time as it has been so notified, in writing, by MJNE (the “Commencement Notice”) and MJNE cannot estimate when the requisite approvals from the CCB and the State of Nevada will be forthcoming; and

WHEREAS, MJNE and Company desire to enter into an agreement whereby MJNE retains Company to provide the cultivation of one or more lines of product (as described on the Summary of Commercial Terms set forth on Exhibit A attached hereto and incorporated herein) for sale in the State of Nevada under the Cultivation License (the “Cultivation Services”) at MJNE’s facility located at 2215 E. Anvil Road Amargosa Valley, Nevada 89020 (the “Cultivation Facility”) on the terms and conditions set forth herein.

AGREEMENT

NOW THEREFORE, in consideration of the foregoing recitals which are incorporated herein and made part of this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, agreeing to be legally bound, hereby agree as follows:

1. Engagement and Cultivation Rights. As of the Effective Date MJNE hereby engages Company, on a non-exclusive basis, and Company hereby accepts such engagement and agrees, upon the terms and conditions set forth herein, to provide the Cultivation Services pursuant to the terms and conditions set forth herein. Company hereby is granted the right to develop, manage, and produce on behalf of MJNE all Company-branded products, including but not limited to those set forth on Exhibit A; provided, however, that (a) Company is authorized by MJNE to produce all products that may be lawfully grown and distributed in Nevada pursuant to applicable law, including CCB guidelines and the RTMA; (b) Company shall use commercially-reasonable efforts to maximize the production and sales of the products grown at the Cultivation Facility under this Agreement, subject to compliance with all applicable laws; (c) Company shall commence making its improvements to the Designated Acreage within 120 calendar days of the date of the Commencement Notice and shall begin cultivation on the Designated Acreage (as evidenced by registration of the first plants with the CCB) by the first day of Spring following the Commencement Notice or when the CCB approves cultivation activities at the Designated Acreage, whichever occurs later; and (d) Company complies with all applicable laws, rules, and regulations, including but not limited to those pertaining to the labeling of product sold hereunder.

2. Term; Renewal; Termination.

(a) Term. This Agreement shall commence on the date of the Commencement Notice and shall continue for a period of 15 years thereafter (the “Initial Term”), unless earlier terminated as provided in Section 2(b).

Renewal. Upon expiration of the Initial Term, this Agreement shall automatically renew for one fifteen year term followed by automatic renewals for successive five-year terms, or as the Parties otherwise agree in writing prior the expiration of the then-current term (each, a “Renewal Term” and together with the Initial Term, the “Term”), unless either Party provides the other written notice of termination at least sixty (60) days prior to the expiration of the applicable Term. MJNE agrees that it will approve the first fifteen year renewal term so long as Company is not in default in the performance of this Agreement. The terms, covenants and conditions of any Renewal Term shall be the same as the terms, covenants, and conditions in effect immediately prior to such renewal unless otherwise agreed by the Parties in writing prior to the commencement of the new Renewal Term.

(b) Termination. This Agreement may be terminated at any time upon the mutual agreement of the Parties or if Company fails to cure any default or breach of the Agreement within 15 business days from notification of such breach/default (or such shorter time as required by applicable law). In addition, upon the occurrence of any one of the following events, either Party may terminate this Agreement prior to the end of the Initial Term or any Renewal Term by providing written notice to the other Party stating the intended date of termination: (i) subject to Section 20, any breach or default of this Agreement by the other Party which remains uncured in accordance with Section 20(a) or Section 20(b) hereof; (ii) any grossly negligent or intentional or willful misconduct by the other Party; (iii) any federal enforcement action of the type described in Section 24 against MJNE, Company, or any of their respective affiliates, employees or independent contractors; (iv) any change or revocation of state or local law, regulation or licensing, that has the effect of prohibiting the legal operation of the Cultivation Facility or the performance of the Cultivation Services; provided, however, that any change that only impacts compliance and/or operation, or causes costs of goods to be more expensive or difficult shall not provide a basis for termination under this clause (iv); and (v) CCB’s refusal to approve an application to renew, or revocation of, the Cultivation License. In the event of any termination of this Agreement, Company personnel shall be denied access to the Cultivation Facility without the express permission of MJNE. The Parties shall use reasonable commercial efforts to wind down operations of Company in an organized and efficient manner. Company shall pay for and be responsible for any and all costs associated with winding down Company operations at the Cultivation Facility.

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(c) CCB Approval. The Parties acknowledge that this Agreement is subject to the approval of the CCB. The Parties will work together in good faith to provide information to the CCB pursuant to applicable Nevada law. In the event that the CCB does not approve this Agreement or that the Cultivation License is not authorized for use at the Cultivation Facility, the Agreement shall be terminated and neither Party shall have any obligation to the other under this Agreement or arising in connection with this Agreement, including any obligation related to costs or expenses incurred in anticipation of such approval by either Party excepting that MJNE shall return any deposit Company may have forwarded in anticipation of approval Alternatively, if both Parties agree, the Parties may elect to work together in good faith to modify the Agreement to bring it into conformance with CCB guidelines/requests and to further extend the Agreement.

3. Obligations of Company. The following obligations of Company are in addition to any and all obligations set forth elsewhere in this Agreement (including, without limitation, those in Section 1, above), or imposed by applicable law, rule, or regulation, including any orders or policies promulgated by the CCB.

(a) Compliance. Company shall (i) be responsible for the logistics, development, ingredient sourcing, cultivation, preparation and storage at or from the Designated Acreage (as defined below), and sale of the its products and (ii) comply at all times with the RTMA and all applicable rules, regulations and requirements in the provision of the Cultivation Services, subject to MJNE’s good faith assistance and cooperation; provided, that MJNE has the right to require Company to take any and all reasonable actions that MJNE deems necessary or advisable to ensure compliance with RTMA or any other applicable rules, requirements or regulations. The Parties shall cooperate and work together to take any action necessary in furtherance of, in compliance with, or otherwise in any way related to any change whatsoever in any applicable law, rule, statute, regulation, the entitlement and/or approval process, or other process or requirement related to the Cultivation Services that comes into being, occurs, accrues, becomes effective or otherwise becomes applicable or required after the Effective Date. Company shall follow, conform to and abide by any such changes and any regulatory matters. Company shall further address and cure any noncompliance and pay any fines or assessments arising in connection with the failure of the Company or any of its employees or independent contractors to comply with applicable law and all other costs associated therewith.

(b) Standard of Care. Company will perform the Cultivation Services in compliance with best industry practices, applicable law, permits, the terms and conditions of this Agreement (including the Policies and Procedures, as defined below) and otherwise operate in a commercially reasonable manner (the “Standard of Care”).

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(c) Packaging. Company shall comply with all legal requirements pertaining to the labeling of its products grown or produced at the Cultivation Facility, including any regulatory approval of such labels, which labels share bear MJNE’s approved logo in such a manner as shall be directed by MJNE.

(d) Insurance. Prior to commencing operations under this Agreement, Company shall obtain, and thereafter, through the Term, shall maintain industry-standard insurance for an operation comparable to that contemplated, including the Cultivation Services, including workers’ compensation insurance and product liability insurance, the scope and policy limits of which insurance shall be subject to MJNE’s approval. Without limiting the foregoing, during the Term, Company shall maintain a policy of commercial general liability insurance (sometimes known as broad form comprehensive general liability insurance) insuring Company against liability for bodily injury, property damage (including loss of use of property) and personal injury arising out of the operation, use, or occupancy of the Cultivation Facility. Company shall name MJNE and its affiliates, and their respective officers, directors, and employees, as additional insureds under such policy or policies and shall provide a certificate of insurance or policy endorsements acceptable to MJNE prior to commencing operation but no later than 20 calendar days from obtaining its initial coverage and upon each renewal. Coverage shall be for no less than US$1,000,000 per occurrence; shall be provided by a carrier reasonably acceptable to MJNE; and with a deductible or retention amount reasonably acceptable to MJNE. MJNE may require a reasonable increase in coverage amounts during the Term. The amount and scope of coverage of such insurance shall not limit Company’s liability nor relieve Company of any other obligation under this Agreement. MJNE may also obtain comprehensive public liability insurance in an amount and with coverage determined by MJNE insuring MJNE against liability arising out of the ownership, operation, use, or occupancy of the Cultivation Facility, including the Designated Area. Any insurance obtained by MJNE shall not be contributory and shall not provide primary insurance. Company’s insurance policies shall provide that MJNE shall be notified if there is a lapse in coverage, a pending lapse in coverage, or if any claim has been made upon such coverage. MJNE also may require Company to maintain, during the term of this Agreement, a policy of commercial loss of income insurance (business interruption insurance) insuring the Company and MJNE against loss of income resulting from Company’s inability to operate and/or produce product. MJNE shall provide Company a 30-day notice requiring Company to obtain such loss of income insurance.

(e) Labor Matters.

(i) Company may utilize subcontractors to provide any of the Cultivation Services so long as such subcontractors are selected by Company with due care and Company has reasonable assurances that such subcontractors can perform the Cultivation Services pursuant to the requirements of this Agreement, including the Standard of Care; provided, however, that no such utilization will relieve Company of any of its obligations or liabilities under this Agreement. Neither Company nor the employees, contractors, or agents of Company providing Cultivation Services hereunder will be considered employees of MJNE for any purpose. Company will be solely responsible for all matters pertaining to the employment, supervision, compensation, promotion, termination, daily direction, and control of its employees.

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(ii) Company is responsible for payment of all compensation, benefits and employer taxes related to such persons and any fines or other regulatory matters arising in connection with employment matters, including but not limited to the failure of Company or any of its employees or independent contractors to comply with applicable laws. In furtherance and not in limitation of the foregoing, Company represents and warrants to MJNE that it will use the Standard of Care (i) to obtain and maintain all permits, certificates and licenses necessary for Company to provide for the employment of its employees and independent contractors as may be required under the applicable laws of the State of Nevada, and (ii) to comply with (A) all applicable laws relating to hiring practices, workplace safety and health, payment of wages and overtime, employee benefits, and employment discrimination, (B) the Immigration Reform and Control Act of 1986, and (C) all other applicable laws governing the employment relationship between Company and its employees.

(iii) Company shall use the Standard of Care to (A) provide reasonable health protection and safety equipment to all of its employees and independent contractors at the Cultivation Facility; (B) direct its employees and independent contractors to properly dress at the Cultivation Facility, including without limitation wear closed-toe shoes; (C) prohibit horseplay, roughhousing, or sports play in the Cultivation Facility; and (D) train its employees and independent contractors in proper safety procedures and the Policies and Procedures (as described below).

(f) Policies and Procedures. Company shall comply with all policies and procedures, as approved by the CCB, as may be communicated to Company by MJNE from time to time, including, without limitation, the policies and procedures set forth on Exhibit A attached hereto, and the sexual harassment rules adopted by MJNE (collectively, the “Policies and Procedures”). Company shall provide MJNE a copy of any written operations manual including all standard operating procedures for its processes at the Cultivation Facility, and any amendments thereto.

(g) Use and Maintenance of the Cultivation Facility.

(i) MJNE shall permit Company to use the acreage identified as the “Designated Acreage” on Exhibit A for Cultivation Services, subject to any limitations set forth on Exhibit A.

(ii) Company shall be responsible for and pay for all maintenance of the Designated Acreage, which shall be maintained in accordance with the Policies and Procedures (or, if no written Policies and Procedures have been provided by MJNE, in accordance with the directions of MJNE) and applicable laws, rules, and regulations.

(iii) MJNE shall determine the location of the Designated Acreage within the Cultivation Facility, in its sole but reasonable discretion.

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(h) Supplies, Equipment and Tools. Company shall be responsible for the selection, purchase, and acquisition of all supplies, equipment, and tools required to deliver the Cultivation Services (the “Equipment”), which Equipment shall remain the property of Company. Company shall use commercially-reasonable efforts to mark otherwise designate its Equipment as its property and shall maintain (and provide to MJNE from time to time, upon MJNE’s reasonable request) an accurate record identifying its property. Company shall have the right, at its own cost, to install or attach cultivation structures and equipment on the Designated Acreage; provided, however, that (A) such structures and equipment meet the requirements or specifications of the CCB and applicable laws, rules, and regulations; (B) all specifications and plans for structures and equipment be provided in advance to MJNE, along with copies of such documents that are required to be submitted to any applicable regulatory authority; (C) no equipment or structures that are subject to regulatory approval shall be installed or place on the Designated Acreage without the receipt of any necessary regulatory approval; and (D) any structures or equipment that are affixed, meaning attached to the ground permanently, to the Designated Acreage shall become the property of MJNE upon the expiration or termination of this Agreement for any reason (further provided that MJNE, in its sole but reasonable discretion, may require Company to remove such structures or equipment at Company’s sole expense upon the expiration or termination of this Agreement for any reason).

(i) Testing. Company shall cooperate with MJNE to implement all actions necessary for product testing and analytics for all products produced and developed at the Cultivation Facility by or on behalf of Company to ensure compliance with the RTMA and all other applicable rules, regulations, requirements, and laws. MJNE shall facilitate the testing of products by a duly-licensed laboratory or testing provider, provided that Company shall pay all costs and expenses related to that testing. Each Party shall be provided copies of the results of any product testing. No product produced at the Cultivation Facility by or on behalf of Company shall be sold or distributed without such testing and only in compliance with all applicable laws, rules, and regulations pertaining thereto.

(j) Records, Record-Keeping, and Reporting.

(i) Company shall maintain its books and records in accordance with generally accepted account principles and shall maintain accurate records of all product sales and such other business metrics and details as may be required by the CCB and applicable law. At least once per calendar month, on or before the 15^th of the month, Company shall provide MJNE with a detailed report of the immediately preceding month’s sales. Company must use the accounting and tracking system required by the CCB from time to time and as delegated to Company by MJNE (as of the Effective Date, the CCB-designated seed-to-sale tracking compliance system is Metrc Nevada (“Metrc”)). All sales must be accompanied by a sales report, delivery manifest and cash receipts. Product sales and all pertinent data shall be input through Metrc, as directed by MJNE (or such other tracking and compliance system as may be designated by the CCB from time to time) and shall be subjected to audit by MJNE, as set forth below. Company shall maintain sales and cost accounting records and supporting documentation for at least five years after the pertinent period, or such longer period as may be required by applicable law. Company shall maintain its records in readily-accessible electronic format using commercially-available software.

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(ii) Company shall maintain at the Designated Acreage, with MJNE’s oversight and input, complete and accurate records related to the provision of Cultivation Services, including, without limitation, financial records, sales reports, sales invoices, maintenance of all required Agent Cards, human resources, and safety records.

(iii) Upon reasonable advance notice, and during normal business hours, MJNE or an agent designated by MJNE shall have access to such records and supporting documentation to the extent sufficient to audit such materials and to assess and verify gross revenue generated by the Designated Acreage, in accordance with this Agreement. MJNE shall have the right to review the sales records and supporting documentation records with respect to the Cultivation Services. Any such review shall be solely the expense of MJNE and shall not occur more frequently than quarterly; provided, however, that if MJNE determines a material disparity between the results of operation reported by Company and the results of MJNE’s audit, in MJNE’s sole but reasonable determination (it being agreed and understood that a disparity of five percent or greater will be considered material), then MJNE may review Company’s records more frequently (“Additional Audits”) and may require Company to bear the costs of the same. Additional Audits shall be terminated in the event that two sequential audits result in discrepancies less than 5 percent. Notwithstanding the foregoing, Additional Audits may be trigger in the event that a material disparity exists as set forth herein. The access to records that is the subject of this subsection shall be in addition to MJNE’s rights set forth in Section 10 of this Agreement.

(k) Agent Cards. Each employee and independent contractor of Company intended to work at the Cultivation Facility must obtain a state-issued marijuana agent card (“Agent Card”) from the CCB prior to commencing work at the Cultivation Facility and must maintain an active Agent Card in good standing in order to work at the Cultivation Facility at all times. MJNE shall submit all initial applications and renewals, subject to the following: (i) Company must provide MJNE with all applicable information and material necessary to process each initial application, and must ensure that each employee and independent contractor cooperates with the application process; (ii) in the case of renewal filings, Company must provide (and ensure that the applicable employee or independent contract provides) all necessary information and material necessary for MJNE to submit the requisite online filing at least 30 business days before the filing is due; and (iii) Company shall pay all costs, fees, and expenses related to the Agent Card and application/renewal processes, in advance.

(l) Access. MJNE shall provide such access to the Designated Acreage to Company as MJNE deems reasonably necessary and appropriate to allow Company to provide the Cultivation Services. Company shall ensure that guests at the Designated Acreage shall be kept to a minimum. Company shall ensure that all its guests at the Designated Acreage are always escorted by an authorized and appropriate agent of Company. Under no circumstances shall Company personnel, including its management, employees, independent contractors, or guests, enter any portion of the Cultivation Facility other than the Designated Acreage without prior written approval of MJNE.

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(m) Security for Designated Acreage. Company shall install and maintain at the Designated Acreage, at its sole expense, such fences, walls, doors, locks, security systems, camera systems, fire alarms and other security apparatus, including, without limitation, intrusion and motion detection, panic buttons, duress alarm and internal and external video surveillance as may be necessary to meet the requirements of Nevada laws, or as may be directed by the CCB or any other regulatory body with authority over the Cultivation Facility. Company shall submit its security plan to MJNE for its approval prior to installing any fences, walls, or doors, which approval may be denied or conditioned by MJNE, in its sole but reasonable discretion

(n) Marketing. Company shall have the right to develop, direct, maintain, and expand the marketing, branding, and pricing strategies for all products produced by Company at the Cultivation Facility, or otherwise, subject to compliance with applicable rules, regulations, and requirements. The foregoing notwithstanding, MJNE shall have the right to approve in advance all packaging and product representation and claims.

4. Fees and Expenses. As further set forth in Section 5, below, MJNE shall collect revenue from the sale of the products produced by Company hereunder, which revenue shall be for MJNE’s account. As set forth below, Company shall earn a management fee (the “Cultivation Management Fee”) based on the total invoiced amount for the sale of such product (each sale, an “Order”), after the deduction of taxes paid in connection with such Order, as set forth below. If MJNE is owed any fees or expenses hereunder attributable to an Order and funds are not available from the proceeds of such Order (whether because of customer non-payment or otherwise), then MJNE shall invoice Company for such fees and expenses, which invoice will be paid in full by Company within 10 business days of the date of invoice. Alternatively, and in its sole discretion, MJNE may deduct such fees and expenses related to an Order from the Cultivation Management Fee otherwise payable from the proceeds of a prior or subsequent Order.

(a) Deposits. Upon execution of this Agreement, Company shall pay MJNE the sums identified as “Deposits” on Exhibit A. Each of these sums shall be non-refundable except in the following events: (i) where this Agreement is not approved by the CCB; (ii) the Cultivation License is not approved for use at the Cultivation Facility; or (iii) the Company has exercised its options to terminate under Addendum 1.

(b) Security and Compliance Fee. Company shall pay MJNE the Security and Compliance Fee for the Cultivation Facility as whole as set forth in Exhibit A to compensate MJNE for certain security and regulatory compliance expenses incurred by MJNE. This fee shall be paid monthly by the first of each month throughout the Term commencing with the first of the month immediately following the date of the Commencement Notice and may be deducted from any deposits or other funds of Company (including funds otherwise payable as the Cultivation Management Fee, defined below, then in the possession of MJNE). Amounts unpaid by the 10^th of the month shall be considered past due and shall incur a late fee of $500.00. The Security and Compliance Fee shall be increased by MJNE each year based on an increase in the regional cost of living but not less than 1.5% per year and not more than 10% in any five-year period.

MJNE reserves the right to install additional fencing and other security measures at the Cultivation Facility (including on and around the Designated Acreage) and to charge Company a pro rata share of the cost thereof, which will be promptly paid by Company upon invoicing excepting any currently planned or existing perimeter fencing and cameras for the initial phase of perimeter security.

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(c) Royalty. Company shall pay MJNE a percentage of all invoiced Orders less applicable taxes (the “Product Royalty”). The Product Royalty rate is set forth on Exhibit A hereto and is subject to the minimum royalty set forth therein. Such payments are due and payable by Company upon sale of product regardless of whether the purchaser has paid all or any part of the purchase price. Company shall be entitled to a credit or credits for any authorized returns. In the event that Company and MJNE is unable to collect from a purchaser the total amount owed to MJNE and Company for an Order, Company is still obligated to pay the Product Royalty to MJNE for the total amount of the invoiced Order to purchaser

(d) Cultivation Management Fee. Company shall earn a Cultivation Management Fee based on the Net Sales Revenue, at the rate set forth on Exhibit A. For purposes hereof, “Net Sales Revenue” means gross revenue actually realized from an Order less any returns or credits authorized by MJNE related to such Order and less Order Expenses (as defined in subsection (e)) related to such Order. As stated elsewhere in this Agreement, MJNE may retain the following prior to distributing the Cultivation Management Fee to Company to the extent that MJNE has not otherwise recouped such sums: (i) all Order Expenses related to a prior Order; (ii) the monthly royalty set forth in subsection (c), above, as well as any Product Royalty related to a prior Order; (iii) the security and compliance fee set forth in subsection (b), above related to a prior Order; (iv) any returns or credits authorized by MJNE related to such product; and any other fees, expenses, or other sums of money owed to, or invoiced by MJNE to Company. Further, to the extent that Company separately has paid MJNE for any Order Expenses, such sums will not be included in the determination of Net Sales Revenue (i.e., such sums will not be double counted). For the sake of clarity, MJNE may deduct from the Cultivation Management Fee paid to Company any or all sums owed to it from a prior Order or prior Orders, and any other fees and expenses owed to MJNE by Company.

(e) Order Expenses. Company shall pay MJNE for all direct expenses incurred in connection with the Cultivation Services without limitation, including those described in Section 6, as well as the cost of testing product; delivery of product; pick-up and processing of payments; and any other reasonable cost or fee and, as well any late fee, interest or other obligation due from Company to MJNE. Such expenses that are directly attributable to a specific Order, such as the cost of testing product; delivery of product; pick-up and processing of payments; and taxes payable to the State of Nevada related to a specific order, are the “Order Expenses;” provided, however, that if Company separately has paid Company for such taxes related to a specific order, they will not be included in the term Order Expenses as to that Order.

(f) Build Out Payment. Company shall pay MJNE for any and all reasonable expenses MJNE incurs in building out or assisting with the build out of the Designated Acreage as agreed to between the Parties. Such expenses shall not be billable unless previously approved by all parties in writing.

(g) Disbursement. MJNE shall pay Company the Cultivation Management Fee pursuant to Section 4(g), on or before the 10^th of each month, for the preceding month’s fee.

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(h) Examples. By way of example only, and without any inference that the sums reflected below are or should be expected or reflect anticipated revenue or expenses,

(i) The following represents an example of a Product Royalty calculation and a Cultivation Management Fee calculation where (A) the Product Royalty rate is 10%; (B) the Cultivation Management Fee is 90% of Net Sales Revenue:

1.	Company sales 100 lbs of flower at Fair Market Value (“FMV”) at $2,100.00 per lbs;
2.	Billed amount of Order equals $210,000.00;
3.	MJNE collects $210,000.00;
4.	Taxes paid to state equal $36,400.00 (At current tax rate based of the FMV of $2,100/lb, NOTE that if the product was sold at $1,800/lb it would still be taxed at the FMV rate of $2,100/lb)
5.	Net after taxes equals $173,600.00;
6.	Product royalty of 10% paid to MJNE equals $17,360.00
7.	Security and Compliance Fee has not yet been paid and is deducted by MJNE from this Order equaling $10,000.00
8.	Other order expenses equal $6,250.00: testing ($6,000.00) (based on 20 test @ 5lb batches @ $300.00 per test), ($250.00) (transportation cost).
9.	Money owed to Company $139,990.00 paid on the 10th of the following month.

(ii) The following represents an example of the distribution of the Cultivation Management Fee shown in subsection (i), above, at such time as there are outstanding fees payable to MJNE:

Cultivation Management Fee:	$139,990.00
Taxes paid to State for prior Order:	$22,000.00
Order Expenses from prior Order:	$20,000.00
Final Cultivation Management Fee:	$97,990.00 ($139,990-$22,000-$20,000)

5. Sales; Collections; and Payments.

(a) Company shall sell product on behalf of MJNE. All sales shall be timely and properly recorded and data entered into the sales tracking system and MJNE will arrange for collection of sales proceeds via a third-party courier; notwithstanding, MJNE is not responsible for such collections in the event of non-payment or dispute. Company acknowledges that MJNE is required to remit taxes as promulgated by the State of Nevada on the sales of all product/cultivation goods and for any product sold, regardless of whether the proceeds of such sale have been remitted, cleared, or paid in full. As such, to the extent that MJNE has paid taxes related to the products that are the subject of this Agreement, Company is responsible to reimburse MJNE. Notwithstanding anything set forth in this Agreement to the contrary, MJNE shall have the right to invoice Company for the reimbursement of taxes attributable to one or more Orders, and Company shall remit such funds to MJNE immediately upon receipt of the invoice.

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(b) In addition to any other expenses or fees set forth herein, MJNE may invoice Company for any reasonable direct out-of-pocket expenses incurred by MJNE in connection with Company operations, plus a 15% administrative charge if these fees are not paid within 20 days. MJNE invoices to Company are due and payable within 14 calendar days of receipt by Company unless such invoice is for an amount in excess of $2,000; in each such case that invoice shall be due and payable within 20 calendar days and, if not then timely paid, may be paid to Company from any Company funds then in the possession of MJNE, including any Cultivation Management Fee that otherwise would be payable to Company.

(c) Company shall sell product only to a licensed marijuana dispensary, production facility, or cultivation facility, in accordance with the Cultivation License.

6. Company’s Operating and Related Expenses. Without limiting any other provision of this Agreement, Company shall be solely responsible for all costs and expenses necessary to perform the Cultivation Services as contemplated by this Agreement, including, without limitation, all materials, build out costs, electrical, utilities, fencing (which may be prepaid by MJNE and will be reimbursed by Company to MJNE), installation of water piping, trenching, grading, installation of concrete slabs, building construction, soil development, equipment, vehicles, mobile phones, computers, and labor, including, without limitation, all wages, benefits (if any), taxes, withholding, workers’ compensation insurance, payroll processing, uniforms, tools, training and education, and all other employee-related costs and anything else related to Company operations.

7. Confidential Information; Insider Trading.

(a) Definition. “Confidential Information” means nonpublic information that one Party (the “Disclosing Party”) designates as being confidential or which, under the circumstances surrounding disclosure, ought to be treated as confidential, including, but not limited to: all (i) financial, operational, and other information relating to the Disclosing Party; (ii) confidential information and trade secrets of the Disclosing Party; (iii) lists of customers or referral sources; (iv) business, financial, and other information received from a customer or any other third party that the Disclosing Party is obligated to treat as confidential; (v) financial statements and other financial information; (vi) any present or future business or strategic plans, services, trade secrets, designs, recipes, processes, procedures, or other business or technical information of the Disclosing Party; and (vii) any other information designated, either orally, in writing, or by any other means, as confidential. Confidential Information does not include information that: (x) is or becomes generally available to the public other than because of a disclosure by the Party receiving such information (the “Receiving Party”); (y) was in the Receiving Party’s possession prior to disclosure by Disclosing Party as shown by written records of the Receiving Party dated prior to the date of this Agreement.

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(b) Confidentiality Obligations. The Receiving Party agrees: (i) to hold all Confidential Information in strict confidence and to take commercially reasonable precautions to protect the confidentiality of such Confidential Information (including, without limitation, all precautions the Receiving Party employs with respect to its own confidential or proprietary materials of any kind); (ii) not to divulge any Confidential Information or any information derived therefrom to any third person without the express prior written consent of the Disclosing Party, which may be granted or withheld at the Disclosing Party’s sole discretion, or unless compelled to do so by a court of competent jurisdiction or regulatory authority, and then only after providing the Disclosing Party, to the extent allowable under law or regulation, with an opportunity to enjoin the disclosure; and (iii) not to encourage or facilitate any third party to do any of the actions prohibited in the foregoing items.

(c) Return of Confidential Information. It is further understood that all Confidential Information provided by the Disclosing Party to the Receiving Party remains the sole property of Disclosing Party, and upon written request shall immediately be returned by the Receiving Party, together with all copies.

(d) Enforcement. Each Receiving Party agrees that, in the event of any breach of this Agreement by it, such breach will cause irreparable harm to the Disclosing Party, and monetary damages will not be sufficient or may not be adequately quantified, and as such, the Disclosing Party shall be entitled to specific performance, injunctive relief, or other equitable remedies as may be available to it, which remedies shall be cumulative and non-exclusive, and in addition to such other remedies as it may otherwise have at law or in equity.

(d) Insider Trading. Company acknowledges that the stock of MJNE is publicly traded and that MJNE is subject to federal and state securities laws, rules, and regulations, including those under the oversight of the United States Securities and Exchange Commission. Company and its representatives may become aware of material non-public information regarding MJNE in the performance of the Cultivation Services or otherwise in connection with its relationship with MJNE. Company acknowledges that engaging in any transaction in MJNE’s stock while in possession of material nonpublic information, as well as providing material nonpublic information to others who may engage in a transaction in MJNE’s stock while in possession of such information, may subject Company or MJNE or both (as well as their respective officers and directors) to civil and potentially criminal liability. Accordingly, Company and its officers and directors shall ensure that neither the Company, its officers, directors, and members of their respective immediate families, will engage in transactions in MJNE’s stock while in possession of material non-public information and, to the extent that any employees, independent contractors, or other parties associated with Company are or become in possession of material nonpublic information concerning MJNE, Company shall use commercially-reasonable efforts to ensure that they do not engage in such transactions.

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8. Representations and Warranties. The Parties respectively represent and warrant to each other that: (a) it is duly organized, validly existing and in good standing as a limited liability company or corporation under the laws of the state of its domicile; (b) it has the full right, power and authority to enter into this Agreement and to perform its obligations hereunder; (c) the execution of this Agreement by its representative whose signature is set forth at the end hereof has been duly authorized by all necessary corporate action of the Party; and (d) when executed and delivered that Party, this Agreement will constitute the legal, valid and binding obligation of that Party, enforceable against that Party in accordance with its terms. MJNE further represents and warrants that: (x) it is, or will be prior to the commencement of any Cultivation Services hereunder, the holder of the Cultivation License; (y) the Cultivation License is duly and validly issued, and shall be maintained during the entire Term; and (z) the Parties’ respective rights and obligations under this Agreement are permitted activities under the Cultivation License, provided Company complies with its obligations under this Agreement and applicable law. Company further represents that (A) it has sufficient financial resources to engage in the operation contemplated hereby; and (B) that none of the persons that owns an interest in Company, directly or beneficially, is a “Specially Designated National” or “Blocked Person.” “Specially Designated National” or “Blocked Person” means (i) a person designated by the U.S. Department of Treasury’s Office of Foreign Assets Control from time to time as such status, (ii) a person described in Section 1 of U.S. Executive Order 13224, issued September 23, 2001, or (iii) a person otherwise identified by government or legal authority as a person with whom we or our affiliates are prohibited from transacting business. Currently a list of such designations is published under the internet website address http://sdnsearch.ofac.treas.gov/. The text of the Executive Order is published at www.ustreas.gov/office/enforcement/ofac.

9. Indemnification. For purposes of this Agreement, the term “Affiliate” means any person or entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, a Party. Each Party (respectively an “Indemnifying Party”) shall indemnify and save harmless the other Party and its agents, officers, directors, members, managers, directors, employees, and Affiliates (each an “Indemnified Party”) from and against any and all actions, claims, costs (including attorneys’ fees), fines, damages, judgments, and liabilities whatsoever, including without limitation any product liability claims, in law or equity, arising out of or caused by (a) any breach by the Indemnifying Party of this Agreement, (b) the Indemnifying Party’s operations at the Cultivation Facility or performance as contemplated under this Agreement, (c) obligations that either Indemnifying Party is alleged to have or have had with respect to Indemnifying Party’s employees to make payments, contributions or withholdings under any applicable federal, state or local laws pertaining to workers’ compensation, unemployment, social security or income or other taxes, (d) any and all claims against Indemnified Party of whatever nature arising from any act, omission or negligence of Indemnifying Party, its contractors, licensees, agents, servants, employees, invitees, or visitors, arising from any accident, injury, damage or any other reason, (e) any claims, suits, charges, proceedings or actions for workers’ compensation benefits or awards filed against Indemnified Party by or concerning Indemnifying Party’s employees, (f) any grossly negligent acts, omissions or deliberate, willful or intentional misconduct or malfeasance, of Indemnifying Party’s employees while performing services or other obligations contemplated under this Agreement; and (g) any damage to the Cultivation Facility caused by Indemnifying Party’s gross negligence or willful misconduct.

10. Inspections and Audits. The Parties acknowledge and agree that the Cultivation Facility may be subject to inspection by CCB and that CCB may perform audits of all activities licensed under Nevada law. As such, the Parties agree to fully cooperate in good faith with any such inspection or audits. MJNE shall have the right (but not the obligation) to inspect and direct corrections at the Cultivation Facility at any time without prior notice or consent; provided, however, that Company may not rely on the results of any such inspection as evidence that it is in compliance with applicable law.

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11. Taxes. Each of the Parties shall be responsible for its own taxes (including all personal property taxes) that are incurred as a result of that Party’s activities pursuant to this Agreement, and no Party shall be liable to any other Party for contribution or otherwise related to the payment of any taxes. Any taxes imposed shall be paid at the level they are imposed.

12. Limited MJNE License; No Other Intellectual Property Licenses.

(a) MJNE hereby grants Company a non-exclusive limited, royalty free, license to use its name, trademarks, and other trade dress in the performance of the Cultivation Services in the State of Nevada during the Term. Except for the foregoing license, nothing herein shall be construed or interpreted as to give Company any right, title, interest, or license to use any intellectual property of MJNE or any of its affiliates. Apart from the license granted in this section, Company shall not use MJNE’s name or brand in any way without the prior written consent of Company. Any authority granted to Company hereby may be revoked by MJNE upon commercially reasonable notice being given.

(b) Nothing herein shall be construed or interpreted as to give MJNE any right, title, interest, or license to use any intellectual property of Company or any of its affiliates. MJNE shall not use the Company name or brand in any way without the prior written consent of Company, except as may be necessary to perform any of the services undertaken under this Agreement (e.g., the filing of applications for Agent Cards).

(c) Company expressly acknowledges and agrees that in addition to other third parties that may be granted the right to conduct grow operations at the Cultivation Facility, Company or its affiliates, on their own behalf, may engage in grow operations at the Cultivation Facility. Notwithstanding anything set forth in this Agreement to the contrary, Company shall have no right to interfere with or object to any other licenses granted by Company nor any activities conducted by MJNE or its affiliates, including those that may be deemed competitive with Company.

13. Events of Default.

(a) Events of Default by Company. Company shall be in default hereunder if any one or more of the following events happen, and Company fails to cure such default within 15 days following written notice from MJNE (or such lesser period of time required under Nevada laws): (i) Company fails to act in accordance with, or is alleged by a federal, state, or county state regulatory authority or administrative body that it has violated, any law, rule, or regulation, including but not limited to any regulations promulgated by the CCB, including the RTMA; (ii) the filing by Company of a voluntary petition of bankruptcy or a voluntary petition or answer seeking reorganization, rearrangement, or readjustment of its debts, or any relief under any bankruptcy or insolvency act or law, now or hereafter existing, or any agreement by Company indicating consent to, approval of, or acquiescence in, any such petition or proceeding or face involuntary bankruptcy; (iii) the application by Company or the consent or acquiescence of Company in the appointment of a receiver or trustee for all or a substantial part of any of its properties or assets; (iv) the making by Company of a general assignment for the benefit of creditors; (v) the inability of Company or the admission of Company in writing of its inability to pay its debts as they mature; (vi) the filing of an involuntary petition against Company seeking reorganization, rearrangement or readjustment of its debts or for any other relief under any bankruptcy or insolvency act or law, now or hereafter existing, or the involuntary appointment of a receiver or trustee for Company for all or a substantial part of its property or assets, or the issuance of a warrant of attachment, or execution of similar process against a substantial part of the property of Company and the continuance of such for 120 days undismissed or undischarged; or (vii) the failure by Company to perform or comply with any material covenant or agreement in this Agreement. If Company fails to cure the default within 15 days, MJNE has the right to terminate the Agreement pursuant to Section 2(c).

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(b) Events of Default by MJNE. MJNE shall be in default hereunder if any one or more of the following events happen, and MJNE fails to cure such default within 30 days following written notice from Company (or such lesser period of time required under Nevada laws): (i) the revocation of the Cultivation License by the State of Nevada; (ii) the filing by MJNE of a voluntary petition of bankruptcy or a voluntary petition or answer seeking reorganization, rearrangement, or readjustment of its debts, or any relief under any bankruptcy or insolvency act or law, now or hereafter existing, or any agreement by MJNE indicating consent to, approval of, or acquiescence in, any such petition or proceeding or face involuntary bankruptcy; (iii) the application by MJNE or the consent or acquiescence of MJNE in the appointment of a receiver or trustee for all or a substantial part of any of its properties or assets; (iv) the making by MJNE of a general assignment for the benefit of creditors; (v) the inability of MJNE or the admission of MJNE in writing of its inability to pay its debts as they mature; (vi) the filing of an involuntary petition against MJNE seeking reorganization, rearrangement or readjustment of its debts or for any other relief under any bankruptcy or insolvency act or law, now or hereafter existing, or the involuntary appointment of a receiver or trustee for MJNE for all or a substantial part of its property or assets, or the issuance of a warrant of attachment, or execution of similar process against a substantial part of the property of MJNE and the continuance of such for 120 days undismissed or undischarged; or (vii) the failure by MJNE to perform or comply with any material covenant or agreement in this Agreement.

14. Notices. The Parties acknowledge and agree that any notice required under this Agreement shall be given in writing and shall be delivered personally, via overnight delivery service with tracking, email, or by certified mail, postage prepaid, addressed to the Party for whom intended as follows:

(a) To Company, at the address set forth on Exhibit A.

(b) To MJNE:

MJ Holdings, Inc.

2215 E. Anvil Road

Amargosa Valley, Nevada 89020

Attn: Paris Balaouras

Email: Paris@mjholdingsinc.com

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with a copy to:

Adam R. Fulton, Esq.

Jennings & Fulton, LTD.

2580 Sorrel Street

Las Vegas, Nevada 89146

afulton@jfnvlaw.com

15. Amendment and Modification; Waiver. This Agreement may be amended, modified, or supplemented only by an agreement in writing signed by each Party. No waiver by either Part of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

16. Assignment. Neither Party may assign, transfer, or convey this Agreement, in whole or in part, without the express prior written consent of the other Party. Any attempted assignment of this Agreement by a Party without the prior written consent of the other Party shall be considered void. Any such assignment and written consent shall be attached to this Agreement and shall be incorporated herein. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

17. Regulatory Compliance; Severability. It is the intent of the Parties that this Agreement comply in all respects with all applicable state and local laws, regulations, rules and interpretive case decisions, and the Parties have structured their relationship with that specific intent. However, each Party understands that such laws, regulations, and case decisions are complicated and in a state of flux. Therefore, in the event that any provisions of this Agreement is rendered invalid or unenforceable by a court of competent jurisdiction, or the applicable laws and regulations are altered by any legislative or regulatory body, or either party notifies the other party in writing of its reasonable belief that this Agreement or any of its provisions may be declared null, void, unenforceable, or in violation of applicable laws or regulations, the remaining provisions, if any, of this Agreement shall nevertheless continue in full force and effect. Furthermore, in such event the parties agree to negotiate in good faith an amendment to the Agreement to comply with law while remaining consistent with the parties’ original intent to the fullest extent allowable by law.

18. Governing Law. This Agreement shall be governed, interpreted, performed, and enforced solely in accordance with the laws of the State of Nevada, without reference to principles of conflicts of law.

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19. Neutral Interpretation. The Parties acknowledge and agree that they have both participated in the negotiation of this Agreement and its terms and have had the opportunity to have this Agreement reviewed by an attorney of their choosing. The Parties agree that no rules of construction or interpretation shall be applied to this Agreement that would favor one party over the other, and that the Agreement shall be interpreted neutrally. All headings and captions are provided for convenience of the reader only and shall not imply any interpretation of the following subject matter in and of themselves.

20. Dispute Resolution. The Parties agree to discuss in good faith any alleged default or breach described in Section 13 (each generally constituting a failure to abide the terms of this Agreement) telephonically within 48 hours of such time as written notice of the alleged breach is received by the Party alleged to have committed such breach or default. If the alleged issue is not then resolved, then the Parties that authorized representatives of the respective Parties, with settlement authority, will meet in person within seven days to attempt in good faith to resolve the issue. If the issue persists, then the Parties shall resolve the dispute as set forth below. The foregoing shall not preclude any party seeking interim emergency injunctive relief in a court of competent jurisdiction located in Clark County, Nevada or from pursuing injunctive relief under Section 7 hereof. The Parties agree that the Party pursuing injunctive shall not be required to post a bond or shall be required to post the minimum bond required by applicable law, to the extent a bond is not waivable. Nothing contained in this Section 20 precludes MJNE from terminating the Agreement pursuant to Section 2(c).

(a) Mediation. Except if emergency injunctive relief is required, any dispute, controversy, or claim arising out of or relating to this Agreement (a “Dispute”) that cannot be settled through negotiation between the Parties shall be mediated by the Parties before a single mediator in Clark County, Nevada, or any other place agreed to by the Parties. Either Party to this Agreement may invoke the right to mediation set forth in this Section 20 (a) by sending written notice to the other Party of such invocation and setting forth in adequate detail the nature of the matter to be mediated. The Parties to the mediation jointly shall appoint the mediator within 15 calendar days of receipt of the written notice. The mediation proceedings shall commence and be diligently pursued by the Parties to this Agreement within 15 calendar days of the appointment of the mediator. Each Party to the mediation shall bear its own cost and expenses incurred with respect to the mediation. The cost of the mediator and the mediation procedure shall be borne equally by the Parties.

(b) Arbitration. Any Dispute that has not been settled or resolved by negotiation or through mediation to the satisfaction of the Parties within 90 days of the notice of the invocation of mediation pursuant to Section 20(a) above (or such other date as the Parties may agree) shall be resolved through binding arbitration. Either Party shall have the right to submit the Dispute to arbitration set forth in this Section 20(b) by sending written notice to the other Party. The Parties shall name a single arbitrator within 20 calendar days after such written notice. If the Parties fail to select an arbitrator, then each Party shall designate a third-party attorney duly licensed and in good standing in the State of Nevada, which two designees shall together designate a third person, duly licensed as an attorney in the State of Nevada, which person (if he or she accepts such appointment) shall be the arbitrator. If those designees cannot agree on an arbitrator, then the arbitrator shall be selected in accordance with then existing rules and processes of the American Arbitration Association (“AAA”). The arbitrator shall render a decision within 60 calendar days after his or her appointment and shall conduct all proceedings pursuant to the then existing rules of AAA governing commercial transactions, to the extent such rules are not inconsistent with Nevada law and this Agreement. The cost of the arbitration procedure shall be borne by the non-prevailing Party or, if the decision is not clearly in favor of one Party or the other, then such costs shall be borne as determined by the arbitrator. The arbitration procedure provided for in this Agreement shall be binding arbitration and shall be the sole and exclusive dispute resolution mechanism for any applicable Dispute, except to the extent that judicial enforcement proceedings are necessary to give effect to the resulting arbitral award.

17

21. Limitations on Damages. MJNE shall not be liable to Company for any action or inaction, whether intentional or not, made by any other third party, including but not limited to, other parties that are conducting cultivation activities at the Cultivation Facility, which affects Company’s ability to operate, grow or conduct sales pursuant to this Agreement. MJNE is only responsible to Company for any willful or negligent action on the part of MJNE or its direct employees. Company reserves the right to pursue claims against any third-party vendor or MJNE affiliate.

Company acknowledges and understands that there may be additional cannabis operators conducting grow operations at the Cultivation Facility. As such, there is risk that an additional operator may jeopardize MJNE’s license to operate, thereby impacting Company’s ability to operate. If another operator jeopardizes the license, or causes the license to be revoked or suspended, thereby negatively impacting Company’s ability to conduct operations pursuant to this Agreement, Company agrees that MJNE shall have no liability to Company for the same. Company enters into this Agreement with full knowledge of the foregoing and does so with the understanding and willingness to accept the risk as stated herein.

22. Venue. Any arbitration or other action to enforce or interpret this Agreement shall exclusively be in Clark County, Nevada.

23. Third-Party Beneficiaries. This Agreement is for the sole benefit of the Parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement.

24. Federal Government Action. The Parties acknowledge that they are aware of and fully understand that despite the State of Nevada’s marijuana laws and the terms and conditions of this Agreement, Nevada-licensed marijuana cultivators, transporters, distributors, or possessors may still be arrested by federal officers and prosecuted under federal law. In the event of federal arrest, seizure, or prosecution associated with the activities described in this Agreement, the Parties agree to hold each other harmless and agree to be individually responsible for any attorneys’ fees associated with defending such actions. The Parties also agree to waive illegality as a defense to any contract enforcement action related to this Agreement.

25. Relationship of the Parties. This Agreement does not create any partnership or joint venture between the Parties. Company shall be an independent contractor pursuant to this Agreement. Except as expressly set forth in this Agreement, neither Party shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other Party or to bind the other Party to any contract, agreement, or undertaking with any third party.

26. Further Assurances. Each Party will execute and deliver such further instruments and take such further action as may be required to carry out the intent and purpose of this Agreement.

27. Entire Agreement. This Agreement represents the entire understanding between the Parties with respect to the subject matter hereof and supersedes all other negotiations, agreements, representations, and covenants, oral or written. All the Recitals and Exhibits hereto are hereby incorporated within the Agreement. In the event of any conflict between this Agreement and any other Agreement between the parties, the terms and provisions of this Agreement shall control, unless specifically varied by a subsequent Agreement. This Agreement may be amended or otherwise modified only by a written documents signed by each of the Parties hereto.

28. Execution. The Parties may execute this Agreement in counterparts, all of which, when considered together, shall constitute one agreement. This Agreement may be executed by DocuSign or any other e-signature method authorized by MJNE.

18

IN WITNESS WHEREOF, the Parties have caused this Cultivation and Sales Agreement to be duly executed and delivered by their authorized representatives as of the Effective Date.

MJNE		COMPANY
MJ HOLDINGS, INC.		RK GROW LLC
By:	/s/ Roger j Bloss	By:	/s/ Abdulla Ahmed
	Roger Bloss		Abdulla Ahmed
	Chief Executive Officer		Manager
Date:	Jun 22, 2021	Date:	Jun 24, 2021

19

EXHIBIT A

SUMMARY OF COMMERCIAL TERMS

COMPANY LEGAL NAME: RK GROW LLC

COMPANY ADDRESS:	9205 W. RUSSELL RD. SUITE 240
	LAS VEGAS, NEVADA 89148

COMPANY NOTICE INFORMATION:

Address:	9205 W. RUSSEL RD. SUITE 240
	LAS VEGAS, NEVADA 89148
Attention of:	CHRIS LIU

Email: chris.liu@ruilincpa.com Phone: 702-403-3645

with a copy to:

ABDULLA AHMED

9205 RUSSEL RD. SUITE 240

LAS VEGAS, NEVADA 89148

DESIGNATED ACREAGE:

For Cultivation: 40 acres

Total: 40 acres

PRODUCT: As of the Execution Date, Company anticipates growing on the Designated Acreage and selling in the State of Nevada the following product or products: CANNABIS AND CANNABIS-RELATED PRODUCTS

DEPOSITS*: (i) Product Royalty Deposit of $3,000,000.00 to be applied to the first Product Royalty or Product Royalties that become due and payable to MJNE; (ii) a deposit of $20,000.00 to be applied to the first and last monthly Security and Compliance Fee. The initial Deposit is due and payable on or before July 30, 2021and shall be made via wire transfer. MJNE to provide wire instructions.

PRODUCT ROYALTY*: 10%

MINIMUM MONTHLY PRODUCT ROYALTY: Beginning with the first calendar month following the second anniversary of the date of the Commencement Notice, $90,000.00 per month or $1,080,000 per annum Minimum Monthly Product Royalty is owed to MJNE from Company.

MONTHLY SECURITY AND COMPLIANCE FEE*: $10,000.00.

CULTIVATION MANAGEMENT FEE (PAYABLE TO COMPANY)*: 90% of Net Sales Revenue

*All sums payable are shown in and payable in U.S. Dollars.

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ADDENDUM 1 TO CULTIVATION AND SALES AGREEMENT

This Addendum 1 to the Cultivation and Sales Agreement entered into this ____ day of June, 2021, by and between MJ Holdings Inc., a Nevada corporation (“MJNE”) and RK Grow, LLC, a Nevada limited liability company (“Company”) (jointly, the “Parties” and, individually, a “Party”). To the extent any provisions of this Addendum contradict any provisions of the Cultivation and Sales Agreement, the provisions of this Addendum shall control:

1. Company has represented to MJNE that it is unable to obtain product liability insurance and general liability insurance coverage pursuant to the Cultivation and Sales Agreement (“Agreement”). MJNE hereby waives the Company’s requirement to obtain the aforementioned insurance coverages pursuant to section 3(d) of the Agreement. However, Company is required to obtain all other insurance coverages as set forth therein so long as reasonably possible. To wit, MJNE agrees to use its best efforts to assist Company in obtaining any governmental permits or licenses and third party consents necessary to obtain all insurances set forth in section 3(d). Company shall reimburse MJNE to the extent MJNE directly incurs out-of-pocket costs as a result of MJNE assisting Company.

2. In the event that Company or MJNE determines that product liability insurance and/or general liability insurance is available, Company shall obtain said insurance within 30 days of receiving notice from MJNE of the same. Alternatively, if MJNE can obtain product liability insurance and general liability insurance on its own for the Cultivation Facility, MJNE may charge the Company, pro rata, its share of the costs of the same. The above terms shall also apply to the Company’s requirement to obtain Business Interruption Insurance (where applicable) should the Company be unable to obtain such insurance.

3. MJNE agrees to provide access to water for the Designated Acreage without charge to the Company. However, Company understands it will be responsible for any construction required to have the water actually delivered to its Designated Acreage from the source. Company’s deposit as it relates to prepayment shall be on the following schedule: $500,000.00 shall be due within 30 days of the execution of the Agreement. One million dollars will be due when: (a) MJNE provides Company with a proposal to obtain electrical power from a utility or other electrical provider for the Designated Acreage; and (b) Company approves and executes such proposal. Company agrees that it will not unreasonably reject any tendered proposal specified herein. The Company shall pay the additional $1,500,000.00 portion of the Deposit on or before October 1, 2022. Company’s monthly security and compliance fee shall be suspended unless and until such time as Company receives 160,000 Amps of electrical power on the Designated Acreage.

4. Company holds all rights as it relates to the terms sale for MJNE’s product which are produced by Company subject to the terms of set forth in paragraph 5 of the Agreement.

5. For purposes of clarifying section 4(e) of the Agreement, Company reserves the right to select testing facilities so long as such facility is selected from a list pre-approved by MJNE. MJNE agrees that such list will hold a reasonable number of qualified facilities to ensure competitive pricing for testing.

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6. Minimum Monthly Product Royalty: Minimum Monthly Product Royalty (MMPR) shall be calculated on a per annum basis. Therefore, Company will have satisfied all MMPR obligations for the year upon remitting $1,080,000.00 to MJNE.

a.	The Following represents an example of how MMPR may be satisfied assuming the a year begins the first day of January:
		i.	January: No Sale. Company remits $90,000.00 MMPR,
		ii.	February, Company makes sales resulting in $800,000 paid to MJNE in royalties.
		iii.	March, No Sale. Company remits $90,000.00 MMPR.
		iv.	April, Company makes sales resulting in $100,000.00 royalties paid to MJNE.
		v.	May through December, MMPR is satisfied for the remainder of the year based upon earlier sales.

7. Company reserves the right to terminate this agreement within 24 months of execution upon providing MJNE with 30 day notice. Upon termination MJNE agrees to refund Company the pro rata share of Company’s prepaid deposit. The pro rata share shall be calculated on a monthly basis as set forth in example 6(a). However, if such termination is provided without Company having initiated infrastructure improvements (such as concrete buildup), Company’s “pro rata share” shall be defined as $500,000.00 without regard to the timing of Company’s notice.

a.	The following represents an example of the “Pro Rata” share calculated with Company exercising the exit clause at 8.5 months with infrastructure improvements using a three million dollar prepaid royalty deposit over fifteen years:
		i.	3,000,000.00 divided by 15 years = $200,000.00 per year or $16,666.66 per month.

$16,666.66 x 8.5 = $141,666.61

MJNE refunds Company $2,858,333.39

b. Company shall have met the requirements for Infrastructure Improvements when Company approves and executes an agreement and remits its deposit to a licensed and bonded contractor to pour 15 acres of concrete on the Site.

(THE BALANCE OF THIS PAGE IS LEFT INTENTIONALLY BLANK)

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IN WITNESS WHEREOF, the Parties have caused this Addendum 1 to Cultivation and Sales Agreement to be duly executed and delivered by their authorized representatives as of the Effective Date.

MJ HOLDINGS, INC.		RK GROW, LLC
By:	/s/ Roger j Bloss	By:	/s/ Abdulla Ahmed
	Roger Bloss		Abdulla Ahmed
	Chief Executive Officer		Manager
Date:	Jun 22, 2021	Date:	Jun 24, 2021

Page 3 of 3

EX-10.48

Exhibit 10.48

CONSULTING AGREEMENT

This CONSULTING AGREEMENT (the “Agreement”), is entered into as of the ___ day of June, 2021 (“Effective Date”), between MJ HOLDINGS, LLC, a Nevada Limited Liability Company (“Client”) and WOLFPACK CONSULTING, LLC, a Nevada Limited Liability Company (“Consultant”).

WHEREAS, Client is a holding company engaged in development, cultivation, and production associated with its various cannabis licenses and leases.

WHEREAS, part of Consultant’s business is to investigate and locate various properties for the expansion of Client’s business in other states and countries including, without limitation, Greece, North Carolina and South Carolina.

NOW THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, the adequacy and sufficiency of which is hereby acknowledged, Client and Consultant agree as follows:

1. Term. This Agreement shall begin on the date hereof and end upon the earlier of: (a) the first anniversary of the Effective Date (i.e., one year), or (b) either party’s receipt of written notice from the other party of its intent to terminate this Agreement after the expiration of the first anniversary (the “Term”).

2. Services. Consultant shall use its commercially reasonable efforts and adequate business time and attention to identify various properties that may fit into Client’s business model to develop, cultivate, and produce marijuana related products.

3. Compensation. Consultant shall be paid the sum of Twenty-Five Thousand Dollars ($25,000.00) within three (3) days of execution of this Agreement.

4. Confidentiality. The term “Confidential Information” shall include any proprietary information, in whatever form, that: (a) is provided by Client to Consultant, including information regarding Client’s businesses, finances, prospects, operations, products, employees, technologies, contact lists, and financial models (including not only written information but also information transferred verbally, visually, electronically or by any other means); or (b) concerns any agreements that Consultant may aid Client in entering into; or (c) consists of analysis and/or any other internal non-redacted memoranda, or other documents prepared by the Consultant derived from, or including material portions of, the Confidential Information. Confidential Information shall not include any information that: (i) is already known to the Consultant at the time of its disclosure; (ii) is or becomes publicly known through no wrongful act of the Consultant; (iii) is communicated to a third party with the express written consent of Client; or (v) is lawfully required to be disclosed, provided that before making such disclosure, the Consultant shall immediately give the Client written notice and cooperate in the Client’s actions to assure confidential handling of such information. The Consultant shall safeguard and keep confidential the Confidential Information and shall not disclose any Confidential Information to any other person or entity. The Consultant shall not use the Confidential Information for any purpose other than those related to the Services. All such Confidential Information and any copies obtained thereof shall be returned to the Client promptly upon its written request and shall not be retained in any form by Consultant. The obligations of Consultant under this Paragraph 4 shall apply to Consultant both during the Term and thereafter.

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5. Non-Circumvent: Client may learn the names and telephone numbers of potential buyers for their License (hereinafter sometimes referred to as the “Contacts”), that would not otherwise be available to them through their own due diligence without the same being provided by Consultant. The Parties acknowledge, accept and agree that the identities of the aforementioned persons/entities will be recognized by Client as exclusive and valuable Contacts of the Consultant. Client agrees to keep confidential the names of any Contacts introduced or revealed to them by Consultant, and Client agrees that they will not contact, deal with, negotiate or participate in any transactions with any of the Contacts without the signed written consent of the Consultant. The Client agrees that Consultant shall be entitled to compensation as set forth herein for any purchase and/or use of their License as set forth hereinabove.

6. Exclusivity. Client hereby agrees that during the Term of this Agreement Consultant shall be the sole and exclusive provider of the services provided for herein, and Client shall not engage any other person or entity to provide them the services contemplated in this Agreement.

7. No Partnership. Consultant and its agents and employees will perform their duties and obligations under this Agreement as independent contractors. Nothing contained in this Agreement will be construed as creating an employment, agency, partnership, joint owner, or joint venture relationship between the parties.

8. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Nevada, without regard to its conflicts of laws rules.

9. Amendment. This Agreement may not be altered or amended except in writing signed by Client and Consultant.

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10. No Waiver. The failure of any party hereto at any time to require performance of any provisions hereof shall in no manner affect the right to enforce the same. No waiver by any party hereto of any condition, or of the breach of any term, provision, warranty, representation, agreement or covenant contained in this Agreement, whether by conduct or otherwise, in one or more instances shall be deemed or construed as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of the breach of any other terms, provision, warranty, representation, agreement or covenant herein contained

11. Entire Agreement. This Agreement constitutes the entire agreement among the parties hereto with respect to the transactions contemplated and supersedes all prior agreements, understandings, letter of intent and negotiations, both written and oral, among the parties with respect thereto.

12. Venue & Jurisdiction. The Parties hereby irrevocably submit to the sole and exclusive venue and jurisdiction of the courts sitting in Clark County, Nevada for any suit, action or proceeding arising out of or relating to this Agreement or any related transaction between the Parties. The Parties hereby irrevocably waive, to the fullest extent permitted by law, any objection which may now or hereafter be made to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding has been brought in an inconvenient forum.

13. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one in the same instrument.

14. Severability. If any term or provision of this agreement or the performance thereof shall to any extent by invalid or unenforceable, such invalidity or unenforceability shall not affect or render invalid or unenforceable any other provision of this agreement or extent permitted by law.

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IN WITNESS WHEREOF, the parties hereto have executed this Consulting Agreement as of the Effective Date.

CONSULTANT:
WOLFPACK CONSULTING, LLC
By:
	John T. Medlen, Manager
CLIENT:
MJ HOLDINGS, LLC
By:
	Roger Bloss
	Chief Executive Officer

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Roger Bloss, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the six months ended June 30, 2021 of MJ 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.	I am 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 my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on 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 (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my 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 functions):

(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 25, 2021

/s/ Roger Bloss

Roger Bloss

Interim Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a)

under the Securities Exchange Act of 1934

I, Bernard Moyle, Principal Financial Officer of MJ Holdings, Inc. certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the six months ended June 30, 2021 of MJ 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.	I am 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 on 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 (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

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 25, 2021
By:	/s/ Bernard Moyle
	Bernard Moyle
	Interim Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of MJ Holdings, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company, hereby certify, in their capacity as an executive officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 25, 2021	/s/ Roger Bloss
	Roger Bloss
	Interim Chief Executive Officer (Principal Executive Officer)

Dated: August 25, 2021	/s/ Bernard Moyle
	Bernard Moyle
	Interim Chief Financial Officer (Principal Financial Officer)

XML

Cover - shares	6 Months Ended
	Jun. 30, 2021	Aug. 25, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2021
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2021
Current Fiscal Year End Date	--12-31
Entity File Number	000-55900
Entity Registrant Name	MJ HOLDINGS, INC.
Entity Central Index Key	0001456857
Entity Tax Identification Number	20-8235905
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	2580 S. Sorrel
Entity Address, Address Line Two	St.,
Entity Address, City or Town	Las Vegas
Entity Address, State or Province	NV
Entity Address, Postal Zip Code	89146
City Area Code	(702)
Local Phone Number	879-4440
Title of 12(b) Security	Common Stock
Trading Symbol	MJNE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		71,078,333

XML

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Current assets
Cash	$ 5,899,684	$ 117,536
Accounts receivable	18,254	9,461
Prepaid expenses	755,290	713,782
Marketable securities – available for sale		150,000
Convertible note receivable	500,000
Total current assets	7,173,228	990,779
Property and equipment, net	2,719,136	4,155,675
Intangible assets	300,000	300,000
Deposits	1,074,817	64,817
Operating lease - right-of-use asset	1,915,507	1,979,181
Total non-current assets	6,009,460	6,499,673
Total assets	13,182,688	7,490,452
Current liabilities
Accounts payable and accrued expenses	1,711,665	2,382,779
Deposits	538,921	538,921
Other current liabilities		1,328,438
Contract liabilities	1,270,000
Income taxes payable	277,000
Current portion of notes payable – related party		300,405
Current portion of long-term notes payable	770,135	1,185,273
Current portion of operating lease obligation	211,427	241,466
Total current liabilities	4,779,148	5,977,282
Non-current liabilities
Long-term notes payable, net of current portion	108,891	921,723
Operating lease obligation, net of current portion	1,850,313	1,889,575
Total non-current liabilities	1,959,204	2,811,298
Total liabilities	6,738,352	8,788,580
Commitments and contingencies (Note 8)
Stockholders’ equity (deficit)
Common stock, $0.001 par value, 95,000,000 shares authorized, 70,660,015 and 68,613,541 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	70,660	68,613
Additional paid-in capital	20,084,895	18,748,688
Common stock issuable	199
Accumulated deficit	(13,598,949)	(20,002,960)
Total stockholders’ equity (deficit) attributable to MJ Holdings, Inc.	6,556,805	(1,185,659)
Noncontrolling interests	(112,469)	(112,469)
Total shareholders’ equity (deficit)	6,444,336	(1,298,128)
Total liabilities and stockholders’ equity (deficit)	13,182,688	7,490,452
Series A convertible preferred stock
Stockholders’ equity (deficit)
Preferred stock, $0.001 par value, 5,000,000 shares authorized, 0 shares issued; Series A convertible Preferred stock $1,000 stated value, 2,500 authorized, 0 shares issued and outstanding

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Preferred stock, stated value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	95,000,000	95,000,000
Common stock, shares issued	70,660,015	68,613,541
Common stock, shares outstanding	70,660,015	68,613,541
Series A convertible preferred stock
Preferred stock, stated value	$ 1,000	$ 1,000
Preferred stock, shares authorized	2,500	2,500
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Statement [Abstract]
Revenue, net	$ 209,006	$ 66,914	$ 516,381	$ 523,072
Operating expenses
Direct costs of revenue	40,590	67,428	40,590	540,198
General and administrative	1,967,097	459,046	4,773,024	1,497,727
Depreciation	96,787	111,743	194,257	223,489
Marketing and selling	7,880	7,700	7,880	6,792
Total operating expenses	2,112,354	645,917	5,015,751	2,268,206
Operating loss	(1,903,348)	(579,003)	(4,499,370)	(1,745,134)
Other income (expense)
Interest expense	(15,081)	(49,390)	(32,308)	(98,377)
Interest income	4,636	4,587	9,298	9,173
Miscellaneous expense	(4,587)	(9,173)	(9,173)	(9,173)
Loss on conversion of related party note payable			(310,526)
Gain on sale of marketable securities			9,857,429
Gain on sale of commercial building			260,141
Other income	1,359,208		1,405,520
Total other income (expense)	1,344,176	(53,976)	11,180,381	(98,377)
Net income (loss) before income taxes	(559,172)	(632,979)	6,681,011	(1,843,511)
Provision for income taxes	277,000		277,000
Net income (loss)	(836,172)	(632,979)	6,404,011	(1,843,511)
Loss (gain) attributable to non-controlling interest		(2,867)		(5,129)
Net income (loss) attributable to common stockholders	$ (836,172)	$ (630,112)	$ 6,404,011	$ (1,838,382)
Net income (loss) attributable to common stockholders per share - basic and diluted	$ (0.01)	$ (0.10)	$ 0.09	$ (0.03)
Weighted average number of shares outstanding:
Basic	70,632,612	65,754,724	69,580,992	65,662,894
Diluted	70,632,612	65,754,724	69,969,539	65,662,894

XML

Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit) (Unaudited) - USD ($)	Common stock issuable	Common Stock [Member]	Additional Paid-in Capital [Member]	Subscriptions Payable	Noncontrolling Interest [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2019	$ 19	$ 65,436	$ 18,177,723	$ 10,000	$ (103,956)	$ (16,038,345)	$ 2,110,877
Beginning balance, shares at Dec. 31, 2019	18,562	65,436,449
Issuance of common stock for services		$ 281	55,969				56,250
Share based compensation, shares		281,251
Issuance of common stock for conversion of debt and interest	$ (19)	$ 19
Issuance of common stock for conversion of debt and interest, shares	(18,562)	18,562
Issuance of common stock for stock subscriptions payable
Net loss					(2,262)	(1,208,270)	(1,210,532)
Ending balance, value at Mar. 31, 2020		$ 65,736	18,233,692	10,000	(106,218)	(17,246,615)	956,595
Ending balance, shares at Mar. 31, 2020	(0)	65,736,262
Beginning balance, value at Dec. 31, 2019	$ 19	$ 65,436	18,177,723	10,000	(103,956)	(16,038,345)	2,110,877
Beginning balance, shares at Dec. 31, 2019	18,562	65,436,449
Net loss							(1,843,511)
Ending balance, value at Jun. 30, 2020		$ 65,756	18,243,672		(109,085)	(17,876,727)	323,616
Ending balance, shares at Jun. 30, 2020	(0)	65,756,262
Beginning balance, value at Mar. 31, 2020		$ 65,736	18,233,692	10,000	(106,218)	(17,246,615)	956,595
Beginning balance, shares at Mar. 31, 2020	(0)	65,736,262
Issuance of common stock for stock subscriptions payable		$ 20	9,980	(10,000)
Issuance of common stock for stock subscriptions payable, shares		20,000
Net loss					(2,867)	(630,112)	(632,979)
Ending balance, value at Jun. 30, 2020		$ 65,756	18,243,672		(109,085)	(17,876,727)	323,616
Ending balance, shares at Jun. 30, 2020	(0)	65,756,262
Beginning balance, value at Dec. 31, 2020		$ 68,613	18,748,688		(112,469)	(20,002,960)	(1,298,128)
Beginning balance, shares at Dec. 31, 2020		68,613,541
Common stock to be issued for termination of rights participation agreement	$ 1,000		629,000				630,000
Common stock to be issued for termination of rights participation agreement, shares	1,000,000
Issuance of common stock for services		$ 225	134,775				135,000
Share based compensation, shares		225,000
Issuance of common stock for conversion of debt and interest
Issuance of common stock for conversion of debt and interest, shares
Issuance of common stock for cash		$ 263	49,737				50,000
Issuance of common stock for cash, shares		263,158
Issuance of common stock for loan payable conversion		$ 526	410,000				410,526
Issuance of common stock for loan payable conversion, shares		526,316
Stock based compensation			7,841				7,841
Stock based compensatio, shares
Issuance of common stock for stock subscriptions payable
Issuance of common stock for stock subscriptions payable, shares
Net loss						$ 7,240,183	7,240,183
Ending balance, value at Mar. 31, 2021	$ 1,000	$ 69,627	19,980,041		(112,469)	(12,762,777)	7,175,422
Ending balance, shares at Mar. 31, 2021	1,000,000	69,628,015
Beginning balance, value at Dec. 31, 2020		$ 68,613	18,748,688		(112,469)	(20,002,960)	(1,298,128)
Beginning balance, shares at Dec. 31, 2020		68,613,541
Net loss							6,404,011
Ending balance, value at Jun. 30, 2021	$ 199	$ 70,660	20,084,895		(112,469)	(13,598,949)	6,444,336
Ending balance, shares at Jun. 30, 2021	198,539	70,660,015
Beginning balance, value at Mar. 31, 2021	$ 1,000	$ 69,627	19,980,041		(112,469)	(12,762,777)	7,175,422
Beginning balance, shares at Mar. 31, 2021	1,000,000	69,628,015
Issuance of common stock for services		$ 33	14,367				14,400
Share based compensation, shares		32,000
Issuance of common stock as per terms of Termination Agreement	$ (1,000)	$ 1,000
Issuance of common stock as per terms of Termination Agreement, shares	(1,000,000)	1,000,000
Common stock to be issued for director compensation	$ 199		90,487				90,685
Common stock to be issued for director compensation, shares	198,539
Net loss						(836,172)	(836,172)
Ending balance, value at Jun. 30, 2021	$ 199	$ 70,660	$ 20,084,895		$ (112,469)	$ (13,598,949)	$ 6,444,336
Ending balance, shares at Jun. 30, 2021	198,539	70,660,015

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash Flows from Operating Activities
Net income (loss)	$ 6,404,011	$ (1,843,511)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of right to use asset	63,674	106,067
Common stock issued for prepaid services	135,000	56,250
Depreciation	194,257	223,489
Gain on sale of marketable securities	(9,857,429)
Provision for income taxes	277,000
Gain on sale of commercial building	(260,141)
Stock based compensation	98,361
Common stock issued for services	14,367
Common stock to be issued for wages payable	199
Common stock to be issued for termination of rights participation agreement	630,000
Expenses paid on behalf of Company		36,405
Loss on conversion of related party note payable	310,526
Reserve on impairment		9,173
Changes in operating assets and liabilities:
Accounts receivable	(8,793)	(4,975)
Prepaid expenses	(41,508)	137,460
Deposits	(1,010,000)	125,212
Accounts payable and accrued liabilities	(671,112)	543,829
Contract liabilities	1,270,000
Other current assets		156,229
Other current liabilities	(1,328,438)	532,789
Operating lease liability	(69,301)	(117,321)
Net cash used in operating activities	(3,849,327)	(38,904)
Cash Flows from Investing Activities
Purchase of property and equipment	(125,077)
Proceeds from sale of commercial building	1,627,500
Purchase of marketable securities	(200,000)
Issuance of convertible note receivable	(500,000)
Proceeds from the sale of marketable securities	10,207,429
Net cash provided by investing activities	11,009,852
Financing activities
Proceeds from notes payable	300,000
Proceeds from notes payable – related party		164,000
Repayment of notes payable	(1,728,377)	(10,669)
Proceeds from common stock issued for cash	50,000
Net cash provided by (used in) financing activities	(1,378,377)	153,331
Net change in cash	5,782,148	114,427
Cash, beginning of period	117,536	22,932
Cash, end of period	5,899,684	137,359
Supplemental disclosure of cash flow information:
Interest paid	98,716	32,356
Income taxes paid
Non-cash investing and financing activities:
Common stock issued for prior period debt conversion		19
Issuance of stock for conversion of related party note payable	100,000
Common stock issued for stock subscriptions payable		$ 10,000

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Nature of the Business

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of the Business

Note 1 — Nature of the Business

MJ Holdings, Inc. (OTCPK: MJNE) is a highly-diversified cannabis holding company providing cultivation management, asset and infrastructure development – currently concentrated in the Las Vegas market. It is the Company’s intention to grow its business and provide a 360-degree spectrum of infrastructure, including, cannabis cultivation, production of cannabis related products, management services, dispensaries and consulting services. The Company intends to grow its business through joint ventures with existing companies possessing complementary subject matter expertise, acquisition of existing companies and through the development of new opportunities. The Company intends to “prove the concept” profitably in the rapidly expanding Las Vegas market and then use that anticipated success as a template for replicating the concept in other developing states through a combination of strategic partnerships, acquisitions and opening new operations.

The Company was incorporated on November 17, 2006, as Securitas EDGAR Filings, Inc. under the laws of the State of Nevada. Prior to the formation of Securitas EDGAR Filings Inc., the business was operated as Xpedient EDGAR Filings, LLC, a Florida Limited Liability Company, formed on October 31, 2005. On November 21, 2005, Xpedient EDGAR Filings LLC amended its Articles of Organization to change its name to Securitas EDGAR Filings, LLC. On January 21, 2009, Securitas EDGAR Filings LLC merged into Securitas EDGAR Filings, Inc., a Nevada corporation. On February 14, 2014, the Company amended and restated its Articles of Incorporation and changed its name to MJ Holdings, Inc.

On November 22, 2016, in connection with a plan to divest the Company of its real estate business, the Company submitted to its stockholders an offer to exchange (the “Exchange Offer”) its common stock for shares in MJ Real Estate Partners, LLC, (“MJRE”) a newly formed LLC formed for the sole purpose of effecting the Exchange Offer. On January 10, 2017, the Company accepted for exchange 1,800,000 shares of its Common Stock in exchange for 1,800,000 shares of MJRE’s common units, representing membership interests in MJRE. Effective February 1, 2017, the Company transferred its ownership interests in the real estate properties and its subsidiaries, through which the Company held ownership of the real estate properties, to MJRE. MJRE also assumed the senior notes and any and all obligations associated with the real estate properties and business, effective February 1, 2017.

Acquisition of Red Earth

On December 15, 2017, the Company acquired all of the issued and outstanding membership interests of Red Earth, LLC, a Nevada limited liability company (“Red Earth”) established in October 2016, in exchange for 52,732,969 shares of its Common Stock and a promissory note in the amount of $900,000. The acquisition was accounted for as a “Reverse Merger”, whereby Red Earth was considered the accounting acquirer and became its wholly owned subsidiary. Upon the consummation of the acquisition, the now former members of Red Earth became the beneficial owners of approximately 88% of the Company’s Common Stock, obtained controlling interest of the Company, and retained certain of its key management positions. In accordance with the accounting treatment for a “reverse merger” or a “reverse acquisition”, the Company’s historical financial statements prior to the reverse merger will be replaced with the historical financial statements of Red Earth prior to the reverse merger in all future filings with the SEC. Red Earth is the holder of a Nevada Marijuana Establishment Certificate for the cultivation of marijuana.

On or about May 7, 2021, the Company’s wholly owned subsidiary, Red Earth, LLC (the “Subsidiary”), received an inquiry from the State of Nevada Cannabis Compliance Board (“CCB”) regarding the transfer of ownership of the Subsidiary from its previous owners to the Company. The CCB has determined that the transfer was not formally approved, thus a Category II violation.

On July 27, 2021, the Subsidiary entered into a Stipulation and Order for Settlement of Disciplinary Action (the “Stipulation Order”) with the CCB. Under the terms of the Stipulation Order, the Subsidiary has agreed to present to the CCB, by not later than August 31, 2021, a plan pursuant to which the ownership of the Subsidiary will be returned to the original owners. The Parties to the Stipulation Order resolved the matter without the necessity of taking formal action. The Subsidiary agreed to pay a civil penalty of $10,000, which was paid on July 29, 2021.

COVID-19

COVID-19 has caused and continues to cause significant loss of life and disruption to the global economy, including the curtailment of activities by businesses and consumers in much of the world as governments and others seek to limit the spread of the disease, and through business and transportation shutdowns and restrictions on people’s movement and congregation.

As a result of the pandemic, the Company has experienced, and continues to experience, weakened demand for its products. Many of its customers have been unable to sell its products in customer stores due to government-mandated closures and have deferred or significantly reduced orders for the Company’s products. The Company expects these trends to continue until such closures are significantly curtailed or lifted. In addition, the pandemic has reduced foot traffic in the stores where its products are sold that remain open, and the global economic impact of the pandemic has temporarily reduced consumer demand for its products as they focus on purchasing essential goods.

Given these factors, the Company anticipates that the greatest impact from the COVID-19 pandemic in 2020 occurred in the second and third quarters and resulted in a significant net sales decline in its quarterly results.

In addition, certain of its suppliers and the manufacturers of certain of its products were adversely impacted by COVID-19. As a result, the Company faced delays or difficulty sourcing products, which negatively affected its business and financial results. Even if the Company were able to find alternate sources for such products, it may cost more and cause delays in its supply chain, which could adversely impact its profitability and financial condition.

The Company has taken actions to protect its employees in response to the pandemic, including closing its corporate offices and requiring its office employees to work from home. At its grow facilities, certain practices are in effect to safeguard workers, including a staggered work schedule, and the Company is continuing to monitor direction from local and national governments carefully.

As a result of the impact of COVID-19 on its financial results, and the anticipated future impact of the pandemic, the Company has implemented cost control measures and cash management actions, including:

● Furloughing a significant portion of its employees; and

● Implementing 20% salary reductions across its executive team and other members of upper-level management; and

● Executing reductions in operating expenses, planned inventory levels and non-product development capital expenditures; and

● Proactively managing working capital, including reducing incoming inventory to align with anticipated sales.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2 — Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Red Earth, LLC, HDGLV, LLC, Icon Management, LLC, Alternative Hospitality, Inc., Condo Highrise Management, LLC and Prescott Management, LLC. Inter-company balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates and assumptions are required in the determination of the fair value of financial instruments and the valuation of stock-based compensation. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates.

Cash

Cash includes cash on hand and deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal and use and with an original maturity of three months or less. The Company maintains its cash in bank deposit accounts.

The Company, at various times throughout the year, had cash in financial institutions in excess of Federally insured limits. At June 30, 2021, the Company had $5,755,000 in excess. However, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on its credit balances.

Fair Value of Financial Instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2021 and December 31, 2020. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market.

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 2 — Summary of Significant Accounting Policies (continued)

Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.

Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in these situations.

Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. The FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.

As of June 30, 2021 and December 31, 2020, the Company’s investment in marketable securities – available for sale was determined to be a level 1 investment.

	June 30, 2021		December 31, 2020
Marketable securities		-		150,000
Total	$	-	$	150,000

On February 17, 2021, the Company entered into a Stock Purchase Agreement (the “Agreement”) with ATG Holdings, LLC (the “ATG”). Under the terms of the Agreement, the Company purchased 1,500,000,000 shares of common stock of Healthier Choices Management Corp (“HCMC”) from ATG for the purchase price of $200,000. The transaction closed on February 19, 2021.

During the six months ended June 30, 2021, the Company liquidated its marketable securities that it received in the Stock Exchange Agreement with HCMC dated August 13, 2018 and the shares of HCMC that it received under the Agreement with ATG.

The net proceeds received by the Company for the sale of the marketable securities were $9,857,429.

Accounts Receivable and Allowance for Doubtful Accounts:

Accounts receivable are recorded at invoiced amount and generally do not bear interest. An allowance for doubtful accounts is established, as necessary, based on past experience and other factors which, in management’s judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable and current economic conditions. The determination of the collectability of amounts due from customer accounts requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer accounts, and the financial condition of the Company’s customers. Based on a review of these factors, the Company establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole.

	June 30, 2021			December 31, 2020
Accounts receivable	$	57,772		$	23,675
Less allowance		(39,518	)		(12,000	)
Net accounts receivable	$	18,254		$	11,675

Debt Issuance Costs

Costs associated with obtaining, closing, and modifying loans and/or debt instruments are netted against the carrying amount of the debt instrument, and charged to interest expense over the term of the loan.

Inventory

Inventories consist of finished goods as of June 30, 2021 and December 31, 2020. Inventories are valued at the lower of cost or net realizable value. The Company determines cost on the basis of the first in first out method. The Company periodically reviews inventories for obsolescence and any inventories identified as obsolete are reserved or written off. The Company has performed a valuation and has established a reserve against its finished goods inventory.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and any impairment losses. Depreciation is computed using the straight-line method over the useful lives of the assets. Major renewals and betterments are capitalized and depreciated; maintenance and repairs that do not extend the life of the respective assets are expensed as incurred. Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in the consolidated statements of operations.

Construction in progress primarily represents the construction or the renovation costs stated at cost less any accumulated impairment loss, which is not depreciated. Costs incurred are capitalized and transferred to property and equipment upon completion, at which time depreciation commences.

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 2 — Summary of Significant Accounting Policies (continued)

Property and equipment are depreciated over their estimated useful lives as follows:

Buildings	12 years
Land	Not depreciated
Leasehold Improvements	Lessor of lease term or 5 years
Machinery and Equipment	5 years
Furniture and Fixtures	5 years

Long–lived Assets

Long-lived assets, including real estate property and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If the assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value.

Impairment of Long-lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC 360-10-15, “Impairment or Disposal of Long-Lived Assets.” ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals. The Company recorded an impairment of its long-lived assets in the amount of $9,173 and $18,345 for the six months ended June 30, 2021 and year ended December 31, 2020, respectively.

Other Current Liabilities

The Company’s other current liabilities consisted of amounts due under the management agreement and performance guarantee with Acres Cultivation, LLC. As of June 30, 2021 and December 31, 2020, other current liabilities were $- and $1,328,438, respectively.

Non- Controlling Interest

The Company’s non-controlling interest represents the minority shareholder’s ownership interest related to the Company’s subsidiary, Alternative Hospitality, Inc. The Company reports its non-controlling interest in subsidiaries as a separate component of equity in the Consolidated Balance Sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common shareholders on the face of the Consolidated Statements of Operations. The Company’s equity interest in Alternative Hospitality, Inc. is 51% and the non-controlling stockholder’s interest is 49%. This is reflected in the Consolidated Statements of Equity.

Revenue Recognition

On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers using the modified retrospective method. There was no impact upon adoption of ASC 606 on our consolidated financial statements. The new revenue standard was applied prospectively in the Company’s consolidated financial statements from January 1, 2018 forward and reported financial information for historical comparable periods will not be revised and will continue to be reported under the accounting standards in effect during those historical periods.

Generally, the Company considers all revenues as arising from contracts with customers. Revenue is recognized based on the five-step process outlined in the Accounting Standards Codification (“ASC”) 606:

Step 1 – Identify the Contract with the Customer – A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and it is probably that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

Step 2 – Identify Performance Obligations in the Contract – Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct, or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation.

Step 3 – Determine the Transaction Price – When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur.

Step 4 – Allocate the Transaction Price – After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price (SSP) at contract inception.

Step 5 – Satisfaction of the Performance Obligations (and Recognize Revenue) – Revenue is recognized when (or as) goods or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use of and obtain substantially all of the remaining benefits from an asset. It includes the ability to prevent other entities from directing the use of and obtaining the benefits from an asset. Indicators that control has passed to the customer include: a present obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset(s). Performance obligations can be satisfied at a point in time or over time.

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 2 — Summary of Significant Accounting Policies (continued)

The majority of the Company’s revenue was derived under the agreements, Consulting Agreement and Equipment Lease Agreement, entered into with Acres Cultivation, LLC. Revenue derived from consulting services fees are recognized over the term of the arrangement as services are provided. Revenue is presented net of discounts, fees and other related taxes. Revenue derived from equipment leases is recognized when the lease agreement is entered into and control of the equipment has passed to the customer. The Company’s remaining revenue is derived from its rental property in Nye County, Nevada. Rental revenue for operating leases is recognized on a straight-line basis over the term of the lease. Rental revenue recognition commences when the leased space is available for use by the lessee.

	For the six months ended
	June 30,
	2021		2020
Revenues:
Rental income (i)	$	40,169	$	57,963
Management income (ii)		341,398		328,313
Equipment lease income (ii)		134,814		136,796
Total	$	516,381	$	523,072

(i)

The rental income is from the Company’s THC Park.

(ii)

In April 2018, the Company entered into a management agreement with Acres Cultivation, LLC, a Nevada limited liability company (the “Licensed Operator”) that holds a license for the legal cultivation of marijuana for sale under the laws of the State of Nevada. In January of 2019, the Company entered into a revised agreement, which replaced the April 2018 agreement, with the Licensed Operator in order to be more stringently aligned with Nevada marijuana laws. The material terms of the agreement remain unchanged. The Licensed Operator is contractually obligated to pay over to the Company eighty-five (85%) percent of gross revenues defined as gross proceeds from sales of marijuana products minus applicable state excise taxes and local sales tax. The agreement is to remain in force until April 2026. In April 2019, the Licensed Operator was acquired by Curaleaf Holdings, Inc., a publicly traded Canadian cannabis company. On January 21, 2021, the Company received a Notice of Termination, effective immediately, from Acres Cultivation, LLC. The Company does not anticipate that it will generate any further revenue under the Acres relationship.

Contract Balances

The Company receives payments for new Cultivation and Sales Agreements (the “Agreements”) upon signing and defers revenue recognition for these payments until certain milestones are met as per the terms of the Agreements. These payments represent contract liabilities and are recorded as such on the balance sheet. As of June 30, 2021 and December 31, 2020, the Company had $1,270,000 and $0 contract liabilities, respectively.

Stock-Based Compensation

The Company’s share-based payment awards principally consist of grants of common stock. In accordance with the applicable accounting guidance, stock-based payment awards are classified as either equity or liabilities. For equity-classified awards, the Company measures compensation cost based on the grant date fair value and recognizes compensation expense in the consolidated statements of operations over the requisite service or performance period the award is expected to vest. The fair value of liability-classified awards is at each reporting date through the settlement date. Change in fair value during the requisite service period will be remeasured as compensation cost over that period.

The Company utilizes its historical stock price to determine the volatility of any stock-based compensation.

The expected dividend yield is 0% as the Company has not paid any dividends on its common stock and does not anticipate it will pay any dividends in the foreseeable future.

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant date with a term equal to the expected term of the stock-based award.

For stock-based financial instruments issued to parties other than employees, the Company uses the contractual term of the financial instruments as the expected term of the stock-based financial instruments.

The assumptions used in calculating the fair value of stock-based financial instruments represent its best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and it uses different assumptions, its stock-based compensation expense could be materially different in the future.

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 2 — Summary of Significant Accounting Policies (continued)

Operating Leases

The Company adopted ASC Topic 842, Leases, on January 1, 2019. The new leasing standard requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company used its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. A number of the lease agreements contain options to renew and options to terminate the leases early. The lease term used to calculate ROU assets and lease liabilities only includes renewal and termination options that are deemed reasonably certain to be exercised.

The Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months. The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, and unamortized lease incentives provided by lessors. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur. The Company has elected not to separate lease and non-lease components for all property leases for the purposes of calculating ROU assets and lease liabilities.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance on deferred tax assets is established when management considers it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income tax expense. The Company has not recognized any tax benefits from uncertain tax positions for any of the reporting periods presented.

Recent Accounting Pronouncements

Stock Based Compensation: In June 2018, FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share Based Payment Accounting.

The amendments in this Update expand the scope of stock compensation to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance in this Update does not apply to transactions involving equity instruments granted to a lender or investor that provides financing to the issuer. The guidance is effective for fiscal years beginning after December 31, 2018 including interim periods within the fiscal year. The Company adopted with an effective date of January 1, 2019.

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Going Concern

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Going Concern

Note 3 — Going Concern

The Company has recurring net losses, which have resulted in an accumulated deficit of $13,598,949 as of June 30, 2021. The Company had negative cash flows from operations of $3,849,327 for the six months ended June 30, 2021. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements. The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan, raise capital, and generate revenues. The Financial Statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company’s current capital resources include cash. Historically, the Company has financed its operations principally through equity and debt financing.

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Note Receivable

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

Note Receivable

Note 4 — Note Receivable

Note receivable at June 30, 2021 and December 31, 2020 consisted of the following:

	June 30, 2021		December 31, 2020
Note receivable- GeneRx (i)		500,000		-
Total	$	500,000	$	-

i.

On March 12, 2021, the Company (the “Holder”) was issued a Convertible Promissory Note (the “Note”) by GeneRx (the “Borrower”), a Delaware corporation, in the amount of $300,000. The Note has a term of one year (March 12, 2022 Maturity Date) and accrues interest at two percent (2%) per annum. The Note is convertible, at the option of the Holder, into shares of common stock of the Borrower at a fixed conversion price of $1.00 per share. Upon an Event of Default, the Conversion Price shall equal the Alternate Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Alternate Conversion Price” shall equal the lesser of (i) 80% multiplied by the average of the three lowest daily volume weighted average prices (“VWAP”) during the previous twenty (20) Trading Days (as defined below) before the Issue Date of this Note (representing a discount rate of 20%) or (ii) 80% multiplied by the Market Price (as defined herein) (representing a discount rate of 20%). “Market Price” means the average of the three lowest daily VWAPs for the Common Stock during the twenty (20) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty-four percent (24%) per annum from the due date thereof until the same is paid (the “Default Interest”). The Company funded $300,000 on March 15, 2021, $150,000 on April 2, 2021 and $50,000 on April 7, 2021.

ii.

The convertible note receivable is considered available for sale debt securities with a private company that is not traded in active markets. Since observable price quotations were not available at acquisition, fair value was estimated based on cost less an appropriate discount upon acquisition. The discount of each instrument is accreted into interest income over the respective term as shown within the Company’s Condensed Consolidated Statements of Operations.

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Property and Equipment

6 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

Property and Equipment

Note 5 — Property and Equipment

Property and equipment at June 30, 2021 and December 31, 2020 consisted of the following:

	June 30, 2021			December 31, 2020
Leasehold Improvements	$	323,281		$	323,281
Machinery and Equipment		1,177,280			1,087,679
Building and Land		1,650,000			3,150,000
Furniture and Fixtures		578,843			543,366
Total property and equipment		3,729,404			5,104,326
Less: Accumulated depreciation		(1,010,268	)		(948,651	)
Property and equipment, net	$	2,719,136		$	4,155,675

Depreciation expense for the six months ended June 30, 2021 and 2020 was $194,255 and $223,489, respectively.

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Intangible Assets

6 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Note 6 — Intangible Assets

In October 2016, Red Earth entered into an Asset Purchase and Sale Agreement with the owner of a provisional Medical Marijuana Establishment Registration Certificate (the “Provisional Grow License”) issued by the state of Nevada for the cultivation of medical marijuana for $300,000. To initiate the purchase and transfer the Provisional Grow License, the Company paid a $25,000 deposit to the seller in October 2016. In February 2017, an investor advanced the Company $350,000.

The Provisional Grow License remains in a provisional status until the Company has completed the build out of a cultivation facility and obtained approval from the state of Nevada to begin cultivation in the approved facility. Once approval from the state of Nevada is received, the Company begins the cultivation process.

On or about May 7, 2021, the Company’s wholly owned subsidiary, Red Earth, LLC (the “Subsidiary”), received an inquiry from the State of Nevada Cannabis Compliance Board (“CCB”) regarding the transfer of ownership of the Subsidiary from its previous owners to the Company. The CCB has determined that the transfer was not formally approved, thus a Category II violation.

On July 27, 2021, the Subsidiary entered into a Stipulation and Order for Settlement of Disciplinary Action (the “Stipulation Order”) with the CCB. Under the terms of the Stipulation Order, the Subsidiary has agreed to present to the CCB, by not later than August 31, 2021, a plan pursuant to which the ownership of the Subsidiary will be returned to the original owners. The Parties to the Stipulation Order resolved the matter without the necessity of taking formal action. The Subsidiary agreed to pay a civil penalty of $10,000, which was paid on July 29, 2021.

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

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Notes Payable

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Notes Payable

Note 7 — Notes Payable

Notes payable as of June 30, 2021 and December 31, 2020 consist of the following:

	June 30, 2021			December 31, 2020
Note payable bearing interest at 6.50%, originated November 1, 2018, due on October 31, 2023, originally $1,100,000 (i)	$	-		$	1,022,567
Note payable bearing interest at 5.0%, originated January 17, 2019, due on January 31, 2022, originally $750,000 (ii)		750,000			750,000
Note payable bearing interest at 9.0%, originated January 17, 2019, due on January 16, 2020, originally $150,000 (iii)		-			100,000
Note payable bearing interest at 6.5% originated April 1, 2019, due on March 31, 2022, originally $250,000 (iv)		129,026			234,431
Notes payable, related party, bearing interest at 9.0%, originated February 20, 2020, due on February 20, 2021, originally $110,405 (v)		-			110,405
Notes payable, related party, bearing interest at 9.0%, originated April 3, 2020, due on March 30, 2021, originally $90,000 (vi)		-			90,000
Total notes payable	$	879,026		$	2,307,403
Less: current portion		(770,135	)		(1,485,678	)
Long-term notes payable	$	108,891		$	921,725

(i) On September 21, 2018, the Company, through its wholly-owned subsidiary Prescott Management, LLC, entered into a contract to purchase an approximately 10,000 square foot office building located at 1300 South Jones Boulevard, Las Vegas, Nevada 89146 for $1,500,000, subject to seller financing in the amount of $1,100,000, amortizing over 30 years at an interest rate of 6.5% per annum with monthly installments of $6,952.75 beginning on November 1, 2018, and continuing on the same day of each month thereafter until October 31, 2019. Upon the one-year anniversary of the note, a principal reduction payment of $50,000 is due, and provided that the monthly payments and the principal reduction payment have been made, the payments will be recalculated and re-amortized on the same terms with a new scheduled monthly payment of $6,559 beginning on November 1, 2019 and continuing until October 31, 2023, at which time the entire sum of principal in the amount of $986,438, plus any accrued interest, is due and payable. The Company closed the purchase on October 18, 2018. On December 12, 2020, the Company entered into a sales contract with Helping Hands Support, Inc. for the sale of the Company’s commercial building. On January 12, 2021, the Company completed the sale of its commercial building for $1,627,500. As of June 30, 2021, the note was paid in full.

(ii)	On January 17, 2019, the Company executed a promissory note for $750,000 with FR Holdings LLC, a Wyoming limited liability company. The note accrues interest at 5.0% per annum, payable in regular monthly installments of $3,125, due on or before the same day of each month beginning February 1, 2019 until January 31, 2022 at which the entire principal and any then accrued interest thereon shall be due and payable. As of June 30, 2021, $750,000 principal and $0 interest remain due.
(iii)	On January 17, 2019, the Company executed a short-term promissory note for $150,000 with Let’s Roll Holdings, LLC. The note accrues interest at 9.0% per annum and is due on January 16, 2020. Principal payments in the amount of $50,000 were made during the year ended December 31, 2019. As of June 30, 2021, the note was paid in full.
(iv)	On April 1, 2019, the Company executed a promissory note for $250,000 with John T. Jacobs and Teresa D. Jacobs. The note accrues interest at 6.5% per annum, payable in regular monthly installments of $2,178, due on or before the same day of each month beginning May 1, 2019 until March 31, 2020 at which time a principal reduction of $50,000 shall be due, the payments shall be re-amortized (15-year amortization). On or before March 31, 2021, a second principal reduction of $50,000 shall be due, the payments shall be re-amortized (15-year amortization). Payments shall continue to be paid until March 31, 2022, at which time the entire sum of principal and accrued interest shall be due and payable. As of June 30, 2021, $129,026 principal and $1,318 interest remain due.
(v)	On February 20, 2020, the Company’s subsidiary, Alternative Hospitality, Inc. (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $110,405 that matures on February 19, 2021. The Company received cash in the amount of $74,000 and the Holder paid expenses on behalf of the Company in the amount of $36,405. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $825 due on or before the twentieth day of each month commencing on April 20, 2020. The Borrower was required to make an interest and principal reduction payment in the amount of $1,233 on or before March 20, 2020. The Holder is granted a security interest in that certain real property located at 1300 S. Jones Blvd, Las Vegas, NV 89146, which was owned by the Borrower. As of June 30, 2021, the note was paid in full
(vi)	On March 31, 2020, the Company’s subsidiary, Condo Highrise Management, LLC (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $90,000 that matures on March 30, 2021. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $675 due on or before the first day of each month commencing on May 1, 2020. The Holder is granted a security interest in that certain real property located at 4295 Hwy 343, Amargosa, NV 89020, which was owned by the Borrower. The transaction closed on April 3, 2020. As of June 30, 2021, the note was paid in full

	Amount
Fiscal year ending December 31:
2021 (excluding the six months ended June 30, 2021)		13,615
2022		865,411
2023		-
2024		-
2025		-
Thereafter		-
Total minimum loan payments	$	879,026

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 8 — Commitments and Contingencies

Employment Agreements

On October 1, 2020, the Company entered into an Employment Agreement (the “Agreement”) with Jim Kelly. The Agreement became effective as of October 1, 2020. Under the terms of the Kelly Agreement, the Employee shall serve as the Company’s Interim Chief Financial Officer for a term of (i) the sooner of six (6) months, or (ii) the completion of all regulatory filings, including but not limited to the Company’s 2019 Annual Report on Form 10-K, the March 31, 2020 Quarterly Report on Form 10-Q, the June 30, 2020 Quarterly Report on Form 10-Q, the September 30, 2020 Quarterly Report on Form 10-Q and all required Current Reports on Form 8-K, with the Securities and Exchange Commission (“SEC”) to bring the Company current with the SEC. The Employee shall receive a base salary of $24,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the C-Suite of the Company in its sole discretion, in an amount equal to up to 400% of the Employee’s base salary for the then current fiscal year, and at commencement of the Term the Employee shall receive a grant of stock of 500,000 restricted shares of the Company’s common stock. On March 16, 2021, Mr. Kelly resigned in his position as Interim Chief Financial Officer.

On September 1, 2020, the Company entered into an Employment Agreement (the “Agreement”) with Paris Balaouras (the “Employee”). Under the terms of the Agreement, the Employee shall serve as the Company’s Chief Cultivation Officer for a term of three (3) years (the “Term”) commencing on September 15, 2020. The Employee shall receive a base salary of $105,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the board of directors of the Company in its sole discretion, in amount equal to up to 100% of Employee’s base salary for the then current fiscal year, shall be eligible to receive an annual discretionary stock grant during the Term which shall be vested in equal increments of 1/3^rd each over a three year period beginning on the first anniversary of employment, shall be eligible to receive a compensatory stock grant of 667,000 shares for and in consideration of past compensation ($224,000 at September 15, 2020) foregone by Employee; such grant exercisable at Employee’s option as such time as Employer is profitable at the NOI level on a trailing twelve (12) month basis or upon other commercial reasonable terms as the Board may determine and shall be awarded options to purchase 500,000 shares of the Company’s common stock, exercisable at a price of $.75 per share.

On September 1, 2020, the Company entered into an Employment Agreement (the “Agreement”) with Roger Bloss. Under the terms of the Agreement, the Employee shall serve as the Company’s Interim Chief Executive Officer for a term of six (6) months and the Chief Executive Officer and for an additional two (2) years and six (6) months as the Chief Executive Officer for a total of three (3) years (the “Term”) commencing on September 15, 2020. The Employee shall receive a base salary of $105,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the board of directors of the Company in its sole discretion, in amount equal to up to 100% of Employee’s base salary for the then current fiscal year, shall be eligible to receive an annual discretionary stock grant during the Term which shall be vested in equal increments of 1/3^rd each over a three year period beginning on the first anniversary of employment and shall be awarded options to purchase 500,000 shares of the Company’s common stock, exercisable at a price of $.75 per share.

On September 1, 2020, the Company entered into an Employment Agreement (the “Agreement”) with Bernard Moyle. Under the terms of the Agreement, the Employee shall serve as the Company’s Secretary/Treasurer for a term of three (3) years (the “Term”) commencing on September 15, 2020. The Employee shall receive a base salary of $60,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the board of directors of the Company in its sole discretion, in amount equal to up to 200% of Employee’s base salary for the then current fiscal year, shall, at commencement of the Term receive a grant of stock of 500,000 shares and shall be eligible to receive an annual discretionary stock grant during the Term which shall be vested in equal increments of 1/3^rd each over a three year period beginning on the first anniversary of employment and shall be awarded options to purchase 500,000 shares of the Company’s common stock, exercisable at a price of $.75 per share. On March 16, 2021, Mr. Moyle assumed the role of interim Chief Financial Officer upon the resignation of Mr. Kelly. The terms of Mr. Moyle’s Agreement did not change.

On May 12, 2021, the Company entered into a Cooperation and Release Agreement (the “Agreement”) with Richard S. Groberg and RSG Advisors, LLC. Under the terms of the Agreement, Mr. Groberg agreed to relinquish all common stock of the Company issued to or owned by him and waived any right to any future stock issuances except for 100,000 shares to be retained by Mr. Groberg.

Board of Directors Services Agreements

On September 15, 2020, the Company entered into a Board of Directors Services Agreement (the “Agreement”) with Messrs. Bloss, Dear and Balaouras (collectively, the “Directors”). Under the terms of the Agreement, each of the Directors shall provide services to the Company as a member of the Board of Directors for a period of not less than one year. Each of the Directors shall receive compensation as follows: (i) Fifteen Thousand and no/100 dollars ($15,000.00), paid in four (4) equal installments on the last calendar day of each quarter, and (ii) Fifteen Thousand (15,000) shares of the Company’s common stock on the last calendar day of each quarter. The Agreement for each of the Directors is effective as of October 1, 2020. On March 26, 2021, the Company’s Board of Directors elected to revise the terms of the Board of Directors Services Agreement for each director. Section 2 (Compensation) was revised such that the directors’ cash compensation was revised to stock compensation in the following manner: $3,750 divided by the closing stock price on the last business day of each quarter multiplied by 1.10. The remainder of Section is unchanged.

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 8 — Commitments and Contingencies (continued)

Operating Leases

The Company leases a two production / warehouse facility under a non-cancelable operating lease that expires in June 2027 and September 2029, respectively.

As of June 30, 2021, the Company recorded operating lease liabilities of $2,061,740 and right of use assets for operating leases of $1,915,507. During the six months ended June 30, 2021, operating cash outflows relating to operating lease liabilities was $69,301. As of June 30, 2021, the Company’s operating leases had a weighted-average remaining term of 7.13 years.

Future minimal rental and lease commitments under non-cancelable operating leases with terms in excess of one year as of June 30, 2021, are as follows:

	Amount
Fiscal year ending December 31:
2021 (excluding the six months ended June 30, 2021)		175,320
2022		350,755
2023		350,986
2024		351,333
2025		351,911
Thereafter		799,084
Total minimum lease payments	$	2,379,389

Rent expense, incurred pursuant to operating leases for the six months ended June 30, 2021 and 2020, was $164,066 and $177,003, respectively.

Litigation

From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company will record a liability for the loss. In addition to the estimated loss, the liability includes probable and estimable legal cost associated with the claim or potential claim. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company business.

DGMD Complaint

On March 19, 2021, a Complaint was filed against the Company, Jim Mueller, John Mueller, MachNV, LLC, Acres Cultivation, Paris Balaouras, Dimitri Deslis, ATG Holdings, LLC and Curaleaf, Inc. (collectively, the “Defendants”) by DGMD Real Estate Investments, LLC, ARMPRO, LLC, Zhang Springs LV, LLC, Prodigy Holdings, LLC and Green Organics, LLC (collectively, the “Plaintiffs”) in the District Court of Clark County, Nevada.

In the Complaint, the Plaintiffs allege that the Defendants: (i) intended to fraudulently obtain money from the Plaintiffs in order to put that money towards the Acres dispensary and to make Acres look more appealing to potential buyers as well as pay off Defendants’ agents, and (ii) the Defendants acted together in order to find investors to invest money into the Acres and MJ Holdings “Investment Schemes”, and (iii) the Defendants intended to fraudulently obtain Plaintiffs’ money for the purpose of harming the Plaintiffs to benefit the Defendants, and (iv) the Defendants committed unlawful fraudulent misrepresentation in the furtherance of the agreement to defraud the Plaintiffs. The Plaintiffs allege that damages are in excess of $15,000.

As the complaint pleads only the statutory minimum of damages, the Company is unable to estimate the potential exposure, if any, resulting from this matter but believes it is without merit as to liability and otherwise deminimis as to damages. Thus, the Company does not expect this matter to have a material effect on the Company’s consolidated financial position or its results of operations. The Company will vigorously defend itself against this action and has filed an appropriate and timely answer to the Complaint including a lengthy and comprehensive series of affirmative defenses and liability and damage avoidances.

Tierney Arbitration

On March 9, 2021, Terrence Tierny, the Company’s former President and Secretary, filed for arbitration with the American Arbitration Association for: (i) breach of contract, (i) breach of the implied covenant of good faith and fair dealing, and (iii) NRS 608 wage claim. Mr. Tierney demanded payment in the amount of $501,085 for deferred business compensation, business compensation, expenses paid on behalf of the Company, accrued vacation and severance pay.

On April 7, 2021, the Company made payment against the wage claim in the amount of $62,392, inclusive of $59,583 for wages and $2,854 for accrued vacation.

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Stockholders’ Equity (Deficit)

6 Months Ended

Jun. 30, 2021

Equity [Abstract]

Stockholders’ Equity (Deficit)

Note 9 — Stockholders’ Equity (Deficit)

General

The Company is currently authorized to issue up to 95,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.001 per share.

Common Stock

Of the 95,000,000 shares of Common Stock authorized by the Company’s Articles of Incorporation, 70,660,015 shares of Common Stock are issued and outstanding as of June 30, 2021. Each holder of Common Stock is entitled to one vote per share on all matters to be voted upon by the stockholders and are not entitled to cumulative voting for the election of directors. Holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the board of directors out of funds legally available therefor subject to the rights of preferred stockholders. The Company has not paid any dividends and does not intend to pay any cash dividends to the holders of Common Stock in the foreseeable future. The Company anticipates reinvesting its earnings, if any, for use in the development of its business. In the event of liquidation, dissolution, or winding up of the Company, the holders of Common Stock are entitled, unless otherwise provided by law or the Company’s Articles of Incorporation, including any certificate of designations for a series of preferred stock, to share ratably in all assets remaining after payment of liabilities and the preferences of preferred stockholders. Holders of the Company’s Common Stock do not have preemptive, conversion, or other subscription rights. There are no redemptions or sinking fund provisions applicable to the Company’s Common Stock.

Common Stock Issuances

For the six months ended June 30, 2021

On March 8, 2021, the Company issued 526,216 shares of common stock with a fair market value of $410,448 in satisfaction of $100,000 principal and all accrued interest for a note payable to a related party as per the terms of the Debt Conversion and Stock Purchase Agreement dated January 14, 2021.

On March 8, 2021, the Company issued 263,158 shares of common stock with a fair market value of $205,263 to a related party for the purchase of $50,000 of common stock as per the terms of the Debt Conversion and Stock Purchase Agreement dated January 14, 2021.

On March 29, 2021, the Company issued 225,000 shares of common stock with a fair market value of $135,000 to a consultant as per the terms of the Consulting Agreement dated February 25, 2021.

On April 24, 2021, the Company issued 1,000,000 shares of common stock with a fair market value of $490,000 as per the terms of the Termination Agreement with Blue Sky Companies, LLC and Let’s Roll Nevada, LLC. 

On June 4, 2021, the Company issued 32,000 shares of common stock with a fair market value of $13,514 to its former Chief Financial Officer as final compensation for services previously rendered on behalf of the Company.

Common Stock Issuable

At June 30, 2021, the Company had 198,539 shares of stock issuable to its directors as per the terms of the Board of Directors Services Agreements.

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 9 — Stockholders’ Equity (Deficit) (continued)

At June 30, 2021 and December 31, 2020, there are 70,660,015 and 68,613,541 shares of Common Stock issued and outstanding, respectively.

Preferred Stock

The Board is authorized, without further approval from our stockholders, to create one or more series of preferred stock, and to designate the rights, privileges, preferences, restrictions, and limitations of any given series of preferred stock. Accordingly, the Board may, without stockholder approval, issue shares of preferred stock with dividend, liquidation, conversion, voting, or other rights that could adversely affect the voting power or other rights of the holders of Common Stock. The issuance of preferred stock could have the effect of restricting dividends payable to holders of our Common Stock, diluting the voting power of our Common Stock, impairing the liquidation rights of our Common Stock, or delaying or preventing a change in control of us, all without further action by our stockholders. Of the 5,000,000 shares of preferred stock, par value $0.001 per share, authorized in our Articles of Incorporation, 2,500 shares are designated as Series A Convertible Preferred Stock.

Series A Convertible Preferred Stock

Each share of Series A Preferred Stock is convertible, at the option of the holder, into that number of shares of Common Stock determined by dividing the stated value of each share of Series A Preferred Stock (currently, $1,000) by the conversion price (currently, $0.75). The stated value and the conversion price are subject to adjustment as provided for in the Certificate of Designation. We are prohibited from effecting a conversion of the Series A Preferred Stock to the extent that, after giving effect to the conversion, the holder (together with such holder’s affiliates and any persons acting as a group with holder or any of such holder’s affiliates) would beneficially own in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion. A holder, upon notice to us, may increase or decrease this beneficial ownership limitation; provided, that, in no event can the holder increase the beneficial ownership limitation in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon the conversion of the Series A Preferred Stock then held by holder. Such increase of the beneficial ownership limitation cannot be effective until the 61^st day after such notice is given to us and shall apply only to such holder. The Series A Preferred Stock has no voting rights; however, as long as any shares of Series A Preferred Stock are outstanding, we are not permitted, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series A Preferred Stock to (i) alter or change adversely the powers, preferences, or rights given to the Series A Preferred Stock or alter or amend the Series A Preferred Stock Certificate of Designation, (ii) amend our Articles of Incorporation or other charter documents in any manner that adversely affects any rights of the holders, (iii) increase the number of authorized shares of Series A Preferred Stock, or (iv) enter into any agreement with respect to any of the forgoing.

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 9 — Stockholders’ Equity (Deficit) (continued)

Preferred Stock Issuances

For the six months ended June 30, 2021

None

At June 30, 2021 and December 31, 2020, there were 0 and 0 shares of Series A Preferred Stock issued and outstanding, respectively.

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Basic and Diluted Earnings (Loss) per Common Share

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Basic and Diluted Earnings (Loss) per Common Share

Note 10 — Basic and Diluted Earnings (Loss) per Common Share

Basic earnings (loss) per share is computed by dividing the net income or net loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated using the treasury stock method and reflects the potential dilution that could occur if warrants were exercised and were not anti-dilutive.

For the three months ended June 30, 2021, basic and diluted loss per common share were the same since there were no potentially dilutive shares outstanding during the respective periods. The outstanding warrants and options as of June 30, 2021, to purchase 760,000 shares of 1,010,000 common stock were not included in the calculations of diluted loss per share because the impact would have been anti-dilutive. 207,479 common stock equivalents were included in the calculation as their impact would have been dilutive.

For the six months ended June 30, 2021, basic and diluted income per common share were based on 69,580,992 and 69,969,539 shares, respectively.

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Stock Based Compensation

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

Stock Based Compensation

Note 11 — Stock Based Compensation

Warrants and Options

A summary of the warrants and options issued, exercised and expired are below:

Stock Options

On September 15, 2020, the Company issued an option to purchase 500,000 shares of common stock to each of Messrs. Balaouras, Bloss and Moyle as per the terms of their employment agreements. The options have an exercise price of $0.75 and expire on the three-year anniversary date.

A summary of the options issued, exercised and expired are below:

Options:	Shares		Weighted Avg. Exercise Price		Remaining Contractual Life in Years
Balance at December 31, 2020		1,510,000	$	0.75		2.33
Issued		-		-		-
Exercised		-		-		-
Expired		-		-		-
Balance at June 30, 2021		1,510,000	$	0.75		2.20
Exercisable at June 30, 2021		760,000	$	0.76		2.18

Options outstanding as of June 30, 2021 and December 31, 2020 were 1,510,000 and 1,510,000, respectively.

Warrants

In June of 2019, in conjunction with the Company’s offering under Rule 506 of Regulation D of the Securities Act (the “Offering”), the Company granted warrants to each participant in the Offering upon the following terms and conditions: (a) each participant has the right to acquire additional shares of the Company’s Common Stock equal to ten (10%) of the shares purchased in the offering (the “Warrants”); (b) one-half of the Warrants granted to each participant have an exercise price of $0.65 and the other one-half have an exercise price of $1.00, and (c) the Warrants shall be exercisable between June 5, 2019, the date of grant and June 4, 2021 the date of expiration of the Warrants. As of June 30, 2021, all warrants issued in the June 2019 offering had expired.

On January 11, 2021, the Company issued an accredited investor a Common Stock Purchase Warrant Agreement in conjunction with the July 2020 Securities Purchase Agreement granting the holder the right to purchase up to 250,000 shares of the Company’s common stock at an exercise price of $0.10 for a term of 4-years.

A summary of the warrants issued, exercised and expired are below:

Warrants:	Shares		Weighted Avg. Exercise Price		Remaining Contractual Life in Years
Balance at December 31, 2020		1,233,000	$	0.83		0.4
Issued		250,000		0.10		3.5
Exercised		-		-		-
Expired		1,233,000		0.83		-
Balance at June 30, 2021		250,000	$	0.10		3.5

Warrants outstanding as of June 30, 2021 and December 31, 2020 were 250,000 and 1,233,000, respectively.

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Related Party Transactions

6 Months Ended

Jun. 30, 2021

Related Party Transactions [Abstract]

Related Party Transactions

Note 12 — Related Party Transactions

On February 20, 2020, the Company’s subsidiary, Alternative Hospitality, Inc. (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $110,405 that matures on February 19, 2021. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $825 due on or before the twentieth day of each month commencing on April 20, 2020. The Borrower was required to make an interest and principal reduction payment in the amount of $1,233 on or before March 20, 2020. The Holder is granted a security interest in that certain real property located at 1300 S. Jones Blvd, Las Vegas, NV 89146, which is owned by the Borrower. The Note was paid in full on March 31, 2021.

On March 31, 2020, the Company’s subsidiary, Condo Highrise Management, LLC (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $90,000 that matures on March 30, 2021. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $675 due on or before the first day of each month commencing on May 1, 2020. The Holder is granted a security interest in that certain real property located at 4295 Hwy 343, Amargosa, NV 89020 which is owned by the Borrower. The transaction closed on April 3, 2020. The Note was paid in full on March 31, 2021.

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Subsequent Events

6 Months Ended

Jun. 30, 2021

Subsequent Events [Abstract]

Subsequent Events

Note 13 — Subsequent Events

On July 14, 2021, the Company issued 29,495 shares of common stock with a fair market value of $12,093 to a Director as compensation per the terms of the Board of Directors Services Agreement.

On July 14, 2021, the Company issued 43,245 shares of common stock with a fair market value of $17,730 to a director as compensation per the terms of the Board of Directors Services Agreement.

On July 14, 2021, the Company issued 43,245 shares of common stock with a fair market value of $17,730 to a Director as compensation per the terms of the Board of Directors Services Agreement.

On July 21, 2021, the Company issued 62,333 shares of common stock with a fair market value of $25,089 to a consultant for services rendered on behalf of the Company.

On July 21, 2021, the Company issued 30,000 shares of common stock with a fair market value of $12,075 to a consultant for services rendered on behalf of the Company.

On July 21, 2021, the Company issued 120,000 shares of common stock with a fair market value of $48,300 to an employee for past due wages.

On July 21, 2021, the Company issued 60,000 shares of common stock with a fair market value of $24,150 to an employee for past due wages.

On July 21, 2021, the Company issued 30,000 shares of common stock with a fair market value of $12,075 to an employee for past due wages.

On July 27, 2021, the Red Earth, LLC, a wholly owned subsidiary of the Company (the “Subsidiary”), entered into a Stipulation and Order for Settlement of Disciplinary Action (the “Stipulation Order”) with the CCB. Under the terms of the Stipulation Order, the Subsidiary has agreed to present to the CCB, by not later than August 31, 2021, a plan pursuant to which the ownership of the Subsidiary will be returned to the original owners. The Parties to the Stipulation Order resolved the matter without the necessity of taking formal action. The Subsidiary agreed to pay a civil penalty of $10,000, which was paid on July 29, 2021.

On July 30, 2021, the Company returned 300,000 shares of common stock to treasury as per the terms of the Groberg Cooperation and Release Agreement. 

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Red Earth, LLC, HDGLV, LLC, Icon Management, LLC, Alternative Hospitality, Inc., Condo Highrise Management, LLC and Prescott Management, LLC. Inter-company balances and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates and assumptions are required in the determination of the fair value of financial instruments and the valuation of stock-based compensation. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates.

Cash

Cash

Cash includes cash on hand and deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal and use and with an original maturity of three months or less. The Company maintains its cash in bank deposit accounts.

The Company, at various times throughout the year, had cash in financial institutions in excess of Federally insured limits. At June 30, 2021, the Company had $5,755,000 in excess. However, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on its credit balances.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2021 and December 31, 2020. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market.

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 2 — Summary of Significant Accounting Policies (continued)

Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.

Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in these situations.

Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. The FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.

As of June 30, 2021 and December 31, 2020, the Company’s investment in marketable securities – available for sale was determined to be a level 1 investment.

	June 30, 2021		December 31, 2020
Marketable securities		-		150,000
Total	$	-	$	150,000

On February 17, 2021, the Company entered into a Stock Purchase Agreement (the “Agreement”) with ATG Holdings, LLC (the “ATG”). Under the terms of the Agreement, the Company purchased 1,500,000,000 shares of common stock of Healthier Choices Management Corp (“HCMC”) from ATG for the purchase price of $200,000. The transaction closed on February 19, 2021.

During the six months ended June 30, 2021, the Company liquidated its marketable securities that it received in the Stock Exchange Agreement with HCMC dated August 13, 2018 and the shares of HCMC that it received under the Agreement with ATG.

The net proceeds received by the Company for the sale of the marketable securities were $9,857,429.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts:

Accounts receivable are recorded at invoiced amount and generally do not bear interest. An allowance for doubtful accounts is established, as necessary, based on past experience and other factors which, in management’s judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable and current economic conditions. The determination of the collectability of amounts due from customer accounts requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer accounts, and the financial condition of the Company’s customers. Based on a review of these factors, the Company establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole.

	June 30, 2021			December 31, 2020
Accounts receivable	$	57,772		$	23,675
Less allowance		(39,518	)		(12,000	)
Net accounts receivable	$	18,254		$	11,675

Debt Issuance Costs

Debt Issuance Costs

Costs associated with obtaining, closing, and modifying loans and/or debt instruments are netted against the carrying amount of the debt instrument, and charged to interest expense over the term of the loan.

Inventory

Inventory

Inventories consist of finished goods as of June 30, 2021 and December 31, 2020. Inventories are valued at the lower of cost or net realizable value. The Company determines cost on the basis of the first in first out method. The Company periodically reviews inventories for obsolescence and any inventories identified as obsolete are reserved or written off. The Company has performed a valuation and has established a reserve against its finished goods inventory.

Property and Equipment

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and any impairment losses. Depreciation is computed using the straight-line method over the useful lives of the assets. Major renewals and betterments are capitalized and depreciated; maintenance and repairs that do not extend the life of the respective assets are expensed as incurred. Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in the consolidated statements of operations.

Construction in progress primarily represents the construction or the renovation costs stated at cost less any accumulated impairment loss, which is not depreciated. Costs incurred are capitalized and transferred to property and equipment upon completion, at which time depreciation commences.

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 2 — Summary of Significant Accounting Policies (continued)

Property and equipment are depreciated over their estimated useful lives as follows:

Buildings	12 years
Land	Not depreciated
Leasehold Improvements	Lessor of lease term or 5 years
Machinery and Equipment	5 years
Furniture and Fixtures	5 years

Long–lived Assets

Long–lived Assets

Long-lived assets, including real estate property and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If the assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value.

Impairment of Long-lived Assets

Impairment of Long-lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC 360-10-15, “Impairment or Disposal of Long-Lived Assets.” ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals. The Company recorded an impairment of its long-lived assets in the amount of $9,173 and $18,345 for the six months ended June 30, 2021 and year ended December 31, 2020, respectively.

Other Current Liabilities

Other Current Liabilities

The Company’s other current liabilities consisted of amounts due under the management agreement and performance guarantee with Acres Cultivation, LLC. As of June 30, 2021 and December 31, 2020, other current liabilities were $- and $1,328,438, respectively.

Non- Controlling Interest

Non- Controlling Interest

The Company’s non-controlling interest represents the minority shareholder’s ownership interest related to the Company’s subsidiary, Alternative Hospitality, Inc. The Company reports its non-controlling interest in subsidiaries as a separate component of equity in the Consolidated Balance Sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common shareholders on the face of the Consolidated Statements of Operations. The Company’s equity interest in Alternative Hospitality, Inc. is 51% and the non-controlling stockholder’s interest is 49%. This is reflected in the Consolidated Statements of Equity.

Revenue Recognition

Revenue Recognition

On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers using the modified retrospective method. There was no impact upon adoption of ASC 606 on our consolidated financial statements. The new revenue standard was applied prospectively in the Company’s consolidated financial statements from January 1, 2018 forward and reported financial information for historical comparable periods will not be revised and will continue to be reported under the accounting standards in effect during those historical periods.

Generally, the Company considers all revenues as arising from contracts with customers. Revenue is recognized based on the five-step process outlined in the Accounting Standards Codification (“ASC”) 606:

Step 1 – Identify the Contract with the Customer – A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and it is probably that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

Step 2 – Identify Performance Obligations in the Contract – Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct, or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation.

Step 3 – Determine the Transaction Price – When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur.

Step 4 – Allocate the Transaction Price – After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price (SSP) at contract inception.

Step 5 – Satisfaction of the Performance Obligations (and Recognize Revenue) – Revenue is recognized when (or as) goods or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use of and obtain substantially all of the remaining benefits from an asset. It includes the ability to prevent other entities from directing the use of and obtaining the benefits from an asset. Indicators that control has passed to the customer include: a present obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset(s). Performance obligations can be satisfied at a point in time or over time.

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 2 — Summary of Significant Accounting Policies (continued)

The majority of the Company’s revenue was derived under the agreements, Consulting Agreement and Equipment Lease Agreement, entered into with Acres Cultivation, LLC. Revenue derived from consulting services fees are recognized over the term of the arrangement as services are provided. Revenue is presented net of discounts, fees and other related taxes. Revenue derived from equipment leases is recognized when the lease agreement is entered into and control of the equipment has passed to the customer. The Company’s remaining revenue is derived from its rental property in Nye County, Nevada. Rental revenue for operating leases is recognized on a straight-line basis over the term of the lease. Rental revenue recognition commences when the leased space is available for use by the lessee.

	For the six months ended
	June 30,
	2021		2020
Revenues:
Rental income (i)	$	40,169	$	57,963
Management income (ii)		341,398		328,313
Equipment lease income (ii)		134,814		136,796
Total	$	516,381	$	523,072

(i)

The rental income is from the Company’s THC Park.

(ii)

In April 2018, the Company entered into a management agreement with Acres Cultivation, LLC, a Nevada limited liability company (the “Licensed Operator”) that holds a license for the legal cultivation of marijuana for sale under the laws of the State of Nevada. In January of 2019, the Company entered into a revised agreement, which replaced the April 2018 agreement, with the Licensed Operator in order to be more stringently aligned with Nevada marijuana laws. The material terms of the agreement remain unchanged. The Licensed Operator is contractually obligated to pay over to the Company eighty-five (85%) percent of gross revenues defined as gross proceeds from sales of marijuana products minus applicable state excise taxes and local sales tax. The agreement is to remain in force until April 2026. In April 2019, the Licensed Operator was acquired by Curaleaf Holdings, Inc., a publicly traded Canadian cannabis company. On January 21, 2021, the Company received a Notice of Termination, effective immediately, from Acres Cultivation, LLC. The Company does not anticipate that it will generate any further revenue under the Acres relationship.

Contract Balances

Contract Balances

The Company receives payments for new Cultivation and Sales Agreements (the “Agreements”) upon signing and defers revenue recognition for these payments until certain milestones are met as per the terms of the Agreements. These payments represent contract liabilities and are recorded as such on the balance sheet. As of June 30, 2021 and December 31, 2020, the Company had $1,270,000 and $0 contract liabilities, respectively.

Stock-Based Compensation

Stock-Based Compensation

The Company’s share-based payment awards principally consist of grants of common stock. In accordance with the applicable accounting guidance, stock-based payment awards are classified as either equity or liabilities. For equity-classified awards, the Company measures compensation cost based on the grant date fair value and recognizes compensation expense in the consolidated statements of operations over the requisite service or performance period the award is expected to vest. The fair value of liability-classified awards is at each reporting date through the settlement date. Change in fair value during the requisite service period will be remeasured as compensation cost over that period.

The Company utilizes its historical stock price to determine the volatility of any stock-based compensation.

The expected dividend yield is 0% as the Company has not paid any dividends on its common stock and does not anticipate it will pay any dividends in the foreseeable future.

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant date with a term equal to the expected term of the stock-based award.

For stock-based financial instruments issued to parties other than employees, the Company uses the contractual term of the financial instruments as the expected term of the stock-based financial instruments.

The assumptions used in calculating the fair value of stock-based financial instruments represent its best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and it uses different assumptions, its stock-based compensation expense could be materially different in the future.

MJ HOLDINGS, INC. and SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2021 and 2020

(Unaudited)

Note 2 — Summary of Significant Accounting Policies (continued)

Operating Leases

Operating Leases

The Company adopted ASC Topic 842, Leases, on January 1, 2019. The new leasing standard requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company used its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. A number of the lease agreements contain options to renew and options to terminate the leases early. The lease term used to calculate ROU assets and lease liabilities only includes renewal and termination options that are deemed reasonably certain to be exercised.

The Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months. The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, and unamortized lease incentives provided by lessors. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur. The Company has elected not to separate lease and non-lease components for all property leases for the purposes of calculating ROU assets and lease liabilities.

Income Taxes

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance on deferred tax assets is established when management considers it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income tax expense. The Company has not recognized any tax benefits from uncertain tax positions for any of the reporting periods presented.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Stock Based Compensation: In June 2018, FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share Based Payment Accounting.

The amendments in this Update expand the scope of stock compensation to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance in this Update does not apply to transactions involving equity instruments granted to a lender or investor that provides financing to the issuer. The guidance is effective for fiscal years beginning after December 31, 2018 including interim periods within the fiscal year. The Company adopted with an effective date of January 1, 2019.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Schedule of Investment in Marketable Securities

As of June 30, 2021 and December 31, 2020, the Company’s investment in marketable securities – available for sale was determined to be a level 1 investment.

	June 30, 2021		December 31, 2020
Marketable securities		-		150,000
Total	$	-	$	150,000

Schedule of Accounts Receivable and Allowance for Doubtful Accounts

	June 30, 2021			December 31, 2020
Accounts receivable	$	57,772		$	23,675
Less allowance		(39,518	)		(12,000	)
Net accounts receivable	$	18,254		$	11,675

Schedule of Property and Equipment Estimated Useful Lives

Property and equipment are depreciated over their estimated useful lives as follows:

Buildings	12 years
Land	Not depreciated
Leasehold Improvements	Lessor of lease term or 5 years
Machinery and Equipment	5 years
Furniture and Fixtures	5 years

Schedule of Rental Revenue Recognition

	For the six months ended
	June 30,
	2021		2020
Revenues:
Rental income (i)	$	40,169	$	57,963
Management income (ii)		341,398		328,313
Equipment lease income (ii)		134,814		136,796
Total	$	516,381	$	523,072

(i)

The rental income is from the Company’s THC Park.

(ii)

In April 2018, the Company entered into a management agreement with Acres Cultivation, LLC, a Nevada limited liability company (the “Licensed Operator”) that holds a license for the legal cultivation of marijuana for sale under the laws of the State of Nevada. In January of 2019, the Company entered into a revised agreement, which replaced the April 2018 agreement, with the Licensed Operator in order to be more stringently aligned with Nevada marijuana laws. The material terms of the agreement remain unchanged. The Licensed Operator is contractually obligated to pay over to the Company eighty-five (85%) percent of gross revenues defined as gross proceeds from sales of marijuana products minus applicable state excise taxes and local sales tax. The agreement is to remain in force until April 2026. In April 2019, the Licensed Operator was acquired by Curaleaf Holdings, Inc., a publicly traded Canadian cannabis company. On January 21, 2021, the Company received a Notice of Termination, effective immediately, from Acres Cultivation, LLC. The Company does not anticipate that it will generate any further revenue under the Acres relationship.

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Note Receivable (Tables)

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

Schedule of Note Receivable

Note receivable at June 30, 2021 and December 31, 2020 consisted of the following:

	June 30, 2021		December 31, 2020
Note receivable- GeneRx (i)		500,000		-
Total	$	500,000	$	-

i.

On March 12, 2021, the Company (the “Holder”) was issued a Convertible Promissory Note (the “Note”) by GeneRx (the “Borrower”), a Delaware corporation, in the amount of $300,000. The Note has a term of one year (March 12, 2022 Maturity Date) and accrues interest at two percent (2%) per annum. The Note is convertible, at the option of the Holder, into shares of common stock of the Borrower at a fixed conversion price of $1.00 per share. Upon an Event of Default, the Conversion Price shall equal the Alternate Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Alternate Conversion Price” shall equal the lesser of (i) 80% multiplied by the average of the three lowest daily volume weighted average prices (“VWAP”) during the previous twenty (20) Trading Days (as defined below) before the Issue Date of this Note (representing a discount rate of 20%) or (ii) 80% multiplied by the Market Price (as defined herein) (representing a discount rate of 20%). “Market Price” means the average of the three lowest daily VWAPs for the Common Stock during the twenty (20) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty-four percent (24%) per annum from the due date thereof until the same is paid (the “Default Interest”). The Company funded $300,000 on March 15, 2021, $150,000 on April 2, 2021 and $50,000 on April 7, 2021.

ii.

The convertible note receivable is considered available for sale debt securities with a private company that is not traded in active markets. Since observable price quotations were not available at acquisition, fair value was estimated based on cost less an appropriate discount upon acquisition. The discount of each instrument is accreted into interest income over the respective term as shown within the Company’s Condensed Consolidated Statements of Operations.

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment at June 30, 2021 and December 31, 2020 consisted of the following:

	June 30, 2021			December 31, 2020
Leasehold Improvements	$	323,281		$	323,281
Machinery and Equipment		1,177,280			1,087,679
Building and Land		1,650,000			3,150,000
Furniture and Fixtures		578,843			543,366
Total property and equipment		3,729,404			5,104,326
Less: Accumulated depreciation		(1,010,268	)		(948,651	)
Property and equipment, net	$	2,719,136		$	4,155,675

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Notes Payable (Tables)

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Schedule of Notes Payable

Notes payable as of June 30, 2021 and December 31, 2020 consist of the following:

	June 30, 2021			December 31, 2020
Note payable bearing interest at 6.50%, originated November 1, 2018, due on October 31, 2023, originally $1,100,000 (i)	$	-		$	1,022,567
Note payable bearing interest at 5.0%, originated January 17, 2019, due on January 31, 2022, originally $750,000 (ii)		750,000			750,000
Note payable bearing interest at 9.0%, originated January 17, 2019, due on January 16, 2020, originally $150,000 (iii)		-			100,000
Note payable bearing interest at 6.5% originated April 1, 2019, due on March 31, 2022, originally $250,000 (iv)		129,026			234,431
Notes payable, related party, bearing interest at 9.0%, originated February 20, 2020, due on February 20, 2021, originally $110,405 (v)		-			110,405
Notes payable, related party, bearing interest at 9.0%, originated April 3, 2020, due on March 30, 2021, originally $90,000 (vi)		-			90,000
Total notes payable	$	879,026		$	2,307,403
Less: current portion		(770,135	)		(1,485,678	)
Long-term notes payable	$	108,891		$	921,725

(i) On September 21, 2018, the Company, through its wholly-owned subsidiary Prescott Management, LLC, entered into a contract to purchase an approximately 10,000 square foot office building located at 1300 South Jones Boulevard, Las Vegas, Nevada 89146 for $1,500,000, subject to seller financing in the amount of $1,100,000, amortizing over 30 years at an interest rate of 6.5% per annum with monthly installments of $6,952.75 beginning on November 1, 2018, and continuing on the same day of each month thereafter until October 31, 2019. Upon the one-year anniversary of the note, a principal reduction payment of $50,000 is due, and provided that the monthly payments and the principal reduction payment have been made, the payments will be recalculated and re-amortized on the same terms with a new scheduled monthly payment of $6,559 beginning on November 1, 2019 and continuing until October 31, 2023, at which time the entire sum of principal in the amount of $986,438, plus any accrued interest, is due and payable. The Company closed the purchase on October 18, 2018. On December 12, 2020, the Company entered into a sales contract with Helping Hands Support, Inc. for the sale of the Company’s commercial building. On January 12, 2021, the Company completed the sale of its commercial building for $1,627,500. As of June 30, 2021, the note was paid in full.

(ii)	On January 17, 2019, the Company executed a promissory note for $750,000 with FR Holdings LLC, a Wyoming limited liability company. The note accrues interest at 5.0% per annum, payable in regular monthly installments of $3,125, due on or before the same day of each month beginning February 1, 2019 until January 31, 2022 at which the entire principal and any then accrued interest thereon shall be due and payable. As of June 30, 2021, $750,000 principal and $0 interest remain due.
(iii)	On January 17, 2019, the Company executed a short-term promissory note for $150,000 with Let’s Roll Holdings, LLC. The note accrues interest at 9.0% per annum and is due on January 16, 2020. Principal payments in the amount of $50,000 were made during the year ended December 31, 2019. As of June 30, 2021, the note was paid in full.
(iv)	On April 1, 2019, the Company executed a promissory note for $250,000 with John T. Jacobs and Teresa D. Jacobs. The note accrues interest at 6.5% per annum, payable in regular monthly installments of $2,178, due on or before the same day of each month beginning May 1, 2019 until March 31, 2020 at which time a principal reduction of $50,000 shall be due, the payments shall be re-amortized (15-year amortization). On or before March 31, 2021, a second principal reduction of $50,000 shall be due, the payments shall be re-amortized (15-year amortization). Payments shall continue to be paid until March 31, 2022, at which time the entire sum of principal and accrued interest shall be due and payable. As of June 30, 2021, $129,026 principal and $1,318 interest remain due.
(v)	On February 20, 2020, the Company’s subsidiary, Alternative Hospitality, Inc. (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $110,405 that matures on February 19, 2021. The Company received cash in the amount of $74,000 and the Holder paid expenses on behalf of the Company in the amount of $36,405. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $825 due on or before the twentieth day of each month commencing on April 20, 2020. The Borrower was required to make an interest and principal reduction payment in the amount of $1,233 on or before March 20, 2020. The Holder is granted a security interest in that certain real property located at 1300 S. Jones Blvd, Las Vegas, NV 89146, which was owned by the Borrower. As of June 30, 2021, the note was paid in full
(vi)	On March 31, 2020, the Company’s subsidiary, Condo Highrise Management, LLC (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $90,000 that matures on March 30, 2021. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $675 due on or before the first day of each month commencing on May 1, 2020. The Holder is granted a security interest in that certain real property located at 4295 Hwy 343, Amargosa, NV 89020, which was owned by the Borrower. The transaction closed on April 3, 2020. As of June 30, 2021, the note was paid in full

Schedule of Minimum Loan Payments

	Amount
Fiscal year ending December 31:
2021 (excluding the six months ended June 30, 2021)		13,615
2022		865,411
2023		-
2024		-
2025		-
Thereafter		-
Total minimum loan payments	$	879,026

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental and Lease Commitments

Future minimal rental and lease commitments under non-cancelable operating leases with terms in excess of one year as of June 30, 2021, are as follows:

	Amount
Fiscal year ending December 31:
2021 (excluding the six months ended June 30, 2021)		175,320
2022		350,755
2023		350,986
2024		351,333
2025		351,911
Thereafter		799,084
Total minimum lease payments	$	2,379,389

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Stock Based Compensation (Tables)

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

Summary of Options Issued, Exercised and Expired

A summary of the options issued, exercised and expired are below:

Options:	Shares		Weighted Avg. Exercise Price		Remaining Contractual Life in Years
Balance at December 31, 2020		1,510,000	$	0.75		2.33
Issued		-		-		-
Exercised		-		-		-
Expired		-		-		-
Balance at June 30, 2021		1,510,000	$	0.75		2.20
Exercisable at June 30, 2021		760,000	$	0.76		2.18

Summary of Warrants Issued, Exercised and Expired

A summary of the warrants issued, exercised and expired are below:

Warrants:	Shares		Weighted Avg. Exercise Price		Remaining Contractual Life in Years
Balance at December 31, 2020		1,233,000	$	0.83		0.4
Issued		250,000		0.10		3.5
Exercised		-		-		-
Expired		1,233,000		0.83		-
Balance at June 30, 2021		250,000	$	0.10		3.5

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Nature of the Business (Details Narrative) - USD ($)	Jul. 29, 2021	Dec. 15, 2017	Jan. 10, 2017	Jun. 30, 2021	Dec. 31, 2020
Entity Listings [Line Items]
Promissory note				$ 879,026	$ 2,307,403
Subsequent Event [Member]
Entity Listings [Line Items]
civil penalty amount	$ 10,000
Red Earth LLC [Member]
Entity Listings [Line Items]
Percentage of controlling interest		88.00%
MJ Real Estate Partners, LLC (MJRE) [Member]
Entity Listings [Line Items]
Number of common stocks, exchanged during period			1,800,000
Red Earth LLC [Member]
Entity Listings [Line Items]
Number of common stocks, exchanged during period		52,732,969
Promissory note		$ 900,000

XML

Schedule of Investment in Marketable Securities (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Accounting Policies [Abstract]
Marketable securities		$ 150,000
Total		$ 150,000

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Schedule of Accounts Receivable and Allowance for Doubtful Accounts (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Accounting Policies [Abstract]
Accounts receivable	$ 57,772	$ 23,675
Less: allowance	(39,518)	(12,000)
Net accounts receivable	$ 18,254	$ 11,675

XML

Schedule of Property and Equipment Estimated Useful Lives (Details)	6 Months Ended
	Jun. 30, 2021
Building [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	12 years
Land [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives, description	Not depreciated
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives, description	Lessor of lease term or 5 years
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	5 years
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	5 years

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Schedule of Rental Revenue Recognition (Details) - USD ($)		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020
Accounting Policies [Abstract]
Rental income (i)	[1]	$ 40,169	$ 57,963
Management income (ii)	[2]	341,398	328,313
Equipment lease income (ii)	[2]	134,814	136,796
Total		$ 516,381	$ 523,072

[1] The rental income is from the Company’s THC Park.

[2] In April 2018, the Company entered into a management agreement with Acres Cultivation, LLC, a Nevada limited liability company (the “Licensed Operator”) that holds a license for the legal cultivation of marijuana for sale under the laws of the State of Nevada. In January of 2019, the Company entered into a revised agreement, which replaced the April 2018 agreement, with the Licensed Operator in order to be more stringently aligned with Nevada marijuana laws. The material terms of the agreement remain unchanged. The Licensed Operator is contractually obligated to pay over to the Company eighty-five (85%) percent of gross revenues defined as gross proceeds from sales of marijuana products minus applicable state excise taxes and local sales tax. The agreement is to remain in force until April 2026. In April 2019, the Licensed Operator was acquired by Curaleaf Holdings, Inc., a publicly traded Canadian cannabis company. On January 21, 2021, the Company received a Notice of Termination, effective immediately, from Acres Cultivation, LLC. The Company does not anticipate that it will generate any further revenue under the Acres relationship.

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Schedule of Rental Revenue Recognition (Details) (Parenthetical) - Management Agreement [Member] - Common Stock To Be Issued [Member]	1 Months Ended
	Apr. 30, 2018
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percentage of gross revenue payable	85.00%
Agreement expiration date	2026-04

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Summary of Significant Accounting Policies (Details Narrative) - USD ($)		6 Months Ended		12 Months Ended
	Feb. 17, 2021	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Entity Listings [Line Items]
Excess federally insured amount		$ 5,755,000
Proceeds from sale of marketable securities		10,207,429
Impairment of long-lived assets		9,173		$ 18,345
Other Liabilities, Current			$ 1,328,438	1,328,438
Contract liabilities		$ 1,270,000		$ 0
Expected dividend yield		0.00%
Stockholder [Member].
Entity Listings [Line Items]
Non-controlling interest percentage		49.00%
Alternative Hospitality, Inc [Member]
Entity Listings [Line Items]
Equity interest		51.00%
Stock Purchase Agreement | ATG Holdings, LLC [Member]
Entity Listings [Line Items]
Number of common stock shares purchased	1,500,000,000
Purchase price of shares purchased	$ 200,000
Proceeds from sale of marketable securities	$ 9,857,429

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Going Concern (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accumulated deficit	$ 13,598,949		$ 20,002,960
Cash flows from operations	$ 3,849,327	$ 38,904

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Schedule of Note Receivable (Details) - USD ($)		Jun. 30, 2021	Dec. 31, 2020
Schedule of Capitalization, Long-term Debt [Line Items]
Total		$ 500,000
Note Receivable- GeneRx [Member]
Schedule of Capitalization, Long-term Debt [Line Items]
Total	[1]	$ 500,000

[1] On March 12, 2021, the Company (the “Holder”) was issued a Convertible Promissory Note (the “Note”) by GeneRx (the “Borrower”), a Delaware corporation, in the amount of $300,000. The Note has a term of one year (March 12, 2022 Maturity Date) and accrues interest at two percent (2%) per annum. The Note is convertible, at the option of the Holder, into shares of common stock of the Borrower at a fixed conversion price of $1.00 per share. Upon an Event of Default, the Conversion Price shall equal the Alternate Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Alternate Conversion Price” shall equal the lesser of (i) 80% multiplied by the average of the three lowest daily volume weighted average prices (“VWAP”) during the previous twenty (20) Trading Days (as defined below) before the Issue Date of this Note (representing a discount rate of 20%) or (ii) 80% multiplied by the Market Price (as defined herein) (representing a discount rate of 20%). “Market Price” means the average of the three lowest daily VWAPs for the Common Stock during the twenty (20) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty-four percent (24%) per annum from the due date thereof until the same is paid (the “Default Interest”). The Company funded $300,000 on March 15, 2021, $150,000 on April 2, 2021 and $50,000 on April 7, 2021.

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Schedule of Note Receivable (Details) (Parenthetical)					6 Months Ended
	Apr. 07, 2021 USD ($)	Apr. 02, 2021 USD ($)	Mar. 15, 2021 USD ($)	Mar. 12, 2021 USD ($) Integer $ / shares	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)
Transfer of Financial Assets Accounted for as Sales [Line Items]
Proceeds from Notes Payable	$ 50,000	$ 150,000	$ 300,000		$ 300,000
Convertible Debt [Member] | GeneRx [Member]
Transfer of Financial Assets Accounted for as Sales [Line Items]
Debt Instrument, Face Amount				$ 300,000
Debt Instrument, Term				1 year
Debt Instrument, Interest Rate, Stated Percentage				2.00%
Debt Conversion, Description				The Note is convertible, at the option of the Holder, into shares of common stock of the Borrower at a fixed conversion price of $
Debt Instrument, Convertible, Conversion Price | $ / shares				$ 1.00
Debt, Weighted Average Interest Rate				80.00%
Debt Instrument, Convertible, Threshold Trading Days | Integer				20
Debt Instrument, Interest Rate, Effective Percentage				20.00%

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Schedule of Property and Equipment (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 3,729,404	$ 5,104,326
Less: Accumulated depreciation	(1,010,268)	(948,651)
Property and equipment, net	2,719,136	4,155,675
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	323,281	323,281
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	1,177,280	1,087,679
Land, Buildings and Improvements [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	1,650,000	3,150,000
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 578,843	$ 543,366

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Property and Equipment (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Depreciation	$ 96,787	$ 111,743	$ 194,257	$ 223,489
Property, Plant and Equipment [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Depreciation			$ 194,255	$ 223,489

XML

Intangible Assets (Details Narrative) - USD ($)		1 Months Ended
	Jul. 29, 2021	Feb. 28, 2017	Oct. 31, 2016
Subsequent Event [Member]
Entity Listings [Line Items]
Civil penalty amount	$ 10,000
Provisional Grow License [Member] | Investor [Member]
Entity Listings [Line Items]
Payment for business acquisition		$ 350,000
Red Earth LLC [Member] | Provisional Grow License [Member] | Asset Purchase and Sale Agreement [Member]
Entity Listings [Line Items]
Agreement amount received from seller			$ 300,000
Payment for deposit			$ 25,000

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Schedule of Notes Payable (Details) - USD ($)		Jun. 30, 2021	Dec. 31, 2020
Short-term Debt [Line Items]
Total notes payable		$ 879,026	$ 2,307,403
Less: current portion		(770,135)	(1,485,678)
Long-term notes payable		108,891	921,725
Note Payable One [Member]
Short-term Debt [Line Items]
Total notes payable	[1]		1,022,567
Note Payable Two [Member]
Short-term Debt [Line Items]
Total notes payable	[2]	750,000	750,000
Note Payable Three [Member]
Short-term Debt [Line Items]
Total notes payable	[3]		100,000
Note Payable Four [Member]
Short-term Debt [Line Items]
Total notes payable	[4]	129,026	234,431
Note Payable Five [Member]
Short-term Debt [Line Items]
Total notes payable	[5]		110,405
Note Payable Six [Member]
Short-term Debt [Line Items]
Total notes payable	[6]		$ 90,000

[1] On September 21, 2018, the Company, through its wholly-owned subsidiary Prescott Management, LLC, entered into a contract to purchase an approximately 10,000 square foot office building located at 1300 South Jones Boulevard, Las Vegas, Nevada 89146 for $1,500,000, subject to seller financing in the amount of $1,100,000, amortizing over 30 years at an interest rate of 6.5% per annum with monthly installments of $6,952.75 beginning on November 1, 2018, and continuing on the same day of each month thereafter until October 31, 2019. Upon the one-year anniversary of the note, a principal reduction payment of $50,000 is due, and provided that the monthly payments and the principal reduction payment have been made, the payments will be recalculated and re-amortized on the same terms with a new scheduled monthly payment of $6,559 beginning on November 1, 2019 and continuing until October 31, 2023, at which time the entire sum of principal in the amount of $986,438, plus any accrued interest, is due and payable. The Company closed the purchase on October 18, 2018. On December 12, 2020, the Company entered into a sales contract with Helping Hands Support, Inc. for the sale of the Company’s commercial building. On January 12, 2021, the Company completed the sale of its commercial building for $1,627,500. As of June 30, 2021, the note was paid in full.

[2] On January 17, 2019, the Company executed a promissory note for $750,000 with FR Holdings LLC, a Wyoming limited liability company. The note accrues interest at 5.0% per annum, payable in regular monthly installments of $3,125, due on or before the same day of each month beginning February 1, 2019 until January 31, 2022 at which the entire principal and any then accrued interest thereon shall be due and payable. As of June 30, 2021, $750,000 principal and $0 interest remain due.

[3] On January 17, 2019, the Company executed a short-term promissory note for $150,000 with Let’s Roll Holdings, LLC. The note accrues interest at 9.0% per annum and is due on January 16, 2020. Principal payments in the amount of $50,000 were made during the year ended December 31, 2019. As of June 30, 2021, the note was paid in full.

[4] On April 1, 2019, the Company executed a promissory note for $250,000 with John T. Jacobs and Teresa D. Jacobs. The note accrues interest at 6.5% per annum, payable in regular monthly installments of $2,178, due on or before the same day of each month beginning May 1, 2019 until March 31, 2020 at which time a principal reduction of $50,000 shall be due, the payments shall be re-amortized (15-year amortization). On or before March 31, 2021, a second principal reduction of $50,000 shall be due, the payments shall be re-amortized (15-year amortization). Payments shall continue to be paid until March 31, 2022, at which time the entire sum of principal and accrued interest shall be due and payable. As of June 30, 2021, $129,026 principal and $1,318 interest remain due.

[5] On February 20, 2020, the Company’s subsidiary, Alternative Hospitality, Inc. (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $110,405 that matures on February 19, 2021. The Company received cash in the amount of $74,000 and the Holder paid expenses on behalf of the Company in the amount of $36,405. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $825 due on or before the twentieth day of each month commencing on April 20, 2020. The Borrower was required to make an interest and principal reduction payment in the amount of $1,233 on or before March 20, 2020. The Holder is granted a security interest in that certain real property located at 1300 S. Jones Blvd, Las Vegas, NV 89146, which was owned by the Borrower. As of June 30, 2021, the note was paid in full

[6] On March 31, 2020, the Company’s subsidiary, Condo Highrise Management, LLC (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $90,000 that matures on March 30, 2021. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $675 due on or before the first day of each month commencing on May 1, 2020. The Holder is granted a security interest in that certain real property located at 4295 Hwy 343, Amargosa, NV 89020, which was owned by the Borrower. The transaction closed on April 3, 2020. As of June 30, 2021, the note was paid in full

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Schedule of Notes Payable (Details) (Parenthetical)									6 Months Ended
	Jan. 12, 2021 USD ($)	Apr. 03, 2020 USD ($)	Mar. 31, 2020 USD ($)	Feb. 20, 2020 USD ($)	Apr. 02, 2019 USD ($)	Jan. 17, 2019 USD ($)	Nov. 02, 2018 USD ($)	Sep. 21, 2018 USD ($) ft²	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)
Short-term Debt [Line Items]
Sale of commercial building									$ 1,627,500
Prescott Management LLC [Member]
Short-term Debt [Line Items]
Debt interest rate								6.50%
Seller financing								$ 1,100,000
Amortizing period								30 years
Debt instrument monthly installments								$ 6,952
Debt instrument maturity date, description								beginning on November 1, 2018, and continuing on the same day of each month thereafter until October 31, 2019.
Sale of commercial building	$ 1,627,500
Prescott Management LLC [Member] | One-Year Anniversary [Member]
Short-term Debt [Line Items]
Debt instrument monthly installments								$ 50,000
Prescott Management LLC [Member] | New Scheduled Payment [Member] | Beginning on November 1, 2019 and Continuing Until October 31, 2023 [Member]
Short-term Debt [Line Items]
Debt instrument principal value								986,438
Debt instrument monthly installments								$ 6,559
Debt instrument maturity date, description								beginning on November 1, 2019 and continuing until October 31, 2023
Prescott Management LLC [Member] | Office Building [Member]
Short-term Debt [Line Items]
Area of land | ft²								10,000
Seller financing								$ 1,500,000
Note Payable One [Member]
Short-term Debt [Line Items]
Debt interest rate							6.50%
Debt instrument maturity date							Oct. 31, 2023
Debt instrument principal value							$ 1,100,000
Promissory Note [Member] | John T. Jacobs and Teresa D. Jacobs [Member]
Short-term Debt [Line Items]
Debt interest rate					6.50%
Debt instrument maturity date					Mar. 31, 2022
Debt instrument principal value					$ 250,000				129,026
Debt instrument monthly installments					$ 2,178
Debt instrument maturity date, description					beginning May 1, 2019 until March 31, 2020
Interest payable									1,318
Promissory Note [Member] | John T. Jacobs and Teresa D. Jacobs [Member] | Second Payment [Member] | March 31, 2021 [Member]
Short-term Debt [Line Items]
Debt instrument principal payment reduction					$ 50,000
Debt instrument, interest rate terms					the payments shall be re-amortized (15-year amortization).
Promissory Note [Member] | FR Holdings, LLC [Member]
Short-term Debt [Line Items]
Debt interest rate						5.00%
Debt instrument maturity date						Jan. 31, 2022
Debt instrument principal value						$ 750,000			750,000
Debt instrument monthly installments						$ 3,125
Debt instrument maturity date, description						beginning February 1, 2019 until January 31, 2022
Interest payable									$ 0
Short-term Promissory Note [Member] | Alternative Hospitality, Inc [Member] | Pyrros One, LLC [Member]
Short-term Debt [Line Items]
Debt interest rate				9.00%
Debt instrument principal value				$ 110,405
Debt intrument payment expenses				36,405
Debt instrument interest payment				825
Debt instrument interest and principal reduction payment				$ 1,233
Notes payable, description				The Holder is granted a security interest in that certain real property located at 1300 S. Jones Blvd, Las Vegas, NV 89146, which was owned by the Borrower. As of June 30, 2021, the note was paid in full
Short-term Promissory Note [Member] | Condo Highrise Management, LLC [Member] | Pyrros One, LLC [Member]
Short-term Debt [Line Items]
Debt interest rate			9.00%
Debt instrument principal value			$ 90,000
Debt instrument, interest rate terms			The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $675 due on or before the first day of each month commencing on May 1, 2020.
Debt instrument interest payment			$ 675
Notes payable, description			The Holder is granted a security interest in that certain real property located at 4295 Hwy 343, Amargosa, NV 89020, which was owned by the Borrower.
Short-term Promissory Note [Member] | Let's Roll Holdings, LLC [Member]
Short-term Debt [Line Items]
Debt interest rate						9.00%
Debt instrument maturity date						Jan. 16, 2020
Debt instrument principal value						$ 150,000
Debt instrument monthly installments						$ 50,000
Short-term Promissory Note [Member] | Let's Roll Holdings, LLC [Member] | Chief Cultivation Officer and Director [Member]
Short-term Debt [Line Items]
Debt interest rate						9.00%
Debt instrument maturity date						Jan. 16, 2020
Debt instrument principal value						$ 150,000
Note Payable Five [Member]
Short-term Debt [Line Items]
Debt interest rate				9.00%
Debt instrument maturity date				Feb. 20, 2021
Debt instrument principal value				$ 110,405
Debt instrument principal payment reduction				$ 74,000
Note Payable Six [Member]
Short-term Debt [Line Items]
Debt interest rate		9.00%
Debt instrument maturity date		Mar. 30, 2021
Debt instrument principal value		$ 90,000

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Schedule of Minimum Loan Payments (Details)	Jun. 30, 2021 USD ($)
Debt Disclosure [Abstract]
2021 (excluding the six months ended June 30, 2021)	$ 13,615
2022	865,411
2023
2024
2025
Thereafter
Total minimum loan payments	$ 879,026

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Schedule of Future Minimum Rental and Lease Commitments (Details)	Jun. 30, 2021 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2021 (excluding the six months ended June 30, 2021)	$ 175,320
2022	350,755
2023	350,986
2024	351,333
2025	351,911
Thereafter	799,084
Total minimum lease payments	$ 2,379,389

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Commitments and Contingencies (Details Narrative) - USD ($)							3 Months Ended	6 Months Ended
	May 12, 2021	Apr. 07, 2021	Mar. 09, 2021	Oct. 01, 2020	Sep. 15, 2020	Sep. 01, 2020	Mar. 31, 2021	Jun. 30, 2021	Jun. 30, 2020	Mar. 26, 2021	Dec. 31, 2020
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Stock awarded options to purchase
Stock option exercisable price								$ 0.76
Stock Issued During Period, Value, New Issues							$ 50,000
Operating Lease, Liability								$ 2,061,740
Operating Lease, Right-of-Use Asset								1,915,507			$ 1,979,181
Operating Lease, Payments								$ 69,301
Lessee, Operating Lease, Remaining Lease Term								7 years 1 month 17 days
Operating Leases, Rent Expense								$ 164,066	$ 177,003
Excess alleged damages								$ 15,000
Bernard Moyle [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Stock awarded options to purchase					500,000
Former Secretary and President [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Consideration of past compensation			$ 501,085
Payment made for wage claim		$ 62,392
Former Secretary and President [Member] | Wages [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Payment made for wage claim		59,583
Former Secretary and President [Member] | Accrued Vacation [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Payment made for wage claim		$ 2,854
Employment Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Employment agreement description				On October 1, 2020, the Company entered into an Employment Agreement (the “Agreement”) with Jim Kelly. The Agreement became effective as of October 1, 2020. Under the terms of the Kelly Agreement, the Employee shall serve as the Company’s Interim Chief Financial Officer for a term of (i) the sooner of six (6) months, or (ii) the completion of all regulatory filings, including but not limited to the Company’s 2019 Annual Report on Form 10-K, the March 31, 2020 Quarterly Report on Form 10-Q, the June 30, 2020 Quarterly Report on Form 10-Q, the September 30, 2020 Quarterly Report on Form 10-Q and all required Current Reports on Form 8-K, with the Securities and Exchange Commission (“SEC”) to bring the Company current with the SEC. The Employee shall receive a base salary of $24,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the C-Suite of the Company in its sole discretion, in an amount equal to up to 400% of the Employee’s base salary for the then current fiscal year, and at commencement of the Term the Employee shall receive a grant of stock of 500,000 restricted shares of the Company’s common stock. On March 16, 2021, Mr. Kelly resigned in his position as Interim Chief Financial Officer		On September 1, 2020, the Company entered into an Employment Agreement (the “Agreement”) with Paris Balaouras (the “Employee”). Under the terms of the Agreement, the Employee shall serve as the Company’s Chief Cultivation Officer for a term of three (3) years (the “Term”) commencing on September 15, 2020.
Annual base compensation				$ 24,000		$ 105,000
Annual discretionary bonus percentage				400.00%		100.00%
Stock awarded options to purchase				500,000		500,000
Stock reserved for future issuance						667,000
Consideration of past compensation					$ 224,000
Stock option exercisable price						$ 0.75
Employment Agreement [Member] | Bernard Moyle [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Employment agreement description						On September 1, 2020, the Company entered into an Employment Agreement (the “Agreement”) with Bernard Moyle. Under the terms of the Agreement, the Employee shall serve as the Company’s Secretary/Treasurer for a term of three (
Annual base compensation						$ 60,000
Annual discretionary bonus percentage						200.00%
Stock awarded options to purchase						500,000
Stock reserved for future issuance						500,000
Stock option exercisable price						$ 0.75
Employment Agreement [Member] | Chief Financial Officer [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Term of employment agreement				6 months
Employment Agreement [Member] | Chief Cultivation Officer [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Term of employment agreement						3 years
Employment Agreement [Member] | Chief Executive Officer [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Employment agreement description					On September 1, 2020, the Company entered into an Employment Agreement (the “Agreement”) with Roger Bloss. Under the terms of the Agreement, the Employee shall serve as the Company’s Interim Chief Executive Officer for a term of six (6) months and the Chief Executive Officer and for an additional two (2) years and six (6) months as the Chief Executive Officer for a total of three (3) years (the “Term”) commencing on September 15, 2020.
Term of employment agreement						3 years
Annual base compensation					$ 105,000
Annual discretionary bonus percentage					100.00%
Stock awarded options to purchase					500,000
Stock option exercisable price						$ 0.75
Employment Agreement [Member] | Secretary/Treasurer [Member] | Bernard Moyle [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Term of employment agreement						3 years
Cooperation And Release Agreement [Member] | Mr Groberg [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Shares retained	100,000
Board of Directors Services Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Dividend										$ 3,750
Board of Directors Services Agreement [Member] | Directors [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Stock Issued During Period, Value, New Issues					$ 15,000
Stock Issued During Period, Shares, New Issues					15,000

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Stockholders’ Equity (Deficit) (Details Narrative) - USD ($)					3 Months Ended	6 Months Ended
	Jun. 04, 2021	Apr. 24, 2021	Mar. 29, 2021	Mar. 08, 2021	Mar. 31, 2021	Jun. 30, 2021	Dec. 31, 2020
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock, shares authorized					95,000,000	95,000,000	95,000,000
Preferred stock, shares authorized						5,000,000	5,000,000
Common stock, par value						$ 0.001	$ 0.001
Common Stock, Shares, Outstanding						70,660,015	68,613,541
Stock issued during period value					$ 50,000
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture					$ 7,841
Preferred stock, par value						$ 0.001	$ 0.001
Preferred stock, shares issued						0	0
Series A convertible preferred stock
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, shares authorized						2,500	2,500
Preferred stock, par value						$ 1,000	$ 1,000
Conversion price						$ 0.75
Ownership percentage						4.99%
Description of principal activities						A holder, upon notice to us, may increase or decrease this beneficial ownership limitation; provided, that, in no event can the holder increase the beneficial ownership limitation in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon the conversion of the Series A Preferred Stock then held by holder
Preferred stock, shares issued						0	0
Preferred stock, shares outstanding						0	0
Common Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stock issued during period shares					263,158
Stock issued during period value					$ 263
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture
Common Stock [Member] | Blue Sky Companies LLC and Let's Roll Nevada LLC [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stock issued during period shares		1,000,000
Stock issued during period value		$ 490,000
Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, shares authorized						5,000,000
Preferred stock, par value						$ 0.001
Related Party [Member] | Debt Conversion and Stock Purchase Agreement [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Debt Conversion, Converted Instrument, Shares Issued				526,216
Debt conversion converted amount				$ 410,448
Debt Conversion, Original Debt, Amount				$ 100,000
Related Party [Member] | Debt Conversion and Stock Purchase Agreement [Member] | Common Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Debt Conversion, Converted Instrument, Shares Issued				263,158
Debt conversion converted amount				$ 205,263
Related Party [Member] | Debt Conversion and Stocks Purchase Agreement [Member] | Common Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Debt conversion converted amount				$ 50,000
Consultant [Member] | Common Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stock issued during period shares			225,000
Stock issued during period value			$ 135,000
Former Chief Financial Officer [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Compensation for services shares	32,000
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture	$ 13,514
Board of Directors Chairman [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stock issued during period shares						198,539

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Basic and Diluted Earnings (Loss) per Common Share (Details Narrative) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Earnings Per Share [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			760,000
Common stock per shares diluted			$ 1,010,000
Anti diluted share			207,479
Weighted average number of shares outstanding, basic	70,632,612	65,754,724	69,580,992	65,662,894
Weighted Average Number of Shares Outstanding, Diluted	70,632,612	65,754,724	69,969,539	65,662,894

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Summary of Options Issued, Exercised and Expired (Details)	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Share-based Payment Arrangement [Abstract]
Options, Beginning Balance | shares	1,510,000
Weighted Average Exercise Price, Beginning Balance | $ / shares	$ 0.75
Remaining Contractual Life in Years, Beginning Balance	2 years 3 months 29 days
Options, Issued | shares
Weighted Average Exercise Price, Issued | $ / shares
Options, Exercised | shares
Weighted Average Exercise Price, Exercised | $ / shares
Options, Expired | shares
Weighted Average Exercise Price, Expired | $ / shares
Options, Ending Balance | shares	1,510,000
Weighted Average Exercise Price, Ending Balance | $ / shares	$ 0.75
[custom:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm3]	2 years 2 months 12 days
Options, Exercisable, Ending Balance | shares	760,000
Weighted Average Exercise Price, Exercisable, Ending Balance | $ / shares	$ 0.76
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term	2 years 2 months 4 days

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Summary of Warrants Issued, Exercised and Expired (Details)	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Share-based Payment Arrangement [Abstract]
Warrants Shares, Beginning Balance | shares	1,233,000
Weighted Avg. Exercise Price Warrant, Beginning Balance | $ / shares	$ 0.83
Remaining Contractual Life in Years, Beginning Balance	4 months 24 days
Warrants Shares, Issued | shares	250,000
Weighted Avg. Exercise Price Warrant, Issued | $ / shares	$ 0.10
Remaining Contractual Life in Years, Issued	3 years 6 months
Warrants Shares, Exercised | shares
Weighted Avg. Exercise Price Warrant, Exercised | $ / shares
Warrants Shares, Expired | shares	1,233,000
Weighted Avg. Exercise Price Warrant, Expired | $ / shares	$ 0.83
Warrants Shares, Ending Balance | shares	250,000
Weighted Avg. Exercise Price Warrant, Ending Balance | $ / shares	$ 0.10
Remaining Contractual Life in Years, Ending Balance	3 years 6 months

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Stock Based Compensation (Details Narrative) - $ / shares		1 Months Ended	6 Months Ended
	Sep. 15, 2020	Jun. 30, 2019	Jun. 30, 2021	Jan. 11, 2021	Dec. 31, 2020
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Number of option granted, shares
Option exercise price per
Options outstanding			1,510,000		1,510,000
Class of Warrant or Right, Outstanding			250,000		1,233,000
Common Stock Purchase Warrant Agreement [Member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Warrants exercise price				$ 0.10
Warrant to purchase common stock				250,000
Warrant term				4 years
Warrant One [Member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Warrants exercise price			$ 0.65
Warrant Two [Member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Warrants exercise price			$ 1.00
Warrants [Member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Warrant or Right, Reason for Issuance, Description		(a) each participant has the right to acquire additional shares of the Company’s Common Stock equal to ten (10%) of the shares purchased in the offering (the “Warrants”); (b) one-half of the Warrants granted to each participant have an exercise price of $
Warrant [Member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Class of Warrant or Right, Date from which Warrants or Rights Exercisable			Jun. 05, 2019
Warrants and Rights Outstanding, Maturity Date			Jun. 04, 2021
Paris Balaouras [Member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Number of option granted, shares	500,000
Option exercise price per	$ 0.75
Options term	three
Roger Bloss [Member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Number of option granted, shares	500,000
Option exercise price per	$ 0.75
Options term	three
Bernard Moyle [Member]
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Number of option granted, shares	500,000
Option exercise price per	$ 0.75
Options term	three

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Related Party Transactions (Details Narrative) - Pyrros One, LLC [Member] - USD ($)	Mar. 31, 2020	Feb. 20, 2020
Alternative Hospitality, Inc [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Debt Instrument, Face Amount		$ 110,405
Debt Instrument, Maturity Date		Feb. 19, 2021
Debt Instrument, Interest Rate, Stated Percentage		9.00%
Debt Instrument, Periodic Payment, Interest		$ 825
Debt instrument reduction in interest and principal.		$ 1,233
Debt Instrument, Collateral		The Holder is granted a security interest in that certain real property located at 1300 S. Jones Blvd, Las Vegas, NV 89146, which is owned by the Borrower
Condo Highrise Management, LLC [Member] | Short-term Promissory Note [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Debt Instrument, Face Amount	$ 90,000
Debt Instrument, Maturity Date	Mar. 30, 2021
Debt Instrument, Interest Rate, Stated Percentage	9.00%
Debt Instrument, Periodic Payment, Interest	$ 675
Debt Instrument, Collateral	The Holder is granted a security interest in that certain real property located at 4295 Hwy 343, Amargosa, NV 89020 which is owned by the Borrower. The transaction closed on April 3, 2020

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Subsequent Events (Details Narrative) - USD ($)					3 Months Ended
	Jul. 30, 2021	Jul. 29, 2021	Jul. 21, 2021	Jul. 14, 2021	Jun. 30, 2021	Mar. 31, 2021	Mar. 31, 2020
Subsequent Event [Line Items]
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture						$ 7,841
Stock Issued During Period, Value, Issued for Services					$ 14,400	135,000	$ 56,250
Common Stock [Member]
Subsequent Event [Line Items]
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture
Shares issued for services					32,000	225,000	281,251
Stock Issued During Period, Value, Issued for Services					$ 33	$ 225	$ 281
Subsequent Event [Member]
Subsequent Event [Line Items]
Civil penalty amount		$ 10,000
Subsequent Event [Member] | Groberg Cooperation and Release Agreement [Member]
Subsequent Event [Line Items]
Number of returned shares of common stock	300,000
Subsequent Event [Member] | Common Stock [Member] | Consultant [Member]
Subsequent Event [Line Items]
Shares issued for services			62,333
Stock Issued During Period, Value, Issued for Services			$ 25,089
Subsequent Event [Member] | Common Stock [Member] | Consultant One [Member]
Subsequent Event [Line Items]
Shares issued for services			30,000
Stock Issued During Period, Value, Issued for Services			$ 12,075
Subsequent Event [Member] | Common Stock [Member] | Employee [Member]
Subsequent Event [Line Items]
Shares based employee benefit shares			120,000
Shares based employee benefit value			$ 48,300
Subsequent Event [Member] | Common Stock [Member] | Employee One [Member]
Subsequent Event [Line Items]
Shares based employee benefit shares			60,000
Shares based employee benefit value			$ 24,150
Subsequent Event [Member] | Common Stock [Member] | Employee Two [Member]
Subsequent Event [Line Items]
Shares based employee benefit shares			30,000
Shares based employee benefit value			$ 12,075
Subsequent Event [Member] | Common Stock [Member] | Board of Directors Services Agreement [Member]
Subsequent Event [Line Items]
Common stock share based compensation				29,495
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture				$ 12,093
Subsequent Event [Member] | Common Stock [Member] | Board of Directors Services Agreement [Member] | Paris Balaouras [Member]
Subsequent Event [Line Items]
Common stock share based compensation				43,245
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture				$ 17,730
Subsequent Event [Member] | Common Stock [Member] | Service Agreement [Member] | Board of Directors [Member]
Subsequent Event [Line Items]
Common stock share based compensation				43,245
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture				$ 17,730