10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2016

 or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     

Commission file number: 333-167824

MJ HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

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

4141 NE 2nd Avenue, Suite 204-A, Miami, Florida 33137
(Address of principal executive offices) (Zip Code)

(305) 455-1881
(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 þ   No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ   No ¨

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

Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company þ
(Do not check if a smaller reporting company)

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨   No þ

APPLICABLE TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding as of May 11, 2016
Common Stock, $0.001	14,027,939

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MJ HOLDINGS, INC.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements	3
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	16
Item 4.	Controls and Procedures	16
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults Upon Senior Securities	17
Item 4.	Mine Safety Disclosures	17
Item 5.	Other Information	17
Item 6.	Exhibits	17
SIGNATURES		18

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PART I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

MJ HOLDINGS, INC.

Condensed Consolidated Balance Sheets

As of March 31, 2016 and December 31, 2015

(Unaudited)

	March 31, 2016			December 31, 2015
Assets
Real estate property:
Land	$	747,389		$	747,389
Buildings and improvements		3,141,193			3,141,193
Computer equipment and software		2,000			2,000
		3,890,582			3,890,582
Accumulated depreciation		(169,737	)		(140,699	)
Real estate property, net		3,720,845			3,749,883
Cash		311,732			303,368
Deferred leasing costs		150,516			157,463
Deferred rent receivable		65,777			54,664
Prepaid expenses and other assets		2,966			6,093
Total Assets	$	4,251,836		$	4,271,471
Liabilities and Stockholders’ Equity
Liabilities
Notes payable - related party, net of unamortized debt issuance costs of $7,617 and $11,357, respectively	$	2,717,383		$	2,713,643
Security deposits		70,168			95,203
Accounts payable and accrued liabilities		95,192			118,983
Total Liabilities		2,882,743			2,927,829
Stockholders’ Equity
Preferred stock, par value $0.001, 5,000,000 shares authorized; 0 shares issued and outstanding		—			—
Common stock, par value $0.001, 95,000,000 shares authorized; 14,027,939 shares issued and outstanding		14,028			14,028
Additional paid-in capital		2,779,105			2,779,105
Accumulated deficit		(1,424,040	)		(1,449,491	)
Total Stockholders’ Equity		1,369,093			1,343,642
Total Liabilities and Stockholders’ Equity	$	4,251,836		$	4,271,471

 See accompanying notes to unaudited condensed consolidated financial statements

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MJ HOLDINGS, INC.

Condensed Consolidated Statements of Operations

For the three months ended March 31, 2016 and 2015

(Unaudited)

	Three Months Ended March 31,
	2016		2015
Revenues:
Rental income	$	168,873	$	132,804
Operating Expenses:
Property expenses		24,456		55,703
General and administrative expenses		18,097		73,508
Depreciation expense		29,038		20,163
Total operating expenses		71,591		149,374
Operating income (loss)		97,282		(16,570)
Interest expense, net - related party		(68,125)		(45,000)
Interest expense, net		(3,706)		(2,459)
Income (loss) before income taxes		25,451		(64,029)
Provision for income taxes		—		—
Net Income (Loss)	$	25,451	$	(64,029)
Basic and diluted earnings (loss) per common share:
Weighted average shares outstanding		14,027,939		13,885,227
Net loss per common share	$	0.002	$	(0.005)

See accompanying notes to unaudited condensed consolidated financial statements

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MJ HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

For the three months ended March 31, 2016 and 2015

(unaudited)

		Three Months Ended March 31,
		2016		2015
Cash flow from operating activities:
Net income (loss)	$	25,451	$	(64,029)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		29,038		20,163
Stock-based compensation		—		20,000
Deferred rental income		(11,113)		(9,797)
Amortization of deferred leasing and debt costs		10,687		9,190
Changes in operating assets and liabilities:
Deferred leasing costs		—		17,510
Prepaid and other assets		3,127		52,422
Security deposits		(25,035)		—
Accounts payable and accrued liabilities		(23,791)		(8,035)
Net Cash Provided by Operating Activities		8,364		37,424
Cash flow from investing activities:
Acquisition of real estate property		—		(98,393)
Net Cash Used in Investing Activities		—		(98,393)
Cash flow from financing activities:
Net Cash Provided by Financing Activities		—		—
Net increase (decrease) in cash		8,364		(60,969)
Cash at beginning of period		303,368		175,792
Cash at end of period	$	311,732	$	114,823
Supplemental disclosure of cash flow information:
Cash paid for interest to related party	$	68,125	$	45,000

See accompanying notes to unaudited condensed consolidated financial statements

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MJ HOLDINGS, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

March 31, 2016

Note 1 — Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, these condensed consolidated financial statements do not include all of the information and footnotes required for audited annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the condensed consolidated financial statements not misleading have been included. The balance sheet at December 31, 2015, has been derived from the Company’s audited consolidated financial statements as of that date.

The unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and the notes thereto that are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, that was filed with the SEC on March 30, 2016. The results of operations for the three months ended March 31, 2016, are not necessarily indicative of the results to be expected for the full year.

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, 5353 Joliet, LLC, MJ Havana, LLC, and MJ Sheridan, LLC. Intercompany balances and transactions have been eliminated in consolidation.

Note 2 — Summary of Significant Accounting Policies

The significant accounting policies followed by the Company for interim reporting are consistent with those included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. There were no material changes to our significant accounting policies during the interim period ended March 31, 2016.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued guidance to clarify the principles for recognizing revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a comprehensive framework for revenue recognition that supersedes current general revenue guidance and most industry-specific guidance. In addition, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. An entity should apply the guidance either retrospectively to each prior reporting period presented or retrospectively with the cumulative adjustment at the date of the initial application. In July 2015, the FASB delayed the effective date of the new guidance to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is now permitted after the original effective date of December 15, 2016. The Company is currently in the process of evaluating the impact of adoption of the new accounting guidance on its consolidated financial statements and has not determined the impact of adoption on its consolidated financial statements.

In August 2014, FASB issued guidance that requires management to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern, and to provide certain disclosures when it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The Company adopted this guidance for the annual period ending December 31, 2016, beginning with the first quarter ended March 31, 2016. The adoption of this guidance primarily addressed certain disclosures to the financial statements and had no impact on our financial position, results of operations or cash flows.

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In April 2015, the FASB issued guidance to simplify the presentation of debt issuance costs. This guidance provides that debt issuance costs related to a recognized liability be presented in the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. The Company adopted this guidance with the annual and the interim period beginning January 1, 2016, and applied the standard on a retrospective basis as of December 31, 2015. As of March 31, 2016, and December 31, 2015, we had $7,617 and $11,357, respectively, of debt issuance costs associated with $2.7 million of notes payable that were reclassified from other assets to a reduction in the carrying amount of the notes payable. The adoption of this standard did not have a material impact on our financial position and did not impact our results of operations or cash flows.

Note 3 — Going Concern

The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. During the three months ended March 31, 2016, the Company generated net income of $25,451. As of March 31, 2016, the Company had an accumulated deficit of $1,424,040 and a working capital deficit of $1,580,494, consisting of cash and prepaid expenses of $314,698 less a promissory note for $1,800,000 due June 1, 2016, and accounts payable and accrued liabilities of $95,192. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s future success is dependent upon its ability to achieve and maintain profitable operations, generate cash from operating activities, refinance existing debt obligations and/or obtain additional financing. Although we can provide no assurances, we believe our cash on hand, coupled with revenues generated by rental income and our ability to refinance our equity in the real estate we own, will provide sufficient liquidity and capital resources to fund our business for the next twelve months.

In the event the Company experiences liquidity and capital resource constraints because of unanticipated operating losses, we may need to raise additional capital in the form of equity and/or debt financing. If such additional capital is not available on terms acceptable to us or at all, then we may need to curtail our operations and/or take additional measures to conserve and manage our liquidity and capital resources, any of which would have a material adverse effect on our financial position, results of operations, and our ability to continue in existence. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Note 4 — Real Estate Property Acquisitions

5353 Joliet Street

In June 2014, through its wholly-owned subsidiary, 5353 Joliet LLC, the Company acquired an owner-occupied 22,144 square feet industrial building situated on 1.4 acres of land in Denver, Colorado for $2,214,000. The acquisition was funded with proceeds from the issuance of a secured promissory note in the amount of $1,800,000 and $414,000 of cash on-hand. The promissory note is held by Chemtov Mortgage Group ("CMG"), an entity wholly-owned by the Company's co-CEO, Shawn Chemtov. CMG has assigned all ownership and security interest granted to it pursuant to the promissory note to 5353 Mortgage Loan, LLC, a single purpose entity created solely for the purpose of this transaction. CMG invested $100,000 of the $1,800,000 of funds used to finance the purchase of the promissory note. CMG acts as the loan servicing entity for the promissory note, administering the note, processing payments from the Company, and transferring all payments to 5353 Mortgage Loan, LLC. CMG charges no administration fees for servicing the promissory note.

The promissory note bears interest at 10% per annum, provides for cash interest payments on a monthly basis, matures on June 1, 2016, and is callable at the option of the Company at any time after June 19, 2015. The Company has guaranteed the promissory note and has pledged its ownership interest in 5353 Joliet LLC, and as such its fee-simple ownership interest in the property as security for the promissory note. The promissory note does not restrict the Company's ability to incur future indebtedness. For the three months ended March 31, 2016 and 2015, the Company recorded $45,000 and $45,000, respectively, of interest expense related to the promissory note.

In September 2014, the Company entered into a lease agreement contingent upon the lessee obtaining city and state licenses and permits for its intended operations at the premises. The contingencies were met by the lessee, and the lease agreement became effective December 1, 2014. The lease agreement is for a term of seven years. Insurance and real property taxes shall be paid by the Company and, subsequently, charged to the lessee as additional rent based on the actual expenses incurred - see Note 5 below for additional lease details.

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503 Havana Street

In September 2014, through its wholly-owned subsidiary, MJ Havana LLC, the Company acquired an owner-occupied 1,250 square foot building situated on 23,625 square feet of land in Aurora, Colorado for $756,000, exclusive of closing costs. The acquisition was funded with cash on-hand. The property is zoned B-2 and has been approved by the city of Aurora as a retail dispensary for recreational marijuana.

Prior to closing on the property acquisition, the Company had pre-negotiated a 10-year lease agreement with a third-party, a licensed marijuana dispensary company serving both medical and adult (21+) customers in Colorado. Once the closing of the property was completed with the seller, the pre-negotiated lease was executed in September 2014 with the third-party. Pursuant to the terms of the lease agreement, the Company agreed to contribute $150,000 to improvements to the property - see Note 5 below for additional lease details. As of March 31, 2016, the Company had paid $146,026 towards the tenant's building improvements.

1126 South Sheridan Boulevard

In May 2015, through its wholly-owned subsidiary, MJ Sheridan LLC, the Company acquired real estate property located at 1126 South Sheridan Boulevard in Denver, Colorado, for $771,750, exclusive of closing costs. The Company funded the acquisition through the issuance of a promissory note in the amount of $925,000 to a related party of which $771,750 was used to purchase the property. The balance of the funds will be used by the Company as working capital. The acquired property is 17,729 square feet with a 3,828 square foot one story free-standing building. The property is zoned B-2 and has been approved by the city of Denver as a retail dispensary for recreational marijuana.

The promissory note is held by CMG, an entity wholly-owned by the Company's co-CEO, Shawn Chemtov. CMG has assigned all ownership and security interest granted to it pursuant to the promissory note to a single purpose entity created solely for the purpose of this transaction. CMG acts as the loan servicing entity for the promissory note, administering the note and processing payments from the Company. CMG charges no administration fees for servicing the promissory note.

The promissory note bears interest at 10% per annum, provides for cash interest payments on a monthly basis, matures on June 1, 2017. The promissory note is collateralized with the Company's ownership interest in the newly acquired property and its previously acquired property located at 503 Havana Street in Aurora, Colorado. The promissory note does not restrict the Company's ability to incur future indebtedness. For the three months ended March 31, 2016, the Company recorded $23,125 of interest expense related to the promissory note.

Prior to closing on the property acquisition, the Company had pre-negotiated a 10-year lease agreement with a third-party, a licensed marijuana dispensary company serving both medical and adult (21+) customers in Colorado. Once the closing of the property was completed with the seller, the pre-negotiated lease was executed in May 2015 with the third-party - see Note 5 below for additional lease details.

A summary of real estate property at March 31, 2016, is as follows:

	Estimated		March 31,
	Life		2016
Buildings		30 years	$	2,995,167
Improvements		9-10 years		146,026
Land		Not depreciated		747,389
Computer equipment and software		3 years		2,000
Total real estate property				3,890,582
Less: Accumulated depreciation				(169,737	)
Real estate property, net			$	3,720,845

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Note 5 — Operating Leases

The Company generates revenues by leasing its acquired real estate properties through operating leasing arrangements. A summary of revenues generated from our rental properties for the three months ended March 31, 2016 and 2015, is as follows:

	For the three months ended March 31,
	2016		2015
Revenues:
Rental payments	$	142,113	$	111,254
Reimbursed operating expenses		15,647		11,753
Deferred rental income		11,113		9,797
Total revenues from rental properties	$	168,873	$	132,804

503 Havana Street

In September 2014, the Company entered into a non-cancelable operating lease agreement with a marijuana dispensary (the "Lessee") to move into the Company's acquired property located at 503 Havana Street in Aurora, Colorado. The lease agreement is for a term of ten years and a monthly rent obligation of $11,250, subject to annual increases of 3% per year. Insurance and real property taxes shall be paid by the Company and, subsequently, charged to the Lessee as additional rent based on the actual expenses incurred. Pursuant to the terms of the lease agreement, the Company has agreed to contribute $150,000 to improvements to the property.

Upon the expiration of the term of ten years, the Lessee has the option to renew the lease agreement for one additional ten-year term, on the same terms as provided in the lease agreement. During the third year of the lease agreement, the Lessee may exercise an option to purchase the Property.

5353 Joliet Street

In September 2014, the Company entered into a lease agreement for its property and warehouse building located at 5353 Joliet Street in Denver, Colorado. The lease agreement is for a term of seven years and a monthly rent obligation of $25,835, subject to annual increases of 2% per year. Insurance and real property taxes shall be paid by the Company and, subsequently, charged to the lessee as additional rent based on the actual expenses incurred.

The lease was contingent upon the lessee, obtaining city and state licenses and permits for its intended operations at the premises, within the dates provided in the lease agreement. The contingencies were met by the lessee, and the lease agreement became effective December 1, 2014.

Upon the expiration of the seven-year term, the lessee has the option to renew the lease for two separate five-year terms, subject to rent reviews and adjustments, as set out in the lease agreement.

1126 South Sheridan Boulevard

In May 2015, the Company entered into a lease agreement for its acquired property located at 1126 South Sheridan Boulevard in Denver, Colorado. The lease agreement is for a term of ten years and a monthly rent obligation of $10,945, subject to annual increases of 3% per year. Insurance and real property taxes shall be paid by the Company and, subsequently, charged to the Lessee as additional rent based on the actual expenses incurred.

Upon the expiration of the term of ten years, the Lessee has the option to renew the lease agreement for one additional ten-year term, on the same terms as provided in the lease agreement. During the third year of the lease agreement, the Lessee may exercise an option to purchase the Property.

9

Future minimum rental payments, excluding the reimbursement of specified operating expenses, for non-cancelable operating lease agreements are as follows as of March 31, 2016:

2016	$	431,629
2017		588,457
2018		602,886
2019		617,681
2020		632,857
Thereafter		1,489,861
Total minimal rental payments	$	4,363,371

Note 6 — Related Party Transactions

During the three months ended March 31, 2016 and 2015, the Company paid $68,125 and $45,000, respectively, for interest due pursuant to $2,725,000 of promissory notes held by CMG, wholly-owned by the Company's co-CEO and shareholder, Shawn Chemtov - see Note 4 above for additional details regarding the promissory notes held by a related party. 

Note 7 — Stock Based Compensation

Warrants

A summary of warrants issued, exercised and expired during the three months ended March 31, 2016, is as follows:

			Weighted
			Avg.
			Exercise
Warrants:	Shares		Price
Balance at January 1, 2016		166,665	$	5.88
Issued		—		—
Exercised		—		—
Expired		—		—
Balance at March 31, 2016		166,665	$	5.88

Common Stock

During the three months ended March 31, 2015, the Company issued 8,272 shares of common stock for consulting services and recorded $20,000 of stock-based compensation expense for these consulting services, which has been classified as General and administrative expenses. The stock-based compensation expense was calculated based on the grant date fair value of the common stock shares issued in exchange for the consulting services.

Note 8 — 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 carryforwards. 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.

10

The Company did not incur any federal or state income tax expense or benefit for the three months ended March 31, 2016 and 2015. As of December 31, 2015, the Company had net operating losses of approximately $684,000 for federal and state income tax purposes that can be carried forward for up to twenty years and deducted against future federal taxable income. The taxable income generated as a result of the Company's net income of $25,451 for the three months ended March 31, 2016, was completely offset by the available net operating loss carryforwards for federal and state income tax purposes. Based on the expected taxable income for the year ending December 31, 2016, the Company does not expect to incur alternative minimum tax on its net alternative minimum taxable income for the year. The net operating loss carryforwards expire in various years through 2035. All of the federal and state net operating losses incurred prior to 2014 are subject to 100 percent limitation under the provisions of Internal Revenue Code section 382 due to an ownership change and the continuity of business requirement. 

Note 9 — Basic and Diluted Earnings (Loss) per Common Share

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

For the three months ended March 31, 2016 and 2015, basic and diluted earnings (loss) per common share were the same since there were no potentially dilutive shares outstanding during the respective periods. For the three months ended March 31, 2016 and 2015, there were outstanding warrants to purchase 166,665 shares of common stock that were not included in the calculation of diluted income per share because the impact would have been anti-dilutive for each of the periods presented.

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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, 2015, and in our subsequent filings with the SEC, and include, among others, the following: marijuana is illegal under federal law, competition, our business is dependent on laws pertaining to the marijuana industry, government regulation, our business model depends on the availability of private funding, we will be subject to general real estate risks and the availability, 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. 

Business Overview

MJ Holdings owns and leases real estate zoned for legalized marijuana operations to licensed marijuana operators. In addition to our portfolio of income producing real estate, MJ Holdings owns, operates and is developing a portfolio of business units related to the regulated marijuana industry, including internet websites and mobile apps.

The Company does not and will not, until such time as Federal law allows, grow, harvest, distribute or sell marijuana or any substances that violate the laws of the United States of America.

We have devised our current business strategy based on certain limitations related to the legal status of marijuana under federal law and the fact that we are a public company and make certain representations and warranties in connection with our public filings with the United States Securities and Exchange Commission. We recognize the significant opportunities in the legalized marijuana space and believe that using our current business model, we can position ourselves to not only develop a significant business along our current path, but be able to leverage our position, relationships and assets to capitalize on additional opportunities in the future, if and when federal law reconciles with state law; resulting in the federal legalization of marijuana.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

12

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur, could materially impact the consolidated financial statements. We believe that the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of the consolidated financial statements:

Deferred Leasing Costs

Commissions and other direct costs associated with the acquisition of tenants, or lessees, are capitalized and amortized on a straight-line basis over the terms of the related leases. Costs associated with unsuccessful leasing opportunities are expensed.

Deferred leasing costs charged to property expenses for the three months ended March 31, 2016 and 2015, were $6,947 and $6,731, respectively. As of March 31, 2016, $150,516 of deferred leasing costs are included on the Balance Sheet as a deferred asset.

Debt Issuance Costs 

Costs associated with obtaining, closing, and modifying loans and/or debt instruments such as, but not limited to placement agent fees, attorney fees and state documentary fees are capitalized and charged to interest expense over the term of the loan.

Debt issuance costs charged to interest expense for the three months ended March 31, 2016 and 2015, were $3,740 and $2,459, respectively. As of March 31, 2016, $7,617 of debt issuance costs are included on the Balance Sheet as a reduction in the carrying amount of notes payable to a related party.

Real Estate Property 

Real estate property is recorded at cost, less accumulated depreciation and amortization. Real estate property, excluding land, is depreciated using the straight-line method over the estimated useful life of the respective assets. Leasehold improvements are amortized using the straight-line method over the shorter of the related lease term or useful life. Maintenance, repairs, and minor improvements are charged to expense as incurred; major renewals and betterments that extend the useful life of the associated asset are capitalized. When real estate property is sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in results of operations for the period.

Revenue Recognition 

Before revenue can be recognized, four basic criteria must be met: persuasive evidence of an arrangement exists; the delivery has occurred or services have been rendered; the fee is fixed or determinable; and collectability is reasonably assured.

The Company's revenues are rental income generated by leasing acquired real estate properties to licensed marijuana operators. All leases are classified as operating leases. Rental income is recognized on a straight-line basis over the terms of the leases. Straight-line rent is recognized for all tenants with contractual fixed increases in rent. Deferred rent receivable represents rental revenue recognized on a straight-line basis in excess of billed rents. Reimbursements from tenants for real estate taxes and other recoverable operating expenses are recognized as rental income in the period the applicable costs are incurred. 

 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 carryforwards. 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.

13

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.

Results of Operations For the Three Months Ended March 31, 2016 Compared to the Three Months Ended March 31, 2015

Revenue

Revenue for the three months ended March 31, 2016, was $168,873 compared with revenue of $132,804 for the three months ended March 31, 2015. Revenues for the three months ended March 31, 2016 and 2015, were generated as a result of rental income from operating leases for three real estate properties. Revenue increased by $36,069 for the three months ended March 31, 2016, compared with revenue for three months ended March 31, 2015, as a result of rental income generated by the third real estate property acquired in May 2015. 

Certain property expenses are reimbursable to the Company through our existing leasing arrangements. During the three months ended March 31, 2016 and 2015, the Company recorded $15,647 and $11,753, respectively, of revenue pursuant to operating lease agreements to offset a portion of the property expenses incurred during the respective periods.

Operating Expenses

Property expenses consist of those costs associated with acquiring and leasing real estate properties. These expenses include costs for commissions, appraisals, real property taxes, insurance, repairs and maintenance. For the three months ended March 31, 2016, we incurred property expenses of $24,456 compared with $55,703 for the three months ended March 31, 2015. The decrease of $31,247 in property expenses was primarily attributed to a decrease in costs for repairs and maintenance during the three months ended March 31, 2016, partially offset by increases in costs for real property taxes and insurance as a result of the third real estate property acquired in May 2015. 

General and administrative expenses for the three months ended March 31, 2016, decreased by $55,411 to $18,097 compared with general and administrative expenses of $73,508 for the three months ended March 31, 2015. The decrease in general and administrative expenses for the three months ended March 31, 2016, was attributed to decreases in consulting fees and legal fees, of which $20,000 was for non-cash stock-based compensation for consulting services during the three months ended March 31, 2015.

Depreciation expense for the three months ended March 31, 2016, was $29,038 compared with depreciation expense of $20,163 for the three months ended March 31, 2015. The increase in depreciation expense for the three months ended March 31, 2016, was primarily associated with the depreciation of the third real estate property acquired in May 2015.

Other Expenses

Interest expense for the three months ended March 31, 2016, increased by $24,372 to $71,831 compared with interest expense of $47,459 for the three months ended March 31, 2015. The increase in interest expense for the three months ended March 31, 2016, was due to interest expense incurred on a $925,000 promissory note used to fund a real estate property acquisition in May 2015.  

We had net income of $25,451, or a basic and diluted earnings per share of $0.002, for the three months ended March 31, 2016, compared with a net loss of $64,029, or a basic and diluted loss per share of $0.005, for the three months ended March 31, 2015. The increase of $89,480 in earnings for the three months ended March 31, 2016, was primarily due to the increase in revenues and the decrease in operating expenses described above, partially offset by the increase in interest expense associated with additional funding to acquire our third real estate property acquisition in May 2015. 

14

Liquidity and Capital Resources

The following table summarizes the cash flows for the three months ended March 31, 2015 and 2014:

	For the Three Months Ended March 31,
	2016		2015
Cash Flows:
Net cash provided by operating activities	$	8,364	$	37,424
Net cash used in investing activities		—		(98,393	)
Net cash provided by financing activities		—		—
Net increase (decrease) in cash		8,364		(60,969	)
Cash at beginning of period		303,368		175,792
Cash at end of period	$	311,732	$	114,823

The Company had cash of $311,732 at March 31, 2016, compared with cash of $303,368 at December 31, 2015, an increase of $8,364. The increase in cash during the three months ended March 31, 2016, was attributed to $8,364 of cash generated by operating activities for the three months ended March 31, 2016.

Operating Activities

We had net cash provided by operating activities of $8,364 for the three months ended March 31, 2016, which consisted of net income of $25,451, non-cash charges of $28,612, and a decrease of $3,127 in prepaid and other assets; partially offset by a decrease of $25,035 in security deposits, which was used for rental income during the period, and a decrease of $23,791 in accounts payable and accrued liabilities.

We had net cash provided by operating activities of $37,424 for the three months ended March 31, 2015, which consisted of a decrease of $52,422 in prepaid and other assets, non-cash charges of $39,556, and a decrease in deferred leasing costs of $17,510, partially offset by a net loss of $64,029 and a decrease of $8,035 in accounts payable and accrued liabilities.

Investing Activities

During the three months ended March 31, 2015, we paid $98,393 of building improvements to the property in Aurora, Colorado, pursuant to the terms of a lease agreement executed in September 2014. The Company agreed to contribute $150,000 towards improvements to the property. As of March 31, 2016, the Company had paid $146,026 of the $150,0000 towards the improvements to the property.

Financing Activities

There were no financing activities for the three months ended March 31, 2016 and 2015.

Although we can provide no assurances, we believe our cash on hand, coupled with revenues generated by rental income and our ability to refinance our equity in the real estate we own, will provide sufficient liquidity and capital resources to fund our business for the next twelve months. In the event we experience liquidity and capital resources constraints because of unanticipated operating losses, we may need to raise additional capital in the form of equity and/or debt financing. If such additional capital is not available on terms acceptable to us or at all then we may need to curtail our operations and/or take additional measures to conserve and manage our liquidity and capital resources, any of which would have a material adverse effect on our business, results of operations and financial condition.

15

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Seasonality

We do not consider our business to be seasonal.

Inflation and Changing Prices

Neither inflation or changing prices for the three months ended March 31, 2016, had a material impact on our operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not required for smaller reporting companies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Co-Chief Executive Officers and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of March 31, 2016. Based on that evaluation, our Co-Chief Executive Officers and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2016.

Changes in Internal Control Over Financial Reporting

During the quarter ended March 31, 2016, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rules 13a-15 or 15d-15 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

This quarterly report does not include an attestation report of the Company’s registered public accounting firm regarding internal controls over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this quarterly report.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

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.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. Please refer to the “Risks Factors” section in our Annual Report for a discussion of risks to which our business, financial condition, results of operations and cash flows are subject.

16

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

During the three months ended March 31, 2015, the Company issued 8,272 shares of common stock in exchange for consulting services. The securities were issued in reliance upon the exemptions from registration provided by Section 4(2) of the Securities Act of 1933, as amended.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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
31.1*	Rule 13a14(a)/15d-14(a) Certification of co-Chief Executive Officer
31.2*	Rule 13a14(a)/15d-14(a) Certification of Chief Financial Officer
31.3*	Rule 13a14(a)/15d-14(a) Certification of co-Chief Executive Officer
32.1*	Section 1350 Certification of Chief Executive Officer
32.2*	Section 1350 Certification of Chief Financial Officer
32.3*	Section 1350 Certification of Chief Executive Officer
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF**	XBRL Taxonomy Definition Linkbase Document

*	Filed Herewith
**	Furnished herewith (not filed).

17

SIGNATURES

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

	MJ HOLDINGS, INC.
Date: May 11, 2016	By:	/s/ Adam Laufer
	Adam Laufer
	Co-Chief Executive Officer (co-Principal Executive Officer )

	MJ HOLDINGS, INC.
Date: May 11, 2016	By:	/s/ Shawn Chemtov
	Shawn Chemtov
	Co-Chief Executive Officer and Chief Financial Officer (co-Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer )

18

EX-31.1

Exhibit 31.1

CO-CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Adam Laufer, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

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

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

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based 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 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. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent 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.

Dated: May 11, 2016 /s/ Adam Laufer

Name: Adam Laufer

Title: Co-Chief Executive Officer

EX-31.2

Exhibit 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Shawn Chemtov, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

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

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

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based 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 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. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent 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.

Dated: May 11, 2016 /s/ Shawn Chemtov

Name: Shawn Chemtov

Title: Chief Financial Officer

EX-31.3

Exhibit 31.3

CO-CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Shawn Chemtov, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

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

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

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based 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 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. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent 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.

Dated: May 11, 2016 /s/ Shawn Chemtov                              

Name: Shawn Chemtov

Title: Co-Chief Executive Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Adam Laufer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of MJ Holdings, Inc. on Form 10-Q for the period ended March 31, 2016, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of MJ Holdings, Inc.

Dated: May 11, 2016 /s/ Adam Laufer                               

Name: Adam Laufer

Title: Co-Chief Executive Officer 

A signed original of this written statement required by Section 906 has been provided to MJ Holdings, Inc. and will be retained by MJ Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Shawn Chemtov, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of MJ Holdings, Inc. on Form 10-Q for the period ended March 31, 2016, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of MJ Holdings, Inc.

Dated: May 11, 2016 /s/ Shawn Chemtov                             

Name: Shawn Chemtov

Title: Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to MJ Holdings, Inc. and will be retained by MJ Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.3

Exhibit 32.3

CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Shawn Chemtov, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of MJ Holdings, Inc. on Form 10-Q for the period ended March 31, 2016, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of MJ Holdings, Inc.

Dated: May 11, 2016 /s/ Shawn Chemtov                        

Name: Shawn Chemtov

Title: Co-Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to MJ Holdings, Inc. and will be retained by MJ Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 11, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	MJ Holdings, Inc.
Entity Central Index Key	0001456857
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		14,027,939

XML

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Real estate property:
Land	$ 747,389	$ 747,389
Buildings and improvements	3,141,193	3,141,193
Computer equipment and software	2,000	2,000
Real estate property, gross	3,890,582	3,890,582
Accumulated depreciation	(169,737)	(140,699)
Real estate property, net	3,720,845	3,749,883
Cash	311,732	303,368
Deferred leasing costs	150,516	157,463
Deferred rent receivable	65,777	54,664
Prepaid expenses and other assets	2,966	6,093
Total Assets	4,251,836	4,271,471
Liabilities
Notes payable - related party, net of unamortized debt issuance costs of $7,617 and $11,357, respectively	2,717,383	2,713,643
Security deposits	70,168	95,203
Accounts payable and accrued liabilities	95,192	118,983
Total Liabilities	$ 2,882,743	$ 2,927,829
Stockholders' Equity (Deficit)
Preferred stock, par value $0.001, 5,000,000 shares authorized; 0 shares issued and outstanding
Common stock, par value $0.001, 95,000,000 shares authorized; 14,027,939 shares issued and outstanding	$ 14,028	$ 14,028
Additional paid-in capital	2,779,105	2,779,105
Accumulated deficit	(1,424,040)	(1,449,491)
Total Stockholders' Equity	1,369,093	1,343,642
Total Liabilities and Stockholders' Equity	$ 4,251,836	$ 4,271,471

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Unamortized debt issuance costs	$ 7,617	$ 11,357
Preferred stock, par value per share	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value per share	$ 0.001	$ 0.001
Common stock, shares authorized	95,000,000	95,000,000
Common stock, shares issued	14,027,939	14,027,939
Common stock, shares outstanding	14,027,939	14,027,939

XML

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenues:
Rental income	$ 168,873	$ 132,804
Operating Expenses:
Property expenses	24,456	55,703
General and administrative expenses	18,097	73,508
Depreciation expense	29,038	20,163
Total operating expenses	71,591	149,374
Operating income (loss)	97,282	(16,570)
Interest expense, net - related party	(68,125)	(45,000)
Interest expense, net	(3,706)	(2,459)
Income (loss) before income taxes	$ 25,451	$ (64,029)
Provision for income taxes
Net Income (Loss)	$ 25,451	$ (64,029)
Basic and diluted net loss per common share:
Weighted average shares outstanding	14,027,939	13,885,227
Net loss per common share	$ 0.002	$ (0.005)

XML

Condensed Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash flow from operating activities:
Net income (loss)	$ 25,451	$ (64,029)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	$ 29,038	20,163
Stock-based compensation		20,000
Deferred rental income	$ (11,113)	(9,797)
Amortization of deferred leasing and debt costs	$ 10,687	9,190
Changes in operating assets and liabilities:
Deferred leasing costs		17,510
Prepaid and other assets	$ 3,127	$ 52,422
Security deposits	(25,035)
Accounts payable and accrued liabilities	(23,791)	$ (8,035)
Net Cash Provided by Operating Activities	$ 8,364	37,424
Cash flow from investing activities:
Acquisition of real estate property		(98,393)
Net Cash Used in Investing Activities		$ (98,393)
Cash flow from financing activities:
Net Cash Provided by Financing Activities
Net increase (decrease) in cash	$ 8,364	$ (60,969)
Cash at beginning of period	303,368	175,792
Cash at end of period	311,732	114,823
Supplemental disclosure of cash flow information:
Cash paid for interest to related party	$ 68,125	$ 45,000

XML

Interim Financial Statements

3 Months Ended

Mar. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Interim Financial Statements

Note 1 — Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, these condensed consolidated financial statements do not include all of the information and footnotes required for audited annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the condensed consolidated financial statements not misleading have been included. The balance sheet at December 31, 2015, has been derived from the Company’s audited consolidated financial statements as of that date.

The unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and the notes thereto that are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, that was filed with the SEC on March 30, 2016. The results of operations for the three months ended March 31, 2016, are not necessarily indicative of the results to be expected for the full year.

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, 5353 Joliet, LLC, MJ Havana, LLC, and MJ Sheridan, LLC. Intercompany balances and transactions have been eliminated in consolidation.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2 — Summary of Significant Accounting Policies

The significant accounting policies followed by the Company for interim reporting are consistent with those included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. There were no material changes to our significant accounting policies during the interim period ended March 31, 2016.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued guidance to clarify the principles for recognizing revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a comprehensive framework for revenue recognition that supersedes current general revenue guidance and most industry-specific guidance. In addition, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. An entity should apply the guidance either retrospectively to each prior reporting period presented or retrospectively with the cumulative adjustment at the date of the initial application. In July 2015, the FASB delayed the effective date of the new guidance to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is now permitted after the original effective date of December 15, 2016. The Company is currently in the process of evaluating the impact of adoption of the new accounting guidance on its consolidated financial statements and has not determined the impact of adoption on its consolidated financial statements.

In August 2014, FASB issued guidance that requires management to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern, and to provide certain disclosures when it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The Company adopted this guidance for the annual period ending December 31, 2016, beginning with the first quarter ended March 31, 2016. The adoption of this guidance primarily addressed certain disclosures to the financial statements and had no impact on our financial position, results of operations or cash flows.

In April 2015, the FASB issued guidance to simplify the presentation of debt issuance costs. This guidance provides that debt issuance costs related to a recognized liability be presented in the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. The Company adopted this guidance with the annual and the interim period beginning January 1, 2016, and applied the standard on a retrospective basis as of December 31, 2015. As of March 31, 2016, and December 31, 2015, we had $7,617 and $11,357, respectively, of debt issuance costs associated with $2.7 million of notes payable that were reclassified from other assets to a reduction in the carrying amount of the notes payable. The adoption of this standard did not have a material impact on our financial position and did not impact our results of operations or cash flows.

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Going Concern

3 Months Ended

Mar. 31, 2016

Going Concern [Abstract]

Going Concern

Note 3 — Going Concern

The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. During the three months ended March 31, 2016, the Company generated net income of $25,451. As of March 31, 2016, the Company had an accumulated deficit of $1,424,040 and a working capital deficit of $1,580,494, consisting of cash and prepaid expenses of $314,698 less a promissory note for $1,800,000 due June 1, 2016, and accounts payable and accrued liabilities of $95,192. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s future success is dependent upon its ability to achieve and maintain profitable operations, generate cash from operating activities, refinance existing debt obligations and/or obtain additional financing. Although we can provide no assurances, we believe our cash on hand, coupled with revenues generated by rental income and our ability to refinance our equity in the real estate we own, will provide sufficient liquidity and capital resources to fund our business for the next twelve months.

In the event the Company experiences liquidity and capital resource constraints because of unanticipated operating losses, we may need to raise additional capital in the form of equity and/or debt financing. If such additional capital is not available on terms acceptable to us or at all, then we may need to curtail our operations and/or take additional measures to conserve and manage our liquidity and capital resources, any of which would have a material adverse effect on our financial position, results of operations, and our ability to continue in existence. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Real Estate Property Acquisitions

3 Months Ended

Mar. 31, 2016

Business Combinations [Abstract]

Real Estate Property Acquisitions

Note 4 — Real Estate Property Acquisitions

5353 Joliet Street

In June 2014, through its wholly-owned subsidiary, 5353 Joliet LLC, the Company acquired an owner-occupied 22,144 square feet industrial building situated on 1.4 acres of land in Denver, Colorado for $2,214,000. The acquisition was funded with proceeds from the issuance of a secured promissory note in the amount of $1,800,000 and $414,000 of cash on-hand. The promissory note is held by Chemtov Mortgage Group ("CMG"), an entity wholly-owned by the Company's co-CEO, Shawn Chemtov. CMG has assigned all ownership and security interest granted to it pursuant to the promissory note to 5353 Mortgage Loan, LLC, a single purpose entity created solely for the purpose of this transaction. CMG invested $100,000 of the $1,800,000 of funds used to finance the purchase of the promissory note. CMG acts as the loan servicing entity for the promissory note, administering the note, processing payments from the Company, and transferring all payments to 5353 Mortgage Loan, LLC. CMG charges no administration fees for servicing the promissory note.

The promissory note bears interest at 10% per annum, provides for cash interest payments on a monthly basis, matures on June 1, 2016, and is callable at the option of the Company at any time after June 19, 2015. The Company has guaranteed the promissory note and has pledged its ownership interest in 5353 Joliet LLC, and as such its fee-simple ownership interest in the property as security for the promissory note. The promissory note does not restrict the Company's ability to incur future indebtedness. For the three months ended March 31, 2016 and 2015, the Company recorded $45,000 and $45,000, respectively, of interest expense related to the promissory note.

In September 2014, the Company entered into a lease agreement contingent upon the lessee obtaining city and state licenses and permits for its intended operations at the premises. The contingencies were met by the lessee, and the lease agreement became effective December 1, 2014. The lease agreement is for a term of seven years. Insurance and real property taxes shall be paid by the Company and, subsequently, charged to the lessee as additional rent based on the actual expenses incurred - see Note 5 below for additional lease details.

503 Havana Street

In September 2014, through its wholly-owned subsidiary, MJ Havana LLC, the Company acquired an owner-occupied 1,250 square foot building situated on 23,625 square feet of land in Aurora, Colorado for $756,000, exclusive of closing costs. The acquisition was funded with cash on-hand. The property is zoned B-2 and has been approved by the city of Aurora as a retail dispensary for recreational marijuana.

Prior to closing on the property acquisition, the Company had pre-negotiated a 10-year lease agreement with a third-party, a licensed marijuana dispensary company serving both medical and adult (21+) customers in Colorado. Once the closing of the property was completed with the seller, the pre-negotiated lease was executed in September 2014 with the third-party. Pursuant to the terms of the lease agreement, the Company agreed to contribute $150,000 to improvements to the property - see Note 5 below for additional lease details. As of March 31, 2016, the Company had paid $146,026 towards the tenant's building improvements.

1126 South Sheridan Boulevard

In May 2015, through its wholly-owned subsidiary, MJ Sheridan LLC, the Company acquired real estate property located at 1126 South Sheridan Boulevard in Denver, Colorado, for $771,750, exclusive of closing costs. The Company funded the acquisition through the issuance of a promissory note in the amount of $925,000 to a related party of which $771,750 was used to purchase the property. The balance of the funds will be used by the Company as working capital. The acquired property is 17,729 square feet with a 3,828 square foot one story free-standing building. The property is zoned B-2 and has been approved by the city of Denver as a retail dispensary for recreational marijuana.

The promissory note is held by CMG, an entity wholly-owned by the Company's co-CEO, Shawn Chemtov. CMG has assigned all ownership and security interest granted to it pursuant to the promissory note to a single purpose entity created solely for the purpose of this transaction. CMG acts as the loan servicing entity for the promissory note, administering the note and processing payments from the Company. CMG charges no administration fees for servicing the promissory note.

The promissory note bears interest at 10% per annum, provides for cash interest payments on a monthly basis, matures on June 1, 2017. The promissory note is collateralized with the Company's ownership interest in the newly acquired property and its previously acquired property located at 503 Havana Street in Aurora, Colorado. The promissory note does not restrict the Company's ability to incur future indebtedness. For the three months ended March 31, 2016, the Company recorded $23,125 of interest expense related to the promissory note.

Prior to closing on the property acquisition, the Company had pre-negotiated a 10-year lease agreement with a third-party, a licensed marijuana dispensary company serving both medical and adult (21+) customers in Colorado. Once the closing of the property was completed with the seller, the pre-negotiated lease was executed in May 2015 with the third-party - see Note 5 below for additional lease details.

A summary of real estate property at March 31, 2016, is as follows:

	Estimated		March 31,
	Life		2016
Buildings		30 years	$	2,995,167
Improvements		9-10 years		146,026
Land		Not depreciated		747,389
Computer equipment and software		3 years		2,000
Total real estate property				3,890,582
Less: Accumulated depreciation				(169,737	)
Real estate property, net			$	3,720,845

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Operating Leases

3 Months Ended

Mar. 31, 2016

Leases, Operating [Abstract]

Operating Leases

Note 5 — Operating Leases

The Company generates revenues by leasing its acquired real estate properties through operating leasing arrangements. A summary of revenues generated from our rental properties for the three months ended March 31, 2016 and 2015, is as follows:

	For the three months ended March 31,
	2016		2015
Revenues:
Rental payments	$	142,113	$	111,254
Reimbursed operating expenses		15,647		11,753
Deferred rental income		11,113		9,797
Total revenues from rental properties	$	168,873	$	132,804

503 Havana Street

In September 2014, the Company entered into a non-cancelable operating lease agreement with a marijuana dispensary (the "Lessee") to move into the Company's acquired property located at 503 Havana Street in Aurora, Colorado. The lease agreement is for a term of ten years and a monthly rent obligation of $11,250, subject to annual increases of 3% per year. Insurance and real property taxes shall be paid by the Company and, subsequently, charged to the Lessee as additional rent based on the actual expenses incurred. Pursuant to the terms of the lease agreement, the Company has agreed to contribute $150,000 to improvements to the property.

Upon the expiration of the term of ten years, the Lessee has the option to renew the lease agreement for one additional ten-year term, on the same terms as provided in the lease agreement. During the third year of the lease agreement, the Lessee may exercise an option to purchase the Property.

5353 Joliet Street

In September 2014, the Company entered into a lease agreement for its property and warehouse building located at 5353 Joliet Street in Denver, Colorado. The lease agreement is for a term of seven years and a monthly rent obligation of $25,835, subject to annual increases of 2% per year. Insurance and real property taxes shall be paid by the Company and, subsequently, charged to the lessee as additional rent based on the actual expenses incurred.

The lease was contingent upon the lessee, obtaining city and state licenses and permits for its intended operations at the premises, within the dates provided in the lease agreement. The contingencies were met by the lessee, and the lease agreement became effective December 1, 2014.

Upon the expiration of the seven-year term, the lessee has the option to renew the lease for two separate five-year terms, subject to rent reviews and adjustments, as set out in the lease agreement.

1126 South Sheridan Boulevard

In May 2015, the Company entered into a lease agreement for its acquired property located at 1126 South Sheridan Boulevard in Denver, Colorado. The lease agreement is for a term of ten years and a monthly rent obligation of $10,945, subject to annual increases of 3% per year. Insurance and real property taxes shall be paid by the Company and, subsequently, charged to the Lessee as additional rent based on the actual expenses incurred.

Upon the expiration of the term of ten years, the Lessee has the option to renew the lease agreement for one additional ten-year term, on the same terms as provided in the lease agreement. During the third year of the lease agreement, the Lessee may exercise an option to purchase the Property.

Future minimum rental payments, excluding the reimbursement of specified operating expenses, for non-cancelable operating lease agreements are as follows as of March 31, 2016:

2016	$	431,629
2017		588,457
2018		602,886
2019		617,681
2020		632,857
Thereafter		1,489,861
Total minimal rental payments	$	4,363,371

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Related Party Transactions

3 Months Ended

Mar. 31, 2016

Related Party Transactions [Abstract]

Related Party Transactions

Note 6 — Related Party Transactions

During the three months ended March 31, 2016 and 2015, the Company paid $68,125 and $45,000, respectively, for interest due pursuant to $2,725,000 of promissory notes held by CMG, wholly-owned by the Company's co-CEO and shareholder, Shawn Chemtov - see Note 4 above for additional details regarding the promissory notes held by a related party. 

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Stock Based Compensation

3 Months Ended

Mar. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Based Compensation

Note 7 — Stock Based Compensation

Warrants

A summary of warrants issued, exercised and expired during the three months ended March 31, 2016, is as follows:

			Weighted
			Avg.
			Exercise
Warrants:	Shares		Price
Balance at January 1, 2016		166,665	$	5.88
Issued		—		—
Exercised		—		—
Expired		—		—
Balance at March 31, 2016		166,665	$	5.88

Common Stock

During the three months ended March 31, 2015, the Company issued 8,272 shares of common stock for consulting services and recorded $20,000 of stock-based compensation expense for these consulting services, which has been classified as General and administrative expenses. The stock-based compensation expense was calculated based on the grant date fair value of the common stock shares issued in exchange for the consulting services.

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Income Taxes

3 Months Ended

Mar. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Note 8 — 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 carryforwards. 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.

The Company did not incur any federal or state income tax expense or benefit for the three months ended March 31, 2016 and 2015. As of December 31, 2015, the Company had net operating losses of approximately $684,000 for federal and state income tax purposes that can be carried forward for up to twenty years and deducted against future federal taxable income. The taxable income generated as a result of the Company's net income of $25,451 for the three months ended March 31, 2016, was completely offset by the available net operating loss carryforwards for federal and state income tax purposes. Based on the expected taxable income for the year ending December 31, 2016, the Company does not expect to incur alternative minimum tax on its net alternative minimum taxable income for the year. The net operating loss carryforwards expire in various years through 2035. All of the federal and state net operating losses incurred prior to 2014 are subject to 100 percent limitation under the provisions of Internal Revenue Code section 382 due to an ownership change and the continuity of business requirement. 

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Basic and Diluted Earnings (Loss) per Common Share

3 Months Ended

Mar. 31, 2016

Earnings Per Share [Abstract]

Basic and Diluted Earnings (Loss) per Common Share

Note 9 — Basic and Diluted Earnings (Loss) per Common Share

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

For the three months ended March 31, 2016 and 2015, basic and diluted earnings (loss) per common share were the same since there were no potentially dilutive shares outstanding during the respective periods. For the three months ended March 31, 2016 and 2015, there were outstanding warrants to purchase 166,665 shares of common stock that were not included in the calculation of diluted income per share because the impact would have been anti-dilutive for each of the periods presented.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued guidance to clarify the principles for recognizing revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a comprehensive framework for revenue recognition that supersedes current general revenue guidance and most industry-specific guidance. In addition, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. An entity should apply the guidance either retrospectively to each prior reporting period presented or retrospectively with the cumulative adjustment at the date of the initial application. In July 2015, the FASB delayed the effective date of the new guidance to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is now permitted after the original effective date of December 15, 2016. The Company is currently in the process of evaluating the impact of adoption of the new accounting guidance on its consolidated financial statements and has not determined the impact of adoption on its consolidated financial statements.

In August 2014, FASB issued guidance that requires management to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern, and to provide certain disclosures when it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The Company adopted this guidance for the annual period ending December 31, 2016, beginning with the first quarter ended March 31, 2016. The adoption of this guidance primarily addressed certain disclosures to the financial statements and had no impact on our financial position, results of operations or cash flows.

In April 2015, the FASB issued guidance to simplify the presentation of debt issuance costs. This guidance provides that debt issuance costs related to a recognized liability be presented in the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. The Company adopted this guidance with the annual and the interim period beginning January 1, 2016, and applied the standard on a retrospective basis as of December 31, 2015. As of March 31, 2016, and December 31, 2015, we had $7,617 and $11,357, respectively, of debt issuance costs associated with $2.7 million of notes payable that were reclassified from other assets to a reduction in the carrying amount of the notes payable. The adoption of this standard did not have a material impact on our financial position and did not impact our results of operations or cash flows.

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Real Estate Property Acquisitions (Tables)

3 Months Ended

Mar. 31, 2016

Business Combinations [Abstract]

Summary of Real Estate Property

A summary of real estate property at March 31, 2016, is as follows:

	Estimated		March 31,
	Life		2016
Buildings		30 years	$	2,995,167
Improvements		9-10 years		146,026
Land		Not depreciated		747,389
Computer equipment and software		3 years		2,000
Total real estate property				3,890,582
Less: Accumulated depreciation				(169,737	)
Real estate property, net			$	3,720,845

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Operating Leases (Tables)

3 Months Ended

Mar. 31, 2016

Leases, Operating [Abstract]

Summary of Revenues From Rental Properties

A summary of revenues generated from our rental properties for the three months ended March 31, 2016 and 2015, is as follows:

	For the three months ended March 31,
	2016		2015
Revenues:
Rental payments	$	142,113	$	111,254
Reimbursed operating expenses		15,647		11,753
Deferred rental income		11,113		9,797
Total revenues from rental properties	$	168,873	$	132,804

Schedule of Future Minimum Rental Payments

Future minimum rental payments, excluding the reimbursement of specified operating expenses, for non-cancelable operating lease agreements are as follows as of March 31, 2016:

2016	$	431,629
2017		588,457
2018		602,886
2019		617,681
2020		632,857
Thereafter		1,489,861
Total minimal rental payments	$	4,363,371

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Stock Based Compensation (Tables)

3 Months Ended

Mar. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of warrants issued, exercised and expired

A summary of warrants issued, exercised and expired during the three months ended March 31, 2016, is as follows:

			Weighted
			Avg.
			Exercise
Warrants:	Shares		Price
Balance at January 1, 2016		166,665	$	5.88
Issued		—		—
Exercised		—		—
Expired		—		—
Balance at March 31, 2016		166,665	$	5.88

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Summary of Significant Accounting Policies (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Note payable	$ 1,800,000	$ 2,700,000
Unamortized debt issuance costs	$ 7,617	$ 11,357

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Going Concern (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Going Concern [Abstract]
Net income (loss)	$ 25,451	$ (64,029)
Accumulated deficit	1,424,040		$ 1,449,491
Working capital deficit	1,580,494
Total cash and prepaid expenses	314,698
Promissory note, current portion	1,800,000		2,700,000
Accounts payable and accrued liabilities	$ 95,192		$ 118,983

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Real Estate Property Acquisitions (Narrative) (Details)	1 Months Ended			3 Months Ended
	May. 31, 2015 USD ($) ft²	Sep. 30, 2014 USD ($) ft²	Jun. 30, 2014 USD ($) a ft²	Mar. 31, 2016 USD ($)	Mar. 31, 2015 USD ($)
Business Acquisition [Line Items]
Interest expense				$ 68,125	$ 45,000
Owner Occupied Industrial Building Situated on Land in Denver Colorado [Member]
Business Acquisition [Line Items]
Area of building acquired (in square foot) | ft²			22,144
Area of land on which building is situated (in acres) | a			1.4
Purchase consideration			$ 2,214,000
Proceeds from the issuance of a secured promissory note used to fund acquisition			1,800,000
Cash on-hand used to fund acquisition			414,000
Lease agreement term		7 years
Owner Occupied Building Situated On Land In Aurora Colorado [Member]
Business Acquisition [Line Items]
Area of building acquired (in square foot) | ft²		1,250
Area of land on which building is situated (in acres) | ft²		23,625
Purchase consideration		$ 756,000
Obligation to improvements to the property				150,000
Payments for tenant's building improvements				146,026
Chemtov Mortgage Group [Member]
Business Acquisition [Line Items]
Interest expense				68,125	45,000
Chemtov Mortgage Group [Member] | Owner Occupied Industrial Building Situated on Land in Denver Colorado [Member]
Business Acquisition [Line Items]
Amount invested to finance the purchase of the promissory note			$ 100,000
Administration fees for servicing the promissory note
Interest rate of promissory note			10.00%
Promissory note, maturity date			Jun. 01, 2016
Promissory note, date callable			Jun. 19, 2015
Interest expense				45,000	$ 45,000
Real Estate Property Located at South Sheridan Boulevard in Denver, Colorado [Member]
Business Acquisition [Line Items]
Area of building acquired (in square foot) | ft²	17,729
Area of land on which building is situated (in acres) | ft²	3,828
Purchase consideration	$ 771,750
Proceeds from the issuance of a secured promissory note used to fund acquisition	925,000
Amount invested to finance the purchase of the promissory note	$ 771,750
Lease agreement term	10 years
Monthly rent obligation	$ 10,945
Annual increases percentage	3.00%
Real Estate Property Located at South Sheridan Boulevard in Denver, Colorado [Member] | Chemtov Mortgage Group [Member]
Business Acquisition [Line Items]
Promissory note, maturity date	Jun. 01, 2017
Interest expense				$ 23,125

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Real Estate Property Acquisitions (Schedule of Real Estate Property) (Details)	3 Months Ended
	Mar. 31, 2016 USD ($)
Property, Plant and Equipment [Line Items]
Total real estate property	$ 3,890,582
Less: Accumulated depreciation	(169,737)
Real estate property, net	$ 3,720,845
Building [Member]
Property, Plant and Equipment [Line Items]
Estimated Life	30 years
Total real estate property	$ 2,995,167
Computer equipment and software [Member]
Property, Plant and Equipment [Line Items]
Estimated Life	3 years
Total real estate property	$ 2,000
Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Total real estate property	$ 146,026
Building Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated Life	9 years
Building Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated Life	10 years
Land [Member]
Property, Plant and Equipment [Line Items]
Total real estate property	$ 747,389

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Operating Leases (Narrative) (Details) - USD ($)	1 Months Ended
	May. 31, 2015	Sep. 30, 2014
Real Estate Property Located at South Sheridan Boulevard in Denver, Colorado [Member]
Property Subject to or Available for Operating Lease [Line Items]
Lease agreement term	10 years
Monthly rent obligation	$ 10,945
Annual increases percentage	3.00%
Option to renew term	10 years
5353 Joliet Street Denver Colorado [Member]
Property Subject to or Available for Operating Lease [Line Items]
Lease agreement term		7 years
Monthly rent obligation		$ 25,835
Annual increases percentage		2.00%
Option to renew term		5 years
503 Havana Street Aurora, Colorado [Member]
Property Subject to or Available for Operating Lease [Line Items]
Lease agreement term		10 years
Monthly rent obligation		$ 11,250
Annual increases percentage		3.00%
Obligation to improvements to the property		$ 150,000
Option to renew term		10 years

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Operating Leases (Schedule of Revenues From Rental Properties) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenues:
Rental payments	$ 142,113	$ 111,254
Reimbursed operating expenses	15,647	11,753
Deferred rental income	11,113	9,797
Total revenues from rental properties	$ 168,873	$ 132,804

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Operating Leases (Schedule of Future Minimum Rental Revenues) (Details)	Mar. 31, 2016 USD ($)
Leases, Operating [Abstract]
2016	$ 431,629
2017	588,457
2018	602,886
2019	617,681
2020	632,857
Thereafter	1,489,861
Total minimal rental payments	$ 4,363,371

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Related Party Transactions (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Related Party Transaction [Line Items]
Interest paid to the promissory note held by CMG	$ 68,125	$ 45,000
Promissory note held by related party	2,717,383		$ 2,713,643
Chemtov Mortgage Group [Member]
Related Party Transaction [Line Items]
Interest paid to the promissory note held by CMG	68,125	$ 45,000
Promissory note held by related party	$ 2,725,000

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Stock Based Compensation (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock issued for services, shares		8,272
Stock-based compensation expense		$ 20,000

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Stock Based Compensation (Schedule of Warrants Issued, Exercised and Expired) (Details) - Warrant [Member] - Medbox, Inc. [Member] - Consulting services agreement [Member]	3 Months Ended
	Mar. 31, 2016 $ / shares shares
Shares
Balance at the beginning of the period | shares	166,665
Issued | shares
Exercised | shares
Expired | shares
Balance at the end of the period | shares	166,665
Weighted Avg. Exercise Price
Balance at the beginning of the period | $ / shares	$ 5.88
Issued | $ / shares
Exercised | $ / shares
Expired | $ / shares
Balance at the end of the period | $ / shares	$ 5.88

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Income Taxes (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Provision for income taxes
Net operating losses			$ 684,000
Operating loss carryforwards,expiration period	20 years
Operating loss carryforwards,expiration date	Dec. 31, 2035

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Basic and Diluted Earnings (Loss) per Common Share (Details)	3 Months Ended
	Mar. 31, 2016 shares
Earnings Per Share [Abstract]
Warrants excluded from calculation of of diluted income per share	166,665