10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q 

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

For the quarterly period ended March 31, 2018

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: 001-35902

AMERICANN, INC

(Exact name of registrant as specified in its charter)

Delaware	27-4336843
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
1550 Wewatta St, Denver, CO	80202
(Address of principal executive offices)	(Zip Code)
(303) 862-9000
(Registrant’s telephone number, including area code)
3200 Brighton Blvd, Unit 114, Denver, CO 80216
(Former name, former address and former fiscal year, if changed since last report)

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

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

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☑
(Do not check if a smaller reporting company)		Emerging growth company	☐

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

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

Yes ☐ No ☑ 

As of April 30, 2018, the registrant had 19,391,000 shares of common stock outstanding.

AmeriCann, Inc.

FORM 10-Q

TABLE OF CONTENTS

			PAGE NO.
PART I	FINANCIAL INFORMATION
	Item 1.	Unaudited Financial Statements:	F-1
		Consolidated Balance Sheets as of March 31, 2018 and September 30, 2017	F-1
		Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2018 and 2017	F-2
		Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2018 and 2017	F-3
		Notes to Consolidated Financial Statements	F-4
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
	Item 4.	Controls and Procedures	19
PART II	OTHER INFORMATION
	Item 6.	Exhibits	19
	SIGNATURES		20

Part I:  FINANCIAL INFORMATION

Item 1.      UNAUDITED Financial Statements

AMERICANN, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)  

	March 31, 2018			September 30, 2017
	(unaudited)
Assets
Current Assets:
Cash and cash equivalents	$	392,154		$	1,627
Restricted cash		497,361			-
Current portion of prepaid land lease		57,959			57,959
Prepaid expenses and other current assets		4,970			5,000
Total current assets		952,444			64,586
Land held for sale		-			1,611,312
Construction in progress		699,300			680,028
Furniture and equipment (net of depreciation of $4,265 and $3,704)		3,591			4,153
Website development costs (net of amortization of $35,736 and $28,820)		5,764			12,680
Notes and other receivables (net of allowance of $469,699)		783,905			780,315
Note receivable - related party		157,122			125,327
Prepaid land lease and related deposits, net of current portion		2,753,068			2,782,047
Security deposit and other assets		63,110			3,110
Total assets	$	5,418,304		$	6,063,558
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued expenses	$	9,942		$	624,623
Interest payable (including $42,002 and $84,998 to related parties)		52,316			86,253
Other payables		7,995			19,699
Notes payable (net of discount of $1,235,104 and $0)		769,533			1,070,000
Total current liabilities		839,786			1,800,575
Notes payable - related party (inclusive of premium of $36,355 and $47,037)		1,968,001			1,978,683
Total liabilities		2,807,787			3,779,258
Commitments and contingencies - see Note 10
Stockholders' Equity:
Preferred stock, $0.0001 par value; 20,000,000 shares authorized; no shares issued and outstanding		-			-
Common stock, $0.0001 par value; 100,000,000 shares authorized; 19,391,000 and 19,366,000 shares issued and outstanding as of March 31, 2018 and September 30, 2017, respectively		1,940			1,937
Additional paid in capital		13,582,034			10,959,188
Accumulated deficit		(10,973,457	)		(8,676,825	)
Total stockholders' equity		2,610,517			2,284,300
Total liabilities and stockholders' equity	$	5,418,304		$	6,063,558

See accompanying notes to unaudited consolidated financial statements.

F-1

AMERICANN, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended March 31,						Six Months Ended March 31,
	2018			2017			2018			2017
Revenues:
Consulting fees	$	-		$	15,000		$	-		$	30,000
Total revenues		-			15,000			-			30,000
Operating expenses:
Advertising and marketing		2,787			4,973			3,749			7,220
Professional fees		118,128			148,686			270,115			201,083
General and administrative expenses		357,592			364,817			792,454			653,250
Total operating expenses		478,507			518,476			1,066,318			861,553
Loss from operations		(478,507	)		(503,476	)		(1,066,318	)		(831,553	)
Other income (expense):
Interest income		17,309			2,584			25,386			10,759
Interest expense		(424,609	)		(57,762	)		(1,178,988	)		(139,337	)
Other income (expense)		-			-			(2,861	)		-
Interest expense - related party		(36,461	)		(36,634	)		(73,851	)		(69,602	)
Total other income (expense)		(443,761	)		(91,812	)		(1,230,314	)		(198,180	)
Net loss	$	(922,268	)	$	(595,288	)	$	(2,296,632	)	$	(1,029,733	)
Basic and diluted loss per common share	$	(0.05	)	$	(0.03	)	$	(0.12	)	$	(0.06	)
Weighted average common shares outstanding		19,376,278			19,136,555			19,371,082			18,706,825

See accompanying notes to unaudited consolidated financial statements.

F-2

AMERICANN, INC.

consolidated STATEMENTS OF CASH FLOWS

(unaudited)

	Six Months Ended March 31,
	2018			2017
Cash flows from operating activities:
Net loss	$	(2,296,632	)	$	(1,029,733	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		7,478			7,479
Stock based compensation and option expense		306,661			37,450
Loss on disposal of land		2,861			-
Amortization of equity instruments issued to lessor		28,979			-
Amortization of debt discount/(premium)		1,121,652			20,318
Changes in operating assets and liabilities:
Interest receivable		(25,385	)		1,994
Prepaid expenses		(59,970	)		28,980
Accounts payable and accrued expenses		(597,593	)		(330,932	)
Notes receivable - related party		(10,000	)		-
Interest payable		9,059			21,346
Interest payable - related party		(42,996	)		(109,825	)
Other payables		(11,704	)		8,081
Net cash flows used in operations		(1,567,590	)		(1,344,842	)
Cash flows from investing activities:
Additions to construction in progress		(19,272	)		(214,881	)
Payments received on notes receivable		-			214,631
Advances made on notes receivable - related party		-			(41,048	)
Advances made on notes receivable		-			(30,000	)
Net cash flows provided by (used) in investing activities		(19,272	)		(71,298	)
Cash flows from financing activities:
Common stock issued for cash, net		-			1,843,774
Proceeds from note payable		2,536,000			24,657
Proceeds from the exercise of stock options		18,750			-
Payments on note payable - related party		-			(20,000	)
Payments on notes payable		(80,000	)		(227,904	)
Net cash flows provided by financing activities		2,474,750			1,620,527
Net increase in cash, cash equivalents, and restricted cash		887,888			204,387
Cash, cash equivalents, and restricted cash at beginning of period		1,627			24
Cash, cash equivalents, and restricted cash at end of period	$	889,515		$	204,411
Supplementary Disclosure of Cash Flow Information:
Cash paid for interest	$	165,124		$	277,100
Cash paid for income taxes	$	-		$	-
Non-Cash Investing and Financing Activities:
Shares and warrants issued to lessor as consideration for land lease					1,770,333
Proceeds from sale of land used to satisfy debt obligations		1,608,451			-
Debt discount related to warrants issued with debt and BCF		2,297,438			-

See accompanying notes to unaudited consolidated financial statements. 

F-3

AMERICANN, INC.

Notes To Unaudited consolidated Financial Statements

NOTE 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

AmeriCann, Inc. ("the Company", “we”, “our” or "the Issuer") was organized under the laws of the State of Delaware on June 25, 2010.

On January 17, 2014, a privately held limited liability company acquired approximately 93% of the Company's outstanding shares of common stock from several of the Company's shareholders, which resulted in a change in control of the Company.

The Company offers a comprehensive, turnkey package of services that includes consulting, design, construction and financing to approved and licensed marijuana operators throughout the United States. The Company's business plan is based on the anticipated growth of the regulated marijuana market in the United States.

The Company's activities are subject to significant risks and uncertainties including failure to secure funding to properly expand its operations.

Basis of Presentation

The (a) balance sheet as of September 30, 2017, which has been derived from audited financial statements, and (b) the unaudited financial statements as of and for the three and six months ended March 31, 2018 and 2017, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Form 10-K filed with the SEC on December 4, 2017. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for future quarters or for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal 2017 as reported in the Form 10-K have been omitted.

Certain prior period amounts have been reclassified to conform with current period presentation. These reclassifications have no impact on net loss.

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts in the consolidated statements of cash flows:

	March 31, 2018		September 30, 2017
Cash and cash equivalents	$	392,154	$	1,627
Restricted cash		497,361		-
Total cash, cash equivalents, and restricted cash shown in the cash flow statement	$	889,515	$	1,627

Amounts included in restricted cash represent those required to be set aside by a contractual agreement with a lender for the payment of specific construction related expenditures as part of the Company’s property development in Massachusetts. See Notes 5 and 10.

F-4

Recent Accounting Pronouncements

In January 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-01, LEASES (TOPIC 842): LAND EASEMENT PRACTICAL EXPEDIENT FOR TRANSITION TO TOPIC 842; On February 25, 2016, the FASB issued Accounting Standards Update No. 2016- 02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. The FASB has been assisting stakeholders with implementation questions and issues as organizations prepare to adopt Topic 842. In connection with the FASB’s transition support efforts, a number of stakeholders inquired about the application of the new lease requirements in Topic 842 to land easements. Land easements (also commonly referred to as rights of way) represent the right to use, access, or cross another entity’s land for a specified purpose The amendments in this Update affect the amendments in Update 2016-02, which are not yet effective but may be early adopted, and Example 10 of Subtopic 350- 30. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Update 2016-02. An entity that early adopted Topic 842 should apply the amendments in this Update upon issuance. The Company does not expect this amendment to have a material impact on its financial statements.

In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. The ASU was issued to address the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity. The ASU, among other things, eliminates the need to consider the effects of down round features when analyzing convertible debt, warrants and other financing instruments.  As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The amendments are effective for fiscal years beginning after December 15, 2018, and should be applied retrospectively. Early adoption is permitted, including adoption in an interim period. The Company plans to early adopt the ASU, and is currently evaluating implementation date and the impact of this amendment on its financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC 718. The amendments are effective for fiscal years beginning after December 15, 2017, and should be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted, including adoption in an interim period. The Company does not expect this amendment to have a material impact on its financial statements.

In February 2017, the FASB issued ASU No. 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, to clarify the scope of Subtopic 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets, and to add guidance for partial sales of nonfinancial assets. Subtopic 610-20, which was issued in May 2014 as a part of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. The amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, which is the same time as the amendments in ASU No. 2014-09, and early adoption is permitted. The Company is currently evaluating the impact of this amendment on its financial statements.

In January 2017, the FASB issued ASU No. 2017-03, Accounting Changes and Error Corrections (Topic 250). The ASU adds SEC disclosure requirements for both the quantitative and qualitative impacts that certain recently issued accounting standards will have on the financial statements of a registrant when such standards are adopted in a future period. Specially, these disclosure requirements apply to the adoption of ASU No. 2014- 09, Revenue from Contracts with Customers (Topic 606); ASU No. 2016-02, Leases (Topic 842); and ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.   As indicated below, the Company does not believe that the adoption of ASU No. 2014-09 will have a material impact on its revenue recognition as it pertains to current revenue streams.

Between May 2014 and December 2016, the FASB issued several ASU’s on Revenue from Contracts with Customers (Topic 606). These updates will supersede nearly all existing revenue recognition guidance under current U.S. generally accepted accounting principles (GAAP). The core principle is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. A five-step process has been defined to achieve this core principle, and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standards are effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standards in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting the standards recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of its pending adoption of these standards on its financial statements and expects to adopt the modified retrospective approach. However, the adoption of these new standards will not have a material impact on its revenue recognition as it pertains to current revenue streams.

F-5

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force), to provide guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flow. The amendments should be applied using a retrospective transition method, and are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This current quarter represents the first period in which the Company has maintained restricted cash balances, and the Company has elected to early adopt this amendment as of October 1, 2017. As this amendment affects presentation and disclosures only, the adoption had no impact on the Company’s financial position or results of operations.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 will require lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Under ASU 2016-02, a lessee will be required to recognize assets and liabilities for leases with terms of more than 12 months. Lessor accounting remains substantially similar to current GAAP. In addition, disclosures of leasing activities are to be expanded to include qualitative along with specific quantitative information. ASU 2016-02 will be effective in fiscal years beginning after December 15, 2018 (with early adoption permitted). ASU 2016-02 mandates a modified retrospective transition method. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

NOTE 2. GOING CONCERN 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $10,973,457 and $8,676,825 at March 31, 2018 and September 30, 2017, respectively, and had a net loss of $922,268 and $2,296,632 for the three and six months ended March 31, 2018, respectively. Further, the amount due from WGP of $1,253,604 (before an allowance of $469,699) may not be collectible. These matters, among others, raise substantial doubt about the Company’s ability to continue as a going concern. While the Company is attempting to increase operations and generate additional revenues, the Company's cash position may not be significant enough to support the Company's daily operations. Management intends to raise additional funds through the sale of its securities. The Company filed a Demand for Arbitration against WGP on April 7, 2017. There are no indicators to suggest that the amounts due from WGP will not be collectible. On January 18, 2018, the arbitration panel awarded the Company $1,045,000 plus interest at the rate of 18% per year from April 18, 2015 to January 18, 2018 for $523,023. In addition to the principal and interest awarded of $1,568,023, the Company was also awarded its attorneys’ fees and arbitration fees. On March 15, 2018, the arbitration panel issued its final award and awarded the Company $1,761,675. This award consisted of $1,045,000, plus interest at the rate of 18% per year from April 18, 2015 through March 15, 2018 ($550,000), the Company’s attorneys’ fees and costs ($113,865), and arbitration fees and expenses ($52,810). The American Arbitration Association will also return to the Company $32,562 which the Company paid to the AAA as deposits during the course of the arbitration proceeding. The arbitration award issued on March 15, 2018 is final and not subject to appeal. The Company has not collected on the award as of the filing date of this report.

Management believes that the actions presently being taken to further implement the Company’s business plan and generate additional revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate additional revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company's ability to further implement its business plan and generate additional revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

F-6

NOTE 3. NOTES AND OTHER RECEIVABLES

Notes and other receivables as of March 31, 2018 and September 30, 2017, consisted of the following: 

	March 31, 2018		September 30, 2017
Notes and other receivables from WGP, a licensed medical marijuana cultivator; $673,294 note secured by personal property of the borrower, interest rate of 18.0%; accrued consulting fees of $40,000, construction advances of $332,357 and accrued interest of $207,953. Net of reserves of $469,699. All amounts are due and payable immediately.		783,905		780,315
Related party note receivable from CCI, a non-profit corporation, financing of up to $2.5 million through April 2021, interest rate of 18.0%; monthly principal and interest payments commencing the sixth month after CCI begins to generate sales; construction and working capital advances of $129,634, and accrued interest of $27,488; unsecured.		157,122		125,327
	$	941,027	$	905,642

The notes and other receivables from WGP are classified as long term due to ongoing disputes between the Company and WGP. The Company recently won an arbitration hearing against WGP, but will not reclassify the amounts from long-term until such time that actual payment is made or becomes known.

NOTE 4. LAND

On July 31, 2014, the Company purchased a five-acre parcel of land located at 4200 Monaco Street, Denver, Colorado for $2,250,809. The property is currently zoned for cannabis cultivation and processing by the City and County of Denver. On October 5, 2017, the Company entered into a purchase and sale agreement to sell the parcel of land for $1,760,000 to an unrelated third party. An impairment loss was recognized for the year ended September 30, 2017 to adjust the carrying value to $1,611,312, net of estimated selling costs. The property was reported in the Company’s consolidated balance sheet at September 30, 2017 as Land Held for Sale of $1,611,312.

The land sale was completed on December 4, 2017 and a loss of $2,861 was recognized during the quarter ended December 31, 2017 based on the difference between the net proceeds and the carrying amount of the land at the date of sale. The proceeds were used to repay a $990,000 loan and interest of $17,088 secured by the property and $601,363 was used to partially repay an $800,000 loan that was secured by a second lien on the property.

NOTE 5.  NOTES PAYABLE

Unrelated

The Company maintained a loan secured by a first lien on the five-acre parcel of land in Denver. During the six months ended March 31, 2018, the land was sold and the related loan balance of $990,000 was repaid. See Note 4.

On August 25, 2017, we entered into a Promissory Note with an unrelated party that provides financing of up to $150,000. The note bears interest at 12% and is due and payable on May 31, 2018. As of March 31, 2018, we had a balance borrowed of $0 and accrued interest on this note payable was $85. A total payment of $89,677 was made during the six months ended March 31, 2018. Interest expense was $85 and $0 for the three months ended March 31, 2018 and 2017, respectively. Interest expense was $3,142 and $0 for the six months ended March 31, 2018 and 2017, respectively.

F-7

Convertible loans

On October 5, 2017, the Company borrowed $128,000 from an unrelated party. The loan bears interest at a rate of 12% and is due and payable on October 5, 2018. At any time on or before April 5, 2018 the Company may prepay the loan by paying the Lender the outstanding loan principal and accrued interest plus premiums ranging from 15% to 35%. After April 5, 2018, the Company may not repay the loan with the consent of the Lender. At any time after April 5, 2018, the full value of any unpaid principal is convertible into the Company’s common stock at a variable conversion price. The conversion price is equal to: (a) if the market price is greater than or equal to $1.35, the greater of (1) the variable conversion price (defined as market price multiplied by 65 percent) and (2) the fixed conversion price of $1.00, and (b) if the market price is less than $1.35, the lessor of (1) the variable conversion price and (2) the fixed conversion price. Market price is defined as the average of the lowest two daily dollar volume-weighted average sales price for the common stock during the fifteen day trading period ending on the latest complete trading day prior to the conversion date. The Company incurred debt issuance costs of $3,000 which is reflected as a debt discount in the accompanying consolidated balance sheet at March 31, 2018. As the instrument is not yet convertible, no beneficial conversion feature has been recognized at March 31, 2018. Amortization expense related to the debt discount was $750 and $0 for the three months ended March 31, 2018 and 2017, respectively and $1,500 and $0 for the six months ended March 31, 2018 and 2017, respectively.

On November 13, 2017, the Company borrowed $68,000 from an unrelated party. The loan bears interest at a rate of 12% and is due and payable on November 13, 2018. At any time on or before May 13, 2018 the Company may prepay the loan by paying the Lender the outstanding loan principal and accrued interest plus premiums ranging from 15% to 35%. After May 13, 2018, the Company may not repay the loan with the consent of the Lender. At any time after May 13, 2018, the full value of any unpaid principal is convertible into the Company’s common stock at a variable conversion price. The conversion price is equal to: (a) if the market price is greater than or equal to $1.35, the greater of (1) the variable conversion price (defined as market price multiplied by 65 percent) and (2) the fixed conversion price of $1.00, and (b) if the market price is less than $1.35, the lessor of (1) the variable conversion price and (2) the fixed conversion price. Market price is defined as the average of the lowest two daily dollar volume-weighted average sales price for the common stock during the fifteen day trading period ending on the latest complete trading day prior to the conversion date. The Company incurred debt issuance costs of $3,000 which is reflected as a debt discount in the accompanying consolidated balance sheet at March 31, 2018. As the instrument is not yet convertible, no beneficial conversion feature has been recognized at March 31, 2018. Amortization expense related to the debt discount was $750 and $0 for the three months ended March 31, 2018 and 2017, respectively and $1,250 and $0 for the six months ended March 31, 2018 and 2017 respectively.

Construction loan

On October 30, 2017 the Company secured $800,000 in financing from three unrelated parties (the “Lenders”) in the form of a loan. The primary use of the loans proceeds will be to prepare the Company’s Massachusetts Medical Cannabis Center (the “MMCC”) for the first phase of development, which will include a pad-ready site for Building 3 and the improvements to the entrance and roadways for the entire project. The remaining loan proceeds will be used to pay lease payments, thru Nov 17, 2017, to Medical Massachusetts Properties, LLC, owner of the land on which the MMCC will be built, and for working capital.

The loan bears interest at 8% per year and is due and payable on April 30, 2018, and an extension or conversion is currently being negotiated. At the options of the Lenders upon the sale of the Denver property or the Company’s notice to prepay the note, all or any portion of the outstanding loan balance is convertible into shares of the Company’s common stock. The number of shares of the Company’s common stock which will be issued upon any conversion will be determined by dividing the amount to be converted by $1.50, which amount will be proportionately adjusted in the event of any stock split or capital reorganization. The loan may be prepaid at any time, without penalty on 5 days’ notice to the Lenders.

As further consideration for the loan, the Company issued warrants to the Lenders which allow the Lenders to purchase up to 660,000 shares of the Company’s common stock. The warrants are exercisable at a price of $1.50 per share any time on or before October 30, 2022. The Company allocated the proceeds between the note and the warrants based on their relative fair values. The relative fair value of the 660,000 warrants was $442,388 which was recognized as additional paid in capital and a corresponding debt discount. After such allocation, the effective conversion price on the issuance date was less than the fair value of the stock into which the note is convertible, giving rise to a beneficial conversion feature of $357,612 which is recognized as additional paid in capital and a corresponding debt discount.

As described in Note 4, on December 4, 2017, the Company sold its property in Denver, Colorado and used $601,363 of the sale proceeds to partially repay this loan. triggering the conversion option described above and the lenders elected not to exercise their conversion option. As the conversion period had passed, the Company’s has fully expensed the debt discount associated with the beneficial conversion feature. The remaining debt discount is being recognized on a straight-line basis over the life of the note. Amortization expense related to the debt discounts was $779,725 and $0 for the six months ended March 31, 2018 and 2017, respectively.

December 2017 Convertible Note Offering

On December 29, 2017 the Company sold convertible notes in the principal amount of $800,000 to a group of accredited investors. The notes bear interest at 8% per year, are unsecured, and are due and payable on December 31, 2018. At the option of the note holders, the notes may be converted at any time into shares of the Company's common stock at an initial conversion price of $1.50 per share.

F-8

The note holders also received warrants which entitle the note holders to purchase up to 533,333 shares of the Company's common stock. The warrants are exercisable at a price of $1.50 per share and expire on October 17, 2022.

GVC Capital LLC acted as the placement agent for the offering and received a cash commission of $64,000, plus warrants to purchase 106,667 shares of the Company's common stock. The warrants are exercisable at a price of $1.50 per share and expire on December 29, 2022.

The Company allocated the proceeds between the note and the warrants based on their relative fair values. The relative fair value of the 640,000 warrants was $607,024 which was recognized as additional paid in capital and a corresponding debt discount. After such allocation, the effective conversion price on the issuance date was less than the fair value of the stock into which the note is convertible, giving rise to a beneficial conversion feature of $128,976 which is recognized as additional paid in capital and a corresponding debt discount.

The $64,000 paid to the placement agent, was allocated on a pro-rata basis to the warrants and the debt, which was recorded as an offset to additional paid in capital and an increase in debt discount of $48,562 and $15,438, respectively

All debt discounts are being recognized on a straight-line basis over the terms of the notes. Amortization expense related to the debt discounts were $187,859 and $0 for the six months ended March 31, 2018 and 2017, respectively.

February 2018 Convertible Note Offerings

On February 12, 2018 the Company sold convertible notes in the principal amount of $810,000 to a group of accredited investors. The notes bear interest at 8% per year, are unsecured, and are due and payable on December 31, 2018. At the option of the note holders, the notes may be converted at any time into shares of the Company's common stock at an initial conversion price of $1.50 per share.

The note holders also received warrants which entitle the note holders to purchase up to 540,000 shares of the Company's common stock. The warrants are exercisable at a price of $1.50 per share and expire on October 17, 2022.

The Company allocated the proceeds between the note and the warrants based on their relative fair values. The relative fair value of the 540,000 warrants was $523,013 which was recognized as additional paid in capital and a corresponding debt discount. After such allocation, the effective conversion price on the issuance date was less than the fair value of the stock into which the note is convertible, giving rise to a beneficial conversion feature of $286,987 which is recognized as additional paid in capital and a corresponding debt discount.

All debt discounts are being recognized on a straight-line basis over the terms of the notes. Amortization expense related to the debt discounts were $162,000 and $0 for the six months ended March 31, 2018 and 2017, respectively.

Related Party

On February 1, 2016, we entered into an agreement with an unrelated party which provided us with borrowing capacity of $200,000. On May 1, 2016, the agreement was amended to increase the borrowing capacity to $1,000,000. On July 14, 2016, Strategic Capital Partners (“SCP”) assumed the $521,297 loan borrowed against this credit line, increasing the total balance owed to SCP to $2,431,646. SCP is controlled by Benjamin J. Barton, one of our officers and directors and a principal shareholder. The amounts borrowed from SCP were used to fund our operations.

On July 14, 2016, we entered into a debt modification agreement whereby a portion of the debt was converted into common stock and the remaining debt was renegotiated into two promissory notes.

Of the amounts owed to SCP, $500,000 was converted into 400,000 shares of our common stock ($1.25 conversion rate).

The remaining $1,931,646 owed to SCP was divided into two promissory notes.

The first note, in the principal amount of $1,000,000, bears interest at 9.5% per year and matures on December 31, 2019. Interest is payable quarterly. The note can be converted at any time, at the option of the lender, into shares of our common stock, initially at a conversion price of $1.25 per share. The conversion price will be proportionately adjusted in the event of any stock split or capital reorganization. The note is not secured.

F-9

If the average closing price of our common stock is at least $2.50 for twenty consecutive trading days, and the average daily volume of trades of our common stock during the twenty trading days is at least 100,000 shares, we may, within 10 days of the end of such twenty-day period, notify SCP that its right to convert the note into shares of our common stock will end 45 days after the date of the notice to SCP.

The second note, in the principal amount of $931,646, bears interest at 8% per year and matures on December 31, 2019. Interest is payable quarterly. The note is not convertible into shares of our common stock but is secured by a first lien on all amounts due to us by WGP. Any payments received from the sale, lease or commercialization of the property in Denver, and any amounts received from WGP, will be applied to the principal amount of the note. Otherwise, all unpaid principal and interest will be due on December 31, 2019.

Accrued interest on these notes payable was $42,002 and $84,998 at March 31, 2018 and September 30, 2017, respectively.

In connection with the debt modification agreement, we issued SCP warrants to purchase 800,000 shares of our common stock, exercisable at a price of $1.50 per share, and warrants to purchase an additional 800,000 shares of common stock, exercisable at a price of $3.00 per share. Both sets of warrants expire on June 30, 2020. We allocated the relative fair values to the warrants, stock options, and convertible debt, as determined by the Black Scholes option pricing model. Based on the Black Scholes option pricing model, a net debt premium of $72,651 was allocated to the warrants which are reflected in additional paid-in-capital. The debt premium is being amortized on a straight-line basis over the term of the notes. At March 31, 2018, the outstanding principal on these notes was $1,931,646, and the unamortized debt premium was $36,355. Amortization of debt premium was $10,682 and $14,932 for the six months ended March 31, 2018 and 2017, respectively.

NOTE 6. RELATED PARTY TRANSACTIONS

Strategic Capital Partners. At March 31, 2018 and September 30, 2017, we had outstanding notes payable to SCP of $1,968,001 and $1,978,683, respectively.

Interest expense was $36,461 and $36,634 for the three months ended March 31, 2018 and 2017, respectively; and $73,851 and $69,602 for the six months ended March 31, 2018 and 2017. Interest payable – related party of $42,002 and $84,998 was included in the accompanying consolidated balance sheets at March 31, 2018 and September 30, 2017, respectively.  We made interest payments of $106,396 during the quarter ended March 31, 2018, and $127,529 during the six months ended March 31, 2018. 

Coastal Compassion. On April 7, 2016, we signed agreements with Coastal Compassion Inc. (“CCI”). CCI is one of a limited number of non-profit organizations that has received a provisional or final registration to cultivate, process and sell medical cannabis by the Massachusetts Department of Public Health. CCI has agreed to become the initial tenant in our planned MMCC. Tim Keogh, our Chief Executive Officer, is a Board Member of CCI.

Pursuant to the agreements, we agreed to provide CCI with financing of up to $2.5 million for a five-year term at 18% interest per year for construction and working capital required for CCI’s approved dispensary and cultivation center in Fairhaven, MA. For a three- year period beginning April 1, 2016, we agreed to consult with CCI in the design, construction and operation of the Fairhaven facility. CCI will pay us $10,000 each month for these consulting services. Although the DPH has approved our agreement with CCI relating to the development and lease terms of the MMCC, the actual lease agreement with CCI has not been finalized or approved by the DPH. We will need to secure significant capital to provide the financing to CCI.

As of March 31, 2018, we have provided financing to CCI of $157,122, which includes construction and working capital advances of $129,634, and accrued interest of $27,488.

F-10

NOTE 7. LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per share:

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2018			2017			2018			2017
Net loss attributable to common stockholders	$	(922,268	)	$	(595,288	)	$	(2,296,632	)	$	(1,029,733	)
Basic weighted average outstanding shares of common stock		19,376,278			19,136,555			19,371,082			18,706,825
Dilutive effects of common share equivalents		-			-			-			-
Dilutive weighted average outstanding shares of common stock		19,376,278			19,136,555			19,371,082			18,706,825
Basic and diluted net loss per share of common stock	$	(0.05	)	$	(0.03	)	$	(0.12	)	$	(0.06	)

As of March 31, 2018, we have excluded 180,000 of stock options and 10,306,000 of warrants from the computation of diluted net loss per share since the effects are anti-dilutive. As of March 31, 2017, we have excluded 1,155,000 of stock options and 9,981,000 of warrants from the computation of diluted net loss per share since the effects are anti-dilutive.

NOTE 8. INCOME TAXES

We did not record any income tax expense or benefit for the three or six months ended March 31, 2018. We increased our valuation allowance and reduced our net deferred tax assets to zero. Our assessment of the realization of our deferred tax assets has not changed, and as a result we continue to maintain a full valuation allowance for our net deferred assets as of March 31, 2018.

As of March 31, 2018, we did not have any unrecognized tax benefits. There were no significant changes to the calculation since September 30, 2017.

NOTE 9. STOCK BASED COMPENSATION

Restricted Stock Awards. We use restricted stock awards to compensate certain key executives and other individuals.  At March 31, 2018, we had no outstanding unvested restricted stock awards. Stock-based compensation expense associated with restricted stock awards was $0 and $18,725 for the three months ended March 31, 2018 and 2017, respectively, and $0 and $37,450 for the six months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, there is no remaining unrecognized stock-based compensation associated with restricted stock awards. 

Stock Options. There was no stock option activity for the quarter ended March 31, 2018. Stock option details are as follows: 

						Weighted
				Weighted		Average
				Average		Contractual		Aggregate
	Number of			Exercise		Term		Intrinsic
	Shares			Price		(Years)		Value
Outstanding and exerciseable at September 30, 2017		1,305,000		$	8.29		0.6	$	431,200
Granted		-		$	-		-		-
Cancelled/Expired		(1,100,000	)		9.45		-		-
Exercised		25,000			0.75		-		-
Outstanding as of March 31, 2018		180,000		$	2.21		2.21	$	-
Vested and expected to vest at March 31, 2018		180,000		$	2.21		2.21	$	-
Exercisable at March 31, 2018		180,000		$	2.21		2.21	$	35,700

There was no stock-based compensation expense associated with stock options for the three and six months ended March 31, 2018 and 2017. At March 31, 2018, there is no remaining unrecognized stock-based compensation associated with stock options.

F-11

NOTE 10.  COMMITMENTS AND CONTINGENCIES

Coastal Compassion. On April 7, 2016, we signed agreements with Coastal Compassion Inc. (“CCI”). CCI is one of a limited number of non-profit organizations that has received a provisional or final registration to cultivate, process and sell medical cannabis by the Massachusetts Department of Public Health. CCI has agreed to become the initial tenant in our planned MMCC. Tim Keogh, our Chief Executive Officer, is a Board Member of CCI.

Pursuant to the agreements, we agreed to provide CCI with financing of up to $2.5 million for a five-year term at 18% interest per year for construction and working capital required for CCI’s approved dispensary and cultivation center in Fairhaven, MA. For a three- year period beginning April 1, 2016, we agreed to consult with CCI in the design, construction and operation of the Fairhaven facility. CCI will pay us $10,000 each month for these consulting services. Although the DPH has approved our agreement with CCI relating to the development and lease terms of the MMCC, the actual lease agreement with CCI has not been finalized or approved by the DPH. We will need to secure significant capital to provide the financing to CCI.

As of March 31, 2018, we have provided financing to CCI of $157,122, which includes construction and working capital advances of $129,634, and accrued interest of $27,488.

Operating Leases

Land

On October 17, 2016, the Company closed the previously announced acquisition of a 52.6-acre parcel of undeveloped land in Freetown, Massachusetts. The deposits of $925,000 previously paid by the Company to the seller, Boston Beer Company (“BBC”), were credited against the total purchase price of $4,475,000. The remaining balance of $3,550,000 was paid to BBC by Massachusetts Medical Properties, LLC (“MMP”). The property is located approximately 47 miles southeast of Boston. The Company plans to develop the property as the Massachusetts Medical Cannabis Center (the “MMCC”). Plans for the MMCC include the construction of sustainable greenhouse cultivation, processing, and infused product facilities that will be leased or sold to Registered Marijuana Dispensaries under the Massachusetts Medical Marijuana Program.

As part of a simultaneous transaction, the Company assigned the property rights to MMP for a nominal fee and entered a lease agreement pursuant to which MMP agreed to lease the property to the Company for an initial term of fifty (50) years. We have the option to extend the term of the lease for four (4) additional ten (10) year periods. The lease is a triple net lease, with the Company paying all real estate taxes, repairs, maintenance and insurance.

The lease payments will be the greater of (a) $30,000 per month; (b) $0.38 per square foot per month of any structure built on the property; or (c) 1.5% of all gross monthly sales of products sold by the Company, any assignee of the Company, or any subtenant of the Company. The lease payments will be adjusted up (but not down) every five (5) years by any increase in the Consumer Price Index.

Between October 17, 2016 and April 17, 2017, the monthly lease payments will accrue, with all accrued lease payments to be paid to MMP on April 17, 2017. On April 17, 2017, the Company reimbursed MMP for its costs and expenses associated with the acquisition of the property, the lease, and the acquisition of the shares and the warrant from the Company (as further described below).

Under the terms of the lease, the Company had six months to obtain $2.6 million in capital funding for the construction of the first phase building. In the event that the Company is unable to raise these funds within the six month period, the Company had an additional six months to do so; provided, that the Company has paid accrued lease payments and closing costs. On October 17, 2017, the lease agreement was amended to provide that the Company will have until 16 months from October 17, 2016 to raise $2.6 million in capital funding. In addition to extending the funding deadline, this amendment granted MMP a warrant to purchase up to 100,000 shares of the Company’s common stock at an exercise price of $1.50 per share. The warrant can be exercised on October 17, 2022. The Company recognized an expense of $0 and $171,307 during the three and six months ended March 31, 2018, respectively, representing the entire grant date fair value of the warrant.

On February 16, 2018, the lease agreement was amended to provide that the Company will have until 18 months from October 17, 2016 to raise $2.6 million in capital funding. In addition to extending the funding deadline, this amendment granted MMP a warrant to purchase up to 50,000 shares of the Company’s common stock at an exercise price of $1.50 per share. The warrant can be exercised on October 17, 2022. The Company recognized an expense of $135,354 during the three months ended March 31, 2018, representing the entire grant date fair value of the warrant.

The Company received a credit for the $925,000 paid towards the purchase price of the land in the form of discounted lease payments. For the initial fifty (50) year term of the lease, the lease payments will be reduced by $1,542 each month

F-12

In connection with the sale of the property to MMP and the lease, the Company and MMP entered into a Share Purchase Agreement pursuant to which the Company issued to MMP 100,000 shares of its common stock at par value of $0.0001 (“Common Stock”), and a warrant to purchase up to 3,640,000 shares of Common Stock at an exercise price of $1.00 per share. The warrant can be exercised at any time on or after October 17, 2018 and on or before October 17, 2020. The warrant does not contain a cashless exercise provision. The fair value of the warrant was established using the Black Scholes option pricing model using the following assumptions:

● Risk-free interest rate – 1.12 percent

● Expected term – 4.0 years

● Volatility – 100 percent

The Company allocated $1,899,966 to the warrant which is reflected in additional paid-in-capital and was allocated to prepaid land lease. The fair value of the common stock on the date of the agreement was $73,000, which is also reflected in additional paid-in-capital and was allocated to prepaid land lease. The prepaid land lease is being amortized on a straight-line basis over the term of the lease.

The lease expense was $99,865 and $208,184 for the three months ended March 31, 2018 and 2017, respectively, and $199,730 and $307,036 for the six months ended March 31, 2018 and 2017, respectively. At March 31, 2018, the future rental payments required under this lease are $170,748 for the remainder of fiscal 2018, $341,496 for fiscal years 2019 through 2022, and $15,026,024 thereafter.

Office space

The Company leases its office space located at 1550 Wewatta, Denver, Colorado 80202 for $1,845 per month under a month-to-month lease.

Except as described above, the Company has no other non-cancelable lease commitments.

NOTE 11.  SHAREHOLDERS’ EQUITY

Equity Line Agreement. On December 12, 2017, the Company entered into an amended and restated equity line agreement with Mountain States Capital, LLC (MSC). Under the equity line agreement, MSC agreed to provide the Company with up to $10,000,000 of funding through the purchase of shares of the Company's common stock.

During the term of the Agreement, the Company, at its sole discretion, may deliver a Put Notice to MSC, which will specify the dollar amount which the Company wants to draw down under the Equity Line. The amount the Company can draw down at any one time is the lesser of twice the average of the 10-day average daily trading volume (computed by multiplying the volume weighted average price for each day by the number of shares traded for that day), or $500,000.

A closing will occur on the date which is no earlier than five trading days following and no later than seven trading days following the applicable Put Notice. On each Closing Date, the Company will sell, and MSC will purchase, the shares of the Company's common stock specified in the Put Notice.

The amount to be paid by MSC on a particular Closing Date will be determined by dividing the dollar amount specified in the Put Notice by the Purchase Price. The Purchase Price is 90% of the lowest daily volume weighted average price of the Company's common stock during the Pricing Period. The Pricing Period, with respect to a particular Put Notice, is five consecutive trading days including, and immediately following, the delivery of a Put Notice. However, no Put Notice may be delivered on a day that is not a Trading Day.

The Company may specify a Minimum Price when submitting a Put Notice, provided however that the Minimum Price must be more than 75% of the Closing Price of the Company's Common Stock on the date immediately preceding the date of the delivery of the Put Notice. If the Purchase Price is less than the Minimum Price, the Company may, at its option, sell shares to MSC on the Closing Date using the Purchase Price. Notwithstanding the above, the Company will not sell any shares at a price below $1.00 per share.

The Company is under no obligation to submit any Put Notices.

The equity line agreement has a term of 18 months, which began on February 14, 2018

During the three and six months ended March 31, 2018, the Company issued 25,000 shares from the exercise of stock options for proceeds of $18,750. These options were fully vested and had been previously expensed.

F-13

Warrants. Warrant activity as of and for the six months ended March 31, 2018 is as follows: 

						Weighted
				Weighted		Average
				Average		Contractual		Aggregate
	Number of			Exercise		Term		Intrinsic
	Shares			Price		(Years)		Value
Outstanding and exerciseable at September 30, 2017		10,166,000		$	3.68		2.4	$	-
Granted		1,940,000		$	1.50		4.8
Cancelled/Expired		(1,800,000	)		9.33
Exercised		-
Outstanding as of March 31, 2018		10,306,000		$	2.30		2.4	$	4,768,201
Vested and expected to vest at March 31, 2018		10,306,000		$	2.40		2.4	$	4,768,201
Exercisable at March 31, 2018		6,566,000		$	2.40		2.4	$	1,302,601

As disclosed in Notes 5 and 10, the Company issued warrants to purchase up to 1,940,000 shares of Common Stock at an exercise price of $1.50 per share. The fair value of the warrants was determined using the Black-Scholes option pricing model using the following assumptions:

● Expected term – 3 to 5 years

● Volatility – 163% to 176%

● Risk-free rate – 1.73% to 2.61%

● Stock price - $1.74 to $4.09

● Expected dividends – $0

For those warrants that were issued with debt, the proceeds were allocated to the respective instruments on a pro rata basis based on the fair value of each instrument. See Note 5.

NOTE 12. SUBSEQUENT EVENTS

On October 17, 2016, the Company closed the previously announced acquisition of a 52.6-acre parcel of undeveloped land in Freetown, Massachusetts. The Company plans to develop the property as the Massachusetts Medical Cannabis Center (the “MMCC”).

As part of a simultaneous transaction, the Company sold the property to Massachusetts Medical Properties, LLC (“MMP”) and the Company and MMP entered into a lease, pursuant to which MMP leased the property to the Company for an initial term of fifty years.

Under the terms of the lease, the Company had until October 16, 2017 to obtain capital funding for the construction of the first phase building. On October 17, 2017 the Company and MMP amended the lease to provide that the Company will have until 16 months from October 17, 2016 to raise $2.6 million for the construction of the first phase of the MMCC.

On April 17, 2018 the Company and MMP amended the lease for the third time to provide that the Company will have until 20 months from October 17, 2016 to raise $2.6 million for the construction of the first phase of the MMCC. If the Company is unable to raise $2.6 million on or before 20 months from October 17, 2016, the lease will terminate.

As further consideration for the third amendment to the lease, the Company issued a warrant which allows MMP to purchase 50,000 shares of the Company’s common stock at a price of $1.50 per share. The warrant expires on October 17, 2022.

On April 5, 2018, the Company prepaid the $128,000 loan discussed in Note 5.

F-14

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto as of and for the year ended September 30, 2017 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K

Forward-Looking Statements

The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, (“the Exchange Act”), which are subject to the “safe harbor” created by those sections. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “should,” “could,” “predicts,” “potential,” “continue,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements. All forward-looking statements in this Form 10-Q are made based on our current expectations, forecasts, estimates and assumptions, and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. In evaluating these statements, you should specifically consider various factors, uncertainties and risks that could affect our future results or operations. These factors, uncertainties and risks may cause our actual results to differ materially from any forward-looking statement set forth in this Form 10-Q. You should carefully consider these risk and uncertainties described and other information contained in the reports we file with or furnish to the SEC before making any investment decision with respect to our securities. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

OVERVIEW

AmeriCann offers a comprehensive, turnkey package of services that includes consulting, design, construction and financing to approved and licensed marijuana operators throughout the United States. Our business plan is based on the anticipated growth of the regulated marijuana market in the United States.

AmeriCann’s team includes board members, consultants, engineers and architects who specialize in real estate development, traditional horticulture, lean manufacturing, medical research, facility construction, regulatory compliance, security, marijuana cultivation and genetics, extraction processes, and infused product development.

To support local businesses that seek to serve cannabis patients in their communities we initiated the AmeriCann Preferred Partner Program. Currently, we have one Preferred Partner in Colorado, which is 4900 Jackson, LLC and one Preferred Partner in Massachusetts, which is Coastal Compassion, Inc. Through this program, we plan to provide an essential set of resources including advanced cultivation facilities, access to a team of experts and in certain cases, capital for our partner’s businesses. In addition, AmeriCann’s team has assisted applicants in obtaining cannabis licenses in competitive application processes in Massachusetts and Illinois. This support is designed to assist our Preferred Partners in newly regulated markets.

AmeriCann plans to lease facilities to its Preferred Partners that will be designed with AmeriCann’s propriety cultivation and processing system called “Cannopy.” AmeriCann developed Cannopy with experts from traditional horticulture, lean manufacturing, regulatory compliance and cannabis cultivation. Cannopy includes automation throughout the production life-cycle, customized workflow processes, monitoring and controls, and top-line security systems. Cannopy empowers Preferred Partners to consistently produce medical marijuana for patients at the lowest cost in the most efficient, compliant manner. We plan to provide initial and on-going training, policies, practices and procedures to operate the facilities.

The expanding cannabis industry requires extensive real estate to meet the growing needs of the market for cannabis products. AmeriCann assists its Preferred Partners with the identification, design, permitting, acquisition, development and operation of scalable infrastructure to cultivate and to dispense medical cannabis in regulated markets. 

15

RECENT DEVELOPMENTS

Land Sale. On December 4, 2017 we completed a sale of land in Denver, Colorado. The proceeds of $1,608,451 were used to repay a $990,000 loan secured by the property and the related interest and the remaining proceeds were used as a partial paydown on an $800,000 loan that was in a second lien position on the property.

Convertible Debt Offerings. During the six months ended March 31, 2018, we borrowed $2,606,000 from unrelated parties, as described in Note 5 to the consolidated financial statements included with this report.

Equity Line Agreement. On December 12, 2017, we entered into an amended and restated equity line agreement with Mountain States Capital, LLC (MSC). Under the equity line agreement, MSC agreed to provide us with up to $10,000,000 of funding through the purchase of shares of our common stock.

During the term of the Agreement, we, at our sole discretion, may deliver a Put Notice to MSC, which will specify the dollar amount which we want to draw down under the Equity Line. The amount we can draw down at any one time is the lesser of twice the average of the 10-day average daily trading volume (computed by multiplying the volume weighted average price for each day by the number of shares traded for that day), or $500,000.

A closing will occur on the date which is no earlier than five trading days following and no later than seven trading days following the applicable Put Notice. On each Closing Date, we will sell, and MSC will purchase, the shares of our common stock specified in the Put Notice.

The amount to be paid by MSC on a particular Closing Date will be determined by dividing the dollar amount specified in the Put Notice by the Purchase Price. The Purchase Price is 90% of the lowest daily volume weighted average price of the Company's common stock during the Pricing Period. The Pricing Period, with respect to a particular Put Notice, is five consecutive trading days including, and immediately following, the delivery of a Put Notice. However, no Put Notice may be delivered on a day that is not a Trading Day.

We may specify a Minimum Price when submitting a Put Notice, provided however that the Minimum Price must be more than 75% of the Closing Price of our Common Stock on the date immediately preceding the date of the delivery of the Put Notice. If the Purchase Price is less than the Minimum Price, we may, at its option, sell shares to MSC on the Closing Date using the Purchase Price. Notwithstanding the above, we will not sell any shares at a price below $1.00 per share.

We are under no obligation to submit any Put Notices.

The equity line agreement has a term of 18 months, which began on February 14, 2018.

December 2017 Financing. On December 29, 2017, we sold convertible notes in the principal amount of $800,000 to a group of accredited investors. The notes bear interest at 8% per year, are unsecured, and are due and payable on December 31, 2018. At the option of the note holders, the notes may be converted at any time into shares of our common stock at an initial conversion price of $1.50 per share. The note holders also received warrants which entitle the note holders to purchase up to 533,333 shares of our common stock. The warrants are exercisable at a price of $1.50 per share and expire on October 17, 2022. The placement agent for the offering received a cash commission of $64,000, plus warrants to purchase 106,667 shares of our common stock. The placement agent’s warrants are exercisable at a price of $1.50 per share and expire on December 29, 2022.

16

Arbitration Award. On April 7, 2017, we filed an arbitration claim against Wellness Group Pharms, LLC (“WGP”). On January 18, 2018, the arbitration panel awarded us $1,045,000, plus interest at the rate of 18% per year from April 18, 2015 to January 18, 2018 for $523,023. On March 15, 2018, the arbitration panel issued its final award and awarded the Company $1,761,675. This award consisted of $1,045,000, plus interest at the rate of 18% per year from April 18, 2015 through March 15, 2018 ($550,000), the Company’s attorneys’ fees and costs ($113,865), and arbitration fees and expenses ($52,810). The American Arbitration Association will also return to the Company $32,562 which the Company paid to the AAA as deposits during the course of the arbitration proceeding. The arbitration award issued on March 15, 2018 is final and not subject to appeal.

February 2018 Financing. On February 12, 2018 we sold convertible notes in the principal amount of $810,000 to a group of accredited investors. The notes bear interest at 8% per year, are unsecured, and are due and payable on December 31, 2018. At the option of the note holders, the notes may be converted at any time into shares of our common stock at an initial conversion price of $1.50 per share. The note holders also received warrants which entitle the note holders to purchase up to 540,000 shares of our common stock. The warrants are exercisable at a price of $1.50 per share and expire on October 17, 2022.

SIGNIFICANT ACCOUNTING POLICIES

There were no changes in our significant accounting policies and estimates during the six months ended March 31, 2018 from those set forth in our Annual Report on Form 10-K for the year ended September 30, 2017 filed on December 4, 2017.

RESULTS OF OPERATIONS

Total Revenues

During the three months ended March 31, 2018 and 2017, we generated $0 and $15,000 in revenue, respectively. During the six months ended we generated $0 and $30,000 in revenue, respectively. The decrease in revenues is due to the deferral of revenues from the CCI consulting agreement that occurred in fiscal 2017.

Advertising and Marketing Expenses

Advertising and marketing expenses were approximately $2,800 and $5,000 for the three months ended March 31, 2018 and 2017, respectively. During the six months ended March 31, 2018 and 2017 the advertising and marketing expenses were approximately $3,700 and $7,200, respectively. The decrease is due fewer advertising and marketing activities, as the Company is shifting its focus to the planning and development of the first phase building of the Massachusetts Medical Cannabis Center.

Professional Fees  

Professional fees were approximately $118,000 and $149,000 for the three months ended March 31, 2018 and 2017, respectively. The decrease is primarily due to reduction of audit fees of approx. $31,000, Professional fees were approximately $270,000 and $201,000 for the six months ended March 31, 2018 and 2017, respectively. The increase is due to increased consulting fees of approx. $17,000 and legal fees of approximately $108,000 offset by reduced architecture and engineering fees of approximately 40,000 and audit fees of approximately $17,000.

General and Administrative Expenses

General and administrative expenses were approximately $358,000 and $365,000 for the three months ended March 31, 2018 and 2017, respectively. General and administrative expenses were approximately $792,000 and $653,000 for the six months ended March 13, 2018 and 2017, respectively. The increase is attributable primarily to stock based compensation associated with the warrant granted to our lessor, partially offset by higher licenses and fees in the six months ended March 31, 2018 associated with the initial planning phases of certain of our developments.

Interest Income

Interest income was approximately $17,300 and $2,600 for the three months ended March 31, 2008 and 2017, respectively. Interest income was approximately $25,386 and $10,759 for the six months ended March 31, 2018 and 2017, respectively. The increase is directly with CCI note receivable.

17

Interest Expense

Interest expense was approximately $425,000 and $58,000 for the three months ended March 31, 2018 and 2017, respectively. Interest expense was approximately $1,179,000 and $139,000 for the six months ended March 31, 2018 and 2017, respectively. The increase is primarily attributable to increased interest rates and the amortization of debt discounts that are associated with the convertible debt issuances that occurred in this quarter. 

 Net Operating Loss 

We had a net loss of $(922,268) and $(595,288) for the three months ended March 31, 2018 and 2017, respectively. We had a net loss of $(2,296,632) and $(1,029,733) for the six months ended March 31, 2018 and 2017, respectively. The increase in net loss is attributable to changes in revenues, operating expenses and interest income and expense, each of which is described above.

Going Concern

See Note 2 to the unaudited consolidated financial statements filed with this report for information concerning our ability to continue as a going concern.

Notes Payable

See Notes 5 and 6 to the unaudited consolidated financial statements filed with this report for information concerning our notes payable

Analysis of Cash Flows 

During the six months ended March 31, 2018, our net cash flows used in operations were $1,567,590 as compared to net cash flows used in operations of $1,344,842 for the six months ended March 31, 2017. The decrease is primarily due to the timing of working capital payments

Cash flows used in investing activities were $19,272 for the six months ended March 31, 2018, consisting of additions to construction in progress. as compared to the net cash flows used in investing activities were $71,298 for the six months ended March 31, 2017, consisting of advances made on notes receivable of $71,048.

Cash flows provided by financing activities were $2,474,750 for the six months ended March 31, 2018, consisting of proceeds from notes payable of $2,536,000, proceeds from exercise of stock options of $18,750, partially offset by payments on notes payable of $80,000. Cash flows provided by financing activities were $1,620,527 for the six months ended March 31, 2017, consisting of net proceeds from the issuance of common stock of $1,843,774, proceeds from notes payable of $24,657, offset by payments on notes payable to related parties of $20,000 and payments on notes payable of $227,904.

Note that we sold our property in Denver, Colorado, yielding proceeds of $1,608,451 which were used to pay down existing debt, which is reflected as a noncash financing and investing activity in our statement of cash flows for the six months ended March 31, 2018.  

We do not have any firm commitments from any person to provide us with any capital.

18

OFF-BALANCE SHEET ARRANGEMENTS

As of March 31, 2018, we did not have any off balance sheet arrangements.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our President and Chief Executive Officer and Chief Financial Officer, has 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 of the end of the period covered by this Quarterly Report on Form 10-Q.  Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were not effective for the same reasons that our internal control over financial reporting were not effective.

Internal Control over Financial Reporting

As indicated in our Form 10-K filed on December 4, 2017, our Principal Executive Officer and Principal Financial Officer concluded that our internal control over financial reporting was not effective during the 2017 fiscal year at the reasonable assurance level, as a result of a material weaknesses primarily related to a lack of a sufficient number of personnel with appropriate training and experience in accounting principles generally accepted in the United States of America, or GAAP, limited or no segregation of duties, and lack of independent directors.

We are currently in the process of evaluating the steps necessary to remediate these material weaknesses.

Change in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the six months ended March 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected.

PART II OTHER INFORMATION

ITEM 6. EXHIBITS

Exhibit Number	Description of Document
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, (filed herewith)
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, (filed herewith)
32	Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

19

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.

	AMERICANN, INC.
Dated: May 15, 2018	By:	/s/ Timothy Keogh
		Timothy Keogh
		Principal Executive Officer
	By:	/s/ Benjamin Barton
		Benjamin Barton
		Principal Financial and Accounting Officer

20

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO RULES 13a-14(a)AND 15a-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

I, Timothy Keogh, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the three and six months ended March 31, 2018 of AmeriCann, 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(s) 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 fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) 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.

Date: May 15, 2018

/s/ Timothy Keogh

Timothy Keogh

Principal Executive Officer

EX-31.2

 Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO RULES 13a-14(a) AND 15a-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

I, Benjamin Barton, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the three and six months ended March 31, 2018 of AmeriCann, 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(s) 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 fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) 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.

Date: May 15, 2018

/s/ Benjamin Barton

Benjamin Barton

Principal Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of AmeriCann, Inc. (the “Company”), for the quarter ended March 31, 2018, as filed with the Securities and Exchange Commission (the “Report”), each of the undersigned, Timothy Keogh, principal executive officer of the Company, and Benjamin Barton, principal financial officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of their knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By:	/s/ Timothy Keogh
	Timothy Keogh
	Principal Executive Officer
Dated May 15, 2018
By:	/s/ Benjamin Barton
	Benjamin Barton
	Principal Financial Officer

Dated May 15, 2018

XML

Document And Entity Information - shares	6 Months Ended
	Mar. 31, 2018	Apr. 30, 2018
Document Information [Line Items]
Entity Registrant Name	Americann, Inc.
Entity Central Index Key	0001508348
Trading Symbol	acan
Current Fiscal Year End Date	--09-30
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		19,391,000
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Mar. 31, 2018	Sep. 30, 2017
Current Assets:
Cash and cash equivalents	$ 392,154	$ 1,627
Restricted cash	497,361
Current portion of prepaid land lease	57,959	57,959
Prepaid expenses and other current assets	4,970	5,000
Total current assets	952,444	64,586
Land held for sale		1,611,312
Construction in progress	699,300	680,028
Furniture and equipment (net of depreciation of $4,265 and $3,704)	3,591	4,153
Website development costs (net of amortization of $35,736 and $28,820)	5,764	12,680
Notes and other receivables (net of allowance of $469,699)	783,905	780,315
Note receivable - related party	157,122	125,327
Prepaid land lease and related deposits, net of current portion	2,753,068	2,782,047
Security deposit and other assets	63,110	3,110
Total assets	5,418,304	6,063,558
Current Liabilities:
Accounts payable and accrued expenses	9,942	624,623
Interest payable (including $42,002 and $84,998 to related parties)	52,316	86,253
Other payables	7,995	19,699
Notes payable (net of discount of $1,235,104 and $0)	769,533	1,070,000
Total current liabilities	839,786	1,800,575
Notes payable - related party (inclusive of premium of $36,355 and $47,037)	1,968,001	1,978,683
Total liabilities	2,807,787	3,779,258
Commitments and contingencies - see Note 10
Stockholders' Equity:
Preferred stock, $0.0001 par value; 20,000,000 shares authorized; no shares issued and outstanding	0	0
Common stock, $0.0001 par value; 100,000,000 shares authorized; 19,391,000 and 19,366,000 shares issued and outstanding as of March 31, 2018 and September 30, 2017, respectively	1,940	1,937
Additional paid in capital	13,582,034	10,959,188
Accumulated deficit	(10,973,457)	(8,676,825)
Total stockholders' equity	2,610,517	2,284,300
Total liabilities and stockholders' equity	$ 5,418,304	$ 6,063,558

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Mar. 31, 2018	Sep. 30, 2017
Furniture and equipment, accmulated depreciation	$ 4,265	$ 3,704
Website development costs, accumulation amortization	35,736	28,820
Notes and other receivables, allowance	469,699	469,699
Interest payable, related parties	42,002	84,998
Note payable, discount	1,235,104	0
Note payable, related party, discount	$ 36,355	$ 47,037
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	20,000,000	20,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	19,391,000	19,366,000
Common stock, shares outstanding (in shares)	19,391,000	19,366,000

XML

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Revenues:
Revenues		$ 15,000		$ 30,000
Operating expenses:
Advertising and marketing	2,787	4,973	3,749	7,220
Professional fees	118,128	148,686	270,115	201,083
General and administrative expenses	357,592	364,817	792,454	653,250
Total operating expenses	478,507	518,476	1,066,318	861,553
Loss from operations	(478,507)	(503,476)	(1,066,318)	(831,553)
Other income (expense):
Interest income	17,309	2,584	25,386	10,759
Interest expense	(424,609)	(57,762)	(1,178,988)	(139,337)
Other income (expense)			(2,861)
Interest expense - related party	(36,461)	(36,634)	(73,851)	(69,602)
Total other income (expense)	(443,761)	(91,812)	(1,230,314)	(198,180)
Net loss	$ (922,268)	$ (595,288)	$ (2,296,632)	$ (1,029,733)
Basic and diluted loss per common share (in dollars per share)	$ (0.05)	$ (0.03)	$ (0.12)	$ (0.06)
Weighted average common shares outstanding (in shares)	19,376,278	19,136,555	19,371,082	18,706,825
Service [Member]
Revenues:
Revenues		$ 15,000		$ 30,000

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net loss	$ (2,296,632)	$ (1,029,733)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	7,478	7,479
Stock based compensation and option expense	306,661	37,450
Loss on disposal of land	2,861
Amortization of equity instruments issued to lessor	28,979
Amortization of debt discount/(premium)	1,121,652	20,318
Changes in operating assets and liabilities:
Interest receivable	(25,385)	1,994
Prepaid expenses	(59,970)	28,980
Accounts payable and accrued expenses	(597,593)	(330,932)
Notes receivable - related party	(10,000)
Interest payable	9,059	21,346
Interest payable - related party	(42,996)	(109,825)
Other payables	(11,704)	8,081
Net cash flows used in operations	(1,567,590)	(1,344,842)
Cash flows from investing activities:
Additions to construction in progress	(19,272)	(214,881)
Payments received on notes receivable		214,631
Advances made on notes receivable - related party		(41,048)
Advances made on notes receivable		(30,000)
Net cash flows provided by (used) in investing activities	(19,272)	(71,298)
Cash flows from financing activities:
Common stock issued for cash, net		1,843,774
Proceeds from note payable	2,536,000	24,657
Proceeds from the exercise of stock options	18,750
Payments on note payable - related party		(20,000)
Payments on notes payable	(80,000)	(227,904)
Net cash flows provided by financing activities	2,474,750	1,620,527
Net increase in cash, cash equivalents, and restricted cash	887,888	204,387
Cash, cash equivalents, and restricted cash at beginning of period	1,627	24
Cash, cash equivalents, and restricted cash at end of period	889,515	204,411
Supplementary Disclosure of Cash Flow Information:
Cash paid for interest	165,124	277,100
Cash paid for income taxes	0	0
Non-Cash Investing and Financing Activities:
Shares and warrants issued to lessor as consideration for land lease		1,770,333
Proceeds from sale of land used to satisfy debt obligations	1,608,451
Debt discount related to warrants issued with debt and BCF	$ 2,297,438

XML

Note 1 - Nature of Business and Basis of Presentation

6 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

NOTE

1.

NATURE OF BUSINESS AND BASIS OF PRESENTATION

AmeriCann, Inc. ("the Company", “we”, “our” or "the Issuer") was organized under the laws of the State of Delaware on

June 25, 2010.

On

January 17, 2014,

a privately held limited liability company acquired approximately

93%

of the Company's outstanding shares of common stock from several of the Company's shareholders, which resulted in a change in control of the Company.

The Company offers a comprehensive, turnkey package of services that includes consulting, design, construction and financing to approved and licensed marijuana operators throughout the United States. The Company's business plan is based on the anticipated growth of the regulated marijuana market in the United States.

The Company's activities are subject to significant risks and uncertainties including failure to secure funding to properly expand its operations.

Basis of Presentation

The (a) balance sheet as of

September 30, 2017,

which has been derived from audited financial statements, and (b) the unaudited financial statements as of and for the

three

and

six

months ended

March 31, 2018

and

2017,

have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Form

10

-K filed with the SEC on

December 4, 2017.

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are

not

necessarily indicative of the results to be expected for future quarters or for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal

2017

as reported in the Form

10

-K have been omitted.

Certain prior period amounts have been reclassified to conform with current period presentation. These reclassifications have

no

impact on net loss.

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts in the consolidated statements of cash flows:

	March 31, 2018		September 30, 2017
Cash and cash equivalents	$	392,154	$	1,627
Restricted cash		497,361		-
Total cash, cash equivalents, and restricted cash shown in the cash flow statement	$	889,515	$	1,627

Amounts included in restricted cash represent those required to be set aside by a contractual agreement with a lender for the payment of specific construction related expenditures as part of the Company’s property development in Massachusetts. See Notes

5

and

10.

Recent Accounting Pronouncements

In

January 2018,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

No.

2018

-

01,

LEASES (TOPIC

842

): LAND EASEMENT PRACTICAL EXPEDIENT FOR TRANSITION TO TOPIC

842;

On

February 25, 2016,

the FASB issued Accounting Standards Update

No.

2016

-

02,

Leases (Topic

842

), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. The FASB has been assisting stakeholders with implementation questions and issues as organizations prepare to adopt Topic

842.

In connection with the FASB’s transition support efforts, a number of stakeholders inquired about the application of the new lease requirements in Topic

842

to land easements. Land easements (also commonly referred to as rights of way) represent the right to use, access, or cross another entity’s land for a specified purpose The amendments in this Update affect the amendments in Update

2016

-

02,

which are

not

yet effective but

may

be early adopted, and Example

10

of Subtopic

350

-

30.

The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Update

2016

-

02.

An entity that early adopted Topic

842

should apply the amendments in this Update upon issuance. The Company does

not

expect this amendment to have a material impact on its financial statements.

In

July 2017,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

No.

2017

-

11,

Earnings Per Share (Topic

260

); Distinguishing Liabilities from Equity (Topic

480

); Derivatives and Hedging (Topic

815

): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. The ASU was issued to address the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity. The ASU, among other things, eliminates the need to consider the effects of down round features when analyzing convertible debt, warrants and other financing instruments.  As a result, a freestanding equity-linked financial instrument (or embedded conversion option)

no

longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The amendments are effective for fiscal years beginning after

December 15, 2018,

and should be applied retrospectively. Early adoption is permitted, including adoption in an interim period. The Company plans to early adopt the ASU, and is currently evaluating implementation date and the impact of this amendment on its financial statements.

In

May 2017,

the FASB issued ASU

No.

2017

-

09,

Compensation—Stock Compensation (Topic

718

): Scope of Modification Accounting, to provide clarity and reduce both (

1

) diversity in practice and (

2

) cost and complexity when applying the guidance in Topic

718,

Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC

718.

The amendments are effective for fiscal years beginning after

December 15, 2017,

and should be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted, including adoption in an interim period. The Company does

not

expect this amendment to have a material impact on its financial statements.

In

February 2017,

the FASB issued ASU

No.

2017

-

05,

Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic

610

-

20

): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, to clarify the scope of Subtopic

610

-

20,

Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets, and to add guidance for partial sales of nonfinancial assets. Subtopic

610

-

20,

which was issued in

May 2014

as a part of ASU

No.

2014

-

09,

Revenue from Contracts with Customers (Topic

606

), provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. The amendments are effective for fiscal years beginning after

December 15, 2017,

including interim periods within those fiscal years, which is the same time as the amendments in ASU

No.

2014

-

09,

and early adoption is permitted. The Company is currently evaluating the impact of this amendment on its financial statements.

In

January 2017,

the FASB issued ASU

No.

2017

-

03,

Accounting Changes and Error Corrections (Topic

250

). The ASU adds SEC disclosure requirements for both the quantitative and qualitative impacts that certain recently issued accounting standards will have on the financial statements of a registrant when such standards are adopted in a future period. Specially, these disclosure requirements apply to the adoption of ASU

No.

2014

-

09,

Revenue from Contracts with Customers (Topic

606

); ASU

No.

2016

-

02,

Leases (Topic

842

); and ASU

No.

2016

-

13,

Financial Instruments—Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments.   As indicated below, the Company does

not

believe that the adoption of ASU

No.

2014

-

09

will have a material impact on its revenue recognition as it pertains to current revenue streams.

Between

May 2014

and

December 2016,

the FASB issued several ASU’s on Revenue from Contracts with Customers (Topic

606

). These updates will supersede nearly all existing revenue recognition guidance under current U.S. generally accepted accounting principles (GAAP). The core principle is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. A

five

-step process has been defined to achieve this core principle, and, in doing so, more judgment and estimates

may

be required within the revenue recognition process than are required under existing U.S. GAAP. The standards are effective for annual periods beginning after

December 15, 2017,

and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standards in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting the standards recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of its pending adoption of these standards on its financial statements and expects to adopt the modified retrospective approach. However, the adoption of these new standards will

not

have a material impact on its revenue recognition as it pertains to current revenue streams.

In

November 2016,

the FASB issued ASU

No.

2016

-

18,

Statement of Cash Flows (Topic

230

): Restricted Cash (a consensus of the FASB Emerging Issues Task Force), to provide guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flow. The amendments should be applied using a retrospective transition method, and are effective for fiscal years beginning after

December 15, 2017,

including interim periods within those fiscal years. This current quarter represents the

first

period in which the Company has maintained restricted cash balances, and the Company has elected to early adopt this amendment as of

October 1, 2017.

As this amendment affects presentation and disclosures only, the adoption had

no

impact on the Company’s financial position or results of operations.

In

February 2016,

the FASB issued Accounting Standards Update

No.

2016

-

02,

“Leases (Topic

842

)” (“ASU

2016

-

02”

). ASU

2016

-

02

will require lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Under ASU

2016

-

02,

a lessee will be required to recognize assets and liabilities for leases with terms of more than

12

months. Lessor accounting remains substantially similar to current GAAP. In addition, disclosures of leasing activities are to be expanded to include qualitative along with specific quantitative information. ASU

2016

-

02

will be effective in fiscal years beginning after

December 15, 2018 (

with early adoption permitted). ASU

2016

-

02

mandates a modified retrospective transition method. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

XML

Note 2 - Going Concern

6 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Substantial Doubt about Going Concern [Text Block]

NOTE

2.

GOING CONCERN

 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of

$10,973,457

and

$8,676,825

at

March 31, 2018

and

September 30, 2017,

respectively, and had a net loss of

$922,268

and

$2,296,632

for the

three

and

six

months ended

March 31, 2018,

respectively. Further, the amount due from WGP of

$1,253,604

(before an allowance of

$469,699

)

may

not

be collectible. These matters, among others, raise substantial doubt about the Company’s ability to continue as a going concern. While the Company is attempting to increase operations and generate additional revenues, the Company's cash position

may

not

be significant enough to support the Company's daily operations. Management intends to raise additional funds through the sale of its securities. The Company filed a Demand for Arbitration against WGP on

April 7, 2017.

There are

no

indicators to suggest that the amounts due from WGP will

not

be collectible. On

January 18, 2018,

the arbitration panel awarded the Company

$1,045,000

plus interest at the rate of

18%

per year from

April 18, 2015

to

January 18, 2018

for

$523,023.

In addition to the principal and interest awarded of

$1,568,023,

the Company was also awarded its attorneys’ fees and arbitration fees. On

March 15, 2018,

the arbitration panel issued its final award and awarded the Company

$1,761,675.

This award consisted of

$1,045,000,

plus interest at the rate of

18%

per year from

April 18, 2015

through

March 15, 2018 (

$550,000

), the Company’s attorneys’ fees and costs (

$113,865

), and arbitration fees and expenses (

$52,810

). The American Arbitration Association will also return to the Company

$32,562

which the Company paid to the AAA as deposits during the course of the arbitration proceeding. The arbitration award issued on

March 15, 2018

is final and

not

subject to appeal. The Company has

not

collected on the award as of the filing date of this report.

Management believes that the actions presently being taken to further implement the Company’s business plan and generate additional revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate additional revenues and in its ability to raise additional funds, there can be

no

assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company's ability to further implement its business plan and generate additional revenues. The financial statements do

not

include any adjustments that might be necessary if the Company is unable to continue as a going concern.

XML

Note 3 - Notes and Other Receivables

6 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE

3.

NOTES AND OTHER RECEIVABLES

Notes and other receivables as of

March 31, 2018

and

September 30, 2017,

consisted of the following: 

	March 31, 2018		September 30, 2017
Notes and other receivables from WGP, a licensed medical marijuana cultivator; $673,294 note secured by personal property of the borrower, interest rate of 18.0%; accrued consulting fees of $40,000, construction advances of $332,357 and accrued interest of $207,953. Net of reserves of $469,699. All amounts are due and payable immediately.		783,905		780,315
Related party note receivable from CCI, a non-profit corporation, financing of up to $2.5 million through April 2021, interest rate of 18.0%; monthly principal and interest payments commencing the sixth month after CCI begins to generate sales; construction and working capital advances of $129,634, and accrued interest of $27,488; unsecured.		157,122		125,327
	$	941,027	$	905,642

The notes and other receivables from WGP are classified as long term due to ongoing disputes between the Company and WGP. The Company recently won an arbitration hearing against WGP, but will

not

reclassify the amounts from long-term until such time that actual payment is made or becomes known.

XML

Note 4 - Land

6 Months Ended

Mar. 31, 2018

Land [Member]

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE

4.

LAND

On

July 31, 2014,

the Company purchased a

five

-acre parcel of land located at

4200

Monaco Street, Denver, Colorado for

$2,250,809.

The property is currently zoned for cannabis cultivation and processing by the City and County of Denver. On

October 5, 2017,

the Company entered into a purchase and sale agreement to sell the parcel of land for

$1,760,000

to an unrelated

third

party. An impairment loss was recognized for the year ended

September 30, 2017

to adjust the carrying value to

$1,611,312,

net of estimated selling costs. The property was reported in the Company’s consolidated balance sheet at

September 30, 2017

as Land Held for Sale of

$1,611,312.

The land sale was completed on

December 4, 2017

and a loss of

$2,861

was recognized during the quarter ended

December 31, 2017

based on the difference between the net proceeds and the carrying amount of the land at the date of sale. The proceeds were used to repay a

$990,000

loan and interest of

$17,088

secured by the property and

$601,363

was used to partially repay an

$800,000

loan that was secured by a

second

lien on the property.

XML

Note 5 - Notes Payable

6 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE

5.

 NOTES PAYABLE

Unrelated

The Company maintained a loan secured by a

first

lien on the

five

-acre parcel of land in Denver. During the

six

months ended

March 31, 2018,

the land was sold and the related loan balance of

$990,000

was repaid. See Note

4.

On

August 25, 2017,

we entered into a Promissory Note with an unrelated party that provides financing of up to

$150,000.

The note bears interest at

12%

and is due and payable on

May 31, 2018.

As of

March 31, 2018,

we had a balance borrowed of

$0

and accrued interest on this note payable was

$85.

A total payment of

$89,677

was made during the

six

months ended

March 31, 2018.

Interest expense was

$85

and

$0

for the

three

months ended

March 31, 2018

and

2017,

respectively. Interest expense was

$3,142

and

$0

for the

six

months ended

March 31, 2018

and

2017,

respectively.

Convertible loans

On

October 5, 2017,

the Company borrowed

$128,000

from an unrelated party. The loan bears interest at a rate of

12%

and is due and payable on

October 5, 2018.

At any time on or before

April 5, 2018

the Company

may

prepay the loan by paying the Lender the outstanding loan principal and accrued interest plus premiums ranging from

15%

to

35%.

After

April 5, 2018,

the Company

may

not

repay the loan with the consent of the Lender. At any time after 

April 5, 2018,

the full value of any unpaid principal is convertible into the Company’s common stock at a variable conversion price. The conversion price is equal to: (a) if the market price is greater than or equal to

$1.35,

the greater of (

1

) the variable conversion price (defined as market price multiplied by

65

percent) and (

2

) the fixed conversion price of

$1.00,

and (b) if the market price is less than

$1.35,

the lessor of (

1

) the variable conversion price and (

2

) the fixed conversion price. Market price is defined as the average of the lowest

two

daily dollar volume-weighted average sales price for the common stock during the

fifteen

day trading period ending on the latest complete trading day prior to the conversion date. The Company incurred debt issuance costs of

$3,000

which is reflected as a debt discount in the accompanying consolidated balance sheet at

March 31, 2018.

As the instrument is

not

yet convertible,

no

beneficial conversion feature has been recognized at

March 31, 2018.

Amortization expense related to the debt discount was

$750

and

$0

for the

three

months ended

March 31, 2018

and

2017,

respectively and

$1,500

and

$0

for the

six

months ended

March 31, 2018

and

2017,

respectively.

On

November 13, 2017,

the Company borrowed

$68,000

from an unrelated party. The loan bears interest at a rate of

12%

and is due and payable on

November 13, 2018.

At any time on or before

May 13, 2018

the Company

may

prepay the loan by paying the Lender the outstanding loan principal and accrued interest plus premiums ranging from

15%

to

35%.

After

May 13, 2018,

the Company

may

not

repay the loan with the consent of the Lender. At any time after

May 13, 2018,

the full value of any unpaid principal is convertible into the Company’s common stock at a variable conversion price. The conversion price is equal to: (a) if the market price is greater than or equal to

$1.35,

the greater of (

1

) the variable conversion price (defined as market price multiplied by

65

percent) and (

2

) the fixed conversion price of

$1.00,

and (b) if the market price is less than

$1.35,

the lessor of (

1

) the variable conversion price and (

2

) the fixed conversion price. Market price is defined as the average of the lowest

two

daily dollar volume-weighted average sales price for the common stock during the

fifteen

day trading period ending on the latest complete trading day prior to the conversion date. The Company incurred debt issuance costs of

$3,000

which is reflected as a debt discount in the accompanying consolidated balance sheet at

March 31, 2018.

As the instrument is

not

yet convertible,

no

beneficial conversion feature has been recognized at

March 31, 2018.

Amortization expense related to the debt discount was

$750

and

$0

for the

three

months ended

March 31, 2018

and

2017,

respectively and

$1,250

and

$0

for the

six

months ended

March 31, 2018

and

2017

respectively.

Construction loan

On

October 30, 2017

the Company secured

$800,000

in financing from

three

unrelated parties (the “Lenders”) in the form of a loan. The primary use of the loans proceeds will be to prepare the Company’s Massachusetts Medical Cannabis Center (the “MMCC”) for the

first

phase of development, which will include a pad-ready site for Building

3

and the improvements to the entrance and roadways for the entire project. The remaining loan proceeds will be used to pay lease payments, thru

Nov 17, 2017,

to Medical Massachusetts Properties, LLC, owner of the land on which the MMCC will be built, and for working capital.

The loan bears interest at

8%

per year and is due and payable on

April 30, 2018,

and an extension or conversion is currently being negotiated. At the options of the Lenders upon the sale of the Denver property or the Company’s notice to prepay the note, all or any portion of the outstanding loan balance is convertible into shares of the Company’s common stock. The number of shares of the Company’s common stock which will be issued upon any conversion will be determined by dividing the amount to be converted by

$1.50,

which amount will be proportionately adjusted in the event of any stock split or capital reorganization. The loan

may

be prepaid at any time, without penalty on

5

days’ notice to the Lenders.

As further consideration for the loan, the Company issued warrants to the Lenders which allow the Lenders to purchase up to

660,000

shares of the Company’s common stock. The warrants are exercisable at a price of

$1.50

per share any time on or before

October 30, 2022.

The Company allocated the proceeds between the note and the warrants based on their relative fair values. The relative fair value of the

660,000

warrants was

$442,388

which was recognized as additional paid in capital and a corresponding debt discount. After such allocation, the effective conversion price on the issuance date was less than the fair value of the stock into which the note is convertible, giving rise to a beneficial conversion feature of

$357,612

which is recognized as additional paid in capital and a corresponding debt discount.

As described in Note

4,

on

December 4, 2017,

the Company sold its property in Denver, Colorado and used

$601,363

of the sale proceeds to partially repay this loan. triggering the conversion option described above and the lenders elected

not

to exercise their conversion option. As the conversion period had passed, the Company’s has fully expensed the debt discount associated with the beneficial conversion feature. The remaining debt discount is being recognized on a straight-line basis over the life of the note. Amortization expense related to the debt discounts was

$779,725

and

$0

for the

six

months ended

March 31, 2018

and

2017,

respectively.

December 2017

Convertible Note Offering

On

December 29, 2017

the Company sold convertible notes in the principal amount of

$800,000

to a group of accredited investors. The notes bear interest at

8%

per year, are unsecured, and are due and payable on

December 31, 2018.

At the option of the note holders, the notes

may

be converted at any time into shares of the Company's common stock at an initial conversion price of

$1.50

per share.

The note holders also received warrants which entitle the note holders to purchase up to

533,333

shares of the Company's common stock. The warrants are exercisable at a price of

$1.50

per share and expire on

October 17, 2022.

GVC Capital LLC acted as the placement agent for the offering and received a cash commission of

$64,000,

plus warrants to purchase

106,667

shares of the Company's common stock. The warrants are exercisable at a price of

$1.50

per share and expire on

December 29, 2022.

The Company allocated the proceeds between the note and the warrants based on their relative fair values. The relative fair value of the

640,000

warrants was

$607,024

which was recognized as additional paid in capital and a corresponding debt discount. After such allocation, the effective conversion price on the issuance date was less than the fair value of the stock into which the note is convertible, giving rise to a beneficial conversion feature of

$128,976

which is recognized as additional paid in capital and a corresponding debt discount.

The

$64,000

paid to the placement agent, was allocated on a pro-rata basis to the warrants and the debt, which was recorded as an offset to additional paid in capital and an increase in debt discount of

$48,562

and

$15,438,

respectively

All debt discounts are being recognized on a straight-line basis over the terms of the notes. Amortization expense related to the debt discounts were

$187,859

and

$0

for the

six

months ended

March 31, 2018

and

2017,

respectively.

February 2018

Convertible Note Offerings

On

February 12, 2018

the Company sold convertible notes in the principal amount of

$810,000

to a group of accredited investors. The notes bear interest at

8%

per year, are unsecured, and are due and payable on

December 31, 2018.

At the option of the note holders, the notes

may

be converted at any time into shares of the Company's common stock at an initial conversion price of

$1.50

per share.

The note holders also received warrants which entitle the note holders to purchase up to

540,000

shares of the Company's common stock. The warrants are exercisable at a price of

$1.50

per share and expire on

October 17, 2022.

The Company allocated the proceeds between the note and the warrants based on their relative fair values. The relative fair value of the

540,000

warrants was

$523,013

which was recognized as additional paid in capital and a corresponding debt discount. After such allocation, the effective conversion price on the issuance date was less than the fair value of the stock into which the note is convertible, giving rise to a beneficial conversion feature of

$286,987

which is recognized as additional paid in capital and a corresponding debt discount.

All debt discounts are being recognized on a straight-line basis over the terms of the notes. Amortization expense related to the debt discounts were

$162,000

and

$0

for the

six

months ended

March 31, 2018

and

2017,

respectively.

Related Party

On

February 1, 2016,

we entered into an agreement with an unrelated party which provided us with borrowing capacity of

$200,000.

 On

May 1, 2016,

the agreement was amended to increase the borrowing capacity to

$1,000,000.

On

July 14, 2016,

Strategic Capital Partners (“SCP”) assumed the

$521,297

loan borrowed against this credit line, increasing the total balance owed to SCP to

$2,431,646.

SCP is controlled by Benjamin J. Barton,

one

of our officers and directors and a principal shareholder. The amounts borrowed from SCP were used to fund our operations.

On

July 14, 2016,

we entered into a debt modification agreement whereby a portion of the debt was converted into common stock and the remaining debt was renegotiated into

two

promissory notes.

Of the amounts owed to SCP,

$500,000

was converted into

400,000

shares of our common stock (

$1.25

conversion rate).

The remaining

$1,931,646

owed to SCP was divided into

two

promissory notes.

The

first

note, in the principal amount of

$1,000,000,

bears interest at

9.5%

per year and matures on

December 31, 2019.

Interest is payable quarterly. The note can be converted at any time, at the option of the lender, into shares of our common stock, initially at a conversion price of

$1.25

per share. The conversion price will be proportionately adjusted in the event of any stock split or capital reorganization. The note is

not

secured.

If the average closing price of our common stock is at least

$2.50

for

twenty

consecutive trading days, and the average daily volume of trades of our common stock during the

twenty

trading days is at least

100,000

shares, we

may,

within

10

days of the end of such

twenty

-day period, notify SCP that its right to convert the note into shares of our common stock will end

45

days after the date of the notice to SCP.

The

second

note, in the principal amount of

$931,646,

bears interest at

8%

per year and matures on

December 31, 2019.

Interest is payable quarterly. The note is

not

convertible into shares of our common stock but is secured by a

first

lien on all amounts due to us by WGP. Any payments received from the sale, lease or commercialization of the property in Denver, and any amounts received from WGP, will be applied to the principal amount of the note. Otherwise, all unpaid principal and interest will be due on

December 31, 2019.

Accrued interest on these notes payable was

$42,002

and

$84,998

at

March 31, 2018

and

September 30, 2017,

respectively.

In connection with the debt modification agreement, we issued SCP warrants to purchase

800,000

shares of our common stock, exercisable at a price of

$1.50

per share, and warrants to purchase an additional

800,000

shares of common stock, exercisable at a price of

$3.00

per share. Both sets of warrants expire on

June 30, 2020.

We allocated the relative fair values to the warrants, stock options, and convertible debt, as determined by the Black Scholes option pricing model. Based on the Black Scholes option pricing model, a net debt premium of

$72,651

was allocated to the warrants which are reflected in additional paid-in-capital. The debt premium is being amortized on a straight-line basis over the term of the notes. At

March 31, 2018,

the outstanding principal on these notes was

$1,931,646,

and the unamortized debt premium was

$36,355.

Amortization of debt premium was

$10,682

and

$14,932

for the

six

months ended

March 31, 2018

and

2017,

respectively.

XML

Note 6 - Related Party Transactions

6 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

NOTE

6.

RELATED PARTY TRANSACTIONS

Strategic Capital Partners.

 At

March 31, 2018

and

September 30, 2017,

we had outstanding notes payable to SCP of

$1,968,001

and

$1,978,683,

respectively.

Interest expense was

$36,461

and

$36,634

for the

three

months ended

March 31, 2018

and

2017,

respectively; and

$73,851

and

$69,602

for the

six

months ended

March 31, 2018

and

2017.

Interest payable – related party of

$42,002

and

$84,998

was included in the accompanying consolidated balance sheets at

March 31, 2018

and

September 30, 2017,

respectively.  We made interest payments of

$106,396

during the quarter ended

March 31, 2018,

and

$127,529

during the

six

months ended

March 31, 2018. 

Coastal Compassion.

 On

April 7, 2016,

we signed agreements with Coastal Compassion Inc. (“CCI”). CCI is

one

of a limited number of non-profit organizations that has received a provisional or final registration to cultivate, process and sell medical cannabis by the Massachusetts Department of Public Health. CCI has agreed to become the initial tenant in our planned MMCC. Tim Keogh, our Chief Executive Officer, is a Board Member of CCI.

Pursuant to the agreements, we agreed to provide CCI with financing of up to

$2.5

million for a

five

-year term at

18%

interest per year for construction and working capital required for CCI’s approved dispensary and cultivation center in Fairhaven, MA. For a

three

- year period beginning

April 1, 2016,

we agreed to consult with CCI in the design, construction and operation of the Fairhaven facility. CCI will pay us

$10,000

each month for these consulting services. Although the DPH has approved our agreement with CCI relating to the development and lease terms of the MMCC, the actual lease agreement with CCI has

not

been finalized or approved by the DPH. We will need to secure significant capital to provide the financing to CCI.

As of

March 31, 2018,

we have provided financing to CCI of

$157,122,

which includes construction and working capital advances of

$129,634,

and accrued interest of

$27,488.

XML

Note 7 - Loss Per Share

6 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Earnings Per Share [Text Block]

NOTE

7.

LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per share:

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2018			2017			2018			2017
Net loss attributable to common stockholders	$	(922,268	)	$	(595,288	)	$	(2,296,632	)	$	(1,029,733	)
Basic weighted average outstanding shares of common stock		19,376,278			19,136,555			19,371,082			18,706,825
Dilutive effects of common share equivalents		-			-			-			-
Dilutive weighted average outstanding shares of common stock		19,376,278			19,136,555			19,371,082			18,706,825
Basic and diluted net loss per share of common stock	$	(0.05	)	$	(0.03	)	$	(0.12	)	$	(0.06	)

As of

March 31, 2018,

we have excluded

180,000

of stock options and

10,306,000

of warrants from the computation of diluted net loss per share since the effects are anti-dilutive. As of

March 31, 2017,

we have excluded

1,155,000

of stock options and

9,981,000

of warrants from the computation of diluted net loss per share since the effects are anti-dilutive.

XML

Note 8 - Income Taxes

6 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

8.

INCOME TAXES

We did

not

record any income tax expense or benefit for the

three

or

six

months ended

March 31, 2018.

We increased our valuation allowance and reduced our net deferred tax assets to

zero

. Our assessment of the realization of our deferred tax assets has

not

changed, and as a result we continue to maintain a full valuation allowance for our net deferred assets as of

March 31, 2018.

As of

March 31, 2018,

we did

not

have any unrecognized tax benefits. There were

no

significant changes to the calculation since

September 30, 2017.

XML

Note 9 - Stock Based Compensation

6 Months Ended

Mar. 31, 2018

Notes to Financial Statements

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

NOTE

9.

STOCK BASED COMPENSATION

Restricted Stock Awards.

We use restricted stock awards to compensate certain key executives and other individuals.  At

March 31, 2018,

we had

no

outstanding unvested restricted stock awards. Stock-based compensation expense associated with restricted stock awards was

$0

and

$18,725

for the

three

months ended

March 31, 2018

and

2017,

respectively, and

$0

and

$37,450

for the

six

months ended

March 31, 2018

and

2017,

respectively. As of

March 31, 2018,

there is

no

remaining unrecognized stock-based compensation associated with restricted stock awards. 

Stock Options

.

There was

no

stock option activity for the quarter ended

March 31, 2018.

Stock option details are as follows: 

						Weighted
				Weighted		Average
				Average		Contractual		Aggregate
	Number of			Exercise		Term		Intrinsic
	Shares			Price		(Years)		Value
Outstanding and exerciseable at September 30, 2017		1,305,000		$	8.29		0.6	$	431,200
Granted		-		$	-		-		-
Cancelled/Expired		(1,100,000	)		9.45		-		-
Exercised		25,000			0.75		-		-
Outstanding as of March 31, 2018		180,000		$	2.21		2.21	$	-
Vested and expected to vest at March 31, 2018		180,000		$	2.21		2.21	$	-
Exercisable at March 31, 2018		180,000		$	2.21		2.21	$	35,700

There was

no

stock-based compensation expense associated with stock options for the

three

and

six

months ended

March 31, 2018

and

2017.

At

March 31, 2018,

there is

no

remaining unrecognized stock-based compensation associated with stock options.

XML

Note 10 - Commitments and Contingencies

6 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE

10.

 COMMITMENTS AND CONTINGENCIES

Coastal Compassion.

On

April 7, 2016,

we signed agreements with Coastal Compassion Inc. (“CCI”). CCI is

one

of a limited number of non-profit organizations that has received a provisional or final registration to cultivate, process and sell medical cannabis by the Massachusetts Department of Public Health. CCI has agreed to become the initial tenant in our planned MMCC. Tim Keogh, our Chief Executive Officer, is a Board Member of CCI.

Pursuant to the agreements, we agreed to provide CCI with financing of up to

$2.5

million for a

five

-year term at

18%

interest per year for construction and working capital required for CCI’s approved dispensary and cultivation center in Fairhaven, MA. For a

three

- year period beginning

April 1, 2016,

we agreed to consult with CCI in the design, construction and operation of the Fairhaven facility. CCI will pay us

$10,000

each month for these consulting services. Although the DPH has approved our agreement with CCI relating to the development and lease terms of the MMCC, the actual lease agreement with CCI has

not

been finalized or approved by the DPH. We will need to secure significant capital to provide the financing to CCI.

As of

March 31, 2018,

we have provided financing to CCI of

$157,122,

which includes construction and working capital advances of

$129,634,

and accrued interest of

$27,488.

Operating Leases

Land

On

October 17, 2016,

the Company closed the previously announced acquisition of a

52.6

-acre parcel of undeveloped land in Freetown, Massachusetts. The deposits of

$925,000

previously paid by the Company to the seller, Boston Beer Company (“BBC”), were credited against the total purchase price of

$4,475,000.

The remaining balance of

$3,550,000

was paid to BBC by Massachusetts Medical Properties, LLC (“MMP”). The property is located approximately

47

miles southeast of Boston. The Company plans to develop the property as the Massachusetts Medical Cannabis Center (the “MMCC”). Plans for the MMCC include the construction of sustainable greenhouse cultivation, processing, and infused product facilities that will be leased or sold to Registered Marijuana Dispensaries under the Massachusetts Medical Marijuana Program.

As part of a simultaneous transaction, the Company assigned the property rights to MMP for a nominal fee and entered a lease agreement pursuant to which MMP agreed to lease the property to the Company for an initial term of

fifty

(

50

) years. We have the option to extend the term of the lease for

four

(

4

) additional

ten

(

10

) year periods. The lease is a triple net lease, with the Company paying all real estate taxes, repairs, maintenance and insurance.

The lease payments will be the greater of (a)

$30,000

per month; (b)

$0.38

per square foot per month of any structure built on the property; or (c)

1.5%

of all gross monthly sales of products sold by the Company, any assignee of the Company, or any subtenant of the Company. The lease payments will be adjusted up (but

not

down) every

five

(

5

) years by any increase in the Consumer Price Index.

Between

October 17, 2016

and

April 17, 2017,

the monthly lease payments will accrue, with all accrued lease payments to be paid to MMP on

April 17, 2017.

On

April 17, 2017,

the Company reimbursed MMP for its costs and expenses associated with the acquisition of the property, the lease, and the acquisition of the shares and the warrant from the Company (as further described below).

Under the terms of the lease, the Company had

six

months to obtain

$2.6

million in capital funding for the construction of the

first

phase building. In the event that the Company is unable to raise these funds within the

six

month period, the Company had an additional

six

months to do so; provided, that the Company has paid accrued lease payments and closing costs. On

October 17, 2017,

the lease agreement was amended to provide that the Company will have until

16

months from

October 17, 2016

to raise

$2.6

million in capital funding. In addition to extending the funding deadline, this amendment granted MMP a warrant to purchase up to

100,000

shares of the Company’s common stock at an exercise price of

$1.50

per share. The warrant can be exercised on

October 17, 2022.

The Company recognized an expense of

$0

and

$171,307

during the

three

and

six

months ended

March 31, 2018,

respectively, representing the entire grant date fair value of the warrant.

On

February 16, 2018,

the lease agreement was amended to provide that the Company will have until

18

months from

October 17, 2016

to raise

$2.6

million in capital funding. In addition to extending the funding deadline, this amendment granted MMP a warrant to purchase up to

50,000

shares of the Company’s common stock at an exercise price of

$1.50

per share. The warrant can be exercised on 

October 17, 2022.

The Company recognized an expense of

$135,354

during the

three

months ended

March 31, 2018,

representing the entire grant date fair value of the warrant.

The Company received a credit for the

$925,000

paid towards the purchase price of the land in the form of discounted lease payments. For the initial

fifty

(

50

) year term of the lease, the lease payments will be reduced by

$1,542

each month

In connection with the sale of the property to MMP and the lease, the Company and MMP entered into a Share Purchase Agreement pursuant to which the Company issued to MMP

100,000

shares of its common stock at par value of

$0.0001

(“Common Stock”), and a warrant to purchase up to

3,640,000

shares of Common Stock at an exercise price of

$1.00

per share. The warrant can be exercised at any time on or after

October 17, 2018

and on or before

October 17, 2020.

The warrant does

not

contain a cashless exercise provision. The fair value of the warrant was established using the Black Scholes option pricing model using the following assumptions:

● Risk-free interest rate – 1.12 percent

● Expected term – 4.0 years

● Volatility – 100 percent

The Company allocated

$1,899,966

to the warrant which is reflected in additional paid-in-capital and was allocated to prepaid land lease. The fair value of the common stock on the date of the agreement was

$73,000,

which is also reflected in additional paid-in-capital and was allocated to prepaid land lease. The prepaid land lease is being amortized on a straight-line basis over the term of the lease.

The lease expense was

$99,865

and

$208,184

for the

three

months ended

March 31, 2018

and

2017,

respectively, and

$199,730

and

$307,036

for the

six

months ended

March 31, 2018

and

2017,

respectively. At

March 31, 2018,

the future rental payments required under this lease are 

$170,748

for the remainder of fiscal

2018,

$341,496

for fiscal years

2019

through

2022,

and

$15,026,024

thereafter.

Office space

The Company leases its office space located at

1550

Wewatta, Denver, Colorado

80202

for

$1,845

per month under a month-to-month lease.

Except as described above, the Company has

no

other non-cancelable lease commitments.

XML

Note 11 - Shareholders' Equity

6 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

11.

 SHAREHOLDERS’ EQUITY

Equity Line Agreement.

On

December 12, 2017,

the Company entered into an amended and restated equity line agreement with Mountain States Capital, LLC (MSC). Under the equity line agreement, MSC agreed to provide the Company with up to

$10,000,000

of funding through the purchase of shares of the Company's common stock.

During the term of the Agreement, the Company, at its sole discretion,

may

deliver a Put Notice to MSC, which will specify the dollar amount which the Company wants to draw down under the Equity Line. The amount the Company can draw down at any

one

time is the lesser of twice the average of the

10

-day average daily trading volume (computed by multiplying the volume weighted average price for each day by the number of shares traded for that day), or

$500,000.

A closing will occur on the date which is

no

earlier than

five

trading days following and

no

later than

seven

trading days following the applicable Put Notice. On each Closing Date, the Company will sell, and MSC will purchase, the shares of the Company's common stock specified in the Put Notice.

The amount to be paid by MSC on a particular Closing Date will be determined by dividing the dollar amount specified in the Put Notice by the Purchase Price. The Purchase Price is

90%

of the lowest daily volume weighted average price of the Company's common stock during the Pricing Period. The Pricing Period, with respect to a particular Put Notice, is

five

consecutive trading days including, and immediately following, the delivery of a Put Notice. However,

no

Put Notice

may

be delivered on a day that is

not

a Trading Day.

The Company

may

specify a Minimum Price when submitting a Put Notice, provided however that the Minimum Price must be more than

75%

of the Closing Price of the Company's Common Stock on the date immediately preceding the date of the delivery of the Put Notice. If the Purchase Price is less than the Minimum Price, the Company

may,

at its option, sell shares to MSC on the Closing Date using the Purchase Price. Notwithstanding the above, the Company will

not

sell any shares at a price below

$1.00

per share.

The Company is under

no

obligation to submit any Put Notices.

The equity line agreement has a term of

18

months, which began on

February 14, 2018

During the

three

and

six

months ended

March 31, 2018,

the Company issued

25,000

shares from the exercise of stock options for proceeds of

$18,750

.

These options were fully vested and had been previously expensed.

Warrants.

 Warrant activity as of and for the

six

months ended

March 31, 2018

is as follows: 

						Weighted
				Weighted		Average
				Average		Contractual		Aggregate
	Number of			Exercise		Term		Intrinsic
	Shares			Price		(Years)		Value
Outstanding and exerciseable at September 30, 2017		10,166,000		$	3.68		2.4	$	-
Granted		1,940,000		$	1.50		4.8
Cancelled/Expired		(1,800,000	)		9.33
Exercised		-
Outstanding as of March 31, 2018		10,306,000		$	2.30		2.4	$	4,768,201
Vested and expected to vest at March 31, 2018		10,306,000		$	2.40		2.4	$	4,768,201
Exercisable at March 31, 2018		6,566,000		$	2.40		2.4	$	1,302,601

As disclosed in Notes

5

and

10,

the Company issued warrants to purchase up to

1,940,000

shares of Common Stock at an exercise price of

$1.50

per share. The fair value of the warrants was determined using the Black-Scholes option pricing model using the following assumptions:

● Expected term – 3 to 5 years

● Volatility – 163% to 176%

● Risk-free rate – 1.73% to 2.61%

● Stock price - $1.74 to $4.09

● Expected dividends – $0

For those warrants that were issued with debt, the proceeds were allocated to the respective instruments on a pro rata basis based on the fair value of each instrument. See Note

5.

XML

Note 12 - Subsequent Events

6 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE

12.

SUBSEQUENT EVENTS

On

October 17, 2016,

the Company closed the previously announced acquisition of a

52.6

-acre parcel of undeveloped land in Freetown, Massachusetts. The Company plans to develop the property as the Massachusetts Medical Cannabis Center (the “MMCC”).

As part of a simultaneous transaction, the Company sold the property to Massachusetts Medical Properties, LLC (“MMP”) and the Company and MMP entered into a lease, pursuant to which MMP leased the property to the Company for an initial term of

fifty

years.

Under the terms of the lease, the Company had until

October 16, 2017

to obtain capital funding for the construction of the

first

phase building. On

October 17, 2017

the Company and MMP amended the lease to provide that the Company will have until

16

months from

October 17, 2016

to raise

$2.6

million for the construction of the

first

phase of the MMCC.

On

April 17, 2018

the Company and MMP amended the lease for the

third

time to provide that the Company will have until

20

months from

October 17, 2016

to raise

$2.6

million for the construction of the

first

phase of the MMCC. If the Company is unable to raise

$2.6

million on or before

20

months from

October 17, 2016,

the lease will terminate.

As further consideration for the

third

amendment to the lease, the Company issued a warrant which allows MMP to purchase

50,000

shares of the Company’s common stock at a price of

$1.50

per share. The warrant expires on

October 17, 2022.

On

April 5, 2018,

the Company prepaid the

$128,000

loan discussed in Note

5.

XML

Significant Accounting Policies (Policies)

6 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The (a) balance sheet as of

September 30, 2017,

which has been derived from audited financial statements, and (b) the unaudited financial statements as of and for the

three

and

six

months ended

March 31, 2018

and

2017,

have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Form

10

-K filed with the SEC on

December 4, 2017.

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are

not

necessarily indicative of the results to be expected for future quarters or for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal

2017

as reported in the Form

10

-K have been omitted.

Certain prior period amounts have been reclassified to conform with current period presentation. These reclassifications have

no

impact on net loss.

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block]

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts in the consolidated statements of cash flows:

	March 31, 2018		September 30, 2017
Cash and cash equivalents	$	392,154	$	1,627
Restricted cash		497,361		-
Total cash, cash equivalents, and restricted cash shown in the cash flow statement	$	889,515	$	1,627

Amounts included in restricted cash represent those required to be set aside by a contractual agreement with a lender for the payment of specific construction related expenditures as part of the Company’s property development in Massachusetts. See Notes

5

and

10.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In

January 2018,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

No.

2018

-

01,

LEASES (TOPIC

842

): LAND EASEMENT PRACTICAL EXPEDIENT FOR TRANSITION TO TOPIC

842;

On

February 25, 2016,

the FASB issued Accounting Standards Update

No.

2016

-

02,

Leases (Topic

842

), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. The FASB has been assisting stakeholders with implementation questions and issues as organizations prepare to adopt Topic

842.

In connection with the FASB’s transition support efforts, a number of stakeholders inquired about the application of the new lease requirements in Topic

842

to land easements. Land easements (also commonly referred to as rights of way) represent the right to use, access, or cross another entity’s land for a specified purpose The amendments in this Update affect the amendments in Update

2016

-

02,

which are

not

yet effective but

may

be early adopted, and Example

10

of Subtopic

350

-

30.

The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Update

2016

-

02.

An entity that early adopted Topic

842

should apply the amendments in this Update upon issuance. The Company does

not

expect this amendment to have a material impact on its financial statements.

In

July 2017,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

No.

2017

-

11,

Earnings Per Share (Topic

260

); Distinguishing Liabilities from Equity (Topic

480

); Derivatives and Hedging (Topic

815

): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. The ASU was issued to address the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity. The ASU, among other things, eliminates the need to consider the effects of down round features when analyzing convertible debt, warrants and other financing instruments.  As a result, a freestanding equity-linked financial instrument (or embedded conversion option)

no

longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The amendments are effective for fiscal years beginning after

December 15, 2018,

and should be applied retrospectively. Early adoption is permitted, including adoption in an interim period. The Company plans to early adopt the ASU, and is currently evaluating implementation date and the impact of this amendment on its financial statements.

In

May 2017,

the FASB issued ASU

No.

2017

-

09,

Compensation—Stock Compensation (Topic

718

): Scope of Modification Accounting, to provide clarity and reduce both (

1

) diversity in practice and (

2

) cost and complexity when applying the guidance in Topic

718,

Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC

718.

The amendments are effective for fiscal years beginning after

December 15, 2017,

and should be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted, including adoption in an interim period. The Company does

not

expect this amendment to have a material impact on its financial statements.

In

February 2017,

the FASB issued ASU

No.

2017

-

05,

Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic

610

-

20

): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, to clarify the scope of Subtopic

610

-

20,

Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets, and to add guidance for partial sales of nonfinancial assets. Subtopic

610

-

20,

which was issued in

May 2014

as a part of ASU

No.

2014

-

09,

Revenue from Contracts with Customers (Topic

606

), provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. The amendments are effective for fiscal years beginning after

December 15, 2017,

including interim periods within those fiscal years, which is the same time as the amendments in ASU

No.

2014

-

09,

and early adoption is permitted. The Company is currently evaluating the impact of this amendment on its financial statements.

In

January 2017,

the FASB issued ASU

No.

2017

-

03,

Accounting Changes and Error Corrections (Topic

250

). The ASU adds SEC disclosure requirements for both the quantitative and qualitative impacts that certain recently issued accounting standards will have on the financial statements of a registrant when such standards are adopted in a future period. Specially, these disclosure requirements apply to the adoption of ASU

No.

2014

-

09,

Revenue from Contracts with Customers (Topic

606

); ASU

No.

2016

-

02,

Leases (Topic

842

); and ASU

No.

2016

-

13,

Financial Instruments—Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments.   As indicated below, the Company does

not

believe that the adoption of ASU

No.

2014

-

09

will have a material impact on its revenue recognition as it pertains to current revenue streams.

Between

May 2014

and

December 2016,

the FASB issued several ASU’s on Revenue from Contracts with Customers (Topic

606

). These updates will supersede nearly all existing revenue recognition guidance under current U.S. generally accepted accounting principles (GAAP). The core principle is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. A

five

-step process has been defined to achieve this core principle, and, in doing so, more judgment and estimates

may

be required within the revenue recognition process than are required under existing U.S. GAAP. The standards are effective for annual periods beginning after

December 15, 2017,

and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standards in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting the standards recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of its pending adoption of these standards on its financial statements and expects to adopt the modified retrospective approach. However, the adoption of these new standards will

not

have a material impact on its revenue recognition as it pertains to current revenue streams.

In

November 2016,

the FASB issued ASU

No.

2016

-

18,

Statement of Cash Flows (Topic

230

): Restricted Cash (a consensus of the FASB Emerging Issues Task Force), to provide guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flow. The amendments should be applied using a retrospective transition method, and are effective for fiscal years beginning after

December 15, 2017,

including interim periods within those fiscal years. This current quarter represents the

first

period in which the Company has maintained restricted cash balances, and the Company has elected to early adopt this amendment as of

October 1, 2017.

As this amendment affects presentation and disclosures only, the adoption had

no

impact on the Company’s financial position or results of operations.

In

February 2016,

the FASB issued Accounting Standards Update

No.

2016

-

02,

“Leases (Topic

842

)” (“ASU

2016

-

02”

). ASU

2016

-

02

will require lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Under ASU

2016

-

02,

a lessee will be required to recognize assets and liabilities for leases with terms of more than

12

months. Lessor accounting remains substantially similar to current GAAP. In addition, disclosures of leasing activities are to be expanded to include qualitative along with specific quantitative information. ASU

2016

-

02

will be effective in fiscal years beginning after

December 15, 2018 (

with early adoption permitted). ASU

2016

-

02

mandates a modified retrospective transition method. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

XML

Note 1 - Nature of Business and Basis of Presentation (Tables)

6 Months Ended

Mar. 31, 2018

Notes Tables

Cash, Cash Equivalents, and Restricted Cash [Table Text Block]

	March 31, 2018		September 30, 2017
Cash and cash equivalents	$	392,154	$	1,627
Restricted cash		497,361		-
Total cash, cash equivalents, and restricted cash shown in the cash flow statement	$	889,515	$	1,627

XML

Note 3 - Notes and Other Receivables (Tables)

6 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	March 31, 2018		September 30, 2017
Notes and other receivables from WGP, a licensed medical marijuana cultivator; $673,294 note secured by personal property of the borrower, interest rate of 18.0%; accrued consulting fees of $40,000, construction advances of $332,357 and accrued interest of $207,953. Net of reserves of $469,699. All amounts are due and payable immediately.		783,905		780,315
Related party note receivable from CCI, a non-profit corporation, financing of up to $2.5 million through April 2021, interest rate of 18.0%; monthly principal and interest payments commencing the sixth month after CCI begins to generate sales; construction and working capital advances of $129,634, and accrued interest of $27,488; unsecured.		157,122		125,327
	$	941,027	$	905,642

XML

Note 7 - Loss Per Share (Tables)

6 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2018			2017			2018			2017
Net loss attributable to common stockholders	$	(922,268	)	$	(595,288	)	$	(2,296,632	)	$	(1,029,733	)
Basic weighted average outstanding shares of common stock		19,376,278			19,136,555			19,371,082			18,706,825
Dilutive effects of common share equivalents		-			-			-			-
Dilutive weighted average outstanding shares of common stock		19,376,278			19,136,555			19,371,082			18,706,825
Basic and diluted net loss per share of common stock	$	(0.05	)	$	(0.03	)	$	(0.12	)	$	(0.06	)

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Note 9 - Stock Based Compensation (Tables)

6 Months Ended

Mar. 31, 2018

Notes Tables

Share-based Compensation, Stock Options, Activity [Table Text Block]

						Weighted
				Weighted		Average
				Average		Contractual		Aggregate
	Number of			Exercise		Term		Intrinsic
	Shares			Price		(Years)		Value
Outstanding and exerciseable at September 30, 2017		1,305,000		$	8.29		0.6	$	431,200
Granted		-		$	-		-		-
Cancelled/Expired		(1,100,000	)		9.45		-		-
Exercised		25,000			0.75		-		-
Outstanding as of March 31, 2018		180,000		$	2.21		2.21	$	-
Vested and expected to vest at March 31, 2018		180,000		$	2.21		2.21	$	-
Exercisable at March 31, 2018		180,000		$	2.21		2.21	$	35,700

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Note 11 - Shareholders' Equity (Tables)

6 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

						Weighted
				Weighted		Average
				Average		Contractual		Aggregate
	Number of			Exercise		Term		Intrinsic
	Shares			Price		(Years)		Value
Outstanding and exerciseable at September 30, 2017		10,166,000		$	3.68		2.4	$	-
Granted		1,940,000		$	1.50		4.8
Cancelled/Expired		(1,800,000	)		9.33
Exercised		-
Outstanding as of March 31, 2018		10,306,000		$	2.30		2.4	$	4,768,201
Vested and expected to vest at March 31, 2018		10,306,000		$	2.40		2.4	$	4,768,201
Exercisable at March 31, 2018		6,566,000		$	2.40		2.4	$	1,302,601

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Note 1 - Nature of Business and Basis of Presentation (Details Textual)	Jan. 17, 2014
Ownership Percentage, Transfered	93.00%

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Note 1 - Nature of Business and Basis of Presentation - Restricted Cash (Details) - USD ($)	Mar. 31, 2018	Sep. 30, 2017	Mar. 31, 2017	Sep. 30, 2016
Cash and cash equivalents	$ 392,154	$ 1,627
Restricted cash	497,361
Total cash, cash equivalents, and restricted cash shown in the cash flow statement	$ 889,515	$ 1,627	$ 204,411	$ 24

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Note 2 - Going Concern (Details Textual) - USD ($)			3 Months Ended		6 Months Ended
	Mar. 15, 2018	Jan. 18, 2018	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Sep. 30, 2017
Retained Earnings (Accumulated Deficit), Ending Balance			$ (10,973,457)		$ (10,973,457)		$ (8,676,825)
Net Income (Loss) Attributable to Parent, Total			(922,268)	$ (595,288)	(2,296,632)	$ (1,029,733)
Allowance for Notes, Loans and Financing Receivable, Noncurrent			469,699		469,699		469,699
Demand for Arbitration against WGP [Member]
Litigation Settlement, Amount Awarded from Other Party	$ 1,761,675	$ 1,045,000
Litigation Settlement, Amount Awarded Receivable from Other Party, Interest Rate		18.00%
Litigation Settlement Interest	550,000	$ (523,023)
Litigation Settlement, Amount Awarded from Other Party, Including Interest		$ 1,568,023
Litigation Settlement, Amount Awarded from Other Party, Attorney Fees and Costs	113,865
Litigation Settlement, Amount Awarded from Other Party, Arbitration Fees and Expenses	52,810
Litigation Settlement, Return of Deposits	$ 32,562
Wellness Group Pharms LLC [Member]
Notes, Loans and Financing Receivable, Gross, Noncurrent			1,253,604		1,253,604
Allowance for Notes, Loans and Financing Receivable, Noncurrent			$ 469,699		$ 469,699		$ 469,699

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Note 3 - Notes and Other Receivables - Schedule of Notes Receivables (Details) - USD ($)	Mar. 31, 2018	Sep. 30, 2017
Notes and other receivables	$ 941,027	$ 905,642
Wellness Group Pharms LLC [Member]
Notes and other receivables	783,905	780,315
Coastal Compassion Inc. [Member]
Notes and other receivables	$ 157,122	$ 125,327

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Note 3 - Notes and Other Receivables - Schedule of Notes Receivables (Details) (Parentheticals) - USD ($)	6 Months Ended	12 Months Ended
	Mar. 31, 2018	Sep. 30, 2017
Notes and other receivables, allowance	$ 469,699	$ 469,699
Wellness Group Pharms LLC [Member]
Secured note		$ 673,294
Interest rate		18.00%
Accrued consulting fees		$ 40,000
Construction advances		332,357
Accrued interest		207,954
Notes and other receivables, allowance	$ 469,699	$ 469,699
Coastal Compassion Inc. [Member]
Interest rate	18.00%	18.00%
Construction advances	$ 129,634	$ 129,634
Accrued interest	27,488	27,488
Maximum financing amount	$ 2,500,000	$ 2,500,000

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Note 4 - Land (Details Textual)				6 Months Ended
	Dec. 04, 2017 USD ($) a	Oct. 05, 2017 USD ($)	Jul. 31, 2014 USD ($) a	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)
Area of Land | a	5		5
Payments to Acquire Land Held-for-use			$ 2,250,809
Land						$ 1,611,312
Assets Held-for-sale, Not Part of Disposal Group, Noncurrent						$ 1,611,312
Gain (Loss) on Disposition of Property Plant Equipment, Total				$ (2,861)
Repayments of Notes Payable				80,000	227,904
Interest Paid, Excluding Capitalized Interest, Operating Activities				$ 165,124	$ 277,100
Unrelated Party [Member] | Construction Loans [Member]
Repayments of Notes Payable	$ 601,363
Debt Instrument, Face Amount	800,000
Loan Secured by Land [Member]
Repayments of Notes Payable	990,000
Interest Paid, Excluding Capitalized Interest, Operating Activities	17,088
Land [Member]
Gain (Loss) on Disposition of Property Plant Equipment, Total	$ (2,861)
Parcel of Land in Denver, Colorado [Member]
Proceeds from Sale of Land Held-for-use		$ 1,760,000

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Note 5 - Notes Payable (Details Textual)								3 Months Ended		6 Months Ended
	Feb. 12, 2018 USD ($) $ / shares shares	Dec. 29, 2017 USD ($) $ / shares shares	Dec. 04, 2017 USD ($) a	Nov. 13, 2017 USD ($) $ / shares	Oct. 30, 2017 USD ($) $ / shares shares	Oct. 05, 2017 USD ($) $ / shares	Jul. 14, 2016 USD ($) $ / shares shares	Mar. 31, 2018 USD ($) $ / shares	Mar. 31, 2017 USD ($)	Mar. 31, 2018 USD ($) $ / shares	Mar. 31, 2017 USD ($)	Sep. 30, 2017 USD ($) $ / shares	Aug. 25, 2017 USD ($)	May 01, 2016 USD ($)	Feb. 01, 2016 USD ($)	Jul. 31, 2014 a
Area of Land | a			5													5
Repayments of Notes Payable										$ 80,000	$ 227,904
Interest Expense, Total								$ 424,609	$ 57,762	1,178,988	139,337
Amortization of Debt Discount (Premium)										$ 1,121,652	20,318
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares								$ 2.30		$ 2.30		$ 3.68
Debt Instrument, Unamortized Discount, Total								$ 1,235,104		$ 1,235,104		$ 0
Strategic Capital Partners [Member]
Amortization of Debt Discount (Premium)										10,682	14,932
Debt Instrument, Convertible, Conversion Price | $ / shares							$ 1.25
Line of Credit Outstanding Amount Assumed by Related Party							$ 521,297
Notes Payable, Related Parties							$ 2,431,646	1,931,646		1,931,646
Debt Conversion, Converted Instrument, Shares Issued | shares							400,000
Debt Instrument, Unamortized Premium, Total							$ 72,651	36,355		36,355
Strategic Capital Partners [Member] | Debt Converted into Common Stock [Member]
Debt Conversion, Original Debt, Amount							500,000
Strategic Capital Partners [Member] | Debt Converted into Promissory Notes [Member]
Debt Conversion, Original Debt, Amount							$ 1,931,646
Warrants Issued to Unrelated Parties Lenders [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares					660,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares					$ 1.50
Warrant to Related Party, Set 1 [Member] | Strategic Capital Partners [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares							800,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares							$ 1.50
Warrants to Purchase Additional Shares [Member] | Strategic Capital Partners [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares							800,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares							$ 3
Unrelated Party [Member]
Line of Credit Facility, Current Borrowing Capacity														$ 1,000,000	$ 200,000
Unrelated Party [Member] | Construction Loans [Member]
Repayments of Notes Payable			$ 601,363
Debt Instrument, Interest Rate, Stated Percentage					8.00%
Proceeds from Issuance of Long-term Debt, Total					$ 800,000
Debt Instrument, Convertible, Beneficial Conversion Feature					$ 357,612
Amortization of Debt Discount (Premium)										779,725	0
Debt Instrument, Convertible, Conversion Price | $ / shares					$ 1.50
Debt Instrument, Unamortized Discount, Total					$ 442,388
Debt Instrument, Face Amount			800,000
Loan Secured by Land [Member]
Repayments of Notes Payable			$ 990,000
Promissory Notes [member] | Unrelated Party [Member]
Line of Credit Facility, Maximum Borrowing Capacity													$ 150,000
Debt Instrument, Interest Rate, Stated Percentage													12.00%
Long-term Line of Credit, Total								0		0
Interest Payable								85		85
Repayments of Lines of Credit										89,677
Interest Expense, Total								85	0	3,142	0
Loans Due and Payable on October 5, 2018 [Member] | Unrelated Party [Member] | Convertible Debt [Member]
Debt Instrument, Interest Rate, Stated Percentage						12.00%
Proceeds from Issuance of Long-term Debt, Total						$ 128,000
Debt Instrument, Conversion Price, Market Price | $ / shares						$ 1.35
Debt Instrument, Variable Conversion Price, Input, Percentage						65.00%
Debt Instrument, Fixed Conversion Price | $ / shares						$ 1
Debt Instrument, Convertible, Beneficial Conversion Feature						$ 3,000
Amortization of Debt Discount (Premium)								750	0	1,500	0
Loans Due and Payable on October 5, 2018 [Member] | Unrelated Party [Member] | Convertible Debt [Member] | Minimum [Member]
Debt Instrument, Prepay, Premiums, Percentage						15.00%
Loans Due and Payable on October 5, 2018 [Member] | Unrelated Party [Member] | Convertible Debt [Member] | Maximum [Member]
Debt Instrument, Prepay, Premiums, Percentage						35.00%
Loans Due and Payable on November 13, 2018 [Member] | Unrelated Party [Member] | Convertible Debt [Member]
Debt Instrument, Interest Rate, Stated Percentage				12.00%
Proceeds from Issuance of Long-term Debt, Total				$ 68,000
Debt Instrument, Conversion Price, Market Price | $ / shares				$ 1.35
Debt Instrument, Variable Conversion Price, Input, Percentage				65.00%
Debt Instrument, Fixed Conversion Price | $ / shares				$ 1
Debt Instrument, Convertible, Beneficial Conversion Feature				$ 3,000
Amortization of Debt Discount (Premium)								750	$ 0	1,250	0
Loans Due and Payable on November 13, 2018 [Member] | Unrelated Party [Member] | Convertible Debt [Member] | Minimum [Member]
Debt Instrument, Prepay, Premiums, Percentage				15.00%
Loans Due and Payable on November 13, 2018 [Member] | Unrelated Party [Member] | Convertible Debt [Member] | Maximum [Member]
Debt Instrument, Prepay, Premiums, Percentage				35.00%
December 2017 Convertible Notes [Member] | GVC Capital LLC [Member]
Debt Instrument, Unamortized Discount, Total		$ 15,438
Payments of Debt Issuance Costs		64,000
Adjustments to Additional Paid in Capital, Warrant Issued		$ 48,562
December 2017 Convertible Notes [Member] | Warrants Issued to Accredited Investors [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares		533,333
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares		$ 1.50
December 2017 Convertible Notes [Member] | Warrants Issued to Placement Agent [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares		106,667
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares		$ 1.50
December 2017 Convertible Notes [Member] | Warrants Issued to Accredited Investors and Placement Agent [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares		640,000
December 2017 Convertible Notes [Member] | Accredited Investors [Member] | Convertible Debt [Member]
Debt Instrument, Interest Rate, Stated Percentage		8.00%
Debt Instrument, Convertible, Beneficial Conversion Feature		$ 128,976
Amortization of Debt Discount (Premium)										187,859	0
Debt Instrument, Convertible, Conversion Price | $ / shares		$ 1.50
Debt Instrument, Unamortized Discount, Total		$ 607,024
Debt Instrument, Face Amount		$ 800,000
February 2018 Convertible Notes [Member] | Warrants Issued to Accredited Investors [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares	540,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 1.50
February 2018 Convertible Notes [Member] | Accredited Investors [Member] | Convertible Debt [Member]
Debt Instrument, Interest Rate, Stated Percentage	8.00%
Debt Instrument, Convertible, Beneficial Conversion Feature	$ 286,987
Amortization of Debt Discount (Premium)										162,000	$ 0
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 1.50
Debt Instrument, Unamortized Discount, Total	$ 523,013
Debt Instrument, Face Amount	$ 810,000
Promissory Note One [Member] | Strategic Capital Partners [Member]
Debt Instrument, Interest Rate, Stated Percentage							9.50%
Debt Instrument, Convertible, Conversion Price | $ / shares							$ 1.25
Notes Payable, Related Parties							$ 1,000,000
Average Closing Price per Share | $ / shares							$ 2.50
Convertible Debt, Number of Trading Days							20
Average Daily Volume Of Shares Trades | shares							100,000
Period to Notify End of Right to Convert Notes							10 days
Period before Right to Convert Notes Expires							45 days
Promissory Note Two [Member] | Strategic Capital Partners [Member]
Debt Instrument, Interest Rate, Stated Percentage							8.00%
Interest Payable								$ 42,002		$ 42,002		$ 84,998
Notes Payable, Related Parties							$ 931,646

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Note 6 - Related Party Transactions (Details Textual) - USD ($)		3 Months Ended		6 Months Ended
	Apr. 07, 2016	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Sep. 30, 2017	Jul. 14, 2016
Interest Expense, Related Party		$ 36,461	$ 36,634	$ 73,851	$ 69,602
Interest Payable, Current		52,316		52,316		$ 86,253
Strategic Capital Partners [Member]
Notes Payable, Related Parties		1,931,646		1,931,646			$ 2,431,646
Interest Expense, Related Party		36,461	$ 36,634	73,851	$ 69,602
Interest Payable, Current		42,002		42,002		84,998
Interest Paid, Including Capitalized Interest, Operating and Investing Activities, Total		106,396		127,529
Strategic Capital Partners [Member] | Notes Payable Converted to Promissory Notes [Member]
Notes Payable, Related Parties		1,968,001		1,968,001		$ 1,978,683
Coastal Compassion Inc. [Member]
Working Capital Advances	$ 2,500,000
Working Capital Advances, Term	5 years
Note Receivable, Interest Rate	18.00%
Consulting Services Term	3 years
Consulting Services Revenue Monthly	$ 10,000
Coastal Compassion Inc. [Member] | Construction and Working Capital Advances [Member]
Due from Related Parties, Total		157,122		157,122
Coastal Compassion Inc. [Member] | Construction and Working Capital Advances Excluding Accrued Interest [Member]
Due from Related Parties, Total		129,634		129,634
Coastal Compassion Inc. [Member] | Construction and Working Capital Advances Related Accrued Interest [Member]
Due from Related Parties, Total		$ 27,488		$ 27,488
Coastal Compassion Inc. [Member] | Maximum [Member]
Working Capital Advances	$ 2,500,000

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Note 7 - Loss Per Share (Details Textual) - shares	6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Employee Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	180,000	1,155,000
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	10,306,000	9,981,000

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Note 7 - Loss Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Net loss	$ (922,268)	$ (595,288)	$ (2,296,632)	$ (1,029,733)
Basic weighted average outstanding shares of common stock (in shares)	19,376,278	19,136,555	19,371,082	18,706,825
Dilutive effects of common share equivalents (in shares)	0	0
Dilutive weighted average outstanding shares of common stock (in shares)	19,376,278	19,136,555	19,371,082	18,706,825
Basic and diluted loss per common share (in dollars per share)	$ (0.05)	$ (0.03)	$ (0.12)	$ (0.06)

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Note 8 - Income Taxes (Details Textual) $ in Thousands	3 Months Ended	6 Months Ended
	Mar. 31, 2018 USD ($)	Mar. 31, 2018 USD ($)
Income Tax Expense (Benefit), Total	$ 0	$ 0
Unrecognized Tax Benefits, Ending Balance	0	0
Deferred Income Tax Assets, Net, Total	$ 0	$ 0

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Note 9 - Stock Based Compensation (Details Textual) - USD ($) shares in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance	0		0
Allocated Share-based Compensation Expense, Total	$ 0	$ 18,725	$ 0	$ 37,450
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options	0		0
Employee Stock Option [Member]
Allocated Share-based Compensation Expense, Total	0	$ 0	0	$ 0
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total	$ 0		$ 0

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Note 9 - Stock Based Compensation - Stock Option Activity (Details) - USD ($)	3 Months Ended	6 Months Ended	12 Months Ended
	Mar. 31, 2018	Mar. 31, 2018	Sep. 30, 2017
Shares Outstanding (in shares)		1,305,000
Outstanding, weighted average exercise price (in dollars per share)		$ 8.29
Outstanding, weighted average contractual term (Year)		2 years 76 days	219 days
Outstanding, aggregate intrinsic value			$ 431,200
Shares Granted (in shares)
Shares Cancelled/Expired (in shares)		(1,100,000)
Cancelled/Expired, weighted average exercise price (in dollars per share)		$ 9.45
Shares Exercised (in shares)	25,000	25,000
Exercised, weighted average exercise price (in dollars per share)		$ 0.75
Shares Outstanding (in shares)	180,000	180,000	1,305,000
Outstanding, weighted average exercise price (in dollars per share)	$ 2.21	$ 2.21	$ 8.29
Shares Vested and expected to vest (in shares)	180,000	180,000
Vested and expected to vest, weighted average exercise price (in dollars per share)	$ 2.21	$ 2.21
Vested and expected to vest, weighted average contractual term (Year)		2 years 76 days
Shares Exercisable (in shares)	180,000	180,000
Exercisable, weighted average exercise price (in dollars per share)	$ 2.21	$ 2.21
Exercisable, weighted average contractual term (Year)		2 years 76 days
Exercisable, aggregate intrinsic value	$ 35,700	$ 35,700

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Note 10 - Commitments and Contingencies (Details Textual)						3 Months Ended		6 Months Ended		21 Months Ended
	Feb. 16, 2018 USD ($) $ / shares shares	Oct. 17, 2017 USD ($) $ / shares shares	Oct. 17, 2016 USD ($) a $ / shares $ / item shares	Apr. 07, 2016 USD ($)	Jul. 31, 2014 USD ($) a	Mar. 31, 2018 USD ($) $ / shares	Mar. 31, 2017 USD ($)	Mar. 31, 2018 USD ($) $ / shares	Mar. 31, 2017 USD ($)	Sep. 30, 2016 USD ($)	Dec. 12, 2017 $ / shares	Dec. 04, 2017 a	Sep. 30, 2017 $ / shares
Area of Land | a					5							5
Payments to Acquire Land Held-for-use					$ 2,250,809
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares						$ 2.30		$ 2.30					$ 3.68
Common Stock, Par or Stated Value Per Share | $ / shares						$ 0.0001		$ 0.0001					$ 0.0001
Operating Leases, Office Space [Member]
Operating Leases, Monthly Payment								$ 1,845
Additional Paid-in Capital [Member]
Warrants Issued During Period, Value, Sale Leaseback Transaction			$ 1,899,966
Stock Issued During Period, Value, Sale Leaseback Transaction			73,000
Warrants Issued for Lease Amendment #1 [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares		100,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares		$ 1.50
Allocated Warrants or Rights Expense						$ 0		171,307
Warrants Issued for Lease Amendment #2 [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares	50,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 1.50
Allocated Warrants or Rights Expense						135,354
Sale Leaseback to MMP [Member]
Payments to Acquire Land			$ 925,000
Lessee, Operating Lease, Term of Contract			50 years
Lessee Leasing Arrangements, Operating Leases, Number of Renewal Periods			4
Lessee, Operating Lease, Renewal Term			10 years
Sale Leaseback Transaction, Monthly Rental Payments			$ 30,000
Sale Leaseback Transaction, Monthly Rental Payments, Per Square Foot | $ / item			0.38
Sale Leaseback Transaction, Monthly Rental Payments, Percentage of Gross Monthly Sales			1.50%
Sale Leaseback Transaction, Monthly Rental Payments, Adjustment Period			5 years
Sale Leaseback Transaction, Period Available to Obtain Capital Funding for Construction of the First Phase Building	1 year 180 days	1 year 120 days	180 days
Sales Leaseback Transaction, Amount of Capital Funding to Obtain For Construction of the First Phase Building	$ 2,600,000	$ 2,600,000	$ 2,600,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares			3,640,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares			$ 1								$ 1
Sale Leaseback Transaction, Discount to the Purchase Price, Monthly Reduction in Payments			$ 1,542
Stock Issued During Period, Shares, Sale Leaseback Transaction | shares			100,000
Common Stock, Par or Stated Value Per Share | $ / shares			$ 0.0001
Sale Leaseback to MMP [Member] | Measurement Input, Risk Free Interest Rate [Member]
Warrants and Rights Outstanding, Measurement Input			1.12
Sale Leaseback to MMP [Member] | Measurement Input, Expected Term [Member]
Warrants and Rights Outstanding, Measurement Input			4
Sale Leaseback to MMP [Member] | Measurement Input, Price Volatility [Member]
Warrants and Rights Outstanding, Measurement Input			100
Massachusetts Land Purchase [Member]
Area of Land | a			52.6
Payments to Acquire Land										$ 925,000
Land, Selling Price			$ 4,475,000
Payments to Acquire Land Held-for-use			$ 3,550,000
Lessee, Operating Lease, Term of Contract			50 years
Sale Leaseback Transaction, Period Available to Obtain Capital Funding for Construction of the First Phase Building			1 year 120 days
Sales Leaseback Transaction, Amount of Capital Funding to Obtain For Construction of the First Phase Building			$ 2,600,000
Operating Leases, Rent Expense, Net, Total						99,865	$ 208,184	199,730	$ 307,036
Operating Leases, Future Minimum Payments, Remainder of Fiscal Year						170,748		170,748
Operating Leases, Future Minimum Payments, Due in Four and Five Years, Total						15,026,024		15,026,024
Operating Leases, Future Minimum Payments, Due in Two Years						341,496		341,496
Operating Leases, Future Minimum Payments, Due in Three Years						341,496		341,496
Operating Leases, Future Minimum Payments, Due in Four Years						341,496		341,496
Operating Leases, Future Minimum Payments, Due in Five Years						341,496		341,496
Coastal Compassion Inc. [Member]
Working Capital Advances				$ 2,500,000
Working Capital Advances, Term				5 years
Note Receivable, Interest Rate				18.00%
Officer Employment Agreement, Initial Term				3 years
Consulting Services Revenue Monthly				$ 10,000
Coastal Compassion Inc. [Member] | Construction and Working Capital Advances [Member]
Due from Related Parties, Total						157,122		157,122
Coastal Compassion Inc. [Member] | Construction and Working Capital Advances Excluding Accrued Interest [Member]
Due from Related Parties, Total						129,634		129,634
Coastal Compassion Inc. [Member] | Construction and Working Capital Advances Related Accrued Interest [Member]
Due from Related Parties, Total						$ 27,488		$ 27,488

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Note 11 - Shareholders' Equity (Details Textual)	3 Months Ended	6 Months Ended
	Mar. 31, 2018 USD ($) $ / shares shares	Mar. 31, 2018 USD ($) $ / shares shares	Mar. 31, 2017 USD ($)	Dec. 12, 2017 USD ($) $ / shares	Sep. 30, 2017 $ / shares	Oct. 17, 2016 $ / shares	Jul. 14, 2016 $ / shares
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 2.30	$ 2.30			$ 3.68
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | shares	25,000	25,000
Proceeds from Stock Options Exercised | $	$ 18,750	$ 18,750
Class of Warrant or Right, Granted During Period | shares		1,940,000
Class of Warrant or Right, Granted During Period, Exercise Price		$ 1.50
Strategic Capital Partners [Member] | Warrants to Purchase Additional Shares [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights							$ 3
Strategic Capital Partners [Member] | Warrants to Purchase Additional Shares [Member] | Measurement Input, Expected Dividend Payment [Member]
Warrants and Rights Outstanding, Measurement Input	0	0
Minimum [Member] | Strategic Capital Partners [Member] | Warrants to Purchase Additional Shares [Member] | Measurement Input, Expected Term [Member]
Warrants and Rights Outstanding, Measurement Input	3	3
Minimum [Member] | Strategic Capital Partners [Member] | Warrants to Purchase Additional Shares [Member] | Measurement Input, Price Volatility [Member]
Warrants and Rights Outstanding, Measurement Input	163	163
Minimum [Member] | Strategic Capital Partners [Member] | Warrants to Purchase Additional Shares [Member] | Measurement Input, Risk Free Interest Rate [Member]
Warrants and Rights Outstanding, Measurement Input	1.73	1.73
Minimum [Member] | Strategic Capital Partners [Member] | Warrants to Purchase Additional Shares [Member] | Measurement Input, Share Price [Member]
Warrants and Rights Outstanding, Measurement Input	1.74	1.74
Maximum [Member] | Strategic Capital Partners [Member] | Warrants to Purchase Additional Shares [Member] | Measurement Input, Expected Term [Member]
Warrants and Rights Outstanding, Measurement Input	5	5
Maximum [Member] | Strategic Capital Partners [Member] | Warrants to Purchase Additional Shares [Member] | Measurement Input, Price Volatility [Member]
Warrants and Rights Outstanding, Measurement Input	176	176
Maximum [Member] | Strategic Capital Partners [Member] | Warrants to Purchase Additional Shares [Member] | Measurement Input, Risk Free Interest Rate [Member]
Warrants and Rights Outstanding, Measurement Input	2.61	2.61
Maximum [Member] | Strategic Capital Partners [Member] | Warrants to Purchase Additional Shares [Member] | Measurement Input, Share Price [Member]
Warrants and Rights Outstanding, Measurement Input	4.09	4.09
Sale Leaseback to MMP [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 1		$ 1
Sale Leaseback to MMP [Member] | Measurement Input, Expected Term [Member]
Warrants and Rights Outstanding, Measurement Input						4
Sale Leaseback to MMP [Member] | Measurement Input, Price Volatility [Member]
Warrants and Rights Outstanding, Measurement Input						100
Sale Leaseback to MMP [Member] | Measurement Input, Risk Free Interest Rate [Member]
Warrants and Rights Outstanding, Measurement Input						1.12
Equity Line Agreement [Member]
Purchase Price of Weighted Average Price of Common Stock				90.00%
Percentage of Closing Price of Common Stock				75.00%
Mountain States Capital, LLC [Member]
Line of Credit Facility, Maximum Borrowing Capacity | $				$ 10,000,000
Line of Credit Facility, Current Borrowing Capacity | $				$ 500,000

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Note 11 - Shareholders' Equity - Warrant Activity (Details) - USD ($)	6 Months Ended	12 Months Ended
	Mar. 31, 2018	Sep. 30, 2017
Outstanding, warrants (in shares)	10,166,000
Outstanding, warrants, weighted average exercise price (in dollars per share)	$ 3.68
Outstanding, warrants, weighted average remaining contract term (Year)	2 years 146 days	2 years 146 days
Granted, warrants (in shares)	1,940,000
Granted, warrants, weighted average exercise price (in dollars per share)	$ 1.50
Granted, warrants, weighted average remaining contract term (Year)	4 years 292 days
Cancelled/Expired, warrants (in shares)	(1,800,000)
Cancelled/Expired, warrants, weighted average exercise price (in dollars per share)	$ 9.33
Outstanding, warrants (in shares)	10,306,000	10,166,000
Outstanding, warrants, weighted average exercise price (in dollars per share)	$ 2.30	$ 3.68
Class of warrant or right, outstanding, aggregate intrinsic value	$ 4,768,201
Vested and expected to vest, warrants (in shares)	10,306,000
Vested and expected to vest, warrants, weighted average exercise price (in dollars per share)	$ 2.40
Vested and expected to vest , weighted average remaining contract term (Year)	2 years 146 days
Class of warrant or right, vested and expected to vest, aggregate intrinsic value	$ 4,768,201
Exercisable, warrants (in shares)	6,566,000
Exercisable, warrants, weighted average exercise price (in dollars per share)	$ 2.40
Exercisable, warrants, weighted average remaining contract term (Year)	2 years 146 days
Class of warrant or right, exercisable, aggregate intrinsic value	$ 1,302,601

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Note 12 - Subsequent Events (Details Textual)				6 Months Ended
	Apr. 17, 2018 USD ($) $ / shares shares	Apr. 05, 2018 USD ($)	Oct. 17, 2016 USD ($) a	Mar. 31, 2018 USD ($) $ / shares	Mar. 31, 2017 USD ($)	Dec. 04, 2017 a	Sep. 30, 2017 $ / shares	Jul. 31, 2014 a
Area of Land | a						5		5
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares				$ 2.30			$ 3.68
Repayments of Notes Payable				$ 80,000	$ 227,904
Subsequent Event [Member] | Unrelated Party [Member] | Convertible Debt [Member] | Loans Due and Payable on October 5, 2018 [Member]
Repayments of Notes Payable		$ 128,000
Subsequent Event [Member] | Warrants Issued for Lease Amendment #3 [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares	50,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 1.50
Massachusetts Land Purchase [Member]
Area of Land | a			52.6
Lessee, Operating Lease, Term of Contract			50 years
Sale Leaseback Transaction, Period Available to Obtain Capital Funding for Construction of the First Phase Building			1 year 120 days
Sales Leaseback Transaction, Amount of Capital Funding to Obtain For Construction of the First Phase Building			$ 2,600,000
Massachusetts Land Purchase [Member] | Subsequent Event [Member]
Sale Leaseback Transaction, Period Available to Obtain Capital Funding for Construction of the First Phase Building	1 year 240 days
Sales Leaseback Transaction, Amount of Capital Funding to Obtain For Construction of the First Phase Building	$ 2,600,000