UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form 10-Q
(Mark One)
R |
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2015 |
or
£ |
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TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number:
333-167824
MJ
HOLDINGS, INC.
(Exact
name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of
incorporation or organization) |
|
20-8235905
(I.R.S. Employer
Identification No.) |
4141
NE 2nd Avenue, Suite 204-A, Miami, Florida 33137
(Address of principal executive offices) (Zip Code)
(305) 455-1800
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes þ No ¨
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).
Yes þ No ¨
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer ¨ |
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Accelerated filer ¨ |
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Non-accelerated filer ¨ |
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Smaller reporting company þ |
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(Do not check if a smaller reporting company) |
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Indicate by a check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No þ
APPLICABLE TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer’s classes of common stock, as of the latest practicable date.
Class |
|
Outstanding as of August 12, 2015 |
Common Stock, $0.001 |
|
14,007,939 |
MJ
HOLDINGS, INC.
TABLE
OF CONTENTS
PART
I - FINANCIAL INFORMATION |
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Item 1. |
Condensed
Consolidated Financial Statements |
3 |
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Notes
to Condensed Consolidated Financial Statements |
6 |
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Item 2. |
Management's
Discussion and Analysis of Financial Condition and Results of Operations |
12 |
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Item 3. |
Quantitative
and Qualitative Disclosures about Market Risk |
16 |
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Item 4. |
Controls
and Procedures |
17 |
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PART
II - OTHER INFORMATION |
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Item 1. |
Legal
Proceedings |
18 |
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Item 1A. |
Risk
Factors |
18 |
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Item 2. |
Unregistered
Sales of Equity Securities and Use of Proceeds |
18 |
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Item 3. |
Defaults
Upon Senior Securities |
18 |
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Item 4. |
Mine
Safety Disclosures |
18 |
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Item 5. |
Other
Information |
18 |
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Item 6. |
Exhibits |
18 |
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SIGNATURES |
19 |
PART
I – FINANCIAL
INFORMATION
Item 1. Condensed Consolidated Financial Statements
MJ HOLDINGS, INC.
Condensed Consolidated Balance Sheets
As of June 30, 2015 (unaudited) and
December 31, 2014
| |
June 30, 2015 | |
December 31, 2014 |
Assets | |
| | | |
| | |
Real estate property: | |
| | | |
| | |
Land | |
$ | 747,389 | | |
$ | 551,251 | |
Buildings and improvements | |
| 3,141,193 | | |
| 2,442,188 | |
| |
| 3,888,582 | | |
| 2,993,439 | |
Accumulated depreciation | |
| (82,846 | ) | |
| (38,173 | ) |
Real estate property, net | |
| 3,805,736 | | |
| 2,955,266 | |
Cash | |
| 151,101 | | |
| 175,792 | |
Deferred leasing costs | |
| 171,357 | | |
| 202,545 | |
Deferred rent receivable | |
| 29,170 | | |
| 6,936 | |
Prepaid expenses and other assets | |
| 22,915 | | |
| 73,377 | |
Total
Assets | |
$ | 4,180,279 | | |
$ | 3,413,916 | |
| |
| | | |
| | |
Liabilities and Stockholders’ Equity | |
| | | |
| | |
Liabilities: | |
| | | |
| | |
Notes payable - related party | |
$ | 2,725,000 | | |
$ | 1,800,000 | |
Security deposits | |
| 95,203 | | |
| 102,045 | |
Accounts payable and accrued liabilities | |
| 68,984 | | |
| 195,582 | |
Total
Liabilities | |
| 2,889,187 | | |
| 2,097,627 | |
| |
| | | |
| | |
Stockholders’ Equity: | |
| | | |
| | |
Preferred stock, par value $0.001, 5,000,000 shares authorized; 0 shares issued and outstanding | |
| — | | |
| — | |
Common stock, par value $0.001, 95,000,000 shares authorized; 13,977,388 and 13,878,522 shares issued and outstanding, respectively | |
| 13,977 | | |
| 13,879 | |
Additional paid-in capital | |
| 2,721,272 | | |
| 2,640,120 | |
Accumulated deficit | |
| (1,444,157 | ) | |
| (1,337,710 | ) |
Total
Stockholders’ Equity | |
| 1,291,092 | | |
| 1,316,289 | |
Total
Liabilities and Stockholders’ Equity | |
$ | 4,180,279 | | |
$ | 3,413,916 | |
| |
| | | |
| | |
See accompanying
notes to unaudited condensed consolidated financial statements
MJ HOLDINGS, INC.
Condensed Consolidated Statements
of Operations
For the three and six months ended
June 30, 2015 and 2014
(Unaudited)
| |
Three months ended June 30, | |
Six months ended June 30, |
| |
2015 | |
2014 | |
2015 | |
2014 |
Revenues: | |
| | | |
| | | |
| | | |
| | |
Rental income | |
$ | 155,883 | | |
$ | 4,428 | | |
$ | 288,687 | | |
$ | 4,428 | |
| |
| | | |
| | | |
| | | |
| | |
Operating Expenses: | |
| | | |
| | | |
| | | |
| | |
Property expenses | |
| 22,246 | | |
| 10,681 | | |
| 77,949 | | |
| 10,681 | |
General and administrative expenses | |
| 88,470 | | |
| 300,524 | | |
| 161,978 | | |
| 313,383 | |
Depreciation expense | |
| 24,510 | | |
| 1,924 | | |
| 44,673 | | |
| 1,924 | |
Total operating expenses | |
| 135,226 | | |
| 313,129 | | |
| 284,600 | | |
| 325,988 | |
Operating
income (loss) | |
| 20,657 | | |
| (308,701 | ) | |
| 4,087 | | |
| (321,560 | ) |
| |
| | | |
| | | |
| | | |
| | |
Interest expense, net - related party | |
| (63,075 | ) | |
| (7,123 | ) | |
| (110,534 | ) | |
| (8,328 | ) |
| |
| | | |
| | | |
| | | |
| | |
Loss
before income taxes | |
| (42,418 | ) | |
| (315,824 | ) | |
| (106,447 | ) | |
| (329,888 | ) |
| |
| | | |
| | | |
| | | |
| | |
Provision for income taxes | |
| — | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | | |
| | | |
| | |
Net
Loss | |
$ | (42,418 | ) | |
$ | (315,824 | ) | |
$ | (106,447 | ) | |
$ | (329,888 | ) |
| |
| | | |
| | | |
| | | |
| | |
Basic and diluted net loss per common share: | |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding | |
| 13,912,690 | | |
| 13,813,403 | | |
| 13,899,034 | | |
| 13,041,482 | |
Net loss per common share | |
$ | (0.003 | ) | |
$ | (0.023 | ) | |
$ | (0.008 | ) | |
$ | (0.025 | ) |
See accompanying notes to unaudited condensed
consolidated financial statements
MJ HOLDINGS, INC.
Condensed Consolidated Statements
of Cash Flows
For the six months ended June 30,
2015 and 2014
(unaudited)
| |
Six Months Ended June 30, |
| |
2015 | |
2014 |
Cash flow from operating activities: | |
| | | |
| | |
Net loss | |
$ | (106,447 | ) | |
$ | (329,888 | ) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |
| | | |
| | |
Depreciation | |
| 44,673 | | |
| 1,924 | |
Stock-based compensation | |
| 81,250 | | |
| 269,117 | |
Deferred rental income | |
| (22,233 | ) | |
| — | |
Amortization of deferred leasing and debt costs | |
| 19,408 | | |
| 301 | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Deferred leasing costs | |
| 17,510 | | |
| — | |
Security deposits | |
| (6,842 | ) | |
| — | |
Prepaid and other assets | |
| 55,365 | | |
| (11,738 | ) |
Accounts payable and accrued liabilities | |
| (126,598 | ) | |
| 34,937 | |
Net
Cash Used in Operating Activities | |
| (43,914 | ) | |
| (35,347 | ) |
| |
| | | |
| | |
Cash flow from investing activities: | |
| | | |
| | |
Acquisition of real estate property | |
| (895,143 | ) | |
| (2,214,000 | ) |
Net
Cash Used in Investing Activities | |
| (895,143 | ) | |
| (2,214,000 | ) |
| |
| | | |
| | |
Cash flow from financing activities: | |
| | | |
| | |
Proceeds from the sale of common stock | |
| — | | |
| 1,615,000 | |
Proceeds from notes payable -
related party | |
| 925,000 | | |
| 1,800,000 | |
Payment for debt issuance costs | |
| (10,634 | ) | |
| (19,202 | ) |
Proceeds from loans from stockholders | |
| — | | |
| 200 | |
Net
Cash Provided by Financing Activities | |
| 914,366 | | |
| 3,395,998 | |
| |
| | | |
| | |
Net increase (decrease) in cash | |
| (24,691 | ) | |
| 1,146,651 | |
| |
| | | |
| | |
Cash at beginning of period | |
| 175,792 | | |
| 478 | |
Cash
at end of period | |
$ | 151,101 | | |
$ | 1,147,129 | |
| |
| | | |
| | |
Supplemental disclosure of cash flow information: | |
| | | |
| | |
Cash paid for interest to related party | |
$ | 97,096 | | |
$ | 5,918 | |
| |
| | | |
| | |
Supplemental schedule of non-cash financing activities: | |
| | | |
| | |
Accounts payable paid by principal stockholders | |
$ | — | | |
$ | 7,665 | |
See accompanying notes to unaudited condensed
consolidated financial statements
MJ HOLDINGS, INC.
Notes to the Unaudited Condensed Consolidated Financial
Statements
June 30, 2015
Note 1 — Interim Financial Statements
The accompanying unaudited
condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”) for interim financial information and with the rules and regulations of the U.S.
Securities and Exchange Commission (“SEC”). Accordingly, these condensed consolidated financial statements do not include
all of the information and footnotes required for audited annual financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary to make the condensed consolidated financial statements not misleading
have been included. The balance sheet at December 31, 2014, has been derived from the Company’s audited consolidated
financial statements as of that date.
The unaudited condensed consolidated financial statements
included herein should be read in conjunction with the audited consolidated financial statements and the notes thereto that are
included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, that was filed with the SEC on
March 30, 2015. The results of operations for the three and six months ended June 30, 2015, are not necessarily indicative of the
results to be expected for the full year.
The unaudited condensed consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries, 5353 Joliet, LLC, MJ Havana, LLC, and MJ Sheridan, LLC.
Intercompany balances and transactions have been eliminated in consolidation.
Note 2 — Summary of Significant Accounting Policies
The significant accounting policies followed by the Company
for interim reporting are consistent with those included in the Company’s Annual Report on Form 10-K for the year ended December
31, 2014. There were no material changes to our significant accounting policies during the interim period ended June 30, 2015.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (the "FASB")
issued guidance to clarify the principles for recognizing revenue. The core principle of the guidance is that an entity should
recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a comprehensive framework
for revenue recognition that supersedes current general revenue guidance and most industry-specific guidance. In addition, the
guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and
uncertainty of revenue that is recognized. An entity should apply the guidance either retrospectively to each prior reporting period
presented or retrospectively with the cumulative adjustment at the date of the initial application. In July 2015, the FASB delayed
the effective date of the new guidance to annual reporting periods beginning after December 15, 2017, including interim periods
within that reporting period. Early adoption is now permitted after the original effective date of December 15, 2016. The
Company is currently in the process of evaluating the impact of adoption of the new accounting guidance on its consolidated financial
statements and has not determined the impact of adoption on its consolidated financial statements.
In August 2014, FASB issued guidance that requires management to
evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a
going concern, and to provide certain disclosures when it is probable that the entity will be unable to meet its obligations as
they become due within one year after the date that the financial statements are issued. The new guidance is effective for the
annual period ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. Since this guidance
primarily addresses certain disclosures to the financial statements, we anticipate no impact on our financial position, results
of operations or cash flows from adopting this standard. The Company is currently in the process of evaluating the additional disclosure
requirements of the new guidance and has not determined the impact of adoption on its financial statement disclosures.
In April 2015, the FASB issued guidance to simplify the presentation
of debt issuance costs. This guidance provides that debt issuance costs related to a recognized liability be presented in the balance
sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance is effective
for fiscal years and interim periods beginning after December 15, 2015 and is required to be applied on a retrospective basis.
Early adoption is permitted for financial statements that have not been previously issued. As of June 30, 2015, we had $18,837
in debt issuance costs associated with $2.7 million of notes payable that would be reclassified from other assets to a reduction
in the carrying amount of the note payable. The adoption of this standard is not expected to have a material impact on our financial
position and will not impact our results of operations or cash flows.
Note 3 — Going Concern
The Company’s financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal
course of business. During the three and six months ended June 30, 2015, the Company incurred net losses of $42,418
and $106,447, respectively. The Company had an accumulated deficit of $1,444,157 as of June 30, 2015. These factors, among
others, raise substantial doubt about the Company’s ability to continue as a going concern.
The Company’s future success is dependent upon its
ability to achieve profitable operations, generate cash from operating activities and obtain additional financing. Although
we can provide no assurances, we believe our cash on hand, coupled with revenues generated by rental income and our ability to
refinance our equity in the real estate we own, will provide sufficient liquidity and capital resources to fund our business for
the next twelve months.
In the event the Company experiences
liquidity and capital resource constraints because of unanticipated operating losses, we may need to raise additional capital in
the form of equity and/or debt financing. If such additional capital is not available on terms acceptable to us or at all, then
we may need to curtail our operations and/or take additional measures to conserve and manage our liquidity and capital resources,
any of which would have a material adverse effect on our financial position, results of operations, and our ability to continue
in existence. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 4 — Real Estate Property Acquisitions
5353 Joliet Street
In June 2014, through its wholly-owned subsidiary, 5353 Joliet
LLC, the Company acquired an owner-occupied 22,144 square feet industrial building situated on 1.4 acres of land in Denver, Colorado
for $2,214,000. The acquisition was funded with proceeds from the issuance of a secured promissory note in the amount of $1,800,000
and $414,000 of cash on-hand. The promissory note is held by Chemtov Mortgage Group ("CMG"), an entity wholly-owned by
the Company's co-CEO, Shawn Chemtov. CMG has assigned all ownership and security interest granted to it pursuant to the promissory
note to 5353 Mortgage Loan, LLC, a single purpose entity created solely for the purpose of this transaction. CMG invested $100,000
of the $1,800,000 of funds used to finance the purchase of the promissory note. CMG acts as the loan servicing entity for the promissory
note, administering the note, processing payments from the Company, and transferring all payments to 5353 Mortgage Loan, LLC. CMG
charges no administration fees for servicing the promissory note.
The promissory note bears interest at 10% per annum, provides
for cash interest payments on a monthly basis, matures on June 1, 2016, and is callable at the option of the Company at any time
after June 19, 2015. The Company has guaranteed the promissory note and has pledged its ownership interest in 5353 Joliet LLC,
and as such its fee-simple ownership interest in the property as security for the promissory note. The promissory note does not
restrict the Company's ability to incur future indebtedness. For the six months ended June 30, 2015 and 2014, the Company recorded
$90,000 and $5,918, respectively, of interest expense related to the promissory note.
In September 2014, the Company entered into a lease agreement
contingent upon the lessee obtaining city and state licenses and permits for its intended operations at the premises. The contingencies
were met by the lessee, and the lease agreement became effective December 1, 2014. The lease agreement is for a term of seven years
and a monthly rent obligation of $25,835, subject to annual increases of 2% per year. Insurance and real property taxes
shall
be paid by the Company and, subsequently, charged to the lessee as additional rent based on the actual expenses incurred - see
Note 5 below for additional lease details.
503 Havana Street
In September 2014, through its wholly-owned subsidiary, MJ
Havana LLC, the Company acquired an owner-occupied 1,250 square foot building situated on 23,625 square feet of land in Aurora,
Colorado for $756,000, exclusive of closing costs. The acquisition was funded with cash on-hand. The property is zoned B-2 and
has been approved by the city of Aurora as a retail dispensary for recreational marijuana.
Prior to closing on the property acquisition, the Company
had pre-negotiated a 10-year lease agreement with a third-party, a licensed marijuana dispensary company serving both medical and
adult (21+) customers in Colorado. Once the closing of the property was completed with the seller, the pre-negotiated lease was
executed in September 2014 with the third-party. Pursuant to the terms of the lease agreement, the Company agreed to contribute
$150,000 to improvements to the property - see Note 5 below for additional lease details. As of June 30, 2015, the Company had
paid $146,026 towards the tenant's building improvements.
1126 South Sheridan Boulevard
In May 2015, through its wholly-owned subsidiary, MJ Sheridan
LLC, the Company acquired real estate property located at 1126 South Sheridan Boulevard in Denver, Colorado, for $771,750, exclusive
of closing costs. The Company funded the acquisition through the issuance of a promissory note in the amount of $925,000 of which
$771,750 was used to purchase the property. The balance of the funds will be used by the Company as working capital. The newly
acquired property is 17,729 square feet with a 3,828 square foot one story free-standing building. The property is zoned B-2 and
has been approved by the city of Denver as a retail dispensary for recreational marijuana.
The promissory note is held by CMG, an entity wholly-owned
by the Company's co-CEO, Shawn Chemtov. CMG has assigned all ownership and security interest granted to it pursuant to the promissory
note to a single purpose entity created solely for the purpose of this transaction. CMG acts as the loan servicing entity for the
promissory note, administering the note and processing payments from the Company. CMG charges no administration fees for servicing
the promissory note.
The promissory note bears interest at 10% per annum, provides
for cash interest payments on a monthly basis, matures on June 1, 2017. The promissory note is collateralized with the Company's
ownership interest in the newly acquired property and its previously acquired property located at 503 Havana Street in Aurora,
Colorado. The promissory note does not restrict the Company's ability to incur future indebtedness. For the six months ended June
30, 2015, the Company recorded $14,804 of interest expense related to the promissory note.
Prior to closing on the property acquisition, the Company
had pre-negotiated a 10-year lease agreement with a third-party, a licensed marijuana dispensary company serving both medical and
adult (21+) customers in Colorado. Once the closing of the property was completed with the seller, the pre-negotiated lease was
executed in May 2015 with the third-party - see Note 5 below for additional lease details.
A summary of real estate property
at June 30, 2015, is as follows:
| |
Estimated | |
June
30, |
| |
Life | |
2015 |
Buildings | |
30 years | |
$ | 2,995,167 | |
Improvements | |
9-10 years | |
| 146,026 | |
Land | |
Not depreciated | |
| 747,389 | |
Total real estate property | |
| |
| 3,888,582 | |
Less: Accumulated depreciation | |
| |
| (82,846 | ) |
Real
estate property, net | |
| |
$ | 3,805,736 | |
| |
| |
| | |
Note 5 — Operating Leases
The Company generates revenues by leasing its acquired real
estate properties through operating leasing arrangements. A summary of revenues generated from our rental properties for the three
and six months ended June 30, 2015 and 2014, is as follows:
| |
Three months ended June 30, | |
Six months ended June 30, |
| |
2015 | |
2014 | |
2015 | |
2014 |
Revenues: | |
| | | |
| | | |
| | | |
| | |
Rental payments | |
$ | 129,270 | | |
$ | 4,428 | | |
$ | 240,524 | | |
$ | 4,428 | |
Reimbursed operating expenses | |
| 14,177 | | |
| — | | |
| 25,930 | | |
| — | |
Deferred rent revenue | |
| 12,436 | | |
| — | | |
| 22,233 | | |
| — | |
Total revenues from rental properties | |
$ | 155,883 | | |
$ | 4,428 | | |
$ | 288,687 | | |
$ | 4,428 | |
| |
| | | |
| | | |
| | | |
| | |
503 Havana Street
In September 2014, the Company entered into a non-cancelable
operating lease agreement with a marijuana dispensary (the "Lessee") to move into the Company's acquired property located
at 503 Havana Street in Aurora, Colorado. The lease agreement is for a term of ten years and a monthly rent obligation of $11,250,
subject to annual increases of 3% per year. Insurance and real property taxes shall be paid by the Company and, subsequently, charged
to the Lessee as additional rent based on the actual expenses incurred. Pursuant to the terms of the lease agreement, the Company
has agreed to contribute $150,000 to improvements to the property.
Upon the expiration of the term of ten years, the Lessee
has the option to renew the lease agreement for one additional ten-year term, on the same terms as provided in the lease agreement.
During the third year of the lease agreement, the Lessee may exercise an option to purchase the Property.
5353 Joliet Street
In September 2014, the Company entered into a lease agreement
for its property and warehouse building located at 5353 Joliet Street in Denver, Colorado. The lease agreement is for a term of
seven years and a monthly rent obligation of $25,835, subject to annual increases of 2% per year. Insurance and real property taxes
shall be paid by the Company and, subsequently, charged to the lessee as additional rent based on the actual expenses incurred.
The lease was contingent upon the lessee, obtaining city
and state licenses and permits for its intended operations at the premises, within the dates provided in the lease agreement. The
contingencies were met by the lessee, and the lease agreement became effective December 1, 2014.
Upon the expiration of the seven-year term, the lessee has
the option to renew the lease for two separate five-year terms, subject to rent reviews and adjustments, as set out in the lease
agreement.
1126 South Sheridan Boulevard
In May 2015, the Company entered into a lease agreement for
its acquired property located at 1126 South Sheridan Boulevard in Denver, Colorado. The lease agreement is for a term of ten years
and a monthly rent obligation of $10,945, subject to annual increases of 3% per year. Insurance and real property taxes shall be
paid by the Company and, subsequently, charged to the Lessee as additional rent based on the actual expenses incurred.
Upon the expiration of the term of ten years, the Lessee
has the option to renew the lease agreement for one additional ten-year term, on the same terms as provided in the lease agreement.
During the third year of the lease agreement, the Lessee may exercise an option to purchase the Property.
Future minimum rental payments, excluding the reimbursement
of specified operating expenses, for non-cancelable operating lease agreements are as follows as of June 30, 2015:
2015 |
$ |
282,952 |
|
2016 |
|
575,968 |
|
2017 |
|
590,069 |
|
2018 |
|
604,530 |
|
2019 |
|
619,359 |
|
Thereafter |
|
2,124,431 |
|
Total minimal rental payments |
$ |
4,797,309 |
|
|
|
|
|
Note 6 — Related Party Transactions
In February 2014, in connection with the change in control
of the Company, the principal stockholders paid $7,665 of the Company's accounts payable, which was recorded as a capital contribution
to the Company.
During the six months ended June 30, 2014, the Company borrowed
$5,277 from its principal stockholders and repaid $5,077 of the borrowings to its principal shareholders, resulting in $200 of
net borrowings from related parties.
During the six months ended June 30, 2015, the Company paid
$97,096 for interest due pursuant to $2,725,000 of promissory notes held by CMG, wholly-owned by the Company's co-CEO and shareholder,
Shawn Chemtov - see Note 4 above for additional details regarding the promissory notes held by related party.
Note 7 — Stockholder Loans Payable
Stockholder loans payable consisted of three
promissory notes with each of two of its stockholders in which the company may borrow up to $25,000, $20,000, and $10,000,
respectively. These borrowings accrued interest at 5%, 8%, and 8% per annum, respectively. They were due in part
in December 2014 and December 2016.
In February 2014, in connection with the change of control
of the Company, Messrs. Chemtov and Laufer, purchased the Stock holder loans from Messrs. Peraman and Sarfoh.
On August 31, 2014, the outstanding balance of $99,450 for
the stockholder loans and the associated accrued interest were converted to 19,890 shares of the Company's common stock at a conversion
price of $5.00 per share.
For the six months ended June 30, 2014, the Company accrued
interest expense of $2,410 related to the outstanding stockholder loans.
Note 8 — Sale of Unregistered Securities
The Company conducted a private placement of its shares of
common stock, whereby we sold 1,615,000 shares of common stock for an aggregate of $1,615,000. We began accepting subscriptions
on March 24, 2014 and closed the private placement on April 9, 2014.
For the six months ended June 30, 2014, the Company received
proceeds from the private placement of $1,615,000.
The shares were issued pursuant to an exemption from the
registration requirements under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and
Rule 506 of Regulation D promulgated thereunder (“Regulation D”) since, among other things, the transactions did not
involve a public offering and the securities were acquired for investment purposes only and not with a view to or for sale in connection
with any distribution thereof. Offers and sales were made solely to persons qualifying as “accredited investors” (as
such term is defined by Rule 501 of Regulation D).
The securities offered will not be and have not been registered
under the Securities Act, and may not be offered or sold in the United States absent registration or an applicable exemption from
registration requirements.
Note 9 — Stock Based Compensation
Warrants
A summary of warrants issued, exercised and expired during
the six months ended June 30, 2015, is as follows:
| |
| |
Weighted |
| |
| |
Avg. |
| |
| |
Exercise |
Warrants: | |
Shares | |
Price |
| Balance at January 1, 2015 | | |
| 166,665 | | |
$ | 5.88 | |
| Issued | | |
| — | | |
| — | |
| Exercised | | |
| — | | |
| — | |
| Expired | | |
| — | | |
| — | |
| Balance
at June 30, 2015 | | |
| 166,665 | | |
$ | 5.88 | |
| | | |
| | | |
| | |
Common Stock
During the six months ended June 30, 2015, the Company issued
98,866 shares of common stock for consulting services and recorded $81,250 of stock-based compensation expense for these consulting
services, which has been classified as General and administrative expenses. The stock-based compensation expense was calculated
based on the grant date fair value of the common stock shares issued in exchange for the consulting services.
Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Our Management’s
Discussion and Analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related
notes thereto included elsewhere in this quarterly report.
Forward-Looking Statements
This quarterly report contains forward-looking statements
and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information
currently available to, our management. When used in this report, the words “believe,” “anticipate,” “expect,”
“will,” “estimate,” “intend”, “plan” and similar expressions, as they relate to
us or our management, are intended to identify forward-looking statements. Although we believe that the plans, objectives, expectations
and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties
and other factors that may cause our actual results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans,
objectives, expectations and prospects will be achieved. Important factors that might cause our actual results to differ materially
from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of and
elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and in our subsequent filings with
the SEC, and include, among others, the following: marijuana is illegal under federal law, competition, our business is dependent
on laws pertaining to the marijuana industry, government regulation, our business model depends on the availability of private
funding, we will be subject to general real estate risks and the availability, if debt payments to note holder are not made
we could lose our investment in our real estate properties, terms and deployment of capital. The terms “MJ Holdings, Inc.,”
“MJ Holdings,” “MJ,” “we,” “us,” “our,” and the “Company”
refer to MJ Holdings, Inc.
Business Overview
MJ Holdings owns, operates and is developing a portfolio
of business units related to the regulated marijuana industry, including internet websites, mobile apps and consumer products,
in addition to our portfolio of income producing real estate . As of June 30, 2015, we have acquired three real estate properties
in Colorado that are leased to state licensed marijuana operators and generating $56,626 in monthly rental income.
We have devised our current business strategy based on certain
limitations related to the legal status of marijuana under federal law and the fact that we are a public company and make certain
representations and warranties in connection with our public filings with the United States Securities and Exchange Commission.
We recognize the significant opportunities in the legalized marijuana space and believe that using our current business model,
we can position ourselves to not only develop a significant business along our current path, but be able to leverage our position,
relationships and assets to capitalize on additional opportunities in the future, if and when federal law reconciles with state
law; resulting in the federal legalization of marijuana.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results
of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. Generally Accepted
Accounting Principles
(“GAAP”).
The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect
the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities.
We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates.
An accounting policy is considered to be critical if it requires
an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made,
and if different estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely
to occur, could materially impact the consolidated financial statements. We believe that the following critical accounting policies
reflect the more significant estimates and assumptions used in the preparation of the consolidated financial statements:
Deferred Leasing Costs
Commissions and other direct costs associated with the acquisition
of tenants, or lessees, are capitalized and amortized on a straight-line basis over the terms of the related leases. Costs associated
with unsuccessful leasing opportunities are expensed.
Deferred leasing costs charged to property expenses for the
six months ended June 30, 2015 and 2014, were $13,678 and $0, respectively. As of June 30, 2015, $171,357 of deferred leasing costs
are included on the Balance Sheet as a deferred asset.
Debt Issuance Costs
Costs associated with obtaining, closing, and modifying loans
and/or debt instruments such as, but not limited to placement agent fees, attorney fees and state documentary fees are capitalized
and charged to interest expense over the term of the loan.
Debt issuance costs charged to interest expense for the six
months ended June 30, 2015 and 2014, were $5,731 and $301, respectively. As of June 30, 2015, $18,837 of debt issuance costs are
included on the Balance Sheet within the Prepaid expenses and other assets.
Real Estate Property
Real estate property is recorded at cost, less accumulated
depreciation and amortization. Real estate property, excluding land, is depreciated using the straight-line method over the estimated
useful life of the respective assets. Leasehold improvements are amortized using the straight-line method over the shorter of the
related lease term or useful life. Maintenance, repairs, and minor improvements are charged to expense as incurred; major renewals
and betterments that extend the useful life of the associated asset are capitalized. When real estate property is sold or retired,
the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in results of operations
for the period.
Revenue Recognition
Before revenue can be recognized, four basic criteria must
be met: persuasive evidence of an arrangement exists; the delivery has occurred or services have been rendered; the fee is fixed
or determinable; and collectability is reasonably assured.
The Company's revenues are rental income generated by leasing
acquired real estate properties to licensed marijuana operators. All leases are classified as operating leases. Rental income is
recognized on a straight-line basis over the terms of the leases. Straight-line rent is recognized for all tenants with contractual
fixed increases in rent. Deferred rent receivable represents rental revenue recognized on a straight-line basis in excess of billed
rents. Reimbursements from tenants for real estate taxes and other recoverable operating expenses are recognized as rental income
in the period the applicable costs are incurred.
Stock-Based Compensation
The Company estimates the fair values of share-based payments
on the date of grant using a Black-Scholes option pricing model, which requires assumptions for the expected volatility of the
share price of our common stock, the expected dividend yield, and a risk-free interest rate over the expected term of the stock-based
financial instrument.
Since the number of outstanding and free-trading shares of
the Company’s common stock is limited and the trading volume is relatively low, we do not have sufficient company specific
information regarding the volatility of our share price on which to base an estimate of expected volatility. As a result, we use
the average historical volatilities of similar entities within our industry as the expected volatility of our share price.
The expected dividend yield is 0% as the Company has not
paid any dividends on its common stock and does not anticipate it will pay any dividends in the foreseeable future.
The risk-free interest rate is based on the U.S. Treasury
yield curve in effect at the time of the grant date with a remaining term equal to the expected term of the stock-based award.
For stock-based financial instruments issued to parties other
than employees, we use the contractual term of the financial instruments as the expected term of the stock-based financial instruments.
The assumptions used in calculating the fair value of stock-based
financial instruments represent our best estimates, but these estimates involve inherent uncertainties and the application of management
judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially
different in the future.
Results of Operations For the Three and Six Months Ended
June 30, 2015 Compared to the Three and Six Months Ended June 30, 2014
Revenue
Revenue for the three and six months ended June 30, 2015,
was $155,883 and $288,687, respectively, compared with revenue of $4,428 for the three and six months ended June 30, 2014. The
increase in revenue for the three and six months ended June 30, 2015, was generated as a result of rental income from operating
leases for three real estate properties acquired in June 2014, September 2014, and May 2015.
Certain property expenses are reimbursable to the Company
through our existing leasing arrangements. During the three and six months ended June 30, 2015, the Company recorded $24,632 of
revenue pursuant to operating lease agreements to offset a portion of the property expenses incurred during the respective periods.
Operating Expenses
Property expenses consist of those costs associated
with acquiring and leasing real estate properties. These expenses include costs for commissions, appraisals, real property taxes,
insurance, repairs and maintenance. For the three and six months ended June 30, 2015, we incurred property expenses of $22,246
and $77,949, respectively, compared with $10,681 for the three and six months ended June 30, 2014. The property expenses for the
three and six months ended June 30, 2015, were the result of costs incurred from the three real estate properties acquired in June
2014,September 2014, and May 2015 and from costs incurred as a result of analyzing potential real estate acquisition opportunities.
General and administrative expenses for the three
months ended June 30, 2015, decreased by $212,054 to $88,470 compared with general and administrative expenses of $300,524 for
the three months ended June 30, 2014. For the six months ended June 30, 2015, general and administrative expenses decreased by
$151,405 to $161,978 compared with general and administrative expenses of $313,383 for the six months ended June 30, 2014.The decreases
in general and administrative expenses for the three and six months ended June 30, 2015, were primarily attributed to decreases
of 207,867 and 187,867, respectively, in non-cash stock-based compensation for consulting services
compared
to the three and six months ended June 30, 2014, partially offset by an increases in professional fees, legal fees, and overhead
expenses due to the ramp up of our business during the latter portion of 2014.
Depreciation expense for the three and six months
ended June 30, 2015, was $24,510 and $44,673, respectively, compared with depreciation expense of $1,924 for the three and six
months ended June 30, 2014. The increases in depreciation expense for the three and six months ended June 30, 2015, were associated
with the depreciation of the three real estate properties acquired in June 2014, September 2014, and May 2015.
Other Expenses
Interest expense for the three months ended June 30, 2015,
increased by $55,952 to $63,075 compared with interest expense of $7,123 for the three months ended June 30, 2014. Interest expense
for the six months ended June 30, 2015, increased by $102,206 to $110,534 compared with interest expense of $8,328 for the six
months ended June 30, 2014. The increases in interest expense were primarily attributed to $59,804 and $104,804, respectively,
of interest expense incurred during the three and six months ended June 30, 2015 on $2.7 million of promissory notes from
a related party used to fund real estate property acquisitions in June 2014 and May 2015.
Net Loss
We had a net loss of $42,418, or a basic and diluted loss
per share of $0.003, for the three months ended June 30, 2015, compared with a net loss of $315,824, or a basic and diluted loss
per share of $0.023, for the three months ended June 30, 2014. We had a net loss of $106,447, or a basic and diluted loss per share
of $0.008, for the six months ended June 30, 2015, compared with a net loss of $329,888, or a basic and diluted loss per share
of $0.025, for the six months ended June 30, 2014. The decreases in the net loss was primarily due to increases in revenues as
a result of rental income generated from operating leases for three real estate properties acquired in June 2014, September 2014,
and May 2015, and decreases in operating expenses primarily as a result of lower non-cash stock-based compensation for consulting
services during the three and six months ended June 30, 2015.
Liquidity and Capital Resources
The following table summarizes the cash flows for the six
months ended June 30, 2015 and 2014:
| |
For the Six Months Ended June 30, |
| |
2015 | |
2014 |
Cash Flows: | |
| | | |
| | |
Net cash used in operating activities | |
$ | (43,914 | ) | |
$ | (35,347 | ) |
Net cash used in investing activities | |
| (895,143 | ) | |
| (2,214,000 | ) |
Net cash provided by financing activities | |
| 914,366 | | |
| 3,395,998 | |
| |
| | | |
| | |
Net increase (decrease) in cash | |
| (24,691 | ) | |
| 1,146,651 | |
Cash at beginning of period | |
| 175,792 | | |
| 478 | |
| |
| | | |
| | |
Cash
at end of period | |
$ | 151,101 | | |
$ | 1,147,129 | |
| |
| | | |
| | |
The Company had cash of $151,101 at June 30, 2015, compared
with cash of $175,792 at December 31, 2014, a decrease of $24,691. The decrease in cash during the six months ended June 30, 2015,
was primarily attributed to $895,143 of cash used for the acquisition of real estate property and cash used in operating activities
of $43,914, partially offset by cash provided by the net proceeds from financing activities of $914,366.
Operating Activities
We had net cash used in operating activities of $43,914 for
the six months ended June 30, 2015, which consisted of a decrease of $126,598 in accounts payable and accrued liabilities, a net
loss of $106,447, and a decrease in security deposits of $6,842, partially offset by non-cash charges of $123,098, a decrease in
prepaid and other assets of $55,365, and a decrease in deferred leasing costs of $17,510.
We had net cash used in operating activities of $35,347 for
the six months ended June 30, 2014, which consisted of a net loss of $329,888 and an increase of $11,437 in prepaid and other assets,
partially offset by non-cash charges of $271,041 and an increase of $34,937 in accounts payable, accrued liabilities, and accrued
interest.
Investing Activities
During the six months ended June 30, 2015, we purchased a
3,828 square feet retail building in Denver, Colorado for $771,750. In addition, pursuant to the terms of the lease agreement for
the real estate property located in Aurora, Colorado, the Company agreed to contribute $150,000 to improvements to the property.
For the six months ended June 30, 2015, we incurred $123,393 for building improvements to the property in Aurora, Colorado. As
of June 30, 2015, the Company had paid $146,026 of the $150,000 towards the improvements to the property.
During the six months ended June 30, 2014, we purchased a
22,144 square foot industrial building situated on 1.4 acres of land in Denver, Colorado for $2,214,000.
Financing Activities
We had $914,366 in net cash provided by financing activities
for the six months ended June 30, 2015, which consisted of proceeds of $925,000 from the issuance of a promissory note, partially
offset by debt issuance costs of $10,634.
We had $3,395,998 in net cash provided by financing activities
for the six months ended June 30, 2014, which consisted of proceeds of $1,800,000 from the issuance of a promissory note and proceeds
of $1,615,000 received from the sale of common stock, partially offset by debt issuance costs of $19,202.
Although we can provide no assurances, we believe our cash
on hand, coupled with revenues generated by rental income and our ability to refinance our equity in the real estate we own, will
provide sufficient liquidity and capital resources to fund our business for the next twelve months. In the event we experience
liquidity and capital resources constraints because of unanticipated operating losses, we may need to raise additional capital
in the form of equity and/or debt financing. If such additional capital is not available on terms acceptable to us or at all then
we may need to curtail our operations and/or take additional measures to conserve and manage our liquidity and capital resources,
any of which would have a material adverse effect on our business, results of operations and financial condition.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Seasonality
We do not consider our business to be seasonal.
Inflation and Changing Prices
Neither inflation or changing prices for the six months ended
June 30, 2015, had a material impact on our operations.
Item 3. Quantitative and Qualitative Disclosures
about Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls
and Procedures
Our management, with the participation
of our Co-Chief Executive Officers and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2015. Based
on that evaluation, our Co-Chief Executive Officers and Chief Financial Officer concluded that our disclosure controls and procedures
were effective as of June 30, 2015.
Changes in Internal Control
Over Financial Reporting
During the quarter ended June 30,
2015, there were no changes in our internal control over financial reporting identified in connection with the evaluation required
by paragraph (d) of Securities Exchange Act Rules 13a-15 or 15d-15 that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.
This quarterly report does not include an attestation report
of the Company’s registered public accounting firm regarding internal controls over financial reporting. Management’s
report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only management’s report in this quarterly report.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no legal proceedings, which are pending or have
been threatened against us or any of our officers, directors or control persons of which management is aware.
Item 1A. Risk Factors
There have been no material changes to the risk factors disclosed
in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. Please refer to the “Risks Factors”
section in our Annual Report for a discussion of risks to which our business, financial condition, results of operations and cash
flows are subject.
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds
During the six months ended June 30, 2015, the Company issued
98,866 shares of common stock in exchange for consulting services. The securities were issued in reliance upon the exemptions from
registration provided by Section 4(2) of the Securities Act of 1933, as amended.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
The documents set forth
below are filed, incorporated by reference or furnished herewith as indicated.
Index to Exhibits
Exhibit No, |
Description of Exhibit |
31.1* |
Rule 13a14(a)/15d-14(a) Certification of co-Chief Executive Officer |
31.2* |
Rule 13a14(a)/15d-14(a) Certification of Chief Financial Officer |
31.3* |
Rule 13a14(a)/15d-14(a) Certification of co-Chief Executive Officer |
32.1* |
Section 1350 Certification of Chief Executive Officer |
32.2* |
Section 1350 Certification of Chief Financial Officer |
32.3* |
Section 1350 Certification of Chief Executive Officer |
101.INS** |
XBRL Instance Document |
101.SCH** |
XBRL Taxonomy Extension Schema Document |
101.CAL** |
XBRL Taxonomy Extension Calculation Linkbase Document |
101.LAB** |
XBRL Taxonomy Extension Label Linkbase Document |
101.PRE** |
XBRL Taxonomy Extension Presentation Linkbase Document |
101.DEF** |
XBRL Taxonomy Definition Linkbase Document |
* |
Filed Herewith |
** |
Furnished herewith (not filed). |
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
|
MJ HOLDINGS, INC. |
|
|
|
Date: August 14, 2015 |
By: |
/s/ Adam Laufer |
|
Adam Laufer |
|
Co-Chief Executive Officer
(co-Principal Executive Officer ) |
|
MJ HOLDINGS, INC. |
|
|
|
Date: August 14, 2015 |
By: |
/s/ Shawn Chemtov |
|
Shawn Chemtov |
|
Co-Chief Executive Officer and
Chief Financial Officer (co-Principal
Executive Officer, Principal Financial
Officer and Principal Accounting Officer ) |
Exhibit
31.1
CO-CHIEF
EXECUTIVE OFFICER CERTIFICATION
I,
Adam Laufer, certify that:
| 1. | I have
reviewed this Quarterly Report on Form 10-Q of MJ Holdings, Inc.; |
| 2. | Based
on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
| 3. | Based
on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the Registrant as of, and for, the periods presented
in this report; |
| 4. | The Registrant’s
other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)
and 15d-15(f)) for the Registrant and have: |
| a) | Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to
the Registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed
such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated
the effectiveness of the Registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation;
and |
| d) | Disclosed
in this report any change in the Registrant’s internal control over financial reporting
that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s
fourth quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the Registrant’s internal control over financial reporting;
and |
| 5. | The Registrant’s
other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the Registrant’s auditors and the
audit committee of the Registrant’s board of directors (or persons performing the
equivalent functions): |
| a) | All significant
deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the Registrant’s
ability to record, process, summarize and report financial information; and |
| b) | Any fraud,
whether or not material, that involves management or other employees who have a significant
role in the Registrant’s internal control over financial reporting. |
Dated: August 14, 2015 |
/s/ Adam Laufer |
|
Title: Co-Chief Executive Officer |
Exhibit
31.2
CHIEF
FINANCIAL OFFICER CERTIFICATION
I,
Shawn Chemtov, certify that:
| 1. | I
have reviewed this Quarterly Report on Form 10-Q of MJ Holdings, Inc.; |
| 2. | Based
on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
| 3. | Based
on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the Registrant as of, and for, the periods presented
in this report; |
| 4. | The Registrant’s
other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)
and 15d-15(f)) for the Registrant and have: |
| a) | Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to
the Registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed
such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated
the effectiveness of the Registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation;
and |
| d) | Disclosed
in this report any change in the Registrant’s internal control over financial reporting
that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s
fourth quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the Registrant’s internal control over financial reporting;
and |
| 5. | The Registrant’s
other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the Registrant’s auditors and the
audit committee of the Registrant’s board of directors (or persons performing the
equivalent functions): |
| a) | All significant
deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the Registrant’s
ability to record, process, summarize and report financial information; and |
| b) | Any fraud,
whether or not material, that involves management or other employees who have a significant
role in the Registrant’s internal control over financial reporting. |
Dated:
August 14, 2015 |
/s/ Shawn Chemtov |
|
Title: Chief Financial Officer |
Exhibit
31.3
CO-CHIEF
EXECUTIVE OFFICER CERTIFICATION
I,
Shawn Chemtov, certify that:
| 1. | I have
reviewed this Quarterly Report on Form 10-Q of MJ Holdings, Inc.; |
| 2. | Based
on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
| 3. | Based
on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the Registrant as of, and for, the periods presented
in this report; |
| 4. | The Registrant’s
other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)
and 15d-15(f)) for the Registrant and have: |
| a) | Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to
the Registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed
such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated
the effectiveness of the Registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation;
and |
| d) | Disclosed
in this report any change in the Registrant’s internal control over financial reporting
that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s
fourth quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the Registrant’s internal control over financial reporting;
and |
| 5. | The Registrant’s
other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the Registrant’s auditors and the
audit committee of the Registrant’s board of directors (or persons performing the
equivalent functions): |
| a) | All significant
deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the Registrant’s
ability to record, process, summarize and report financial information; and |
| b) | Any fraud,
whether or not material, that involves management or other employees who have a significant
role in the Registrant’s internal control over financial reporting. |
Dated:
August 14, 2015 |
/s/ Shawn Chemtov |
|
Title: Co-Chief Executive Officer
|
Exhibit
32.1
CERTIFICATION
OF CO-CHIEF EXECUTIVE OFFICER
PURSUANT
TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
I,
Adam Laufer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that the Quarterly Report of MJ Holdings, Inc. on Form 10-Q for the period ended June 30, 2015, fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Form 10-Q fairly presents,
in all material respects, the financial condition and results of operations of MJ Holdings, Inc.
Dated: August 14, 2015 |
/s/ Adam Laufer |
|
Title: Co-Chief ExecutiveOfficer |
A
signed original of this written statement required by Section 906 has been provided to MJ Holdings, Inc. and will be retained
by MJ Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit
32.2
CERTIFICATION
OF CHIEF FINANCIAL OFFICER
PURSUANT
TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
I,
Shawn Chemtov, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that the Quarterly Report of MJ Holdings, Inc. on Form 10-Q for the period ended June 30, 2015, fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Form 10-Q fairly presents,
in all material respects, the financial condition and results of operations of MJ Holdings, Inc.
Dated: August 14, 2015 |
/s/ Shawn Chemtov |
|
Title: Chief Financial Officer |
A
signed original of this written statement required by Section 906 has been provided to MJ Holdings, Inc. and will be retained
by MJ Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit
32.3
CERTIFICATION
OF CO-CHIEF EXECUTIVE OFFICER
PURSUANT
TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
I,
Shawn Chemtov, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that the Quarterly Report of MJ Holdings, Inc. on Form 10-Q for the period ended June 30, 2015, fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Form 10-Q fairly presents,
in all material respects, the financial condition and results of operations of MJ Holdings, Inc.
Dated: August 14, 2015 |
/s/ Shawn Chemtov |
|
Title: Co-Chief Executive Officer
|
A
signed original of this written statement required by Section 906 has been provided to MJ Holdings, Inc. and will be retained
by MJ Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
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