(Mark One)
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended
September 30, 2017
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
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For the transition period from __________________ to ______________
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Texas
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75-2095676
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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13575 58th St. North #138 Clearwater, FL
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33760
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller Reporting Company
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Emerging growth company
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Page
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PART I. Financial Information
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Item 1.
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F-1
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Item 2.
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1
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Item 3.
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5
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Item 4.
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5
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PART II. Other Information
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Item 1.
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6
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Item 1A.
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6
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Item 2.
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6
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Item 3.
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6
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Item 4.
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6
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Item 5.
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6
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Item 6.
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7
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8
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2017
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2016
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||||||
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss
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$
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(1,373,536
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)
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$
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(928,487
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)
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Adjustments to reconcile net loss to net cash and cash equivalents
used by operating activities:
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Depreciation
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58,627
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56,945
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Common stock issued for services
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337,469
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14,955
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Employee stock plan
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44,738
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-
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Common stock issued for interest
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366,400
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-
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Amortization of debt discount
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15,000
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-
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Loss on sale of equipment to related party
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4,249
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42,987
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(Increase) decrease in:
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Accounts receivable
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(59,470
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)
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135,200
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Inventories
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5,614
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(80,363
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)
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Prepaid expenses and other current assets
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46,965
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(9,905
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)
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Increase (decrease) in:
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Accounts payable
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(8,332
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)
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21,530
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Accrued expenses
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(20,557
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)
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7,874
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Payable to related parties
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89,984
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-
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Net cash used by operating activities
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(492,849
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)
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(739,264
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)
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Acquisition of property and equipment
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(6,196
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)
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(35,414
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)
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Net cash used by investing activities
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(6,196
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)
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(35,414
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)
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Proceeds from payable to related party
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130,050
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510,000
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Payment on due to related party
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(28,000
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)
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-
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Proceeds from issuance of convertible note payable, net
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85,000
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-
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Repayment on convertible note payable
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(100,000
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)
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-
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Proceeds from issuance of note payable to related party
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405,000
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-
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Proceeds from issuance of common stock
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-
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150
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Proceeds from reverse acquisition
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-
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180,854
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Net cash provided by financing activities
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492,050
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691,004
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Net change in cash and cash equivalents
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(6,995
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)
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(83,674
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)
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Cash and cash equivalents, beginning of the period
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43,878
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221,174
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Cash and cash equivalents, end of the period
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$
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36,883
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$
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137,500
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SUPPLEMENTAL CASH FLOW INFORMATION:
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Cash paid for interest
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$
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5,000
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$
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48
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Cash paid for income taxes
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$
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-
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$
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-
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NON-CASH FINANCING AND INVESTING ACTIVITIES:
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Common stock issued for acquisition of property
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$
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50,723
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$
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-
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Common stock issued for deferred offering cost
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$
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240,900
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$
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-
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Consolidation of notes payable to related party, including accrued interest
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$
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153,400
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$
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-
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Changes in operating assets and liabilities due to reverse acquisition:
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Prepaid expenses
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$
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-
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$
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(3,434
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)
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Property and equipment
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$
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-
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$
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(95,860
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)
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Accumulated depreciation
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$
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-
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$
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44,332
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Deposits
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$
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-
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$
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(841
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Accounts payable
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$
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-
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$
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6,973
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Additional paid-in capital
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$
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-
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$
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48,830
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1. |
10,000 shares to each director for services rendered for fiscal year 2016 and 10,000 shares for services to be rendered for fiscal year 2017, total 60,000 shares, valued at $99,000;
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2. |
17,646 shares to a consultant for investors relations services, valued at $30,000;
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3. |
50,000 shares to the Company’s SEC legal counsel for services performed, valued at $82,500;
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4. |
15,000 shares to a consultant for continuing services, valued at $23,400; and
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5. |
54,254 shares to a director as other considerations and to purchase and prepare assets acquired by the Company’s subsidiary, valued at $86,806.
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Level 1 – Quoted prices for identical instruments in active markets;
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Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and
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Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
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September 30,
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December 31,
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2017
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2016
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Short term loan from related entity (1)
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$
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35,348
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$
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-
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Short term loan from related entity (1)
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26,636
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-
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Storage and corporate housing and auto allowances owed to CEO (2)
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4,000
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4,000
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Working capital advances from CEO (3)
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-
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-
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$
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65,984
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$
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4,000
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Note Date
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Note Amount
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Accrued Interest
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January 2017
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$
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300,000
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$
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16,504
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June 2017
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105,000
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2,048
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June 2017
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130,050
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2,564
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Total notes and accrued interest
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$
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556,166
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Expenses owed to related party
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2,234
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$
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558,400
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Land
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$
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26,194
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Land preparation and cleanup
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15,000
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Industrial Hemp Grower License
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-
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Other considerations
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86,806
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Total Purchase Price
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$
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128,000
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September 30,
2017
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December 31,
2016
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Raw materials
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$
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46,880
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$
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52,363
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Finished goods
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10,591
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10,722
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$
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57,471
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$
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63,085
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1) |
10,000 shares to each director for services rendered for fiscal year 2016 and 10,000 shares for services to be rendered for fiscal year 2017, total 60,000 shares, valued at $99,000;
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2) |
17,646 shares to a consultant for investors relations services, valued at $30,000;
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3) |
50,000 shares to the Company’s SEC legal counsel for services performed, valued at $82,500;
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4) |
10,000 shares to an employee for services performed, valued at $12,800;
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5) |
110,000 shares to an investor and its affiliate as offering costs, valued at $184,800;
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6) |
50,000 shares to a director for services rendered in the convertible note and equity purchase agreement transactions, valued at $82,500;
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7) |
100,000 shares issued as debt issuance cost to CEO for related party advances, valued at $182,000;
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8) |
100,000 shares issued as interest expense to CEO for related party advances, valued at $158,000;
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9) |
15,000 shares to a consultant for continuing services, valued at $23,400; and
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10) |
80,000 shares to a director as other considerations and to purchase and prepare assets acquired by the Company’s subsidiary, valued at $128,000.
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11) |
15,520 shares to a director for expenses incurred related to land excavation and clean up, valued at $9,529.
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1) |
Cannabis oil extraction and processing - MariJ Pharma has a unique mobile cannabis oil processing and extraction unit designed into a heavy-duty truck chassis. The unit has already begun performing extractions and processing of medical hemp oils at various sites in Colorado, and MariJ Pharma is currently developing additional contracts for services.
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2) |
Wholesale sale of raw and processed medical cannabis oils.
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3) |
Laboratory testing and certification services – As the demand for these services grows in the medical cannabis industry, MariJ Pharma is uniquely positioned to fulfill the growing demand for these services by utilizing its existing mobile laboratory and testing unit built on a heavy-duty truck chassis.
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4) |
Licensing and support of the Company’s GeoTraking Technology systems.
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5) |
Processing and compounding services for medical grade cannabis oils.
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1) |
EMT will seek to enter into product development projects with institutions of higher learning in efforts to develop new and better strains of medical cannabis related products for dispensing as medications, nutraceuticals, cosmeceuticals, and probably dietary supplements. EMT anticipates participating in state and federal grants in conjunction with one or more universities as a means to defray part of its costs in these efforts.
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2) |
Private label packaging services - the Company has obtained a majority of the equipment required to engage in the business of packaging and labeling of medical cannabis oils, oil-infused products, and related items.
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3) |
Retail sales of medical cannabis oils, oil-infused products, and other merchandise through its web-based portal or retail dispensaries planned for that purpose. These activities are dependent in large part upon meeting FDA regulations and criteria relating to the sale and distribution of cannabis-infused products, and the Company is currently in the process of determining the status of those criteria.
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4) |
Retail and wholesale sales of cosmeceutical and nutraceutical products and dietary supplements containing its high-quality cannabis oil extracts, subject to compliance with FDA and other regulations.
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5) |
Growing high quality cannabis plants and extracting oil for sale or for manufacturing of oil-infused products.
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Note Date
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Note Amount
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Accrued Interest
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January 2017
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$
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300,000
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$
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16,504
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June 2017
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105,000
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2,048
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June 2017
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130,050
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2,564
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Total notes and accrued interest
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$
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556,166
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Expenses owed to related party
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2,234
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$
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558,400
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1) |
10,000 shares to each director for services rendered for fiscal year 2016 and 10,000 shares for services to be rendered for fiscal year 2017, total 60,000 shares, valued at $99,000;
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2) |
17,646 shares to a consultant for investors relations services, valued at $30,000;
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3) |
50,000 shares to the Company’s SEC legal counsel for services performed, valued at $82,500;
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4) |
10,000 shares to an employee for services performed, valued at $12,800;
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5) |
110,000 shares to an investor and its affiliate as offering costs, valued at $184,800;
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6) |
50,000 shares to a director for services rendered in the convertible note and equity purchase agreement transactions, valued at $82,500;
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7) |
100,000 shares issued as debt issuance cost to CEO for related party advances, valued at $182,000;
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8) |
100,000 shares issued as interest expense to CEO for related party advances, valued at $158,000;
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9) |
15,000 shares to a consultant for continuing services, valued at $23,400; and
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10) |
80,000 shares to a director as other considerations and to purchase and prepare assets acquired by the Company’s subsidiary, valued at $128,000.
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11) |
15,520 shares to a director for expenses incurred related to land excavation and clean up, valued at $9,529.
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Acacia Diversified Holdings, Inc.
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Date:
November 13
, 2017
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By:
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/s/ Richard K. Pertile
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Richard K. Pertile
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Chief Executive Officer,
Principal Executive Officer
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Chief Financial Officer and
Principal Financial Officer
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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;
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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;
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c) |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based upon such evaluation; and
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d) |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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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
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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.
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Date:
November 13
, 2017
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By:
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/s/ Richard K. Pertile
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Richard K. Pertile
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Chief Executive Officer and Chief Financial Officer
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