MJ Holdings, Inc. (Form: 10-Q, Received: 08/30/2018 17:19:01)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2018

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

COMMISSION FILE NUMBER 333-167824

MJ HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

NEVADA

20-8235905

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

3275 South Jones Blvd., Suite 104, Las Vegas, NV 89146

(Address of principal executive offices) (Zip Code)

(702) 879-4440

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes 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, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of August 24, 2018, there were 63,477,188 shares of our Common Stock, par value $0.001 per share, outstanding.

MJ HOLDINGS, INC.

FORM 10-Q

FOR THE THREE MONTHS ENDED MARCH 31, 2018

INDEX

	PAGE
PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited)	1

Notes to Consolidated Financial Statements (Unaudited)	4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	8

Item 3. Quantitative and Qualitative Disclosure About Market Risk	10

Item 4. Controls and Procedures	11

PART II – OTHER INFORMATION

Item 1. Legal Proceedings	12

Item 1A. Risk Factors	12

Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities	12

Item 3. Defaults Upon Senior Securities	12

Item 4. Mine Safety Disclosures	12

Item 5. Other Information	12

Item 6. Exhibits	13

EXHIBIT INDEX	13

SIGNATURES	14

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

MJ HOLDINGS, INC.

Consolidated Balance Sheets

(Unaudited)

	March 31,			December 31,
	2018			2017
Assets
Current Assets
Cash	$	1,856,867		$	2,513,863
Prepaid expenses		257,962			5,500
Total Current Assets		2,114,829			2,519,363
Fixed assets
Leasehold improvements		40,449			17,535
Other Assets
Deposits		38,633			42,383
Intangible asset (net)		300,000			300,000
Noncurrent assets held for disposition		584			584
Total Assets	$	2,494,495		$	2,879,865

Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable and accrued liabilities	$	4,250		$	70,382
Customer deposits		341,216			-
Convertible notes payable due to related party		-			900,000
Total Current Liabilities		345,466			970,382

Noncurrent liabilities:
Deferred rent		157,598			104,565
Total noncurrent liabilities		157,598			104,565

Total Liabilities		503,064			1,074,947

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; 63,058,856 and 62,675,407 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively		63,059			62,675
Additional paid in capital		1,991,968			1,704,764
Common stock to be issued		500,000			400,000
Accumulated deficit		(563,596	)		(362,521	)
Total Stockholders’ Equity		1,991,431			1,804,918
Total Liabilities and Stockholders’ Equity	$	2,494,495		$	2,879,865

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

MJ HOLDINGS, INC.

Consolidated Statements of Operations

(Unaudited)

	Three months ended			Three months ended
	March 31,			March 31,
	2018			2017
Net Revenues	$	-		$	-

Operating Expenses
General and administrative		191,764			-
Sales and marketing		9,515			-
Total operating expenses		201,279			-

Operating loss		(201,279	)		-

Other Expenses (income)
Interest expense (income)		(204	)		2,640
Total other expenses (income)		(204	)		2,640

Loss before provision for income taxes		(201,075	)		(2,640	)

Provision for income taxes		-			-

Net Loss	$	(201,075	)	$	(2,640	)

Basic and diluted net loss per common share:	$	(0.00	)	$	(0.00	)

Weighted average shares outstanding		62,981,679			52,732,969

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

MJ HOLDINGS, INC.

Consolidated Statements of Cash Flows

(Unaudited)

	Three months ended			Three months ended
	March 31,			March 31,
	2018			2017
Cash Flows from Operating Activities
Net loss	$	(201,075	)	$	(2,640	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt issuance cost		-			2,640
Amortization of deferred rent expense		53,033			-
Common stock issued for services		1,086			-
Changes in operating assets and liabilities:
Prepaid expenses		(252,461	)		-
Deposits		3,750			(35,479	)
Accounts payable and accrued liabilities		(66,132	)		-
Customer deposits		341,216			-
Net cash used in operating activities		(120,583	)		(35,479	)

Cash Flows from Investing Activities:
Payment for leasehold improvements		(22,914	)		-
Purchase of growth license		-			(300,000	)
Net cash used in investing activities		(22,914	)		(300,000	)

Cash Flows from Financing Activities
Proceeds from issuance of common stock		286,501			-
Proceeds from common stock to be issued		100,000			-
Proceeds from notes payable		-			335,479
Repayment of convertible note due to a related party		(900,000	)		-
Net cash provided by (used in) financing activities		(513,499	)		335,479

Net decrease in cash		(656,996	)		-

Cash, beginning of period		2,513,863			-

Cash, end of period	$	1,856,867		$	-

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

MJ HOLDINGS, INC.

Notes to the Consolidated Financial Statements

For the three months ended March 31, 2018 and 2017

(Unaudited)

Note 1 — Nature of the Business

MJ Holdings, Inc. (the “Company”) is a holding company, whose subsidiaries provide infrastructure, consulting and construction services, in addition to holding, and managing third-party state-issued cultivation and production licenses.

Our wholly owned subsidiary, Red Earth, LLC (“Red Earth”) is the holder of a provisional Medical Marijuana Establishment Registration Certificate (the “Certificate”).

In April, 2018, the State of Nevada finalized and approved the transfer of the provisional Medical Marijuana Establishment Registration Certificate (the “Certificate”) from its wholly owned subsidiary, Red Earth, LLC (“Red Earth”) to the Company. The Certificate, when perfected, will allow the Company to commence legal marijuana cultivation activities in the State of Nevada. HDGLV, LLC, a wholly owned subsidiary of Red Earth, holds a triple-net leasehold, with an option to buy, on a 17,298 square-foot building, which will be home to our cultivation facility. The Company expect Phase 1 of this facility to be completed in the third quarter of 2018. The Company expects final approval by the State of Nevada, Department of Taxation of its Certificate and issuance of a Business License from the City of Las Vegas in the third quarter of 2018.

In April, 2018, the Company entered into a management agreement with a Nevada company (the “Licensed Operator”) that holds a license, for the legal cultivation of marijuana for sale under the laws of the State of Nevada. The Licensed Operator has engaged the Company to develop, manage, and operate a licensed cultivation facility on property owned by the Licensed Operator. At its sole cost and expense, the Company has agreed to complete the construction of a 120,000 square-foot outdoor grow facility, including the construction of an 8,000 square-foot building and installation of security fencing, meeting the State of Nevada building codes and regulations. The Company expects to receive all necessary state and local approvals and complete construction of the facility to commence operations in the latter part of the third quarter of 2018.

It is the Company’s intention to grow its business through the acquisition of existing companies and/or through the development of new opportunities that can provide a 360-degree spectrum of infrastructure (dispensaries), cultivation/production management, and consulting services in the regulated cannabis industry.

Note 2 — Summary of Significant Accounting Policies

The accompanying unaudited 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 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 consolidated financial statements not misleading have been included. The balance sheet at December 31, 2017, has been derived from the Company’s audited consolidated financial statements as of that date.

The unaudited 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, 2017, that was filed with the SEC on July 27, 2018. The results of operations for the three months ended March 31, 2018, are not necessarily indicative of the results to be expected for the full year or any further periods.

The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.

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, 2017. There were no material changes to our significant accounting policies during the interim period ended March 31, 2018.

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.

The Company’s primary asset is a provisional Medical Marijuana Establishment Registration Certificate issued by the State of Nevada for the cultivation of medical marijuana. There is no assurance on the receipt and/or timing of final approvals from the appropriate authorities. The Company has not generated any revenues from inception (October 17, 2016) to March 31, 2018 and has an accumulated deficit of $563,596. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

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 — Prepaid Expenses

On February 8, 2018 the Company entered into an agreement with an unrelated third party for the purpose of designing, purchasing and reselling greenhouses for sale. Under the agreement the Company was to contribute its expertise in construction, and the other party its expertise in designing, procuring and operating greenhouses. In April of 2018 the third party informed the Company that it was unable to satisfy its duties under the agreement due to unrelated hardships. Upon its departure, the Company agreed with four (4) separate purchasers to complete the agreement, which includes the design, purchase and resale of six (6) greenhouses to purchasers.

As of March 31, 2018 the Company had received $341,216 in deposits from the purchasers which were recorded as Customer Deposits on the balance sheet, and had prepaid for the manufacture and sale of the greenhouses $257,962 as Prepaid Expenses.

Note 5 — Convertible Note Payable Due to Related Party

As part of a transaction on December 15, 2017, that was accounted as a Reverse Merger, the Company issued a convertible note payable in the amount of $900,000 to the members of Red Earth. The managing partner and 50% owner of Red Earth at the time of the transaction was Paris Balaouras, the Company’s Chief Executive Officer. The convertible note payable is due October 15, 2018. The note is convertible into shares of the Company’s common stock at the holder’s discretion at a conversion price of $0.75 per share. The note accrues interest, commencing six months from the issuance date, at a rate equal to one half of one percent (0.50%) per annum. Interest shall be payable on the maturity date or the conversion date, if applicable.

The Company assessed the embedded conversion feature of the note payable and determined that the fair value of the underlying common stock at inception did not exceed the conversion price of the convertible note. Since, at the time the convertible note was issued, the Company’s common stock had limited publicly traded volume, the Company based the fair value of the Company’s common stock on the sales of the Company’s common stock, which were sold at $0.75 per share.

In January 2018, the $900,000 convertible note payable due to a related party was repaid in full.

Note 6 — Capital Stock

During the three months ended March 31, 2018, the Company sold and issued an aggregate of 382,001 shares of the Company’s common stock at $0.75 per share for gross proceeds of $286,501. In addition, the Company received $100,000 pursuant to a stock subscription agreement to purchase 133,333 shares of common stock at $0.75 per share, but the shares had not been issued as of August 24, 2018.

During the three months ended March 31, 2018, the Company issued an aggregate of 1,448 shares of the Company’s common stock in exchange for professional services valued at $1,086.

Note 7 — Warrants

Prior to the Reverse Merger, the Company had issued warrants as compensation for consulting services. The warrants expire between June 2019 and October 2019. The following table summarizes all stock warrant activity of the Company for the three months ended March 31, 2018:

			Weighted
			Avg.
			Exercise
Warrants:	Shares		Price
Balance at December 31, 2017		166,665	$	5.88
Issued		—		—
Exercised		—		—
Expired		—		—
Balance at March 31, 2018		166,665	$	5.88

Note 8 — Commitments and Contingencies

Operating Leases

The Company leases an office facility and a production / warehouse facility under two non-cancelable operating leases that expire in May 2019 and June 2027, respectively. Future minimum rental and lease commitments under non-cancelable operating leases with terms in excess of one year as of March 31, 2018, are as follows:

	Amount
Fiscal year ending December 31:
2018	$	151,470
2019		249,090
2020		230,640
2021		230,640
2022		230,755
Thereafter		1,043,315
Total minimum lease payments	$	2,135,910

Rent expense, including deferred rent expense of $157,598, incurred pursuant to operating leases for the three months ended March 31, 2018 and 2017, was $53,033 and $0, respectively.

Litigation

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.

Note 9 — Subsequent Events

Subsequent to March 31, 2018, the Company sold and issued an aggregate of 413,332 shares of the Company’s common stock at $0.75 per share for gross proceeds of $309,999. In addition, the Company received $100,000 pursuant to a stock subscription agreement to purchase 133,333 shares of common stock at $0.75 per share, but the shares had not been issued as of August 24, 2018.

Subsequent to March 31, 2018, the Company issued an aggregate of 5,000 shares of the Company’s common stock in exchange for professional services valued at $3,750.

In April 2018, the Company entered into a management agreement with a Nevada company (the “Licensed Operator”) that holds a cultivation license that permits it to engage in the lawful cultivation of marijuana for sale under the laws of the State of Nevada. The term of the agreement is for 8 years. The Licensed Operator has engaged the Company to develop, manage, and operate a licensed cultivation facility on property owned by the Licensed Operator. The Company, at its sole cost and expense, has agreed to complete the construction of a 120,000 square-foot outdoor grow facility, including the construction of an 8,000 square-foot building and installation of security fencing, meeting the State of Nevada building codes and regulations.

Upon completion of the build-out of the outdoor grow facility and obtaining the appropriate approvals from the local and state authorities, the Company has committed to generate gross sales of at least $5 million per year from product cultivated from the outdoor grow facility. The Licensed Operator may terminate the agreement if sales fall below the $5 million minimum requirement as defined in the agreement. Prior to the termination of the agreement, the Company may cure any applicable deficiency by paying the Licensed Operator 10% of the deficiency.

Pursuant to the management agreement, the Licensed Operator will retain 15% of the net revenues generated from product cultivated from the outdoor grow facility and 85% of the net revenues will be retained by the Company. Upon execution of the agreement, the Company paid $300,000 to the Licensed Operator as consideration for the opportunity to construct and manage the outdoor grow facility on the Licensed Operator’s property. In exchange for the initial consideration, the Licensed Operator has agreed not to retain 15% of the first $2 million of net revenues generated from the outdoor grow facility. In addition, the Company has agreed to pay the Licensed Operator $7,000 per month for compliance, security, and administration costs incurred by the Licensed Operator during the term of the agreement.

On July 1, 2018 the Company entered into a Corporate Advisory Agreement (“Advisory Agreement”) with a New York City based consulting company (the “Consultant”) to provide business management, corporate compliance and related services to MJ Holdings and its subsidiaries. The Advisory Agreement is for a term of 12 months and provides for payment for services to be rendered, pursuant to the Advisory Agreement, by the issuance of 14,444 shares of the Company’s common stock during the term of the Advisory Agreement. These shares are exempt from registration pursuant to Rule 144 of the Securities Act and such shares shall be restricted for a period of two years from the date of issuance unless otherwise registered. The Advisory Agreement also grants to the Consultant an option to acquire up to 10,000 additional shares of the Company’s common stock at a strike price to be determined.

On August 9, 2018 (the “Transaction Date”), the Company entered into a Securities Purchase Agreement, pursuant to which the Company sold and issued 2,500 shares of its Series A Convertible Preferred Stock (the “Preferred Stock”) to a single institutional, accredited investor for $1,000 per share or an aggregate subscription of $2,500,000. Subject to a standard “4.99% Beneficial Ownership Limitation blocker,” the Preferred Stock is convertible into 3,333,334 shares of the Company’s Common Stock at a conversion price of $0.75 per share, subject to adjustment as described in the Series A Certificate of Designation.

The Company also entered into a Registration Rights Agreement with the investor, pursuant to which the Company is obligated to file a registration statement with the Securities and Exchange Commission (the “Commission”), within 30 calendar days of the Transaction Date, to register for resale the shares of common stock underlying the Preferred Stock. If the Commission has not declared the registration statement effective by the 60th calendar day following the Transaction Date (or, in the event of a “full review” by the Commission, the 90th calendar day following the Transaction Date), or upon the occurrence of other events, then the Company shall pay to the investor an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of 4.0% multiplied by the aggregate subscription amount paid by the investor pursuant to the Purchase Agreement on a monthly basis until the event has been cured.

On August 13, 2018, the Company filed a Certificate of Designation of its Series A Convertible Preferred Stock with the Secretary of State of the State of Nevada to designate a series of its convertible preferred stock, consisting of 2,500 shares. The stated value of each share of Preferred Stock is $1,000. Subject to a standard “4.99% Beneficial Ownership Limitation blocker,” each share of Preferred Stock is convertible into shares of the Company’s common stock at any time or from time to time at a conversion price equivalent of $0.75 per share, subject to adjustment as described in Certificate of Designation.

On August 13, 2018 (the “Effective Transaction Date”), the Company closed the transactions contemplated by an Exclusive Distribution Agreement (the “Agreement”). The Agreement is between the Company and a designer and seller (the “Seller”) of a series of related products, all of which are designed to be utilized to consume cannabis products by vaporizing oil and other products related thereto (the “Goods”). The Company has the exclusive right to distribute the Goods in the territory of Nevada (the “Territory”). The Agreement further requires the Company to advertise and market the Goods in the Territory.

Pursuant to the terms of the Agreement, the Company purchased certain Goods from the Seller and tendered the sum of two million dollars ($2,000,000). The funds were transferred to the Seller on the Effective Transaction Date. The Seller has applied for patent protection in respect of one of the products. As of the date of this report, the patent application is still pending.

The initial term of the Agreement is for one year with additional successive one-year renewals, subject to certain standard termination provisions. The Agreement is subject to standard termination provisions; however, the Seller has the option to terminate the Agreement, on 30 days’ written notice, if the Company fails to purchase a sufficient minimum quantity of Goods from the Seller. The Company has met its obligations for the first year of the Agreement ($2,000,000). Thereafter, for each renewal term, the Company’s minimum purchase obligation for the Goods is currently $500,000, subject to good faith negotiation at the end of each year. Notwithstanding the exclusivity provided by the Agreement, the Seller reserves the right to sell Goods, directly or indirectly, to a specific retail group (the “Excluded Account”). In such event, the Seller shall pay to the Company a fee equivalent to 5% of the gross sales of the Goods that the Seller sold to an Excluded Account in Nevada. The Company, however, does not have the right to appoint sub-distributors or sell Goods through any third party. In connection with the transactions contemplated by the Agreement, the Seller granted to the Company a non-exclusive, non-transferrable, and non-sub licensable fully paid license agreement. The Agreement provides standard cross-indemnity provisions.

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, 2017, 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.

Company Background

MJ Holdings, Inc. is a holding company, whose subsidiaries provide infrastructure, consulting and construction services, in addition to holding, and managing third-party state issued cultivation and production licenses.

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

From February 2014 to January 2017, we owned and leased real estate properties zoned for legalized marijuana operations to licensed marijuana operators.

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

Reverse Merger

On December 15, 2017, we acquired all of the issued and outstanding membership interests of Red Earth LLC, a Nevada limited liability company (“Red Earth”) established in October 2016, in exchange for 52,732,969 shares of our common stock and a Promissory Note in the amount of $900,000, payable to the members of Red Earth. The managing partner and 50% owner of Red Earth at the time of the transaction was Paris Balaouras, the Company’s Chief Executive Officer. The convertible note payable is due October 15, 2018. The note is convertible into shares of the Company’s common stock at the holder’s discretion at a conversion price of $0.75 per share. The note accrues interest, commencing six months from the issuance date, at a rate equal to one half of one percent (0.50%) per annum. Interest shall be payable on the maturity date or the conversion date, if applicable. The transaction was accounted for as a reverse merger, whereby Red Earth was considered the accounting acquirer and became a wholly-owned subsidiary of the Company. As a result of the acquisition, the members of Red Earth became the beneficial owners of approximately 88% of the Company’s common stock immediately following the acquisition, obtained controlling interest of the Company, and retained key management positions of the Company. In accordance with the accounting treatment for a “reverse merger” or a “reverse acquisition,” the Company’s historical financial statements prior to the reverse merger will be replaced with the historical financial statements of Red Earth prior to the reverse merger, in all future filings with the U.S. Securities and Exchange Commission (the “SEC”). The consolidated financial statements after completion of the reverse merger will include the assets, liabilities and results of operations of the combined company from and after the closing date of the reverse merger.

Our corporate headquarters is located at 3275 South Jones Blvd., Las Vegas, Nevada, 89146, and our telephone number is (702) 879-4440. Our website address is: www.MJHoldingsinc.com. No information available on or through our websites shall be deemed to be incorporated into this Form 10-K. Our common stock, par value $0.001, is quoted on the OTC Markets Group, Inc.’s listing service under the symbol “MJNE.”

Our Business

Through our acquisition of Red Earth and its wholly owned subsidiary, HDGLV, LLC (“HDGLV”) we expect to commence legal marijuana cultivation activities in the third quarter of 2018 upon approval by the Nevada Department of Taxation of the transfer of a Provisional Cultivation License to Red Earth and the required state and city approvals for our cultivation facility. It is our intention to grow our business through the acquisition of existing companies and/or through the development of new opportunities that can provide a 360-degree spectrum of infrastructure (dispensaries), cultivation and production management, and consulting services in the regulated cannabis industry.

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

Critical Accounting Policies, Judgments and Estimates

There were no material changes to our critical accounting policies and estimates during the interim period ended March 31, 2018.

Please see our Annual Report on Form 10-K for the year ended December 31, 2017, for a discussion of our critical accounting policies and estimates and their effect, if any, on the Company's financial results.

Results of Operations for the Three Months Ended March 31, 2018 and 2017.

Revenue

The Company has not generated any revenues during the three months ended March 31, 2018 and 2017. During the first quarter of 2018, we began accepting customer deposits for the sale, design, installation and/or construction of greenhouse solutions to be used in the cultivation process in the cannabis industry. We expect to generate revenues from these greenhouse projects in the third quarter of 2018.

Operating Expenses

General and administrative expenses were $191,764 for the three months ended March 31, 2018, as compared to $0 during the three months ended March 31, 2017. The general and administrative expenses for the three months ended March 31, 2018 consisted mainly of professional fees of $113,931 and rent expense of $75,033.

Sales and marketing expenses were $9,515 for the three months ended March 31, 2018, as compared to $0 during the three months ended March 31, 2017.

Interest Expense (Income)

The Company recorded $204 of interest income during the three months ended March 31, 2018, as compared to $ 2,640 of interest expense during the three months ended March 31, 2017. The interest expense was associated with an investor’s advance of $350,000 to fund the acquisition of a Provisional Grow License in February 2017.

Net Loss

For the three months ended March 31, 2018, we recorded a net loss of $201,075 compared to a net loss of $2,640 for the three months ended March 31, 2017.

Liquidity and Capital Resources

The Company had cash of $1,856,867 at March 31, 2018, compared with cash of $2,513,863 at December 31, 2017.

Operating Activities

During the three months ended March 31, 2018, we used $120,583 of cash in operating activities primarily as a result of our net loss of $201,075, offset by amortization of deferred rent expense of $53,033, common stock issued for services valued at $1,086, and net changes in operating assets and liabilities of $26,373.

During the three months ended March 31, 2017, we used $35,479 of cash in operating activities primarily as a result of our net loss of $2,640, offset by amortization of debt discount of $2,640, and net changes in operating assets and liabilities of $35,479.

Investing Activities

Net cash used in investing activities during the three months ended March 31, 2018, was $22,914, which consisted of the payment for leasehold improvements.

Net cash used in investing activities during the three months ended March 31, 2017, was $300,000, which consisted of the purchase of a provisional grow license issued in the State of Nevada.

Financing Activities

During the three months ended March 31, 2018, financing activities provided $286,501 in proceeds from the issuance of common stock, $100,000 in proceeds from common stock to be issued. The Company used $900,000 in repayments of convertible notes payable.

During the three months ended March 31, 2017, financing activities provided $335,479 in proceeds from notes payable.

The Company expects to begin generating revenues during the fourth quarter of 2018 but will likely incur additional net losses during this time period. Although we can provide no assurances, we believe our cash on hand and our ability to raise additional capital will provide sufficient liquidity and capital resources to fund our business for the next twelve months.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Seasonality

We do not consider our business to be seasonal.

Commitments and Contingencies

We are subject to the legal proceedings described in “Item 3. Legal Proceedings” of this report. There are no legal proceedings which are pending or have been threatened against us or any of our officers, directors or control persons of which management is aware.

Inflation and Changing Prices

Neither inflation nor changing prices for the three months ended March 31, 2018 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

As of the end of the period covered by this Form 10-Q, management performed, with the participation of our principal executive officer and principal financial officer, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures. Based on the evaluation, our principal executive officer and principal financial officer concluded that, as of March 31, 2018, our disclosure controls and procedures were not effective.

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

Changes in Internal Control over Financial Reporting

There was no change to our internal controls or in other factors that could affect these controls during the three month period ended March 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. However, our management is currently seeking to improve our controls and procedures in an effort to remediate the deficiency described above.

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

Not required for smaller reporting companies.

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

None.

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
10.5*		Exclusive Distribution Agreement with Healthier Choices Management Corp. dated July 30, 2018
31.1 *		Rule 13a14(a)/15d-14(a) Certification of Chief Executive Officer
31.2 *		Rule 13a14(a)/15d-14(a) Certification of Chief Financial Officer
32 .1 *		Section 1350 Certification of Chief Executive Officer
32.2 *		Section 1350 Certification of Chief Financial 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 30, 2018	By:	/s/ Paris Balaouras
		Paris Balaouras
		Chief Executive Officer and (Principal Executive Officer)

	By:	/s/ John R. Wheeler
		Chief Financial Officer
		(Principal Accounting Officer)

Exhibit 10.5

Exclusive Distribution Agreement

This Exclusive Distribution Agreement (this “ Agreement ”), dated as of July 30, 2018 (the “ Effective Date ”), is entered into between Healthier Choices Management Corp., a Delaware corporation, or its assigned wholly owned subsidiary (“ Seller ”), and MJ Holdings Inc., a Nevada corporation, or its approved designee or any wholly owned subsidiary (“ Distributor ”, and together with Seller, the “ Parties ”, and each, a “ Party ”).

WHEREAS, Seller is in the business of designing, and selling the Goods (as defined in Schedule 1 );

WHEREAS, Distributor is in the business of marketing and reselling Goods (as defined in Section 1 ) that contain Distributor’s [marijuana concentrate]; and

WHEREAS, Seller desires to appoint Distributor as its exclusive distributor to resell the Goods to customers located in the Territory (as defined below), and Distributor desires to accept such appointment, subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions set out herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

1. Appointment .

1.1 Exclusive Appointment . Contingent upon payment for an initial Purchase Order (as defined in Section 4.1 ) for Goods in an amount of at least $2,000,000 (the “ Initial Order ”), Seller appoints Distributor as its exclusive distributor of the Goods within the State of Nevada (“ Territory ”) during the Term, and Distributor accepts such appointment. Distributor shall not directly or indirectly market, advertise, promote, sell or distribute the Goods to any person located outside the Territory, including selling or distributing the Goods to any person for ultimate resale to persons outside the Territory. Notwithstanding the above, Seller may, directly or through distributors, market, advertise, promote, sell or distribute the Goods in the Territory to the excluded accounts set out in Schedule 1 (“ Excluded Accounts ”); provided , however , that, during the Term, Seller shall pay Distributor 5% of the gross sales for any Goods sold to the Excluded Accounts for resale in the Territory.

1.2 No Right to Appoint Sub-distributors . Distributor shall not appoint any sub-distributor or other person or entity to sell or distribute the Goods, without the prior written approval of Seller, said approval to not be unreasonably withheld. It is understood that for the purposes of this Agreement Focus Distribution, LLC is an approved sub-distributor.

1.3 Seller hereby avers that the The Vape Store, Inc. is a wholly owned subsidiary of the Seller and that Seller has the right to license the Goods and any Trademarks attached thereto as described in Schedule 1 (the “ Trademarks ”) to Distributor.

2. Promotion, Marketing and Accounting . Distributor shall:

2.1 market, advertise, promote and sell the Goods in the Territory in a manner that reflects favorably on the Goods and the good name, goodwill and reputation of Seller that is consistent with good business practices. Distributor shall utilize its best efforts to maximize the sales volume of the Goods. Notwithstanding the foregoing Distributor shall not violate any local or state laws regarding the marketing or advertising of the Goods;

2.2 purchase and maintain at all times a representative quantity of each of the Goods sufficient for the anticipated demand in the Territory;

2.3 have sufficient knowledge of the cannabis industry and of any products competitive to the Goods (including specifications, features, and benefits) so as to be able to reasonably explain the Goods to the end user as follows:

(a) the material differences between the Goods and competing products; and

(b) provide information on the use of and features of the Goods; and

2.4 develop a comprehensive marketing plan to assist in the fulfillment of its obligations under this Agreement;

2.5 not make any materially misleading or untrue statements concerning Seller or the Goods, including any product disparagement or “bait-and-switch” practices;

2.6 promptly notify Seller of any complaint or adverse claim about any of the Goods or its use of which Distributor becomes expressly aware;

2.7 provide quarterly sales and inventory reports on or before the fifteenth day after the close of any quarter in a format reasonably acceptable to Seller.

2.8 not resell Goods to any federal, state, local or foreign government or political subdivision or agency thereof, without express written approval from Seller.

3. Agreement to Purchase and Sell Goods .

3.1 Terms of Sale; Orders . Seller shall make available and sell Goods to Distributor at the prices under Section 3.2 and on the terms and conditions set out in this Agreement.

3.2 Price . The prices for Goods sold under this Agreement shall be as per Schedule 1 .

(a) All prices are exclusive of all sales, use and excise taxes, and any other similar taxes, duties, and charges of any kind imposed by any governmental authority on any amounts payable by Distributor under this Agreement.

(b) Distributor is responsible for all charges, costs, and taxes; provided, that, Distributor is not responsible for any taxes imposed on, or regarding, Seller’s income, revenues, gross receipts, personnel or real or personal property or other assets.

3.3 Payment Terms . Distributor shall pay all properly invoiced amounts due to Seller as follows: 50% shall be payable upon acceptance by Seller of any Purchase Order and the remaining 50% shall be paid within thirty (30) days of receipt of the Goods by Distributor. Notwithstanding the foregoing Seller hereby grants a two (2%) percent discount to Distributor for invoices paid within ten (10) days of receipt of Goods by Distributor. Payment of invoices will not be deemed acceptance of the Goods or waive any rights Distributor may have under Section 6.3 . Distributor shall make all payments in US dollars by check, wire transfer, or automated clearing house (“ACH”).

3.4 Initial Order. Upon execution of this Agreement, with respect to the Initial Order, Distributor shall deliver to Wells Fargo Bank, N.A. the irrevocable instruction letter attached as Exhibit A hereto. Distributor represents and warrants that Wells Fargo Bank, N.A. is the only financial institution that provides to Distributor banking services and agrees to not seek banking services from any other financial institution until it has made the payment for the Initial Order.

3.5 Initial Order Payment. Payment for the Initial Order shall be made by Distributor to the Seller within two (2) business days after receipt by the Distributor of the Capital Raise described in Section 9.2(a) hereinbelow.

4. Orders Procedure .

4.1 Purchase Orders . Distributor shall issue all purchase orders (“ Purchase Order(s) ”) to Seller in written form in such a manner as prescribed by Seller. By placing an order, Distributor makes an offer to purchase Goods under the terms and conditions of this Agreement and the following commercial terms listed in the purchase order (“ Purchase Order Transaction Terms ”), and on no other terms: (a) a clear description of the Goods to be purchased; (b) the quantity of each of the Goods ordered; and (c) the desired delivery date. Except as regards to the Purchase Order Transaction Terms, any variations made to any terms and/or conditions of this Agreement by Distributor in any Purchase Order shall be void and shall have no effect on the provisions or enforcement of this Agreement. Seller may charge Distributor its then standard small order handling charge for any Purchase Order requiring Seller to ship Goods in less than its standard box-lot quantities. Except as otherwise set forth herein, Distributor shall submit to Seller a non-refundable payment equal to 50% of any Purchase Order that is accepted by Seller within three (3) business days of receiving acceptance of such Purchase Order by Seller. In the event a Purchase Order is cancelled by the Distributor after acceptance by the Seller, then any payments made hereunder shall be retained by the Seller and only a the pro-rata portion of the Purchase Order equal to the payment amount shall be delivered; provided that no Purchase Order for White Label Goods shall be cancellable. “White Label Goods” shall mean any products that have been rebranded or repackaged to appear as if it had been made by a third-party other than Seller. In the event such payment is not received by Seller within three (3) business days of the acceptance of Distributor’s Purchase Order, then said Purchase Order will be deemed canceled.

4.2 Acceptance and Rejection of Purchase Orders . Seller may, in its sole discretion, accept or reject any Purchase Order. Seller may accept any Purchase Order by confirming the order (whether by written confirmation, invoice, or other manner acceptable to the parties) or by delivering the Goods, whichever occurs first. If Seller does not accept the Purchase Order under the terms of this Section 4.2 within five days of Seller’s receipt of the Purchase Order, the Purchase Order will be deemed rejected. No Purchase Order is binding on Seller unless accepted by Seller as provided in this Agreement. Seller may without liability or penalty, cancel any Purchase Order placed by Distributor and accepted by Seller, in whole or in part: if Seller determines that Distributor is in violation of its payment obligations hereunder or is in material breach of this Agreement. Distributor May rescind any Purchase Order submitted hereunder prior to acceptance by Seller.

4.3 Any disputes or disagreements in regards to this Section 4 of this Agreement shall be governed by Article 2 of the Uniform Commercial Code.

5. Minimum Purchase Obligation. During any Renewal Term, the Minimum Order shall be reduced to $500,000 per month; provided, however that at the end of the Initial Term the Parties shall, collectively, review the previous twelve month period sales and in good faith determine the appropriate Minimum Order for that Renewal Term. Thereafter, Distributor shall purchase sufficient quantities of Goods to meet the minimum purchase obligation for each year of this Agreement as specified in Schedule 1 (“ Minimum Purchase Obligation ”). If Distributor fails to achieve the Minimum Purchase Obligation, Seller may:

(a) terminate this Agreement pursuant to Section 9.2(c)(vi) and/or

(b) Or elect not renew this Agreement under Section 9.1 .

6. Shipment and Delivery .

6.1 Shipment and Delivery Requirements . Unless otherwise expressly agreed to by the Parties, Seller shall deliver the Goods to _________ (the “ Delivery Point ”), using Seller’s or manufacturer’s standard methods for packaging and shipping the Goods. Seller may, in its sole discretion, without liability or penalty, make partial shipments of Goods, each of which constitutes a separate sale, and Distributor shall pay for the units shipped in accordance with the payment terms specified in Section 3.3 whether such shipment is in whole or partial fulfillment of a Purchase Order. Any time quoted for delivery is an estimate only.

6.2 Title and Risk of Loss; Purchase Money Security Interest . Title and risk of loss passes to Distributor upon delivery of the Goods at the Delivery Point.

6.3 Acceptance of Goods . Distributor shall inspect Goods received under this Agreement. On the third day after delivery of the Goods, Distributor shall be deemed to have accepted the Goods unless it earlier notifies Seller in writing and furnishes written evidence or other documentation as reasonably required by Seller that the Goods:

(a) are damaged or defective; or

(b) were delivered to Distributor as a result of Seller’s error.

If Distributor notifies Seller pursuant to this Section 6.3 , then Seller shall determine, in its sole discretion, whether to repair or replace the Goods or refund the price for the Goods, together with all shipping expenses incurred by Distributor in connection therewith.

Distributor shall ship at Seller’s expense, all goods to be returned, repaired or replaced under this Section 6.3 to Seller’s facility located at Hollywood, Florida, or any other location as specified by Seller. If Seller exercises its option to replace the Goods, Seller shall, after receiving Distributor’s shipment of the Goods under this provision, 15 days to inspect such Goods. Except with respect to customer returns as set forth below, within 30 days after inspection has been completed, the Seller shall ship to Distributor, at Seller’s expense, the replaced Goods to the Delivery Point. Distributor acknowledges and agrees that the remedies set out in this Section 6.3 are its exclusive remedies, subject to Distributor’s rights under Section 12 regarding any Goods for which Distributor has accepted delivery under this Section 6.3 . In addition, insofar as some defects in packaged electronics may be undetectable from the initial inspection, Seller agrees to replace defective Goods returned to Distributor by its customers within 90 days from the time of purchase of such customer; provided , however , that this provision shall not include coils, which are a disposable and replaceable part unless such coil is alleged to have failed upon initial use.

Except as provided under this Section 6.3 and Section 12 , all sales of Goods to Distributor under this Agreement are made on a one-way basis and Distributor has no other right to return Goods purchased under this Agreement.

7. Seller’s Trademark License Grant. Subject to the terms and conditions of this Agreement, Seller hereby grants to Distributor a non-exclusive, non-transferable, and non-sublicensable license in the Territory during the Term solely on or in connection with the promotion, advertising, and resale of the Goods in accordance with the terms and conditions of this Agreement to use all Seller’s trademarks set forth on Schedule 1 , whether registered or unregistered, including the listed registrations and applications and any registrations, which may be granted pursuant to such applications. On expiration or earlier termination of this Agreement or upon Seller request, Distributor shall promptly discontinue the display or use of any trademark or change the manner in which it is displayed or used with regard to the Goods. Upon expiration or earlier termination of this Agreement, Distributor’s rights under this Section 7 shall cease immediately. Other than the express licenses granted by this Section 7 , Seller grants no right or license to Distributor, by implication, estoppel or otherwise, to the Goods or any intellectual property rights of Seller or its affiliates.

8. Resale Prices . The list of goods in Schedule 1 sets out Seller’s suggested resale prices for the Goods. These are suggested prices that Seller believes accurately reflect the relative market for the Goods based on features, technology, and comparative competitive products. Notwithstanding the foregoing, Distributor shall solely establish resale or advertised prices and Seller retains no control over Distributor’s advertised prices.

9. Term; Termination .

9.1 Term . The term of this Agreement commences on the Effective Date and terminates on the first anniversary of the date hereof, and shall thereafter renew for additional successive one year terms unless and until either Party provides notice of nonrenewal at least 30 days before the end of the then-current term, or unless and until earlier terminated as provided under this Agreement or applicable law (the “Term”). If either Party provides timely notice of its intent not to renew this Agreement, then unless earlier terminated in accordance with its terms, this Agreement terminates on the expiration of the then-current Term

9.2 Termination Rights. Either Party may terminate this Agreement upon notice to the other Party:

(a) It being understood by the Parties hereto that the closing of the transaction contemplated herein is predicated upon receipt by the Distributor of $2,500,000 in additional capital (the “Capital Raise”) . Should Distributor be unable to consummate the Capital Raise prior to August 31, 2018 then either Seller or Distributor may terminate this Agreement pursuant to the Notice provisions in Section 18 herein.

(b) except as otherwise specifically provided under this Section 9.2 if the other Party is in material breach of this Agreement and either the breach cannot be cured or, if the breach can be cured, it is not cured within 45 days following the other Party’s receipt of notice of such breach;

(d) if the other Party:

(i) becomes insolvent or is generally unable to pay, or fails to pay, its debts as they become due;

(ii) files or has filed against it, a petition for voluntary or involuntary bankruptcy or otherwise becomes subject, voluntarily or involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency law;

(iii) seeks reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts;

(iv) makes or seeks to make a general assignment for the benefit of its creditors; or

(v) applies for or has a receiver, trustee, custodian or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business.

Any termination under this Section 9.1 is effective on receipt of notice of termination.

9.3 Effect of Expiration or Termination . Upon the expiration or earlier termination of this Agreement:

(a) All related Purchase Orders are automatically terminated; and

(b) Each Party shall promptly return or destroy all documents and tangible materials (and any copies) containing, reflecting, incorporating or based on the other Party’s Confidential Information.

9.4 Post-Term Resale . On the expiration or earlier termination of this Agreement, except for termination by Seller under Section 9.2(a) , Distributor may, in accordance with the applicable terms and conditions of this Agreement, sell off its existing inventories of Goods for a period of six months following the last day of the Term (“ Post-Term Resale Period ”).

10. Confidential Information . From time to time during the Term, either Party may disclose or make available to the other Party information about its business affairs, products, product pricing, confidential intellectual property, trade secrets, third-party confidential information, and other sensitive or proprietary information (collectively, “ Confidential Information ”). Confidential Information shall not include information that, at the time of disclosure is: (a) in the public domain; (b) known to the receiving party at the time of disclosure; or (c) rightfully obtained by receiving party on a non-confidential basis from a third party.

The receiving party shall not disclose any such Confidential Information to any person or entity, except to the receiving party’s employees who have a need to know the Confidential Information for the receiving party to perform its obligations hereunder. On the expiration or termination of the Agreement, the receiving party shall promptly return to the disclosing party all copies, whether in written, electronic or other form or media, of the disclosing party’s Confidential Information, or destroy all such copies and certify in writing to the disclosing party that such Confidential Information has been destroyed.

11. Compliance with Laws . Distributor is in compliance with and shall comply with all applicable laws, regulations and ordinances. Distributor has and shall maintain in effect all the licenses, permissions, authorizations, consents and permits that it needs to carry out its obligations under this Agreement.

12. Limited Product Warranty and Disclaimer

12.1 Limited Product Warranty . Seller warrants that the Goods (with the exception of the disposable and replaceable coils as provided in Section 6.3 ) are free from defects in material and workmanship under normal use for 3 months. The term for such warranties shall begin upon receipt of the Good by Distributor’s customer. Distributor or its customer shall promptly notify Seller of any known warranty claims and shall cooperate in the investigation of such claims. If any Good is proven to not conform with this warranty during the applicable warranty period, Seller shall, at its exclusive option, either repair or replace the Good or refund the purchase price paid by Distributor for each non-conforming Good.

Seller shall have no obligation under the warranty set forth above if Distributor or its customer:

(a) fails to notify Seller in writing during the warranty period of a non-conformity; or

(b) uses, misuses, or neglects the Good in a manner inconsistent with the Good’s specifications or use or maintenance directions, modifies the Good, or improperly installs, handles or maintains the Good.

Except as explicitly authorized in this Agreement or in a separate written agreement with Seller, Distributor shall not service, repair, modify, alter, replace, reverse engineer or otherwise change the Goods it sells to its customers. Notwithstanding the foregoing, Seller may, in its sole discretion, provide Distributor with a supply of replacement coils that Distributor may give to customers to resolve return issues at the point of sale. Distributor shall not provide its own warranty regarding any Good.

12.2 DISCLAIMER. EXCEPT FOR THE WARRANTIES SET OUT UNDER THIS SECTION 12 , NEITHER SELLER NOR ANY PERSON ON SELLER’S BEHALF HAS MADE OR MAKES FOR DISTRIBUTOR’S OR ITS CUSTOMERS’ BENEFIT ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER, INCLUDING ANY WARRANTIES OF: (i) MERCHANTABILITY; (ii) FITNESS FOR A PARTICULAR PURPOSE; (iii) TITLE; OR (iv) NON-INFRINGEMENT; WHETHER ARISING BY LAW, COURSE OF DEALING, COURSE OF PERFORMANCE, USAGE OF TRADE OR OTHERWISE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED. DISTRIBUTOR ACKNOWLEDGES THAT IT HAS NOT RELIED ON ANY REPRESENTATION OR WARRANTY MADE BY SELLER, OR ANY OTHER PERSON ON SELLER’S BEHALF.

13. Indemnification .

(a) Subject to the terms and conditions of this Agreement, Distributor shall indemnify, hold harmless, and defend Seller and its parent, officers, directors, partners, members, shareholders, employees, agents, affiliates, successors, and permitted assigns (collectively, “ Seller Indemnified Party ”) against any and all losses, damages, liabilities, deficiencies, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs, or expenses of whatever kind, including attorneys’ fees, fees and the costs of enforcing any right to indemnification under this Agreement, and the cost of pursuing any insurance providers relating to any claim of a third party or Seller arising out of or occurring in connection with: (a) Distributor’s acts or omissions as Distributor of the Goods, including negligence, willful misconduct or breach of this Agreement; (b) Distributor’s advertising or representations that warrant performance of Goods beyond that provided by Seller’s written warranty or based upon Distributor’s business or trade practices; (c) any failure by Distributor or its personnel to comply with any applicable laws; or (d) allegations that Distributor breached its agreement with a third party as a result of or in connection with entering into, performing under or terminating this Agreement.

(b) Subject to the terms and conditions of this Agreement, Seller shall indemnify, hold harmless, and defend Distributor and its parent, officers, directors, partners, members, shareholders, employees, agents, affiliates, successors, and permitted assigns (collectively, “Distributor Indemnified Parties ”) against any and all losses, damages, liabilities, deficiencies, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs, or expenses of whatever kind, including attorneys’ fees, fees and the costs of enforcing any right to indemnification under this Agreement. Seller shall incur any costs of pursuing any insurance providers relating to any claim of a third party or Distributor arising out of or occurring in connection with: (a) Seller’s acts or omissions as manufacturer of the Goods, including negligence, willful misconduct or breach of this Agreement; (b) any failure by Seller or its personnel to comply with any applicable laws.

14. Limitation of Liability . IN NO EVENT SHALL SELLER OR ANY OF ITS REPRESENTATIVES BE LIABLE UNDER THIS AGREEMENT TO DISTRIBUTOR OR ANY THIRD PARTY FOR CONSEQUENTIAL, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE OR ENHANCED DAMAGES, ARISING OUT OF, OR RELATING TO, AND/OR IN CONNECTION WITH ANY BREACH OF THIS AGREEMENT, REGARDLESS OF (A) WHETHER SUCH DAMAGES WERE FORESEEABLE, (B) WHETHER OR NOT SELLER WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND (C) THE LEGAL OR EQUITABLE THEORY (CONTRACT, TORT OR OTHERWISE) UPON WHICH THE CLAIM IS BASED. ABSENT FRAUD OR WILLFUL MISCONDUCT, IN NO EVENT SHALL SELLER’S AGGREGATE LIABILITY ARISING OUT OF OR RELATED TO THIS AGREEMENT, WHETHER ARISING OUT OF OR RELATED TO BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE), OR OTHERWISE, EXCEED THE TOTAL OF THE AMOUNTS PAID AND AMOUNTS ACCRUED BUT NOT YET PAID TO SELLER UNDER THIS AGREEMENT IN THE TWELVE-MONTH PERIOD PRECEDING THE EVENT GIVING RISE TO THE CLAIM. THE FOREGOING LIMITATIONS APPLY EVEN IF THE DISTRIBUTOR’S REMEDIES UNDER THIS AGREEMENT FAIL OF THEIR ESSENTIAL PURPOSE.

15. Insurance . For a period of five years after the Effective Date, Distributor shall, at its own expense, maintain and carry insurance in full force and effect that includes, but is not limited to, commercial general liability (including product liability) with limits no less than $1,000,000 for each occurrence and $2,000,000 in the aggregate with financially sound and reputable insurers. Upon Seller’s request, Distributor shall provide Seller with a certificate of insurance and policy endorsements for all insurance coverage required by this Section 15 , and shall not do anything to invalidate such insurance. The certificate of insurance shall name Seller as an additional insured. Distributor shall provide Seller with five days’ advance written notice in the event of a cancellation or material change in Seller’s insurance policy. Except where prohibited by law, Distributor shall require its insurer to waive all rights of subrogation against Seller’s insurers and Seller or the Seller Indemnified Parties.

16. Entire Agreement . This Agreement, including and together with any related exhibits, schedules, attachments and appendices, constitutes the sole and entire agreement of the Parties with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, regarding such subject matter. In the event of conflict between the terms of this Agreement and the terms of any purchase order or other document submitted by one Party to the other, this Agreement shall control unless the Parties specifically otherwise agree in writing pursuant to Section 18 .

17. Survival . Subject to the limitations and other provisions of this Agreement: (a) the representations and warranties of the Parties contained herein will survive the expiration or earlier termination of this Agreement for a period of 12 months after such expiration or termination; and (b) Section 10 of this Agreement, as well as any other provision that, in order to give proper effect to its intent, should survive such expiration or termination, will survive the expiration or earlier termination of this Agreement for period of 24 months after such expiration or termination.

18. Notices . All notices, requests, consents, claims, demands, waivers and other communications under this Agreement must be in writing and addressed to the other Party at its address set forth below (or to such other address that the receiving Party may designate from time to time in accordance with this Section 20 ). Unless otherwise agreed herein, all notices must be delivered by personal delivery, nationally recognized overnight courier, or certified or registered mail (in each case, return receipt requested, postage prepaid). Except as otherwise provided in this Agreement, a notice is effective only (a) on receipt by the receiving Party, and (b) if the Party giving the notice has complied with the requirements of this Section 20 .

Notice to Distributor:	3275 South Jones Blvd., Suite 104 Las Vegas, NV 89146 Attention: _________

Notice to Seller:	3800 N 28th Way, #1 Hollywood, FL 33020 Attention: Jeffrey Holman, CEO

19. Severability . If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect the enforceability of any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon a determination that any term or provision is invalid, illegal or unenforceable, the court may modify this Agreement to effect the original intent of the Parties as closely as possible in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

20. Amendments . No amendment to this Agreement is effective unless it is in writing and signed by an authorized representative of each Party.

21. Waiver . No waiver by any Party of any of the provisions of this Agreement shall be effective unless explicitly set forth in writing and signed by the party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.

22. Cumulative Remedies . All rights and remedies provided in this Agreement are cumulative and not exclusive, and the exercise by either Party of any right or remedy does not preclude the exercise of any other rights or remedies that may now or subsequently be available at law, in equity, by statute, in any other agreement between the Parties or otherwise. Despite the previous sentence, the parties intend that Distributor’s remedies under Section 12 are the Distributor’s exclusive remedy for the events specified therein.

23. Cumulative Remedies . All rights and remedies provided in this Agreement are cumulative and not exclusive, and the exercise by either Party of any right or remedy does not preclude the exercise of any other rights or remedies that may now or subsequently be available at law, in equity, by statute, in any other agreement between the Parties or otherwise. Despite the previous sentence, the parties intend that Distributor’s remedies under Section 12 are the Distributor’s exclusive remedy for the events specified therein.

24. Assignment . Neither Party may assign any of its rights or delegate any of its responsibilities under this Agreement without the prior written consent of the other Party. The other Party shall not unreasonably withhold or delay its consent. Any purported assignment or delegation in violation of this Section 23 shall be null and void.

25. Successors and Assigns . This Agreement is binding on and inures to the benefit of the Parties to this Agreement and their respective permitted successors and permitted assigns.

26. No Third-Party Beneficiaries . Subject to the next paragraph, this Agreement benefits solely the Parties to this Agreement and their respective permitted successors and permitted assigns and nothing in this Agreement, express or implied, confers on any other Person any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement.

The Parties hereby designate Indemnified Parties as third-party beneficiaries of Section 13 with the right to enforce such Section 13 .

27. Choice of Law . This Agreement, including all exhibits, schedules, attachments, and appendices attached to this Agreement and thereto are governed by, and construed in accordance with, the laws of the State of Nevada, United States of America, without regard to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of Nevada.

28. Choice of Forum . Each Party irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind whatsoever against the other Party in any way arising from or relating to this Agreement, including all exhibits, schedules, attachments, and appendices attached to this Agreement, and all contemplated transactions, in any forum other than United States District Court for the Southern District of Nevada or, if such court does not have subject matter jurisdiction, the courts of the State of Nevada sitting in Clark County, and any appellate court from any thereof. Each Party irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and agrees to bring any such action, litigation, or proceeding only in United States District Court for the Southern District of Nevada or, if such court does not have subject matter jurisdiction, the courts of the State of Nevada sitting in Clark County . Each Party agrees that a final judgment in any such action, litigation, or proceeding is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

29. Waiver of Jury Trial . Each Party acknowledges and agrees that any controversy that may arise under this Agreement, including exhibits, schedules, attachments, and appendices attached to this Agreement, is likely to involve complicated and difficult issues and, therefore, each such Party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement, including any exhibits, schedules, attachments, or appendices attached to this Agreement, or the transactions contemplated hereby.

30. Counterparts . This Agreement may be executed in counterparts, each of which is deemed an original, but all of which together are deemed to be one and the same agreement. Notwithstanding anything to the contrary in Section 18 , a signed copy of this Agreement delivered by facsimile, email or other means of electronic transmission is deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

31. Force Majeure . Any delay or failure of either Party to perform its obligations under this Agreement will be excused to the extent that the delay or failure was caused directly by an event beyond such Party’s reasonable control, without such Party’s fault or negligence and that by its nature could not have been foreseen by such Party or, if it could have been foreseen, was unavoidable (which events may include natural disasters, embargoes, explosions, riots, wars or acts of terrorism) (each, a “ Force Majeure Event ”). A Party shall give the other Party prompt written notice of any event or circumstance that is reasonably likely to result in a Force Majeure Event, and the anticipated duration of such Force Majeure Event. An affected Party shall use all diligent efforts to end the Force Majeure Event, ensure that the effects of any Force Majeure Event are minimized and resume full performance under this Agreement. Notwithstanding the above, no failure by Distributor to make payment of any amounts owed under this Agreement is excused by reason of any Force Majeure Event.

32. Relationship of the Parties . The relationship between the parties is that of independent contractors. Nothing contained in this Agreement shall be construed as creating any agency, partnership, franchise, business opportunity, joint venture or other form of joint enterprise, employment or fiduciary relationship between the parties, and neither party shall have authority to contract for or bind the other party in any manner whatsoever.

[signature page follows]

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

	HEALTHIER CHOICES MANAGEMENT CORP.

	By:	/s/ Jeffrey E. Holman
		Name: Jeffrey E. Holman
		Title: Chief Executive Officer

	MJ HOLDINGS INC.

	By:	/s/ Paris Balaouras
		Name: Paris Balaouras
		Title: Chief Executive Officer

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Paris Balaouras, 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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;

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;

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

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

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

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

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 30, 2018

/s/ Paris Balaouras
Name: Paris Balaouras
Title: Chief Executive Officer

Exhibit 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION

I, John R. Wheeler, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of MJ Holdings, Inc.;

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 30, 2018

/s/ John R. Wheeler
Name: John R. Wheeler
Title: Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF 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, Paris Balaouras, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of MJ Holdings, Inc. on Form 10-Q for the period ended March 31, 2018, 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 30, 2018

/s/ Paris Balaouras
Name: Paris Balaouras
Title: 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.

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, John R. Wheeler, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of MJ Holdings, Inc. on Form 10-Q for the period ended March 31, 2018, 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 30, 2018

/s/ John R. Wheeler
Name: John R. Wheeler
Title: Chief Financial Officer