MJ Holdings, Inc. - Quarter Report: 2017 September (Form 10-Q)

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Accelerated filer ¨

Non-accelerated filer ¨

Smaller reporting company þ

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Emerging growth company ¨

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


R		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2017


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

Commission file number: 333-167824

MJ HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

NEVADA

(State or other jurisdiction of

incorporation or organization)

20-8235905

(I.R.S. Employer

Identification No.)

5040 Cecile Ave, Las Vegas, NV 89115

(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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

Yes ¨ No þ

APPLICABLE TO CORPORATE ISSUERS:

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


Class		Outstanding as of December 18, 2017
Common Stock, $0.001		59,684,244

MJ HOLDINGS, INC.

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements	3

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	11

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	15

Item 4.	Controls and Procedures	15

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	16

Item 1A.	Risk Factors	16

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16

Item 3.	Defaults Upon Senior Securities	16

Item 4.	Mine Safety Disclosures	16

Item 5.	Other Information	16

Item 6.	Exhibits	17

SIGNATURES		18

PART I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

MJ HOLDINGS, INC.

Condensed Consolidated Balance Sheets

As of September 30, 2017, and December 31, 2016

(Unaudited)


	September 30, 2017		December 31, 2016
Assets
Current assets:
Cash	$	51,324	$	463,773
Accounts receivable		25,155		30,187
Prepaid assets		—		6,862
Current assets held for disposition		—		54,419
Total current assets		76,479		555,241
Property and equipment, net of accumulated depreciation of $1,278 and $778		722		1,222
Noncurrent assets held for disposition		—		3,807,782
Total Assets	$	77,201	$	4,364,245

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	49,017	$	130,889
Accrued liabilities due to related party		—		2,132
Current liabilities held for disposition		—		2,722,865
Total current liabilities		49,017		2,855,886
Security deposits		—		70,168
Total Liabilities		49,017		2,926,054

Stockholders’ Equity
Preferred stock, par value $0.001, 5,000,000 shares authorized; 0 shares issued and outstanding		—		—
Common stock, par value $0.001, 95,000,000 shares authorized; 14,027,939 shares issued; 12,227,939 and 14,027,939 shares outstanding at September 30, 2017, and December 31, 2016, respectively		14,028		14,028
Additional paid-in capital		3,200,998		2,779,105
Accumulated deficit		(1,638,842)		(1,354,942)
Less: treasury stock, at cost; 1,800,000 shares at September 30, 2017		(1,548,000)		—
Total Stockholders’ Equity		28,184		1,438,191
Total Liabilities and Stockholders’ Equity	$	77,201	$	4,364,245

See accompanying notes to unaudited condensed consolidated financial statements

MJ HOLDINGS, INC.

Condensed Consolidated Statements of Operations

For the three and nine months ended September 30, 2017 and 2016

(Unaudited)


	For the three months ended September 30,				For the nine months ended September 30,
	2017		2016		2017		2016
Revenues	$	—	$	6,900	$	—	$	9,039

Operating Expenses:
General and administrative expenses		25,500		9,348		298,701		67,726
Depreciation expense		166		166		500		500
Total operating expenses		25,666		9,514		299,201		68,226

Operating loss		(25,666)		(2,614)		(299,201)		(59,187)

Other income		—		26		—		89

Loss before income taxes		(25,666)		(2,588)		(299,201)		(59,098)

Provision for income taxes		—		—		—		—

Loss from continuing operations, net of tax		(25,666)		(2,588)		(299,201)		(59,098)

Income from discontinued operations, net of tax		—		51,376		15,301		125,018

Net income (loss)	$	(25,666)	$	48,788		(283,900)		65,920

Basic and diluted net income (loss) per common share:
Continuing operations	$	(0.002)	$	(0.001)	$	(0.024)	$	(0.004)
Discontinued operations		—		0.004		0.001		0.009
Net income (loss) per common share	$	(0.002)	$	0.003	$	(0.023)	$	0.005

Weighted average shares outstanding, basic and diluted		12,227,939		14,027,939		12,293,873		14,027,939

See accompanying notes to unaudited condensed consolidated financial statements

MJ HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

For the nine months ended September 30, 2017 and 2016

(unaudited)


	2017	2016
Cash flow from operating activities:
Net income (loss)	(283,900)		65,920
Less: income from discontinued operations, net of tax	(15,301)		(125,018)
Loss from continuing operations, net of tax	(299,201)		(59,098)
Adjustments to reconcile loss from continuing operations to net cash provided by (used in) operating activities:
Depreciation	500		500
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities	31,485		375
Net cash used in operating activities, continuing operations	(267,216)		(58,223)
Net cash provided by (used in) operating activities, discontinued operations	(10,200)		180,589
Net Cash Provided by (Used in) Operating Activities	(277,416)		122,366

Cash flow from investing activities:
Payment of cash through exchange offer (see Note 3)	(135,033)		—
Investment in real estate loan receivable	—		(150,000)
Repayment of investment in real estate loan receivable	—		150,000
Net cash used in investing activities, continuing operations	(135,033)		—
Net cash used in investing activities, discontinued operations	—		(3,974)
Net Cash Used in Investing Activities	(135,033)		(3,974)

Cash flow from financing activities:
Net Cash Provided by Financing Activities	—		—

Net increase (decrease) in cash	(412,449)		118,392

Cash at beginning of period	463,773		303,368
Cash at end of period	51,324		421,760

Supplemental disclosure of cash flow information:
Cash paid for interest to related party	45,417		204,375

Supplemental schedule of non-cash investing activities:
Disposition of real estate business through exchange offer (see Note 3)	1,126,107		—

See accompanying notes to unaudited condensed consolidated financial statements

MJ HOLDINGS, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

September 30, 2017

Note 1 — Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, these condensed consolidated financial statements do not include all of the information and footnotes required for audited annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the condensed consolidated financial statements not misleading have been included. The balance sheet at December 31, 2016, has been derived from the Company’s audited consolidated financial statements as of that date.

The unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and the notes thereto that are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, that was filed with the SEC on March 30, 2017. The results of operations for the nine months ended September 30, 2017, are not necessarily indicative of the results to be expected for the full year.

The unaudited condensed consolidated financial statements include the accounts of the Company and its previously wholly owned subsidiaries, 5353 Joliet, LLC, MJ Havana, LLC, and MJ Sheridan, LLC. Intercompany balances and transactions have been eliminated in consolidation. Effective February 1, 2017, the Company transferred its ownership interests in its wholly owned subsidiaries as part of the exchange transaction discussed below in Note 3.

Note 2 — Summary of Significant Accounting Policies

The significant accounting policies followed by the Company for interim reporting are consistent with those included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. There were no material changes to our significant accounting policies during the interim period ended September 30, 2017.

Recent Accounting Pronouncements

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

Note 3 — Disposition of Real Estate Business

On November 22, 2016, in connection with a plan to divest its real estate business, the Company submitted to its shareholders an offer to exchange (the "Exchange Offer") the Company's common stock for shares in MJ Real Estate Partners, LLC, (“MJRE”) a newly formed LLC formed for the sole purpose of effecting the Exchange Offer. On January 10, 2017, the Company accepted for exchange 1,800,000 shares of the Company's common stock in exchange 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 held 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.

On February 1, 2017, the 1,800,000 shares of the Company's common stock acquired in the Exchange Offer was recorded as an acquisition of treasury stock at a cost equal to the market value of the shares of the Company's common stock accepted in the exchange offer. The difference of $421,893 between the market value of the treasury stock acquired in the Exchange Offer and the net book value of the assets and liabilities exchanged was recorded as additional paid-in capital due to the common controlling interests between the two entities involved with the Exchange Offer. In addition, $135,033 of cash was transferred to MJRE to cover accrued property taxes and security deposits, less prepaid property insurance premiums, held by the Company that were previously collected from the tenants of the real estate properties exchanged.

The historical results of the disposed assets and liabilities are shown in the Company's financial statements as discontinued operations for periods presented before the exchange. In subsequent periods, the Company's financial statements will no longer reflect the assets, liabilities, results of operations or cash flows attributable to the disposed assets and liabilities.

A summary of the difference between the market value of the treasury stock acquired in the Exchange Offer and the net book value of the assets and liabilities exchanged that was recorded as additional paid-in capital on February 1, 2017, is as follows:


	February 1, 2017
Treasury stock acquired via exchange
1,800,000 shares at $0.86 per share (market value as of 1/10/2017)	$	1,548,000

Net book value of assets and liabilities exchanged:
Land	$	747,389
Building and improvements		3,145,167
Less: accumulated depreciation		(266,406)
Real estate property, net		3,626,150
Deferred rent receivable		99,359
Deferred leasing costs		127,360
Total assets exchanged		3,852,869
Notes payable, net of unamortized debt issuance costs		(2,723,292)
Other accrued liabilities		(3,470)
Net book value of assets and liabilities exchanged	$	1,126,107

Change in additional paid-in capital	$	421,893

A summary of the results of operations reported as discontinued operations for the three and nine months ended September 30, 2017 and 2016, is as follows:


	For the three months ended September 30,				For the nine months ended September 30,
	2017		2016		2017		2016
Net revenues	$	—	$	181,498	$	57,978	$	519,492
Operating expenses:
Property expenses		—		31,278		9,883		94,977
Depreciation expense		—		29,439		9,659		87,181
Total operating expenses		—		60,717		19,542		182,158
Operating income		—		120,781		38,436		337,334
Interest expense, net - related party		—		(68,125)		(22,708)		(204,375)
Interest expense, net		—		(1,280)		(427)		(7,941)
Income before income taxes		—		51,376		15,301		125,018
Provision for income taxes		—		—		—		—
Income from discontinued operations, net of tax	$	—	$	51,376	$	15,301	$	125,018

Note 4 — Going Concern

The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. During the first quarter of 2017, the Company divested their real estate properties and associated business. During the nine months ended September 30, 2017, the Company generated a loss from continuing operations of $299,201 and used $267,216 of cash for continuing operations. Subsequent to the divestiture of its real estate business, the Company does not expect to generate revenues for the next six to nine months. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

The Company is developing mobile and computer based applications focused on providing cannabis for medical use content and educational materials to licensed medical professionals, in addition to matching patients with medical professionals who are familiar with the therapeutic effects and indications of cannabinoids and making social connections by and between cannabis users.

Our goal is to develop a “freemium” based business model, where we offer our services for free in an effort to build and develop a user-base. We expect to generate revenues in the future through advertising and by marketing premium products and services to our growing user-base.

Although we can provide no assurances, we believe our cash on hand will provide sufficient liquidity and capital resources to fund our business for the next twelve months.

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

Note 5 — Related Party Transactions

During the nine months ended September 30, 2017 and 2016, the Company paid $45,417 and $204,375, respectively, for interest due pursuant to $2,725,000 of promissory notes held by Chemtov Mortgage Group (“CMG”), an entity wholly-owned by the Company's previous co-CEO and current shareholder, Shawn Chemtov. On February 1, 2017, the promissory notes held by CMG were exchanged as part of the Exchange Offer discussed above in Note 3.

During the nine months ended September 30, 2017, the Company paid $75,000 to each of the Company’s co-CEOs, Mr. Laufer and Mr. Chemtov, as a result of one-time bonuses earned as part of employment agreements executed in April 2017.

In May 2017, Mr. Chemtov resigned from his position as co-CEO of the Company and from its Board of Directors. As part of the separation, the Company paid Mr. Chemtov $75,000 during the nine months ended September 30, 2017.

In May 2016, the Company invested $150,000 in a $1,750,000 promissory note secured by the assignment of a mortgage on real estate property located in Miami, Florida. The mortgage was held by CMG, an entity wholly-owned by the Company's previous co-CEO and current shareholder, Shawn Chemtov. The Company did not incur any loan origination fees or any other costs associated with the mortgage investment. The promissory note paid interest at 12% per annum and provided for cash interest payments on a monthly basis, commencing on July 1, 2016. The Company earned $6,900 and 9,039 of interest income, recorded as revenue, as a result of the $150,000 investment during the three and nine months ended September 30, 2016. The outstanding principal amount and unpaid interest were repaid in September 2016.

Note 6 — Outstanding Warrants

A summary of warrants issued, exercised and expired during the nine months ended September 30, 2017, is as follows:


			Weighted
			Avg.
			Exercise
Warrants:	Shares		Price
Balance at January 1, 2017		166,665	$	5.88
Issued		—		—
Exercised		—		—
Expired		—		—
Balance at September 30, 2017		166,665	$	5.88

Note 7 — Basic and Diluted Earnings (Loss) per Common Share

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

For the three and nine months ended September 30, 2017 and 2016, basic and diluted earnings (loss) per common share were the same since there were no potentially dilutive shares outstanding during the respective periods. Outstanding warrants as of September 30, 2017 and 2016, to purchase 166,665 shares of common stock were not included in the calculations of diluted income per share because the impact would have been anti-dilutive for each of the periods presented.

Note 8 — Subsequent Events

On November 15, 2017, in connection with the acquisition of Red Earth, discussed below, and the Company’s desire to monetize the assets into an operating business, the Company’s Board of Directors appointed Mr. Paris Balaouras as the Company’s CEO.

On December 14, 2017, the Company’s Board of Directors approved the spin-off of the intellectual property, trademark and domain names related to the Company’s social meet-up app, Toker. The Company’s stockholders will receive one share of common stock in a new public company (“NewCo”), which will own the Toker intellectual property and business, for every one share of MJ Holdings common stock held as of 5:00 p.m. Eastern time on December 14, 2017. NewCo plans to file a Form 10 in connection with the spinoff and will bear all associated costs related to the spinoff and its future business operations. The spin-off is expected to occur during the second quarter of 2018.

On December 15, 2017, the Company acquired 100% of the outstanding membership interests of Red Earth, LLC, a Nevada limited liability company (“Red Earth”) for 52,732,969 shares of common stock of the Company, par value $0.001 and a Promissory Note in the amount of $900,000.

The Promissory Note accrues interest at 0.25% per annum and is due on October 30, 2018. At the discretion of the noteholder, the Promissory Note and any accrued and unpaid interest are convertible into shares of the Company’s common stock at $0.75 per share. Upon maturity, the outstanding principal amount and any accrued and unpaid interest on this Promissory Note will automatically convert into shares of the Company’s common stock at $0.75 per share.

Red Earth is a holding company, whose assets are, a provisional cultivation license to grow marijuana in the city of Las Vegas in the state of Nevada and a triple net leasehold interest in a 17,298-square foot building located at 2310 Western Avenue Las Vegas, Nevada. The lease is for an initial term of 10 years, with a 12-month rent abatement. The commencement date of the lease was June 29, 2017. The Lease includes two options to extend, each for an additional 5 years. The lease grants Tenant an option to purchase the property on or after the 25th month of the lease and continuing through the 60th month of the lease for the sum of $2,607,880.

In connection with and contemporaneous with the acquisition of Red Earth, the Company sold an aggregate of 4,377,241 shares of the Company’s common stock at a price of $0.75 per share for proceeds of $3,282,931 as part of an offering of the Company’s securities (the “Offering”). The proceeds of the Offering will be used to develop certain business opportunities, including but not limited to monetizing the Red Earth assets.

On December 15, 2017, in accordance with Nevada Revised Statues (NRS) sec.78.335, the Company’s Board of Directors appointed Paris Balaouras to the Board of Directors to fill a vacancy on the board. Contemporaneous to said appointment, Mr. Laufer resigned from the board of directors and as CEO of the Company, subsequent to the resignation; Mr. Balaouras, became the sole officer and director of the Company.

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, 2016, and in our subsequent filings with the SEC, and include, among others, the following: marijuana is illegal under federal law, competition, our business is dependent on laws pertaining to the marijuana industry, government regulation, our business model depends on the availability of private funding, we will be subject to general real estate risks and the availability, if debt payments to note holder are not made we could lose our investment in our real estate properties, terms and deployment of capital. The terms “MJ Holdings, Inc.,” “MJ Holdings,” “MJ,” “we,” “us,” “our,” and the “Company” refer to MJ Holdings, Inc.

Business Overview

MJ Holdings owned and leased real estate to licensed operators in the regulated cannabis industry. Additionally, we are developing desktop and mobile social, meet-up and health and wellness applications. Our mobile and computer based applications are focused on providing cannabis for medical use content and educational materials to licensed medical professionals, in addition to matching patients with medical professionals who are familiar with the therapeutic effects and indications of cannabinoids and making social connections by and between cannabis users.

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

The MJ Real Estate Partners separation was due to our inability to scale and expand our real estate business as previously planned and our intention to engage in business opportunities where we believe we have greater growth opportunities to which capital will be more readily available.

Critical Accounting Policies and Estimates

There were no material changes to our critical accounting policies and estimates during the interim period ended September 30, 2017.

Please see our Annual Report on Form 10-K for the year ended December 31, 2016, 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 and Nine months ended September 30, 2017, compared to the Three and Nine months ended September 30, 2016

Revenue

We generated no revenue from continuing operations for the three and nine months ended September 30, 2017.

We generated $6,900 and $9,039 of interest income, recorded as revenue, during the three and nine months ended September 30, 2016, respectively, as a result of a $150,000 investment in May 2016. The $150,000 investment was a portion of a $1,750,000 promissory note secured by the assignment of a mortgage on real estate property located in Miami, Florida. The promissory note was held by CMG, an entity wholly-owned by the Company's previous co-CEO and current shareholder, Shawn Chemtov. The promissory note earned interest at 12% per annum and provided for cash interest payments on a monthly basis, commencing on July 1, 2016. The outstanding principal amount and unpaid interest were repaid in September 2016.

Operating Expenses

General and administrative expenses increased by $16,152 and $230,975, respectively, to $25,500 and $298,701 for the three and nine months ended September 30, 2017, compared with general and administrative expenses of $9,348 and $67,726, respectively, for the three and nine months ended September 30, 2016. The increase in general and administrative expenses during the three months ended September 30, 2017, was primarily attributed to $18,750 of compensation recorded for the Company’s current CEO, partially offset by a $1,800 reduction in professional fees incurred during the three months ended September 30, 2017.The increase in general and administrative expenses during the nine months ended September 30, 2017, was primarily attributed to $257,692 of compensation recorded for the Company’s current CEO and previous co-CEO, partially offset by a $30,000 reduction in travel expenses incurred during the nine months ended September 30, 2017.

Loss from Continuing Operations

We had a loss from continuing operations of $25,666 and $299,201, respectively, for the three and nine months ended September 30, 2017, compared with a loss from continuing operations of $2,588 and $59,098, respectively, for the three and nine months ended September 30, 2016. The increases of $23,078 and $240,103, respectively, in the loss from continuing operations during the three and nine months ended September 30, 2017, were primarily driven by the increases in general and administrative expenses and reduction in revenue discussed above.

Discontinued Operations

As a result of the Exchange Offer, the Company transferred its ownership interests in the real estate properties and its subsidiaries, through which the Company held ownership of the real estate properties, to MJRE, effective February 1, 2017. The historical results of the disposed assets and liabilities are shown in the Company's financial statements as discontinued operations for periods presented before the exchange. In subsequent periods, the Company's financial statements will no longer reflect the assets, liabilities, results of operations or cash flows attributable to the disposed assets and liabilities.

During the three and nine months ended September 30, 2017, we generated income from discontinued operations of $0 and $15,301, respectively, compared to income from discontinued operations of $51,376 and $125,018, respectively, during the three and nine months ended September 30, 2016. The decreases in income from discontinued operations are primarily attributed to generating one month of income from discontinued operations prior to the divestiture in February 2017, compared with three and nine months of income during the interim periods ended September 30, 2016.

Liquidity and Capital Resources

The following table summarizes the cash flows for the nine months ended September 30, 2017 and 2016:


	For the nine months ended September 30,
	2017		2016
Cash Flows:


Operating Activities:
Continuing operations	$	(267,216)	$	(58,223)
Discontinued operations		(10,200)		180,589
Net cash provided by (used in) operating activities		(277,416)		122,366

Investing Activities:
Continuing operations		(135,033)		—
Discontinued operations		—		(3,974)
Net cash used in investing activities		(135,033)		(3,974)

Net cash provided by financing activities		—		—

Net increase (decrease) in cash		(412,449)		118,392
Cash at beginning of period		463,773		303,368

Cash at end of period	$	51,324	$	421,760

The Company had cash of $51,324 at September 30, 2017, compared with cash of $463,773 at December 31, 2016, a decrease of $412,449. The decrease in cash during the nine months ended September 30, 2017, was attributed to cash used in operating activities of $277,416 and cash used in investing activities of $135,033.

Operating Activities

Continuing Operations

We had net cash used in operating activities for continuing operations of $267,216 for the nine months ended September 30, 2017, which consisted of a net loss from continuing operations of $299,201; partially offset by depreciation of $500 and an increase in accounts payable and accrued liabilities of $31,485.

We had net cash used in operating activities for continuing operations of $58,223 for the nine months ended September 30, 2016, which consisted of a net loss from continuing operations of $59,098; partially offset by depreciation of $500 and an increase in accounts payable and accrued liabilities of $375.

Discontinued Operations

We had net cash used in operating activities from discontinued operations of $10,200 for the nine months ended September 30, 2017, which consisted of income from discontinued operations of $15,301, non-cash charges of $9,760; offset by an increase in working capital requirements of $35,261, consisting of a decrease in accounts payable and accrued liabilities of $41,449, partially offset by a decrease in prepaid and other assets of $6,188.

We had net cash provided by operating activities from discontinued operations of $180,589 for the nine months ended September 30, 2016, which consisted of income from discontinued operations of $125,018, non-cash charges of $84,070; partially offset by an increase in working capital requirements of $28,499, consisting of a decrease in security deposits of $25,035, a decrease in accounts payable and accrued liabilities of $2,608, and an increase in prepaid assets and other assets of $856.

Investing Activities

During the nine months ended September 30, 2017, $135,033 of cash was transferred to MJRE as part of the Exchange Offer to cover accrued property taxes and security deposits, less prepaid property insurance premiums, that were previously collected from the tenants of the real estate properties divested.

During the nine months ended September 30, 2016, we invested $150,000 in a $1,750,000 promissory note secured by the assignment of a mortgage on real estate property located in Miami, Florida. The promissory note paid interest at 12% per annum and provided for cash interest payments on a monthly basis, commencing on July 1, 2016. In September 2016, the $1,750,000 promissory note was repaid and the Company received proceeds of $150,000 as repayment.

Pursuant to the terms of a lease agreement previously held for the real estate property located in Aurora, Colorado, the Company paid $3,974 for building improvements to the property in Aurora, Colorado.

Financing Activities

There were no financing activities during the nine months ended September 30, 2017 and 2016.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Seasonality

We do not consider our business to be seasonal.

Inflation and Changing Prices

Neither inflation or changing prices for the three and nine months ended September 30, 2017, had a material impact on our operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not required for smaller reporting companies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Co-Chief Executive Officers and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of September 30, 2017. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2017.

Changes in Internal Control Over Financial Reporting

During the interim period ended September 30, 2017, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rules 13a-15 or 15d-15 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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
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: December 19, 2017	By:	/s/ Paris Balaouras
	Paris Balaouras
	Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Accounting Officer)