Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Jul. 20, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | MJ Holdings, Inc. | ||
Entity Central Index Key | 1,456,857 | ||
Trading Symbol | MJNE | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 721,992 | ||
Entity Common Stock, Shares Outstanding | 63,310,522 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 2,513,863 | |
Prepaid assets | 5,500 | |
Total current assets | 2,519,363 | |
Deposits | 42,383 | 25,000 |
Intangible assets, net of accumulated amortization of $0 | 300,000 | |
Property and equipment, net of accumulated depreciation of $0 | 17,535 | |
Noncurrent assets held for disposition | 584 | |
Total Assets | 2,879,865 | 25,000 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 70,382 | |
Convertible note payable due to related party | 900,000 | |
Total current liabilities | 970,382 | |
Deferred rent | 104,565 | |
Total Liabilities | 1,074,947 | |
Commitments and contingencies | ||
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; 62,675,407 and 52,732,969 shares issued and outstanding as of December 31, 2017 and 2016, respectively | 62,675 | 52,733 |
Additional paid-in capital | 1,704,764 | |
Common stock to be issued of 533,333 shares | 400,000 | |
Accumulated deficit | (362,521) | (27,733) |
Total Stockholders' Equity | 1,804,918 | 25,000 |
Total Liabilities and Stockholders' Equity | $ 2,879,865 | $ 25,000 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Intangible assets, net of accumulated amortization | $ 0 | |
Property and equipment, net of accumulated depreciation | $ 0 | |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 95,000,000 | 95,000,000 |
Common stock, shares issued | 62,675,407 | 52,732,969 |
Common stock, shares outstanding | 62,675,407 | 52,732,969 |
Common stock to be issued | 533,333 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 2 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Net revenues | ||
Operating Expenses: | ||
General and administrative expenses | 270,267 | |
Total operating expenses | 270,267 | |
Operating loss | (270,267) | |
Interest expense | (64,521) | |
Loss before provision for income taxes | (334,788) | |
Provision for income taxes | ||
Net loss | $ (334,788) | |
Basic and diluted net loss per common share: | ||
Weighted average shares outstanding | 52,732,969 | 53,149,168 |
Net loss per common share | $ 0 | $ (0.01) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Preferred Stock | Common Stock | Common Stock to be Issued | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Oct. 16, 2016 | ||||||
Balance, shares at Oct. 16, 2016 | ||||||
Common stock issued to founder | $ 52,733 | (25,000) | (27,733) | |||
Common stock issued to founder, shares | 52,732,969 | |||||
Capital contribution | 25,000 | 25,000 | ||||
Net loss | ||||||
Balance at Dec. 31, 2016 | $ 52,733 | (27,733) | 25,000 | |||
Balance, shares at Dec. 31, 2016 | 52,732,969 | |||||
Distribution | (25,000) | (25,000) | ||||
Effect of reverse merger | $ 6,951 | (510,617) | (503,666) | |||
Effect of reverse merger, shares | 6,951,275 | |||||
Issuance of common stock in private placement | $ 2,991 | 2,240,381 | 2,243,372 | |||
Issuance of common stock in private placement, shares | 2,991,163 | |||||
Common stock subscribed, but not issued | 400,000 | 400,000 | ||||
Net loss | (334,788) | (334,788) | ||||
Balance at Dec. 31, 2017 | $ 62,675 | $ 400,000 | $ 1,704,764 | $ (362,521) | $ 1,804,918 | |
Balance, shares at Dec. 31, 2017 | 62,675,407 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 2 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Dec. 31, 2017 | |
Cash flow from operating activities: | ||
Net loss | $ (334,788) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization of debt issuance costs | 14,521 | |
Amortization of deferred rent expense | 104,565 | |
Non-cash interest expense | 50,000 | |
Changes in operating assets and liabilities: | ||
Prepaid assets | (5,500) | |
Deposits | (25,000) | (17,383) |
Accounts payable and accrued liabilities | 66,132 | |
Net Cash Used in Operating Activities | (25,000) | (122,453) |
Cash flow from investing activities: | ||
Purchase of provisional grow license | (300,000) | |
Purchase of property, equipment, and building improvements | (17,535) | |
Net Cash Used in Investing Activities | (317,535) | |
Cash flow from financing activities: | ||
Capital contribution | 25,000 | |
Distribution | (25,000) | |
Proceeds from issuance of common stock | 2,243,372 | |
Proceeds from common stock to be issued | 400,000 | |
Proceeds from issuance of note payable | 350,000 | |
Payment of debt issuance costs | (14,521) | |
Net Cash Provided by Financing Activities | 25,000 | 2,953,851 |
Net increase in cash | 2,513,863 | |
Cash at beginning of year | ||
Cash at end of year | 2,513,863 | |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | ||
Cash paid for income taxes | ||
Supplemental disclosure of non-cash investing and financing activities: | ||
Net liabilities incurred in connection with reverse merger | $ (503,666) |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Note 1 — Description of Business 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. 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, 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. 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 common stock of the Company, par value $0.001 and a Promissory Note in the amount of $900,000. The merger 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 — Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Red Earth, LLC, HDGLV, LLC, Icon Management, LLC, and Prescott Management, LLC. Intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates and assumptions are required in the determination of the fair value of financial instruments and the valuation of long-lived and indefinite-lived assets. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy that requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels: ● Level one - Quoted market prices in active markets for identical assets or liabilities; ● Level two - Inputs other than level one inputs that are either directly or indirectly observable; and ● Level three - Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. Financial instruments include cash, payables, and debt obligations. Except as described below, due to the short-term nature of the financial instruments, there are no financial instruments measured at fair value on a recovery basis. Warrants to Purchase Common Stock and Other Derivative Financial Instruments We classify as equity any contracts that require physical settlement or net-share settlement or provide us a choice of net-cash settlement or settlement in our own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock. We classify as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our control) or give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). We assess the classification of warrants issued to purchase our common stock and any other financial instrument at each reporting date to determine whether a change in classification between assets and liabilities is required. Cash Cash includes cash on hand and deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal and use and with an original maturity of three months or less. The Company maintains its cash in bank deposit accounts. The Company has cash in financial institutions in excess of Federally insured limits. However, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on its cash balances. Cash exceeding federally insured limits amounted to $2,263,863 as of December 31, 2017. Debt Issuance Costs Costs associated with obtaining, closing, and modifying loans and/or debt instruments such as, but not limited to placement agent fees, attorney fees and state documentary fees are capitalized, netted against the carrying amount of the debt instrument, and charged to interest expense over the term of the loan. Long –lived Assets Long-lived assets, including real estate property and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If the assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value. We did not record any impairments of long-lived assets during the year ended December 31, 2017, and from inception (October 17, 2016) to December 31, 2016. Revenue Recognition The Company recognizes revenue from the sales of products or services rendered when the following four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; the delivery has occurred or services have been rendered; the fee is fixed or determinable; and collectability is reasonably assured. The Company has not generated any revenues for the year ended December 31, 2017, and from inception (October 17, 2016) to December 31, 2016. Stock-Based Compensation The Company estimates the fair values of share-based payments on the date of grant using a Black-Scholes option pricing model, which requires assumptions for the expected volatility of the share price of our common stock, the expected dividend yield, and a risk-free interest rate over the expected term of the stock-based financial instrument. Since the number of outstanding and free-trading shares of the Company’s common stock is limited and the trading volume is relatively low, we do not have sufficient company specific information regarding the volatility of our share price on which to base an estimate of expected volatility. As a result, we use the average historical volatilities of similar entities within our industry as the expected volatility of our share price. The expected dividend yield is 0% as the Company has not paid any dividends on its common stock and does not anticipate it will pay any dividends in the foreseeable future. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant date with a remaining term equal to the expected term of the stock-based award. For stock-based financial instruments issued to parties other than employees, we use the contractual term of the financial instruments as the expected term of the stock-based financial instruments. The assumptions used in calculating the fair value of stock-based financial instruments represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future. Convertible Instruments The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities. Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. Operating Leases The Company leases production and warehouse facilities and office space under operating leases. Operating lease agreements may contain rent escalation clauses, rent holidays or certain landlord incentives, including tenant improvement allowances. Rent expense with scheduled rent increases or landlord incentives are recognized on a straight-line basis over the lease term, beginning with the effective lease commencement date, which is generally the date in which the Company takes possession of or controls the physical use of the property. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance on deferred tax assets is established when management considers it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income tax expense. The Company has not recognized any tax benefits from uncertain tax positions for any of the reporting periods presented. Recent Accounting Pronouncements In December 2017, the Securities and Exchange Commission (“SEC”) released accounting guidance for the accounting for income taxes for the reporting period that includes the enactment of the Tax Act. The Bulletin provides guidance in those situations where the accounting for certain income tax effects of the Tax Act will be incomplete by the time financial statements are issued for the reporting period that includes the enactment date. For those elements of the Tax Act that cannot be reasonably estimated, no effect will be recorded. The SEC has provided in the Bulletin that in situations where the accounting is incomplete for certain effects of the Tax Act, a measurement period which begins in the reporting period that includes the enactment of the Tax Act and ends when the entity has obtained, prepared and analyzed the information is needed in order to complete the accounting requirements. The measurement period shall not exceed one year from enactment. In February 2016, the Financial Accounting Standards Board (the “FASB”) issued an accounting standard update related to accounting for leases. The guidance introduces a lessee model that requires most leases to be reported on the balance sheet. The accounting standard update aligns many of the underlying principles of the new lessor model with those in the FASB’s new revenue recognition standard. The guidance also eliminates the requirement in current U.S. GAAP for an entity to use bright-line tests in determining lease classification. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2020, with early adoption in fiscal 2019 permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements. In May 2014, 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. |
Reverse Merger
Reverse Merger | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Reverse Merger | Note 3 — Reverse Merger On December 15, 2017, the Company 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 common stock of the Company, par value $0.001 and a Promissory Note in the amount of $900,000. The merger 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,” Red Earth was treated as the “acquiring company” and MJ Holdings was treated as the “acquired company.” The Company’s historical financial statements prior to the reverse merger were 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. The assets acquired and liabilities assumed recorded from the acquisition of MJ Holdings were recognized at their fair values as of the effective acquisition date, December 15, 2017. The following table summarizes the fair values assigned to the assets acquired and liabilities assumed: December 15, 2017 Assets Acquired: Website (recorded as Asset Held for Disposition) $ 584 Liabilities Assumed: Accounts payable and accrued liabilities (4,250 ) Convertible note payable due to related party (900,000 ) Less: Assumption of existing liability by related party (see Note 7) 400,000 Net Liabilities Acquired $ (503,666 ) |
Going Concern
Going Concern | 12 Months Ended |
Dec. 31, 2017 | |
Going Concern [Abstract] | |
Going Concern | 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. In December 2017, the Company acquired 100% of the assets and operations of Red Earth, as discussed above in Note 3, and changed its business operations to provide a 360-degree spectrum of infrastructure, construction, cultivation management, production management, distribution consulting and operating services to cultivation and production operators in the regulated cannabis industry. Red Earth is a development stage company established in October 2016. 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 December 31, 2017 and has an accumulated deficit of $362,521. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. During 2017, the Company raised $2.6 million through the sale of the Company’s common stock at $0.75 per share and will continue to raise capital in 2018 to fund the build out and development of our business operations. The Company expects to begin generating revenues during the third 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. 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. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 5 — Intangible Assets In October 2016, Red Earth entered into an Asset Purchase and Sale Agreement with the owner of a provisional Medical Marijuana Establishment Registration Certificate (the “Provisional Grow License”) issued by the State of Nevada for the cultivation of medical marijuana for $300,000. To initiate the purchase and transfer the Provisional Grow License, the Company paid a $25,000 deposit to the seller in October 2016. In February 2017, an investor advanced the Company $350,000 (see Note 7) to fund the purchase of the Provisional Grow License. The Provisional Grow License remains in a provisional status until the Company has completed the build out of a cultivation facility and obtained approval from the State of Nevada to begin cultivation in the approved facility. Once approval from the State of Nevada is received and the Company begins the cultivation process, the intangible asset will be amortized over its useful life. |
Convertible Note Payable Due to
Convertible Note Payable Due to Related Party | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Convertible Note Payable Due to Related Party | Note 6 — Convertible Note Payable Due to Related Party As part of the Reverse Merger transaction described above in Note 3, on December 15, 2017, 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, described below in Note 8. |
Note Payable to Fund Acquisitio
Note Payable to Fund Acquisition of Provisional Grow License | 12 Months Ended |
Dec. 31, 2017 | |
Note Payable To Fund Acquisition Of Provisional Grow License | |
Note Payable to Fund Acquisition of Provisional Grow License | Note 7 — Note Payable to Fund Acquisition of Provisional Grow License In February 2017, an investor advanced the Company $350,000 to fund the acquisition of the Provisional Grow License discussed above in Note 5. The Company incurred $14,521 of debt issuance costs in association with the advance. The note, plus a $50,000 fee for consideration of the advance, was due within sixty days upon approval by the State of Nevada of the transfer of the Provisional Grow License to the Company. In December 2017, upon completion of the Reverse Merger discussed above in Note 3, the debt obligation, including the $50,000 fee, was assumed by Paris Balaouras, the Chief Executive Officer of the Company. The Company recorded $64,521 of interest expense, the $50,000 fee plus the $14,521 of debt issuance costs, during the year ended December 31, 2017. |
Sales of Unregistered Securitie
Sales of Unregistered Securities | 12 Months Ended |
Dec. 31, 2017 | |
Sales of Unregistered Securities [Abstract] | |
Sales of Unregistered Securities | Note 8 — Sales of Unregistered Securities. In connection with and contemporaneous with the Reverse Merger, for the year ended December 31, 2017, the Company sold and issued an aggregate of 2,991,163 shares of the Company’s common stock at a price of $0.75 per share for proceeds of $2,243,372 as part of an offering of the Company’s securities. In addition, the Company sold $400,000, or 533,333 additional shares of common stock, as part of the offering, but the shares had not been issued as of December 31, 2017, and were presented in the consolidated balance sheet as common stock to be issued under the equity section. The proceeds of the common stock sales will be used to develop certain business opportunities, including but not limited to monetizing the acquired Red Earth assets describe above in Note 3. The shares were issued pursuant to an exemption from the registration requirements under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D promulgated thereunder (“Regulation D”) since, among other things, the transactions did not involve a public offering and the securities were acquired for investment purposes only and not with a view to or for sale in connection with any distribution thereof. Offers and sales were made solely to persons qualifying as “accredited investors” (as such term is defined by Rule 501 of Regulation D). The securities offered will not be and have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. |
Stock Based Compensation
Stock Based Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Compensation | Note 9 — Stock Based Compensation 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. A summary of the warrants issued, exercised and expired is as follows: Weighted Avg. Exercise Warrants: Shares Price Balance at Inception (October 17, 2016) 166,665 $ 5.88 Issued — — Exercised — — Expired — — Balance at December 31, 2016 166,665 $ 5.88 Issued — — Exercised — — Expired — — Balance at December 31, 2017 166,665 $ 5.88 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10 — 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 minimal rental and lease commitments under non-cancelable operating leases with terms in excess of one year as of December 31, 2017, are as follows: Amount Fiscal year ending December 31: 2018 $ 162,270 2019 249,090 2020 230,640 2021 230,640 2022 230,755 Thereafter 1,043,315 Total minimum lease payments $ 2,146,710 Rent expense, including deferred rent expense of $104,565, incurred pursuant to operating leases for the year ended December 31, 2017, was $112,815. 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. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 11 — Income Taxes The Company had no operation in 2016 and had no net loss carryforward to the year 2017. The Company did not incur any federal or state income tax expense or benefit for the year ended December 31, 2017. The provision for income taxes differs from the amounts which would result from applying the federal statutory rate of 34% to the Company’s loss before income taxes as follows: December 31, 2017 Computed “expected” income tax benefit $ (113,828 ) State income tax benefit, net of federal benefit 15,209 Change in valuation allowance (191,667 ) Permanent differences, net (106,919 ) Change in federal income tax rate 120,784 IRC section 382 limitations on future NOL utilization 249,208 Write-off of property & equipment deferred tax asset 27,213 Provision for income taxes $ — Temporary differences that give rise to the components of deferred tax assets and liabilities are as follows: 2017 Deferred tax assets: Deferred expenses $ 176,030 Property and equipment (65 ) Capitalized start-up expenses 48,078 Deferred tax assets 224,043 Less: Valuation allowance (224,043 ) Net deferred tax assets $ — As of December 31, 2017, the Company did not have any net operating losses for federal or state income tax purposes. All of the federal and state net operating losses incurred through December 15, 2017, are subject to 100 percent limitation under the provisions of Internal Revenue Code section 382 due to various ownership changes and the continuity of business requirement. The U.S. Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017 and introduces significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21%. The Company’s deferred tax assets were calculated to reflect the reduction in the U.S. corporate income tax rate from 35% to 21%. As of December 31, 2017, management determined a valuation allowance against the net deferred tax assets of $224,043. In assessing the ability to realize a portion of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities and projected future taxable income in making the assessment. For 2017 and prior years, the Company filed federal and state income tax returns. These returns remain subject to examination by taxing authorities for all years after December 31, 2013. |
Basic and Diluted Earnings (Los
Basic and Diluted Earnings (Loss) Per Common Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Earnings (Loss) Per Common Share | Note 12 — 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 year ended December 31, 2017, basic and diluted loss per common share were the same since there were no potentially dilutive shares outstanding during the respective periods. The outstanding warrants as of December 31, 2017, to purchase 166,665 shares of common stock were not included in the calculations of diluted loss per share because the impact would have been anti-dilutive. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13 — Subsequent Events In January 2018, the $900,000 convertible note payable due to a related party was repaid in full. From January 2018 through June 2018, the Company sold and issued an aggregate of 628,667 shares of the Company’s common stock at $0.75 per share for gross proceeds of $471,500. 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 the filing of this Annual Report. In March 2018 and June 2018, the Company issued an aggregate of 6,448 shares of the Company’s common stock in exchange for professional services. In April 2018, the State of Nevada finalized and approved the transfer of the Provisional Grow License, discussed above in Note 5, to the Company. In April 2018, the Company entered into a management agreement with a Nevada company (the “Licensed Operator”) that holds a cultivation license, such that it can lawfully engage in the 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 3 acres of property owned by the Licensed Operator. The Company, at its sole cost and expense, has agreed to complete the construction of an outdoor grow facility meeting the local and state building codes and regulations to cultivate marijuana. 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 agreed to generate sales of at least $5 million per year from product cultivated from the outdoor grow facility. The Licensed Operator may terminate the agreement if annual sales fall below the $5 million minimum requirement as defined in the agreement. Prior to the termination of the agreement by the Licensed Operator, the Company may cure any applicable deficiency by paying 10% of the deficiency to the Licensed Operator. 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 pay 85% of the net revenues to 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, once the outdoor grow facility begins production, the Company has agreed to pay the Licensed Operator $7,000 per month for compliance, security, and other administration costs incurred by the Licensed Operator during the term of the agreement. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Red Earth, LLC, HDGLV, LLC, Icon Management, LLC, and Prescott Management, LLC. Intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates and assumptions are required in the determination of the fair value of financial instruments and the valuation of long-lived and indefinite-lived assets. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy that requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels: ● Level one - Quoted market prices in active markets for identical assets or liabilities; ● Level two - Inputs other than level one inputs that are either directly or indirectly observable; and ● Level three - Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. Financial instruments include cash, payables, and debt obligations. Except as described below, due to the short-term nature of the financial instruments, there are no financial instruments measured at fair value on a recovery basis. |
Warrants to Purchase Common Stock and Other Derivative Financial Instruments | Warrants to Purchase Common Stock and Other Derivative Financial Instruments We classify as equity any contracts that require physical settlement or net-share settlement or provide us a choice of net-cash settlement or settlement in our own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock. We classify as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our control) or give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). We assess the classification of warrants issued to purchase our common stock and any other financial instrument at each reporting date to determine whether a change in classification between assets and liabilities is required. |
Cash | Cash Cash includes cash on hand and deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal and use and with an original maturity of three months or less. The Company maintains its cash in bank deposit accounts. The Company has cash in financial institutions in excess of Federally insured limits. However, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on its cash balances. Cash exceeding federally insured limits amounted to $2,263,863 as of December 31, 2017. |
Debt Issuance Costs | Debt Issuance Costs Costs associated with obtaining, closing, and modifying loans and/or debt instruments such as, but not limited to placement agent fees, attorney fees and state documentary fees are capitalized, netted against the carrying amount of the debt instrument, and charged to interest expense over the term of the loan. |
Long -lived Assets | Long –lived Assets Long-lived assets, including real estate property and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If the assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value. We did not record any impairments of long-lived assets during the year ended December 31, 2017, and from inception (October 17, 2016) to December 31, 2016. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue from the sales of products or services rendered when the following four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; the delivery has occurred or services have been rendered; the fee is fixed or determinable; and collectability is reasonably assured. The Company has not generated any revenues for the year ended December 31, 2017, and from inception (October 17, 2016) to December 31, 2016. |
Stock-Based Compensation | Stock-Based Compensation The Company estimates the fair values of share-based payments on the date of grant using a Black-Scholes option pricing model, which requires assumptions for the expected volatility of the share price of our common stock, the expected dividend yield, and a risk-free interest rate over the expected term of the stock-based financial instrument. Since the number of outstanding and free-trading shares of the Company’s common stock is limited and the trading volume is relatively low, we do not have sufficient company specific information regarding the volatility of our share price on which to base an estimate of expected volatility. As a result, we use the average historical volatilities of similar entities within our industry as the expected volatility of our share price. The expected dividend yield is 0% as the Company has not paid any dividends on its common stock and does not anticipate it will pay any dividends in the foreseeable future. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant date with a remaining term equal to the expected term of the stock-based award. For stock-based financial instruments issued to parties other than employees, we use the contractual term of the financial instruments as the expected term of the stock-based financial instruments. The assumptions used in calculating the fair value of stock-based financial instruments represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future. |
Convertible Instruments | Convertible Instruments The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities. Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. |
Operating Leases | Operating Leases The Company leases production and warehouse facilities and office space under operating leases. Operating lease agreements may contain rent escalation clauses, rent holidays or certain landlord incentives, including tenant improvement allowances. Rent expense with scheduled rent increases or landlord incentives are recognized on a straight-line basis over the lease term, beginning with the effective lease commencement date, which is generally the date in which the Company takes possession of or controls the physical use of the property. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance on deferred tax assets is established when management considers it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income tax expense. The Company has not recognized any tax benefits from uncertain tax positions for any of the reporting periods presented. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In December 2017, the Securities and Exchange Commission (“SEC”) released accounting guidance for the accounting for income taxes for the reporting period that includes the enactment of the Tax Act. The Bulletin provides guidance in those situations where the accounting for certain income tax effects of the Tax Act will be incomplete by the time financial statements are issued for the reporting period that includes the enactment date. For those elements of the Tax Act that cannot be reasonably estimated, no effect will be recorded. The SEC has provided in the Bulletin that in situations where the accounting is incomplete for certain effects of the Tax Act, a measurement period which begins in the reporting period that includes the enactment of the Tax Act and ends when the entity has obtained, prepared and analyzed the information is needed in order to complete the accounting requirements. The measurement period shall not exceed one year from enactment. In February 2016, the Financial Accounting Standards Board (the “FASB”) issued an accounting standard update related to accounting for leases. The guidance introduces a lessee model that requires most leases to be reported on the balance sheet. The accounting standard update aligns many of the underlying principles of the new lessor model with those in the FASB’s new revenue recognition standard. The guidance also eliminates the requirement in current U.S. GAAP for an entity to use bright-line tests in determining lease classification. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2020, with early adoption in fiscal 2019 permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements. In May 2014, 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. |
Reverse Merger (Tables)
Reverse Merger (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of fair values assigned to assets acquired and liabilities assumed | December 15, 2017 Assets Acquired: Website (recorded as Asset Held for Disposition) $ 584 Liabilities Assumed: Accounts payable and accrued liabilities (4,250 ) Convertible note payable due to related party (900,000 ) Less: Assumption of existing liability by related party (see Note 7) 400,000 Net Liabilities Acquired $ (503,666 ) |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of warrants issued, exercised and expired | Weighted Avg. Exercise Warrants: Shares Price Balance at Inception (October 17, 2016) 166,665 $ 5.88 Issued — — Exercised — — Expired — — Balance at December 31, 2016 166,665 $ 5.88 Issued — — Exercised — — Expired — — Balance at December 31, 2017 166,665 $ 5.88 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimal rental and lease commitments | Amount Fiscal year ending December 31: 2018 $ 162,270 2019 249,090 2020 230,640 2021 230,640 2022 230,755 Thereafter 1,043,315 Total minimum lease payments $ 2,146,710 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of statutory federal rate and loss before income taxes | December 31, 2017 Computed “expected” income tax benefit $ (113,828 ) State income tax benefit, net of federal benefit 15,209 Change in valuation allowance (191,667 ) Permanent differences, net (106,919 ) Change in federal income tax rate 120,784 IRC section 382 limitations on future NOL utilization 249,208 Write-off of property & equipment deferred tax asset 27,213 Provision for income taxes $ — |
Schedule of components of deferred tax assets and liabilities | 2017 Deferred tax assets: Deferred expenses $ 176,030 Property and equipment (65 ) Capitalized start-up expenses 48,078 Deferred tax assets 224,043 Less: Valuation allowance (224,043 ) Net deferred tax assets $ — |
Description of Business (Detail
Description of Business (Details) | Dec. 15, 2017 | Jan. 10, 2017 |
Description ofBusiness (Textual) | ||
Exchanges of common stock units to common stock | 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 | |
Description on reverse merger | 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 common stock of the Company, par value $0.001 and a Promissory Note in the amount of $900,000. |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Summary of Significant Accounting Policies (Textual) | |
Cash exceeding federally insured limits amount | $ 2,263,863 |
Expected dividend yield | 0.00% |
Reverse Merger (Details)
Reverse Merger (Details) | Dec. 15, 2017USD ($) |
Assets Acquired: | |
Website (recorded as Asset Held for Disposition) | $ 584 |
Liabilities Assumed: | |
Accounts payable and accrued liabilities | (4,250) |
Convertible note payable due to related party | (900,000) |
Less: Assumption of existing liability by related party (see Note 7) | 400,000 |
Net Liabilities Acquired | $ (503,666) |
Reverse Merger (Details Textual
Reverse Merger (Details Textual) - USD ($) | Dec. 15, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Reverse Merger (Textual) | |||
Common stock par value | $ 0.001 | $ 0.001 | |
Red Earth LLC [Member] | |||
Reverse Merger (Textual) | |||
Common stock exchange shares | 52,732,969 | ||
Promissory note amount | $ 900,000 | ||
Common stock par value | $ 0.001 | ||
Percentage of beneficial owners | 88.00% |
Going Concern (Details)
Going Concern (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Going Concern (Textual) | ||
Percentage of business acquired | 100.00% | |
Accumulated deficit | $ (362,521) | $ (27,733) |
Raised of common stock | $ 2,600,000 | |
Sale of stock per share | $ 0.75 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 1 Months Ended | 2 Months Ended | 12 Months Ended | |
Feb. 28, 2017 | Oct. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2017 | |
Intangible Assets (Textual) | ||||
Provisional of cultivation of medical marijuana | $ 300,000 | |||
Provisional Grow License [Member] | ||||
Intangible Assets (Textual) | ||||
Provisional of cultivation of medical marijuana | $ 300,000 | |||
License amount paid deposit to seller | $ 25,000 | |||
Advanced amount of fund the purchase of license | $ 350,000 |
Convertible Note Payable Due 31
Convertible Note Payable Due to Related Party (Details) - USD ($) | Dec. 15, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Convertible Note Payable Due to Related Party (Textual) | |||
Convertible note payable amount | $ 900,000 | ||
Sold of common stock per shares | $ 0.75 | ||
Red Earth LLC [Member] | |||
Convertible Note Payable Due to Related Party (Textual) | |||
Convertible note payable amount | $ 900,000 | ||
Conversion price | $ 0.75 | ||
Percentage of accrues interest | 0.50% | ||
Sold of common stock per shares | $ 0.75 | ||
Related party transaction, percentage | 50.00% |
Note Payable to Fund Acquisit32
Note Payable to Fund Acquisition of Provisional Grow License (Details) - USD ($) | 1 Months Ended | 12 Months Ended |
Feb. 28, 2017 | Dec. 31, 2017 | |
Note Payable to Fund Acquisition of Provisional Grow License (Textual) | ||
Debt issuance costs | $ 14,521 | |
Note fee amount | 50,000 | |
Interest expense | $ 64,521 | |
Provisional Grow License [Member] | ||
Note Payable to Fund Acquisition of Provisional Grow License (Textual) | ||
Advanced to fund the acquisition | $ 350,000 | |
Debt issuance costs | 14,521 | |
Note fee amount | $ 50,000 |
Sales of Unregistered Securit33
Sales of Unregistered Securities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Sales of Unregistered Securities (Textual) | ||
Common stock sold and issued aggregate | 2,991,163 | |
Sale of common stock price | $ 0.75 | |
Proceeds from offering securities | $ 2,243,372 | |
Common stock sold | $ 400,000 | |
Additional shares of common stock | 533,333 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - Warrant [Member] - $ / shares | 2 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Dec. 31, 2017 | |
Warrants: | ||
Shares, Beginning Balance | 166,665 | 166,665 |
Shares, Issued | ||
Shares, Exercised | ||
Shares, Expired | ||
Shares Ending, Balance | 166,665 | 166,665 |
Weighted Avg. Exercise Price, Beginning Balance | $ 5.88 | $ 5.88 |
Weighted Avg. Exercise Price, Issued | ||
Weighted Avg. Exercise Price, Exercised | ||
Weighted Avg. Exercise Price, Expired | ||
Weighted Avg Exercise Price, Ending Balance | $ 5.88 | $ 5.88 |
Commitments and Contingencies35
Commitments and Contingencies (Details) | Dec. 31, 2017USD ($) |
Summary of future minimum lease obligation | |
2,018 | $ 162,270 |
2,019 | 249,090 |
2,020 | 230,640 |
2,021 | 230,640 |
2,022 | 230,755 |
Thereafter | 1,043,315 |
Total minimum lease payments | $ 2,146,710 |
Commitments and Contingencies36
Commitments and Contingencies (Details Textual) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Commitments and Contingencies (Textual) | |
Deferred rent expense | $ 104,565 |
Operating leases rent expense | $ 112,815 |
Description of operating lease expiration | 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. |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 2 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Computed "expected" income tax benefit | $ (113,828) | |
State income tax benefit, net of federal benefit | 15,209 | |
Change in valuation allowance | (191,667) | |
Permanent differences, net | (106,919) | |
Change in federal income tax rate | 120,784 | |
IRC section 382 limitations on future NOL utilization | 249,208 | |
Write-off of property & equipment deferred tax asset | 27,213 | |
Provision for income taxes |
Income Taxes (Details 1)
Income Taxes (Details 1) | Dec. 31, 2017USD ($) |
Deferred tax assets: | |
Deferred expenses | $ 176,030 |
Property and equipment | (65) |
Capitalized start-up expenses | 48,078 |
Deferred tax assets | 224,043 |
Less: Valuation allowance | (224,043) |
Net deferred tax assets |
Income Taxes (Details Textual)
Income Taxes (Details Textual) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Income Taxes (Textual) | |
Federal statutory rate | 34.00% |
Limitation on use of operating loss carryforwards | All of the federal and state net operating losses incurred through December 15, 2017, are subject to 100 percent limitation under the provisions of Internal Revenue Code section 382 due to various ownership changes and the continuity of business requirement. |
U.S. corporate income tax rate | the Tax Act reduces the U.S. statutory tax rate from 35% to 21%. The Company’s deferred tax assets were calculated to reflect the reduction in the U.S. corporate income tax rate from 35% to 21% |
Deferred tax assets | $ 224,043 |
Basic and Diluted Earnings (L40
Basic and Diluted Earnings (Loss) Per Common Share (Details) | 12 Months Ended |
Dec. 31, 2017shares | |
Basic and Diluted Earnings (Loss) Per Common Share (Textual) | |
Warrants excluded from calculation of diluted income per share | 166,665 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | |
Apr. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Jan. 31, 2018 | |
Subsequent Events (Textual) | ||||
Common stock price | $ 0.75 | |||
Received from stock amount | $ 2,600,000 | |||
Subsequent Event [Member] | ||||
Subsequent Events (Textual) | ||||
Convertible note payable | $ 900,000 | |||
Common stock sold and issued an aggregate | 628,667 | |||
Common stock price | $ 0.75 | |||
Gross proceeds from stock | $ 471,500 | |||
Received from stock amount | $ 100,000 | |||
Stock subscription agreement to purchase common stock | 133,333 | |||
Common stock exchange for professional services | 6,448 | |||
Condition of operator terminate sales agreement, description | The Company has agreed to generate sales of at least $5 million per year from product cultivated from the outdoor grow facility. The Licensed Operator may terminate the agreement if annual sales fall below the $5 million minimum requirement as defined in the agreement. Prior to the termination of the agreement by the Licensed Operator, the Company may cure any applicable deficiency by paying 10% of the deficiency. | |||
Amount to paid from revenue, description | The Licensed Operator will retain 15% of the net revenues generated from product cultivated from the outdoor grow facility and pay 85% of the net revenues to 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, once the outdoor grow facility begins production, the Company has agreed to pay the Licensed Operator $7,000 per month for compliance, security, and other administration costs incurred by the Licensed Operator during the term of the agreement. | |||
Term of Agreement | 8 years |