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EX-32.1 - EXHIBIT 32.1 - MJ BIOTECH, INC.exhibit321_ex32z1.htm
EX-31.2 - EXHIBIT 31.2 - MJ BIOTECH, INC.exhibit312_ex31z2.htm
EX-31.1 - EXHIBIT 31.1 - MJ BIOTECH, INC.exhibit311_ex31z1.htm

 

  

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K

For the Fiscal Year Ended December 31, 2017

or

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

 

 

Commission File No.:  000-54616


MJ BIOTECH, INC.


(Exact name of registrant as specified in its charter)

(Formerly Michael James Enterprises, Inc.)

 

 

            Wyoming

     45-2288672

(State or other jurisdiction of incorporation or organization)

                  (I.R.S. Employer Identification No.)


109 East 17th Street, Suite 80 Cheyenne, WY 82001

(Address of principal executive offices) (Zip Code)


Registrants telephone number, including area code (561) 563-3830


Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class: Name of each exchange on which registered:

                                 None

                    Not applicable


Securities registered pursuant to Section 12(g) of the Act:


Common Stock, par value $0 01

(Title of class)


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ]  No [X]


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No[X]

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[ ] No[X]  


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 [X]  No[ ]  


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  Yes[  ] 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:

Large accelerated filer  [ ]


Accelerated filer          [  ]


Non-accelerated filer   [ ]


Smaller reporting company  [X]

Emerging growth company  [  ]





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


State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants most recently completed second quarter.  Approximately $113,061.


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


As of July 27, 2018, the registrant had 53,348,590 shares of the registrants $0.0001 par value common stock issued and outstanding. The registrant also had 4,000 Preferred A shares, 3,781,700 Preferred B shares and 160,000 Preferred C shares. All issued and outstanding Preferred shares have a par value $.0001 per shares.


 DOCUMENTS INCORPORATED BY REFERENCE


List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933.  The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).  


Definitive Schedule 14C Information Statement file July 31, 2017


 





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TABLE OF CONTENTS


 

 

 

 

 

Page No.

 

Part I

 

                    

 

 

Item 1.

Business.

5

Item 1A.

Risk Factors.

8

Item 1B.

Unresolved Staff Comments.

11

Item 2.

Properties.

11

Item 3.

Legal Proceedings.

11

Item 4.

Mine Safety Disclosures.

11

 

 

 

 

Part II

 

 

 

 

Item 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

11

Item 6.

Selected Financial Data.

14

Item 7.

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

14

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk.

17

Item 8.

Financial Statements and Supplementary Data.

18

Item 9.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

34

Item 9A.

Controls and Procedures.

34

Item 9B.

Other Information.

35

 

 

 

 

Part III

 

 

 

 

Item 10.

Directors, Executive Officers and Corporate Governance.

35

Item 11.

Executive Compensation.

37

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

38

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

39

Item 14.

Principal Accounting Fees and Services.

39

 

 

 

 

Part IV

 

 

 

 

Item 15.

Exhibits, Financial Statement Schedules.

41









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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION


Various statements in this report contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived from utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to:


·

our recent exit from shell status, lack of profitable operations and risk we will ever generate revenues or profits,

·

need for additional capital, including our ability to repay $544,556 in notes and accrued interest of $119,344 to non-related parties, all of which if not paid off will convert into common stock over time causing dilution to all shareholders.,

·

our ability to continue as a going concern,

·

our inability to manage our growth,

·

potential infringement of third party intellectual property rights,

·

our ability to effectively compete,

·

our ability to timely and effectively scale our technology,

·

the status of an action pending in the Office of Financial Regulation of the State of Florida,

·

the limited trading market for our common stock which is quoted on the OTC Markets,

·

anti-takeover aspects of our certificate of incorporation and bylaws and the ability of our Board to issue preferred stock without stockholder consent,

·

the application of penny stock rules to trading in our common stock, and

·

the dilutive impact of outstanding convertible notes and warrants.


You should read thoroughly this report and the documents that we refer to herein with the understanding that our actual future results may be materially different from and/or worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements including those made in Part I. Item 1A. Risk Factors appearing elsewhere in this report. Other sections of this report include additional factors which could adversely impact our business and financial performance. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.


OTHER PERTINENT INFORMATION


We maintain our web site at www.mjbiotech.com. Information on this web site is not a part of this report.


Unless specifically set forth to the contrary, when used in this report the terms MJTV the Company, "we", "us", "our" and similar terms refer to MJ Biotech Inc., f/k/a Michael James Enterprises, Inc., also f/k/a as BullsnBears.com, Inc., a WYOMING corporation In addition, 2017 refers to the year ending December 31, 2017 and 2016 refers to the year ended December 31, 2016.



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PART I


    ITEM 1.   BUSINESS OVERVIEW.


1.

Nature of Operations and Continuance of Business


The audited financial statements included herein have been prepared by MJ Biotech, Inc. (formerly Michael James Enterprises, Inc.) (the Company) in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (the SEC). We believe that all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein and that the disclosures made are adequate to make the information not misleading.


We were a Company focused on developing intellectual property. We have, since the beginning of the third quarter of 2017, changed our focus toward Nutraceuticals. With this change in focus we entered into a Binding Letter of Agreement on July 26, 2017 to acquire ZEN HERO, Inc. d/b/a Zens Tea House Zen. The business of Zen is a formulator of organic teas and herbs (Nutraceuticals) for sale to the public and other businesses. Zen, currently works with doctors and other health professionals to develop teas and herbs to assist in the development of alternative solutions to the current medicines offered to patients and non-patients alike.


Zen cannot make any health claims or state that green tea possesses specific health benefits. However, Zen can offer anecdotal literature and other information on diet and health benefits others have experienced and point people to ethically sound, licensed medical physicians who can offer medical advice, diagnosis, and treatment.

Our goal is to help Zen create a well-known brand within the Nutraceutical market segment. To accomplish this goal, Zen is currently selling their teas and herbs through three main distribution networks.


The primary distribution source is via farmers markets. Zen currently operates in over 40 farmers markets per week. Farmers markets provide a valuable sales and distribution channel for the Zens products. Private markets are solitary events held by corporations for their employees as part of their health and wellness programs. Online sales are Zens main focus for growth through Zens website www.zenstea.com

Capital Needs


Our ability to implement this business model, develop, and market our products and services via Farmers Markets, Special Events and online with our ecommerce website is dependent upon our ability to raise sufficient capital. We have determined we need to raise approximately $1,500,000 for general operating capital, including funds necessary to hire and compensate executive and other employees, including staffing, support and equipment, advertising and marketing, expansion of business operations, and general working capital. Although we have received approximately $63,500 in promissory notes and $603,361 in convertible promissory notes during 2016 through 2017 we do not have any firm commitments to provide the balance of this capital and there are no assurances we will be successful in raising the necessary capital. In that event, our ability to fully implement our business model and begin generating revenues from our operations would be in jeopardy.


Competition


Most of Zens competitors online are well-established and have substantially greater financial resources than Zen does. Some of our online competitors are the Full Leaf Company, the Republic Coffee and Tea Company and Adagio Teas. Zen is currently working on increasing its online presence. Zen has little or no competitions in its current farmers markets and with the growth of the farmers markets segment across the nation this is an area Zen has the opportunity to expand.


Governmental regulation


While there are currently relatively few laws or regulations directly applicable to Internet access, commerce, or commercial search activity, there is increasing awareness and concern regarding some uses of the Internet and other online services, leading federal, state, local, and international governments to consider adopting civil and criminal laws and regulations, amending existing laws and regulations, conducting investigations, or commencing litigation with respect to the Internet and other online services covering issues such as:

·

user privacy;

·

trespass;

·



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defamation;

·

database and data protection;

·

limitations on the distribution of materials considered harmful to children;

·

liability for misinformation provided over the web;

·

user protection, pricing, taxation, and advertising restrictions (including, for example, limitation on the advertising on Internet gambling websites or of certain products);

·

delivery of contextual advertisements via connected desktop software;

·

intellectual property ownership and infringement, including liability for listing or linking to third-party websites that include materials infringing copyrights or other rights;

·

distribution, characteristics, and quality of products and services; and


other consumer protection laws.


Legislation has also been introduced in the U.S. Congress and some state legislatures that is designed to regulate spyware, which      does not have a precise definition, but which is often defined as software installed on consumers' computers without their informed consent and designed to gather and, in some cases, disseminate information about those consumers, including personally identifiable information. We do not expect to rely on spyware for any purpose, and it will not be part of our product offerings, but the definition of spyware or proposed legislation relating to spyware may be broadly defined or interpreted to include legitimate ad-serving software, including toolbar offerings and other downloadable software currently provided by our product offerings. Currently, legislation has focused on providing Internet users with notification of and the ability to consent or decline the installation of such software, but there can be no guarantee that future legislation will not provide more burdensome standards by which software can be downloaded onto consumers' computers. We expect that all downloadable software that we will distribute will require an express consent of the consumer and will provide consumers with an easy mechanism to delete the software once downloaded. However, if future legislation is adopted that makes the consent, notice, or uninstall procedures more onerous, we may have to develop new technology or methods to provide our services or discontinue those services in some jurisdictions or altogether. There is no guarantee we will be able to develop this new technology at all or in a timely fashion or on commercially reasonable terms. The adoption of any additional laws or regulations, application of existing laws to the Internet generally or our industry, or any governmental investigation or litigation related to the Internet generally, our industry, or our services may decrease the growth of the Internet or other online services.


    

    Employees


As of December 31, 2017, we have 2 full time employees, and Company operations are being conducted at our corporate offices   located in Cheyenne Wyoming 82001 at 109 East 17th Street, Suite 80.


   Our History


We were organized under the laws of the State of Delaware on December 30, 2010 under the name Spicy Gourmet International,  Inc. as part of the implementation of the Chapter 11 plan of reorganization of Spicy Gourmet Organics, Inc. ("SGO"), a California corporation. SGO was incorporated in the State of California in 2006 and was formed to import specialty, organic spices from South Asia and sell them in the United States. SGO was undercapitalized and sales of its spice products were slow to develop, possibly due to the recession in the 2007-2008-time period. As a result, SGO lacked sufficient cash flow to meet its current obligations and on October 1, 2010 SGO filed a voluntary petition for bankruptcy under Chapter 11 in the U.S. Bankruptcy Court for the Central District of California. SGO's plan of reorganization was confirmed by the Court on November 19, 2010.


The plan of reorganization provided for the acquisition by SGO of a new, unrelated, retail business and the spin-off of all of the various elements of SGO's spice business to four different entities. The plan of reorganization called for the spin-off of SGO's manufacturing business to our company, the incorporation of our company, and the distribution of shares of our common stock to the bankruptcy creditors. The plan required us to issue 1,180,000 shares of our common stock and distribute these to SGO's general unsecured creditors, to its administrative creditors, and to its shareholders. The shares were distributed pursuant to Section 1145 of the U.S. Bankruptcy Code.




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The Court also ordered the distribution of warrants to all administrative creditors of SGO, with these creditors to receive five warrants exercisable into shares of our common stock for each $0.05 of SGO's administrative debt which they held. All warrants were exercisable at any time prior to November 19, 2017.  No Warrants were exercised prior to their expiration.


We were a shell company as that term is defined in the Securities Act of 1933 from our date of incorporation until October 2012.


On October 20, 2012, we acquired from James M. Palladino, then an unrelated third party, the URL domain name and websites of bullsnbears.com for $150,000. Following this asset purchase we were no longer considered a shell company. On October 23, 2012, our former officers and directors resigned and certain of the then officers and directors were appointed, with the balance of our directors being newly appointed in December 2012.


In November 2012 we changed our name to BullsnBears.com, Inc. Effective December 11, 2015, we changed our name to Michael James Enterprises, Inc., and entered into an Agreement for Plan of Merger and Reorganization between the Company and Michael James Enterprises, Inc., a Nevada corporation.  


Prior to that, effective December 11, 2015, the Company filed an Amendment to the Companys Articles of Incorporation changing the Companys name to Michael James Enterprises Inc. and filed with FINRA for a new stock ticker symbol MJTV.


On December 31, 2015, the Company formed a new wholly-owned company, BullsnBears Holdings, LLC., for the purpose of holding the Companys intellectual property assets.  As contractually agreed to, the Company's wholly-owned subsidiary, BullsnBears, Holdings LLC. was spun off in its entirety including all of the assets and liabilities of the subsidiary including certain liabilities of the parent company that were incurred by the previous management including BullsnBears Holdings, LLC. Intellectual Property assets, including its websites, URLs, and proprietary software, were transferred through a share dividend to MJTV shareholders of record as of the close of business on December 28, 2016, with one share of BullsnBears Holdings, LLC.  Common Stock distributed for each one share of MJTV Common Stock owned as of the record date.  Distribution of the shares took place on December 28, 2016.


On August 4, 2016, the companys Board of Directors approved an asset purchase agreement with RP Capital Group, Ltd. to acquire all rights and title to the studies and intellectual property to a dronabinol based treatment for sleep apnea. This acquisition substituted the contemplated acquisition of Michael James Enterprises, Inc., a Nevada corporation which did not move forward as the acne-based product it was bringing to market has experienced several significant setbacks and the Board of Directors has determined that the proposed agreement was not in the best interest of the Company and its shareholders.


Since August of 2016 the Company created the alchemy of essential oils called LUNA to help a person relax and hopefully achieve better sleep. Additionally, the Companys then CEO, James M. Farinella, designed a creative noninvasive delivery system for an active ingredient which was assigned to the company by the then CEO in exchange for 2,350,000 Preferred B shares. This product VOLUPTAS, now patent pending with a filing for a trademark on the Name VOLUPTAS.


On December 28, 2016 The Company's wholly-owned subsidiary, BullsnBears Holdings, Inc., was spun off spun-off through a share dividend to BNBI shareholders of record as of the close of business, with one share of BullsnBears Holdings Common Stock distributed for each one share of MJTV Common Stock owned as of the record date. Distribution of the shares is the responsibility of BullsnBears Holdings, Inc. and will take place upon the effectiveness of a Registration Statement filed with the U.S. Securities and Exchange Commission.


On April 12, 2017, the Company changes its name to MJ Biotech, Inc. to better represent the new direction of the Company.  MJ Biotech has also changed its state of incorporation to the state of Wyoming. The change of domicile took place on August 25, 2017.

On July 26, 2017, the Company entered into a Binding Letter of Agreement for the acquisition of ZEN HERO, Inc. d/b/a Zens Tea House. The business of ZEN HERO is a formulator of Organic Teas for sale to the public and other businesses. The transaction was anticipated to close within ninety (90) days of the execution of the Binding Letter of Agreement.  The proposed purchase price is a combination of cash ($750,000) and stock. $400,000 is payable on closing with the balance to be paid based on performance milestones. Zen Hero is a company that sells its own line of medicinal teas. Based on Un-Audited financial statements, Zen Hero generates more than $100,000 per month in sales and is profitable. The acquisition has not closed as of the date of this Report.  The Company is still working towards auditing Zen Heros financial statements in preparation to close on the acquisition into the Company as a wholly-owned subsidiary. There is no guarantee if, or when, this acquisition will be completed.  As of the date of this Report, neither party to the Binding Letter of Agreement has terminated the proposed acquisition.


ITEM 1A. RISK FACTORS

Before you invest in our securities, you should be aware that there are various risks. You should consider carefully these risk factors, together with all of the other information included in this annual report before you decide to purchase our securities. If any



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of the following risks and uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected.


Risks Related to Our Business


We exited shell status in October 12, 2012 have not operated profitably since inception, and there are no assurances we will ever generate revenues or profits.


Our operations have never been profitable, and it is expected that we will continue to incur operating losses through the end of 2018 and the beginning part of 2019. In 2012, we exited shell status thorough the purchase of the URL domain names and websites, however, those assets have generated minimal revenues to date. We reported revenues of $1,517 in 2013, and our net loss was ($1,104,250). We reported revenues of $106,859 in 2014, and our net loss was ($648,016).   Our revenues for the year ended December 31, 2015 were $22,610, and our net loss was ($425,345).  Our revenues for the year ended December 31, 2016 were $1,000 and our net loss was ($10,852,818). Also, on December 31, 2016 we had a working capital deficit of ($947,340) and an accumulated deficit of ($13,389,043). As of December 31, 2017, we had zero revenue and our net loss was ($1,071,348). Also, as of December 31, 2017 we had a working capital deficit of ($1,796,827) and an accumulated deficit of ($14,460,391). There is no assurance that we will be able to fully implement our business model, generate any meaningful revenues or operate profitably in the future. Our failure to generate substantial revenues and achieve profitable operations in future periods will adversely affect our ability to continue as a going concern. If we should be unable to continue as a going concern, you could lose all of your investment in our company.


We will need additional financing which we may not be able to obtain on acceptable terms. If we cannot raise additional capital as needed, our ability to execute our business plan and grow our company will be in jeopardy.


Capital is needed not only to fund our ongoing operations and to pay our existing obligations, but capital is also necessary for the effective implementation of our business plan. As described elsewhere herein, we will need to raise approximately $1,500,000 of additional capital. Our working capital is not sufficient to fund our operations. We do not have any firm commitments to provide capital and we anticipate that we will have certain difficulties raising capital given the current uncertainties in the capital markets. Accordingly, we cannot assure you that additional working capital will be available to us upon terms acceptable to us. If we do not raise funds as needed, our ability to continue to implement our business model is in jeopardy and we may never be able to achieve profitable operations. In that event, our ability to continue as a going concern is in jeopardy and you could lose all of your investment in our company.


Our auditors have raised substantial doubts about our ability to continue as a going concern.


The report of our independent registered public accounting firm on our financial statements at December 31, 2017 and for the year then ended raises substantial doubts about our ability to continue as a going concern based our operating losses and working capital deficit. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. As described above, our current working capital is not sufficient to sustain our current operations and we need to raise additional working capital in order to continue to implement our business model. If such funds are not available to us as needed, we may be forced to curtail our growth plans and our ability to grow our company will be in jeopardy. In such event, we may not be able to continue as a going concern.


We have principal amount outstanding convertible notes payable to non-related parties.


We have $544,556 outstanding and currently in default convertible promissory notes.  If these lenders choose to convert their debt into equity as a result of a conversion of all or a portion of such notes into the common stock of the Company, substantial dilution will result to all the stockholders at the time of conversion.  If the Company does not have the funds to repay the notes, the Company will be unable to protect any of its shareholders against this dilution.


We have a limited history of operations upon which an investor could evaluate our company. There are no assurances our business model will prove successful.


We have a limited operating history. Our business is in a new and unproven market, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful. This lack of a significant operating history makes it difficult to effectively assess our future prospects. You should consider our business and prospects in light of the risks and difficulties we encounter in this rapidly evolving market. These risks and difficulties include our ability to, among other things: Produce sufficient product to keep up with the demand. Successfully market our product at our physical locations and on line. If we fail to address the needs of our target market, our ability to fully implement our business model will be in jeopardy. There are no assurances we will



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be successful in the further implementation of our business model. You should consider our business and prospects in light of the risks and difficulties we encounter as we seek to further expand our operations.


We cannot assure you that we will be able to manage the growth of our organization effectively.


We currently expect to experience rapid growth in demand for our products if we are able to penetrate new markets. Any future successful growth and/or expansion of our business and product offerings will place significant demands on our management and our operational and financial resources. We will be required to manage multiple relations with various merchants, subscribers, technology licensors and other third parties. In the event of further growth of our operations or in the number of our third-party relationships, our information technology systems or our internal controls and procedures may not be adequate to support our operations. To effectively manage our proposed growth, we must continue to implement operational plans and strategies, improve and expand our infrastructure of people and information systems, and train and manage our employee base. There are no assurances our efforts will be effective.


We may face third party intellectual property infringement claims that could be costly to defend and result in the loss of significant rights.


Our current and future product offerings may infringe upon the proprietary rights of others, and third parties may assert infringement claims against us, including claims alleging, among other things, copyright, trademark, or patent infringement. We are aware of allegations from time to time concerning these types of claims and in particular in respect of copyright and trademark infringement claims. While we believe that we have defenses to these types of claims under appropriate trademark laws, we may not prevail in our defenses to any intellectual property infringement claims. In addition, we may not be adequately insured for any judgments awarded in connection with any litigation. Any such claims and resulting litigation could subject us from time to time to significant liability for damages, or result in the invalidation of our proprietary rights, which would have a material adverse effect on our business, financial condition, and results of operations. Even if we were to prevail, these claims could be time-consuming, expensive to defend, and could result in the diversion of management's time and attention.   


There are no assurances we will ever effectively compete in our target market.


Competitors may develop or offer products that provide significant performance, price or other advantages over the products offered by us. Most of our competitors are larger and better capitalized than we are. We may not have the financial resources, marketing, nor support capabilities to compete successfully. If we fail to gain market share, our financial condition, operating results and business could be adversely affected and the value of the investment in the Company could be reduced significantly.


We may not timely and effectively scale and adapt our existing technology and network infrastructure to ensure that our website is accessible within an acceptable load time.


A key element to our growth strategy is the ability to create a viable website for the sale of our products and to effectively develop members, users (whom we define as anyone who visits our website, regardless of whether or not they are a member), consumers in all geographies to access our website within acceptable load times. We call this website performance due to a variety of factors, including infrastructure changes, human or software errors, capacity constraints due to an overwhelming number of users accessing our website simultaneously, and denial of service or fraud or security attacks. In some instances, we may not be able to identify the cause or causes of these website performance problems within an acceptable period of time. It may become increasingly difficult to maintain and improve our website performance, especially during peak usage times and as our products gain market share causing dramatic user traffic increases. If our website is unavailable when users attempt to access it or does not load as quickly as they expect, and may not return to our website as often in the future, or at all causing a serious drop in sales of our products including our primary product Golden Milk subject to the availability of sufficient capital, we expect to make significant investments to maintain and improve website performance and to enable rapid releases of new interactive blogs, services and products. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business and operating results may be harmed.


Risks Related to Our Common Stock


   Action from Office of Financial Regulation State of Florida (OFR).


On September 1, 2015, the Company received notice of an Administrative Complaint filed by the State of Florida Office of Financial Regulation (OFR) concerning certain private placement investments received by the Company during the period from 2011 to 2013 and the applicability of the registration exemption provisions of the Florida Statutes to said investments.  The Company vigorously disputes the legal basis for this Administrative Complaint as it relates to the Company.  Written submissions were presented to the OFR and the OFR designated hearing offer has rendered a recommendation that the Company should be fined in the amount of



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$980,000.  The Company had reached a settlement with the OFR in the amount of $25,000.  The Company was unable to pay the settlement amount and on July 3, 2017 an Order was entered against the Company, and in favor of the ORF, in the full amount sought of $980,000.  As of the date of this Report, no Judgment has been entered. When the company has the resources available it will contact the OFR to try to resurrect the prior settlement


Our common stock is currently quoted on the OTC Markets, but trading in the securities is extremely limited.


Currently, our common stock is quoted on the OTCQB tier of the OTC Markets. The market for our common stock is extremely limited and there are no assurances an active market for our common stock will ever develop. The OTC Markets is an inter-dealer, over-the-counter market that provides generally significantly less liquidity than a national or regional securities exchange. Securities quoted on the OTC Markets typically have fewer market makers and are not followed by analysts. The quotation of our shares on the OTC Markets may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future. Until an active market for our common stock develops, if ever, an investment in our common stock should be considered illiquid.


Provisions of our certificate of incorporation and bylaws may delay or prevent a take-over which may not be in the best interests of our stockholders.


Provisions of our certificate of incorporation and bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our stockholders may be called, and may delay, defer or prevent a takeover attempt. In addition, certain provisions of the Delaware General Corporation Law also may be deemed to have certain anti-takeover effects which include that control of shares acquired in excess of certain specified thresholds will not possess any voting rights unless these voting rights are approved by a majority of a corporation's disinterested stockholders. Further, our certificate of incorporation authorizes the issuance of up to 20,000,000 shares of preferred stock with such rights and preferences as may be determined from time to time by our board of directors in their sole discretion. Our board of directors may, without stockholder approval, issue series of preferred stock with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of our common stock.   


The tradability of our common stock is limited under the penny stock regulations which may cause the holders of our common stock difficulty should they wish to sell the shares.


Because the quoted price of our common stock is less than $5.00 per share, our common stock is considered a penny stock, and trading in our common stock is subject to the requirements of Rule 15g-9 under the Securities Exchange Act of 1934. Under this rule, broker/dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements. The broker/dealer must make an individualized written suitability determination for the purchaser and receive the purchasers written consent prior to the transaction. SEC regulations also require additional disclosure in connection with any trades involving a penny stock, including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and its associated risks. These requirements severely limit the liquidity of securities in the secondary market because few broker or dealers are likely to undertake these compliance activities and this limited liquidity will make it more difficult for an investor to sell his shares of our common stock in the secondary market should the investor wish to liquidate the investment. In addition to the applicability of the penny stock rules, other risks associated with trading in penny stocks could also be price fluctuations and the lack of a liquid market.


The majority of our outstanding common shares are restricted securities and we have outstanding warrants and convertible notes to purchase approximately 42% of our currently outstanding common stock.


At December 31, 2017 we had 32,303,283 shares of common stock outstanding. Future sales of restricted common stock under Rule 144 or otherwise could negatively impact the market price of our common stock.


In addition, conversion of the convertible notes, will have a dilutive effect on our existing stockholders.


ITEM 1B.  UNRESOLVED STAFF COMMENTS.


Not applicable to a smaller reporting company.


ITEM 2.  PROPERTIES.




10

 

Our corporate offices are located at 109 East 17th Street, Suite 80 Cheyenne, WY, 82001which are rented on a month-to-month basis.   We believe that our current space and arrangement is adequate to meet our current needs and the needs for the foreseeable future.


ITEM 3.  LEGAL PROCEEDINGS.  


A lawsuit was filed against the Company on November 13, 2014, in the First Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida entitled Thinspace Technology, Inc. v. Michael James Enterprises, Inc. (formerly BullsnBears.com, Inc.) The complaint alleges that BullsnBears failed to provide certain services it was contractually committed to provide and seeks damages in excess of $15,000.  On January 20, 2017 this case was disposed of for lack of prosecution.


On September 1, 2015, the Company received notice of an Administrative Complaint filed by the State of Florida Office of Financial Regulation (OFR) concerning certain private placement investments received by the Company during the period from 2011 to 2013 and the applicability of the registration exemption provisions of the Florida Statutes to said investments.  The Company vigorously disputes the legal basis for this Administrative Complaint as it relates to the Company.  Written submissions were presented to the OFR and the OFR designated hearing offer has rendered a recommendation that the Company should be fined in the amount of $980,000.  The Company had reached a settlement with the OFR in the amount of $25,000.  The Company was unable to pay the settlement amount and on July 3, 2017 an Order was entered against the Company, and in favor of the ORF, in the full amount sought of $980,000.  As of the date of this Report, no Judgment has been entered. When the company has the resources available it will contact the OFR to try to resurrect the prior settlement.


On June 27, 2017 an assignor to the Companys former auditors (Friedman LLP) filed Suit against the Company in Superior Court of the State of New Jersey, Camden County, for $13,390 in alleged open invoices.  Despite not being properly served the Plaintiff moved for, and received, a default Judgment in the full amount sought.  It is the intention of the Company to move to vacate the Judgment for lack of proper service and based on the Companys meritorious defenses that: (i) Friedman failed to provide the audit services for which it billed; and more than $5,000 of the amount sought related to services related to another entity.


On November 21, 2017 Power Up Lending Group, LTD. filed a Complaint in the United States District Court for the Eastern District of New York alleging the Company has defaulted on three convertible promissory notes in the aggregate amount of $155,000.  It is the Companys position that it has not yet been properly served with the Summons and Complaint.  As of the date of this report, not default or Judgment has been entered.  The Company hopes to be able to reach a settlement with Power Up when the Companys financial condition permits, to avoid future litigation costs.




ITEM 4.  MINE SAFETY DISCLOSURES.


Not applicable for our operations.  





11

 

PART II


ITEM 5.  MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND   ISSUER PURCHASES OF EQUITY SECURITIES.


Market Information


From October 2, 2012 to April 2016 our shares of common stock were quoted on the OTC Pink Sheet Tier of the OTC Markets Group Inc. under the symbol MJTV (formerly BNBI). Since April 2016 our shares of common stock are quoted on the OTCQB Tier of the OTC Markets Group Inc. under the symbol MJTV (formerly BNBI).  Our shares of common stock are thinly traded.  Set forth below are the high and low closing bid prices for our common stock for the for the last two fiscal years. These bid prices were obtained from OTC Markets Group Inc. All prices listed herein reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions.


2016

 

 High

 

Low

 

January 1, 2016 to March 31, 2016

 

$0.65

 

$0.50

 

April 1, 2016 to June 30, 2016

 

$0.60

 

$0.12

 

July 1, 2016 to December 31, 2016

 

$0.20

 

$0.07

 

October 1, 2016 to December 31, 2016

 

$0.1149

 

$0.065

 

2017

 

 

 

 

 

January 1, 2017 to March 31, 2017

 

$0.057


$0.009

April 1, 2017 to June 30, 2017

 

$0.013


$0.002

July 1, 2017 to September 30, 2017

 

$0.0043


$0.001

October 1, 2017 to December 31, 2017

 

$0.0087


$0.0012







As of July 27, 2018, the last day our common stock traded before the filing date of this report, the last sale price of our common stock as reported on the OTC Markets was $.0021 per share. As of December 31, 2017, there are approximately 125 record holders of our common stock.


Dividends


We have never paid cash dividends on our common stock. Under Wyoming law, we may declare and pay dividends on our capital stock either out of our surplus, as defined in the relevant Wyoming statutes, or if there is no such surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. If, however, the capital of our company, computed in accordance with the relevant Wyoming statutes, has been diminished by depreciation in the value of our property, or by losses, or otherwise, to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets, we are prohibited from declaring and paying out of such net profits and dividends upon any shares of our capital stock until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets shall have been repaired.


Recent Sales of Unregistered Securities


On February 4, 2016, the Company entered into a $121,000 10% Convertible Promissory Note with Tangiers Investment Group, LLC, a non-affiliate.  The term is for one year, with an original issuance discount of $11,000 for due diligence and legal costs.  The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to 50% of the lowest trading price of the Companys Common Stock during the 20 trading days prior to the election to convert. See the foot notes to the financial statements for discussion of the derivative liability.


On March 23, 2016, the Company entered into a $60,500 10% Convertible Promissory Note with Vista Capital Investments, LLC. a non-affiliate.  The term is for two years, with an original issuance discount of $5,500 for due diligence and legal costs.  The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to 55% of the lowest trading price of the Companys Common Stock during the 20 trading days prior to the election to convert. See the foot notes to the financial statements for discussion of the derivative liability. In connection with the note payable the Company is obligated to issue 200,000 shares of common stock that was valued at $120,000. Out of the full consideration $55,000 was recorded as debt discount and the remaining $65,000 was included in interest expense.


On March 24, 2016, the Company entered into a $60,500 10% Convertible Promissory Note with Tangiers Investment Group, LLC, a non-affiliate.  The term is for one year, with an original issuance discount of $5,500 for due diligence and legal costs.  The Note



12

 

is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to 55% of the lowest trading price of the Companys Common Stock during the 20 trading days prior to the election to convert. See the foot notes to the financial statements for discussion of the derivative liability.


On December 5, 2016, the Company entered into a $79,000 10% Convertible Promissory Note with GHS Investments, LLC, a non-affiliate.  The term is for eight months, with an original issuance discount of $9,000 for due diligence and legal costs.  The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to the lower of $.09 or 55% of the lowest trading price of the Companys Common Stock during the 20 trading days prior to the election to convert. See the foot notes to the financial statements for discussion of the derivative liability.


On December 16, 2016, the Company entered into a $63,250 12% Convertible Promissory Note with Auctus Fund, LLC, a non-affiliate.  The term is for nine months, with an original issuance discount of $8,250 for due diligence and legal costs. The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to the lower of $.09 or 50% of the lowest trading price of the Companys Common Stock during the 25 trading days prior to the election to convert. See the foot notes to the financial statements 4 for discussion of the derivative liability.


On January 5, 2017, the Company entered into a $53,000 8% Convertible Promissory Note with Power Up Lending Group, LTD, a non-affiliate.  The term of the Note is for 9 months, with an original issuance discount of $3,000 for due diligence and legal costs.  The Note is convertible after 180days into Common Stock of the Company at a conversion price which shall be equal to 55% of the average of the three lowest trading prices of the Companys Common Stock during the 10 trading days prior to the election to convert. See the foot notes to the financial statements 4 for discussion of the derivative liability. Power Up Lending Group, LTD has declared the Company in default of its obligations under the Note.


On March 7, 2017, the Company entered into a $25,000 12% Convertible Promissory Note with Vista Capital Investments, LLC, a non-affiliate. The term of the Note is for two years, with an original issuance discount of $5,000 for due diligence and legal costs.  The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to 50% of the lowest trading price of the Companys Common Stock during the 25 trading days prior to the election to convert. See the foot notes to the financial statements for discussion of the derivative liability.


On March 7, 2017, the Company entered into a $5,000,000 equity line with Tangier Investment Group, LLC which will require a registration statement to be filed. The Company no longer intends to move forward on the equity line. As part of the Equity line the Company entered into a commitment note for $29,000 with no interest. The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price, which shall be equal to 50% of the lowest trading price of the Companys Common Stock during the 25 trading days prior to the election to convert. See the foot notes to the financial statements for discussion of the derivative liability.


On March 13, 2017 the Company entered into a $43,000 8% Convertible Promissory Note with Power Up Lending Group, LTD, a non-affiliate. The term of the Note is for 9 months, with an original issuance discount of $3,000 for due diligence and legal costs.  The Note is convertible after 180 days into Common Stock of the Company at a conversion price which shall be equal to 55% of the average of the three lowest trading prices of the Companys Common Stock during the 10 trading days prior to the election to convert. See the foot notes to the financial statements for discussion of the derivative liability. Power Up Lending Group, LTD has declared the Company in default of its obligations under the Note.


On January 17, 2017 Vista Capital Investments, LLC converted $10,000 of its $60,500 note dated March 23, 2016 at a conversion price of $0.01925 for 519,481 shares.


On January 24, 2017 Tangiers Investment Group, LLC converted $19,943 of its $121,000 note dated February 4, 2016 at a conversion price of $0.0175 for 1,139,600 shares.


On January 30, 2017 Vista Capital converted $14,500 of its $60,500 note dated March 23, 2016 at a conversion price of $0.01375 for 1,054,545 shares.


On February 22, 2017 Tangiers Investment Group, LLC converted $10,119 of its $121,000 note dated February 4, 2016 at a conversion price of $0 61 for 1,658,852 shares.


On March 17, 2017 Collier Investments, LLC converted $7,995 of its $75,000 note it acquired from Tangiers Investment Group, LLC dated February 4, 2016 at a conversion price of $0 410 for 1,950,000 shares.


On March 3, 2017 Vista Capital Investments, LLC converted $5,637.50 of its $60,500 note dated March 23, 2016 at a conversion price of $0 451 for 1,250,000 shares.


On March 9, 2017 GHS Investments, LLC converted $4,100 of its $66,500 note it acquired from Tangiers Investment Group, LLC



13

 

dated March 24, 2016 at a conversion price of $0 41 for 1,000,000 shares.


On March 17, 2017 Collier Investments, LLC converted $7,995 of its $75,000 note it acquired from Tangiers Investment Group, LLC dated February 4, 2016 at a conversion price of $0 410 for 1,950,000 shares.


On April 7, 2017 GHS Investments, LLC. converted $3,300 of its note originally owned by Tangiers Investment Group, LLC dated March 24, 2016 at a conversion price of $0 33 for 1,000,000 common shares. On May 2, 2017 the Company entered into a Securities Purchase Agreement with GPL Ventures LLC the agreement allows the Company to draw down up to $10,000,000 over the term of the agreement with a maximum drawdown of $125,000 at one time.


On May 16, 2017 the Company entered into a $200,000 8% Convertible Promissory Note with Tri-Bridge Ventures LLC, a non-affiliate. The term of the Note is for 9 months. The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which, shall be equal to 50% of the lowest trading price of the Companys Common Stock during the 20 trading days prior to the election to convert. Tri-Bridge Ventures, LLC will fund $100,000 of the $200,000 Convertible Promissory Note Upon the filing of the Companys 2016 year-end audited financial statements on Form 10K and the 2017 first quarter results on Form 10Q. Tri-Bridge Ventures, LLC will have the right to fund the remaining balance at any time during the term of the Note. This transaction never closed, and the agreement was terminated


On May 16, 2017, the Company entered into a $10,000,000 equity line with GPL Ventures, LLC, which will require a registration statement to be filed. As part of the Equity line the Company entered into a commitment note for $100,000. The term of the Note is for 6 months.  The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price, which shall be equal to 80% of the lowest trading price of the Companys Common Stock during the 20 trading days prior to the election to convert. The company no longer plans on moving forward with GPL Ventures, LLC on the equity line.


On May 24, 2017 the Company entered into a $10,000 12% Convertible Promissory Note with Power Up Lending Group, LTD, a non-affiliate. The term of the Note is for 9 months, with an original issuance discount of $3,000 for due diligence and legal costs.  The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to 58% of the average of the three lowest trading prices of the Companys Common Stock during the 10 trading days prior to the election to convert. Power Up Lending Group, LTD has declared the Company in default of its obligations under the Note.


On July 6, 2017 Power Up Lending Group LTD. converted $1,070 of its $53,000 note dated January 5, 2017 at a conversion price of $0 092 for 1,163,043 common shares.


On July 21, 2017 Power Up Lending Group LTD. converted $795 of its $53,000 note dated January 5, 2017 at a conversion price of $0 068 for 1,169,118 common shares.


On July 27, 2017 Power Up Lending Group LTD. converted $890 of its $53,000 note dated January 5, 2017 at a conversion price of $0 064 for 1,390,625 common shares.


On August 2, 2017 Power Up Lending Group LTD. converted $770 of its $53,000 note dated January 5, 2017 at a conversion price of $0 055 for 1,400,000 common shares.


On August 9, 2017 Power Up Lending Group LTD. converted $770 of its $53,000 note dated January 5, 2017 at a conversion price of $0 055 for 1,400,000 common shares.


In September 2017, the Company entered two Promissory Notes for $5,000 each with an unrelated private party. The Notes bear interest at the rate of 4% per annum and are due on January 30, 2018. These notes are currently in default.


In October the Company entered into a Promissory Note for $29,500 with an unrelated private Party. The Note bears interest at the rate of 4% per annum and has a due date of April 30, 2018. These notes are currently in default.


In December 2017 the Company entered into a Promissory Note for $9,000 with an unrelated private Party. The note bears interest at the rate of 4% per annum and has a due date of April 30, 2018. These notes are currently in default.



All outstanding common stock warrants expired on November 19, 2017.


Purchases of Equity Securities by the Issuer and Affiliated Purchasers


None.


   ITEM 6.  SELECTED FINANCIAL DATA.




14

 

   Not required for smaller reporting companies.


   ITEM 7.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.


The following discussion of our financial condition and results of operations for 2014 and 2013 should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Item 1A. Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in this Form 10-K. We use words such as anticipate, estimate, plan, project, continuing, ongoing, expect, believe, intend, may, will, should, could, and similar expressions to identify forward-looking statements.



OVERVIEW


We were a Company focused on developing intellectual property. We have, since the beginning of the third quarter of 2017, changed our focus toward Nutraceuticals. With this change in focus we entered into a Binding Letter of Agreement on July 26, 2017 to acquire ZEN HERO, Inc. d/b/a Zens Tea House Zen. The business of Zen is a formulator of organic teas and herbs (Nutraceuticals) for sale to the public and other businesses. Zen, currently works with doctors and other health professionals to develop teas and herbs to assist in the development of alternative solutions to the current medicines offered to patients and non-patients alike.


Zen cannot make any health claims or state that green tea is possesses specific health benefits. However, Zen can offer anecdotal literature and other information on diet and health benefits others have experienced and point people to ethically sound, licensed medical physicians who can offer medical advice, diagnosis, and treatment.

Our goal is to help Zen create a well-known brand within the Nutraceutical market segment. To accomplish this goal, Zen is currently selling their teas and herbs through three main distribution networks.


The primary distribution source is via farmers markets. Zen currently operates in over 40 farmers markets per week. Farmers markets provide a valuable sales and distribution channel for the Zens products. Private markets are solitary events held by corporations for their employees as part of their health and wellness programs. Online sales are Zens main focus for growth through Zens website www.zenstea.com


Since August of 2016 the Company created the alchemy of essential oils called LUNA to help a person relax and hopefully achieve better sleep. Additionally, the Companys then CEO, James M. Farinella, designed a creative noninvasive delivery system for an active ingredient which was assigned to the company by the then CEO in exchange for 2,350,000 Preferred B shares. This product VOLUPTAS, now patent pending with a filing for a trademark on the Name VOLUPTAS


On December 28, 2016 The Company's wholly-owned subsidiary, BullsnBears Holdings, Inc., including all assets and liabilities and other certain liabilities of the Parent company including all monies owed Mr. Palladino, our former Chief Executive Officer, approximately $680,574 for funds he has advanced us for working capital was spun off spun-off through a share dividend to BNBI shareholders of record as of the close of business, with one share of BullsnBears Holdings Common Stock distributed for each one share of MJTV Common Stock owned as of the record date. Distribution of the shares is the responsibility of BullsnBears Holdings, Inc. and will take place upon the effectiveness of a Registration Statement filed with the U.S. Securities and Exchange Commission. Mr. Palladino, our former Chief Executive Officer, approximately $680,574 for funds he has advanced us for working capital. We therefore no longer have these obligations on our books.


On April 12, 2017, the Company changes its name to MJ Biotech, Inc. to better represent the new direction of the Company.  MJ Biotech has also changed its state of incorporation to the state of Wyoming. The change of domicile took place on August 25, 2017.

On July 26, 2017, the Company entered into a Binding Letter of Agreement for the acquisition of ZEN HERO, Inc. d/b/a Zens Tea House. The business of ZEN HERO is a formulator of Organic Teas for sale to the public and other businesses. The transaction was anticipated to close within ninety (90) days of the execution of the Binding Letter of Agreement.  The proposed purchase price is a combination of cash ($750,000) and stock. $400,000 is payable on closing with the balance to be paid based on performance milestones. Zen Hero is a company that sells its own line of medicinal teas. Based on Un-Audited financial statements, Zen Hero generates more than $100,000 per month in sales and is profitable. The acquisition



15

 

has not closed as of the date of this Report.  The Company is still working towards auditing Zen Heros financial statements in preparation to close on the acquisition into the Company as a wholly-owned subsidiary. There is no guarantee if, or when, this acquisition will be completed.  As of the date of this Report, neither party to the Binding Letter of Agreement has terminated the proposed acquisition.



   GOING CONCERN


We have incurred net losses of $14,460,391 since inception through December 31, 2017. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2017 contains an explanatory paragraph regarding our ability to continue as a going concern based upon our loss from operations and working capital deficit. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to generate revenues or report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.


   



RESULTS OF OPERATIONS - DECEMBER 31, 2017 COMPARED TO DECEMBER 31, 2016


We generated $0  in revenues during 2017, compared to $1,000 in 2016. While we reasonably expect to report an increase in our revenues in 2018 as a result of the acquisition of Zen Hero, Inc. there is no guarantee the acquisition will be completed


During 2017, our operating expenses of $271,760 is a decrease of $9,962,215 from the 2016 operating expenses of $10,232,975 which is due to a decrease in shares issued for Consulting in 2017.  


During 2017, our interest expense of $219,707 decreased by $94,623 as compared to $314,330 in 2016, due to the decrease in the issuance of the convertible notes.  


LIQUIDITY AND CAPITAL RESOURCES


Liquidity is the ability of a company to generate sufficient cash to satisfy its needs for cash. At December 31, 2017 we had a cash balance of $82 and a working capital deficit of $1,796,829 as compared to cash on hand of $26,767 and a working capital deficit of $947,339 as of December 31, 2016. As of December 31, 2017 we have relied on the issuance of convertible notes and other notes payable.


We do not have any external sources of working capital and have been materially dependent upon the sale of convertible promissory notes to third parties as well as direct investments, our working capital is not sufficient to fund our operations for the next 12 months and satisfy our obligations as they become due. As described earlier in this report, we need to raise significant capital to provide funds to implement our business model and pay our operating expenses. If we are not successful in raising the necessary capital, we will be unable to continue to expand our business and operations and satisfy our obligations as they become due. In that event, our ability to continue as a going concern will be in jeopardy and investors in our company could lose their entire investment.


Cash Flows from Operating Activities


During the year ended December 31, 2017, the Company used ($195,685) of cash flow from operating activities compared with use of ($337,415) during the year ended December 31, 2016. The decrease in the use of cash flow from operating activities is mainly due to the change in business direction and development of new business model and plan


Cash Flows from Investing Activity


During the year ended December 31, 2017, the Companys capital purchases were $0, compared to $0 for the year ended December 31, 2016.


Cash Flows from Financing Activities


During the years ended December 31, 2017, and 2016, the Company received $169,000 and $363,882 respectively, in proceeds from the issuance of convertible notes and straight notes payable.  




16

 

   Critical Accounting Policies


Certain accounting policies which are critical to our financial statement presentation are described under Note 1 of the Notes to Financial Statements appearing later in this report.

 

   Recent Accounting Pronouncements


The recent accounting standards that have been issued or proposed by the Financial Accounting Standards Board (FASB) or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the   financial statements upon adoption.



Off Balance Sheet Arrangements


As of the date of this report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity un  with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.


SUBSEQUENT EVENTS


On January 5, 2018 Power Up Lending Group LTD. converted $855 of its $53,000 note dated January 5, 2017 at a conversion price of $0 061 for 1,401,639 common shares.


On January 22, 2018 GHS Investments, LLC. converted $717 of its note originally owned by Tangiers Investment Group, LLC dated March 24, 2016 at a conversion price of $0 044 for 1,630,000 common shares.


On March 6, 2018 Power Up Lending Group LTD. converted $1,790 of its $53,000 note dated January 5, 2017 at a conversion price of $0 11 for 1,627,273 common shares.


On or about April 26, 2018, the Company sold 173,400 shares of Series B Preferred Stock for the amount of $15,000.


On May 28,2018,  Fernando Lopez resigned as the Chief Operating Officer and Director, of MJ Biotech, Inc. Mr. Lopez' resignation was due to personal reasons and did not reflect any concerns and/or disagreements relating to MJ Biotech, Inc., its operations, policies or practices.  Simultaneous with is resignation, Mr. Lopez returned all company stock issued to him during the tenure of his association with MJ Biotech, Inc



   ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


  Not required for smaller reporting companies.







17

 

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.



C O N T E N T S



 

 

Report of Independent Registered Public Accounting Firm

19



Report of Independent Registered Public Accounting Firm

20

 

 

  Balance Sheets

21

 

 

  Statements of Operations

22

 

 

  Statements of Stockholders' Equity (deficit)

23

 

 

  Statements of Cash Flows

24

 

 

Notes to the Financial Statements

25







18

 

 


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of MJ Biotech, Inc.


Opinion on the Financial Statements

We have audited the accompanying balance sheet of MJ Biotech, Inc. as of December 31, 2017, and the related statements of operations, changes in stockholders equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.


Basis for Opinion

These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the Companys financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.


Consideration of the Companys Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 7 to the financial statements, the Company has not yet established an ongoing source of revenues sufficient to cover its operating costs. This factor raises substantial doubt about the Companys ability to continue as a going concern. Managements plans in regard to these matters are also described in Note 7. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


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Fruci & Associates II, PLLC


We have served as the Companys auditor since 2017.

Spokane, WA

 

August 6, 2018

 











19

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and

Stockholders of Michael James Enterprises Inc.

We have audited the accompanying consolidated balance sheet of Michael James Enterprises Inc. as of December 31, 2016 and the related statements of operations, stockholders equity (deficit), and cash flows for the year then ended. Michael James Enterprises Inc.s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Michael James Enterprises Inc. as of December 31, 2016, the results of their operations, and their cash flows, for the year ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 8 to the financial statements, the Company has negative working capital and has incurred losses from operations.  These factors raise substantial doubt about the Companys ability to continue as a going concern.  Managements plans with regard to these matters are described in Note 8. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.





/s/ KLJ & Associates, LLP


KLJ & Associates, LLP

Edina, MN

June 8, 2017








MJ BIOTECH, INC.

(formerly Michael James Enterprises, Inc.)

Balance Sheets

December 31,





2017 

2016 

ASSETS



CURRENT ASSETS



Cash

$

82 

$

26,767 

Accounts Receivable

1,000 

Total Current Assets

82 

27,767 




TOTAL ASSETS

$

82 

$

27,767 




LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)



CURRENT LIABILITIES



Accounts payable and accrued expenses

$

451,838 

$

247,748 

Accounts payable related party

92,007 

86,030 

Note payable related party

2,536 

240 

Notes Payable

49,000 

Convertible notes payable (net of discount)

408,630 

173,597 

Derivative Liability

792,898 

467,491 

Total Current Liabilities

1,796,909 

975,106 




Longterm Liabilities



Convertible notes payable, net

Total longterm liabilities







Total Liabilities

1,796,909 

975,106 




Commitments and Contingencies




STOCKHOLDERS' EQUITY (DEFICIT)



Preferred stock; $0.0001 par value, 20,000,000 shares authorized, 3,554,000 and 664,000 issued or outstanding respectively, as of December 31, 2017 and December 31, 2016 respectively,

356 

67 

Common stock; $0.0001 par value, 980,000,000 shares authorized, 32,303,283 and 22,315,946 issued and outstanding as of December 31, 2017 and December 31, 2016 respectively,

3,231 

2,231 

Additional paid-in capital

12,659,977 

12,439,406 

Accumulated deficit

(14,460,391)

(13,389,043)

Total Stockholders' Equity (Deficit)

(1,796,827)

(947,339)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

$

82 

$

27,767 



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





MJ BIOTECH, INC.

(formerly Michael James Enterprises, Inc.)

Statements of Operations

For the years ended December 31,




2017

2016 




REVENUES

$

$

1,000 




OPERATING EXPENSES



Depreciation and amortization expense

4,850 

Management and consulting fees

76,503 

265,518 

Shares issued for Consulting

289 

9,634,788 

Professional fees

81,117 

153,727 

Advertising

57,585 

47,959 

General and administrative

56,266 

127,133 




Total Operating Expenses

271,760 

10,233,975 




OPERATING LOSS

(271,760)

(10,232,975)




OTHER INCOME (EXPENSE)



Finance Fees

(357,967)

(128,021)

Gain (loss) on derivative liability

(221,914)

(177,492)

Interest expense

(219,707)

(314,330)




Total Other Income (Expense)

(799,588)

(619,843)




NET LOSS

$

(1,071,348)

$

(10,852,818)




BASIC AND DILUTED NET LOSS PER COMMON SHARE

$

(0.04)

$

(0.66)




BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

26,662,130 

16,526,202 




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




MJ BIOTECH, INC.

(formerly Michael James Enterprises, Inc.)

Statement of Stockholders Equity (Deficit)

December 31, 2017






















Additional

Accumulated

Total






Paid-in

Deficit

Stockholders


Common Stock

Preferred Stock

Capital


Equity


Shares

Amount

Shares

Amount



(Deficit)

Balance, December31, 2015

12,958,270 

$

1,296 

4,000

$

1

$

1,345,766 

$

(2,536,225)

$

(1,189,163)









Shares issued for consulting

7,918,000 

792 

-

-

1,132,248 


1,133,040 

Shares issued for financing fee

100,000 

10 



59,990 


60,000 

Shares issued for note conversion

2,089,676 

209 

-

-

70,291 


70,500 

Cancelled Shares for Consulting

(750,000)

(75)



(143,175)


(143,250)

Preferred shares issued for services



660,000

66

8,579,934 


8,580,000 

Disposition of Liabilities





1,266,332 


1,266,332 

Loss on note conversion





128,021 


128,021 

Net loss






(10,852,818)

(10,852,818)








Balance, December 31, 2016

22,315,946 

2,232 

664,000

67

12,439,407 

(13,389,043)

(947,337)









Cancelled Shares for Consulting

(8,425,000)

(843)



843 


Preferred shares issued for services



2,890,000

289


289 








Shares issued for Note Conversion

18,412,337 

1,842 

-

-

219,726 


221,568 

Net loss






(1,071,348)

(1,071,348)








Balance, December 31, 2017

32,303,283 

$

3,231 

3,554,000

$

356

$

12,659,977 

$

(14,460,391)

$

(1,796,827)




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


MJ BIOTECH, INC.

(formerly Michael James Enterprises, Inc.)

Statements of Cash Flows

For the years ended December 31,





2017

2016 

CASH FLOWS FROM OPERATING ACTIVITIES



Net loss

$

(1,071,348)

$

(10,852,818)

Items to reconcile net loss to net cash used in operating activities:



Depreciation and amortization

4,850 

Change in Debt discount

84,688 

(171,614)

Financing fees, Shares issued and note penalties

251,916 

198,731 

Shares issued for consulting

289 

9,629,790 

Changes in operating assets and liabilities



Change in Accounts Receivable

1,000 

(1,000)

Change in Derivative Liability

325,407 

467,491 

Increase in accounts payable and accrued liabilities

204,090 

301,125 

Increase in accounts payable and accrued liabilities - related party

8,273 

86,030 

Net Cash Used in Operating Activities

(195,685)

(337,415)




CASH FLOWS FROM FINANCING ACTIVITIES



Bank Overdraft

(4,298)

Proceeds (payments) from convertible notes payable

169,000 

368,180 

Net Cash Provided by Financing Activities

169,000 

363,882 




Increase (Decrease) in Cash

(26,685)

26,467 




CASH AT BEGINNING OF PERIOD

26,767 

300 




CASH AT END OF PERIOD

$

82 

$

26,767 




Supplemental Information:



Interest Paid

$

$

Taxes

$

$




 Supplemental Non-Cash Disclosure



 Shares issued for note conversions

$

221,568 

$

70,500 



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



24

 

MJ BIOTECH INC.

(Formerly Michael James Enterprise Inc.)

                    Notes to the Financial Statements


NOTE 1- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES


These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. During the period from inception through December 31, 2017, the Company has generated minimal revenues and has an accumulated deficit of ($14,460,392). The continuation of the Company as a going concern is dependent upon the continued financial support from its management, its ability to generate profits from the Company s future operations, identify future investment opportunities and obtain the necessary debt or equity financing. These factors raise substantial doubt regarding the Companys ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.


Accounting Methods

The Companys financial statements are prepared using the accrual method of accounting. The Company has elected a calendar year-end.

Basic and Diluted Loss Per Share

The Company presents both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including convertible debt, stock options, and warrants, using the treasury stock method, and convertible securities, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. The Company had net losses as of December 31, 2017 so the diluted EPS excluded all dilutive potential shares in the diluted EPS because their effect is anti-dilutive. The Company had outstanding warrants to purchase 5,000,000 shares of common stock which expired November 2017. The Company also had outstanding notes of $63,500 and convertible notes of $603,361 that could be converted into additional shares as of December 31, 2017.

Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.

Fair Value of Financial Instruments

The Financial Accounting Standards Board issued   ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements.  FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date.  FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:


- Level 1:  Quoted prices in active markets for identical assets or liabilities.

- Level 2:  Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.


- Level 3:  Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of the Companys financial instruments as of  December 31, 2017, reflect:

Cash:  Level 1   Measurement based on bank reporting.

    Level 2   Loans from Officers and related parties

  Level 2   Based on promissory notes.

      Level 3  Derivative Liabilities




25

 

Derivative Liabilities

Certain of the Companys convertible notes payable described in Note 4 contain conversion features that qualify for embedded derivative classification. The Company accounts for the embedded derivative features in its convertible debentures in accordance FASB ASC 815-10-Derivatives and Hedging, which requires a periodic valuation of their fair value and a corresponding recognition of liabilities associated with such derivatives. The recognition of derivative liabilities related to the issuance of the convertible debt is applied first to the proceeds of such issuance as a debt discount, at the date of issuance, and the excess of derivative liabilities over the proceeds is recognized as a Loss on Derivative Liability in other expense. The fair value of these liabilities will be re-measured at the end of every reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on derivative financial instruments.

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenues and the related costs when persuasive evidence of an arrangement exists, delivery and acceptance has occurred, or service has been rendered, the price is fixed or determinable, and collection of the resulting receivable is reasonably assured. Amounts invoiced or collected in advance of product delivery or providing services are recorded as deferred revenue. The Company accrues for warranty costs, sales returns, bad debts, and other allowances based on its historical experience. The Company has recognized minimal revenue since inception.

Income Taxes

Federal Income taxes are not currently due since we have had losses since inception.


On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the Tax Act) was enacted.  Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income tax rate (Federal Tax Rate) from 35% to 21% effective January 1, 2018.  The Company will compute its income tax expense for the years ended December 31, 2017 and 2016 using a Federal Tax Rate of 21%.


Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes Recognition.  Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end.  A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the more likely than not standard required by ASC 740-10-25-5.


Deferred income tax amounts reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes.

As of December 31, 2017, we had a net operating loss carry-forward of approximately $(4,825,315,314) and a deferred tax asset of approximately $1,0113,316 using the statutory rate of 21%. The deferred tax asset may be recognized in future periods, not to exceed 20 years.  However, due to the uncertainty of future events we have booked valuation allowance of $(1,013,316).  FASB ASC 740 prescribes recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.  At December 31, 2017, the Company had not taken any tax positions that would require disclosure under FASB ASC 740.






December 31, 2017

December 31, 2016

Deferred Tax Asset

 $ 1,013,316 

 $ 788,394 

Valuation Allowance

  (1,013,316)

  (788,394)

Deferred Tax Asset (Net)

$                            -

$                            -

.

Although Management believes that its estimates are reasonable, no assurance can be given that the final tax outcome of these matters will not be different than that which is reflected in our tax provisions. Ultimately, the actual tax benefits to be realized will be based upon future taxable earnings levels, which are very difficult to predict.




26

 

No provision was made for federal income tax, since the Company had an overall net operating loss and has accumulated net operating loss carryforwards.


For the years ended December 31, 2017, and 2016, no income tax expense has been realized as a result of operations and no income tax penalties and/or interest have been accrued related to uncertain tax positions.  The Company files income tax returns in the U.S. federal jurisdiction and in the State of California.  These filings are subject to a three-year statute of limitations.  The Companys evaluation of income tax positions included the years ended December 14 through 2016 could be subject to agency examinations.  No filings are currently under examination.  No adjustments have been made to reduce the estimated income tax benefit at fiscal year-end or at the quarterly reporting dates.  Any valuations relating to these income tax provisions will comply with U.S. generally accepted accounting principles.


Stock-Based Compensation

The Company records stock-based compensation using the fair value method. Equity instruments issued to employees and the cost of the services received as consideration are accounted for in accordance with ASC 718 Stock Compensation and are measured and recognized based on the fair value of the equity instruments issued. All transactions with non-employees in which goods or services are the consideration received for the issuance of equity instruments are accounted for in accordance with ASC 515 Equity-Based Payments to Non-Employees, based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

New Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-15 Presentation of Financial StatementsGoing Concern, outlining managements responsibility to evaluate whether there is substantial doubt about an entitys ability to continue as a going concern, along with the required disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016 with early adoption permitted. The Company does not anticipate a material impact to our financial statements as a result of this change.

 

In January 2016, the FASB issued ASU 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which revises an entitys accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. ASU 2016-01 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017, with early adoption permitted under certain circumstances. The Company is currently assessing the impact of ASU 2016-01 on its financial statements.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases, which is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 with early adoption permitted. Under Accounting Standards Update 2016-02, lessees will be required to recognize for all leases at the commencement date a lease liability, which is a lessees obligation to make lease payments arising from a lease measured on a discounted basis, and a right-to-use asset, which is an asset that represents the lessees right to use or control the use of a specified asset for the lease term.  The Company is currently evaluating the effect that the new guidance will have on its financial statements and related disclosures.

 

In March 2016, the FASB issued ASU No. 2016-09, CompensationStock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which includes multiple provisions intended to simplify various aspects of the accounting for share-based payments, including treatment of excess tax benefits and forfeitures, as well as consideration of minimum statutory tax withholding requirements. The ASU will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early application permitted in any interim or annual period. The Company is evaluating the future impact of this ASU on the   financial statements.


In May 2017, the FASB amended authoritative guidance on modifications related to stock compensation, codified in ASC 718, Compensation - Stock Compensation. The amendments provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting. The guidance is effective for the Company as of the first quarter of its fiscal year ending January 31, 2019. The Company does not believe the update will have a material impact on its   financial statements.

 

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on the Companys   financial statements or its financial position or results of operations.




27

 

Long Lived Assets


Periodically the Company assesses potential impairment of its long-lived assets, which include property, equipment and acquired intangible assets, in accordance with the provisions of ASC Topic 360, Property, Plant and Equipment. The Company recognizes impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying values. An impairment loss would be recognized in the amount by which the recorded value of the asset exceeds the fair value of the asset, measured by the quoted market price of an asset or an estimate based on the best information available in the circumstances. There were no such losses recognized during 2017 or 2016.


Property, Equipment and Intangible Assets

Property and equipment are carried at cost, less accumulated depreciation. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Intangible assets consist of acquired web site domains and web site content and are carried at cost, less accumulated amortization.

Depreciation and amortization is provided principally on the straight-line basis method over the estimated useful lives of the assets.


NOTE 2 - RELATED PARTY TRANSACTIONS

Management Services

As of December 31, 2017, the company owes Integrated Capital Partners, Inc. (Nevada) $70,596 in expenses paid for the Company. The Companys former CEO (James Farinella) is the controlling shareholder of Integrated Capital Partners, Inc. (Nevada).

In February 2017 the Companys then CEO, James Farinella, assigned his rights to the Voluptas provisional patents that he owns and all intellectual property rights to Voluptas for 2,350,000 preferred B shares of the Company. On May 10, 2017 the provisional patent was updated and re-filed increasing the protection covering more than 10 delivery methods. Mr. Farinella surrendered 120,000 Preferred B shares to pay off loans owed to three trust accounts and those trust accounts were issued 40,000 preferred C shares each. James Farinella now owns 2,890,000 preferred B shares of the Company. James Farinella also retired 8,425,000 common shares and now owns no common shares of the Company. As of December 31, 2017, the Company owes James M. Farinella the previous CEO, $3,036 in expenses paid for the Company.


In February 2017 the Companys Chief Operating Officer, Gina Morreale, was issued 240,000 Preferred B shares. The Company agreed to issue these shares to Miss Morreale in 2016 for her joining the Company as an Officer and Director. Subsequently, Gina Morreale resigned as an officer and director of the Company and relinquished the 240,000 preferred B shares.

On August 4, 2016 the company issued 660,000 shares of preferred series B shares to RP Capital. Each preferred series B is convertible into 100 shares of the companys common stock, for research and development services.


Revenue


In November and December of 2016, the Company sold 50 bottles of LUNA at $20 per bottle for a total of $1,000.

NOTE 3 - CONVERTIBLE PROMISSORY NOTES PAYABLE

On February 4, 2016, the Company entered into a $121,000 10% Convertible Promissory Note with Tangiers Investment Group, LLC, a non-affiliate.  The term is for one year, with an original issuance discount of $11,000 for due diligence and legal costs.  The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to 50% of the lowest trading price of the Companys Common Stock during the 20 trading days prior to the election to convert. See Note 4 for discussion of the derivative liability.


On March 23, 2016, the Company entered into a $60,500 10% Convertible Promissory Note with Vista Capital Investments, LLC. a non-affiliate.  The term is for two years, with an original issuance discount of $5,500 for due diligence and legal costs.  The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to 55% of the lowest trading price of the Companys Common Stock during the 20 trading days prior to the election to convert. See Note 4 for discussion of the derivative liability. In connection with the note payable the Company is obligated to issue 200,000 shares of common stock that was valued at $120,000. Out of the full consideration $55,000 was recorded as debt discount and the remaining $65,000 was included in interest expense.


On March 24, 2016, the Company entered into a $60,500 10% Convertible Promissory Note with Tangiers Investment Group, LLC, a non-affiliate.  The term is for one year, with an original issuance discount of $5,500 for due diligence and legal costs.  The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to 55% of the



28

 

lowest trading price of the Companys Common Stock during the 20 trading days prior to the election to convert. See Note 4 for discussion of the derivative liability.


On December 5, 2016, the Company entered into a $79,000 10% Convertible Promissory Note with GHS Investments, LLC, a non-affiliate.  The term is for eight months, with an original issuance discount of $9,000 for due diligence and legal costs.  The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to the lower of $.09 or 55% of the lowest trading price of the Companys Common Stock during the 20 trading days prior to the election to convert. See Note 4 for discussion of the derivative liability.


On December 16, 2016, the Company entered into a $63,250 12% Convertible Promissory Note with Auctus Fund, LLC, a non-affiliate.  The term is for nine months, with an original issuance discount of $8,250 for due diligence and legal costs.  The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to the lower of $.09 or 50% of the lowest trading price of the Companys Common Stock during the 25 trading days prior to the election to convert. See Note 4 for discussion of the derivative liability.


On January 5, 2017, the Company entered into a $53,000 8% Convertible Promissory Note with Power Up Lending Group, LTD, a non-affiliate.  The term of the Note is for 9 months, with an original issuance discount of $3,000 for due diligence and legal costs.  The Note is convertible after 180days into Common Stock of the Company at a conversion price which shall be equal to 55% of the average of the three lowest trading prices of the Companys Common Stock during the 10 trading days prior to the election to convert. See Note 4 for discussion of the derivative liability.  Power Up Lending Group, LTD has declared the Company in default of its obligations under the Note.


On March 7, 2017, the Company entered into a $25,000 12% Convertible Promissory Note with Vista Capital Investments, LLC, a non-affiliate.  The term of the Note is for two years, with an original issuance discount of $5,000 for due diligence and legal costs.  The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to 50% of the lowest trading price of the Companys Common Stock during the 25 trading days prior to the election to convert. See Note 4 for discussion of the derivative liability.


On March 7, 2017, the Company entered into a $5,000,000 equity line with Tangier Investment Group, LLC which will require a registration statement to be filed. The Company no longer intends to move forward on the equity line.  As part of the Equity line the Company entered into a commitment note for $29,000 with no interest.  The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price, which shall be equal to 50% of the lowest trading price of the Companys Common Stock during the 25 trading days prior to the election to convert. See Note 4 for discussion of the derivative liability.


On March 13, 2017 the Company entered into a $43,000 8% Convertible Promissory Note with PowerUp Lending Group, LTD, a non-affiliate. The term of the Note is for 9 months, with an original issuance discount of $3,000 for due diligence and legal costs.  The Note is convertible after 180 days into Common Stock of the Company at a conversion price which shall be equal to 55% of the average of the three lowest trading prices of the Companys Common Stock during the 10 trading days prior to the election to convert. See Note 4 for discussion of the derivative liability.  Power Up Lending Group, LTD has declared the Company in default of its obligations under the Note.


On January 17, 2017 Vista Capital Investments, LLC converted $10,000 of its $60,500 note dated March 23, 2016 at a conversion price of $0.01925 for 519,481 shares.


On January 24, 2017 Tangiers Investment Group, LLC converted $19,943  of its $121,000 note dated February 4, 2016 at a conversion price of $0.0175 for 1,139,600 shares.


On January 30, 2017 Vista Capital converted $14,500 of its $60,500 note dated March 23, 2016 at a conversion price of $0.01375 for 1,054,545 shares.


On February 22, 2017 Tangiers Investment Group, LLC converted $10,119  of its $121,000 note dated February 4, 2016 at a conversion price of $0 61 for 1,658,852 shares.


On March 17, 2017 Collier Investments, LLC converted $7,995  of its $75,000 note it acquired from Tangiers Investment Group, LLC dated February 4, 2016 at a conversion price of $0 410 for 1,950,000 shares.


On March 3, 2017 Vista Capital Investments, LLC converted $5,637.50 of its $60,500 note dated March 23, 2016 at a conversion price of $0 451 for 1,250,000 shares.


On March 9, 2017 GHS Investments, LLC converted $4,100  of its $66,500 note it acquired from Tangiers Investment Group, LLC dated March 24, 2016 at a conversion price of $0 41 for 1,000,000 shares.




29

 

On March 17, 2017 Collier Investments, LLC converted $7,995  of its $75,000 note it acquired from Tangiers Investment Group, LLC dated February 4, 2016 at a conversion price of $0 410 for 1,950,000 shares.


On April 7, 2017 GHS Investments, LLC. converted $3,300  of its note originally owned by Tangiers Investment Group, LLC dated March 24, 2016 at a conversion price of $0 33 for 1,000,000 common shares. On May 2, 2017 the Company entered into a Securities Purchase Agreement with GPL Ventures LLC the agreement allows the Company to draw down up to $10,000,000 over the term of the agreement with a maximum drawdown of $125,000 at one time.


On May 16, 2017 the Company entered into a $200,000 8% Convertible Promissory Note with Tri-Bridge Ventures LLC, a non-affiliate. The term of the Note is for 9 months. The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which, shall be equal to 50% of the lowest trading price of the Companys Common Stock during the 20 trading days prior to the election to convert. Tri-Bridge Ventures, LLC will fund $100,000 of the $200,000 Convertible Promissory Note Upon the filing of the Companys 2016 year-end audited financial statements on Form 10K and the 2017 first quarter results on Form 10Q. Tri-Bridge Ventures, LLC will have the right to fund the remaining balance at any time during the term of the Note. This transaction never closed, and the agreement was terminated


On May 16, 2017, the Company entered into a $10,000,000 equity line with GPL Ventures, LLC, which will require a registration statement to be filed. As part of the Equity line the Company entered into a commitment note for $100,000. The term of the Note is for 6 months.  The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price, which shall be equal to 80% of the lowest trading price of the Companys Common Stock during the 20 trading days prior to the election to convert. The company no longer plans on moving forward with GPL Ventures, LLC on the equity line.


On May 24, 2017 the Company entered into a $10,000 12% Convertible Promissory Note with PowerUp Lending Group, LTD, a non-affiliate. The term of the Note is for 9 months, with an original issuance discount of $3,000 for due diligence and legal costs.  The Note is convertible at the option of the Holder into Common Stock of the Company at a conversion price which shall be equal to 58% of the average of the three lowest trading prices of the Companys Common Stock during the 10 trading days prior to the election to convert. Power Up Lending Group, LTD has declared the Company in default of its obligations under the Note.


On July 6, 2017 Power Up Lending Group LTD. converted $1,070  of its $53,000 note dated January 5, 2017 at a conversion price of $0 092 for 1,163,043 common shares.


On July 21, 2017 Power Up Lending Group LTD. converted $795  of its $53,000 note dated January 5, 2017 at a conversion price of $0 068 for 1,169,118 common shares.


On July 27, 2017 Power Up Lending Group LTD. converted $890  of its $53,000 note dated January 5, 2017 at a conversion price of $0 064 for 1,390,625 common shares.


On August 2, 2017 Power Up Lending Group LTD. converted $770  of its $53,000 note dated January 5, 2017 at a conversion price of $0 055 for 1,400,000 common shares.


On August 9, 2017 Power Up Lending Group LTD. converted $770  of its $53,000 note dated January 5, 2017 at a conversion price of $0 055 for 1,400,000 common shares.


In September 2017, the Company entered two Promissory Notes for $5,000 each with an unrelated private party. The Notes bear interest at the rate of 4% per annum and are due on January 30, 2018. These notes are currently in default.


In October the Company entered into a Promissory Note for $29,500 with an unrelated private Party. The Note bears interest at the rate of 4% per annum and has a due date of April 30, 2018. These notes are currently in default.


In December 2017 the Company entered into a Promissory Note for $9,000 with an unrelated private Party. The note bears interest at the rate of 4% per annum and has a due date of April 30, 2018. These notes are currently in default.


NOTE 4 - DERIVATIVE LIABILITY

The Company issued financial instruments in the form of convertible notes with embedded conversion features.  The convertible notes payable have conversion rates which are indexed to the market value of the Companys common stock price.


Price protection clauses of the conversion features of the 2017 convertible notes (see Note 3) triggered derivative accounting under GAAP.


During the year ending December 31, 2017, the company issued four convertible promissory notes totaling $169,000.


Derivative Liability


Balance as of December 31, 2016

$

467,491

Change in derivative liability

325,407

Balance December 31, 2017

$

792,898


NOTE 5 - COMMON STOCK AND COMMON STOCK WARRANTS

Common Stock


On August 4, 2016 the company issued 6,218,000 at $.13 for consulting services.

On August 4, 2016, $15,000 of the note dated February 4, 2016 was converted at $.05 for 333,333 shares of common stock. In addition, 100,000 were issued to the holder of this note for a financing fee on this note.

On October 3, 2016, 750,000 shares of common stock held by Dignitas Consulting, LLC. was cancelled due to lack of performance under a contract entered into June of 2016.

On October 20, 2016, Vista Capital Investments, LLC converted $7,500 of its $60,500 note dated March 23, 2016 at a conversion price of $0.0385 for 194,805 shares.

On December 6, 2016, GHS Investments, LLC converted $33,000 of its $66,500 note it acquired from Tangiers dated March 24, 2016 at a conversion price of $0.033 for 1,100,000 shares.

On December 14, 2016, Tangiers Investment Group, LLC converted $15,000 of its $121,000 note dated February 4, 2016 at a conversion price of $0.0325 for 461,538 shares.

On January 17, 2017 Vista Capital Investments, LLC converted $10,000 of its $60,500 note dated March 23, 2016 at a conversion price of $0.01925 for 519,481 shares.


On January 24, 2017 Tangiers Investment Group, LLC converted $19,943 of its $121,000 note dated February 4, 2016 at a conversion price of $0.0175 for 1,139,600 shares.


On January 30, 2017 Vista Capital converted $14,500 of its $60,500 note dated March 23, 2016 at a conversion price of $0.01375 for 1,054,545 shares.


On February 22, 2017 Tangiers Investment Group, LLC converted $10,119 of its $121,000 note dated February 4, 2016 at a conversion price of $0.0061 for 1,658,852 shares.


On March 3, 2017 Vista Capital Investments, LLC converted $5,637.50 of its $60,500 note dated March 23, 2016 at a conversion price of $0.00451 for 1,250,000 shares.


On March 9, 2017 GHS Investments, LLC converted $4,100 of its $66,500 note it acquired from Tangiers Investment Group, LLC dated March 24, 2016 at a conversion price of $0.0041 for 1,000,000 shares.


On March 17, 2017 Collier Investments, LLC converted $7,995 of its $75,000 note it acquired from Tangiers Investment Group, LLC dated February 4, 2016 at a conversion price of $0.00410 for 1,950,000 shares.


On April 7, 2017 GHS Investments, LLC. converted $3,300 of its note originally owned by Tangiers Investment Group, LLC dated March 24, 2016 at a conversion price of $0.0033 for 1,000,000 common shares.


On July 6, 2017 Power Up Lending Group LTD. converted $1,070 of its $53,000 note dated January 5, 2017 at a conversion price of

$0.00092 for 1,163,043 common shares.


On July 21, 2017 Power Up Lending Group LTD. converted $795 of its $53,000 note dated January 5, 2017 at a conversion price of

$0.00068 for 1,169,118 common shares.


On August 9, 2017 Power Up Lending Group LTD. converted $765 of its $53,000 note dated January 5, 2017 at a conversion price of

$0.00055 for 1,390,625 common shares.


On August 2, 2017 Power Up Lending Group LTD. converted $770 of its $53,000 note dated January 5, 2017 at a conversion price of $0.00055 for 1,400,000 common shares.




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On August 9, 2017 Power Up Lending Group LTD. converted $770 of its $53,000 note dated January 5, 2017 at a conversion price of $0.00055 for 1,400,000 common shares.



NOTE 6 PREFERRED STOCK

The Company has authorized a total of 20,000,000 Shares of Preferred Stock, $ .0001 par value, which may be issued from time to time and bearing such rights, privileges and preferences as shall be designated by the Board of Directors.  As of December 31, 2015, the Company had issued 4,000 Shares of Preferred Stock, designated as Cumulative Preference A , at a price of $1.25 per Share.     The Shares bear an annual coupon of 5%, and are convertible into Shares of Common Stock of the Company at any time commencing one (1) year from the date of issuance at a conversion price of $1.25 per Share

During the year ended December 31, 2014, we sold $5,000 principal amount of Series A 5% Cumulative Convertible Preferred Stock, at a price of $1.25 per Share.  These Shares bear annual cumulative dividends of 5%, payable at the option of the Company in cash or Shares of Common Stock.  At the option of the holder, beginning one year from the date of issuance the Shares are convertible into Shares of Common Stock at a price of $1.25 per Share.  

In April, 2015, the Corporation authorized the issuance of up to 10,000,000 shares of Preferred Stock to be designated Series B Preferred Stock, having a conversion right at the option of the holder beginning one year from the date of issuance, and which shall be convertible into Shares of Common stock at a Conversion Price equal to the closing market Bid price of the Corporations Common Stock on the trading date immediately preceding the date of conversion, in accordance with the Certificate of Designation attached hereto and made a part hereof.  In addition, the holder of each Share of Series B Stock shall have the equivalent voting rights of two (2) Shares of Common Stock.  The Preferred B shares certificate of Designation was changed as described below.

In August of 2016 the company changed the Certificate of Designation for the Preferred B shares giving the holder 1,000 common votes for every preferred B share held with a conversion right of 100 common shares for every preferred B share held.  Preferred B shares were issued in the second quarter 2017, following the effectiveness of the Information Statement as filed by the Company on Form 14C. This change gave approximately 99% voting control to the three Board of Directors (if they vote together).

On August 4, 2016 the company issued 660,000 shares of preferred series B shares to RP Capital. Each preferred series B is convertible into 100 shares of the companys common stock, for research and development services.


In February 2017 the Companys CEO, James Farinella, assigned his rights to the Voluptas provisional patents that he owns and all intellectual property rights to Voluptas for 2,350,000 preferred B shares of the Company. On May 10, 2017 the provisional patent was updated and refilled increasing the protection covering more than 10 delivery methods. In February 2017 the Companys Chief Executive Officer, James M. Farinella, was issued 660,000 Preferred B shares. The Company agreed to issue these shares to Mr. Farinella in 2016 for him joining the Company as an Officer and Director. Mr. Farinella surrendered 120,000 Preferred B shares to pay of loans owed to three trust accounts and those trust accounts were issued 40,000 preferred C shares each. At the end of December 31, 2017 Mr. Farinella

owned 2,601,000 Shares of Preferred B shares.


In February 2017 the Companys CEO, James Farinella, assigned his rights to the Voluptas provisional patents that he owns and all intellectual property rights to Voluptas for 2,350,000 preferred B shares of the Company. On May 10, 2017 the provisional patent was updated and refilled increasing the protection covering more than 10 delivery methods. In February 2017 the Companys Chief Executive Officer, James M. Farinella, was issued 660,000 Preferred B shares. The Company agreed to issue these shares to Mr. Farinella in 2016 for him joining the Company as an Officer and Director. Mr. Farinella surrendered 120,000 Preferred B shares to pay of loans owed to three trust accounts and those trust accounts were issued 40,000 preferred C shares each. James Farinella now owns 2,890,000 Preferred B shares.


In February 2017 the Companys Chief Operating Officer, Gina Morreale, was issued 240,000 Preferred B shares. The Company agreed to issue these shares to Miss Morreale in 2016 for her joining the Company as an Officer and Director. Subsequently, Gina Morreale resigned as an officer and director of the Company and relinquished the 240,000 preferred B shares.


There were 3,550,000 Preferred B shares issued and outstanding as of December 31, 2017. Of the Preferred B shares that were issued during the year ended 2017, 3,381,000 were issued to several former members of the Board of Directors.


In August of 2016 the Company also created a Certificate of Designation for a preferred C class as an investment class of stock that carries no voting rights and converts into 100 shares of common for every preferred C share owned.  Additionally, these shares only allow the holder to convert into common and own no more than 9.9% of the outstanding at any point in time. There are 160,000 Preferred C shares issued and outstanding as of December 31, 2017.


NOTE 7 - GOING CONCERN




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The Company's financial statements are prepared using Generally Accepted Accounting Principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has recently accumulated significant losses and has negative working capital. All of these items raise substantial doubt about its ability to continue as a going concern. Management's plans with respect to alleviating the adverse financial conditions that caused management to express substantial doubt about the Company's ability to continue as a going concern are as follows:

We have incurred net losses of $14,460,391 since inception through December 31, 2017. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2017 contains an explanatory paragraph regarding our ability to continue as a going concern based upon our loss from operations and working capital deficit. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to generate revenues or report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.


The Company is currently trying to raise new debt or equity to for acquisitions regarding setting up a facility for the manufacturing nutraceutical Teas and Herbs infused with CBD oils and powders If the Company is not successful in the development and implementation of a concept which produces positive cash flows from operations, the Company may be forced to continue to raise additional equity or debt financing to fund its ongoing obligations or risk ceasing doing business.


There can be no assurance that the Company will be able to achieve its business plans, raise any more required capital or secure the financing necessary to achieve its current operating plan. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations.


NOTE 8 COMMITMENTS AND CONTINGENCIES


On September 1, 2015, the Company received notice of an Administrative Complaint filed by the State of Florida Office of Financial Regulation (OFR) concerning certain private placement investments received by the Company during the period from 2011 to 2013 and the applicability of the registration exemption provisions of the Florida Statutes to said investments.  The Company vigorously disputes the legal basis for this Administrative Complaint as it relates to the Company.  Written submissions were presented to the OFR and the OFR designated hearing offer has rendered a recommendation that the Company should be fined in the amount of $980,000. The Company had reached a settlement with the OFR in the amount of $25,000.  The Company was unable to pay the settlement amount and on July 3, 2017 an Order was entered against the Company, and in favor of the ORF, in the full amount sought of $980,000.  As of the date of this Report, no Judgment has been entered. When the company has the resources available it will contact the OFR to try to resurrect the prior settlement.



On June 27, 2017 an assignor to the Companys former auditors (Friedman LLP) filed Suit against the Company in Superior Court of the State of New Jersey, Camden County, for $13,390 in alleged open invoices.  Despite not being properly served the Plaintiff moved for, and received, a default Judgment in the full amount sought.  It is the intention of the Company to move to vacate the Judgment for lack of proper service and based on the Companys meritorious defenses that: (i) Friedman failed to provide the audit services for which it billed; and more than $5,000 of the amount sought related to services related to another entity.


On November 21, 2017 Power Up Lending Group, LTD. filed a Complaint in the United States District Court for the Eastern District of New York alleging the Company has defaulted on three convertible promissory notes in the aggregate amount of $155,000.  It is the Companys position that it has not yet been properly served with the Summons and Complaint.  As of the date of this report, not default or Judgment has been entered.  The Company hopes to be able to reach a settlement with Power Up when the Companys financial condition permits.


NOTE 9 - SUBSEQUENT EVENTS  

On January 5, 2018 Power Up Lending Group LTD. converted $855 of its $53,000 note dated January 5, 2017 at a conversion price of $0 061 for 1,401,639 common shares.


On January 22, 2018 GHS Investments, LLC. converted $717 of its note originally owned by Tangiers Investment Group, LLC dated March 24, 2016 at a conversion price of $0 044 for 1,630,000 common shares.


On March 6, 2018 Power Up Lending Group LTD. converted $1,790 of its $53,000 note dated January 5, 2017 at a conversion price of $0 11 for 1,627,273 common shares.


On or about April 26, 2018, the Company sold 173,400 shares of Series B Preferred Stock for the amount of $15,000.


On May 28,2018, Fernando Lopez resigned as the Chief Operating Officer and Director, of MJ Biotech, Inc. Mr. Lopez' resignation was



33

 

due to personal reasons and did not reflect any concerns and/or disagreements relating to MJ Biotech, Inc., its operations, policies or practices.  Simultaneous with is resignation, Mr. Lopez returned all company stock issued to him during the tenure of his association with MJ Biotech, Inc.


ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

On August 18, 2016, Friedman, LLP (Friedman) withdrew as the Companys independent registered public accounting firm. During the period from April 20, 2016 (the date of Friedmans appointment as the Companys independent registered public accounting firm) through the effective date of Friedmans withdrawal, there were no disagreements with Friedman on any matter of accounting principles or practices, or financial statement disclosure, which disagreements, if not resolved to the satisfaction of Friedman, would have caused it to make reference to the subject matter of such disagreements in any future report on our financial statements for any periods during which Friedman was engaged. Also, during the same period, there were no matters that were either the subject of a disagreement as defined in Item 304(a)(1)(iv) of Regulation S-K or a reportable event as described in Item 304(a)(1)(v) of Regulation S-K. We provided Friedman with a copy of this disclosure before its filing with the SEC and requested that Friedman provide us with a letter addressed to the SEC stating whether or not it agrees with the above statements. We received a letter from Friedman stating that it agrees with the above statements.


The Companys Board of Directors appointed KLJ & Associates LLP (KLJ) as the Companys new independent registered public accounting firm effective as of August 18, 2016. During the two most recent fiscal years and through the date of engagement, the Company did not consult with KLJ regarding either: (1) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements; or (2) any matter that was either the subject of a disagreement (as defined in Regulation S-K Item 304(a)(1) (v)). Prior to engaging KLJ, KLJ did not provide the Company with either written or oral advice that was an important factor considered by our Company in reaching a decision to change our independent registered public accounting firm from Friedman to KLJ.


On or about October 18, 2017, KLJ & Associates LLP (KLJ) withdrew as the Companys independent registered public accounting firm as it has sold its audit practice. During the period from August 18, 2016 (the date of KLJs appointment as the Companys independent registered public accounting firm) through the effective date of KLJs withdrawal, there were no disagreements with KLJ on any matter of accounting principles or practices, or financial statement disclosure, which disagreements, if not resolved to the satisfaction of KLJ, would have caused it to make reference to the subject matter of such disagreements in any future report on our financial statements for any periods during which KLJ was engaged. Also during the same period, there were no matters that were either the subject of a disagreement as defined in Item 304(a)(1)(iv) of Regulation S-K or a reportable event as described in Item 304(a)(1)(v) of Regulation S-K. We provided KLJ with a copy of this disclosure before its filing with the SEC and requested that KLJ provide us with a letter addressed to the SEC stating whether or not it agrees with the above statements. We received a letter from KLJ stating that it agrees with the above statements.


New Independent Accountants.


The Companys Board of Directors appointed Fruci & Associates II, PLLP (Fruci) as the Companys new independent registered public accounting firm effective as of October 23, 2017. During the two most recent fiscal years and through the date of engagement, the Company did not consult with Fruci regarding either: (1) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements; or (2) any matter that was either the subject of a disagreement (as defined in Regulation S-K Item 304(a)(1) (v)). Prior to engaging Fruci, Fruci did not provide the Company with either written or oral advice that was an important factor considered by our Company in reaching a decision to change our independent registered public accounting firm from KLJ to Fruci.

 

ITEM 9A.


CONTROLS AND PROCEDURES.


Evaluation of Disclosure Controls and Procedures


We maintain disclosure controls and procedures as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934.  In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met.  Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.  The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Our management, with the participation of our principal executive and principal financial officer, evaluated the effectiveness of our disclosure controls



34

 

and procedures as of the end of the period covered by this Annual Report.  Based on that evaluation, our Chief Executive Officer who also serves as our Chief Financial Officer, concluded that our disclosure controls and procedures as of the end of the period covered by the Annual Report were not effective to ensure that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer who also serves as our Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure as a result of material weaknesses in our internal control over financial reporting.  A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.


Managements Annual Report on Internal Control Over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934).  Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.


Our management, with the participation of our Chief Executive Officer who also serves as our Chief Financial Officer assessed the effectiveness of our internal control over financial reporting as of December 31, 2017.  In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO-2013) in Internal Control Integrated Framework.  Based on this assessment, our management concluded that, as of December 31, 2017, our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (GAAP) as a result of material weaknesses. In arriving at that conclusion, management identified as materials weaknesses in our internal control over financial reporting: (1) the lack of accounting proficiency of our Chief Executive Officer who is our sole officer and also serves as our Chief Financial Officer which has resulted in a reliance on part-time outside consultants to perform substantially all of our accounting functions, and (2) a lack of adequate segregation of duties and necessary corporate accounting resources in our financial reporting process and accounting function, also arising from our Chief Executive Officers lack of accounting training and service in multiple roles as well as our limited financial resources to support hiring of personnel and implementation of accounting systems.  During 2017 we expect to engage an outside accounting firm with expertise in both GAAP and SEC reporting requirements to assist us in the preparation of our financial statements.  However, until such time as we expand our staff to include additional accounting personnel and hire a full time chief financial officer, it is likely we will continue to report material weaknesses in our internal control over financial reporting.


Changes in Internal Control Over Financial Reporting


There were no changes in our internal control over financial reporting during the quarter ended December 31, 2017 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.


ITEM 9B.


OTHER INFORMATION


None.



PART III

ITEM 10.


DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.


Identification of Directors and Executive Officers


The following table sets forth the names of all current directors and executive officers of the Company. These persons will serve until the next annual meeting of the stockholders or until their successors are elected or appointed and qualified, or their prior resignation or termination.



 

 

 

 

 

Name

 

Age

 

Positions






Maxine C. Pierson


72


CEO, CFO and Director                    







 


         

                            

Maxine C. Pierson has been involved in both for profit and nonprofit corporate management. Ms. Pierson has been involved in International trade working with the Export-Import Bank. She was a Commissioner on the Economic Development Commission. She has been a corporate and government staff development specialist, curriculum creator, trainer and staff development specialist, conductor of statewide workshops. Ms. Pierson was the innovator of child support and collections systems on a state-wide level. She is a Member Palm Beach Round Table, a Rotarian, and a Chamber of Commerce Member. Ms. Pierson is also involved in the Citizens League   Transportation Committee, Foreign Policy Association, Member Palm Beach Center for Nonprofit Excellence, -nonprofit performance auditor for many years.  Ms. Pierson also has a BA degree in Liberal Arts from Milwaukee Downer College Liberal Arts an MA degree in Public Administration from Rochville University and a BS degree in Paralegal Studies from Southern Christian University

There are no family relationships among our directors and executive officers.


Director Qualifications, Committees of our Board of Directors and the Role of our Board in Risk Oversight


Director qualifications


The following is a discussion for each director of the specific experience, qualifications, attributes or skills that led our Board to conclude that the individual should be serving as a director of our company.


Maxine C. Pierson Ms. Piersons extensive experience as a business consultant and as the founder of small companies were factors considered by the Board in making their recommendation.


In addition to the each of the individual skills and background described above, the Board also concluded that each of these individuals will continue to provide knowledgeable advice to our other directors and to senior management on numerous issues facing our company and, on the development, and execution of our strategy.


Committees of our Board of Directors


We have not established any committees of our board of directors, including an Audit Committee, a Compensation Committee or a Nominating Committee, any committee performing a similar function. The functions of those committees are being undertaken by Board of Directors as a whole. We have only recently expanded our Board and we expect to establish Audit, Compensation and Nominating Committees in the future.


We do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees, nor do we have a policy regarding director diversity. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies, as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees. In considering a director nominee, it is likely that our Board will consider the professional and/or educational background of any nominee with a view towards how this person might bring a different viewpoint or experience to our Board.


Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include independent directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.


Board oversight in risk management


In June 2017, Maxine Pierson assumed the position of Chief Executive Officer, Chief Financial Officer and Chairman of the Board.  We do not have a lead independent director.




36

 

Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including liquidity risk, operational risk, strategic risk and reputation risk. Because our Board is comprised of members of our management, these individuals are responsible for both the day-to-day management of the risks we face as well as the responsibility for the oversight of risk management.


Code of Ethics and Business Conduct


We have adopted a Code of Business Conduct and Ethics, which applies to our Board of Directors, our executive officers and our employees, outlines the broad principles of ethical business conduct we adopted, covering subject areas such as:


·

compliance with applicable laws and regulations,

·

handling of books and records,

·

public disclosure reporting,

·

insider trading,

·

discrimination and harassment,

·

health and safety,

·

conflicts of interest,

·

competition and fair dealing, and

·

protection of company assets.


We have previously filed a copy of our Code of Business Conduct and Ethics. A copy of our Code of Business Conduct and Ethics is available without charge, to any person desiring a copy of the Code of Business Conduct and Ethics, by written request to us at our principal offices at 109 East 17th Street Suite 80, Cheyenne, WY 82001.


Director compensation

We have established standard compensation arrangements for our directors and the compensation payable to each individual for their service on our Board is determined from time to time by our board of directors based upon the amount of time expended by each of the directors on our behalf. Our directors were not compensated for their services in 2017.


Compliance with Section 16(a) of the Exchange Act


Our shares of common stock are registered under the Securities Exchange Act of 1934, and therefore our executive officers and directors and persons who beneficially own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% stockholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. Based on our review of the copies of such forms received by us, and to the best of our knowledge, all executive officers, directors and persons holding greater than 10% of our issued and outstanding stock have filed the required reports in a timely manner during 2015.


ITEM 11.


EXECUTIVE COMPENSATION.


The following table summarizes all compensation recorded by us in 2017 and 2016 for:

·

our principal executive officer or other individual serving in a similar capacity,

·

our most highly compensated executive officers other than our principal executive officer who were serving as executive officers at December 31, 2017 as that term is defined under Rule B-7 of the Securities Exchange Act of 1934, and




37

 

For definitional purposes, these individuals are sometimes referred to as the named executive officers. Change the name of the chart below and compensation

SUMMARY COMPENSATION TABLE


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name and principal position

 

Year

 

Salary

($)

           Bonus

     ___($)__________    

 

 

 

Stock

Awards

($)

 

 

Option

Awards

($)

 

No

Equity

Incentive

Plan

Compensation

($)

 

 

Non-

qualified

Deferred

Compensation

Earnings

($)

 

 

All

Other

Compensation

($)

 

 

Total

($)

 Maxine C.. Pierson

 

2017

 

     0              0


 

 

 

 

 

0

 

 

 

0

 

 

0

 

 

 

0

 

 

 

 0

 

 

 

0


Maxine Pierson served as our Chief Executive Officer from June 27, 2017 to present, and as a Director, Chairman of the Board of Directors, until present.


How the executives compensation is determined


We are not a party to an employment agreement with Maxine Pierson our current Chief Executive Officer. Our executives compensation is paid in the form of a Common Shares of stock of MJ Biotech, Inc. The salary, is determined by our board of directors of which they are both members. The Board considered a number of factors in determining their compensation including the scope of their duties and responsibilities to our company and the time they devote to our business. The Board did not consult with any experts or other third parties in fixing the amount of their compensation. The amount of compensation payable to them can be increased at any time upon the determination of the board of directors.

Outstanding Equity Awards at Fiscal Year End

The following table provides information concerning unexercised options, stock that has not vested and equity incentive plan awards for each named executive officer outstanding as of December 31, 2017:

 

 

 

 

 


 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPTION AWARDS

 

STOCK AWARDS

Name

 

Number of

Securities

Underlying

Unexercised

Options

(#)

Exercisable

 

Number of

Securities

Underlying

Unexercised

Options

(#)

Unexercisable

 

Equity

Incentive

Plan Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options

(#)

 

Option

Exercise

Price

($)

 

Option

Expiration

Date

 

Number

of Shares

or Units

of Stock


(#)

 

Market

Value of

Shares

or Units

of Stock

That

Have

Not

Vested

($)

 

Equity

Incentive

Plan Awards:

Number of

Unearned

Shares,

Units or

Other

Rights that

Have Not

Vested

(#)

 

Equity

Incentive

Plan Awards:

Market or

Payout

Value of

Unearned

Shares,

Units or

Other

Rights That

Have Not

Vested

(#)

Maxine Pierson


  

0

  

0

  

0

  

0

  

0

  

1,000 0

  

0

  

0

  

0


ITEM 12.


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.


As of December 31, 2017, we had two classes of voting stock; Common Stock and Preferred B Stock. The common stock votes one share of Common Stock equals one (1) vote. The preferred B stock votes one share of Preferred B equals one thousand (1,000) votes. The following table sets forth information regarding the beneficial ownership of our common stock as of December 31, 2017 as held by:

each person known by us to be the beneficial owner of more than 5% of our common stock;

·

each of our directors;

·

each of our named executive officers; and

·

our named executive officers, directors and director nominees as a group.


Unless otherwise indicated, the business address of each person listed is in care of 109 East 17th Street, Suite 80 Cheyenne, WY.

 



38

 

The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of that date.  Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse.  

Name and Address of Beneficial Owner

  

Shares

  

  

%

  

CEDE & CO



19,609,661




60.7%


PO BOX 222 BOWLING GREEN STAT NEW YORK, NY NEW YORK US










ITEM 13.


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

                                                                                                                                                                               

Transactions with Related Persons


Management Services

As of December 31, 2017, the company owes Integrated Capital Partners, Inc. (Nevada) $70,596 in expenses paid for the Company. The Companys former CEO (James Farinella) is the controlling shareholder of Integrated Capital Partners, Inc. (Nevada).

In February 2017 the Companys then CEO, James Farinella, assigned his rights to the Voluptas provisional patents that he owns and all intellectual property rights to Voluptas for 2,350,000 preferred B shares of the Company. On May 10, 2017 the provisional patent was updated and re-filed increasing the protection covering more than 10 delivery methods. Mr. Farinella surrendered 120,000 Preferred B shares to pay off loans owed to three trust accounts and those trust accounts were issued 40,000 preferred C shares each. James Farinella now owns 2,890,000 preferred B shares of the Company. James Farinella also retired 8,425,000 common shares and now owns no common shares of the Company. As of December 31, 2017, the Company owes James M. Farinella the previous CEO, $3,036 in expenses paid for the Company.


In February 2017 the Companys Chief Operating Officer, Gina Morreale, was issued 240,000 Preferred B shares. The Company agreed to issue these shares to Miss Morreale in 2016 for her joining the Company as an Officer and Director. Subsequently, Gina Morreale resigned as an officer and director of the Company and relinquished the 240,000 preferred B shares.

On August 4, 2016 the company issued 660,000 shares of preferred series B shares to RP Capital. Each preferred series B is convertible into 100 shares of the companys common stock, for research and development services.


Revenue


In November and December of 2016, the Company sold 50 bottles of LUNA at $20 per bottle for a total of $1,000.


Director Independence


There are no independent directors


ITEM 14.


PRINCIPAL ACCOUNTING FEES AND SERVICES.


The following is a summary of the fees billed to us by our principal accountants 2017 Audit.

 

 

 

 

 

 

 

 

 

Fee Category

 

2017

 




Audit Fees

 

$

12,500

 





Audit-related Fees

 

$

0

 





Tax Fees

 

$

0

 





All Other Fees

 

$

0

 





Total Fees

 

$

12,500

 








39

 

Changes in Registrants Certifying Accountant.


On August 18, 2016, Friedman, LLP (Friedman) withdrew as the Companys independent registered public accounting firm. During the period from April 20, 2016 (the date of Friedmans appointment as the Companys independent registered public accounting firm) through the effective date of Friedmans withdrawal, there were no disagreements with Friedman on any matter of accounting principles or practices, or financial statement disclosure, which disagreements, if not resolved to the satisfaction of Friedman, would have caused it to make reference to the subject matter of such disagreements in any future report on our financial statements for any periods during which Friedman was engaged. Also during the same period, there were no matters that were either the subject of a disagreement as defined in Item 304(a)(1)(iv) of Regulation S-K or a reportable event as described in Item 304(a)(1)(v) of Regulation S-K. We provided Friedman with a copy of this disclosure before its filing with the SEC and requested that Friedman provide us with a letter addressed to the SEC stating whether or not it agrees with the above statements. We received a letter from Friedman stating that it agrees with the above statements.


The Companys Board of Directors appointed KLJ & Associates LLP (KLJ) as the Companys new independent registered public accounting firm effective as of August 18, 2016. During the two most recent fiscal years and through the date of engagement, the Company did not consult with KLJ regarding either: (1) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements; or (2) any matter that was either the subject of a disagreement (as defined in Regulation S-K Item 304(a)(1) (v)). Prior to engaging KLJ, KLJ did not provide the Company with either written or oral advice that was an important factor considered by our Company in reaching a decision to change our independent registered public accounting firm from Friedman to KLJ.


On or about October 18, 2017, KLJ & Associates LLP (KLJ) withdrew as the Companys independent registered public accounting firm as it has sold its audit practice. During the period from August 18, 2016 (the date of KLJs appointment as the Companys independent registered public accounting firm) through the effective date of KLJs withdrawal, there were no disagreements with KLJ on any matter of accounting principles or practices, or financial statement disclosure, which disagreements, if not resolved to the satisfaction of KLJ, would have caused it to make reference to the subject matter of such disagreements in any future report on our financial statements for any periods during which KLJ was engaged. Also during the same period, there were no matters that were either the subject of a disagreement as defined in Item 304(a)(1)(iv) of Regulation S-K or a reportable event as described in Item 304(a)(1)(v) of Regulation S-K. We provided KLJ with a copy of this disclosure before its filing with the SEC and requested that KLJ provide us with a letter addressed to the SEC stating whether or not it agrees with the above statements. We received a letter from KLJ stating that it agrees with the above statements.


New Independent Accountants.


The Companys Board of Directors appointed Fruci & Associates II, PLLP (Fruci) as the Companys new independent registered public accounting firm effective as of October 23, 2017. During the two most recent fiscal years and through the date of engagement, the Company did not consult with Fruci regarding either: (1) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements; or (2) any matter that was either the subject of a disagreement (as defined in Regulation S-K Item 304(a)(1) (v)). Prior to engaging Fruci, Fruci did not provide the Company with either written or oral advice that was an important factor considered by our Company in reaching a decision to change our independent registered public accounting firm from KLJ to Fruci.


Audit Fees - Consists of fees for professional services rendered by our principal accountants for the audit of our annual financial statements and review of the financial statements included in our Forms 10-Q or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.


Audit-related Fees - Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported under Audit fees.


Tax Fees - Consists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.


All Other Fees - Consists of fees for products and services provided by our principal accountants, other than the services reported under Audit fees, Audit-related fees, and Tax fees above.


Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors


We have not adopted an Audit Committee; therefore, there is no Audit Committee policy in this regard. However, we do require approval in advance of the performance of professional services to be provided to us by our principal accountant. Additionally, all



40

 

services rendered by our principal accountant are performed pursuant to a written engagement letter between us and the principal accountant.

 



PART IV

ITEM 15.


EXHIBITS.FINANCIAL STATEMENT SCHEDULES.


(a)(2)


Financial Statements. See the audited financial statements for the years ended December 31, 2017 and 2016 contained in Item 8 above.


(b)


Exhibits. The following exhibits are filed as part of this Annual Report or incorporated by reference:


Exhibits


 

 

 

Exhibit

Number

 

Description

2.1

     

Plan of Reorganization (incorporated by reference to the registration statement on Form 10, SEC File No. 000-54616, as filed with the SEC on March 1, 2012, as amended (the Form 10))

3.1

 

Articles of Incorporation (incorporated by reference to the Form 10)

3.2

 

Bylaws (incorporated by reference to the Form 10)

3.3

 

Certificate of Amendment to the Certificate of Incorporation

4.1

 

Form of A Warrant Agreement (incorporated by reference to the Form 10)

4.2

 

Form of B Warrant Agreement (incorporated by reference to the Form 10)

4.3

 

Form of C Warrant Agreement (incorporated by reference to the Form 10)

4.4

 

Form of D Warrant Agreement (incorporated by reference to the Form 10)

4.5

 

Form of E Warrant Agreement (incorporated by reference to the Form 10)

10.1

 

Asset Purchase Agreement dated October 20, 2012 between Spicy Gourmet Manufacturing, Inc. and James Palladino (incorporated by reference to the Current Report on Form 8-K as filed on October 24, 2012.)

10.2

 

[INTENTIONALLY OMITTED]

10.3

 

10% senior secured convertible note dated October 31, 2012 in the principal amount of $21,176 issued to James M. Palladino

10.4

 

10% senior secured convertible note dated December 31, 2012 in the principal amount of $30,208.23 issued to James M. Palladino

10.5

 

Form of 10% convertible promissory note

 

 

 

 

 

 

14.1

 

Code Conduct and Ethics

 

 

 

31.1

 

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer *

31.2

 

Rule 13a-14(a)/15d-14(a) Certification of principal financial and accounting officer*

32.1

 

Section 1350 Certification of Chief Executive Officer and principal financial and accounting officer*

101.INS

 

XBRL INSTANCE DOCUMENT **

101.SCH

 

XBRL TAXONOMY EXTENSION SCHEMA **

101.CAL

 

XBRL TAXONOMY EXTENSION CALCULATION LINKBASE **

101.DEF

 

XBRL TAXONOMY EXTENSION DEFINITION LINKBASE **

101.LAB

 

XBRL TAXONOMY EXTENSION LABEL LINKBASE **

101.PRE

 

XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE **

*

filed herewith.

**

In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 to this report shall be deemed furnished and not filed.







41

 

SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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 BIOTECH, INC.

 

 

 

August 20, 2018

By:

/s/ Maxine C. Pierson

 

 

Maxine C. Pierson

Chief Executive Officer












42