Form S-1 Marijuana Co of America,



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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM S-1

 

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

 

MARIJUANA COMPANY OF AMERICA, INC.(Exact name of Registrant as specified in its charter)

 

Utah
 
2833
 
94-1246221(State or other jurisdiction of
incorporation or organization)

 

(Primary Standard Industrial

Classification Code)

 

(I.R.S. Employer

Identification No.)

 

1340 West Valley Parkway, Suite 205

Escondido, CA 92029

Telephone: (888) 777-4362

(Address and Telephone Number of Registrant’s
Principal
Executive Offices and Principal Place of Business)

 

Jesus M. Quintero

Marijuana Company of America, Inc.

1340 West Valley Parkway, Suite 205

Escondido, CA 92029

Telephone: (888) 777-4362

(Name, Address, and Telephone Number for Agent
of Service)

 

Pacific Stock Transfer, Inc.

6725 Via Austi Pkwy

Suite 300

Las Vegas, NV 89119
Telephone: (800) 785-7782
(Name, Address, and Telephone Number for Agent of Service)

 

Copies to:

Independent Law PLLC

2106 NW 4th PL, Gainesville, FL 32603

Attn: Alan T. Hawkins, Esq.
Telephone: (352) 353-4048

 

Approximate date of commencement of proposed
sale to the public: As soon as practicable after this Registration Statement becomes effective.

 

If any of the securities being registered on
this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check
the following box:

 

If this form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering.

  

If this form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.

 

If this form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.

 

Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company smaller reporting, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated Filer
Non-accelerated filer

Smaller reporting company
 
 
Emerging growth company

 

If an emerging growth company, indicate by
check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided to Section 7(a)(2)(B) of the Securities Act.

  

 

 

Calculation of Registration Fee

 

Title of Each Class of Securities to be Registered 
Amount to be Registered (1) 

Proposed

Maximum

Aggregate

Price Per

Share

 

Proposed

Maximum

Aggregate

Offering

Price

 

Amount of

Registration

Fee

  
    
    
    
   Common Stock, par value $0.001 (2) 
 646,883,314  
$0.002(3) 
$1,293,767  
$141.15(4)  
    
    
    
   

____________________

 
(1)
Consists of up to 646,883,314 shares of common stock to be offered by the registrant in the Offering.  As of November 23, 2020, the Company had 2,021,510,356 shares of common stock in the public float and 2,053,481,896 shares of common stock outstanding.  The 646,883,314 shares being registered represent approximately 32.0% of the shares in the public float as of November 23, 2020.  Assuming all of these shares are sold, the registrant’s total number of issued and outstanding shares of common stock will be 2,700,365,210, calculated on the total number of shares issued and outstanding at November 23, 2020 of 2,053,481,896. The total number of registered shares will then represent 24.0% of the issued and outstanding shares. 
(2)
Shares of newly issued common stock to be offered by the registrant in the Offering (as hereinafter defined).  
(3)
Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(c) under the Securities Act of 1933. 
(4)
Based on the price per share of $0.002 for Marijuana Company of America, Inc.’s common stock on November 16, 2020, as reported by the OTC Markets Group.

   

The registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment
which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.

 

 

 

The information in this prospectus is not complete and may be changed. The selling stockholder may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

  

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION
DATED November 23, 2020

 

Marijuana Company of America, Inc.

 

646,883,314 Shares of Common Stock Being Offered
by the Company in the Offering

 

This prospectus relates to the sale of 646,883,314
shares of common stock, par value $0.001, of Marijuana Company of America, Inc. (referred to herein as the “Company”
or “Marijuana Company of America, Inc.”), by the Company on a best efforts basis (the “Offering”). The
Company anticipates that public offering price will be $0.002 per share. The Company is offering the shares on a self-underwritten,
“best efforts” basis directly through its CEO, Jesus Quintero. The total proceeds from the Offering will not be escrowed
or segregated but will be available to the Company immediately. There is no minimum amount of common shares required to be purchased,
and, therefore, the total proceeds received by the Company might not be enough to sustain continued operations, or a market may
not develop. No commission or other compensation related to the sale of the shares will be paid. For more information, see the
section titled “Plan of Distribution” and “Use of Proceeds” herein.

 

As of November 23, 2020, the Company had 2,021,510,356
shares of common stock in the public float and 2,053,481,896 shares of common stock outstanding. The 646,883,314 shares being registered
represent approximately 32.0% of the shares in the public float as of November 23, 2020. Assuming all of these shares are sold,
the registrant’s total number of issued and outstanding shares of common stock will be 2,700,365,210, calculated on the total
number of shares issued and outstanding at November 23, 2020 of 2,053,481,896. The total number of registered shares will then
represent 24.0% of the issued and outstanding shares.

 

Our common stock is quoted on the OTC Markets
Pink Open Market alternative trading system, operated by OTC Markets Group, Inc., under the symbol “MCOA”. As of November 16, 2020, the last reported sale price for our common stock was $0.002 per share.

 

This offering is highly speculative, and
these securities involve a high degree of risk and should be considered only by persons who can afford the loss of their entire
investment. See “Risk Factors” beginning on page 8.

 

NEITHER THE SECURITIES AND EXCHANGE COMMISSION
NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

The date of this prospectus is November 23,
2020.

  

 

 

  

Table of Contents

 

 
Page  
 About this Prospectus
3Prospectus Summary
3Risk Factors
8     Risks Related to Our Business
9     Risks Related to the Company
14     Risks Related to Our Common Stock
16The Offering
18Use of Proceeds
18Determination of Offering Price
18Dividend Policy
19Market for our Common Stock
19Forward-Looking Statements
19Dilution
19Financial Statements
F-1Management’s Discussion and Analysis of Financial Condition and Results of Operation
20Description of Business
27Description of Property
28Directors, Executive Officers, Promoters, and Control Persons
28Executive Compensation
33Security Ownership of Certain Beneficial Owners and Management
33Plan of Distribution
35Certain Relationships and Related Transactions
36Description of Securities
37Legal Matters
40Experts
40Changes in and Disagreements with Accountants
40Where You Can Find More Information
41Other Expenses of Issuance and Distribution
II-1Indemnification of Directors and Officers
II-1Recent Sale of Unregistered Securities
II-3Exhibits
II-5Undertakings
II-6Signatures
II-7

 

 

    

 

 

 

 

ABOUT THIS PROSPECTUS

 

You should rely only on the information that
we have provided in this prospectus and any applicable prospectus supplement. We have not authorized anyone to provide you with
different information. No dealer, salesperson or other person is authorized to give any information or to represent anything not
contained in this prospectus and any applicable prospectus supplement. You must not rely on any unauthorized information or representation.
This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where
it is lawful to do so. You should assume that the information in this prospectus and any applicable prospectus supplement is accurate
only as of the date on the front of the document, regardless of the time of delivery of this prospectus, any applicable prospectus
supplement, or any sale of a security.

 

As used in this prospectus, the terms “we”,
“us”, “our” and the “Company”, means Marijuana Company of America, Inc. and subsidiary companies,
H Smart, Inc, a Delaware corporation, MCOA CA, Inc., a California corporation, Hempsmart, Ltd., a United Kingdom corporation, H
Smart Inc. (a California foreign registered corporation) and H Smart Inc., a Washington corporation. All dollar amounts refer to
U.S. dollars unless otherwise indicated.

 

Hempsmart and other registered or common law
trade names, trademarks, or service marks of the Company appearing in this prospectus are the property of H Smart, Inc. and/or
Marijuana Company of America, Inc. Solely for convenience, our trademarks and trade names referred to in this prospectus may appear
with and without the ® and ™ symbols, but those references are not intended to indicate, in any
way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the applicable licensor,
to these trademarks and trade names.

  

PROSPECTUS SUMMARY

 

Except as otherwise indicated, as used in this
prospectus, references to the “Company,” “we,” “us,” or “our” refer to Marijuana
Company of America, Inc.

 

The following summary highlights selected
information contained in this prospectus, and it may not contain all of the information that is important to you. Before making
an investment decision, you should read the entire prospectus carefully, including “Risk Factors” and our financial
statements and related notes, included elsewhere in, or incorporated by reference into, this prospectus.

 

Corporate Background

 

Marijuana Company of America, Inc. is a Utah
corporation is based in Escondido, California. The Company is a publicly listed company quoted on OTC Markets OTCQB Tier under
the symbol “MCOA”.

 

We were incorporated in the State of Utah on
October 4, 1985, under the name of Mormon Mint, Inc. The corporation was originally a startup company organized to manufacture
and market commemorative medallions related to the Church of Jesus Christ of Latter-Day Saints. On January 5, 1999, Bekam Investments,
Ltd. acquired one hundred percent of the common shares of the Company and spun the Company off changing its name Converge Global,
Inc. From August 13, 1999 until November 23, 2002, the Company focused on the development and implementation of Internet web content
and e-commerce applications. From 2009 to 2014, we operated primarily in the mining exploration business. In 2015, we left the
mining business and began an internet-based marketing business focused on offerings from our “Majestic Menu” food service
items offered to the hospitality and food service industry via an on-line internet site, where individuals could purchase retail
direct from food distributors via credit cards and commercial accounts. 

 

On September 4, 2015, Donald Steinberg and
Charles Larsen purchased 400,000,000 shares of restricted common stock and 10,000,000 shares of the Preferred Class A stock from
the Company’s President, Cornelia Volino, in exchange for $105,000.00. On September 9, 2015, Donald Steinberg was appointed
Chairman of the Board, Chief Executive Officer and Secretary of the Company. Mr. Larsen was appointed to the Board of Directors.
The former officers and directors of the Company resigned concurrent with the new appointments. By virtue of Messrs. Steinberg
and Larsen’s stock purchase and appointment to the Company’s Board of Directors, a purchase or sale of a significant
amount of assets not in the ordinary course of business and a corresponding change of control occurred. The Company reported the
change of control in its September 30, 2015 quarterly report filed with the OTC Markets. Thereafter, the Company’s business
plans and operations changed to focus legalized hemp more fully discussed in this filing. The Company changed its name to Marijuana
Company of America, Inc. and trading symbol on December 1, 2015.

 

 

 

 

 

 

 

Our business develops, manufactures, markets
and sells non-psychoactive industrial hemp, and hemp-derived consumer products containing cannabinoids (hereafter referred to as
“CBD”), with a THC content of less than 0.3%. Our business includes the research and development of (1) varieties of
various species of hemp; (2) beneficial uses of hemp and hemp derivatives; (3) indoor and outdoor cultivation methods for hemp;
(4) technology used for cultivation and harvesting of different species of hemp, including but not limited to lighting, venting,
irrigation, hydroponics, nutrients and soil; (5) different species of industrial hemp derived CBD, and the possible health benefits
thereof; and, (6) new and improved methods of hemp CBD extraction omitting or eliminating the delta-9 THC molecule.

 

On September 21, 2015, the Company formed H
Smart, Inc., a Delaware corporation as a wholly owned subsidiary for the purpose of operating the hempSMART™ brand.

 

On February 1, 2016, the Company formed MCOA
CA, Inc., a California corporation as a wholly owned subsidiary to facilitate mergers, acquisitions and the offering of investments
or loans to the Company.

 

On May 3, 2017, the Company formed Hempsmart
Limited, a United Kingdom corporation as a wholly owned subsidiary for the purpose of future expansion into the European market.

 

The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries: H Smart, Inc., Hempsmart Limited and MCOA CA, Inc. All significant
intercompany balances and transactions have been eliminated in consolidation.

 

 The condensed balance sheet as of December
31, 2019 has been derived from audited financial statements.

 

Operating results for the three and nine months
ended September 30, 2020 are not necessarily indicative of results that may be expected for the year ending December 31, 2020.
These condensed financial statements should be read in conjunction with the audited financial statements for the year ended December
31, 2019.

 

Our Business and Strategy

 

Our primary business strategy is to develop,
manufacture, and market non-psychoactive industrial hemp, and hemp-derived consumer products containing cannabinoids (hereafter
referred to as “CBD”), with a THC content of less than 0.3%, while tactically investing in related business via joint
ventures and minority ownership positions.

  

Our business operations include the following:

 

 

hempSMART™

 

Our consumer products containing hemp and CBD
are sold through our wholly owned subsidiary H Smart, Inc. under the brand name hempSMART™. We market and sell our hempSMART™
products directly through our web site, and through our affiliate marketing program, where qualified sales affiliates use a secure
multi-level-marketing sales software program that facilitates order placement over the internet via a web site, and accounts for
affiliate orders and sales; calculates referral benefits apportionable to specific sales associates and calculates and accounts
for loyalty and rewards benefits for returning customers.

 

Our current hempSMART™ wellness products
offerings include the following:

 

 

hempSMART Brain™ a proprietary patented and formulated personal care consumer product encapsulated with enriched non-psychoactive industrial hemp derived CBD. This encapsulation is combined with other high quality, proprietary natural ingredients to compliment CBD to support brain wellness.

 

 

hempSMART Pain™ capsules
formulated with 10mg of Full Spectrum, non-psychoactive CBD per serving, derived from industrial hemp, which along with a proprietary
blend of other natural ingredients, delivers an all-natural formulation for the temporary relief of minor discomfort associated
with physical activity.

 

 

 

 

 

 

 

 

 

 

 

hempSMART Pain Cream™ each
container formulated with 300 mg of full spectrum non-psychoactive CBD derived from industrial hemp. The newly developed product
contains a synergistic combination of natural botanicals and full spectrum hemp extract featuring CBD, CBG and a broad range of
terpenes. The Company’s proprietary blend of Ayurvedic herbs along with Menthol, Cayenne Pepper Extract, Rosemary Oil, Aloe
Gel, White Willow Bark, Arnica, Wintergreen Extract and Tea Tree Oil, provides an immediate cooling and soothing sensation. This
topical wellness consumer product is formulated to help reduce minor discomfort and promote muscle relaxation on areas that it
is applied.

 

 

hempSMART Drops™ full Spectrum
Hemp CBD Oil Tincture Drops, available in 250mg and 500mg bottles, enriched with non-psychoactive industrial hemp derived CBD,
and available in four different flavors: lemon, mint, orange and strawberry that is free of the THC isolate.

 

 

hempSMART Pet Drops™ for
cats and dogs, formulated with 250mg of full spectrum non-psychoactive CBD derived from industrial hemp. This new specially formulated
product contains naturally occurring CBD derived from hemp seed oil, full spectrum hemp extract, fractionated coconut oil, and
a rich bacon flavor.

 

 

hempSMART Face™ a nourishing facial moisturizer combines full spectrum CBD from hemp, with a unique blend of Ayurvedic herbs and botanicals. Designed to refresh, replenish and restore the skin providing long lasting hydration and balance.

 

Brazil
and Uruguay Joint Ventures

On October 1, 2020, the Company entered into
two Joint Venture Agreements with Marco Guerrero, a director of the Company (“Guerrero”) dated September 30, 2020,
to form joint venture operations in Brazil and in Uruguay (the “Joint Venture Agreements”) to produce, manufacture,
market and sell the Company’s hempSMART™ products in Latin America, and will also work to develop and sell hempSMART™
products globally. The Joint Venture Agreements contain equal terms for the formation of joint venture entities in Uruguay and
Brazil. The Brazilian joint venture will be headquartered in São Paulo, Brazil, and will be named HempSmart Produtos Naturais
Ltda. (“HempSmart Brazil”). The Uruguayan joint venture will be headquartered in Montevideo, Uruguay and will be named
Hempsmart Uruguay S.A.S. (“HempSmart Uruguay”).

Under the Joint Venture Agreements,
the Company will acquire a 70% equity interest in both HempSmart Brazil and HempSmart Uruguay. A minority 30% equity interest in
both HempSmart Brazil and HempSmart Uruguay will be held by newly formed entities controlled by Guerrero, a director of the Company,
who is a successful Brazilian entrepreneur. The Company will provide capital in the amount of $50,000 to both HempSmart Brazil
and HempSmart Uruguay under the Joint Venture Agreements, for a total capital outlay obligation of $100,000. It is expected that
the proceeds of the initial capital contribution will be used for contracting with third-party manufacturing facilities in Brazil
and Uruguay, and related infrastructure and employment of key personnel.  

Consulting Services

 

We also provide financial accounting and property
management services for companies associated with the cannabis industry in all stages of development. Our services include the
following:

 

 

Financial Accounting and Bookkeeping. Our business accounting services provide financial accounting, bookkeeping and reporting protocols in order to allow licensed cannabis and/or hemp operators, in those states where cannabis has been legalized for medicinal and/or recreational use, to report collect, verify and state effective financial records and disclosure. We provide a comprehensive accounting strategy based on best accounting practices. We understand the challenges and complexities of financial accounting in the regulated commercial cannabis market and we have the expertise to help client businesses report their financial operations consistent with GAAP. As of the date of this filing, we have not offered any consulting, bookkeeping or financial accounting consulting services that have generated reportable revenues. As of the date of this report we have not provided such services.

 

 

Property Management Consulting. Our property management consulting services consist of providing planning, budgeting, acquisition, accounting and management services to licensed cannabis and/or hemp operators in those states where cannabis and/or hemp has been legalized for medicinal and/or recreational use, and who are searching for appropriate real property to conduct operations. As of the date of this filing, we have not offered any real property management consulting services that have generated reportable revenues. As of the date of this report, we have not provided such services.

 

 

 

 

 

 

 

 

 

Recent Government Decriminalization and
Legalization of Hemp

 

On December 20, 2018, President Donald J. Trump
signed into law the Agriculture Improvement Act of 2018, otherwise known as the “Farm Bill.” Prior to its passage,
hemp, a member of the cannabis family, and hemp derived CBD, were classified as Schedule 1 controlled substances, and so illegal
under the Controlled Substances Act, 21 U.S.C. § 811 (hereafter referred to as the “CSA”).

 

With the passage of the Farm Bill, hemp cultivation
is now broadly permitted. The Farm Bill explicitly allows the transfer of hemp-derived products across state lines for commercial
or other purposes. It also puts no restrictions on the sale, transport, or possession of hemp-derived products, so long as those
items are produced in a manner consistent with the law.

 

Under Section 10113 of the Farm Bill, hemp
cannot contain more than 0.3 percent THC, the chemical compound found in cannabis that produces the psychoactive “high”
associated with cannabis. Any cannabis plant that contains more than 0.3 percent THC would be considered non-hemp cannabis—or
marijuana—illegal under the federal CSA.

 

Additionally, there will be significant, shared
state-federal regulatory power over hemp cultivation and production. Under Section 10113 of the Farm Bill, state departments of
agriculture must consult with the state’s governor and chief law enforcement officer to devise a plan that must be submitted
to the Secretary of the United States Department of Agriculture (hereafter referred to as the “USDA”). A state’s
plan to license and regulate hemp can only commence once the Secretary of USDA approves that state’s plan. In states opting
not to devise a hemp regulatory program, USDA will construct a regulatory program under which hemp cultivators in those states
must apply for licenses and comply with a federally-run program. This system of shared regulatory programming is similar to options
states had in other policy areas such as health insurance marketplaces under Affordable Care Act, or workplace safety plans under
Occupational Health and Safety Act—both of which had federally-run systems for states opting not to set up their own systems.

 

The Farm Bill outlines actions that are considered
violations of federal hemp law (including such activities as cultivating without a license or producing cannabis with more than
0.3 percent THC). The Farm Bill details possible punishments for such violations, pathways for violators to become compliant, and
even which activities qualify as felonies under the law, such as repeated offenses.

 

One of the goals of the previous 2014 Farm
Bill was to generate and protect research into hemp. The 2018 Farm Bill continues this effort. Section 7605 re-extends the protections
for hemp research and the conditions under which such research can and should be conducted. Further, section 7501 of the Farm Bill
extends hemp research by including hemp under the Critical Agricultural Materials Act. This provision recognizes the importance,
diversity, and opportunity of the plant and the products that can be derived from it, but also recognizes that there is a still
a lot to learn about hemp and its products from commercial and market perspectives.

 

We currently operate two divisions within the
regulated hemp industry: (i) the development, manufacturing, marketing and sale of our hempSMART™ consumer products
that include non-psychoactive industrial hemp-based CBD as an ingredient; and, (ii) professional financial consulting and property
management services.

 

On April 15, 2019, we entered into a joint
venture with Natural Plant Extract of California, Inc., and subsidiaries, to operate a licensed psychoactive cannabis distribution
service in California, who legalized THC psychoactive cannabis for medicinal and recreational use on January 1, 2018. As disclosed
in greater detail below, on February 3, 2020, we terminated the joint venture.

 

As of the date of this filing, we do not conduct
any business in the psychoactive cannabis markets in those states that have legalized cannabis for medicinal or recreational use.

 

Cannabis Remains an Illegal Schedule 1 Drug
under Federal Law

 

Psychoactive Cannabis containing greater than
0.3 percent THC (“Psychoactive Cannabis”) and its derivatives are illegal “Schedule 1” drugs under the
Controlled Substances Act (21 U.S.C. § 811). As a Schedule 1 drug, Psychoactive Cannabis and derivatives are viewed as being
highly addictive and having no medical value. The United States Drug Enforcement Agency enforces the CSA and persons violating
it are subject to federal criminal prosecution. The criminal penalty structure in the CSA is determined based on the specific predicate
violations, including but not limited to: simple possession, drug trafficking, attempt and conspiracy, distribution to minors,
trafficking in drug paraphernalia, money laundering, racketeering, environmental damage from illegal manufacturing, continuing
criminal enterprise, and smuggling. A first conviction under the CSA can generally result in possible fines from $250,000 to $50
million dollars, and incarceration for periods generally from five and up to forty years. For a second conviction, fines increase
generally from $500,000 to $75 million dollars, and incarceration for periods generally from ten years to twenty years to life.

 

The United States Food & Drug Administration
(“FDA”) is generally responsible for protecting the public health by ensuring the safety, efficacy, and security of
(1) prescription and over the counter drugs; (2) biologics including vaccines, blood & blood products, and cellular and gene
therapies; (3) foodstuffs including dietary supplements, bottled water, and baby formula; and, (4) medical devices including heart
pacemakers, surgical implants, prosthetics, and dental devices.

 

 

 

 

 

 

 

 

 

Regarding its regulation of drugs, the FDA
process requires a review that begins with the filing of an investigational new drug (IND) application, with follow on clinical
studies and clinical trials that the FDA uses to determine whether a drug is safe and effective, and therefore subject to approval
for human use by the FDA.

 

Aside from the FDA’s mandate to regulate
drugs, the FDA also regulates dietary supplement products and dietary ingredients under the Dietary Supplement Health and Education
Act of 1994. This law prohibits manufacturers and distributors of dietary supplements and dietary ingredients from marketing products
that are adulterated or misbranded. This means that these firms are responsible for evaluating the safety and labeling of their
products before marketing to ensure that they meet all the requirements of the law and FDA regulations, including, but not limited
to the following labeling requirements: (1) identifying the supplement; (2) nutrition labeling; (3) ingredient labeling; (4) claims;
and, (5) daily use information.

 

The FDA has not approved Psychoactive Cannabis,
hemp or derivatives as a safe and effective drug for any indication. As of the date of this filing, we have not, and do not intend
to file an IND with the FDA, concerning any of our products that contain CBD derived from industrial hemp or cannabis delivered
in the State of California pursuant to our joint venture with Natural Plant Extract discussed above. Further, our products containing
CBD derived from industrial hemp are not marketed or sold using claims that their use is safe and effective treatment for any medical
condition subject to the FDA’s jurisdiction.

 

The FDA has concluded that products containing
Psychoactive Cannabis or industrial hemp derived CBD are excluded from the dietary supplement definition under sections 201(ff)(3)(B)(i)
and (ii) of the U.S. Food, Drug & Cosmetic Act, respectively. The FDA’s position is that products containing Psychoactive
Cannabis, and derivatives are Schedule 1 drugs under the CSA, and so are illegal. Our products containing CBD derived from industrial
hemp or cannabis delivered in the State of California are not marketed or sold as dietary supplements. However, at some indeterminate
future time, the FDA may choose to change its position concerning generally Psychoactive Cannabis and products containing hemp
derived CBD, and may choose to enact regulations that are applicable to such products. In this event, our industrial hemp based
products containing CBD and Psychoactive Cannabis delivered through our joint venture interest in Natural Plant Extract may be
subject to regulation (See Risk Factors).

 

Where You Can Find Us

 

The principal offices of our company are located
at 1340 West Valley Parkway, Suite 205, Escondido, CA 92029. Our telephone number is (888) 777-4362.

 

Summary of the Offering

  
 Newly issued common stock being registered
pursuant to the Offering: 
646,883,314 shares of common stock  
 Offering price: 
$0.002 per share  
 Offering period: 
The offering will conclude upon such time as all of the common stock has been sold pursuant to the registration statement, or 24 months after the effective date.  
 Common Stock in the public float before the Offering: 
2,021,510,356 shares of common stock as of November 23, 2020.  
 Number of shares outstanding after the offering: 
2,700,365,210 shares of common stock  
 Market for the common stock: 
Our common stock is quoted on the OTC Link alternative trading system under the symbol “MCOA”. As of November 16, 2020, the last reported sale price for our common stock was $0.002 per share.  
 Use of proceeds: 
We estimate that we will receive approximately $1,293,767 in gross proceeds if we sell all of the shares in the Offering and assuming a $0.002 per share Offering Price, and we will receive estimated net proceeds (after paying offering expenses) of approximately $1,273,767 if we sell all of those shares. See “Use of Proceeds” for a more detailed explanation of how the proceeds from the Offering will be used.  
 Risk Factors: 
See “Risk Factors‚” and the other information in this prospectus for a discussion of the factors you should consider before deciding to invest in shares of our common stock.  
 OTCQB Symbol: 
MCOA

 

As of November 23, 2020, the Company had 2,021,510,356
shares of common stock in the public float and 2,053,481,896 shares of common stock outstanding. The 646,883,314 shares being registered
represent approximately 32.0% of the shares in the public float as of November 23, 2020. Assuming all of these shares are sold,
the registrant’s total number of issued and outstanding shares of common stock will be 2,700,365,210, calculated on the total
number of shares issued and outstanding at November 23, 2020 of 2,053,481,896. The total number of registered shares will then
represent 24% of the issued and outstanding shares.

 

 

 

 

 

  

RISK FACTORS

 

You should carefully consider the risks
described below before investing in our securities. Additional risks not presently known to us or that our management currently
deems immaterial also may impair our business operations. If any of the risks described below were to occur, our business, financial
condition, operating results, and cash flows could be materially adversely affected. In such an event, the trading price of our
common stock could decline, and you could lose all or part of your investment. In assessing these risks, you should also refer
to the other information contained in this Prospectus, including our consolidated financial statements and related notes. The risks
discussed below include forward-looking statements, and our actual results may differ substantially from those discussed in these
forward-looking statements.

 

General risk relating to COVID-19 pandemic

 

The novel coronavirus (COVID-19) pandemic
may have an expected effect on our business, financial condition and results of operations.

 

In March 2020, the World Health Organization
declared COVID-19 a global pandemic, and governmental authorities around the world have implemented measures to reduce the spread
of COVID-19. These measures have adversely affected workforces, customers, supply chains, consumer sentiment, economies, and financial
markets, and, along with decreased consumer spending, have led to an economic downturn across many global economies.

 

The COVID-19 pandemic has rapidly escalated
in the United States, creating significant uncertainty and economic disruption, and leading to record levels of unemployment nationally.
Numerous state and local jurisdictions have imposed, and others in the future may impose, shelter-in-place orders, quarantines,
shut-downs of non-essential businesses, and similar government orders and restrictions on their residents to control the spread
of COVID-19. Such orders or restrictions have resulted in temporary facility closures, work stoppages, slowdowns and travel restrictions,
among other effects, thereby adversely impacting our operations. In addition, we expect to be impacted by a downturn in the United
States economy, which could have an adverse impact on discretionary consumer spending and may have a significant impact on our
business operations and/or our ability to generate revenues and profits.

 

In response to the COVID-19 disruptions, we
have implemented a number of measures designed to protect the health and safety of our staff and contractors. These measures include
restrictions on non-essential business travel, the institution of work-from-home policies wherever feasible and the implementation
of strategies for workplace safety at our facilities that remain open. We are following the guidance from public health officials
and government agencies, including implementation of enhanced cleaning measures, social distancing guidelines and wearing of masks.

 

The extent to which COVID-19 ultimately impacts
our business, financial condition and results of operations will depend on future developments, which are highly uncertain and
unpredictable, including new information which may emerge concerning the severity and duration of the COVID-19 outbreak and the
effectiveness of actions taken to contain the COVID-19 outbreak or treat its impact, among others. Additionally, while the extent
to which COVID-19 ultimately impacts our operations will depend on a number of factors, many of which will be outside of our control.
The COVID-19 outbreak is evolving and new information emerges daily; accordingly, the ultimate consequences of the COVID-19 outbreak
cannot be predicted with certainty. In addition to the COVID-19 disruptions possibility adversely impacting our business and financial
results, they may also have the effect of heightening many of the other risks described in “Risk Factors,” including
risks relating to changes due to our limited operating history; our ability to generate sufficient revenue, to generate positive
cash flow; our relationships with third parties, and many other factors. We will endeavor to minimize these impacts, but there
can be no assurance relative to the potential impacts that may be incurred.

 

As previously reported on Form 8-K filed on
May 15, 2020, as amended, the Company was unable to file its Quarterly Report on Form 10-Q for the period ended March 31, 2020
by the original deadline of May 15, 2020, due to circumstances related to COVID-19 pandemic, specifically: (i) the Southern California
area, including the location of the Company’s corporate headquarters, was at one of the epicenters of the coronavirus outbreaks
in the United States and the Governor of California had ordered all residents to stay at home excepting only essential travel;
and (ii) historically, the Company has relied on vendors in China to manufacture certain of its principal products. The outbreak
of COVID-19 caused different levels of delay in operations of the Company, vendors, customers and professional service providers.
As a result, the Company’s books and records were not easily accessible from our Chinese manufacturer of our products, resulting
in a delay in the preparation, audit and completion of the Company’s financial statements for the Annual Report.

  

 

 

Risks Related to Our Business

 

The Farm Bill recently passed, and undeveloped
shared state-federal regulations over hemp cultivation and production may impact our business.

 

The Farm Bill was signed into law on December
20, 2018. Under Section 10113 of the Farm Bill, state departments of agriculture must consult with the state’s governor and
chief law enforcement officer to devise a plan that must be submitted to the Secretary of USDA. A state’s plan to license
and regulate hemp can only commence once the Secretary of USDA approves that state’s plan. In states opting not to devise
a hemp regulatory program, USDA will need to construct a regulatory program under which hemp cultivators in those states must apply
for licenses and comply with a federally-run program. The details and scopes of each state’s plans are not fully known at
this time and may contain varying regulations that may impact our business. Even if a state creates a plan in conjunction with
its governor and chief law enforcement officer, the Secretary of the USDA must approve it. There can be no guarantee that any state
plan will be approved. Review times may be extensive. There may be amendments and the ultimate plans, if approved by states and
the USDA, may materially limit our business depending upon the scope of the regulations.

 

Laws and regulations affecting our industry
to be developed under the Farm Bill are in development.

 

As a result of the Farm Bill’s recent
passage, laws and regulations affecting the hemp industry will evolve which could detrimentally affect our operations. Local, state
and federal hemp laws and regulations may be broad in scope and subject to changing interpretations. These changes may require
us to incur substantial costs associated with legal and compliance fees and ultimately require us to alter our business plan. Furthermore,
violations of these laws, or alleged violations, could disrupt our business and result in a material adverse effect on our operations.
In addition, we cannot predict the nature of any future laws, regulations, interpretations or applications, and it is possible
that regulations may be enacted in the future that will be directly applicable to our business.

 

Psychoactive Cannabis and derivatives
are illegal under the CSA.

 

Psychoactive Cannabis and derivatives are Schedule
1 controlled substances and are illegal under the CSA. Even in states that have legalized the use of Psychoactive Cannabis, its
sale and use remain violations of federal law. The illegality of Psychoactive Cannabis under the CSA preempts state laws that legalize
its use. Therefore, strict enforcement of the CSA regarding Psychoactive Cannabis and derivatives would likely result in our inability
to proceed with our 3.5% interest in NPE, which operates a psychoactive cannabis delivery service in California.

 

Risk of government action.

 

While we will use our best efforts to comply
with all laws and regulations, there is a possibility that governmental action to enforce any alleged violations may result in
legal fees and damage awards that would adversely affect us.

 

We anticipate our operating expenses
will increase, and we may never achieve profitability.

 

We launched our first hempSMART™ product,
hempSMART Brain™, in November 2316. Since then, we have introduced a number of other consumer products, including hempSMART
Pain™, hempSMART™ Full Spectrum Pet Drops™, and hempSMART™ Full Spectrum Drops™. As we continue to
produce other hempSMART™ products, we anticipate  increases in our operating expenses, without realizing significant
revenues from operations. Within the next 12 months, these increases in expenses will be attributed to the cost of (i) general
and administrative, (ii) new research and development, (iii) advertising and website development, (iv) legal and accounting fees
at various stages of operation, (v) joint venture activities, (vi) creating and maintaining distribution and supply chain channels.

  

As a result of some or all of these factors
in combination, we will incur significant financial losses in the foreseeable future. There is no history upon which to base any
assumption as to the likelihood that our Company will prove successful. We cannot provide investors with any assurance that our
business will attract customers and investors. If we are unable to address these risks, there is a high probability that our business
will fail.

 

Because our business is dependent upon
continued market acceptance by consumers, any negative trends will adversely affect our business operations.

 

We are substantially dependent on continued
market acceptance and proliferation of consumers of hemp and hemp-derived CBD. We believe that as hemp and hemp-derived CBD becomes
more accepted as a result of the passage of the Farm Bill, the stigma associated with hemp and CBD will diminish and as a result
consumer demand will continue to grow. While we believe that the market and opportunity in the hemp space continues to grow, we
cannot predict the future growth rate and size of the market. Any negative outlook on the hemp industry will adversely affect our
business operations.

 

 

 

The possible FDA Regulation of hemp and
industrial hemp derived CBD, and the possible registration of facilities where hemp is grown and CBD products are produced, if
implemented, could negatively affect the hemp industry generally, which could directly affect our financial condition.

 

The Farm Bill established that hemp containing
less the 0.3% THC was no longer a Schedule 1 drug under the CSA. Previously, the U.S. Food and Drug Administration (“FDA”)
did not approve hemp or CBD derived from hemp as a safe and effective drug for any indication. The FDA considered hemp and hemp-derived
CBD as illegal Schedule 1 drugs. Further, the FDA has concluded that products containing hemp or CBD derived from hemp are excluded
from the dietary supplement definition under sections 201(ff)(3)(B)(i) and (ii) of the U.S. Food, Drug & Cosmetic Act, respectively.
However, as a result of the passage of the Farm Bill, at some indeterminate future time, the FDA may choose to change its position
concerning products containing hemp, or CBD derived from hemp, and may choose to enact regulations that are applicable to such
products, including, but not limited to: the growth, cultivation, harvesting and processing of hemp; regulations covering the physical
facilities where hemp is grown and processed; and possible testing to determine efficacy and safety of hemp derived CBD. In this
hypothetical event, our hemp-based hempSMART™ products containing CBD may be subject to regulation. In the hypothetical event
that some or all of these regulations are imposed, we do not know what the impact would be on the hemp industry in general, and
what costs, requirements and possible prohibitions may be enforced. If we are unable to comply with the conditions and possible
costs of possible regulations and/or registration as may be prescribed by the FDA, we may be unable to continue to operate our
business. 

 

Laws governing our access to banking
services remain uncertain and are in a state of flux.

 

On February 14, 2014, the U.S. government issued
rules allowing banks to legally provide financial services to state-licensed cannabis businesses. A memorandum issued by the Justice
Department to federal prosecutors re-iterated guidance previously given, this time to the financial industry, that banks can do
business with legal cannabis businesses and “may not” be prosecuted. We believe this applies to hemp and
to Psychoactive Cannabis. The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued guidelines to banks
that “it is possible to provide financial services” to state-licensed cannabis (and hemp) businesses and still be in
compliance with federal anti-money laundering laws. These provisions created barriers to our banking operations. With the passage
of the Farm Bill, we expect that the banking industry will be more open to doing business with compliant hemp businesses. Currently,
the U.S. Congress is considering the Secure and Fair Enforcement Banking Act sponsored by Reps. Ed Perlmutter (D-CO) Denny Heck
(D-WA), Steve Stivers (R-OH) and Warren Davidson (R-OH) filed in March, 2019 designed to protect banks that service the marijuana
industry from being penalized by federal regulators. The act currently has 138 cosponsors—more than a quarter of the House.
However, this may take time and may not result in a more open banking climate. We expect that banks will be more open to serving
cannabis and hemp businesses, but there is no guarantee – even with the passage of the Farm Bill.

 

Banking regulations in our business are
costly and time consuming.

 

In assessing the prospective risk of providing
services to a hemp-related business, a financial institutions may conduct customer due diligence that includes: (i) verifying with
the appropriate state authorities whether the business is duly licensed and registered; (ii) reviewing the license application
(and related documentation) submitted by the business for obtaining a state license to operate its cannabis-related business; (iii)
requesting from state licensing and enforcement authorities available information about the business and related parties; (iv)
developing an understanding of the normal and expected activity for the business, including the types of products to be sold; (v)
ongoing monitoring of publicly available sources for adverse information about the business and related parties; (vi) ongoing monitoring
for suspicious activity, including for any of the red flags described in this guidance; and (vii) refreshing information obtained
as part of customer due diligence on a periodic basis and commensurate with the risk. With respect to information regarding state
licensure obtained in connection with such customer due diligence, a financial institution may reasonably rely on the accuracy
of information provided by state licensing authorities, where states make such information available. These regulatory reviews
may be time consuming and costly.

 

Due to our involvement in the hemp industry
and the Psychoactive Cannabis delivery business, we may have a difficult time obtaining the various insurances that are desired
to operate our business, which may expose us to additional risk and financial liability.

 

Insurance that is otherwise readily available,
such as general liability, and directors and officer’s insurance, is more difficult for us to find, and more expensive, because
we are service providers to companies in the cannabis industry. There are no guarantees that we will be able to find such insurances
in the future, or that the cost will be affordable to us. If we are forced to go without such insurances, it may prevent us from
entering into certain business sectors, may inhibit our growth, and may expose us to additional risk and financial liabilities.

 

 

 

The Company’s industry is highly
competitive, and we have less capital and resources than many of our competitors which may give them and advantage in developing
and marketing products similar to ours or make our products obsolete.

 

We are involved in a highly competitive industry
where we may compete with numerous other companies who offer alternative hemp products and derivatives, who may have far greater
resources, more experience, and personnel perhaps more qualified than we do. Such resources may give our competitors an advantage
in developing and marketing products similar to ours or products that make our products less desirable to consumers or obsolete.
There can be no assurance that we will be able to successfully compete against these other entities.

 

We may be unable to respond to the rapid
technological change in the industry and such change may increase costs and competition that may adversely affect our business.

 

Rapidly changing technologies, frequent new
product and service introductions and evolving industry standards characterize our market. The continued growth of the Internet
and intense competition in our industry exacerbates these market characteristics. Our future success will depend on our ability
to adapt to rapidly changing technologies by continually improving the performance features and reliability of our hempSMART™
products. We may experience difficulties that could delay or prevent the successful development, introduction or marketing of our
hempSMART™ products. In addition, any new enhancements must meet the requirements of our current and prospective customers
and must achieve significant market acceptance. We could also incur substantial costs if we need to modify our hempSMART™
products and services or infrastructures to adapt to these changes.

 

We also expect that new competitors may introduce
products or services that are directly or indirectly competitive with us. These competitors may succeed in developing, products
and services that have greater functionality or are less costly than our products and services and may be more successful in marketing
such products and services. Technological changes have lowered the cost of operating communications and computer systems and purchasing
software. These changes reduce our cost of selling products and providing services, but also facilitate increased competition by
reducing competitors’ costs in providing similar services. This competition could increase price competition and reduce anticipated
profit margins.

 

Our hempSMART™ products are relatively
new and our industry is rapidly evolving.

 

Due consideration must be given to our prospects
in light of the risks, uncertainties and difficulties frequently encountered by companies in their early stage of development,
particularly companies in the rapidly evolving legal cannabis and hemp industries. To be successful we must, among other things:

 

 

Develop, manufacture and introduce new attractive and successful consumer products in our hempSMART™ brand.

 

 

Attract and maintain a large customer base and develop and grow that customer base.

 

 

Increase awareness of our hempSMART™ brand and develop effective marketing strategies to insure consumer loyalty.

 

 

Establish and maintain strategic relationships with key sales, marketing, manufacturing and distribution providers.

 

 

Respond to competitive and technological developments.

 

 

Attract, retain and motivate qualified personnel.

 

We may be unable to fully capture the
expected value from our new joint venture operations in Brazil and Uruguay..

 

In connection with our entry into new joint
ventures in Brazil and Uruguay, we face numerous risks and uncertainties, including effectively integrating our respective personnel,
management controls and business relationships into an effective and cohesive operation. Further, we are subject to additional
risks and uncertainties because we may be dependent upon, and subject to, liability losses or damages relating to system controls
and personnel that are not under our control. The joint venture business may be subject to unforeseeable negative market conditions,
economic downturns, and legal and political considerations in Brazil and Uruguay.

 

Our joint ventures in Brazil and Uruguay will
rely significantly upon the activities of our joint venture partners. We will rely upon our joint venture partner’s Brazilian
and Uruguayan personnel, business acumen, experience and involvement to seek economic success and the joint ventures’ compliance
with applicable Brazilian and Uruguayan laws.

 

If we are unable to integrate and monitor our
Brazilian and Uruguayan joint ventures successfully and efficiently, there is a risk that our results of operations, financial
condition and cash flows may be materially and adversely affected. In addition, conflicts or disagreements between us and our joint
venture partners in Brazil and Uruguay may negatively impact the benefits to be achieved by the relevant joint venture. There is
no assurance that our joint ventures will be successfully integrated or yield all of the positive benefits anticipated.

 

 

 

Our joint venture investments in Latin America, and other
joint venture investments that we make in the future, could be adversely affected by our lack of sole decision-making authority,
our reliance on co-venturers’ financial condition and liquidity and disputes between us and our co-venturers.

 

In addition to our new joint venture projects
in Brazil and Uruguay, which are in development stage, will require financial investment on our part, and have not yet generated
revenue for the Company, we may co-invest in other joint ventures in the future with third parties through partnerships or other
joint ventures, acquiring non-controlling interests in or sharing responsibility for any such ventures. In this event, we would
not be in a position to exercise sole decision-making authority regarding the joint venture and, in certain cases, may have little
or no decision-making authority. Investments through partnerships or other joint ventures may, under certain circumstances, involve
risks not present were a third party not involved, including the possibility that partners or co-venturers might become bankrupt,
fail to fund their share of required capital contributions, make dubious business decisions or block or delay necessary decisions.
Partners or co-venturers may have economic or other business interests or goals which are inconsistent with our business interests
or goals, and may be in a position to take actions contrary to our policies or objectives. Such investments may also have the potential
risk of impasses on decisions, such as a sale, because neither we nor the partner or co-venturer would have full control over the
partnership or joint venture. Disputes between us and partners or co-venturers may result in litigation or arbitration that would
increase our expenses and prevent our executive officers, senior management and/or directors from focusing their time
and effort on our business. Consequently, action by, or disputes with, partners or co-venturers might result in subjecting properties
owned by the partnership or joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions
of our third-party partners or co-venturers.

 

We cannot guarantee that we will succeed
in achieving our goals, and our failure to do so would have a material adverse effect on our business, prospects, financial condition
and operating results.

 

Some of our hempSMART™ products are new
and are only in the developmental stages of commercialization. We are not certain that these products will function as anticipated
or be desirable to their intended markets. Also, some of our products may have limited functionalities, which may limit their appeal
to consumers and put us at a competitive disadvantage. If our current or future hempSMART™ products fail to function properly
or if we do not achieve or sustain market acceptance, we could lose customers or could be subject to claims which could have a
material adverse effect on our business, financial condition and operating results.

 

As is typical in a new and rapidly evolving
industry, demand and market acceptance for recently introduced products and services are subject to a high level of uncertainty
and risk. Because the market for our Company is evolving, it is difficult to predict with any certainty the ultimate size of this
market and its growth rate, if any. We cannot guarantee that a market for our products will develop or that demand for our products
will emerge or be sustainable. If the market fails to develop, develops more slowly than expected or becomes saturated with competitors,
our business, financial condition and operating results would be materially adversely affected.

 

The Company’s failure to continue
to attract, train, or retain highly qualified personnel could harm the Company’s business.

 

The Company’s success also depends on
the Company’s ability to attract, train, and retain qualified personnel, specifically those with management and product development
skills. In particular, the Company must hire additional skilled personnel to further the Company’s research and development
efforts. Competition for such personnel is intense. If the Company does not succeed in attracting new personnel or retaining and
motivating the Company’s current personnel, the Company’s business could be harmed.

 

If we are unable to attract and retain
independent associates, our business may suffer.

 

Our future success depends largely upon our
ability to attract and retain a large active base of independent direct sales associates and members who purchase our hempSMART™
products. We cannot give any assurances that the number of our independent associates will be established or increase in the future.
Several factors affect our ability to attract and retain independent associates and members, including: on-going motivation of
our independent associates; general economic conditions; significant changes in the amount of commissions paid; public perception
and acceptance of our industry; public perception and acceptance of multi-level marketing; public perception and acceptance of
our business and our products, including any negative publicity; the limited number of people interested in pursuing multi-level
marketing as a business; our ability to provide proprietary quality-driven products that the market demands; and, competition in
recruiting and retaining independent associates.

 

The loss of key management personnel
could adversely affect our business.

 

We depend on the continued services of our
executive officers and senior management team as they work closely with independent associate leaders and are responsible for our
day-to-day operations. Our success depends in part on our ability to retain our executive officers, to compensate our executive
officers at attractive levels, and to continue to attract additional qualified individuals to our management team. Although we
have entered into employment agreements with our senior management team, and do not believe that any of them are planning to leave
or retire in the near term, we cannot assure that our senior managers will remain with us. The loss or limitation of the services
of any of our executive officers or members of our senior management team, or the inability to attract additional qualified management
personnel, could have a material adverse effect on our business, financial condition, results of operations, or independent associate
relations.

 

 

  

If government regulations regarding multi-level
marketing change or are interpreted or enforced in a manner adverse to our business, we may be subject to new enforcement actions
and material limitations regarding our overall business model.

 

Multi-level marketing is subject to foreign,
federal, and state regulations. Any change in legislation and regulations could affect our business. Furthermore, significant penalties
could be imposed on us for failure to comply with various statutes or regulations resulting from: ambiguity in statutes; regulations
and related court decisions; the discretion afforded to regulatory authorities and courts interpreting and enforcing laws; and
new regulations or interpretations of regulations affecting our business.

 

If our network marketing activities do
not comply with government regulations, our business could suffer.

 

Many governmental agencies regulate our multi-level
marketing activities. A government agency’s determination that our business or our independent associates have significantly
violated a law or regulation could adversely affect our business. The laws and regulations for multi-level marketing intend to
prevent fraudulent or deceptive schemes. Our business faces constant regulatory scrutiny due to the interpretive and enforcement
discretion given to regulators, periodic misconduct by our independent associates, adoption of new laws or regulations, and changes
in the interpretation of new or existing laws or regulations.

 

Independent associates could fail to
comply with our policies and procedures or make improper product, compensation, marketing or advertising claims that violate laws
or regulations, which could result in claims against us that could harm our financial condition and operating results.

 

In part, we sell our products through a sales
force of independent associates. The independent associates are independent contractors and, accordingly, we are not in a position
to provide the same direction, motivation, and oversight as we would if associates were our own employees. As a result, there can
be no assurance that our associates will participate in our marketing strategies or plans, accept our introduction of new products,
or comply with our associate policies and procedures. All independent associates will be required to sign a written contract and
agree to adhere to our policies and procedures, which prohibit associates from making false, misleading or other improper claims
regarding our hempSMART™ products or income potential from the distribution of the products. However, independent associates
may from time to time, without our knowledge and in violation of our policies, create promotional materials or otherwise provide
information that does not accurately describe our marketing program. There is a possibility that some jurisdictions could seek
to hold us responsible for independent associate activities that violate applicable laws or regulations, which could result in
government or third-party actions or fines against us, which could harm our financial condition and operating results.

 

We may be held responsible for certain
taxes or assessments relating to the activities of our independent associates, which could harm our financial condition and operating
results.

 

Our independent associates are subject to taxation
and, in some instances, legislation or governmental agencies impose an obligation on us to collect taxes, such as value added taxes,
and to maintain appropriate tax records. In addition, we are subject to the risk in some jurisdictions of being responsible for
social security and similar taxes with respect to our distributors. In the event that local laws and regulations require us to
treat our independent distributors as employees, or if our distributors are deemed by local regulatory authorities to be our employees,
rather than independent contractors, we may be held responsible for social security and related taxes in those jurisdictions, plus
any related assessments and penalties, which could harm our financial condition and operating results.

  

There could be unidentified risks involved
with an investment in our securities.

 

The foregoing risk factors are not a complete
list or explanation of the risks involved with an investment in the securities. Additional risks will likely be experienced that
are not presently foreseen by the Company. Prospective investors must not construe this the information provided herein as constituting
investment, legal, tax or other professional advice. Before making any decision to invest in our securities, you should read this
entire prospectus and consult with your own investment, legal, tax and other professional advisors. An investment in our securities
is suitable only for investors who can assume the financial risks of an investment in the Company for an indefinite period of time
and who can afford to lose their entire investment. The Company makes no representations or warranties of any kind with respect
to the likelihood of the success or the business of the Company, the value of our securities, any financial returns that may be
generated or any tax benefits or consequences that may result from an investment in the Company.

 

 

Risks Related to the Company

 

Uncertainty of profitability

 

Our business strategy may result in increased
volatility of revenues and earnings. As we will only develop a limited number of products at a time, our overall success will depend
on a limited number of products, which may cause variability and unsteady profits and losses depending on the products and/or services
offered and their market acceptance.

 

Our revenues and our profitability may be adversely
affected by economic conditions and changes in the market for our products. Our business is also subject to general economic risks
that could adversely impact the results of operations and financial condition.

 

Because of the anticipated nature of the products
that we offer and attempt to develop, it is difficult to accurately forecast revenues and operating results and these items could
fluctuate in the future due to a number of factors. These factors may include, among other things, the following:

 

 

Our ability to raise sufficient capital to take advantage of opportunities and generate sufficient revenues to cover expenses.

 

 

Our ability to source strong opportunities with sufficient risk adjusted returns.

 

 

Our ability to manage our capital and liquidity requirements based on changing market conditions generally and changes in the developing legal medical marijuana and recreational marijuana industries.

 

 

The acceptance of the terms and conditions of our multi-level sales agreements.

 

 

The amount and timing of operating and other costs and expenses.

 

 

The nature and extent of competition from other companies that may reduce market share and create pressure on pricing and investment return expectations.

 

 

Adverse changes in the national and regional economies in which we will participate, including, but not limited to, changes in our performance, capital availability, and market demand.

 

 

Adverse changes in the projects in which we plan to invest which result from factors beyond our control, including, but not limited to, a change in circumstances, capacity and economic impacts.

 

 

Adverse developments in the efforts to legalize cannabis or increased federal enforcement.

 

 

Changes in laws, regulations, accounting, taxation, and other requirements affecting our operations and business.

 

 

Our operating results may fluctuate from year to year due to the factors listed above and others not listed. At times, these fluctuations may be significant.

 

Management of growth will be necessary
for us to be competitive.

 

Successful expansion of our business will depend
on our ability to effectively attract and manage staff, strategic business relationships, and shareholders. Specifically, we will
need to hire skilled management and technical personnel as well as manage partnerships to navigate shifts in the general economic
environment. Expansion has the potential to place significant strains on financial, management, and operational resources, yet
failure to expand will inhibit our profitability goals.

 

We are operating in a highly competitive
market.

 

The markets for businesses in the hemp industry
is competitive and evolving. In particular, we face strong competition from larger companies that may be in the process of offering
similar products and services to ours. Many of our current and potential competitors have longer operating histories, significantly
greater financial, marketing and other resources and larger client bases than we have (or may be expected to have).

 

Given the rapid changes affecting the global,
national, and regional economies generally and the cannabis and hemp industries, in particular, we may not be able to create and
maintain a competitive advantage in the marketplace. Our success will depend on our ability to keep pace with any changes in its
markets, especially with legal and regulatory changes. Our success will depend on our ability to respond to, among other things,
changes in the economy, market conditions, and competitive pressures. Any failure by us to anticipate or respond adequately to
such changes could have a material adverse effect on our financial condition, operating results, liquidity, cash flow and our operational
performance.

 

 

 

It is unknown whether the passage of
the Farm Bill will provide us trademark protection for our hempSMART™ brand and products.

 

We have applied for a trademark for our hempSMART™
brand name. Before passage of the Farm Bill, we were uncertain that we could obtain patent or trademark protection for our products
Because hemp derived CBD was considered an illegal Schedule 1 drug under the CSA at the time. With the passage of the Farm Bill,
we may be able to overcome these uncertainties, since hemp containing less than 0.3% THC is no longer a Schedule 1 drug under the
CSA. However, we cannot guarantee more favorable treatment and the failure to obtain trademark protection may materially impact
our brand establishment, sales and good will.

 

If we fail to protect our intellectual
property, our business could be adversely affected.

 

Our viability will depend, in part, on our
ability to develop and maintain the proprietary aspects of our hempSMART™ products and brand to distinguish our hempSMART™
products and services from our competitors’ products and services. We rely on patents, copyrights, trademarks, trade secrets,
and confidentiality provisions to establish and protect our intellectual property.

 

Any infringement or misappropriation of our
intellectual property could damage its value and limit our ability to compete. We may have to engage in litigation to protect the
rights to our intellectual property, which could result in significant litigation costs and require a significant amount of our
time.

 

Competitors may also harm our sales by designing
products that mirror the capabilities of our products or technology without infringing on our intellectual property rights. If
we do not obtain sufficient protection for our intellectual property, or if we are unable to effectively enforce our intellectual
property rights, our competitiveness could be impaired, which would limit our growth and future revenue.

 

We may also find it necessary to bring infringement
or other actions against third parties to seek to protect our intellectual property rights. Litigation of this nature, even if
successful, is often expensive and time-consuming to prosecute, and there can be no assurance that we will have the financial or
other resources to enforce our rights or be able to enforce our rights or prevent other parties from developing similar technology
or designing around our intellectual property.

 

Our trade secrets may be difficult to
protect.

 

Our success depends upon the skills, knowledge
and experience of our scientific and technical personnel, our consultants and advisors, as well as our contractors. Because we
operate in a highly competitive industry, we rely in part on trade secrets to protect our proprietary hempSMART™ products
and processes. However, trade secrets are difficult to protect. We enter into confidentiality or non-disclosure agreements with
our corporate partners, employees, consultants, outside scientific collaborators, developers and other advisors. These agreements
generally require that the receiving party keep confidential and not disclose to third party’s confidential information developed
by the receiving party or made known to the receiving party by us during the course of the receiving party’s relationship
with us. These agreements also generally provide that inventions conceived by the receiving party in the course of rendering services
to us will be our exclusive property, and we enter into assignment agreements to perfect our rights.

 

These confidentiality, inventions and assignment
agreements may be breached and may not effectively assign intellectual property rights to us. Our trade secrets also could be independently
discovered by competitors, in which case we would not be able to prevent the use of such trade secrets by our competitors. The
enforcement of a claim alleging that a party illegally obtained and was using our trade secrets could be difficult, expensive
and time consuming and the outcome would be unpredictable. The failure to obtain or maintain meaningful trade secret protection
could adversely affect our competitive position.

 

Our Business Can be Affected by Unusual
Weather Patterns.

 

The production of some of our hempSMART™
products relies on the availability and use of live hemp plant material. Growing periods can be impacted by weather patterns and
these unpredictable weather patterns may impact our ability to harvest hemp. In addition, severe weather, including drought and
hail, can destroy a hemp crop, which could result in our having no hemp to harvest, process and sell. If our suppliers are unable
to obtain sufficient hemp from which to process CBD, our ability to meet customer demand, generate sales, and maintain operations
will be impacted.

 

Our hempSMART™ sales in the UK
may be subject to unforeseeable events and regulation that may have a material impact on our efforts to sell our hempSMART™
products in the UK.

 

Currently, the UK regulates wellness products
containing CBD through its Medicines and Healthcare products Regulatory Agency (“MHRA”). Pursuant to the MHRA, only
wellness products containing less than 0.2% THC may be sold in the UK. Our latest laboratory results from testing the THC content
of our hempSMART™ products containing CBD derived from industrial hemp show that our products approach 0% THC. While we are
confident that our hempSMART™ products are compliant with regulations in both the UK, these regulations may change unforeseeably,
and any such changes may have a material effect on our ability to market and sell our hempSMART™ products in the UK. Additionally,
we rely on affiliates in the UK for the administration of our business there. We have not to date established an effective warehousing
protocol to efficiently store and deliver products there. The failure of our UK affiliates to efficiently handle the storage and
distribution of our products could create a material deficiency in conducting our business there.

 

 

 

Risks Related to Our Common Stock

 

Because we may issue additional shares
of our common stock, investment in our company could be subject to substantial dilution.

 

Investors’ interests in our Company will
be diluted and investors may suffer dilution in their net book value per share when we issue additional shares. Dilution is the
difference between what investors pay for their stock and the net tangible book value per share immediately after the additional
shares are sold by us. We are authorized to issue 15,000,000,000 shares of common stock, $0.001 par value per share. As
of November 23, 2020, there were 2,021,510,356 shares of our common stock in the public float. Our financing activities in
the past focused on convertible note financing that requires us to issue shares of common stock to satisfy principal, interest
and any applicable penalties related to these convertible notes. When required under the terms and conditions of the convertible
notes, we issue additional shares of common stock that have a dilutive effect on our stockholders. We anticipate that all or at
least some of our future funding, if any, will be in the form of equity financing from the sale of our common stock and so any
investment in our company will be diluted, with a resulting decline in the value of our common stock.

 

Our variably priced convertible notes
will result in dilution.

 

We have entered into various financing instruments
containing terms making interest and principal convertible into our common stock at variable prices. As is referenced elsewhere
in this filing, some of those financiers are St. George Investments, LLC, John Fife, GS Capital, Paladin Advisors, LLC, Power Up
Lending, Crown Bridge, LG Capital, Jefferson Street Capital and White Lion Partners. As a result, we may be required to issue additional
shares of our common stock which will cause material dilution. As a result, such issuances will materially reduce the value of
existing investors’ shares and their proportional ownership of our company.

 

Our financing instrument with Power Up
Lending may impede a successful corporate action.

  

FINRA may or may not allow us to complete a
corporate action including, but not limited to, a change of our name and/or trading symbol, due to our financing arrangements with
Power Up Lending and St. George Investments, LLC. One of Power Up Lending’s principals was involved with a former SEC enforcement
action. The principal of St. George Investments, LLC, John Fife, is currently involved, as a defendant, in an SEC enforcement litigation.
The action with Power Up and its affiliate completed without liability to Power Up or the Power Up affiliate, and the action with
John Fife and St. George Investments LLC is ongoing. FINRA has, from time to time when considering whether or not to grant a corporate
action, determined that association with Power Up is a deficiency causing rejection of corporate actions, and FINRA may take a
similar stance with St. George Investments LLC.

 

Trading in our common stock on the OTCQB
Exchange has been subject to wide fluctuations.

 

Our common stock is currently quoted for public
trading on the OTC Pink Market Tier. The trading price of our common stock has been subject to wide fluctuations. Trading prices
of our common stock may fluctuate in response to a number of factors, many of which will be beyond our control, including our issuance
of additional common shares at variable prices to our convertible note holders. The stock market has generally experienced extreme
price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with
limited business operation. There can be no assurance that trading prices and price earnings ratios previously experienced by our
common stock will be matched or maintained. These broad market and industry factors may adversely affect the market price of our
common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a company’s
securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial
costs for us and a diversion of management’s attention and resources.

 

Our common stock has been delisted from
OTC Markets OTCQB listing tier to OTC Markets Pink listing tier.

 

Our common stock traded below $0.01 per share
on the OTC Markets’ QB trading tier for more than 30 consecutive calendar days, and as a result we no longer met the Standards
for Continued Eligibility for OTCQB as per the OTCQB Standards, Section 2.3(2), which state that the company must “maintain
proprietary priced quotations published by a Market Maker in OTC Link with a minimum closing bid price of $.01 per share on at
least one of the prior thirty consecutive calendar days.”

 

As per Section 4.1 of the OTCQB Standards,
the Company was granted a cure period of 90 calendar days, and at the Company’s petition, the OTCQB granted the Company an
extension from this requirement, until October 2020. However, the Company did not meet the requirement and was down-listed from
the OTCQB marketplace to the OTC Markets Pink listing tier.

  

 

 

Utah law, our Certificate of Incorporation
and our by-laws provides for the indemnification of our officers and directors at our expense, and correspondingly limits their
liability, which may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be
expended for the benefit of officers and/or directors.

 

Our Certificate of Incorporation and By-Laws
include provisions that eliminate the personal liability of our directors for monetary damages to the fullest extent possible under
the laws of the State of Utah or other applicable law. These provisions eliminate the liability of our directors and our shareholders
for monetary damages arising out of any violation of a director of his fiduciary duty of due care. Under Utah law, however, such
provisions do not eliminate the personal liability of a director for (i) breach of the director’s duty of loyalty, (ii) acts
or omissions not in good faith or involving intentional misconduct or knowing violation of law, (iii) payment of dividends or repurchases
of stock other than from lawfully available funds, or (iv) any transaction from which the director derived an improper benefit.
These provisions do not affect a director’s liabilities under the federal securities laws or the recovery of damages by third
parties.

 

We do not intend to pay cash dividends
on any investment in the shares of stock of our Company and any gain on an investment in our Company will need to come through
an increase in our stock’s price, which may never happen.

 

We have never paid any cash dividends and currently
do not intend to pay any cash dividends for the foreseeable future. To the extent that we require additional funding currently
not provided for, our funding sources may prohibit the payment of a dividend. Because we do not currently intend to declare dividends,
any gain on an investment in our company will need to come through an increase in the stock’s price. This may never happen,
and investors may lose all of their investment in our company.

  

FINRA sales practice requirements may
also limit a stockholder’s ability to buy and sell our stock.

 

The Financial Industry Regulatory Authority
(known as “FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative
low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about
the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these
rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least
some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common shares,
which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

 

Costs and expenses of being a reporting
company under the 1934 Securities and Exchange Act may be burdensome and prevent us from achieving profitability.

 

As a public company, we are subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended, and parts of the Sarbanes-Oxley Act. We expect that
the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs,
make some activities more difficult, time-consuming and costly, and place significant strain on our personnel, systems and resources.

 

There could be unidentified risks involved
with an investment in our securities.

 

The foregoing risk factors are not a complete
list or explanation of the risks involved with an investment in the securities. Additional risks will likely be experienced that
are not presently foreseen by the Company. Prospective investors must not construe this the information provided herein as constituting
investment, legal, tax or other professional advice. Before making any decision to invest in our securities, you should read this
entire prospectus and consult with your own investment, legal, tax and other professional advisors. An investment in our securities
is suitable only for investors who can assume the financial risks of an investment in the Company for an indefinite period of time
and who can afford to lose their entire investment. The Company makes no representations or warranties of any kind with respect
to the likelihood of the success or the business of the Company, the value of our securities, any financial returns that may be
generated or any tax benefits or consequences that may result from an investment in the Company.

 

 

 

THE OFFERING

 

This prospectus relates to the sale of 646,883,314
shares of common stock, par value $0.001, of the Company at a price of $0.002 per share on a best efforts basis. This offering
(the “Offering”) terminates 24 months after commencement of this offering. The Company is offering the shares on a
self-underwritten “best efforts” basis directly through its CEO and director, Jesus Quintero. There is no minimum amount
of common shares required to be purchased, and the total proceeds received by the Company might not be enough to continue operations
or a market may not develop. No commission or other compensation related to the sale of the shares will be paid. For more information,
see the section titled “Plan of Distribution” and “Use of Proceeds” herein.

 

USE OF PROCEEDS

 

We estimate the net proceeds to us from this
offering will be approximately $1,273,767, based on an assumed initial offering price of $0.002 per share, after deducting estimated
offering expenses payable by us.

 

We anticipate that the net proceeds of the
Offering will be used primarily to execute our business plan as follows: $150,000 for inventory and product development, $350,000
for extinguishing debt and debt service, $350,000 for potential acquisition(s) in the hemp sector (we have located potential acquisition
candidates), $100,000 for advertising and marketing costs, $120,000 for staffing and personnel costs, $173,767 for general working
capital, and $30,000 remaining in cash reserves. Additionally, proceeds will be used for website development, paying other general
and administrative expenses associated with this offering, and paying general and administrative expenses associated with being
a public company, such as accounting, auditing, transfer agent, EDGAR filing, and legal expenses. The precise amounts that the
Company will devote to its programs will vary depending on numerous factors, including but not limited to, the progress and results
of its research and assessments as to the market reception of the Company’s beverage products. In the event that we sell
less than the maximum shares offered in the Offering, our first priority is to pay fees associated with registration of our stock
and developing our website (and expanding our internet sales platforms), and then increasing our inventory and marketing efforts.
The following table summarizes how we anticipate using the gross proceeds of the Offering, depending upon whether we sell 100%,
75%, 50%, or 25% of the shares being offered in the Offering:

 

 
 
If 25% of
 
If 50% of
 
If 75% of
 
If 100%Shares Sold
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 Gross Proceeds
 
$
323,442
 
 
$
646,883
 
 
$
970,325
 
 
$
1,293,767
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Expected offering expenses
 
 
20,000
 
 
 
20,000
 
 
 
20,000
 
 
 
20,000
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Net Proceeds
 
 
303,442
 
 
 
626,883
 
 
 
950,325
 
 
 
1,273,767
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Inventory & Product Development
 
 
37,500
 
 
 
75,000
 
 
 
112,500
 
 
 
150,000
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Extinguish Debt & Debt Services
 
 
87,500
 
 
 
175,000
 
 
 
262,500
 
 
 
350,000
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Potential Acquisition(s)
 
 
87,500
 
 
 
175,000
 
 
 
262,500
 
 
 
350,000
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Advertising and marketing
 
 
25,000
 
 
 
50,000
 
 
 
75,000
 
 
 
100,000
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Staffing
 
 
30,000
 
 
 
60,000
 
 
 
90,000
 
 
 
120,000
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 General Working Capital
 
 
35,942
 
 
 
86,884
 
 
 
130,325
 
 
 
173,767
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Cash Reserves
 
 
0
 
 
 
5,000
 
 
 
17,500
 
 
 
30,000
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Total
 
$
303,442
 
 
$
626,883
 
 
$
950,325
 
 
$
1,273,767
 

 

The Company anticipates that the estimated
$1,293,767 gross proceeds from the offering would enable it to purchase new inventory, improve product development, expand operations,
and fund its other capital needs for the next fiscal year. In the event that the offering is not completed, the Company will likely
be required to seek additional financing as the Company needs a minimum of approximately $1,000,000 in gross proceeds to implement
its business plan and support its operations over the next twelve months. There can be no assurance that additional financing will
be available when needed, and, if available, that it will be on terms acceptable to the Company.

  

DETERMINATION OF OFFERING PRICE

 

The shares for sale by the Company in the Offering
of 646,883,314 shares will be sold at estimated price of $0.002 per share.

 

 

DIVIDEND POLICY

 

We have not declared or paid dividends on our
common stock since our formation, and we do not anticipate paying dividends in the foreseeable future. Declaration or payment of
dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend on our then current financial
condition, results of operations, capital requirements and other factors deemed relevant by the Board of Directors. There are no
contractual restrictions on our ability to declare or pay dividends. Consequently, you will only realize an economic gain on your
investment in our common stock if the price appreciates. You should not purchase our common stock expecting to receive cash dividends.
Since we do not anticipate paying dividends, and if we are not successful in establishing an orderly public trading market for
our shares, then you may not have any manner to liquidate or receive any payment on your investment. Therefore, our failure to
pay dividends may cause you to not see any return on your investment even if we are successful in our business operations. In addition,
because we may not pay dividends in the foreseeable future, we may have trouble raising additional funds which could affect our
ability to expand our business operations.

 

MARKET FOR OUR COMMON STOCK

  

Market Information

 

Our common stock is quoted on the OTC Link
alternative trading system operated by OTC Markets Group, Inc., at the “Pink” level under the symbol “MCOA”.

 

The market price of our common stock is subject
to significant fluctuations in response to variations in our quarterly operating results, general trends in the market and other
factors, over many of which we have little or no control. In addition, broad market fluctuations, as well as general economic,
business and political conditions, may adversely affect the market for our common stock, regardless of our actual or projected
performance.

 

Holders

 

We had 387 shareholders of record of our common
stock as of November 18, 2020.

  

Dividends

  

Please see “Dividend Policy” above.

 

FORWARD-LOOKING STATEMENTS

  

Information included or incorporated by reference
in this prospectus may contain forward-looking statements. This information may involve known and unknown risks, uncertainties
and other factors which may cause our actual results, performance or achievements to be materially different from the future results,
performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions
and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “should,”
“expect,” “anticipate,” “estimate,” “believe,” “intend” or “project”
or the negative of these words or other variations on these words or comparable terminology.

    

This prospectus contains forward-looking statements,
including statements regarding, among other things, (a) our projected sales and profitability, (b) our production and technology,
(c) the regulation to which we are subject, (d) anticipated trends in our industry and (e) our needs for working capital. These
statements may be found under “Management’s Discussion and Analysis or Plan of Operations” and “Business,”
as well as in this Prospectus generally. Actual events or results may differ materially from those discussed in forward-looking
statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and
matters described in this Prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking
statements contained in this prospectus will in fact occur.

Except as otherwise required by applicable
laws, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in the
prospectus, whether as a result of new information, future events, changed circumstances or any other reason after the date of
this prospectus.

 

DILUTION TO STOCKHOLDERS

 

Just prior to the Offering there are 2,053,481,896
common shares outstanding. The 646,883,314 of the Company’s common shares being offered by the Company in the Offering represent
a dilution event to common stockholders that will result in a new total for outstanding and issued common shares of 2,723,303,396.

 

The following table, which
is based on the most recent balance sheet date, illustrates dilution to investors on an approximate dollar per share basis, depending
upon whether we sell 100%, 75%, 50%, or 25% of the Shares being offered in the Offering:

 

Percentage of Offering Shares Sold
 
 
100
%
 
 
75
%
 
 
50
%
 
 
25
%Offering price per share
 
$
0.002
 
 
$
0.002
 
 
$
0.002
 
 
$
0.002
 Net tangible book value per share before offering
 
 
0.0010
 
 
 
0.0735
 
 
 
0.0490
 
 
 
0.0245
 Increase per share attributable to investors
 
 
(0.00023)
 
 
 
(0.0176)
 
 
 
(0.0117)
 
 
 
(0.0059)
 Pro forma net tangible book value per share after offering
 
 
0.00075
 
 
 
0.0559
 
 
 
0.0373
 
 
 
0.0186
 Dilution per share attributable to investors in this offering
 
 
(0.00023)
 
 
 
(0.0176)
 
 
 
(0.0117)
 
 
 
(0.0059)
 

 

 

 

 

 

 

FINANCIAL STATEMENTS 

 

 

 

 

 

REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors
and Stockholders of

Marijuana
Company of America, Inc. (Converge Global, Inc.)

 

Opinion
on the Financial Statements

We
have audited the accompanying balance sheets of
Marijuana Company of America,
Inc. and its subsidiaries (“the Company”) as of December 31, 2019 and December 31, 2018 and the related statements
of operations, stockholders’ deficit, cash flow and the related notes to consolidated financial statements (collectively
referred to as the consolidated financial statements) for the year ended December 31, 2019 and December 31, 2018. In our opinion,
the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December
31, 2019 and December 31, 2018, and the results of its operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.

 

Basis for Opinion

These consolidated
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s consolidated financial statements based on our audits. 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 Company’s 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 audits 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 audits provide a reasonable basis for our opinion.

 

The Company’s Ability to Continue
as a Going Concern

The accompanying
consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 2 to the consolidated financial statements, the Company has an accumulated deficit, recurring losses, and expects continuing
future losses, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern.
Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described
in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

The
firm has served this client since December 2016.

 

/s/ L&L CPAS, PA

L&L CPAS, PA

Certified Public Accountants

Plantation, FL

The United States of America

May 14, 2020

 

 

MARIJUANA COMPANY OF AMERICA, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS   (Audited)
  
  
 
December 31,
  
 
2019
 
2018
  
 
 
 
 
 ASSETS
 
 
 
 
 
 
 
 Current assets:
 
 
 
 
 
 
 
 Cash
 
$
211,765
 
 
$
359,577
 Short-term Investments
 
 
27,403
 
 
 
810,000
 Accounts receivable, net
 
 
18,317
 
 
 
46,376
 Inventory
 
 
149,175
 
 
 
186,989
 Other current assets
 
 
11,034
 
 
 
93,833
   Total current assets
 
 
417,694
 
 
 
1,496,775
  
 
 
 
 
 
 
 
 Property and equipment, net
 
 
7,512
 
 
 
12,430
  
 
 
 
 
 
 
 
 Other assets:
 
 
 
 
 
 
 
 Long-term Investments
 
 
693,915
 
 
 
408,077
 Right-of-use assets
 
 
22,101
 
 
 

 Security deposit
 
 
2,500
 
 
 
2,500
  
 
 
 
 
 
 
 
 Total assets
 
$
1,143,722
 
 
$
1,919,782
  
 
 
 
 
 
 
 
 LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
 
 
 
 
 
 
 Current liabilities:
 
 
 
 
 
 
 
 Accounts payable
 
$
797,790
 
 
$
416,444
 Accrued compensation
 
 
4,875
 
 
 
454,316
 Accrued liabilities
 
 
522,258
 
 
 
216,946
 Debt obligations of Joint venture
 
 

 
 
 
289,742
 Notes payable, related parties
 
 
40,000
 
 
 
287,140
 Convertible notes payable, net of debt discount of $808,890 and $896,180, respectively
 
 
3,193,548
 
 
 
1,132,668
 Right-of-use liabilities – current portion
 
 
14,361
 
 
 
—  
 Warrant liability to be settled
 
 
192,115
 
 
 
—  
 Contingency Liability
 
 
956,251
 
 
 
—  
 Subscriptions payable
 
 
330,797
 
 
 
—  
 Derivative liability
 
 
5,693,071
 
 
 
2,256,631
   Total current liabilities
 
 
11,745,066
 
 
 
5,053,887
  
 
 
 
 
 
 
 
 Noncurrent liabilities
 
 
 
 
 
 
 
 Right-of-use liabilities
 
 
7,858
 
 
 
—  
  
 
 
 
 
 
 
 
 Total liabilities
 
 
11,752,924
 
 
 
5,053,887
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 Stockholders’ deficit:
 
 
 
 
 
 
 
 Preferred stock, $0.001 par value, 50,000,000 shares authorized
 
 
 
 
 
 
 
 Class A preferred stock, $0.001 par value, 10,000,000 shares designated, 10,000,000 shares issued and outstanding as of December 31, 2019 and December 31, 2018
 
 
10,000
 
 
 
10,000
 Class B preferred stock, $0.001 par value, 5,000,000 shares designated, 0 shares issued and outstanding as of December 31, 2019 and December 31, 2018
 
 
—  
 
 
 
—  
 Common stock, $0.001 par value; 5,000,000,000 shares authorized; 77,958,081 and 42,687,301 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively
 
 
77,958
 
 
 
42,687
 Common Stock to be issued
 
 

 
 
 
90,000
 Additional paid in capital
 
 
63,467,0564
 
 
 
50,707,103
 Accumulated deficit
 
 
(74,164,213
)
 
 
(53,983,895
)  Total stockholders’ deficit
 
 
(10,609,201
)
 
 
(3,134,105
) 
 
 
 
 
 
 
 
 Total liabilities and stockholders’ deficit
 
$
1,143,722
 
 
$
1,919,782
  
 
 
 
 
 
 
 
 See the accompanying notes to these audited condensed consolidated financial statements
 

 

MARIJUANA COMPANY OF AMERICA, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE 12 MONTHS ENDED DECEMBER 31, 2019 and 2018(AUDITED) 
 
 
 
  
 
  
 
 
2019
 
 
 
2018
 REVENUES:
 
 
 
 
 
 
 
 Sales
 
$
673,919
 
 
$
240,452
 Related party Sales
 
 
21,157
 
 
 
11,683
 Total Revenues
 
 
695,076
 
 
 
252,135
  
 
 
 
 
 
 
 
 Cost of sales
 
 
248,556
 
 
 
81,250
  
 
 
 
 
 
 
 
 Gross Profit
 
 
446,520
 
 
 
170,885
  
 
 
 
 
 
 
 
 OPERATING EXPENSES:
 
 
 
 
 
 
 
 Selling, general and administrative expenses
 
 
6,910,039
 
 
 
3,980,493
 Depreciation
 
 
7,299
 
 
 
5,341
   Total operating expenses
 
 
6,917,338
 
 
 
3,985,834
  
 
 
 
 
 
 
 
 Net loss from operations
 
 
(6,470,818
)
 
 
(3,814,949
) 
 
 
 
 
 
 
 
 OTHER INCOME (EXPENSES):
 
 
 
 
 
 
 
 Interest expense, net
 
 
(4,682,247
)
 
 
(6,828,939
)Legal contingency expense
 
 
(1,497,674
)
 
 
(1,682,870
)Impairment of Joint Ventures
 
 
(478,400
)
 
 
(933,195
)Loss on equity investment
 
 
(13,842
)
 
 
(90,859
)Loss on debt modification
 
 
—  
 
 
 
(1,343,161
)loss on disposition of investment
 
 
(389,664
)
 
 
—  
 (Loss) Gain on change in fair value of derivative liabilities
 
 
(2,123,570
)
 
 
1,443,249
 Gain on cancellation of debt
 
 
—  
 
 
 
1,500,000
 Unrealized (Loss) Gain on trading securities
 
 
(677,584
)
 
 
560,000
 Loss on sales of trading securities
 
 
(75,545
)
 
 
—  
 (Loss) Gain on settlement of debt
 
 
(3,770,974
)
 
 
94,933
   Total other income (expense)
 
 
(13,709,500
)
 
 
(7,280,842
) 
 
 
 
 
 
 
 
 Net loss before income taxes
 
 
(20,180,318
)
 
 
(11,095,791
) 
 
 
 
 
 
 
 
 Income taxes (benefit)
 
 
—  
 
 
 
—  
  
 
 
 
 
 
 
 
 NET INCOME (LOSS)
 
$
(20,180,318
)
 
$
(11,095,791
) 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 Loss per common share, basic and diluted
 
$
(0.41
)
 
$
(0.29
) 
 
 
 
 
 
 
 
 Weighted average number of common shares outstanding, basic and diluted (after stock-split)
 
 
48,669,683
 
 
 
37,924,703
  
 
 
 
 
 
 
 
 See the accompanying notes to these audited condensed consolidated financial statements
 
 

  

MARIJUANA COMPANY OF AMERICA, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICITFOR THE YEAR ENDED DECEMBER 31, 2019 AND 2018    (AUDITED) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 

Class A

Preferred Stock

 

Class B

Preferred Stock

 
Common Stock
 
Common Stock to be issued
 

Common

Stock

 

Additional

Paid In

 
Accumulated
 
  
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
Subscriptions
 
Capital
 
Deficit
 
TotalBalance, December 31, 2017
 
 
10,000,000
 
 
$
10,000
 
 
 
—  
 
 
$
—  
 
 
 
35,057,733
 
 
$
35,058
 
 
 
—  
 
 
$
—  
 
 
$
—  
 
 
$
32,525,294
 
 
$
(42,888,104
)
 
$
(10,317,752
)Common stock issued for services rendered
 
 
—  
 
 
 
—  
 
 
 
 
 
 
 
 
 
 
 
516,680
 
 
 
517
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
717,583
 
 
 
 
 
 
 
718,100
 Common stock issued in settlement of convertible notes payable and accrued interest
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,465,463
 
 
 
2,465
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
12,350,703
 
 
 
—  
 
 
 
12,353,168
 Additional paid-in capital due to issuance of convertible debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,010,426
 
 
 
 
 
 
 
2,010,426
 Common stock issued in settlement of related party and accrued compensation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,340,471
 
 
 
1,340
 
 
 
 
 
 
 
—  
 
 
 
 
 
 
 
802,939
 
 
 
 
 
 
 
804,279
 Common stock issued in exchange for exercise of warrants on a cashless basis
 
 
 
 
 
 
—  
 
 
 
 
 
 
 
 
 
 
 
2,034,112
 
 
 
2,034
 
 
 
—  
 
 
 
—  
 
 
 
 
 
 
 
(2,034
)
 
 
—  
 
 
 
—  
 Common stock issued in settlement of legal case
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
961,280
 
 
 
961
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,700,505
 
 
 
 
 
 
 
1,701,466
 Sale of common stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
311,561
 
 
 
312
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
151,688
 
 
 
 
 
 
 
152,000
 Proceeds from common stock subscriptions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
316,693
 
 
 
90,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
90,000
 Stock based compensation
 
 
 
 
 
 
—  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—  
 
 
 
—  
 
 
 
 
 
 
 
450,000
 
 
 
—  
 
 
 
450,000
 Net Loss
 
 
 
 
 
 
—  
 
 
 
 
 
 
 
 
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
(11,095,791
)
 
 
(11,095,791
)Balance, December 31, 2018
 
 
10,000,000
 
 
$
10,000
 
 
$
—  
 
 
$
—  
 
 
 
42,687,301
 
 
$
42,687
 
 
 
316,693
 
 
$
90,000
 
 
$
—  
 
 
$
50,707,104
 
 
$
(53,983,895
)
 
$
(3,134,104
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Common stock issued to settle amounts previously accrued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
141,669
 
 
 
142
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
26,975
 
 
 
 
 
 
 
193,800
 Common stock issued for services rendered
 
 
—  
 
 
 
—  
 
 
 
 
 
 
 
 
 
 
 
18,510,381
 
 
 
18,510
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
3,370,264
 
 
 
 
 
 
 
3,293,688
 Common stock issued in settlement of convertible notes payable and accrued interest
 
 
—  
 
 
 
—  
 
 
 
 
 
 
 
 
 
 
 
9,251,217
 
 
 
9,251
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,832,638
 
 
 
—  
 
 
 
5,424,736
 Issuance of warrants and BCF with convertible debt
 
 
—  
 
 
 
—  
 
 
 
 
 
 
 
 
 
 
 
1,000,000
 
 
 
1,000
 
 
 
—  
 
 
 
—  
 
 
 
 
 
 
 
855,717
 
 
 
 
 
 
 
856,717
 Conversion of related party notes payable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,220,856
 
 
 
1,221
 
 
 
954
 
 
 

 
 
 
 
 
 
 
1,181,194
 
 
 
 
 
 
 
1,182,415
 Common stock issued in exchange for exercise of warrants on a cashless basis
 
 
—  
 
 
 
—  
 
 
 
 
 
 
 
 
 
 
 
1,653,175
 
 
 
1,653
 
 
 
 
 
 
 
 
 
 
 
—  
 
 
 
(1,653
)
 
 
—  
 
 
 
—  
 Issuance of common shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
316,693
 
 
 
317
 
 
 
(316,693
)
 
 
(90,000
)
 
 
 
 
 
 
89,683
 
 
 
 
 
 
 
—  
 Sale of common stock
 
 
—  
 
 
 
—  
 
 
 
 
 
 
 
 
 
 
 
222,221
 
 
 
222
 
 
 
27,778
 
 
 
28
 
 
 
 
 
 
 
64,778
 
 
 
—  
 
 
 
90,000
 Common shares issued in settlement of legal case
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,082,398
 
 
 
2,083
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
539,341
 
 
 
 
 
 
 
541,424
 Common shares cancelled by officer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,349,877
)
 
 
(1,350
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,350
 
 
 
 
 
 
 
—  
 Issuance of common stock for investments in joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,222,047
 
 
 
2,222
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,216,818
 
 
 
 
 
 
 
1,219,040
 Reclassification of derivative liabilities to additional paid-in capital
 
 
—  
 
 
 
—  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,582,845
 
 
 
—  
 
 
 
1,582,845
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Net Loss
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
(20,180,318
)
 
 
(20,180,318
)Balance, December 31, 2019
 
 
10,000,000
 
 
$
10,000
 
 
 
10,000,000
 
 
$
—  
 
 
 
77,958,081
 
 
$
77,958
 
 
 
0

 
$
0
 
 
$
—  
 
 
$
63,467,054
 
 
$
(74,164,213
)
 
$
(10,609,201
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 See the accompanying notes to these audited condensed consolidated financial statements
 

MARIJUANA COMPANY OF AMERICA, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
 (AUDITED) 
 
 
2019
 
 
 
2018
 CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 Net Loss
 
$
(20,180,318
)
 
$
(11,095,791
)Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
 
 
 Loss(gain) in fair value of trading securities
 
 
677,584
 
 
 
(560,000
)Loss on sale of trading securities
 
 
105,013
 
 
 
—  
 Bad debt expense
 
 
15,000
 
 
 
1,559
 Depreciation and amortization
 
 
7,299
 
 
 
1,151,890
 Loss on equity investment
 
 
—  
 
 
 
90,859
 Share-based compensation
 
 
3,222,092
 
 
 
—  
 Amortization of debt discount
 
 
2,906,843
 
 
 
—  
 Impairment loss on equity method investee
 
 
286,127
 
 
 
—  
 Impairment loss on joint ventures
 
 
720,921
 
 
 
933,195
 Value of common stock issued for services
 
 
—  
 
 
 
737,305
 Value of vested options issued for services
 
 
—  
 
 
 
(245,001
)Loss(gain) on settlement of debt
 
 
3,770,974
 
 
 
(1,594,933
)Loss(gain) on change in fair value of derivative liability
 
 
2,123,570
 
 
 
(1,443,249
)Interest expense recognized for the excess of fair value of derivative liability over net book value of notes payable at issuance
 
 
1,374,078
 
 
 
6,885,654
 Imputed interest on stock-settled debt
 
 
147,115
 
 
 
—  
 Changes in operating assets and liabilities:
 
 
—  
 
 
 
 
 Accounts receivable
 
 
13,059
 
 
 
(43,073
)Inventories
 
 
37,814
 
 
 
(23,269
)Prepaid expenses and other current assets
 
 
57,799
 
 
 
 
 Accounts payable
 
 
171,629
 
 
 
394,003
 Accrued expenses and other current liabilities
 
 
(92,741
)
 
 
649,316
 Right-of-use assets
 
 
(22,101
)
 
 

 Right-of-use liabilities
 
 
22,219
 
 
 

 Accrued liabilities
 
 
322,068
 
 
 
99,316
 Contingency liability
 
 
1,497,674
 
 
 
1,676,870
 Net cash provided by (used in) operating activities
 
 
(2,816,282
)
 
 
(2,385,349
) 
 
 
 
 
 
 
 
 Cash flows from investing activities:
 
 
 
 
 
 
 
 Purchases of property and equipment
 
 
(2,381
)
 
 
(682,255
)Investment in joint ventures
 
 
(223,788
)
 
 
(4,203
)Net cash provided by (used in) investing activities
 
 
(226,169
)
 
 
(686,458
) 
 
 
 
 
 
 
 
 Cash flows from financing activities:
 
 
 
 
 
 
 
 Proceeds from stock sold for cash
 
 
90,000
 
 
 
421,237
 Proceeds from issuance of notes payable
 
 
2,802,500
 
 
 
2,541,470
 Proceeds from sale of cashless warrant
 
 
45,000
 
 
 
—  
 Repayments to related parties
 
 
(42,861
)
 
 
218,846
 Net cash provided by (used in) financing activities
 
 
2,894,639
 
 
 
3,181,553
  
 
 
 
 
 
 
 
 Net increase (decrease) in cash
 
 
(147,812
)
 
 
109,746
  
 
 
 
 
 
 
 
 Cash at beginning of period
 
 
359,577
 
 
 
249,831
  
 
 
 
 
 
 
 
 Cash at end of period
 
$
211,765
 
 
$
359,577
  
 
 
 
 
 
 
 
 Supplemental disclosure of cash flow information:
 
 
 
 
 
 
 
 Cash paid for interest
 
 
—  
 
 
 
—  
 Cash paid for taxes
 
 
—  
 
 
 
—  
  
 
 
 
 
 
 
 
 Non cash financing activities:
 
 
 
 
 
 
 
 Common stock issued in settlement of related party notes payable
 
$
462,714
 
 
$
804,279
 Common stock issued in settlement of convertible notes payable
 
$
3,016,750
 
 
$
12,166,976
 Investment in joint venture
 
$
2,650,000
 
 
$
—  
 Reclassification of derivative liabilities to additional paid-in
capital

 
$
1,582,845
 
 
$
—  
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 See the accompanying notes to these audited condensed consolidated financial statements

MARIJUANA COMPANY
OF AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

DECEMBER 31,
2019

 

NOTE 1 —
SIGNIFICANT ACCOUNTING POLICIES

A
summary of the significant accounting policies applied in the presentation of the accompanying financial statements follows:

Basis
and business presentation

Marijuana
Company of America, Inc. (The “Company”) was incorporated under the laws of the State of Utah in October 1985 under
the name Mormon Mint, Inc. The corporation was originally a startup company organized to manufacture and market commemorative
medallions related to the Church of Jesus Christ of Latter Day Saints. On January 5, 1999, Bekam Investments, Ltd. acquired one
hundred percent of the common shares of the Company and spun the Company off changing its name Converge Global, Inc. From August
13, 1999 until November 23, 2002, the Company focused on the development and implementation of Internet web content and e-commerce
applications. In October 2009, in a 30 for 1 exchange, the Company merged with Sparrowtech, Inc. for the purpose of exploration
and development of commercially viable mining properties. From 2009 to 2014, we operated primarily in the mining exploration business.

In
2015, the Company changed its business model to a marketing and distribution company for medical marijuana. In conjunction with
the change, the Company changed its name to Marijuana Company of America, Inc. At the time of the transition in 2015, there were
no remaining assets, liabilities or operating activities of the mining business.

On
September 21, 2015, the Company formed H Smart, Inc, a Delaware corporation as a wholly owned subsidiary for the purpose of operating
the hempSMART brand. H Smart, Inc. is also registered with the California Secretary of State as a foreign corporation.

On
February 1, 2016, the Company formed MCOA CA, Inc., a California corporation as a wholly owned subsidiary to facilitate mergers,
acquisitions and the offering of investments or loans to the Company.

On
May 3, 2017, the Company formed Hempsmart Limited, a United Kingdom corporation as a wholly owned subsidiary for the purpose of
future expansion into the European market.

On
May 23, 2018, the Company formed H Smart, LLC in Washington State. On January 21, 2019, the Company converted this entity into
a Washington State corporation named H Smart, Inc.

The
consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: H Smart, Inc., H Smart,
LLC, Hempsmart Limited and MCOA CA, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

Revenue
Recognition

For annual reporting
periods after December 15, 2017, the Financial Accounting Standards Board (“FASB”) made effective ASU 2014-09 “Revenue
from Contracts with Customers,” to supersede previous revenue recognition guidance under current U.S. GAAP. Revenue is now
recognized in accordance with FASB ASC Topic 606, Revenue Recognition. The objective of the guidance is to establish the principles
that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and
uncertainty of revenue and cash flows arising from a contract with a customer. The core principal is to recognize revenue to depict
the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects
to be entitled in exchange for those goods or services. Two options were made available for implementation of the standard: the
full retrospective approach or modified retrospective approach. The guidance became effective for annual reporting periods beginning
after December 15, 2017, including interim periods within that reporting period, with early adoption permitted. We adopted FASB
ASC Topic 606 for our reporting period as of the year ended December 31, 2017, which made our implementation of FASB ASC Topic
606 effective in the first quarter of 2018. We decided to implement the modified retrospective transition method to implement
FASB ASC Topic 606, with no restatement of the comparative periods presented. Using this transition method, we applied the new
standards to all new contracts initiated on/after the effective date. We also decided to apply this method to any incomplete contracts
we determine are subject to FASB ASC Topic 606 prospectively. For the year ended December 31, 2019, there were no incomplete contracts.
As is more fully discussed below, we are of the opinion that none of our contracts for services or products contain significant
financing components that require revenue adjustment under FASB ASC Topic 606.

Identification
of Our Contracts with Our Customers.

Contracts
included in our application of FASB ASC Topic 606, consist completely of sales contracts between us and our customers that create
enforceable rights and obligations. For the year ended December 31, 2019, our sales contracts included the following parties:
us, our sales associates and our customers. Our sales contracts were offered by us and our sales associates to our customers directly
through our web site. Our sales contracts, and those formalized by our sales associates, are represented by an electronic order
form, which contains the contractual elements of offer for sale, acceptance and the provision of consideration consisting of the
buyer’s payment, which is concurrent with our delivery of hempSMART™ product. Since our hempSMART™ product sales
contracts are consummated upon receipt of the customer’s acceptance of our offer; our concurrent receipt of our customers
payment; and, our delivery of the agreed to hempSMART™ product, all parties are equally committed to fulfilling their respective
obligations under the sales contracts. Further, the sales contracts specifically identify (1) parties; (2) quantity of hempSMART™
product ordered; (3) price; and, (4) subject, and so each respective party’s rights are identifiable and the payment terms
are defined. Since the sales contracts are consummated concurrent with offer, acceptance, payment and delivery of the hempSMART™
product ordered, we recognize revenue and cash flows as the principal from the respective sales contract transactions as they
complete. Further, because our sales contracts are offered, accepted and consummated concurrently, our ability to collect revenue
is immediate. We receive no payments for agreements that do not qualify as a contract. If customers agree to multiple sales contracts
when they are entered into at or near the same time, our policy is to combine those contracts if: (1) the sales contracts are
negotiated as a single package; (2) the payment amount of one sales contract is dependent upon another sales contract; (3) our
performance obligations of delivering multiple hempSMART™ products can be determined to be part of a single transaction.
Since the nature of the entry into and consummation of our sales contracts occur concurrently, there are no changes or modifications
to the terms of the sales contracts that would modify the enforceable rights and performance obligations of the parties and that
would materially alter the timing of our receipt of revenue from our sales contracts.

Identifying
the Performance Obligations in Our Sales Contracts.

In
analyzing our sales contracts, our policy is to identify the distinct performance obligations in a sales contract arrangement.
In determining our performance obligations under our sales contracts, we consider that the terms and conditions of sales are explicitly
outlined in our sales contracts and are so distinct and identifiable within the context of each sales contract, and so are not
integrated with other goods, or constitute a modification or customization of other goods in our contracts, or are highly dependent
or highly integrated with other goods in our sales contracts. Thus, our performance obligations are singularly related to our
promise to provide the hempSMART™ products upon receipt of payment. We offer an assurance warranty on our hempSMART™
products that allows a customer to return any hempSMART™ products within thirty days if not satisfied for any reason. Assurance
warranties are not identifiable performance obligations, since they are electable at the whim of the customer for any reason.
However, we do account for returns of purchase prices if made.

Determination
of the Price in Our Sales Contracts.

The
transaction prices in our sales contract is the amount of consideration we expect to be entitled to for transferring promised
hempSMART™ products. The consideration amount is fixed and not variable. The transaction price is allocated to the identified
performance obligations in the contract. These allocated amounts are recognized as revenue when or as the performance obligations
are fulfilled, which is concurrently upon receipt of payment. There are no future options for a contract when considering and
determining the transaction price. We exclude amounts third parties will eventually collect, such as sales tax, when determining
the transaction price. Since the timing between receiving consideration and transferring goods or services is immediate, our sales
contract do not have a significant financing component, i.e., recognizing revenue at the amount that reflects the cash payment
that the customer would have made at the time the goods or services were transferred to them (cash selling price), rather than
significantly before or after the goods or services are provided.

Allocation
of the Transaction Price of Our Sales Contracts.

Our
sales contracts are not considered multi-element arrangements which require the fulfillment of multiple performance obligations.
Rather, our sales contracts include one performance obligation in each contract. As such, from the outset, we allocate the total
consideration to each performance obligation based on the fixed and determinable standalone selling price, which we believe is
an accurate representation of what the price is in each transaction.

Recognition
of Revenue when the Performance Obligation is Satisfied.

A
performance obligation is satisfied when or as control of the good or service is transferred to the customer. The standard defines
control as “the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.”
(ASC 606-10-20). For performance obligations that are fulfilled at a point in time, revenue is recognized at the fulfillment of
the performance obligation. As noted above, our single performance obligation sales contracts are singularly related to our promise
to provide the hempSMART™ products to the customer upon receipt of payment, which occurs concurrently and when, upon completion,
allows us under our revenue recognition policy to realize revenue.

Regarding
our offered financial accounting, bookkeeping and/or real property management consulting services, to date no contracts have been
entered into, and thus no reportable revenues have resulted for the fiscal years ended 2019 and 2018.

Product
Sales

Revenue
from product sales, including delivery fees, FOB shipping point, is recognized when (1) an order is placed by the customer; (2)
the price is fixed and determinable when the order is placed; (3) the customer is required to and concurrently pays for the product
upon order; and, (4) the product is shipped. The evaluation of our recognition of revenue after the adoption of FASB ASC 606 did
not include any judgments or changes to judgments that affected our reporting of revenues, since our product sales, both pre and
post adoption of FASB ASC 606, were evaluated using the same standards as noted above, reflecting revenue recognition upon order,
payment and shipment, which all occurs concurrently when the order is placed and paid for by the customer, and the product is
shipped. Further, given the facts that (1) our customers exercise discretion in determining the timing of when they place their
product order; and, (2) the price negotiated in our product sales is fixed and determinable at the time the customer places the
order, and there is no delay in shipment, we are of the opinion that our product sales do not indicate or involve any significant
customer financing that would materially change the amount of revenue recognized under the sales transaction, or would otherwise
contain a significant financing component for us or the customer under FASB ASC Topic 606.

Consulting
Services

We
also offer professional services for financial accounting, bookkeeping or real property management consulting services based on
consulting agreements. As of the date of this filing, we have not entered into any contracts for any financial accounting, bookkeeping
and/or real property management consulting services that have generated reportable revenues as of the years ended 2019 and 2018.
We intend and expect these arrangements to be entered into on an hourly fixed fee basis.

For
hourly based fixed fee service contracts, we intend to utilize and rely upon the proportional performance method, which recognizes
revenue as services are performed. Under this method, in order to determine the amount of revenue to be recognized, we will calculate
the amount of completed work in comparison to the total services to be provided under the arrangement or deliverable. We only
recognize revenues as we incur and charge billable hours. Because our hourly fees for services are fixed and determinable and
are only earned and recognized as revenue upon actual performance, we are of the opinion that such arrangements are not an indicator
of a vendor or customer based significant financing, that would materially change the amount of revenue we recognize under the
contract or would otherwise contain a significant financing component under FASB ASC Topic 606.

The
Company determined that upon adoption of ASC 606 there were no quantitative adjustments converting from ASC 605 to ASC 606 respecting
the timing of our revenue recognition because product sales revenue is recognized upon customer order, payment and shipment, which
occurs concurrently, and our consulting services offered are fixed and determinable and are only earned and recognized as revenue
upon actual performance.

Use
of Estimates

 

The preparation
of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, 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. Significant estimates include the fair value of the
Company’s stock, stock-based compensation, fair values relating to derivative liabilities, debt discounts and the valuation
allowance related to deferred tax assets. Actual results may differ from these estimates.

 

Cash

 

The Company considers
cash to consist of cash on hand and temporary investments having an original maturity of 90 days or less that are readily convertible
into cash.

 

Concentrations
of credit risk

 

The Company’s
financial instruments that are exposed to a concentration of credit risk are cash and accounts receivable. Occasionally, the Company’s
cash and cash equivalents in interest-bearing accounts may exceed FDIC insurance limits. The financial stability of these institutions
is periodically reviewed by senior management.

 

Accounts Receivable

 

Trade receivables
are carried at their estimated collectible amounts. Trade credit is generally extended on a short-term basis; thus, trade receivables
do not bear interest. Trade accounts receivable are periodically evaluated for collectability based on past credit history with
customers and their current financial condition.

 

Allowance for
Doubtful Accounts

 

Any charges to
the allowance for doubtful accounts on accounts receivable are charged to operations in amounts sufficient to maintain the
allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines
the adequacy of the allowance based on historical write-off percentages and the current status of accounts receivable. Accounts
receivable are charged off against the allowance when collectability is determined to be permanently impaired. As of December
31, 2019, and 2018, allowance for doubtful accounts was $0 and $0, respectively.

  

Inventories

 

Inventories are
stated at the lower of cost or market with cost being determined on a first-in, first-out (FIFO) basis. The Company writes down
its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the
estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less
favorable than those projected by management, additional inventory write-downs may be required. During the periods presented,
there were no inventory write-downs.

 

Cost of sales

 

Cost of sales is
comprised of cost of product sold, packaging, and shipping costs.

 

Stock Based
Compensation

 

The Company measures
the cost of services received in exchange for an award of equity instruments including stock, stock options and restricted stock
awards based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant
date and recognized over the period during which services are required to be provided in exchange for the award, usually the vesting
period. For non-employees, share-based compensation awards are recorded at either the fair value of the services rendered or the
fair value of the share-based payments, whichever is more readily determinable. Stock and restricted stock and option awards are
based on the closing price of the stock underlying the awards on the grant date. Stock-based compensation expense is recorded
by the Company in the same expense classifications in the statements of operations, as if such amounts were paid in cash. As of
December 31, 2019, and 2018, the number of outstanding stock options to purchase shares of common stock was 0 and 0 shares, respectively.
0 and 0 shares were vested as of December 31, 2019 and 2018, respectively.

 

On February 27,
2019, Charles Larsen and Donald Steinberg agreed to cancel all previously issued stock options to purchase an aggregate of 1,000,000,000
common shares.

 

Net Loss per
Common Share, basic and diluted

 

The Company computes
earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”).
Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding
during the year.  Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise
or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if
converted” methods as applicable.

 

The computation
of basic and diluted income (loss) per share as of December 31, 2019 and 2018 excludes potentially dilutive securities when their
inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during
the period.

 

Potentially dilutive
securities excluded from the computation of basic and diluted net loss per share are as follows:

 

  
 2019(1) 
 2018 Convertible notes payable 
 137,219,847  
 137,219,847 Options to purchase common stock(1) 
 0(1) 
 0(1)Warrants to purchase common
stock
 
 110,846,817  
 110,846,817   Total 
 248,066,664  
 248,066,664 

 

(1) On February 27, 2019, Donald Steinberg
and Charles Larsen cancelled previously issued options to purchase an aggregate of 1,000,000,000 shares at an average exercise
price of $0.0005 per share, representing 100% of all previously issued options.

  

Property and Equipment

 

Property and equipment
are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from
the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. For financial
statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated
useful lives of 3 to 5 years.

Investments

 

The Company follows
Accounting Standards Codification subtopic 321-10, Investments-Equity Securities (“ASC 321-10) which requires the accounting
for equity security to be measured at fair value with changes in unrealized gains and losses are included in current period operations.
Where an equity security is without a readily determinable fair value, the Company may elect to estimate its fair value at cost
minus impairment plus or minus changes resulting from observable price changes (See Note 4).

Derivative
Financial Instruments

The Company
classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) provide the Company with
a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement) providing that such
contracts are indexed to the Company’s own stock. The Company classifies as assets or liabilities any contracts that (i) require
net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the
Company’s control) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement
or net-share settlement). The Company assesses classification of its common stock purchase warrants and other free standing derivatives
at each reporting date to determine whether a change in classification between equity and liabilities is required.

 

The Company’s
free-standing derivatives consisted of conversion options embedded within its issued convertible debt and warrants with anti-dilutive
(reset) provisions. The Company evaluated these derivatives to assess their proper classification in the balance sheet using
the applicable classification criteria enumerated under GAAP.  The Company determined that certain conversion and exercise
options do not contain fixed settlement provisions.  The convertible notes contain a conversion feature and warrants have
a reset provision such that the Company could not ensure it would have adequate authorized shares to meet all possible conversion
demands.

 

As such, the Company
was required to record the conversion feature and the reset provision which does not have fixed settlement provisions as liabilities
and mark to market all such derivatives to fair value at the end of each reporting period.   

 

The Company has
adopted a sequencing policy that reclassifies contracts (from equity to assets or liabilities) with the most recent inception
date first. Thus, any available shares are allocated first to contracts with the most recent inception dates.

 

Fair Value of Financial Instruments

 

Fair value estimates
discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31,
2019 and 2018. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values.
These financial instruments include cash and accounts payable. Fair values were assumed to approximate carrying values for cash,
accounts payables and short-term notes because they are short term in nature.

 

Advertising

 

The Company follows
the policy of charging the costs of advertising to expense as incurred. The Company charged to operations $540,474 and $569,832
for the year ended December 31, 2019 and 2018, respectively, as advertising costs.

 

Income Taxes

 

Deferred income
tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carry forwards
and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured
at the current enacted tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it
is not more likely than not that these deferred income tax assets will be realized.

 

The Company recognizes
a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination
by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial
statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized
upon ultimate settlement. As of December 31, 2019, and 2018, the Company has not recorded any unrecognized tax benefits.

 

Segment Information

 

Accounting Standards
Codification subtopic Segment Reporting 280-10 (“ASC 280-10”) establishes standards for reporting information regarding
operating segments in annual financial statements and requires selected information for those segments to be presented in interim
financial reports issued to stockholders. ASC 280-10 also establishes standards for related disclosures about products and services
and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial
information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how
to allocate resources and assess performance. The information disclosed herein materially represents all of the financial information
related to the Company’s only material principal operating segment.

 

Recent Accounting Pronouncements

 

There are various
updates recently issued, most of which represented technical corrections to the accounting literature or application to specific
industries and are not expected to a have a material impact on the Company’s financial position, results of operations or
cash flows.

 

Adoption
of Accounting Standards

 

In
May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014-09 “Revenue from Contracts with
Customers” to supersede previous revenue recognition guidance under current U.S. GAAP. The guidance presents a single five-step
model for comprehensive revenue recognition that requires an entity to recognize revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services. Two options are available for implementation of the standard which is either the retrospective approach
or cumulative effect adjustment approach. The guidance becomes effective for annual reporting periods beginning after December
15, 2017, including interim periods within that reporting period, with early adoption permitted.

 

The
Company has determined that the adoption of ASU-2014-09 will not have a material impact on its financial statements.

 

COVID-19 Impacts on Accounting Policies
and Estimates

 

COVID-19 Impacts on Accounting Policies and Estimates In light of
the currently unknown ultimate duration and severity of COVID-19, we face a greater degree of uncertainty than normal in making
the judgments and estimates needed to apply our significant accounting policies. As COVID-19 continues to develop, we may make
changes to these estimates and judgments over time, which could result in meaningful impacts to our financial statements in future
periods. 

 

As previously reported on Form 8-K filed on March 30, 2020, the Company was unable to file its Annual Report on Form 10-K
for the fiscal year ended December 31, 2019 by the original deadline of March 30, 2020, due to circumstances related to COVID-19
pandemic, specifically: (i) the Southern California area, including the location of the Company’s corporate headquarters,
was at one of the epicenters of the coronavirus outbreaks in the United States and the Governor of California had ordered
all residents to stay at home excepting only essential travel; and (ii) historically, the Company has relied on vendors in
China to manufacture certain of its principal products. The outbreak of COVID-19 caused different levels of delay in operations
of the Company, vendors, customers and professional service providers. As a result, the Company’s books and records
were not easily accessible from our Chinese manufacturer of our products, resulting in a delay in the preparation, audit and
completion of the Company’s financial statements for the Annual Report.

 

Subsequent Events

 

The Company evaluates
events that have occurred after the balance sheet date but before the financial statements are issued.  Based upon the evaluation,
the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure
in the financial statements, except as disclosed.

 

NOTE 2 –
GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

 

The accompanying
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As shown in the accompanying financial statements during year ended December
31, 2019, the Company incurred net losses of $20,180,318 and used cash in operations of $2,816,282. These factors among others
may indicate that the Company will be unable to continue as a going concern for a reasonable period of time.

 

The Company’s primary
source of operating funds in 2019 and 2018 has been from funds generated from proceeds from the sale of common stock and the issuance
of convertible and other debt. The Company has experienced net losses from operations since its inception, but expects these conditions
to improve in 2020 and beyond as it develops its business model. The Company has stockholders’ deficiencies at December 31, 2019
and requires additional financing to fund future operations.

 

The Company’s
existence is dependent upon management’s ability to develop profitable operations and to obtain additional funding sources.
There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of
the Company’s liquidity problems. The accompanying statements do not include any adjustments that might result should the
Company be unable to continue as a going concern.

 

NOTE 3 – PROPERTY AND
EQUIPMENT

 

Property and equipment as of December
31, 2019 and 2018 is summarized as follows:

 

  
2019 
2018Computer equipment 
$16,358  
$15,207 Furniture and fixtures 
 5,140  
 5,140 Subtotal 
 21,498  
 20,347 Less accumulated depreciation 
 (13,986) 
 (7,917)Property and equipment, net 
$7,512  
$12,430 

 

Property and equipment
are stated at cost and depreciated using the straight-line method over their estimated useful lives of 3 years. When retired or
otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net
difference less any amount realized from disposition, is reflected in earnings.

 

Depreciation expense
was $7,299 and $5,341 for the year ended December 31, 2019 and 2018.

 

NOTE 4 – INVESTMENTS

 

MoneyTrac

 

On March 13, 2017,
the Company entered into a stock purchase agreement to acquire up to 15,000,000 common shares of MoneyTrac Technology, Inc., a
corporation organized and operating under the laws of the state of California, for a total purchase price of $250,000 representing
approximately 15% ownership at the time of the agreement. As of December 31, 2017, the Company had acquired 15,000,000 common
shares for $250,000 representing approximately 15% ownership. In connection with the investment, Donald Steinberg, the Company’s
President and Chief Executive Officer and Director, was appointed as a board member to MoneyTrac.

 

The Company accounts
for its investment in MoneyTrac Technology, Inc. at estimated market fair value using the market price for the publicly traded
shares under the ticker symbol “PSYC” as listed on OTC Markets as an indicator of fair market value. MoneyTrac Technologies
changed its name to Global Trac Solutions Inc. on April 13, 2020. As of December 31, 2019, the balance of this investment was
$27,403 with 869,919 shares and was classified as a short-term investment for the period ended December 31, 2019.

Benihemp

 

On June 16,
2017, the Company entered into a Loan Agreement (“Agreement”) with Conveniant Hemp Mart, LLC (“Benihemp”),
a limited liability company formed and operating under the laws of the State of Wyoming. Pursuant to the Agreement, Benihemp executed
a promissory note for a principal loan amount of $50,000, accruing interest at the rate of 4% per annum and payable in one year,
subject to one-time six- month repayment extension. The Agreement also provided that the Company shall have the option to waive
repayment of the note and pay Benihemp an additional $50,000 payment in exchange for a 25% membership interest in Benihemp’s
limited liability company. On May 1, 2019, the Company and Conveniant agreed to cancel the Company’s 25% interest in Conveniant.
Conveniant issued to the Company a credit memo equal to the Company’s $100,000 investment, The Company determined that as
of September 30, 2019, approximately $41,000 of this credit was impaired.

 

Global Hemp Group Joint Ventures

 

We currently have one ongoing joint venture with Global Hemp Group,
Inc., a Canadian corporation the Scio, Oregon Joint Venture. As of
September 30, 2019, we withdrew and fully impaired the Joint Venture with Global Hemp Group referred to as the New
Brunswick” joint venture, because the research project failed to finalize
the research studies and render any tangible revenue to us. The decision to impair this joint venture did not have a material
impact on our reported operations, revenues or gross profits for the fiscal year ended December 31, 2019. This joint venture was
a related party transaction in that Global Hemp Group’s director and
CEO, Charles Larsen, is an owner of our common stock, and a former director of the Company. Further, our former President and
Chief Executive Officer Donald Steinberg is a shareholder in Global Hemp Group. What follows are summaries of both Global Hemp
Group Joint Ventures in 2019. 

 

New Brunswick Canada

 

On September 5, 2017, we announced our
agreement to participate in a joint venture with Global Hemp Group Inc., a Canadian corporation, in a multi-phase industrial
hemp project on the Acadian peninsula of New Brunswick, Canada.The joint venture’s goal is to develop a “Hemp
Agro-Industrial Zone”, a concept that promotes and engages farmers, processors and manufacturers to collaboratively
produce and process 100% of the hemp plant into a number of wholesale materials that can be manufactured into healthy and
sustainable products. The “HAIZ” will be surrounded by hemp production thereby minimizing the cost of expensive
transportation to distant processing facilities. The “Hemp Agro-Industrial Zone” has a goal of producing social
and environmental benefits to the communities where they operate. These zones are envisioned to prospectively create jobs for
farmers, foster rural development, provide the opportunity to develop more sustainable products of superior quality and help
support Global Hemp Group’s commitment to creating a carbon free economy. The first phase of the project involved lab
testing in support of the trials. The Collège Communautaire du Nouveau Brunswick (CCNB) in Bathurst, New Brunswick
(“CCNB”) intends to assist Global Hemp Group in research on its ongoing industrial hemp trials in the region, and
to perform laboratory tests in support of these trials. These tests will provide information to validate agronomic and key
yield data in preparation of a large-scale industrial development project that will involve processing of the full plant:
grain, straw, flowers and leaves, scheduled to begin in 2018. The results of these tests will also be used in discussions
with farmers of the region to refine a hemp-based farming model, and to mobilize additional farmers for the next growing
season. Our participation included providing one-half, or $10,775 of the funding for the phase one work. On January 10, 2018,
phase-one was completed by successfully cultivating industrial hemp during the 2017 growing season for research purposes. The
objective of phase one was to re-introduce hemp into the area and ensure that it could be productive under New Brunswick
growing conditions prior to significantly increasing cultivation acreage and building a hemp processing facility in the
region, in future phases of the project. As a result of our participation in the joint venture, we will share in the
ownership of research and development of hemp and CBD related studies produced by the New Brunswick Project, and, in the
event Canadian laws governing the growing, harvesting, manufacturing and production of products containing hemp and CBD
change (as expected, but not guaranteed) in 2018, we would benefit from possible preferred pricing and terms for the purchase
of hemp and CBD that would enable us to further conduct its business and research and development into hemp and CBD products.
Our New Brunswick joint venture with Global Hemp Group, Inc. is a related party transaction insofar as its director, Charles
Larsen, is a former director of the Company.

 

The Company’s
costs incurred by the Company’s interest was $0 and $10,775 for the years ended December 31, 2019 and 2018 and was recorded
as other income/expense in the Company’s Statement of Operations in the appropriate periods. As of December 31, 2019, the
balance of the New Brunswick JV investment reported on the balance sheet for the year ended December 31, 2019 was $0 as a result
of the investment being deemed fully impaired and the Company withdrawing from the joint venture as of September 30, 2019. (See
Item 1, Business; Principal Products and their Markets; Joint Ventures and Investments).

 

Global Hemp
Group JV – Scio Oregon

Global
Hemp Group Joint Venture/Scio Oregon Hemp Project; On May 8, 2018, the Company, Global Hemp Group, Inc., a Canadian corporation,
and TTO Enterprises, Ltd., an Oregon corporation entered into a Joint Venture Agreement. The purpose of the joint venture is to
develop a project to commercialize the cultivation of industrial hemp on a 109 acre parcel of real property owned by the Company
and Global Hemp Group in Scio, Oregon, and operating under the Oregon corporation Covered Bridges, Ltd. The joint venture is in
the development stage. On May 30, 2018, the joint venture purchased TTO’s 15% interest in the joint venture for $30,000.

On May 8, 2018, the Company, Global Hemp Group,
Inc., a Canadian corporation, and TTO Enterprises, Ltd., an Oregon corporation entered into a Joint Venture Agreement. The purpose
of the joint venture is to develop a project to commercialize the cultivation of industrial hemp on a 109 acre parcel of real
property owned by the Company and Global Hemp Group in Scio, Oregon, and operating under the Oregon corporation Covered Bridges,
Ltd. The joint venture is in the development stage. On May 30, 2018, the joint venture
purchased TTO’s 15% interest in the joint
venture for $30,000. The Company and Global Hemp Group, Inc. now have an
equal 50-50 interest in the joint venture. The joint venture agreement commits the Company to a cash contribution of $600,000
payable on the following funding schedule: $200,000 upon execution of the joint venture agreement; $238,780 by July 31, 2018;
$126,445 by October 31, 2018; and, $34,775 by January 31, 2019. The Company has complied with its payments. The 2018 crop of hemp
grown on the joint venture’s real property consisted of 33 acres of high yielding CBD hemp grown in an orchard style cultivation
on the property. The 2018 harvest consisted of approximately 37,000 high yielding CBD

hemp plants producing 24 tons of biomass that produced 48,000 pounds
of dried biomass. The joint venture partners prepared processing samples ranging in size from 100 to 2,000 lbs. for sample offers
to extraction companies. The biomass is being processed into CBD crude oil with the option to refine it further into isolate,
or full spectrum oil, in order to increase its value on the market. Our joint venture with Global Hemp Group regarding the Scio
Oregon project is a related party transaction insofar as its director, Charles Larsen, is a former director of the Company. 

 

The Company and
Global Hemp Group, Inc. now have an equal 50% – 50% interest in the joint venture. The joint venture agreement commits the Company
to a cash contribution of $600,000 payable on the following funding schedule: $200,000 upon execution of the joint venture agreement;
$238,780 by July 31, 2018; $126,445 by October 31, 2018; and, $34,775 by January 31, 2019. The Company complied with its payment
obligations.

 

As of December
31, 2019, the combined balance of the Covered Bridge (SCIO) investment and related 41389 Farm investment was $0 as the investment
was written off as a loss for the period ended December 31, 2019. The debt obligation related to this JV of $262,414 was also
written off to $0 as of the year ended December 31, 2019.

 

Bougainville
Ventures, Inc. Joint Venture

 

On March 16, 2017,
we entered into a joint venture agreement with Bougainville Ventures, Inc., a Canadian corporation. The purpose of the joint venture
was for the Company and Bougainville to (i) jointly engage in the development and promotion of products in the legalized cannabis
industry in Washington State; (ii) utilize Bougainville’s high quality cannabis grow operations in the State of Washington, where
it claimed to have an ownership interest in real property for use within the legalized cannabis industry; (iii) leverage Bougainville’s
agreement with a I502 Tier 3 license holder to grow cannabis on the site; provide technical and management services and resources
including, but not limited to: sales and marketing, agricultural procedures, operations, security and monitoring, processing and
delivery, branding, capital resources and financial management; and, (iv) optimize collaborative business opportunities. The Company
and Bougainville agreed to operate through a Washington State Limited Liability Company, and BV-MCOA Management, LLC was organized
in the State of Washington on May 16, 2017.

 

As our contribution
to the joint venture, the Company committed to raise not less than $1,000,000 to fund joint venture operations, based upon a funding
schedule. The Company also committed to providing branding and systems for the representation of cannabis related products and
derivatives comprised of management, marketing and various proprietary methodologies directly tailored to the cannabis industry.

The
Company and Bougainville’s agreement provided that funding provided by the Company would contribute towards the joint venture’s
ultimate purchase of the land consisting of a one-acre parcel located in Okanogan County, Washington, for joint venture operations

As
disclosed on Form 8-K on December 11, 2017, the Company did not comply with the funding schedule for the joint venture. On November
6, 2017, the Company and Bougainville amended the joint venture agreement to reduce the amount of the Company’s commitment from
$1,000,000 to $800,000, and also required the Company to issue Bougainville 15 million shares of the Company’s restricted common
stock. The Company completed its payments pursuant to the amended agreement on November 7, 2017, and on November 9, 2017, issued
to Bougainville 15 million shares of restricted common stock. The amended agreement provided that Bougainville would deed the
real property to the joint venture within thirty days of its receipt of payment.

Thereafter,
the Company determined that Bougainville had no ownership interest in the property in Washington State, but rather was a party
to a purchase agreement for real property that was in breach of contract for non-payment. Bougainville also did not possess an
agreement with a Tier 3 I502 license holder to grow Marijuana on the property. Nonetheless, as a result of funding arranged for
by the Company, Bougainville and an unrelated third party, Green Ventures Capital Corp., purchased the land, but did not deed
the real property to the joint venture. Bougainville failed to pay delinquent property taxes to Okanogan County and to date, the
property has not been deeded to the joint venture.

To
clarify the respective contributions and roles of the parties, the Company offered to enter into good faith negotiations to revise
and restate the joint venture agreement with Bougainville. The Company diligently attempted to communicate with Bougainville to
accomplish a revised and restated joint venture agreement, and efforts towards satisfying the conditions to complete the subdivision
of the land by the Okanogan County Assessor. However, Bougainville failed to cooperate or communicate with the Company in good
faith, and failed to pay the delinquent taxes on the real property that would allow for sub-division and the deeding of the real
property to the joint venture.

On
August 10, 2018, the Company advised its independent auditor that Bougainville did not cooperate or communicate with the Company
regarding its requests for information concerning the audit of Bougainville’s receipt and expenditures of $800,000 contributed
by the Company in the joint venture agreement. Bougainville had a material obligation to do so under the joint venture agreement.
The Company believes that some of the funds it paid to Bougainville were misappropriated and that there was self-dealing with
respect to those funds. Additionally, the Company believes that Bougainville misrepresented material facts in the joint venture
agreement, as amended, including, but not limited to, Bougainville’s representations that: (i) it had an ownership interest
in real property that was to be deeded to the joint venture; (ii) it had an agreement with a Tier 3 # I502 cannabis license holder
to grow cannabis on the real property; and, (iii) that clear title to the real property associated with the Tier 3 # I502 license
would be deeded to the joint venture thirty days after the Company made its final funding contribution. As a result, on September
20, 2018, the Company filed suit against Bougainville Ventures, Inc., BV-MCOA Management, LLC, Andy Jagpal, Richard Cindric, et
al. in Okanogan County Washington Superior Court, case number 18-2- 0045324. The Company’s complaint seeks legal and equitable
relief for breach of contract, fraud, breach of fiduciary duty, conversion, recession of the joint venture agreement, an accounting,
quiet title to real property in the name of the Company, for the appointment of a receiver, the return to treasury of 15 million
shares issued to Bougainville, and, for treble damages pursuant to the Consumer Protection Act in Washington State. The registrant
has filed a lis pendens on the real property. The case is currently in litigation.

In
connection with the agreement, the Company recorded a cash investment of $1,188,500 to the Joint Venture during 2017. This was
comprised of 49.5% ownership of BV-MCOA Management LLC, and was accounted for using the equity method of accounting. The Company
recorded an annual impairment in 2017 of $792,500, reflecting the Company’s percentage of ownership of the net book value
of the investment. During 2018, the Company recorded equity losses of $37,673 and $11,043 for the first and second quarters respectively,
and recorded an annual impairment of $285,986 for the year ended December 31, 2018, at which time the Company determined the investment
to be fully impaired due to Bougainville’s breach of contract and resulting litigation, as discussed above. 

GateC Joint
Venture

 

On March 17, 2017,
the Company and GateC Research, Inc. (“GateC”) entered into a Joint Venture Agreement (“Agreement”) whereby
the Company committed to raise up to one and one-half million dollars ($1,500,000) over a six-month period, with a minimum commitment
of five hundred thousand dollars ($500,000) within a three (3) month period; and, information establishing brands and systems
for the representation of cannabis related products and derivatives comprised of management, marketing and various proprietary
methodologies, including but not limited to its affiliate marketing program, directly tailored to the cannabis industry.

 

GateC agreed to
contribute its management and control services and systems related to cannabis grow operations in Adelanto County, California,
and its permit to grow marijuana in an approved zone in Adelanto, California. GateC did not own a physical site for its operation
in Adelanto County, California, and GateC’s permit to grow cannabis did not contain a conditional use permit.

 

On or about November
28, 2017, GateC and the Registrant orally agreed to suspend the Company’s funding commitment, pending the finalization of
California State regulations governing the growth, cultivation and distribution of cannabis, which were expected to be completed
in 2018.

 

On March 19, 2018,
the Company and GateC rescinded the Agreement and concurrently released each other from any all any and all losses, claims, debts,
liabilities, demands, obligations, promises, acts, omissions, agreements, costs and expenses, damages, injuries, suits, actions
and causes of action, of whatever kind or nature, whether known or unknown, suspected or unsuspected, contingent or fixed, that
they may have against each other and their Affiliates, arising out of the Agreement.

 

The Registrant
incurred no termination penalties as the result of its entry into the Recession and Mutual Release Agreement.

 

In 2017, the Company
recorded a debt obligation of $1,500,000 to the Joint Venture and a corresponding impairment charge of $1,500,000 during for year
ended December 31, 2017. Upon termination of the material definitive agreement on March 19, 2018, the Company realized a gain
on settlement of debt obligation of $1,500,000 for the year ended December 31, 2018.

 

The following table
indicates the amount of impairments recorded by the Company quarter to quarter for investment activity related to its joint venture
investments:

 

MARIJUANA COMPANY
OF AMERICA, INC.

INVESTMENT ROLL-FORWARD

AS OF DECEMBER
31, 2019

 

  
INVESTMENTS 
  
  
SHORT-TERM
INVESTMENTS
  
  
Global 
  
  
  
  
Natural 
  
TOTAL 
   
TOTAL 
Hemp 
  
  
Bougainville 
Gate
C
 
Plant 
  
Short-Term 
   
INVESTMENTS 
Group 
Benihemp 
MoneyTrac 
Ventues,
Inc.
 
Research
Inc.
 
Extract 
Vivabuds 
Investments 
MoneyTracBeginning
balance @12-31-16
 
$0  
$0  
$0  
$0  
$0  
$0  
    
    
$0  
$0 Investments
made during 2017
 
 3,049,275  
 10,775  
 100,000  
 250,000  
 1,188,500  
 1,500,000  
    
    
 0  
 0   
    
    
    
    
    
    
    
    
    
   Quarter
03-31-17 equity method Loss
 
 0  
    
    
    
    
    
    
    
 0  
     
    
    
    
    
    
    
    
    
    
   Quarter
06-30-17 equity method Loss
 
 0  
    
    
    
    
    
    
    
 0  
     
    
    
    
    
    
    
    
    
    
   Quarter
09-30-17 equity method Loss
 
 (375,000) 
    
    
    
 (375,000) 
    
    
    
 0  
     
    
    
    
    
    
    
    
    
    
   Quarter
12-31-17 equity method accounting
 
 313,702  
    
    
    
 313,702  
    
    
    
 0  
     
    
    
    
    
    
    
    
    
    
   Impairment
of Investment in 2017
 
 (2,292,500) 
 0  
    
    
 (792,500) 
 (1,500,000) 
    
    
 0  
 0 Balances
as of 12/31/17
 
 695,477  
 10,775  
 100,000  
 250,000  
 334,702  
 0  
 0  
 0  
 0  
 0   
    
    
    
    
    
    
    
    
    
   Investments
made during 2018
 
 986,654  
 986,654  
    
    
    
    
    
    
 0  
     
    
    
    
    
    
    
    
    
    
   Quarter
03-31-18 equity method Loss
 
 (37,673) 
    
    
    
 (37,673) 
    
    
    
 0  
     
    
    
    
    
    
    
    
    
    
   Quarter
06-30-18 equity method Loss
 
 (11,043) 
    
    
    
 (11,043) 
    
    
    
 0  
     
    
    
    
    
    
    
    
    
    
   Quarter
09-30-18 equity method Loss
 
 (10,422) 
    
 (10,422) 
    
    
    
    
    
 0  
     
    
    
    
    
    
    
    
    
    
   Quarter
12-31-18 equity method Loss
 
 (31,721) 
 (31,721) 
 0  
    
    
    
    
    
 0  
     
    
    
    
    
    
    
    
    
    
   Moneytrac
investment reclassified to Short-Term investments
 
 (250,000) 
    
    
 (250,000) 
    
    
    
    
 250,000  
 250,000   
    
    
    
    
    
    
    
    
    
   Unrealized
gains on trading securities – 2018
 
 0  
    
    
    
    
    
    
    
 560,000  
 560,000   
    
    
    
    
    
    
    
    
    
   Impairment
of investment in 2018
 
 (933,195) 
 (557,631) 
 (89,578) 
    
 (285,986) 
    
    
    
 0  
   Balance
@12-31-18
 
$408,077  
$408,077  
$0  
$0  
$0  
$0  
$0  
$0  
$810,000  
$810,000   
    
    
    
    
    
    
    
    
    
   Investments
made during quarter ended 03-31-19
 
 129,040  
 129,040  
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Quarter
03-31-19 equity method Loss
 
 (59,541) 
 (59,541) 
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Unrealized
gains on trading securities – quarter ended 03-31-19
 
    
    
    
    
    
    
    
    
 (135,000) 
$(135,000)Balance
@03-31-19
 
$477,576  
$477,576  
$0  
$0  
$0  
$0  
$0  
$0  
$675,000  
$675,000   
    
    
    
    
    
    
    
    
    
   Investments
made during quarter ended 06-30-19
 
$3,157,234  
$83,646  
    
    
    
    
$3,000,000  
$73,588  
    
     
    
    
    
    
    
    
    
    
    
   Quarter
06-30-19 equity method Income (Loss)
 
$(171,284) 
$(141,870) 
    
    
    
    
$(6,291) 
$(23,123) 
    
     
    
    
    
    
    
    
    
    
    
   Unrealized
gains on trading securities – quarter ended 06-30-19
 
$0  
    
    
    
    
    
    
    
 (150,000) 
$(150,000)Balance
@06-30-19
 
$3,463,526  
$419,352  
$0  
$0  
$0  
$0  
$2,993,709  
$50,465  
$525,000  
$525,000   
    
    
    
    
    
    
    
    
    
   Investments
made during quarter ended 09-30-19
 
$186,263  
    
    
    
    
    
    
$186,263  
    
     
    
    
    
    
    
    
    
    
    
   Quarter
09-30-19 equity method Income (Loss)
 
$122,863  
$262,789  
    
    
    
    
$(94,987) 
$(44,939) 
    
     
    
    
    
    
    
    
    
    
    
   Sale
of trading securities during quarter ended 09-30-19
 
    
    
    
    
    
    
    
    
$(41,667) 
$(41,667)  
    
    
    
    
    
    
    
    
    
   Unrealized
gains on trading securities – quarter ended 09-30-19
 
$0  
    
    
    
    
    
    
    
 (362,625) 
($362,625)Balance
@09-30-19
 
$3,772,652  
$682,141  
$0  
$0  
$0  
$0  
$2,898,722  
$191,789  
$120,708  
$120,708   
    
    
    
    
    
    
    
    
    
   Investments
made during quarter ended 12-31-19
 
$392,226  
$262,414  
    
    
    
    
    
$129,812  
    
     
    
    
    
    
    
    
    
    
    
   Quarter
12-31-19 equity method Income (Loss)
 
$(178,164) 
($(75,220) 
    
    
    
    
$(23,865) 
$(79,079) 
    
   Reversal
of Equity method Loss for 2019
 
$272,285  
    
    
    
    
    
$125,143  
$147,142  
    
   Impairment
of investment in 2019
 
$(3,175,420) 
$(869,335) 
    
    
    
    
$(2,306,085) 
$0  
    
   Loss
on disposition of investment
 
$(389,664) 
    
    
    
    
    
    
(389,664) 
    
   Sale
of trading securities during quarter ended 12-31-19
 
$0  
    
    
    
    
    
    
    
$(17,760) 
$(17,760)  
    
    
    
    
    
    
    
    
    
   Unrealized
gains on trading securities – quarter ended 12-31-19
 
$0  
    
    
    
    
    
    
    
 (75,545) 
$(75,545)Balance
@12-31-19
 
$693,915  
$(0) 
$0  
$0  
$0  
$0  
$693,915  
$0  
$27,403  
$27,403 

 

The
following table indicates the amount of debt the Company recorded quarter to quarter as a result of its joint venture investments:

 

Loan Payable  
    
 Global  
    
    
    
    
 Natural  
    
    
 General   
 TOTAL  
 Hemp  
    
    
 Bougainville  
 Gate C  
 Plant   
 Robert L  
    
 Operating   
 JV Debt  
 Group  
 Benihemp  
 MoneyTrac  
 Ventues, Inc.  
 Research Inc.  
 Extract  
 Hymers III  
 Vivabuds  
 Expense Beginning balance @12-31-16 
$0  
$0  
$0  
$0  
$0  
$0  
    
    
    
$0   
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Quarter 03-31-17 loan borrowings 
 1,500,000  
    
    
    
    
 1,500,000  
    
    
    
     
    
    
    
    
    
    
    
    
    
   Quarter 06-30-17 loan activity 
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Quarter 09-30-17 loan borrowings 
 725,000  
    
    
    
 725,000  
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Quarter 12-31-17 loan repayments 
 (330,445) 
    
    
    
 (330,445) 
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   General operational expense 
 172,856  
    
    
    
    
    
    
    
    
 172,856 Balances as of 12/31/17 (a) 
 2,067,411  
 0  
 0  
 0  
 394,555  
 1,500,000  
 0  
 0  
 0  
 172,856   
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Quarter 03-31-18 loan borrowings (payments) 
 376,472  
 447,430  
    
    
    
    
    
    
    
 (70,958)  
    
    
    
    
    
    
    
    
    
   Quarter 06-30-18 cancellation of JV debt obligation 
 (1,500,000) 
    
    
    
    
 (1,500,000) 
    
    
    
     
    
    
    
    
    
    
    
    
    
   Quarter 06-30-18 loan repayments 
 (101,898) 
    
    
    
    
    
    
    
    
 (101,898)  
    
    
    
    
    
    
    
    
    
   Quarter 09-30-18 loan activity 
 0  
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Quarter 12-31-18 loan borrowings 
 580,425  
 580,425  
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Balance @12-31-18   (b) 
 1,422,410  
 1,027,855  
 0  
 0  
 394,555  
 0  
 0  
 0  
 0  
 0   
    
    
    
    
    
    
    
    
    
   Quarter 03-31-19 loan borrowings 
 649,575  
 649,575  
    
    
    
    
    
    
    
   Quarter 03-31-19 debt conversion to equity 
 (407,192) 
 (407,192) 
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Balance @03-31-19  © 
 1,664,793  
 1,270,238  
 0  
 0  
 394,555  
 0  
 0  
 0  
 0  
 0   
    
    
    
    
    
    
    
    
    
   Quarter 03-31-19 loan borrowings 
 3,836,220  
$161,220  
    
    
    
    
$2,000,000  
    
$0  
$1,675,000   
    
    
    
    
    
    
    
    
    
   Quarter 03-31-19 debt conversion to equity 
 (1,572,971) 
$(161,220) 
    
    
    
    
$(349,650) 
    
    
$(1,062,101)  
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Balance @06-30-19   (d) 
 3,928,042  
 1,270,238  
 0  
 0  
 394,555  
 0  
 1,650,350  
 0  
 0  
 612,899   
    
    
    
    
    
    
    
    
    
   Quarter 09-30-19 loan borrowings 
 582,000  
    
    
    
    
    
    
    
    
$582,000   
    
    
    
    
    
    
    
    
    
   Quarter 09-30-19 debt conversion to equity 
 (187,615) 
    
    
    
    
    
    
    
    
$(187,615)  
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Balance @09-30-19   (e) 
 4,322,427  
 1,270,238  
 0  
 0  
 394,555  
 0  
 1,650,350  
 0  
 0  
 1,007,284   
    
    
    
    
    
    
    
    
    
   Quarter 12-31-19 loan borrowings 
 2,989,378  
$262,414  
    
    
    
    
$596,784  
$4,221  
    
$2,125,959   
    
    
    
    
    
    
    
    
    
   Impairment of investment in 2019 
 (4,083,349) 
$(1,532,652) 
    
    
$(394,555) 
    
$(2,156,142) 
    
    
     
    
    
    
    
    
    
    
    
    
   Loss on settlement of debt in 2019 
 50,093  
    
    
    
    
    
$50,093  
    
    
     
    
    
    
    
    
    
    
    
    
   Adjustment to reclassify amount to accrued liabilities 
 (85,000) 
    
    
    
    
    
$(85,000) 
    
    
     
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Balance @12-31-19   (f) 
$3,193,548  
$(0) 
$0  
$0  
$0  
$0  
$56,085  
$4,221  
$0  
$3,133,243 

 

 
12-31-19
09-30-19
06-30-19
03-31-19
12-31-18
12-31-17This
includes balances for:

Note
(f)

Note
(e)

Note
(d)

Note
(c)

Note
(b)

Note
(a)
      –
Debt obligation of JV

0
1,633,872
1,778,872
128,522
289,742
1,500,000      –
Convertible NP, net of discount

3,193,548
2,688,555
2,149,170
1,536,271
1,132,668
394,555      –
Longterm debt

0
0
0
0
0
172,856Total
Debt balance

3,193,548
4,322,427
3,928,042
1,664,793
1,422,410
2,067,411

     

NOTE
5 – CONVERTIBLE NOTES PAYABLE

    

During
the year ended December 31, 2019 and 2018, the Company issued an aggregate of 9,251,217 and 2,465,463 shares of its common stock
in settlement of the issued convertible notes payable and accrued interest.

 

For
the years ended December 31, 2019 and 2018, the Company recorded amortization of debt discounts of $2,906,843 and $732,463, respectively,
as a charge to interest expense.

 

Convertible
notes payable are comprised of the following:

 

  
2019 
2018Convertible note payable – John Fife – last
due October 27, 2018
 
$—    
$150,959 Convertible note payable – Power Up Lending Group 
$294.000  
$0 Convertible note payable – Crown Bridge Partners 
$110,000  
$0 Convertible note payable – Odyssey Funding LLC 
$250,000  
$0 Convertible note payable – Paladin Advisors LLC 
$75,000  
$0 Convertible note payable-  GS Capital Partners LLC 
$173,000  
$0 Convertible note payable – Natural Plant Extract 
$56,085  
$0 Convertible note payable – Robert Hymers III 
$96,553  
$0 Convertible notes payable-St George-due Dec 31,2019 
$2,947,890  
$1,877,889 Total 
$4,002,528  
$2,028,848 Less debt discounts 
$(808,980) 
$(896,180)Net 
$3,193,548  
$1,132,668 Less current portion 
$(3,193,548) 
$(1,132,668)Long term portion 
$—    
$—   

 

Convertible
notes payable-Power Up Lending

 

From
July 1 through September 12, 2019, the Company issued four convertible promissory notes in the aggregate principal amount of $294,000
to Power Up Lending (“Power Up”). The promissory notes bear interest at 10% per annum, are due one year from the respective
issuance date and include an original issuance discount (“OID”) in aggregate of $12,000. Interest shall accrue from
the issuance date, but interest shall not become payable until the notes becomes payable. The notes are convertible at any time
at a conversion rate equal to 61% of the Market Price (defined as the lowest trading price during the 15-trading-day period prior
to the conversion date). Upon the issuance of these convertible notes, the Company determined that the features associated with
the embedded conversion option embedded in the debentures, should be accounted for at fair value, as a derivative liability, as
the Company cannot determine if a sufficient number of shares would be available to settle all potential future conversion transactions.
As of the funding date of each note, the Company determined the fair value of the embedded
derivative associated with the convertibility of each note. The fair value of the embedded derivative has been added to the debt
discount (total debt discount is limited to the face value of the debt) with any excess of the derivative liability recognized
as interest expense. The aggregate debt discount of $169,202 is being amortized to interest expense over the respective terms
of the notes.

 

The
Company shall have the right to prepay the notes for an amount ranging from 125% – 140% multiplied by the outstanding balance
(all principal and accrued interest) depending on the Prepayment Period (ranging from 1 to 180 days following the issuance date).
The Company is prohibited from effecting a conversion of any note to the extent that, as a result of such conversion, the investor,
together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock
outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note.

 

As
of December 31, 2019, the Company owed an aggregate of $294,000 of principal and $12,514 of accrued interest on these convertible
promissory notes.

 

Convertible
notes payable-Crown Bridge Partners

From
October 1 through December 31, 2019, the Company issued convertible promissory notes in the aggregate principal amount of $225,000
to Crown Bridge Partners LLC (“Crown Bridge”). The promissory notes bear interest at 10% per annum, are due one year
from the respective issuance date and include an original issuance discount (“OID”) in aggregate of $22,500. Interest
shall accrue from the issuance date, but interest shall not become payable until the notes becomes payable. The notes are convertible
at any time at a conversion rate equal to 60% of the Market Price (defined as the lowest trading price during the 15-trading-day
period prior to the conversion date). Upon the issuance of these convertible notes, the Company determined that the features associated
with the embedded conversion option embedded in the debentures, should be accounted for at fair value, as a derivative liability,
as the Company cannot determine if a sufficient number of shares would be available to settle all potential future conversion
transactions. As of the funding date of each note, the Company determined the fair value
of the embedded derivative associated with the convertibility of each note. The fair value of the embedded derivative has been
added to the debt discount (total debt discount is limited to the face value of the debt) with any excess of the derivative liability
recognized as interest expense. The aggregate debt discount of $88,674 is being amortized to interest expense over the respective
terms of the notes.

 

The
Company shall have the right to prepay the notes for an amount ranging from 125% – 140% multiplied by the outstanding balance
(all principal and accrued interest) depending on the Prepayment Period (ranging from 1 to 180 days following the issuance date).
The Company is prohibited from effecting a conversion of any note to the extent that, as a result of such conversion, the investor,
together with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock
outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the note.

 

As
of December 31, 2019, the Company owed an aggregate of $110,000 of principal and $2,138 of accrued interest on these convertible
promissory notes.

 

Convertible
notes payable-Odyssey Funding LLC

On
October 30, 2019, the Company issued convertible promissory notes in the aggregate principal amount of $250,000 to Odyssey Funding
LLC (“Odyssey”). The promissory notes bear interest at 12% per annum, are due one year from the respective issuance
date and include an original issuance discount (“OID”) in aggregate of $12,500. Interest shall accrue from the issuance
date, but interest shall not become payable until the notes becomes payable. The notes are convertible at any time at a conversion
rate equal to 55% the average of the two lowest trading prices of the Common Stock as reported on the National Quotations Bureau
OTC market exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future
(“Exchange”), for the twenty prior trading days including the day upon which a Notice of Conversion is received by the
Company or its transfer agent (provided such Notice of Conversion is delivered by fax or other electronic method of communication
to the Company or its transfer agent after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the
same day closing price). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded.
Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days
of receipt by the Company of the Notice of Conversion. Accrued but unpaid interest shall be subject to conversion. No fractional
shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded
to the nearest whole share. The Company agrees to honor all conversions submitted pending this increase. In the event the Company
experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 45% instead of 55% while that “Chill”
is in effect. In no event shall the Holder be allowed to effect a conversion if such conversion, along with all other shares of
Company Common Stock beneficially owned by the Holder and its affiliates would exceed 4.99% of the outstanding shares of the Common
Stock of the Company (which may be increased up to 9.9% upon 60 days’ prior written notice by the Investor)

 

As
of the funding date of each note, the Company determined the fair value of the embedded derivative associated with the convertibility
of each note. The fair value of the embedded derivative has been added to the debt discount
(total
debt discount is limited to the face value of the debt) with any excess of the derivative liability recognized as interest expense.
The aggregate debt discount of $207,650 is being amortized to interest expense over the respective terms of the notes. As of December
31, 2019, the Company owed an aggregate of $250,000 of principal and $5,096 of accrued interest on these convertible promissory
notes.

 

Convertible
notes payable-Paladin Advisors LLC

On
October 23, 2019, the Company issued convertible promissory notes in the aggregate principal amount of $75,000 to Paladin Advisors,
LLC (“Paladin”). The promissory notes bear interest at 8% per anum,and is due six months from the respective issuance
date of the note along with accrued and unpaid interest. Principal and interest to be payable as provided below on that date which
is six months from the date of issuance (the “Maturity Date”). All payments due hereunder (to the extent not converted
into common stock, $0.001 par value per share (the “Common Stock”) in accordance with the terms of this agreement
and shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall
hereafter give to the Company by written notice made in accordance with the provisions of this Note. Whenever any amount expressed
to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding
day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in
full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest
due on such date. As used in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or
a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain
closed.

 

 

For
so long as there remains any amount due hereunder, the Holder shall have the option to convert all or any portion of the unpaid
principal amount of this Note, plus accrued interest (together with the unpaid principal amount, the “Converted Amount”),
into shares of the Company’s common stock. The conversion price (the “Conversion Price”) shall be equal to a
forty-five percent (45%) discount to the lowest closing bid of the previous ten (10) day trading period, ending on the business
day before a Notice of Conversion is delivered to the Company. The number of shares of Common Stock into which the Converted Amount
shall be convertible (the “Conversion Shares”) shall be determined by dividing (i) the Converted Amount by (ii) the
Conversion Price. For the purposes of this Section 4(a), a conversion shall be deemed to occur on the date that the Company receives
an executed copy of the Conversion Notice.

 

The
aggregate debt discount of $46,721 is being amortized to interest expense over the respective terms of the notes. As of December
31, 2019, the Company owed an aggregate of $75,000 of principal and $0 of accrued interest on these convertible promissory notes.

 

Convertible
notes payable-GS Capital Partners LLC

On
December 19, 2019, the Company issued convertible promissory notes in the aggregate principal amount of $173,000 to GS Capital
Partners LLC (“GS Capital”). The promissory notes bear interest at 10% per annum and is due one year from the respective
issuance date and include an original issuance discount (“OID”) in aggregate of $15,000.

 

The
interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration
and transfers of this Note. The principal of, and interest on, this Note are payable at 30 Broad Street, Suite 1201, New York,
NY 10004, initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof
from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note before or on the
Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer
addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer
shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this
Note to the extent of the sum represented by such check or wire transfer.

 

The
Holder of this Note is entitled, at its option, at any time after cash payment, to convert all or any amount of the principal
face amount of this Note then outstanding into shares of the Company’s common stock (the “Common Stock”) at a price
(“Conversion Price”) for each share of Common Stock equal to 62% of the lowest trading price of the Common Stock as
reported on the National Quotations Bureau OTC Marketplace exchange which the Company’s shares are traded or any exchange
upon which the Common Stock may be traded in the future (“Exchange”), for the twenty prior trading days including the
day upon which a Notice of Conversion is received by the Company or its transfer agent (provided such Notice of Conversion is
delivered by fax or other electronic method of communication to the Company or its transfer agent after 4 P.M. Eastern Standard
or Daylight Savings Time if the Holder wishes to include the same day closing price). If the shares have not been delivered within
3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the
shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Accrued but
unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued
on conversion, but the number of shares issuable shall be rounded to the nearest whole share. To the extent the Conversion Price
of the Company’s Common Stock closes below the par value per share, the Company will take all steps necessary to solicit
the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees to honor all
conversions submitted pending this increase. In the event the Company experiences a DTC “Chill” on its shares, the
Conversion Price shall be decreased to 52% instead of 62% while that “Chill” is in effect. In no event shall the Holder
be allowed to effect a conversion if such conversion, along with all other shares of Company Common Stock beneficially owned by
the Holder and its affiliates would exceed 4.99% of the outstanding shares of the Common Stock of the Company (which may be increased
up to 9.9% upon 60 days’ prior written notice by the Investor).

 

As
of the funding date of each note, the Company determined the fair value of the embedded derivative associated with the convertibility
of each note. The fair value of the embedded derivative has been added to the debt discount (total debt discount is limited to
the face value of the debt) with any excess of the derivative liability recognized as interest expense. The aggregate debt discount
of $166,193 is being amortized to interest expense over the respective terms of the notes. As of December 31, 2019, the Company
owed an aggregate of $173,000 of principal and $569 of accrued interest on these convertible promissory notes.

 

Convertible
notes payable-St George Investments

 

Effective
November 1, 2017, the Company issued a secured convertible promissory note in aggregate of $601,420 to St George Investments LLC
(“St George”). The promissory note bears interest at 10% compounded daily, was due upon maturity on September 10,
2018 and includes an original issue discount (“OID”) of $59,220. The promissory note was funded on November 11, 2017
for $542,200, net of OID and transaction costs. As of September 30, 2019, the Company owed $417,890 of principal and $38,378 of
accrued interest on this convertible promissory note. As of September 30, 2019, this note was in default, but the lender has not
enforced the default interest rate. Effective December 20, 2017, the Company issued a secured convertible promissory note in aggregate
of $1,655,000 to St George Investments LLC (“St George”). The promissory note bears interest at 10% compounded daily,
was due upon maturity on October 27, 2018 and includes an original issue discount (“OID”) of $155,000. In addition,
the Company agreed to pay $5,000 for legal, accounting and other transaction costs of the lender. The promissory note was funded
in nine tranches of $300,000; $200,000; $200,000; $400,000; $75,000; $150,000; $85,000; $120,000 and $70,000, resulting in aggregate
net proceeds of $1,500,000. The Company received aggregate net proceeds of $1,200,000 and $300,000 during the years ended December
31, 2018 and 2017, respectively. As an investment incentive, the Company issued 1,100,000 five-year warrants, exercisable at $2.40
per share, with certain reset provisions.

 

The
promissory notes are convertible, at any time at the lender’s option, at $2.40 per share. However, in the event the Company’s
market capitalization (as defined) falls below $30,000,000, the conversion rate is 60% of the 3 lowest closing trade prices due
the 20 trading days immediately preceding date of conversion, subject to additional adjustments, as defined. In addition, the
promissory note includes certain anti-dilution provisions should the Company subsequently issue any common stock or equivalents
at an effective price less than the lender conversion price. The Company has a right to prepayment of the note, subject to a 20%
prepayment premium and is secured by a trust deed of certain assets of the Company.

 

On
November 5, 2018, $250,000 of principal and accrued interest was assigned to John Fife as an individual with all the terms and
conditions of the original note issued to St George. On March 21, 2019, $150,959 of principal and $4,963 of accrued interest along
with $160,454 of derivative liabilities valued as of the respective conversion date were converted into 394,460 shares of common
stock.

 

During
the nine months ended September 30, 2019, $550,000 of principal, $122,694 of accrued interest and $441,394 of derivative liabilities
valued as of the respective conversion dates were converted into 1,710,897 shares of common stock, resulting in a gain on debt
settlement of $21,586. As of September 30, 2019, the Company owed $0 of principal and $0 of accrued interest on this convertible
promissory note. Although this note was in default until it was repaid, the lender did not enforce the default interest rate.

 

Effective
August 28, 2018, the Company issued a secured convertible promissory note in aggregate of $1,128,518 (includes overfunding of
$23,518) to St George Investments LLC (“St George”). The promissory note bears interest at 10% compounded daily, was
due upon maturity on June 30, 2019 and includes an original issue discount (“OID”) of $100,000. In addition, the Company
agreed to pay $5,000 for legal, accounting and other transaction costs of the lender. During the year ended December 31, 2018,
the Company received aggregate net proceeds of $825,000. During the nine months ended September 30, 2019, an additional $218,518
was funded under this note resulting in net proceeds of $198,518.

 

As
an investment incentive, the Company issued 750,000 five-year warrants, exercisable at $2.40 per share, with certain reset provisions.
The aggregate fair value of the issued warrants was $1,588,493. The face value of the debt was then allocated, on a relative fair
value basis, between the debt and the warrants. The portion allocated to warrants has been added to the debt discount with a resulting
increase in additional paid-in capital. As of the funding date of each tranche of this note, the Company determined the fair value
of the embedded derivative associated with the convertibility of this note. The fair value of the embedded derivative has been
added to the debt discount (total debt discount is limited to the face value of the debt) with any excess of the derivative liability
recognized as interest expense. As of the aggregate debt discount of $1,114,698 is being amortized to interest expense over the
respective term of each tranche.

 

The
promissory notes are convertible, at any time at the lender’s option, at $2.40 per share. However, in the event the Company’s
market capitalization (as defined) falls below $30,000,000, the conversion rate is 60% of the 3 lowest closing trade prices due
the 20 trading days immediately preceding date of conversion, subject to additional adjustments, as defined. In addition, the
promissory note includes certain anti-dilution provisions should the Company subsequently issue any common stock or equivalents
at an effective price less than the lender conversion price. The Company has a right to prepayment of the note, subject to a 15%
prepayment premium and is secured by a trust deed of certain assets of the Company.

 

During
the nine months ended September 30, 2019, $1,000,859 of principal and $840,299 of derivative liabilities valued as of the respective
conversion dates were converted into 4,475,543 shares of common stock, resulting in a loss on debt settlement of $612,034. As
of September 30, 2019, the Company owed $828,518 of principal and $28,138 of accrued interest on this convertible promissory note.
As of September 30, 2019, this note was in default, but the lender has not enforced the default interest rate.

 

Effective
January 29, 2019, the Company issued a secured convertible promissory note in aggregate of $2,205,000 to St George Investments
LLC (“St George”). The promissory note bears interest at 10% compounded daily, is due upon maturity on December 5,
2019 and includes an original issue discount (“OID”) of $200,000. In addition, the Company agreed to pay $5,000 for
legal, accounting and other transaction costs of the lender. During the nine months ended September 30, 2019, the promissory note
was funded in eight tranches totaling $1,406,482 resulting in aggregate net proceeds of $1,276,482 under this note. As an investment
incentive, the Company issued 1,500,000 5-year warrants, exercisable at $2.40 per share, with certain reset provisions. The aggregate
fair value of the issued warrants was $999,838. The face value of the debt was then allocated, on a relative fair value basis,
between the debt and the warrants. The portion allocated to warrants has been added to the debt discount with a resulting increase
in additional paid-in capital. As of the funding date of each tranche of this note, the Company determined the fair value of the
embedded derivative associated with the convertibility of this note. The fair value of the embedded derivative has been added
to the debt discount (total debt discount is limited to the face value of the debt) with any excess of the derivative liability
recognized as interest expense.

 

The
promissory notes are convertible, at any time at the lender’s option, at $2.40 per share. However, in the event the Company’s
market capitalization (as defined) falls below $30,000,000, the conversion rate is 60% of the 3 lowest closing trade prices due
the 20 trading days immediately preceding date of conversion, subject to additional adjustments, as defined. In addition, the
promissory note includes certain anti-dilution provisions should the Company subsequently issue any common stock or equivalents
at an effective price less than the lender conversion price. The Company has a right to prepayment of the note, subject to a 15%
prepayment premium and is secured by a trust deed of certain assets of the Company.

 

Effective
March 25, 2019, the Company issued a secured convertible promissory note in the amount of $580,000 to St George Investments LLC
(“St George”). The promissory note bears interest at 10% compounded daily, is due upon maturity on January 24, 2020
and includes an original issue discount (“OID”) of $75,000. In addition, the Company agreed to pay $5,000 for legal,
accounting and other transaction costs of the lender. During the nine months ended September 30, 2019, the promissory note was
funded in the amount of $580,000 resulting in net proceeds of $500,000 under this note. As an investment incentive, the Company
issued 375,000 five-year warrants, exercisable at $2.40 per share, with certain reset provisions. The aggregate fair value of
the issued warrants was $258,701. The face value of the debt was then allocated, on a relative fair value basis, between the debt
and the warrants. The portion allocated to warrants has been added to the debt discount with a resulting increase in additional
paid-in capital. As of the funding date of this note, the Company determined the fair value of the embedded derivative associated
with the convertibility of this note. The fair value of the embedded derivative has been added to the debt discount (total debt
discount is limited to the face value of the debt) with any excess of the derivative liability recognized as interest expense.
The aggregate debt discount of $483,966 is being amortized to interest expense over the term of the note.

 

The
promissory notes are convertible, at any time at the lender’s option, at $2.40 per share. However, in the event the Company’s
market capitalization (as defined) falls below $30,000,000, the conversion rate is 60% of the 3 lowest closing trade prices due
the 20 trading days immediately preceding date of conversion, subject to additional adjustments, as defined. In addition, the
promissory note includes certain anti-dilution provisions should the Company subsequently issue any common stock or equivalents
at an effective price less than the lender conversion price. The Company has a right to prepayment of the note, subject to a 15%
prepayment premium and is secured by a trust deed of certain assets of the Company. As of December 31, 2019, the Company owed
$2,947,890 of principal and $314,547 of accrued interest on this convertible promissory note.

 

Convertible
notes payable – Robert L. Hymers III

 

On
December 23, 2019, the Company issued convertible promissory notes in the aggregate principal amount of $96,552.70 to Robert L.
Hymers III (“Hymers”) in satisfaction of funds owed to Mr. Hymers from his consulting contract with the Company for
past services rendered and completed. The promissory notes bear interest at 10% per anum, and is due six months from the respective
issuance date of the note along with accrued and unpaid interest. Principal and interest to be payable as provided below on that
date which is six months from the date of issuance (the “Maturity Date”). All payments due hereunder (to the extent
not converted into common stock, $0.001 par value per share (the “Common Stock”) in accordance with the terms of this
agreement and shall be made in lawful money of the United States of America. All payments shall be made at such address as the
Holder shall hereafter give to the Company by written notice made in accordance with the provisions of this Note. Whenever any
amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be
due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date on
which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining
the amount of interest due on such date. As used in this Note, the term “business day” shall mean any day other than
a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive
order to remain closed.

 

For
so long as there remains any amount due hereunder, the Holder shall have the option to convert all or any portion of the unpaid
principal amount of this Note, plus accrued interest (together with the unpaid principal amount, the “Converted Amount”),
into shares of the Company’s common stock. The conversion price (the “Conversion Price”) shall be equal to a
fifty percent (50%) discount to the lowest closing bid of the previous fifteen (15) day trading period, ending on the business
day before a Notice of Conversion is delivered to the Company. The number of shares of Common Stock into which the Converted Amount
shall be convertible (the “Conversion Shares”) shall be determined by dividing (i) the Converted Amount by (ii) the
Conversion Price. A conversion shall be deemed to occur on the date that the Company receives an executed copy of the Conversion
Notice.

 

The
aggregate debt discount of $92,332 is being amortized to interest expense over the respective terms of the notes. As of December
31, 2019, the Company owed an aggregate of $96,552.70 of principal and $212 of accrued interest on these convertible promissory
notes. The derivative liability at December 31, 2019 associated with this convertible note was $158,307.

 

Convertible
notes payable – Natural Plant Extract

 

On
April 15, 2019, we entered into a joint venture with Natural Plant Extract of California, Inc., and subsidiaries, to operate a
licensed psychoactive cannabis distribution service in California. California legalized THC psychoactive cannabis for medicinal
and recreational use on January 1, 2018. On February 3, 2020, we terminated the joint venture.

The
Original Material Definitive Agreement

Pursuant
to the original material definitive agreement, we agreed to acquire twenty percent (equal to 200,000) of NPE’s authorized
shares in exchange for our payment of $2,000,000 and $1,000,000 worth of our restricted common stock. We agreed to form a joint
venture with NPE incorporated in California under the name “Viva Buds, Inc.” (“Viva Buds”) for the purpose
of operating a California licensed cannabis distribution business pursuant to California law legalizing THC psychoactive cannabis
for recreational and medicinal use.

Our
payment obligations were governed by a stock purchase agreement which required us to make the following payments:

a.
Deposit of $350,000 within 5 days of the execution of the material definitive agreement;

b.
Deposit of $250,000 payable within 30 days;

c.
Deposit of $400,000 within 60 days;

d.
Deposit of $500,000 within 75 days;

e.
Deposit of $500,000 within 90 days

We
made our initial payment pursuant to this schedule, but otherwise failed to comply with the payment schedule and we were in breach
of contract.

Settlement
and Release of All Claims Agreement

On
February 3, 2020, the Company and NPE entered into a settlement and release of all claims agreement. In exchange for a complete
release of all claims, the Company and NPE (1) agreed to reduce our interest in NPE from 20% to 5%; (2) we agreed to pay NPE a
total of $85,000 as follows: $35,000 concurrent with the execution of the Settlement and Release of All Claims Agreement, and
$25,000 no later than the 5th calendar day for each of the two months following execution of Settlement and Release of All Claims
Agreement; and, (3) to retire the balance of our original valuation obligation from the material definitive agreement, representing
a shortfall of $56,085.15, in a convertible promissory note, with terms allowing NPE to convert the note into common stock of
MCOA at a 50% discount to the closing price of MCOA’s common stock as of the maturity date.

Of
the total amount due and payable by us as of the date of this filing, we owe $75,000, and we are in breach of the settlement agreement.
On February 3, 2020, we executed a convertible promissory note in the amount of $56,085.15 to NPE. Additionally, as a result of
our settlement agreement with NPE, we became liable to pay NPE our 5% portion equal to $25,902 of the regulatory charges to the
City of Lynwood and the State of California to transfer the cannabis licenses back to NPE. To date, we have not paid this amount
and it is due and owing.

 

Summary:

 

The Company has identified the embedded derivatives
related to the above described notes and warrants. These embedded derivatives included certain conversion and reset features. The
accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the
inception date of the note and to fair value as of each subsequent reporting date. 

 

At December 31, 2018, the Company determined
the aggregate fair values of $2,256,631 of embedded derivatives. The fair values were determined using the Binomial Option Pricing
Model based on the following assumptions: (1) dividend yield of 0%; (2) expected volatility of 112.98% to 240.62%, (3) weighted
average risk-free interest rate of

1.59% to 2.56%, (4) expected life of 0.083
to 1 year, and (5) estimated fair value of the Company’s common stock from $0.0203 per share.

 

For the year ended December 31, 2019, the Company
recorded a loss on the change in fair value of derivative liabilities of $2,123,570, while for the year ended December 31, 2018,
the Company recorded a gain on the change in fair value of derivative liabilities of $1,443,249. For the years ended December 31,
2019 and 2018, the Company recorded amortization of debt discounts of $2,906,843 and $1,146,549, respectively, as a charge to interest
expense, respectively.

 

NOTE
6 – DERIVATIVE LIABILITIES

 

As
described in Notes 4 and 7, the Company issued convertible notes and warrants that contained conversion features and a reset provisions.
The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as
of the inception date and to fair value as of each subsequent reporting date.

 

If
an embedded conversion option in a convertible debt instrument no longer meets the bifurcation criteria in this Subtopic, an issuer
shall account for the previously bifurcated conversion option by reclassifying the carrying amount of the liability for the conversion
option (that is, its fair value on the date of reclassification) to shareholders’ equity. Any debt discount recognized when the
conversion option was bifurcated from the convertible debt instrument shall continue to be amortized.

 

NOTE
7 – STOCKHOLDERS’ DEFICIT

 

 Preferred
stock

 

The
Company is authorized to issue 10,000,000 shares of $0.001 par value preferred stock as of December 31, 2019 and December 31,
2018. As of December 31, 2019, and 2018, the Company has designated and issued 10,000,000 shares of Class A Preferred Stock.

 

Each
share of Class A Preferred Stock is entitled to 100 votes on all matters submitted to a vote to the stockholders of the Company,
does not have conversion, dividend or distribution upon liquidation rights.

 

Common
stock

 

The
Company is authorized to issue 5,000,000,000 shares of $0.001 par value common stock as of December 31, 2019 and 2018. As of December
31, 2019, and 2018, the Company had 77,958,081 and 42,687,301, respectively, common shares issued and outstanding.

 

On September 3, 2019, the Company completed
a 1 for 60 reverse stock-split of its common stock.

 

In
2019, the Company issued an aggregate of 141,669 shares of its common stock in settled amounts previously accrued with an estimated
fair value of $193,800

 

In
2019, the Company issued an aggregate of 18,510,381 shares of its common stock for services rendered with an estimated fair value
of $3,293,688.

 

In
2019, the Company issued an aggregate of 9,251,217 shares of its common stock in settlement of convertible notes payable and accrued
interest with an estimated fair value of $3,388,774.

 

In
2019, the Company issued an aggregate of 1,000,000 shares of its common stock in issuance of warrants and BCF with convertible
debt with an estimated fair value of $856,717.

 

In
2019, the Company issued an aggregate of 1,220,856 shares of its common stock in conversion of related party notes payable with
an estimated fair value of $1,182,415.

 

In
2019, the Company issued an aggregate of 1,653,175 common shares of its common stock in exchange for exercise of warrants on a
cashless basis.

 

In
2019, the Company sold shares 222,221 shares of its common stock with an estimated value of $65,000.

 

In
2019, the Company issued an aggregate of 2,082,398 common shares in settlement of a legal cases with an estimated fair value of
$541,424.

 

In
2019, the Company issued an aggregate of 2,222,047 common shares in settlement of a for investments in joint ventures with an
estimated fair value of $1,219,040.

 

During
the year ended December 31, 2018, the Company issued an aggregate of 31,000,794 shares of its common stock for services rendered
with an estimated fair value of $718,099.

 

During
the year ended December 31, 2018, the Company sold an aggregate of 18,693,636 shares of its common stock for net proceeds of $152,000.

 

During
the year ended December 31, 2018, the Company issued an aggregate of 80,428,246 shares of its common stock in settlement of $804,279
related party notes payable and accrued interest.

 

During
the year ended December 31, 2018, the Company issued 147,927,794 shares of its common stock in part settlement of $5,466,333 convertible
notes payable, accrued interest and penalties.

 

During
the year ended December 31, 2018, the Company issued 57,676,810 shares of its common stock in settlement of a legal case at a
cost of $1,701,466.

 

During
the year ended December 31, 2018, the company issued 122,046,796 shares of its common stock in exchange for exercise of warrants
on a cashless basis.

 

During
the year ended December 31, 2018, the company received proceeds from common stock subscriptions for $90,000.

 

Options

 

Option
valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated
using the Binomial Option Pricing Model with a volatility figure derived from using the Company’s historical stock prices.
Management determined this assumption to be a more accurate indicator of value. The Company accounts for the expected life of
options based on the contractual life of options for non-employees. For employees, the Company accounts for the expected life
of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined
in the accounting standards codification.

 

The
risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent
with the expected term of the options. 

 

In
addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected
to vest. In estimating the Company’s forfeiture rate, the Company analyzed its historical forfeiture rate, the remaining
lives of unvested options, and the number of vested options as a percentage of total options outstanding. If the Company’s
actual forfeiture rate is materially different from its estimate, or if the Company reevaluates the forfeiture rate in the future,
the stock-based compensation expense could be significantly different from what the Company has recorded in the current period.

 

The
following table summarizes the stock option activity for the years ended December 31, 2019 and 2018:

 

 
 
Shares
 
 

Weighted-Average

Exercise
Price

 
 

Weighted
Average

Remaining

Contractual Term

 
 

Aggregate

Intrinsic
Value

Outstanding at December 31, 2017
 
 
16,666,667
 
 
$
0.30
 
 
 
7.76
 
$
15,400,000Granted
 
 

 
 
 
 
 
 
 
 
 
 
 Forfeitures
or expirations

 
 

 
 
 
 
 
 
 
 
 
 
 Outstanding
at December 31, 2018

 
 
16,666,667
 
 
$
0.30
 
 
 
6.76
 
$
 
15,296,667Granted
 
 

 
 
 
 
 
 
 
 
 
 
 
 Forfeitures or expirations
 
 
(16,666,667)
 
 
 
0.30 
 
 
 
 
 
 
 
 Outstanding at December 31, 2019
 
 
0(1)
 
 
$

 
 
 

 
 
 
Exercisable
at December 31, 2019

 
 
0(1)
 
 
$

 
 
 

 
 
$

 

(1)
On February 27, 2019, Donald Steinberg and Charles Larsen cancelled previously issued options to purchase an aggregate of 16,666,667
shares at an average exercise price of $0.30 per share, representing 100% of all previously issued option.

   

The
aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on options with an exercise
price less than the Company’s stock price of $0 and $1.22 as of December 31, 2019 and 2018, respectively, which would have
been received by the option holders had those option holders exercised their options as of that date.

  

The
following table presents information related to stock options at December 31, 2019(1):

 

Options
Outstanding(1)

 
 
Options
Exercisable

 

     
Exercise

  
  Price

 
 

Number
of

Options

 
 

Weighted
Average

Remaining
Life

In
Years

 
 

Exercisable

Number
of

Options

 $

 
 
 

 
 

 
 
 

 

 

The
stock-based compensation expense related to option grants was $0 and $450,000 during the years ended December 31, 2019 and 2018,
respectively.

 

(1)
On February 27, 2019, Donald Steinberg and Charles Larsen cancelled previously issued options to purchase an aggregate of 16,666,667
shares at an average exercise price of $0.30 per share, representing 100% of all previously issued options.

 

 

 

 

 

 

Warrants

 

The
following table summarizes the stock warrant activity for the two years ended December 31, 2019:

 

 
 
Shares
 
 

Weighted-Average

Exercise
Price

 
 

Weighted
Average

Remaining

Contractual Term

 
 

Aggregate

Intrinsic
Value

 Outstanding at December 31, 2017
 
 
186,550
 
 
$
2.40
 
 
 
 
 
$
1,873,492
 Granted
 
 
1,827,564
 
 
 
2.34
 
 
 
 
 
 
 
 Forfeitures
or expirations

 
 
(166,667
)
 
$
1.50-
 
 
 
 
 
 
 
 Outstanding
at December 31, 2018

 
 
1,847,447
 
 
 
 
 
 
 
 
 
 
 
 
 Granted
 
 
2,370,298
 
 
 
1.98
 
 
 
 
 
 
 
 
 Exercised
 
 
(192,521
)
 
 
1.78
 
 
 
 
 
 
 
 
 Forfeitures or expirations
 
 
(14,113)
 
 
 
1.80
 
 
 
 
 
 
 
 
 Outstanding at December 31, 2019
 
 
4,011,111
 
 
$
2.15
 
 
 
3.60
 
 
$

 Exercisable
at December 31, 2019

 
 
4,011,111
 
 
$
2.15
 
 
 
3.60
 
 
$

 

 

The
aggregate intrinsic value in the preceding tables represents the total pretax intrinsic value, based on warrants with an exercise
price less than the Company’s stock price of $0.07 and $1.22 as of December 31, 2019 and 2018, respectively, which would
have been received by the warrant holders had those option holders exercised their warrants as of that date.

 

The
following table presents information related to warrants at December 31, 2019:

 

Warrants
Outstanding

 
 
Warrants
Exercisable

 

     
Exercise

  
  Price

 
 

Number
of

Warrants

 
 

Weighted
Average

Remaining
Life

In
Years

 
 

Exercisable

Number
of

Warrants

 $
0.01
– $1.00

 
 
 
484,187
 
 
2.70
 
 
 
484,187
 $
1.01
– $2.00

 
 
 
27,778
 
 
2.50
 
 
 
27,778
 $
2.01
– $3.00

 
 
 
3,499,146
 
 
3.74
 
 
 
3,499,146
 

 

In
connection with the issuance of convertible notes payable, the Company issued an aggregate of 2,370,298 warrants to purchase the
Company’s common stock from $0.26 to $2.40, vesting immediately and expiring 5 years from the date of issuance. (See Note
7)

 

NOTE
8 — FAIR VALUE MEASUREMENT

 

The
Company adopted the provisions of Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”)
on January 1, 2008. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements
for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous
market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability,
such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires
an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC
825-10 establishes three levels of inputs that may be used 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 with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant
inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full
term of the assets or liabilities.

 

Level
3 – Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or
liabilities.

 

All
items required to be recorded or measured on a recurring basis are based upon level 3 inputs.

 

To
the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination
of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of
the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair
value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

 

Upon
adoption of ASC 825-10, there was no cumulative effect adjustment to beginning retained earnings and no impact on the financial
statements.

 

The
carrying value of the Company’s cash and cash equivalents, accounts receivable, accounts payable, short-term borrowings
(including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term
maturity.

 

As
of December 31, 2019, and 2018, the Company did not have any items that would be classified as level 1 or 2 disclosures.

 

The
Company recognizes its derivative liabilities as level 3 and values its derivatives using the methods discussed in note 6. While
the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that
the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in
a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values
using the methods discussed in Notes 4 and 5 are that of volatility and market price of the underlying common stock of the Company.

 

As
of December 31, 2019, and 2018, the Company did not have any derivative instruments that were designated as hedges.

 

The
combined derivative and warrant liability as of December 31, 2019 and 2018, in the amounts of $5,222,186 and $2,256,631, respectively,
have a level 3 classification.

 

The
following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities for the two years
ended December 31, 2019:

 

The
derivative liabilities as of December 31, 2019 and 2018, in the amount of $5,693,071 and $2,256,631, respectively, have a level
3 classification.

 

The
following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities for the year
ended December 31, 2019:

 

 
 

Debt

Derivative

  Balance, December 31, 2018 
$2,256,631 Increase resulting from initial issuances of additional
convertible notes payable
 
 2,895,717 Decreases resulting from conversion or payoff of
convertible notes payable
 
 (1,582,847)Mark-to-market at December 31, 2019 
 2,123,570 Balance, December 31, 2019 
$5,693,071   
   Net change in fair value included
in earnings related to derivative liabilities during the year ended December 31, 2019
 
$2,123,570 

 

 

Fluctuations
in the Company’s stock price are a primary driver for the changes in the derivative valuations during each reporting period.
During the year ended December 31, 2019, the Company’s stock price decreased significantly from initial valuations. As the
stock price decreases for each of the related derivative instruments, the value to the holder of the instrument generally decreases.
Stock price is one of the significant unobservable inputs used in the fair value measurement of each of the Company’s derivative
instruments.

 

NOTE
9 — RELATED PARTY TRANSACTIONS

 

The
Company’s current officers and stockholders advanced funds to the Company for travel related and working capital purposes.
As of December 31, 2019, and 2018, there were no related party advances outstanding.

 

As
of December 31, 2019, and 2018, accrued compensation due officers and executives included as accrued compensation was $4,875 and
$454,316, respectively.

 

For
the years ended December 31, 2019 and 2018, the Company had sales to related parties of $21,157 and $11,683, respectively.

  

NOTE
10 — COMMITMENTS AND CONTINGENCIES

 

Employment
contracts

 

 On
February 3, 2020, we entered into an executive employment agreement with Jesus Quintero, our CEO and CFO providing for gross salary
of $15,000 monthly, consisting of $12,000 in cash and $3,000 worth of our common stock valued on the closing price of our common
stock on the last trading day of each month.

 

On
February 28, 2020, the Company entered into executive contracts with its directors Edward Manolos and Themistocles Psomiadis .
The agreements are for a term lasting from the effective date until the earlier of the date of the next annual or special
stockholders meeting called for the purposes of electing directors, and the earliest of the following to occur: (a) the death
of the Director; (b) the termination of the Director from his membership on the Board by the mutual agreement of the Company and
the Director; (c) the removal of the Director from the Board by the majority stockholders of the Company; and (d) the resignation
by the Director from the Board. Mr. Psomiadis and Mr. Manolos’s 2020 contracts provide for payments of $5,000 quarterly.

 

Operating
lease

 

On
July 1, 2019, the Company entered into a lease extension agreement, whereby the Company leased for office space in Escondido,
California, commencing June 30, 2020 and expiring on June 30, 2021 at a base monthly lease rate of $1,308.88 per month through
June 30, 2020, and $1,348.14 to June 30, 2021. 

 

To
evaluate the impact on adoption of ASC842 – Leases, on the accounting treatment for leasing of real office property referred
to as the “Premises”. The premises is located in Escondido, CA.

 

On
July 1, 2019, the Company entered into a lease extension agreement for its single operating lease, whereby the Company extended
its office lease Escondido, California,  in for two year. The extension period commenced on June 30, 2020 and will expire
on June 30, 2021 at a base monthly lease rate of $1,308.88 per month through June 30, 2020, and $1,348.14 to June 30, 2021. 

 

To
evaluate the impact on adoption of ASC842 – Leases, on the accounting treatment for leasing of real office property referred
to as the “Premises”. The premises is located in Escondido, CA.

 

The
Company utilizes the incremental borrowing rate in determining the present value of lease payments unless the implicit rate is
readily determinable. The Company used an estimated incremental borrowing rate of 10% to estimate the present value of the right
of use liability.

 

The
Company has right-of-use assets of $22,101 and operating lease liabilities of $22,219 as of December 31, 2019. Operating lease
expense for the year ended December 31, 2019 was $30,048.76. The Company had cash used in operating activities related to leases
of $29,930.76 during the year ended December 31, 2019. The lease has a remaining term of eighteen months.

The
following table provides the maturities of lease liabilities at December 31, 2019:

 

 
 
 
 Maturity of Lease Liabilities at December
31, 2019
2020
$
         15,942
 2021
 
            8,089
                                              2021
and thereafter

 
                  –  
  
 
                  –  
 Total future undiscounted lease payments
 
         24,031
 Less: Interest
 
          (1,812)
 Present value of lease liabilities
$
         22,219
 

 

Minimum
lease payments under the Company’s operating lease under ASC 840 as of for 2020 and 2021 are $15,942 and $8,089, respectively.

 

Litigation

 

The
Company is subject at times to other legal proceedings and claims, which arise in the ordinary course of its business.  Although
occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters should
not have a material adverse effect on its financial position, results of operations or liquidity.

 

Bougainville
Ventures


On September 20, 2018, the Company filed suit against Bougainville Ventures,
Inc., BV-MCOA Management, LLC, Andy Jagpal, Richard Cindric, et al. in Okanogan County Washington Superior Court, case number
18-2- 0045324.

Background.
On March 16, 2017, we entered into a joint venture agreement with Bougainville Ventures, Inc., a Canadian corporation. The purpose
of the joint venture was for the Company and Bougainville to jointly engage in the development and promotion of products in the
legalized cannabis industry in Washington State; (ii) utilize Bougainville’s high quality cannabis grow operations in the
State of Washington, where it claimed to have an ownership interest in real property for use within the legalized cannabis industry;
(iii) leverage Bougainville’s agreement with a I502 Tier 3 license holder to grow cannabis on the site; provide technical
and management services and resources including, but not limited to: sales and marketing, agricultural procedures, operations
security and monitoring, processing and delivery, branding, capital resources and financial management; and, (iv) optimize collaborative
business opportunities. The Company and Bougainville agreed to operate through a Washington State Limited Liability Company, and
BV-MCOA Management, LLC was organized in the State of Washington on May 16, 2017.

As
our contribution to the joint venture, the Company committed to raise not less than $1 million dollars to fund joint venture operations
based upon a funding schedule. The Company also committed to providing branding and systems for the representation of cannabis
related products and derivatives comprised of management, marketing and various proprietary methodologies directly tailored to
the cannabis industry. The Company and Bougainville’s agreement provided that funding provided by the Company would go, in part,
towards the joint venture’s ultimate purchase of the land consisting of a one-acre parcel located in Okanogan County, Washington,
for joint venture operations.

As
disclosed on Form 8-K on December 11, 2017, the Company did not comply with the funding schedule for the joint venture. On November
6, 2017, the Company and Bougainville amended the joint venture agreement to reduce the amount of the Company’s commitment to
$800,000 and also required the Company to issue Bougainville 15 million shares of the Company’s restricted common stock. The Company
completed its payments pursuant to the amended agreement on November 7, 2017, and on November 9, 2017, issued to Bougainville
15 million shares of restricted common stock. The amended agreement provided that Bougainville would deed the real property to
the joint venture within thirty days of its receipt of payment.

Thereafter,
the Company determined that Bougainville had no ownership interest in the property in Washington State, but rather was a party
to a purchase agreement for real property that was in breach for non-payment. Bougainville also did not possess an agreement with
a Tier 3 I502 license holder to grow Marijuana on the property. Nonetheless, as a result of funding arranged for by the Company,
Bougainville and an unrelated third party, Green Ventures Capital Corp., purchased the land. The land is currently pending the
payment of delinquent property taxes that would allow for the Okanogan County Assessor to sub-divide the property, so that the
appropriate portion could be deeded to the joint venture. Although Bougainville represented it would pay the delinquent taxes,
it has not. To date, the property has not been deeded to the joint venture.

To
clarify the respective contributions and roles of the parties, the Company also offered to enter into good faith negotiations
to revise and restate the joint venture agreement with Bougainville. The Company diligently attempted to communicate with Bougainville
in good faith to accomplish a revised and restated joint venture agreement, and efforts towards satisfying the conditions to complete
the subdivision of the land by the Okanogan County Assessor. However, Bougainville failed to cooperate or communicate with the
Company in good faith, and failed to pay the delinquent taxes on the real property that would allow for sub-division and the deeding
of the real property to the joint venture.

Company
Determines to File Suit. On August 10, 2018, the Company advised its independent auditor that Bougainville did not cooperate or
communicate with the Company regarding its requests for information concerning the audit of Bougainville’s receipt and expenditures
of funds contributed by the Company in the joint venture agreement. Bougainville had a material obligation to do so under the
joint venture agreement. The Company believes that some of the funds it paid to Bougainville were misappropriated and that there
was self-dealing with respect to those funds. Additionally, the Company believes that Bougainville misrepresented material facts
in the joint venture agreement, as amended, including, but not limited to, Bougainville’s representations that: (i) it had
an ownership interest in real property that was to be deeded to the joint venture; (ii) it had an agreement with a Tier 3 # I502
cannabis license holder to grow cannabis on the real property; and, (iii) that clear title to the real property associated with
the Tier 3 # I502 license would be deeded to the joint venture thirty days after the Company made its final funding contribution.
As a result, on September 20, 2018, the Company filed suit against Bougainville Ventures, Inc., BV-MCOA Management, LLC, Andy
Jagpal, Richard Cindric, et al. in Okanogan County Washington Superior Court, case number 18-2- 0045324. The Company’s complaint
seeks legal and equitable relief for breach of contract, fraud, breach of fiduciary duty, conversion, recession of the joint venture
agreement, an accounting, quiet title to real property in the name of the Company, for the appointment of a receiver, the return
to treasury of 15 million shares issued to Bougainville, and, for treble damages pursuant to the Consumer Protection Act in Washington
State. The registrant has filed a lis pendens on the real property. The case is currently in litigation. Trial is set for January
26-28, 2021.  

 

Caren
Glasser

On
March 2, 2020, Caren Glasser filed a request for arbitration against the Company alleging non-payment for past due compensation.
The case was filed in the in the American Arbitration Association under Case no. 01-20-0000-6290. The Company and Ms. Glasser
agreed to settle her dispute on May 7, 2020. The settlement agreement obligates the Company to pay Ms. Glasser $24,000 thirty
days of Ms. Glasser’s review and execution, consistent with the Older Workers Benefit Protection Act (29 U.S.C. § 626(f).

NOTE
11 – INCOME TAXES

 

At
December 31, 2019, the Company has available for federal income tax purposes a net operating loss carry forward of approximately
$74,164,213, expiring in the year 2038, that may be used to offset future taxable income, but could be limited under Section 382.
The Company has provided a valuation reserve against the full amount of the net operating loss benefit, since in the opinion of
management based upon the earnings history of the Company; it is more likely than not that the benefits will not be realized.
Due to possible significant changes in the Company’s ownership, the future use of its existing net operating losses may be limited. All
or portion of the remaining valuation allowance may be reduced in future years based on an assessment of earnings sufficient to
fully utilize these potential tax benefits.  

 

We
have adopted the provisions of ASC 740-10-25, which provides recognition criteria and a related measurement model for uncertain
tax positions taken or expected to be taken in income tax returns.  ASC 740-10-25 requires that a position taken or
expected to be taken in a tax return be recognized in the financial statements when it is more likely than not that the position
would be sustained upon examination by tax authorities.  

 

Tax
position that meet the more likely than not threshold is then measured using a probability weighted approach recognizing the largest
amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement.  The Company had no
tax positions relating to open income tax returns that were considered to be uncertain. We
file income tax returns in the U.S. and in the state of California and Utah with varying statutes of limitations.

 

The
Company is required to file income tax returns in the U.S. Federal jurisdiction and in California. The Company is no longer subject
to income tax examinations by tax authorities for tax years ending before December 31, 2016.

 

The
Company’s deferred taxes as of December 31, 2019 and 2018 consist of the following:

 

 
 
2019
 
2018Non-Current deferred tax asset:
 
 
 
 
 
 
 
  Net operating loss carry-forwards
 
$
74,164,213
 
 
$
53,983,895
  Valuation allowance
 
 
(74,164,213
)
 
 
(53,983,895
) Net non-current deferred tax asset
 
$
—  
 
 
$
—  
 

    

NOTE
12 – SUBSEQUENT EVENTS

 

On
April 15, 2019, we entered into a joint venture with Natural Plant Extract of California, Inc., and subsidiaries, to operate a
licensed psychoactive cannabis distribution service in California. California legalized THC psychoactive cannabis for medicinal
and recreational use on January 1, 2018. On February 3, 2020, we terminated the joint venture.

The
Original Material Definitive Agreement

Pursuant
to the original material definitive agreement, we agreed to acquire twenty percent (equal to 200,000) of NPE’s authorized
shares in exchange for our payment of $2,000,000 and $1,000,000 worth of our restricted common stock. We agreed to form a joint
venture with NPE incorporated in California under the name “Viva Buds, Inc.” (“Viva Buds”) for the purpose
of operating a California licensed cannabis distribution business pursuant to California law legalizing THC psychoactive cannabis
for recreational and medicinal use.

Our
payment obligations were governed by a stock purchase agreement which required us to make the following payments:

a.
Deposit of $350,000 within 5 days of the execution of the material definitive agreement;

b.
Deposit of $250,000 payable within 30 days;

c.
Deposit of $400,000 within 60 days;

d.
Deposit of $500,000 within 75 days;

e.
Deposit of $500,000 within 90 days

We
made our initial payment pursuant to this schedule, but otherwise failed to comply with the payment schedule and we were in breach
of contract.

Settlement
and Release of All Claims Agreement

On
February 3, 2020, the Company and NPE entered into a settlement and release of all claims agreement. In exchange for a complete
release of all claims, the Company and NPE (1) agreed to reduce our interest in NPE from 20% to 5%; (2) we agreed to pay NPE a
total of $85,000 as follows: $35,000 concurrent with the execution of the Settlement and Release of All Claims Agreement, and
$25,000 no later than the 5th calendar day for each of the two months following execution of Settlement and Release of All Claims
Agreement; and, (3) to retire the balance of our original valuation obligation from the material definitive agreement, representing
a shortfall of $56,085.15, in a convertible promissory note, with terms allowing NPE to convert the note into common stock of
MCOA at a 50% discount to the closing price of MCOA’s common stock as of the maturity date.

Of
the total amount due and payable by us as of the date of this filing, we owe $75,000, and we are in breach of the settlement agreement.
On February 3, 2020, we executed a convertible promissory note in the amount of $56,085.15 to NPE. Additionally, as a result of
our settlement agreement with NPE, we became liable to pay NPE our 5% portion equal to $25,902 of the regulatory charges to the
City of Lynwood and the State of California to transfer the cannabis licenses back to NPE. To date, we have not paid this amount
and it is due and owing. As of the date of this filing, there is no pending legal action by NPE against us for these matters. 

 

On February 3,
2020, the Company entered into an executive employment agreement with Jesus Quintero, our CEO and CFO providing for a gross salary
of $15,000 monthly, consisting of $12,000 in cash and $3,000 worth of our common stock valued on the closing price of our common
stock on the last trading day of each month.

 

On
February 28, 2020, Themistocles Psomiadis was appointed as an independent member to the board of directors.

On
February 28, 2020, the Company entered into executive contracts with its directors Edward Manolos and Themistocles Psomiadis.
The agreements are for a term lasting from the effective date until the earlier of the date of the next annual or special stockholders
meeting called for the purposes of electing directors, and the earliest of the following to occur: (a) the death of the Director;
(b) the termination of the Director from his membership on the Board by the mutual agreement of the Company and the Director;
(c) the removal of the Director from the Board by the majority stockholders of the Company; and (d) the resignation by the Director
from the Board. Mr. Psomiadis and Mr. Manolos’s 2020 contracts provide for payments of $5,000 quarterly.’

 

On
March 30, 2019, Robert Coale resigned as a member of the board of directors.

 

 

 

 

 

 

 

MARIJUANA COMPANY
OF AMERICA, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED
BALANCE SHEETS

 

  
Sept 30, 2020 
Dec 31, 2019  
 (Unaudited)  
 (Audited) ASSETS 
    
   Current assets: 
    
   Cash 
$149,477  
$211,765 Short-term Investments 
 130,060  
 27,403 Accounts receivable, net 
 8,563  
 18,317 Inventory 
 145,523  
 149,175 Prepaid Insurance 
 66,131  
 —   Investment receivable 
 54,940  
 —   Notes receivable 
 75,000  
 —   Other current assets 
 22,508  
 11,034 Total current assets 
 652,202  
 417,694   
    
   Property and equipment, net 
 3,028  
 7,512   
    
   Other assets: 
    
   Long-term Investments 
 1,343,915  
 693,915 Right-of-use-assets 
 11,642  
 22,101 Security deposit 
 2,500  
 2,500   
    
   Total assets 
 2,013,287  
 1,143,722   
    
   LIABILITIES AND STOCKHOLDERS’ DEFICIT 
    
   Current liabilities: 
    
   Accounts payable 
 696,010  
 797,789 Accrued compensation 
 125,738  
 4,875 Accrued liabilities 
 522,014  
 522,258 Notes payable, related parties 
 40,000  
 40,000 Loans payable PPP Stimulus 
 35,500  
 —   Convertible notes payable, net of debt discount of $334,980 and $808,980, respectively 
 2,181,571  
 3,193,548 Right-of-use liabilities – current portion 
 3,784  
 14,361 Warrant liability to be settled 
 —    
 192,115 Contingency Liability 
 —    
 956,251 Subscriptions payable 
 650,000  
 330,797 Derivative liability 
 3,426,888  
 5,693,071 Total current liabilities 
 7,681,505  
 11,745,065   
    
   Non-Current Liabilities 
    
   Right-of-use liabilities 
 7,858  
 7,858   
    
   Total liabilities 
 7,689,363  
 11,752,923   
    
   Stockholders’ deficit: 
    
   Preferred stock, $0.001 par value, 50,000,000 shares authorized 
    
   Class A preferred stock, $0.001 par value, 10,000,000 shares designated, 10,000,000 shares issued and outstanding as of September 30, 2020 and December 31, 2019 
 10,000  
 10,000 Class B preferred stock, $0.001 par value, 5,000,000 shares designated, 0 shares issued and outstanding as of September 30, 2020 and December 31, 2019 
 —    
 —   Common stock, $0.001 par value; 5,000,000,000 shares authorized; 1,913,880,887 and 77,958,081 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively 
 1,913,881  
 77,958 Common stock to be issued, 1,000,000 and 0 shares, respectively 
 1,000  
 —   Additional paid in capital 
 70,740,648  
 63,467,054 Accumulated deficit 
 (78,341,604) 
 (74,164,213)Total stockholders’ deficit 
 (5,676,075) 
 (10,609,201)  
    
   Total liabilities and stockholders’ deficit 
$2,013,287  
$1,143,722 

 

 

 

See the accompanying notes to these unaudited condensed consolidated financial statements

 

 

MARIJUANA COMPANY
OF AMERICA, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS

FOR THE THREE AND
NINE MONTHS ENDED SEPTEMBER 30, 2020 and 2019

(UNAUDITED)

 

 

  

Three months ended

September 30,

 

Nine months ended

September 30,

  
2020 
2019 
2020 
2019REVENUES: 
  
  
  
 Sales 
$49,933  
$225,356  
$206,407  
$540,398 Related party Sales 
 3,262  
 4,015  
 11,565  
 12,363 Total Revenues 
 53,195  
 229,371  
 217,972  
 552,761   
    
    
    
   Cost of sales 
 37,170  
 90,843  
 110,563  
 159,859   
    
    
    
   Gross Profit 
 16,025  
 138,528  
 107,409  
 392,902   
    
    
    
   OPERATING EXPENSES: 
    
    
    
   Depreciation 
 1,374  
 1,696  
 4,702  
 5,087 Selling and marketing 
 125,942  
 376,342  
 326,608  
 1,462,104 Payroll and related 
 62,000  
 90,000  
 258,842  
 310,000 Stock-based compensation 
 123,000  
 —    
 665,767  
 100,350 General and administrative 
 294,921  
 295,113  
 710,094  
 1,353,757   Total operating expenses 
 607,237  
 763,151  
 1,966,013  
 3,231,298   
    
    
    
   Net loss from operations 
 (591,212) 
 (624,623) 
 (1,858,604) 
 (2,838,396)  
    
    
    
   OTHER INCOME (EXPENSES): 
    
    
    
   Interest expense, net 
 (688,090) 
 (1,559,720) 
 (2,460,185) 
 (3,001,972)Legal Contingency expense 
 —    
 (1,497,674) 
 —    
 (1,497,674)Gain (Loss) on joint venture 
 238,296  
 —    
 (22,658) 
 —   Gain (Loss) on equity investment 
 240,198  
 122,864  
 106,305  
 (107,961)Loss on change in fair value of derivative liabilities 
 (1,454,903) 
 (1,668,112) 
 (312,631) 
 (2,148,262)Unrealized Loss on trading securities 
 —    
 (362,625) 
 (13,945) 
 (647,625)Loss on sale of trading securities 
 —    
 (24,698) 
 (2,603) 
 (24,698)Gain on settlement of joint venture 
 383,440  
 —   
 386,930  
 —   Loss on settlement of debt 
 —   
 (612,034) 
 —   
 (612,034)Total other income (expense) 
 (1,281,059) 
 (5,601,999) 
 (2,318,787) 
 (8,040,226)  
    
    
    
   Net loss before income taxes 
 (1,872,271) 
 (6,226,622) 
 (4,177,391) 
 (10,878,622)  
    
    
    
   Income taxes (benefit) 
 0  
 0  
 0  
 0   
    
    
    
   NET INCOME (LOSS) 
$(1,872,271) 
$(6,226,622) 
$(4,177,391) 
($10,878,622)  
    
    
    
     
    
    
    
   Loss per common share, basic and diluted 
$(0.00) 
$(0.13) 
$(0.01) 
$(0.26)  
    
    
    
   Weighted average number of common shares outstanding, basic and diluted (after stock-split) 
 1,178,860,134  
 49,686,994  
 518,261,567  
 41,726,239 

 

 

See the accompanying notes to these unaudited condensed consolidated financial statements

 

 

MARIJUANA COMPANY
OF AMERICA, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE NINE MONTHS SEPTEMBER 30, 2020 AND 2019  (UNAUDITED)

 

  
 
 
  
  
  
  
  
  
  
  
  
   
Class
A Preferred Stock
 
Class
B Preferred Stock
 
Common
Stock
 
Common
Stock to be issued
 

Common

Stock

 

Additional

Paid
In

 
Accumulated 
   
Shares 
Amount 
Shares 
Amount 
Shares 
Amount 
Shares 
Amount 
Subscriptions 
Capital 
Deficit 
TotalBalance, December 31, 2018 
 10,000,000  
$10,000  
 —    
$—    
 42,687,301  
$42,687  
 —    
$—    
$90,000  
$50,707,103  
$(53,983,895) 
$(3,134,105)Common stock issued for services rendered 
 —    
 —    
 —    
 —    
 552,054  
 552  
 —    
 —    
 —    
 553,815  
 —    
 554,367 Common stock issued in settlement of convertible notes payable and
accrued interest
 
 —    
 —    
 —    
 —    
 5,208,063  
 5,208  
 —    
 —    
 —    
 3,551,615  
 —    
 3,556,823 Reclassification of derivative liabilities to additional paid in capital 
 —    
 —    
 —    
 —    
 —   
 —    
 —   
    
 —    
 462,714   
 —    
 462,714  Conversion of related party notes payable 
 —    
 —    
 —    
 —    
 2,394,565  
 2,395  
 —    
 —    
 —    
 1,730,119  
 —    
 1,732,514 Common stock issued in exchange for exercise of warrants on a cashless
basis
 
 —    
 —    
 —    
 —    
 655,556  
 656  
 27,778  
 28  
 (40,000) 
 95,139  
 —    
 55,823 Sale of common stock 
 —    
 —    
 —    
 —   
 531,699  
 532   
 —    
 —  
 (50,000) 
 203,522  
 —    
 154,054  Net Loss 
 —    
 —    
 —    
 —    
 —    
 —    
 —    
 —    
 —    
 —    
 (10,878,622) 
 (10,878,622)Balance, September 30, 2019 
 10,000,000  
$10,000  
$—    
$—    
 52,029,238  
$52,029  
 27,778  
$28  
$—    
$57,304,027  
$(64,862,517) 
$(7,496,433)

 

 

 

 

 

  
 
 
  
  
  
  
  
  
  
  
  
   
Class
A Preferred Stock
 
Class
B Preferred Stock
 
Common
Stock
 
Common
Stock to be issued
 

Common

Stock

 

Additional

Paid
In

 
Accumulated 
   
Shares 
Amount 
Shares 
Amount 
Shares 
Amount 
Shares 
Amount 
Subscriptions 
Capital 
Deficit 
TotalBalance, December 31, 2019 
 10,000,000  
$10,000  
 —    
$—    
 77,958,081  
$77,958  
 —    
$—    
$—    
$63,467,054  
$(74,164,213) 
$(10,609,201)Common stock issued to settle amounts previously
accrued
 
 —    
 —    
 —    
 —    
 8,333  
 8  
 —    
 —    
   
 6,692    
   
 6,700  Common stock issued for services rendered 
 —    
 —    
 —    
 —    
 156,444,047  
 156,444  
 —    
 —    
 —    
 509,323  
 —    
 665,767 Common stock issued in settlement of convertible notes payable and
accrued interest
 
 —    
 —    
 —    
 —    
 1,469,725,298  
 1,469,725  
 —    
 —    
 —    
 1,165,922  
 —    
 2,635,647 Conversion of related party notes payable 
 —    
 —    
 —    
 —    
 21,384,103  
 21,384  
 —    
 —    
 —    
 29,229  
 —    
 50,613 Common stock issued in exchange for exercise of warrants on a cashless
basis
 
 —    
 —    
 —    
 —    
 51,054,214  
 51,054  
 1,000,000  
 1,000  
 —    
 375,446  
 —    
 427,500 Sale of common stock 
 —    
 —    
 —    
 —    
 127,012,847  
 127,013  
 —    
 —    
   
 26,673   
   
 153,686  Common shares issued in settlement of legal case 
 —    
 —    
 —    
 —    
 10,293,843   
 10,294    
 —    
 —    
 —    
 1,273,338   
 —    
 1,283,632 Reclassification of derivative liabilities to additional paid in
capital
 
 —    
 —    
 —    
 —    
 —    
 —   
 —   
 —    
 —    
 3,886,971   
 —    
 3,886,971  Net Loss 
 —    
 —    
 —    
 —    
 —    
 —    
 —    
 —    
 —    
 —    
 (4,177,391) 
 (4,177,391)Balance, September 30, 2020 
 10,000,000  
$10,000  
 —    
$—    
 1,913,880,766  
$1,913,881  
 1,000,000  
$1,000  
$—    
$70,740,648  
$(78,341,604) 
$(5,676,075)

 

 

 

See the accompanying notes to these unaudited condensed consolidated financial statements

 

 

MARIJUANA COMPANY
OF AMERICA, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2020 AND 2019

(UNAUDITED)

 

 

  
2020 
2019CASH FLOWS FROM OPERATING ACTIVITIES: 
    
   Net Income (Loss) 
$(4,177,391) 
$(10,878,622)Adjustments to reconcile net loss to net cash used in operating activities: 
    
   Amortization of debt discount 
 1,373,575  
 2,172,936 Depreciation and amortization 
 4,702  
 5,087 Bad debt expense 
 —    
 15,000 Non cash interest 
 —    
 1,886,837 Impairment Loss on equity method investee 
 22,658  
   (Gain) Loss on equity investment, net of debt
settlement 
 (106,305) 
 107,961 Loss on change in fair value of derivative liability 
 312,631  
 2,148,262 Loss on share inducement and settlement of warrant liability 
 427,500  
 —   Stock-based compensation 
 665,767  
 100,350 Unrealized Loss on trading securities 
 13,945  
 647,625 Realized Loss on trading securities 
 —    
 41,667 Gain on settlement of joint venture 
 (386,930) 
   Loss on settlement of debt 
 —  
 612,034 Changes in operating assets and liabilities: 
    
   Accounts receivable 
 9,754  
 (31,597)Inventories 
 3,652  
 (17,052)Prepaid expenses and other current assets 
 (77,605) 
 (17,707)Accounts payable 
 205,061  
 206,926 Accrued expenses and other current liabilities 
 325,883  
 (348)Right-of-use assets 
 10,459  
 —   Right-of-use liabilities 
 (10,577) 
 —   Accrued compensation 
 120,863  
 (381,038)Contingency liability 
 —    
 1,497,675 Net cash provided by (used in) operating activities 
 (1,262,358) 
 (1,884,004)  
    
   Cash flows from investing activities: 
    
   Purchases of property and equipment 
 (1,271) 
 (2,703)Investment in joint venture 
 125,000  
 (685,049)Net cash provided by (used in) investing activities 
 123,729 
 (687,752)  
    
   Cash flows from financing activities: 
    
   Proceeds from issuance of notes payable 
 876,302  
 2,257,000 Proceeds from PPP loan payable 
 35,500  
 —   Proceeds from sales of trading securities 
 10,854  
 —   Proceeds from sale of common stock 
 153,685  
 —   Net cash provided by (used in) financing activities 
 1,076,342  
 2,257,000   
    
   Net increase (decrease) in cash 
 (62,288) 
 (314,756)  
    
   Cash at beginning of period 
 211,765  
 359,577   
    
   Cash at end of period 
$149,477  
$44,821   
    
   Supplemental disclosure of cash flow information: 
    
   Cash paid for interest 
 —    
 —   Cash paid for taxes 
 —    
 —     
    
   Non cash transactions: 
    
   Common stock issued in settlement of convertible notes payable 
$2,635,647  
$3,556,823 Common stock issued in settlement of related party notes payable and accrued compensation 
$50,613  
$1,732,514 Reclassification of derivative liabilities to additional paid-in capital 
$3,886,971  
$462,714 Investment in joint venture 
$—    
$2,650,000 Gain on settlement of JV investment 
 386,930  
 —   Common shares issued in settlement of legal case 
$1,283,632  
$—   

 

 

See the accompanying notes to these unaudited condensed consolidated financial statements 

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

 

Marijuana
Company of America, Inc. (The “Company”) was incorporated under the laws of the State of Utah in October 1985 under
the name Mormon Mint, Inc. The corporation was originally a startup company organized to manufacture and market commemorative medallions
related to the Church of Jesus Christ of Latter Day Saints. On January 5, 1999, Bekam Investments, Ltd. acquired one hundred percent
of the common shares of the Company and spun the Company off changing its name Converge Global, Inc. From August 13, 1999 until
November 23, 2002, the Company focused on the development and implementation of Internet web content and e-commerce applications.
In October 2009, in a 30 for 1 exchange, the Company merged with Sparrowtech, Inc. for the purpose of exploration and development
of commercially viable mining properties. From 2009 to 2014, we operated primarily in the mining exploration business.

 

In 2015,
the Company changed its business model to a marketing and distribution company for medical marijuana. In conjunction with the change,
the Company changed its name to Marijuana Company of America, Inc. At the time of the transition in 2015, there were no remaining
assets, liabilities or operating activities of the mining business.

 

On September
21, 2015, the Company formed H Smart, Inc., a Delaware corporation as a wholly owned subsidiary for the purpose of operating the
hempSMART™ brand.

 

On February
1, 2016, the Company formed MCOA CA, Inc., a California corporation as a wholly owned subsidiary to facilitate mergers, acquisitions
and the offering of investments or loans to the Company.

 

On
May 3, 2017, the Company formed Hempsmart Limited, a United Kingdom corporation as a wholly owned subsidiary for the purpose of
future expansion into the European market.

 

The
consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: H Smart, Inc., Hempsmart
Limited and MCOA CA, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

 

The unaudited condensed interim financial statements
of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”)
for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

 

The condensed balance sheet as of December
31, 2019 has been derived from audited financial statements.

 

Operating results for the three and nine months
ended September 30, 2020 are not necessarily indicative of results that may be expected for the year ending December 31, 2020.
These condensed financial statements should be read in conjunction with the audited financial statements for the year ended December
31, 2019.

 

NOTE
2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

 

The accompanying financial statements have
been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the
normal course of business. As shown in the accompanying financial statements for nine months ended September 30, 2020, the Company
had a net loss of $4,177,391 and used cash in operations of $1,263,358. These factors among others may indicate that the Company
will be unable to continue as a going concern for a reasonable period of time.

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

The Company’s primary source of operating funds
in 2020 has been from funds generated from proceeds from the issuance of convertible and other debt and issuance of stock through
private placements. With the exception of the current quarter, the Company has experienced net losses from operations since inception,
but expects these conditions to improve as its business develops. The Company has stockholders’ deficiencies at September 30, 2020
and requires additional financing to fund future operations.

 

The Company’s
existence is dependent upon management’s ability to develop profitable operations and to obtain additional funding sources.
There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of
the Company’s liquidity problems discussed in this filing. The accompanying statements do not include any adjustments that
might result, should the Company be unable to continue as a going concern.

 

NOTE 3 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Revenue Recognition

 

For annual reporting periods after December
15, 2017, the Financial Accounting Standards Board (“FASB”) made effective ASU 2014-09 “Revenue from Contracts
with Customers,” to supersede previous revenue recognition guidance under current U.S. GAAP. Revenue is now recognized in
accordance with FASB ASC Topic 606, Revenue Recognition. The objective of the guidance is to establish the principles that an entity
shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of
revenue and cash flows arising from a contract with a customer. The core principal is to recognize revenue to depict the transfer
of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled
in exchange for those goods or services. Two options were made available for implementation of the standard: the full retrospective
approach or modified retrospective approach. The guidance became effective for annual reporting periods beginning after December
15, 2017, including interim periods within that reporting period, with early adoption permitted. We adopted FASB ASC Topic 606
for our reporting period as of the year ended December 31, 2017, which made our implementation of FASB ASC Topic 606 effective
in the first quarter of 2018. We decided to implement the modified retrospective transition method to implement FASB ASC Topic
606, with no restatement of the comparative periods presented. Using this transition method, we applied the new standards to all
new contracts initiated on/after the effective date. We also decided to apply this method to any incomplete contracts we determine
are subject to FASB ASC Topic 606 prospectively. For the year ended December 31, 2018, and for the quarter ended September 30,
2019, there were no incomplete contracts. As is more fully discussed below, we are of the opinion that none of our contracts for
services or products contain significant financing components that require revenue adjustment under FASB ASC Topic 606.

Identification of Our
Contracts with Our Customers.

Contracts included in
our application of FASB ASC Topic 606, consist completely of sales contracts between us and our customers that create enforceable
rights and obligations. For the year ended December 31, 2019, and for the three and nine months ended September 30, 2020, our sales
contracts included the following parties: us, our sales associates and our customers. Our sales contracts were offered by us and
our sales associates to our customers directly through our web site. Our sales contracts, and those formalized by our sales associates,
are represented by an electronic order form, which contains the contractual elements of offer for sale, acceptance and the provision
of consideration consisting of the buyer’s payment, and the concurrent delivery of our hempSMART™ product. Since our
hempSMART™ product sales contracts are consummated upon (i) receipt of the customer’s acceptance of our offer; (ii)
our concurrent receipt of our customers payment; and, (iii) our delivery of the agreed to hempSMART™ product, all parties
are equally committed to fulfilling their respective obligations under the sales contracts. Further, the sales contracts specifically
identify (i) parties; (ii) quantity and type of hempSMART™ product ordered; (iii) price; and, (iv) subject, and so each respective
party’s rights are identifiable and the payment terms are defined. Since the sales contracts are consummated concurrent with
offer, acceptance, payment and delivery of the hempSMART™ product ordered, we recognize principal revenue and cash flows
as the respective sales contract transactions are completed. Further, because our sales contracts are offered, accepted and consummated
concurrently, our ability to collect revenue is immediate. We receive no payments for agreements that do not qualify as a contract.
If customers agree to multiple sales contracts when they are entered into at or near the same time, our policy is to combine those
contracts if: (i) the sales contracts are negotiated as a single package; (ii) the payment amount of one sales contract is dependent
upon another sales contract; (iii) our performance obligations of delivering multiple hempSMART™ products can be determined
to be part of a single transaction. Since the nature of the entry into and consummation of our sales contracts occurs concurrently,
there are no changes or modifications to the terms of the sales contracts that would modify the enforceable rights and performance
obligations of the parties, and/or materially alter the timing of our receipt of revenue from our sales contracts.

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

  

Identifying the Performance
Obligations in Our Sales Contracts.

In analyzing our sales
contracts, our policy is to identify the distinct performance obligations in a sales contract arrangement. In determining our performance
obligations under our sales contracts, we consider that the terms and conditions of sales are explicitly outlined in our sales
contracts, and are so distinct and identifiable within the context of each sales contract, and so are not integrated with other
goods, or constitute a modification or customization of other goods in our contracts, or are highly dependent or highly integrated
with other goods in our sales contracts. Thus, our performance obligations are singularly related to our promise to provide the
hempSMART™ products upon receipt of payment. We offer an assurance warranty on our hempSMART™ products that allows
a customer to return any hempSMART™ products within thirty days if not satisfied for any reason. Assurance warranties are
not identifiable performance obligations, since they are electable at the whim of the customer for any reason. However, we do account
for returns of purchase prices if made.

Determination of the
Price in Our Sales Contracts.

The transaction prices
in our sales contract is the amount of consideration we expect to be entitled to for transferring promised hempSMART™ products.
The consideration amount is fixed and not variable. The transaction price is allocated to the identified performance obligations
in the contract. These allocated amounts are recognized as revenue when or as the performance obligations are fulfilled, which
is concurrently upon receipt of payment. There are no future options for a contract when considering and determining the transaction
price. We exclude amounts third parties will eventually collect, such as sales tax, when determining the transaction price. Since
the timing between receiving consideration and transferring goods or services is immediate, our sales contracts do not have significant
financing components, i.e., recognizing revenue at the amount that reflects the cash payment that the customer would have made
at the time the goods or services were transferred to them (cash selling price), rather than significantly before or after the
goods or services are provided.

Allocation of the Transaction
Price of Our Sales Contracts.

Our sales contracts are
not considered multi-element arrangements which require the fulfillment of multiple performance obligations. Rather, our sales
contracts include one performance obligation in each contract. As such, from the outset, we allocate the total consideration to
each performance obligation based on the fixed and determinable standalone selling price, which we believe is an accurate representation
of what the price is in each transaction.

Recognition of Revenue
when the Performance Obligation is Satisfied.

A performance obligation
is satisfied when or as control of the good or service is transferred to the customer. The standard defines control as “the
ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.” (ASC 606-10-20). For
performance obligations that are fulfilled at a point in time, revenue is recognized at the fulfillment of the performance obligation.
As noted above, our single performance obligation sales contracts are singularly related to our promises to provide the hempSMART™
products to the customer upon receipt of payment, which occurs concurrently and when completed, allows us under our revenue recognition
policy to realize revenue.

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

Product Sales

Revenue from product
sales, including delivery fees, is recognized when (i) an order is placed by the customer; (ii) the price is fixed and determinable
when the order is placed; (iii) the customer is required to and concurrently pays for the product upon order; and, (iv) the product
is shipped. The evaluation of our recognition of revenue after the adoption of FASB ASC 606 did not include any judgments or changes
to judgments that affected our reporting of revenues, since our product sales, both pre and post adoption of FASB ASC 606, were
evaluated using the same standards as noted above, reflecting revenue recognition upon order, payment and shipment, which all occurs
concurrently when the order is placed and paid for by the customer, and the product is shipped. Further, given the facts that (i)
our customers exercise discretion in determining the timing of when they place their product order; and, (ii) the price negotiated
in our product sales is fixed and determinable at the time the customer places the order, and there is no delay in shipment, we
are of the opinion that our product sales do not indicate or involve any significant customer financing that would materially change
the amount of revenue recognized under the sales transaction, or would otherwise contain a significant financing component for
us or the customer under FASB ASC Topic 606.

Consulting Services

We also offer professional
services for financial accounting, bookkeeping or real property management consulting services based on consulting agreements.
As of the date of this filing, we have not entered into any contracts for any financial accounting, bookkeeping and/or real property
management consulting services that have generated reportable revenues as of the year ended 2019 or the three and nine months ended
September 30, 2020. We intend and expect these arrangements to be entered into on an hourly fixed fee basis.

For hourly based fixed
fee service contracts, we intend to utilize and rely upon the proportional performance method, which recognizes revenue as services
are performed. Under this method, in order to determine the amount of revenue to be recognized, we will calculate the amount of
completed work in comparison to the total services to be provided under the arrangement or deliverable. We will only recognize
revenues as we incur and charge billable hours. Because our hourly fees for services are fixed and determinable and are only earned
and recognized as revenue upon actual performance, we are of the opinion that such arrangements are not an indicator of a vendor
or customer based significant financing, that would materially change the amount of revenue we recognize under the contract or
would otherwise contain a significant financing component under FASB ASC Topic 606.

The Company determined that upon adoption of
ASC 606 there were no quantitative adjustments converting from ASC 605 to ASC 606 respecting the timing of our revenue recognition
because product sales revenue is recognized upon customer order, payment and shipment, which occurs concurrently, and our consulting
services offered are fixed and determinable and are only earned and recognized as revenue upon actual performance.

 

Use
of Estimates

 

The preparation
of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, 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. Significant estimates include the fair value of the
Company’s stock, stock-based compensation, fair values relating to
derivative liabilities, debt discounts and the
valuation allowance related to deferred tax assets. Actual results may differ from these estimates.

 

Cash

 

The Company
considers cash to consist of cash on hand and temporary investments having an original maturity of 90 days or less that are readily
convertible into cash.

 

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

 

Concentrations
of credit risk

 

The Company’s
financial instruments that are exposed to a concentration of credit risk are cash and accounts receivable. Occasionally, the Company’s
cash and cash equivalents in interest-bearing accounts may exceed FDIC insurance limits. The financial stability of these institutions
is periodically reviewed by senior management.

 

Accounts
Receivable

 

Trade
receivables are carried at their estimated collectible amounts. Trade credit is generally extended on a short-term basis; thus,
trade receivables do not bear interest. Trade accounts receivable are periodically evaluated for collectability based on past credit
history with customers and their current financial condition.

 

Allowance
for Doubtful Accounts

 

Any charges
to the allowance for doubtful accounts on accounts receivable are charged to operations in amounts sufficient to maintain
the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines
the adequacy of the allowance based on historical write-off percentages and the current status of accounts receivable. Accounts
receivable are charged off against the allowance when collectability is determined to be permanently impaired. As of September
30, 2020, and December 31, 2019, allowance for doubtful accounts was $0 and $0, respectively.
 

 

Inventories

 

Inventories are stated at the lower of cost
or market with cost being determined on a first-in, first-out (FIFO) basis. The Company writes down its inventory for estimated
obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based
upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected
by management, additional inventory write-downs may be required. During the periods presented, there were no inventory write-downs.

 

Cost of sales

 

Cost of sales is comprised of cost of product
sold, packaging, and shipping costs.

 

Stock Based Compensation

 

The Company measures the cost of services received
in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value
of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting
dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over
the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based
compensation expense is recorded by the Company in the same expense classifications in the statements of operations, as if such
amounts were paid in cash.

 

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

 

Net
Loss per Common Share, basic and diluted

 

The Company
computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”).
Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding
during the year.  Diluted earnings per share, if presented, would
include the dilution that would occur upon the
exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if
converted” methods as applicable.  

 

The computation
of basic and diluted income (loss) per share as of September 30, 2020 and 2019 excludes potentially dilutive securities when their
inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during
the period.

 

Potentially
dilutive securities excluded from the computation of basic and diluted net loss per share are as follows:

 

 

September
30,

2020

 

September
30,

2019

Convertible notes payable 
 5,281,668,086  
 52,346,160 Options to purchase common stock 
 —    
 —   Warrants to purchase common stock 
 292,054,702  
 3,602,160 Restricted stock units 
 —    
 —     Total 
 5,573,722,788  
 55,948,320 

 

Property and Equipment

 

Property
and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are
removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings.
For financial statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over
their estimated useful lives of 3 to 5 years.

 

Investments

 

The Company
follows Accounting Standards Codification subtopic 321-10, Investments-Equity Securities (“ASC 321-10”) which requires
the accounting for equity security to be measured at fair value with changes in unrealized gains and losses are included in current
period operations. Where an equity security is without a readily determinable fair value, the Company may elect to estimate its
fair value at cost minus impairment plus or minus changes resulting from observable price changes.

 

As a smaller reporting company, the company
is subject to provisions of Rule 8-03(b)(3) of Regulation S-X which requires the disclosure of certain financial information for
equity investees that constitute 20% of more of the Company’s consolidated net income (loss).

 

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

Derivative
Financial Instruments

 

The
Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) provide the Company
with a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement) providing that
such contracts are indexed to the Company’s own stock. The Company classifies as assets or liabilities any contracts that (i) require
net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the
Company’s control) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement
or net-share settlement). The Company assesses classification of its common stock purchase warrants and other free-standing derivatives
at each reporting date to determine whether a change in classification between equity and liabilities is required.

The
Company’s free-standing derivatives consisted of conversion options embedded within its issued convertible debt and warrants
with anti-dilutive (reset) provisions. The Company evaluated these derivatives to assess their proper classification in the balance
sheet using the applicable classification criteria enumerated under GAAP.  The Company determined that certain conversion
and exercise options do not contain fixed settlement provisions.  The convertible notes contain a conversion feature and warrants
have a reset provision such that the Company could not ensure it would have adequate authorized shares to meet all possible conversion
demands.

As
such, the Company was required to record the conversion feature and the reset provision which does not have fixed settlement provisions
as liabilities and mark to market all such derivatives to fair value at the end of each reporting period.   

The Company
has adopted a sequencing policy that reclassifies contracts (from equity to assets or liabilities) with the most recent inception
date first. Thus, any available shares are allocated first to contracts with the most recent inception dates.

 

Fair Value of Financial
Instruments

 

Fair value estimates discussed herein are based
upon certain market assumptions and pertinent information available to management as of September 30, 2020 and December 31, 2019.
The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial
instruments include cash and accounts payable. Fair values were assumed to approximate carrying values for cash, accounts payables
and short-term notes, as they are short term in nature.

 

Advertising

 

The Company follows the policy of charging
the costs of advertising to expense as incurred. The Company charged to operations $59,752 and $104,411 for the three and
nine months ended September 30, 2020 and $159,428 and $550,544 for the three and nine months ended September 30, 2019,
respectively, as advertising costs.

 

Income Taxes

 

Deferred income tax assets and liabilities
are determined based on the estimated future tax effects of net operating loss and credit carry forwards and temporary differences
between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted
tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it is not more likely than
not that these deferred income tax assets will be realized.

 

 

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

The Company recognizes a tax benefit from an
uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities,
based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a
position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
As of September 30, 2020, and 2019, the Company has not recorded any unrecognized tax benefits.

 

Segment Information

 

Accounting Standards Codification subtopic
Segment Reporting 280-10 (“ASC 280-10”) establishes standards for reporting information regarding operating segments
in annual financial statements and requires selected information for those segments to be presented in interim financial reports
issued to stockholders. ASC 280-10 also establishes standards for related disclosures about products and services and geographic
areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is
available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources
and assess performance. The information disclosed herein materially represents all of the financial information related to the
Company’s only material principal operating segment.

 

The following table represents the Company’s
hempSMART business, which is its sole operating segment as of September 30, 2020:

 

hempSMART
 
 
 
 
 
 
 
 STATEMENT OF OPERATIONS
 
 
 
 
 
 
 
 

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2020

 
 

 

 
For the three
months ended September 30,
 
For the nine months ended
September 30,
  
2020 
2019 
2020 
2019Revenues 
$53,195  
$229,371  
$217,972  
$552,761 Cost of Sales 
 37,170  
 90,843  
 110,563  
 159,860 Gross
profit
 
 16,025  
 138,528  
 107,409  
 392,901 Expenses 
    
    
    
     Depreciation
expense
 
 1,374  
 1,696  
 4,702  
 5,087   Payroll and related
expenses
 
 26,394  
 —    
 77,256  
     General and admin
expenses
 
 55,672  
 137,146  
 169,707  
 1,028,401   Selling
and marketing
 
 117,978  
 262,516  
 294,231  
 583,180 Total
Expenses
 
 201,418  
 401,358  
 575,221  
 1,616,668 Net
Loss from Operations
 
$(185,393) 
$(262,830) 
$(467,812) 
$(1,223,767)

 

Recent Accounting Pronouncements

 

In February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842). This ASU requires lessees to recognize a lease liability, on a discounted basis, and a right-of-use asset for
substantially all leases, as well as additional disclosures regarding leasing arrangements. In July 2018, the FASB issued ASU 2018-11,
Leases (Topic 842), which provides an optional transition method of applying the new lease standard. Topic 842 can be applied using
either a modified retrospective approach at the beginning of
the earliest period presented, or as permitted by ASU 2018-11, at the beginning of the period in which it is adopted.

 

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

 

We adopted this standard using a modified retrospective
approach on January 1, 2019. The modified retrospective approach includes a number of optional practical expedients relating to
the identification and classification of leases that commenced before the adoption date; initial direct costs for leases that commenced
before the adoption date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase
the underlying asset.

The Company elected the
package of practical expedients permitted under ASC 842 allowing it to account for its existing operating lease that commenced
before the adoption date as an operating lease under the new guidance without reassessing (i) whether the contract contains a lease;
(ii) the classification of the lease; or, (iii) the accounting for indirect costs as defined in ASC 842. The Company negotiated
a 2 year extension on its current office lease.

On July 1, 2019, the
Company entered into an amendment and extension of its one applicable lease for office space until June 30, 2021. The extension
requires the Company to pay monthly rent of $1,308.88 from July 1, 2019 to June 30, 2020; and, $1,348.14 from July 1, 2020 to June
30, 2021. In considering its qualitative disclosure obligations under ASC 842-20-50-3, the Company examined its one lease for office
space that has a fixed monthly rent with no variable lease payments. The lease is for an office space with no right of use assets.
The lease does not provide for terms and conditions granting residual value guarantees by the Company, or any restrictions or covenants
imposed by the lease for dividends or incurring additional financial obligations by the Company. The Company also elected a short-term
lease exception policy and an accounting policy to not separate non-lease components from lease components for our facility lease,
as we determined our right of use asset to be zero.

Consistent with ASC 842-20-50-4,
for the Company’s September 30, 2020, quarterly financial statements, the Company calculated its total lease cost based solely
on its monthly rent obligation. The Company had no cash flows arising from its lease, no finance lease cost, short term lease cost,
or variable lease costs. Our office lease does not produce any sublease income, or any net gain or loss recognized from sale and
leaseback transactions. As a result, the Company did not need to segregate amounts between finance and operating leases for cash
paid for amounts included in the measurement of lease liabilities, segregated between operating and financing cash flows; supplemental
non-cash information on lease liabilities arising from obtaining right-of-use assets; weighted-average calculations for the remaining
lease term; or the weighted-average discount rate.

The adoption of this guidance resulted in
no significant impact to our results of operations or cash flows.

In August 2018, the FASB issued ASU No.
2018-13, “Fair Value Measurement (Topic 820).” This standard modifies disclosure requirements related to fair value
measurement and is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2019. Early adoption is permitted. Implementation on a prospective or retrospective basis varies by specific disclosure
requirement. The standard also allows for early adoption of any removed or modified disclosures upon issuance while delaying adoption
of the additional disclosures until their effective date. The Company is currently assessing the impact of adopting this standard
on its consolidated financial statements.

 

In December 2019, the FASB issued ASU No.
2019-12, “Simplifying the Accounting for Income Taxes (Topic 740)”. This standard simplifies the accounting for income
taxes. This standard is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal
years. Early adoption is permitted for all entities. The Company is currently assessing the impact of adopting this standard on
its consolidated financial statements.

 

In August 2020, the FASB issued ASU 2020-06,
“Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in
Entity’s Own Equity (Subtopic 815 – 40)” (“ASU 2020-06”). ASU 2020-06 simplifies the accounting
for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts
on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary
complexity in U.S. GAAP. The ASU’s amendments are effective for fiscal years beginning after December 15, 2023, and interim
periods within those fiscal years. The Company is currently evaluating the impact ASU 2020-06 will have on its financial statements.

 

Subsequent Events

 

The Company
evaluates events that have occurred after the balance sheet date but before the financial statements are issued.  Based upon
the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment
or disclosure in the financial statements, except as disclosed.

 

 

  

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

 

NOTE 4 – PROPERTY
AND EQUIPMENT

 

Property and equipment as
of September 30, 2020 and December 31, 2019 is summarized as follows:

 

 

September 30,

2020

 

December 31,

2019

Computer equipment 
$15,398  
$16,358 Furniture and fixtures 
 5,140  
 5,140 Subtotal 
 20,538  
 21,498 Less accumulated depreciation 
 (17,510) 
 (13,986)Property and equipment, net 
$3,028  
$7,512 

 

Property
and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives of 3 years. When
retired or otherwise disposed, the related carrying value and accumulated depreciation are

removed
from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings.

 

Depreciation expense was $1,374 and $4,702 for the three and nine
months ended September 30, 2020; and $1,696 and $5,087 for the three and nine months ended September 30, 2019, respectively.

 

NOTE 5 – INVESTMENTS

 

MoneyTrac

 

We entered into a stock purchase agreement
on March 13, 2017 with MoneyTrac Technology, Inc., a California stock corporation (“MoneyTrac”) to purchase a 15% equity
position in MoneyTrac. On July 27, 2017, we completed tender of the purchase price of $250,000 pursuant to that stock purchase
agreement. On June 12th, 2018, Global Payout, Inc. (“Global”) entered into a reverse triangular merger business combination
(the “Merger”) with MoneyTrac and MTrac Tech Corporation, a Nevada corporation and wholly-owned subsidiary of Global
(“Merger Sub”), whereby MoneyTrac was successfully merged into Merger Sub, the surviving corporation of the Merger.
Thereafter, the separate existence of MoneyTrac ceased, and all rights, privileges, powers and property of MoneyTrac were assumed
by Merger Sub. Additionally, Merger Sub assumed all of the financial obligations and liabilities of MoneyTrac, except minute books
and stock records of MoneyTrac insofar as they relate solely to its organization and capitalization, and the rights of MoneyTrac
arising out of the executed Merger. Pursuant to the terms of the Merger, Global issued 1,100,000,000 (one billion, one hundred
million) shares of its common stock to MoneyTrac as consideration for the acquisition of MoneyTrac. Pursuant to the terms of the
Merger, a conversion of issued MoneyTrac stock was completed whereby each one (1) share of MoneyTrac stock, issued and outstanding
immediately prior to the effective date of the Merger, was canceled and extinguished and converted automatically into ten (10)
shares of Global common stock. As of the effective date of the Merger, all shares of Global Preferred Stock issued prior to the
effective date of the Merger were canceled and extinguished without any conversion thereof. We acquired 150,000,000 Global common
shares for our purchase price of $250,000, representing ownership of approximately fifteen percent (15%) of the post-Merger issued
and outstanding equity of Global. Global’s name changed in April, 2020 to Global Trac Solutions, Inc. Global’s common
stock is traded on the OTC Markets under the symbol “PYSC.” We realized $51,748.17 from the sales of all of our Global
securities, and as of September 30, 2020, have no remaining shares. We have a cash balance in the amount of $12,500 held in our
brokerage account, a receivable resulting from the proceeds of our sale of our Global shares, that we have not collected.

 

Benihemp

On July 19, 2017,
we agreed to lend $50,000 to Convenient Hemp Mart, LLC (“Benihemp”) based on a promissory note. The note provided
that in lieu of receiving repayment, we could elect to exercise a right to convert the loaned amount into a payment towards
the purchase of a 25% interest in Benihemp, subject to our payment of an additional $50,000, equaling a total purchase price
of $100,000. The Company exercised this option on November 23, 2017 and made payment to Benihemp on November 21, 2017. On May
1, 2019, the Company and Benihemp agreed to cancel the Company’s 25% interest in Benihemp. Benihemp issued to the
Company a credit memo equal to the Company’s $100,000 investment. The Company determined that as of December 31, 2019,
this credit was impaired and not usable.

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

Global Hemp Group New Brunswick Joint Venture

On September 5, 2017,
we announced our agreement to participate in a joint venture with Global Hemp Group, Inc., a Canadian corporation (“Global
Hemp Group”), in a multi-phase industrial hemp project on the Acadian peninsula New Brunswick, Canada. Our participation
included providing one-half, or $10,775, of the funding for the phase one work of the multi-phase industrial hemp project. On January
10, 2018, phase one of the project was completed by successfully cultivating industrial hemp during the 2017 growing season for
research purposes. The Company’s project-related costs incurred according to the Company’s interest in the industrial
hemp project were $0 and $10,775 for the years ended December 31, 2019 and 2018 respectively and was recorded as other income/expense
in the Company’s Statement of Operations in the appropriate periods. As of December 31, 2019, and September 30, 2020, the
balance of the New Brunswick industrial hemp joint venture investment reported on the balance sheet for the year ended December
31, 2019 was $0 as a result of the investment being deemed fully impaired and the Company withdrawing from the joint venture as
of September 30, 2019. 

Global Hemp Group Oregon Joint Venture
– Scio, OR

On May 8, 2018, the Company,
Global Hemp Group, and TTO Enterprises, Ltd., an Oregon corporation (“TTO”) entered into a joint venture agreement.
The purpose of the joint venture was to develop an Oregon-licensed industrial hemp project to commercialize the cultivation of
industrial hemp biomass on a 109-acre parcel of farmland owned by the Company and Global Hemp Group in Scio, Oregon. The joint
venture operated through the Oregon corporation Covered Bridges, Ltd. On May 30, 2018, the joint venture purchased TTO’s
15% interest in the joint venture for $30,000. The Company and Global Hemp Group then had equal interests as co-owners of the joint
venture. The joint venture agreement committed the Company to a cash contribution of $600,000 payable on the following funding
schedule: $200,000 upon execution of the joint venture agreement; $238,780 by July 31, 2018; $126,445 by October 31, 2018; and
$34,775 by January 31, 2019. The Company performed these payment obligations pursuant to the joint venture agreement.

The 2018 crop of industrial
hemp grown on the joint venture’s farmland consisted of 33 acres of high-yield CBD industrial hemp biomass grown in an orchard-style
cultivation method on our farmland. The 33-acre 2018 harvest produced approximately 37,000 high CBD content industrial hemp plants,
yielding a total of 24 tons of wet harvested industrial hemp biomass that resulted in a saleable harvest of 48,000 pounds of cured
industrial hemp biomass. The joint venture partners prepared processing samples ranging in size from 100 to 2,000 lbs. for sample
offers to licensed industrial hemp handlers and CBD extraction companies. This industrial hemp biomass was processed into a CBD
crude oil concentrate with the option to refine it further into CBD isolate, or full spectrum oil, in order to increase its value
on the market.

As of December 31, 2019,
the combined balance of this joint venture investment and related farmland investment was $0, as the investment was written off
as a loss as a result of its failure to generate any cash flow for the Company for the period ended December 31, 2019. The debt
obligation of $262,414 related to this joint venture was also written off to $0 as of the year ended December 31, 2019. The debt
obligation related to the joint venture for the nine months ended September 30, 2020 was $0.

On September 28, 2020,
the Company and GHG entered into a Settlement and Mutual Release Agreement (the “Agreement”), pursuant to which the
parties agreed to resolve a dispute among them regarding the joint venture agreement. Under the Agreement, GHG agreed to make a
lump sum payment to the Company of $200,000, with $125,000 payable no later than September 30, 2020, and $75,000 payable no later
than November 15, 2020, with applicable interest, and to issue GHG common stock to the Company equal in value to $185,000 as of
the date of the Agreement, or September 28, 2020, subject to a non-dilutive protection provision, and additionally, to pay the
Company $10,000 to cover the Company’s legal fees relating to the Agreement by September 30, 2020. In exchange for the settlement
consideration, the Company has agreed to relinquish its ownership interest in the joint venture.

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

Bougainville Ventures, Inc. Joint Venture

On March 16, 2017, we entered into a joint
venture agreement with Bougainville Ventures, Inc., a Canadian corporation. The purpose of the joint venture was for the Company
and Bougainville to jointly engage in the development and promotion of products in the legalized cannabis industry in Washington
State; (ii) utilize Bougainville’s high quality cannabis grow operations in the State of Washington, where it claimed to
have an ownership interest in real property for use within the legalized cannabis industry; (iii) leverage Bougainville’s
agreement with a I502 Tier 3 license holder to grow cannabis on the site; provide technical and management services

 

and resources including, but not limited to:
sales and marketing, agricultural procedures, operations security and monitoring, processing and delivery, branding, capital resources
and financial management; and, (iv) optimize collaborative business opportunities. The Company and Bougainville agreed to operate
through a Washington State Limited Liability Company, and BV-MCOA Management, LLC was organized in the State of Washington on May
16, 2017.

 

As our contribution to the joint venture, the
Company committed to raise not less than $1 million dollars to fund joint venture operations based upon a funding schedule. The
Company also committed to providing branding and systems for the representation of cannabis related products and derivatives comprised
of management, marketing and various proprietary methodologies directly tailored to the cannabis industry.

 

Bougainville represented that it had an ownership
interest in real property located in Washington State used for growing cannabis, and possessed information primarily related to
the management and control of cannabis grow operations as conducted in Washington State that included research, development and
know how in the cannabis industry. Bougainville also represented that it had an agreement with a I502 Tier 3 license holder in
Washington

State to operate on the land. The Company and
Bougainville’s agreement provided that funding provided by the Company would go, in part, towards the joint venture’s ultimate
purchase of the land consisting of a one-acre parcel located in Okanogan County, Washington, for joint venture operations.

 

As disclosed on Form 8-K on December 11, 2017,
the Company did not comply with the funding schedule for the joint venture. On November 6, 2017, the Company and Bougainville amended
the joint venture agreement to reduce the amount of the Company’s commitment to $800,000 and also required the Company to issue
Bougainville 250,000 shares of the Company’s restricted common stock. The Company completed its payments pursuant to the amended
agreement on November 7, 2017, and on November 9, 2017, issued to Bougainville 15 million shares of restricted common stock. The
amended agreement provided that Bougainville would deed the real property to the joint venture within thirty days of its receipt
of payment.

 

Thereafter, the Company determined that Bougainville
had no ownership interest in the property in Washington State, but rather was a party to a purchase agreement for real property
that was in breach for non-payment. Bougainville also did not possess an agreement with a Tier 3 I502 license holder to grow Marijuana
on the property. Nonetheless, as a result of funding arranged for by the Company, Bougainville and an unrelated third party, Green
Ventures Capital Corp., purchased the land. The land is currently pending the payment of delinquent property taxes that would
allow for the Okanogan County Assessor conditions to complete the subdivision of the land by the Okanogan County Assessor. However,
Bougainville failed to cooperate or communicate with the Company in good faith, and failed to pay the delinquent taxes on the
real property that would allow for sub-division and the deeding of the real property to the joint venture.

 

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

On August 10, 2018, the Company advised its
independent auditor that Bougainville did not cooperate or communicate with the Company regarding its requests for information
concerning the audit of Bougainville’s receipt and expenditures of funds contributed by the Company in the joint venture
agreement. Bougainville had a material obligation to do so under the joint venture agreement. The Company believes that some of
the funds it paid to Bougainville were misappropriated and that there was self-dealing with respect to those funds. Additionally,
the Company believes that Bougainville misrepresented material facts in the joint venture agreement, as amended, including, but
not limited to, Bougainville’s representations that: (i) it had an ownership interest in real property that

 

was to be deeded to the joint venture; (ii)
it had an agreement with a Tier 3 # I502 cannabis license holder to grow cannabis on the real property; and, (iii) that clear title
to the real property associated with the Tier 3 # I502 license would be deeded to the joint venture thirty days after the Company
made its final funding contribution. As a result, on September 20, 2018, the Company filed suit against Bougainville Ventures,
Inc., BV-MCOA Management, LLC, Andy Jagpal, Richard Cindric, et al. in Okanogan County Washington Superior Court, case number 18-2-
0045324. The Company’s complaint seeks legal and equitable relief for breach of contract, fraud, breach of fiduciary duty,
conversion, recession of the joint venture agreement, an accounting, quiet title to real property in the name of the Company, for
the appointment of a receiver, the return to treasury of 15 million shares issued to Bougainville, and, for treble damages pursuant
to the Consumer Protection Act in Washington State. The registrant has filed a lis pendens on the real property. The case is currently
in litigation. The trial is set for January 26-28, 2021.

 

In connection with the agreement, the Company
recorded a cash investment of $1,188,500 to the Joint Venture during 2017. This was comprised of 49.5% ownership of BV-MCOA Management
LLC, and was accounted for using the equity method of accounting. The Company recorded an annual impairment in 2017 of $792,500,
reflecting the Company’s percentage of ownership of the net book value of the investment. During 2018, the Company recorded
equity losses of $37,673 and $11,043 for the first and second quarters respectively, and recorded an annual impairment of $285,986
for the year ended December 31, 2018, at which time the Company determined the investment to be fully impaired due to Bougainville’s
breach of contract, including: (i) its failure to communicate and cooperate regarding the Company’s audit; (ii) its misrepresentations
concerning its ownership interest in the real property in Okanogan County Washington; (iii) its failure to deed the property to
the joint venture within thirty days of payment pursuant to the amended joint venture agreement; and, (iv) its misrepresentation
that it possessed an agreement with a Tier 3 license holder to operate on the property.

 

The Company was able to obtain general loans
from St. George Investments LLC, not specific to any of the company’s joint ventures. Therefore, accordingly, the impairment
of this investment did not create any defaults to the loan agreements and covenants. The loan agreement established the lender’s
option to convert the loans to common shares of the Company.

 

GateC Joint Venture

On March 17, 2017, the
Company and GateC Research, Inc. (“GateC”) entered into a Joint Venture Agreement (“Agreement”) whereby
the Company committed to raise up to one and one-half million dollars ($1,500,000) over a six-month period, with a minimum commitment
of five hundred thousand dollars ($500,000) within a three (3) month period; and, information establishing brands and systems for
the representation of cannabis related products and derivatives comprised of management, marketing and various proprietary methodologies,
including but not limited to its affiliate marketing program, directly tailored to the cannabis industry.

GateC agreed to contribute
its management and control services and systems related to cannabis grow operations in Adelanto County, California, and its permit
to grow marijuana in an approved zone in Adelanto, California. GateC did not own a physical site for its operation in Adelanto
County, California, and GateC’s permit to grow cannabis did not contain a conditional use permit.

On or about November
28, 2017, GateC and the Registrant orally agreed to suspend the Company’s funding commitment, pending the finalization of
California State regulations governing the growth, cultivation and distribution of cannabis, which were expected to be completed
in 2018.

On March 19, 2018,
the Company and GateC rescinded the Agreement and concurrently released each other from any all any and all losses, claims,
debts, liabilities, demands, obligations, promises, acts, omissions, agreements, costs and expenses, damages, injuries,
suits, actions and causes of action, of whatever kind or nature, whether known or unknown, suspected or unsuspected,
contingent or fixed, that they may have against each other and their Affiliates, arising out of the Agreement.

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

The Registrant incurred
no termination penalties as the result of its entry into the Recession and Mutual Release Agreement.

In 2017, the Company
recorded a debt obligation of $1,500,000 to the Joint Venture and a corresponding impairment charge of $1,500,000 during for year
ended December 31, 2017. Upon termination of the material definitive agreement on March 19, 2018, the Company realized a gain on
settlement of debt obligation of $1,500,000 during the six months ended June 30, 2018.

Natural Plant Extract (“NPE”)

On April
15, 2019, we entered into a joint venture with Natural Plant Extract of California, Inc. (“NPE”) to operate a licensed
psychoactive cannabis distribution service in California to be named Viva Buds. California legalized psychoactive cannabis for
medicinal and recreational use on January 1, 2018. On February 3, 2020, we terminated the NPE joint venture and entered into a
Settlement and Release of All Claims Agreement with NPE. In exchange for that universal release, the Company and NPE (i) agreed
to reduce the Company’s interest in NPE from 20% to 5%; (ii) agreed the Company would pay NPE a total of $85,000 as follows:
$35,000 concurrent with the execution of the universal release, and $25,000 no later than the 5th calendar day for each of the
two months following execution of Settlement and Release of All Claims Agreement; and, (iii) agreed to retire the balance of our
original valuation obligation from the material definitive agreement, representing a shortfall of $56,085.15, in a convertible
promissory note, with terms allowing NPE to convert the note into common stock of MCOA at a 50% discount to the closing price of
MCOA’s common stock as of the maturity date.

Cannabis
Global (“CBGL”)

On September 30, 2020,
the Company entered into a Share Exchange Agreement with Cannabis Global, Inc., a Nevada corporation quoted on OTC Markets Pink
(“CBGL”) dated September 30, 2020, to acquire the number of shares of CBGL’s common stock, par value $0.001,
equal in value to $650,000 based on the closing price for the trading day immediately preceding the effective date, in exchange
for the number of shares of Company common stock, par value $0.001, equal in value to $650,000 based on the closing price for the
trading day immediately preceding the effective date (the “Share Exchange Agreement”). For both parties, the Share
Exchange Agreement contains a “true-up” provision requiring the issuance of additional common stock in the event that
a decline in the market value of either parties’ common stock should cause the aggregate value of the stock acquired pursuant
to the Share Exchange Agreement to fall below $650,000.

Complementary to the
Share Exchange Agreement, the Company and CBGL entered into a Lock-Up Agreement dated September 30, 2020, providing that the shares
of common stock acquired pursuant to the Share Exchange Agreement shall be subject to a lock-up period preventing its sale for
a period of 12 months following issuance, and limiting the subsequent sale to aggregate maximum sale value of $20,000 per week,
or $80,000 per month.

Brazil
and Uruguay Joint Ventures

On October
1, 2020, the Company entered into two Joint Venture Agreements with Marco Guerrero, a director of the Company (“Guerrero”)
dated September 30, 2020, to form joint venture operations in Brazil and in Uruguay (the “Joint Venture Agreements”)
to produce, manufacture, market and sell the Company’s hempSMART™ products in Latin America, and will also work to
develop and sell hempSMART™ products globally. The Joint Venture Agreements contain equal terms for the formation of joint
venture entities in Uruguay and Brazil. The Brazilian joint venture will be headquartered in São Paulo, Brazil, and will
be named HempSmart Produtos Naturais Ltda. (“HempSmart Brazil”). The Uruguayan joint venture will be headquartered
in Montevideo, Uruguay and will be named Hempsmart Uruguay S.A.S. (“HempSmart Uruguay”).

Under
the Joint Venture Agreements, the Company will acquire a 70% equity interest in both HempSmart Brazil and HempSmart Uruguay. A
minority 30% equity interest in both HempSmart Brazil and HempSmart Uruguay will be held by newly formed entities controlled by
Guerrero, a director of the Company, who is a successful Brazilian entrepreneur. The Company will provide capital in the amount
of $50,000 to both HempSmart Brazil and HempSmart Uruguay under the Joint Venture Agreements, for a total capital outlay obligation
of $100,000. It is expected that the proceeds of the initial capital contribution will be used for contracting with third-party
manufacturing facilities in Brazil and Uruguay, and related infrastructure and employment of key personnel. 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

 

MARIJUANA COMPANY OF AMERICA, INC.
INVESTMENT ROLL-FORWARD
AS OF SEPTEMBER 30, 2020

 

  
INVESTMENTS 
SHORT-TERM INVESTMENTS  
  
  
  
  
  
  
  
  
  
  
  
   
 TOTAL  
 Global Hemp  
 Cannabis Global  
    
    
 Bougainville Ventures,  
 Gate C Research  
 Natural Plant  
    
 TOTAL Short-Term  
 Global Hemp  
     
 INVESTMENTS  
 Group  
 Inc.  
 Benihemp  
 MoneyTrac  
 Inc.  
 Inc.  
 Extract  
 Vivabuds  
 Investments  
 Group  
 MoneyTrac Beginning balance @12-31-16 
$0  
$0  
    
$0  
$0  
$0  
$0  
    
    
$0  
    
$0   
    
    
    
    
    
    
    
    
    
    
    
   Investments made during 2017 
 3,049,275  
 10,775  
    
 100,000  
 250,000  
 1,188,500  
 1,500,000  
    
    
 0  
    
 0   
    
    
    
    
    
    
    
    
    
    
    
   Quarter 03-31-17 equity method Loss 
 0  
    
    
    
    
    
    
    
    
 0  
    
     
    
    
    
    
    
    
    
    
    
    
    
   Quarter 06-30-17 equity method Loss 
 0  
    
    
    
    
    
    
    
    
 0  
    
     
    
    
    
    
    
    
    
    
    
    
    
   Quarter 09-30-17 equity method Loss 
 (375,000) 
    
    
    
    
 (375,000) 
    
    
    
 0  
    
     
    
    
    
    
    
    
    
    
    
    
    
   Quarter 12-31-17 equity method accounting 
 313,702  
    
    
    
    
 313,702  
    
    
    
 0  
    
     
    
    
    
    
    
    
    
    
    
    
    
   Impairment of Investment in 2017 
 (2,292,500) 
 0  
    
    
    
 (792,500) 
 (1,500,000) 
    
    
 0  
    
 0 Balances as of 12/31/17 
 695,477  
 10,775  
 0  
 100,000  
 250,000  
 334,702  
 0  
 0  
 0  
 0  
 0  
 0   
    
    
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Investments made during 2018 
 986,654  
 986,654  
    
    
    
    
    
    
    
 0  
    
     
    
    
    
    
    
    
    
    
    
    
    
   Quarter 03-31-18 equity method Loss 
 (37,673) 
    
    
    
    
 (37,673) 
    
    
    
 0  
    
     
    
    
    
    
    
    
    
    
    
    
    
   Quarter 06-30-18 equity method Loss 
 (11,043) 
    
    
    
    
 (11,043) 
    
    
    
 0  
    
     
    
    
    
    
    
    
    
    
    
    
    
   Quarter 09-30-18 equity method Loss 
 (10,422) 
    
    
 (10,422) 
    
    
    
    
    
 0  
    
     
    
    
    
    
    
    
    
    
    
    
    
   Quarter 12-31-18 equity method Loss 
 (31,721) 
 (31,721) 
    
 0  
    
    
    
    
    
 0  
    
     
    
    
    
    
    
    
    
    
    
    
    
   Moneytrac investment reclassified to Short-Term investments 
 (250,000) 
    
    
    
 (250,000) 
    
    
    
    
 250,000  
    
 250,000   
    
    
    
    
    
    
    
    
    
    
    
   Unrealized gains on trading securities – 2018 
 0  
    
    
    
    
    
    
    
    
 560,000  
    
 560,000   
    
    
    
    
    
    
    
    
    
    
    
   Impairment of investment in 2018 
 (933,195) 
 (557,631) 
    
 (89,578) 
    
 (285,986) 
    
    
    
 0  
    
   Balance @12-31-18 
$408,077  
$408,077  
$0  
$0  
$0  
$0  
$0  
$0  
$0  
$810,000  
$0  
$810,000   
    
    
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Investments made during quarter ended 03-31-19 
 129,040  
 129,040  
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Quarter 03-31-19 equity method Loss 
 (59,541) 
 (59,541) 
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Unrealized gains on trading securities – quarter ended 03-31-19 
    
    
    
    
    
    
    
    
    
 (135,000) 
    
$(135,000)Balance @03-31-19 
$477,576  
$477,576  
$0  
$0  
$0  
$0  
$0  
$0  
$0  
$675,000  
$0  
$675,000   
    
    
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Investments made during quarter ended 06-30-19 
$3,157,234  
$83,646  
    
    
    
    
    
$3,000,000  
$73,588  
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Quarter 06-30-19 equity method Income (Loss) 
$(171,284) 
$(141,870) 
    
    
    
    
    
$(6,291) 
$(23,123) 
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Unrealized gains on trading securities – quarter ended 06-30-19 
$0  
    
    
    
    
    
    
    
    
 (150,000) 
    
$(150,000)Balance @06-30-19 
$3,463,526  
$419,352  
$0  
$0  
$0  
$0  
$0  
$2,993,709  
$50,465  
$525,000  
$0  
$525,000   
    
    
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Investments made during quarter ended 09-30-19 
$186,263  
    
    
    
    
    
    
    
$186,263  
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Quarter 09-30-19 equity method Income (Loss) 
$122,863  
$262,789  
    
    
    
    
    
$(94,987) 
$(44,939) 
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Sale of trading securities during quarter ended 09-30-19 
    
    
    
    
    
    
    
    
    
$(41,667) 
    
$(41,667)  
    
    
    
    
    
    
    
    
    
    
    
   Unrealized gains on trading securities – quarter ended 09-30-19 
$0  
    
    
    
    
    
    
    
    
 (362,625) 
    
$(362,625)Balance @09-30-19 
$3,772,652  
$682,141  
$0  
$0  
$0  
$0  
$0  
$2,898,722  
$191,789  
$120,708  
$0  
$120,708   
    
    
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Investments made during quarter ended 12-31-19 
$392,226  
$262,414  
    
    
    
    
    
    
$129,812  
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Quarter 12-31-19 equity method Income (Loss) 
$(178,164) 
$(75,220) 
    
    
    
    
    
$(23,865) 
$(79,079) 
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Reversal of Equity method Loss for 2019 
$272,285  
    
    
    
    
    
    
$125,143  
$147,142  
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Impairment of investment in 2019 
$(3,175,420) 
$(869,335) 
    
    
    
    
    
$(2,306,085) 
$0  
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Loss on disposition of investment 
$(389,664) 
    
    
    
    
    
    
    
$(389,664) 
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Sale of trading securities during quarter ended 12-31-19 
$0  
    
    
    
    
    
    
    
    
$(17,760) 
    
$(17,760)  
    
    
    
    
    
    
    
    
    
    
    
   Unrealized gains on trading securities – quarter ended 12-31-19 
$0  
    
    
    
    
    
    
    
    
 (75,545) 
    
$(75,545)Balance @12-31-19 
$693,915  
$(0) 
$0  
$0  
$0  
$0  
$0  
$693,915  
$0  
$27,403  
$0  
$27,403   
    
    
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Equity Loss for Quarter ended 03-31-20 
 126,845  
 126,845  
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Recognize Joint venture liabilities per JV agreement @03-31-20 
 394,848  
 394,848  
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Impairment of Equity Loss for Quarter ended 03-31-20 
 (521,692) 
 (521,692) 
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Unrealized gains on trading securities – quarter ended 03-31-19 
    
    
    
    
    
    
    
    
    
 (13,945) 
    
$(13,945)Balance @03-31-20 
$693,915  
$0  
$0  
$0  
$0  
$0  
$0  
$693,915  
$0  
$13,458  
$0  
$13,458   
    
    
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Equity Loss for Quarter ended 06-30-20 
 (7,048) 
 (7,048) 
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Impairment of Equity Loss for Quarter ended 06-30-20 
 7,048  
 7,048  
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Sales of trading securities – quarter ended 06-30-20 
    
    
    
    
    
    
    
    
    
 (13,458) 
    
$(13,458)Balance @06-30-20 
$693,915  
$0  
$0  
$0  
$0  
$0  
$0  
$693,915  
$0  
$0  
$0  
$0   
    
    
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
    
    
   Global Hemp Group trading securities issued 
 650,000  
    
$650,000  
    
    
    
    
    
    
$185,000  
$185,000  
     
    
    
    
    
    
    
    
    
    
    
    
   Investment in Cannabis Global 
 0  
    
    
    
    
    
    
    
    
    
    
   Balance @09-30-20 
$1,343,915  
$0  
$650,000  
$0  
$0  
$0  
$0  
$693,915  
$0  
$185,000  
$185,000  
$0   
    
    
    
    
    
    
    
    
    
    
    
   

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

 

Loan
Payable
  
  
 
  
  
  
  
 
  
  
  
TOTAL 

Global

Hemp

 
  
  
Bougainville
Ventures,
 

Gate
C

Research

 

Natural

Plant

 
Robert
L. Hymers
 
  
General
Operating
  
JV
Debt
 
Group 
Benihemp 
MoneyTrac 
Inc. 
Inc. 
Extract 
III 
Vivabuds 
ExpenseBeginning
balance @12-31-16
 
$0  
$0  
$0  
$0  
$0  
$0  
    
    
    
$0   
    
    
    
    
    
    
    
    
    
   Quarter 03-31-17 loan
borrowings
 
 1,500,000  
    
    
    
    
 1,500,000  
    
    
    
     
    
    
    
    
    
    
    
    
    
   Quarter 06-30-17 loan
activity
 
    
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Quarter 09-30-17 loan
borrowings
 
 725,000  
    
    
    
 725,000  
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Quarter 12-31-17 loan
repayments
 
 (330,445) 
    
    
    
 (330,445) 
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   General
operational expense
 
 172,856  
    
    
    
    
    
    
    
    
 172,856   
    
    
    
    
    
    
    
    
    
   Balances as of
12/31/17 (a)
 
 2,067,411  
 0  
 0  
 0  
 394,555  
 1,500,000  
 0  
 0  
 0  
 172,856   
    
    
    
    
    
    
    
    
    
   Quarter 03-31-18 loan
borrowings (payments)
 
 376,472  
 447,430  
    
    
    
    
    
    
    
 (70,958)  
    
    
    
    
    
    
    
    
    
   Quarter 06-30-18 cancellation
of JV debt obligation
 
 (1,500,000) 
    
    
    
    
 (1,500,000) 
    
    
    
     
    
    
    
    
    
    
    
    
    
   Quarter 06-30-18 loan
repayments
 
 (101,898) 
    
    
    
    
    
    
    
    
 (101,898)  
    
    
    
    
    
    
    
    
    
   Quarter 09-30-18 loan
activity
 
 0  
    
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Quarter
12-31-18 loan borrowings
 
 580,425  
 580,425  
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Balance
@12-31-18 (b)
 
 1,422,410  
 1,027,855  
 0  
 0  
 394,555  
 0  
 0  
 0  
 0  
 0   
    
    
    
    
    
    
    
    
    
   Quarter 03-31-19 loan
borrowings
 
 649,575  
 649,575  
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Quarter
03-31-19 debt conversion to equity
 
 (407,192) 
 (407,192) 
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Balance @03-31-19
(c)
 
 1,664,793  
 1,270,238  
 0  
 0  
 394,555  
 0  
 0  
 0  
 0  
 0   
    
    
    
    
    
    
    
    
    
   Quarter 03-31-19 loan
borrowings
 
 3,836,220  
$161,220  
    
    
    
    
$2,000,000  
    
$0  
$1,675,000   
    
    
    
    
    
    
    
    
    
   Quarter
03-31-19 debt conversion to equity
 
 (1,572,971) 
($161,220) 
    
    
    
    
($349,650) 
    
    
($1,062,101)  
    
    
    
    
    
    
    
    
    
   Balance
@06-30-19 (d)
 
 3,928,042  
 1,270,238  
 0  
 0  
 394,555  
 0  
 1,650,350  
 0  
 0  
 612,899   
    
    
    
    
    
    
    
    
    
   Quarter 09-30-19 loan
borrowings
 
 582,000  
    
    
    
    
    
    
    
    
$582,000   
    
    
    
    
    
    
    
    
    
   Quarter
09-30-19 debt conversion to equity
 
 (187,615) 
    
    
    
    
    
    
    
    
$(187,615)  
    
    
    
    
    
    
    
    
    
   Balance
@09-30-19 (e)
 
 4,322,427  
 1,270,238  
 0  
 0  
 394,555  
 0  
 1,650,350  
 0  
 0  
 1,007,284   
    
    
    
    
    
    
    
    
    
   Quarter 12-31-19 loan
borrowings
 
 2,989,378  
$262,414  
    
    
    
    
$596,784  
$4,221  
    
$2,125,959   
    
    
    
    
    
    
    
    
    
   Impairment of investment
in 2019
 
 (4,083,349) 
$(1,532,652) 
    
    
$(394,555) 
    
$(2,156,142) 
    
    
     
    
    
    
    
    
    
    
    
    
   Loss on settlement of
debt in 2019
 
 50,093  
    
    
    
    
    
$50,093  
    
    
     
    
    
    
    
    
    
    
    
    
   Adjustment
to reclassify amount to accrued liabilities
 
 (85,000) 
    
    
    
    
    
$(85,000) 
    
    
     
    
    
    
    
    
    
    
    
    
   Balance
@12-31-19 (f)
 
$3,193,548  
$(0) 
$0  
$0  
$0  
$0  
$56,085  
$4,221  
$0  
$3,133,243   
    
    
    
    
    
    
    
    
    
   Quarter 03-31-20 loan
borrowings
 
$441,638  
    
    
    
    
    
    
    
    
$441,638   
    
    
    
    
    
    
    
    
    
   Quarter 03-31-20 debt
conversion to equity
 
$(619,000) 
    
    
    
    
    
    
    
    
$(619,000)  
    
    
    
    
    
    
    
    
    
   Recognize Joint venture
liabilities per JV agreement @03-31-20
 
$394,848  
$394,848  
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Quarter
03-31-20 Debt Discount adjustments
 
$24,138  
    
    
    
    
    
    
$24,138  
    
     
    
    
    
    
    
    
    
    
    
   Balance
@03-31-20 (g)
 
$3,435,172  
$394,848  
$0  
$0  
$0  
$0  
$56,085  
$28,359  
$0  
$2,955,881   
    
    
    
    
    
    
    
    
    
   Quarter 06-30-20 loan
borrowings, net
 
$65,091  
    
    
    
    
    
    
$65,091  
    
     
    
    
    
    
    
    
    
    
    
   Quarter 06-30-20 debt
conversion to equity
 
$(727,118) 
    
    
    
    
    
    
    
    
$(727,118)  
    
    
    
    
    
    
    
    
    
   Quarter 06-30-20 reclass
of liability
 
$83,647  
$83,647  
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Quarter
06-30-20 Debt Discount adjustments
 
$405,746  
    
    
    
    
    
    
$(27,715) 
    
$433,461   
    
    
    
    
    
    
    
    
    
   Balance
@06-30-20 (h)
 
$3,262,538  
$478,495  
$0  
$0  
$0  
$0  
$56,085  
$65,735  
$0  
$2,662,224   
    
    
    
    
    
    
    
    
    
   Quarter 09-30-20 debt
conversion to equity
 
$(606,472) 
    
    
    
    
    
$(56,085) 
$(65,735) 
    
$(484,652)  
    
    
    
    
    
    
    
    
    
   Debt
Settlement during Q3 2020
 
$(474,495) 
$(474,495) 
    
    
    
    
    
    
    
     
    
    
    
    
    
    
    
    
    
   Balance
@09-30-20 (i)
 
$2,181,571  
$4,000  
$0  
$0  
$0  
$0  
$(0) 
$0  
$0  
$2,177,572   
    
    
    
    
    
    
    
    
    
   

 

 

  
09-30-20 
06-30-20 
03-31-20 
12-31-19 
09-30-19 
06-30-19 
03-31-19 
12-31-18 
12-31-17This includes balances for: 
 Note (i)  
 Note (h)  
 Note (g)  
 Note (f)  
 Note (e)  
 Note (d)  
 Note (c)  
 Note (b)  
 Note (a)       – Debt obligation of JV 
 0  
 478,494  
 394,848  
 0  
 1,633,872  
 1,778,872  
 128,522  
 289,742  
 1,500,000       – Convertible NP, net of discount 
 2,181,571  
 2,784,044  
 3,040,324  
 3,193,548  
 2,688,555  
 2,149,170  
 1,536,271  
 1,132,668  
 394,555       – Long term debt 
 0  
 0  
 0  
 0  
 0  
 0  
 0  
 0  
 172,856 Total Debt balance 
 2,181,571  
 3,262,538  
 3,435,172  
 3,193,548  
 4,322,427  
 3,928,042  
 1,664,793  
 1,422,410  
 2,067,411   
    
    
    
    
    
    
    
    
   

 

 

   

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

Concerning our investment loans for general
operation for the quarter ended September 30, 2020, the Company accounted these transactions as an investment and a liability –
“debt obligation of Joint Venture”. The Company follows Accounting Standards Codification subtopic 321-10, Investments-Equity
Securities (“ASC 321-10”) which requires the accounting for equity security to be measured at fair value with changes
in unrealized gains and losses are included in current period operations. Where an equity security is without a readily determinable
fair value, the Company may elect to estimate its fair value at cost minus impairment plus or minus changes resulting from observable
price changes.

 

NOTE 6 – NOTES
PAYABLE, RELATED PARTY

As of September 30, 2020,
and December 31, 2019, the Company’s officers and directors have provided advances and incurred expenses on behalf of the
Company. The issued notes are unsecured, due on demand and bear 5% interest. The balance due to Notes Payable Related Party as
of September 30, 2020 and December 31, 2019 was $40,000 and $40,000 respectively. These notes are payable to the estate of Charles
Larsen, who passed away on May 15, 2020.

NOTE
7 – CONVERTIBLE NOTES PAYABLE
 

During
the nine months ended September 30, 2020, the Company issued an aggregate of 1,491,109,401 shares of its common stock in settlement
of the issued convertible notes payable and accrued interest.

For
the nine months ended September 30, 2020 and September 30, 2019, the Company recorded amortization of debt discounts of $1,373,575
and $2,172,936, respectively, as a charge to interest expense.

Convertible
notes payable as of September 30, 2020 and December 31, 2019 was comprised of the following:

  
2020 
2019Lender 
(Unaudited) 
(Audited)Convertible note payable – Power Up Lending Group 
$73,000  
$294,000 Convertible note payable – Crown Bridge Partners 
$117,040  
$110,000 Convertible note payable – Odyssey Funding LLC 
$—    
$250,000 Convertible note payable – Paladin Advisors LLC 
$—    
$75,000 Convertible note payable – GS Capital Partners LLC 
$143,500  
$173,000 Convertible note payable – Natural Plant Extract 
$—    
$56,085 Convertible note payable – Robert L. Hymers III 
$205,803  
$96,553 Convertible note payable – St. George 
$1,977,208  
$2,947,890 Total 
$2,516,551  
$4,002,528 Less debt discounts 
$(334,980) 
$(808,980)Net 
$2,181,571  
$3,193,548 Less current portion 
$(2,181,571) 
$(3,193,548)Long term portion 
$—    
$—   

 

 

 

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

Convertible
notes payable-Power Up Lending

From
July 1 through September 12, 2019, the Company issued four convertible promissory notes in the aggregate principal amount of $294,000
to Power Up Lending Group Ltd. (“Power Up”). The promissory notes bear interest at 10% per annum, are due one year
from the respective issuance date and include an original issuance discount in the aggregate of $12,000. Interest on the notes
accrues from the issuance date, but interest will not become payable until the notes become payable. The notes are convertible
at any time at a conversion rate equal to 61% of the market price of the Company’s common stock, defined as the lowest trading
price during the 15-trading-day period prior to the conversion date. Upon the issuance of these convertible notes, the Company
determined that the features associated with the embedded conversion option embedded in the debentures should be accounted for
at fair value, as a derivative liability, as the Company cannot determine if a sufficient number of shares would be available to
settle all potential future conversion transactions. As of the funding date of each note, the Company determined the fair value
of the embedded derivative associated with the convertibility of each note. The fair value of the embedded derivative has been
added to the debt discount (total debt discount is limited to the face value of the debt) with any excess of the derivative liability
recognized as interest expense. The aggregate debt discount of $169,202 is being amortized to interest expense over the respective
terms of the notes.

The
Company has the right to prepay the notes for an amount ranging from 125% – 140% multiplied by the outstanding balance (all principal
and accrued interest) depending on the prepayment period (ranging from 1 to 180 days following the issuance date). The Company
is prohibited from effecting a conversion of any note to the extent that, as a result of such conversion, the investor, together
with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding
immediately after giving effect to the issuance of shares of common stock upon conversion of the note.

As
of September 30, 2020, and December 31, 2019, the Company owed an aggregate of $73,000 and, $294,000 of principal, respectively
on these convertible promissory notes. As of September 30, 2020, the Company owed $1,825 of accrued interest.

Convertible
notes payable-Crown Bridge Partners

From
October 1 through December 31, 2019, the Company issued convertible promissory notes in the aggregate principal amount of $225,000
to Crown Bridge Partners LLC (“Crown Bridge”). The promissory notes bear interest at 10% per annum, are due one year
from the respective issuance date and include an original issuance discount (“OID”) in aggregate of $22,500. Interest
accrues from the issuance date, but interest shall not become payable until the notes becomes payable. The notes are convertible
at any time at a conversion rate equal to 60% of the market price of the Company’s common stock, defined as the lowest trading
price during the 15-trading-day period prior to the conversion date. Upon the issuance of these convertible notes, the Company
determined that the features associated with the embedded conversion option embedded in the debentures should be accounted for
at fair value, as a derivative liability, as the Company cannot determine if a sufficient number of shares would be available to
settle all potential future conversion transactions. As of the funding date of each note, the Company determined the fair value
of the embedded derivative associated with the convertibility of each note. The fair value of the embedded derivative has been
added to the debt discount (total debt discount is limited to the face value of the debt) with any excess of the derivative liability
recognized as interest expense. The aggregate debt discount of $88,674 is being amortized to interest expense over the respective
terms of the notes. The Company also issued a total of 519,230 warrants with an initial exercise price of $0.26, with reset provisions
based on issuances of common stock subsequent to the issuance date. Due to the reset provision, the conversion option of these
warrants is also accounted for as a derivative liability. See Note 10. 

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

The
Company has the right to prepay the notes for an amount ranging from 125% – 140% multiplied by the outstanding balance (all principal
and accrued interest) depending on the prepayment period (ranging from 1 to 180 days following the issuance date). The Company
is prohibited from effecting a conversion of any note to the extent that, as a result of such conversion, the investor, together
with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding
immediately after giving effect to the issuance of shares of common stock upon conversion of the note.

As
of September 30, 2020, and December 31, 2019, the Company owed an aggregate of $117,040 and, $110,000 of principal, respectively
on these convertible promissory notes. As of September 30, 2020, the Company owed $1,607 of accrued interest.

Convertible
notes payable-Odyssey Funding LLC

On
October 30, 2019, the Company issued convertible promissory notes in the aggregate principal amount of $250,000 to Odyssey Funding
LLC (“Odyssey”). The promissory notes bear interest at 12% per annum, are due one year from the respective issuance
date and include an original issuance discount in an aggregate of $12,500. Interest accrues from the issuance date, but interest
does not become payable until the notes becomes payable. The notes are convertible at any time at a conversion rate equal to 55%
the average of the two lowest trading prices of the Company’s common stock as quoted on the National Quotations Bureau OTC
market or exchange where the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future,
for the twenty prior trading days to the conversion date.

As
of the funding date of each note, the Company determined the fair value of the embedded derivative associated with the convertibility
of each note. The fair value of the embedded derivative has been added to the debt discount (total debt discount is limited to
the face value of the debt) with any excess of the derivative liability recognized as interest expense. The aggregate debt discount
of $207,650 is being amortized to interest expense over the respective terms of the notes. As of September 30, 2020, and December
31, 2019, the Company owed principal of $0 and $250,000. As of September 30, 2020, the Company owed $0 in accrued interest.

Convertible
notes payable – Paladin Advisors LLC

On
October 23, 2019, the Company issued convertible promissory notes in the aggregate principal amount of $75,000 to Paladin Advisors,
LLC (“Paladin”). The promissory notes bear interest at 8% per annum and are due six months from the respective issuance
date of each note along with accrued and unpaid interest. Principal and interest is payable on the date six months from the date
of issuance of the note. Pursuant to the notes, Paladin has the option to convert all or any portion of the unpaid principal amount
of the notes, plus accrued interest, into shares of the Company’s common stock at a conversion price equal to a 45% discount
to the lowest closing bid of the previous 10 day trading period prior to the conversion. 

The
aggregate debt discount of $46,721 is being amortized to interest expense over the respective terms of the notes. As of September
30, 2020, and December 31, 2019, the Company owed an aggregate of $0 and $75,000 of principal. As of September 30, 2020, the Company
owed $0 in accrued interest.

Convertible
notes payable-GS Capital Partners LLC

On
December 19, 2019, the Company issued convertible promissory notes in the aggregate principal amount of $173,000 to GS Capital
Partners LLC (“GS Capital”). The promissory notes bear interest at 10% per annum, are due one year from the respective
issuance date, and include an original issuance discount in an aggregate of $15,000.

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

Pursuant
to the notes, GS Capital is entitled, at its option, at any time after cash payment, to convert all or any amount of the principal
face amount of the notes into shares of the Company’s common stock at a per-share conversion price equal to 62% of the lowest trading
price of the Company’s common stock as reported on the National Quotations Bureau OTC Marketplace exchange on which the Company’s
shares are quoted, or any exchange upon which the Company’s common stock may be traded in the future, for the twenty trading days
prior to the conversion.

As
of the funding date of each note, the Company determined the fair value of the embedded derivative associated with the convertibility
of each note. The fair value of the embedded derivative has been added to the debt discount (total debt discount is limited to
the face value of the debt) with any excess of the derivative liability recognized as interest expense. The aggregate debt discount
of $166,193 is being amortized to interest expense over the respective terms of the notes. As of September 30, 2020, and December
31, 2019, the Company owed principal of $143,500 and $173,000 respectively. As of September 30, 2020, the Company owed $1,593 in
accrued interest.

Convertible
notes payable-St George Investments

On
November 1, 2017, the Company issued a secured convertible promissory note in the amount of $601,420 to St. George Investments
LLC (“St George”). The promissory note bears interest at 10% compounded daily, was due upon maturity on September 10,
2018 and includes an original issue discount of $59,220. The promissory note was funded on November 11, 2017 for $542,200, net
of the original issue discount and transaction costs. As of September 30, 2019, the Company owed $417,890 of principal and $38,378
of accrued interest on this convertible promissory note. As of September 30, 2019, this note was in default, but the lender has
not enforced the default interest rate. On December 20, 2017, the Company issued a secured convertible promissory note in aggregate
of $1,655,000 to St George Investments LLC (“St George”). The promissory note bears interest at 10% compounded daily,
was due upon maturity on October 27, 2018 and includes an original issue discount of $155,000. In addition, the Company agreed
to pay $5,000 for legal, accounting and other transaction costs of the lender. The promissory note was funded in nine tranches
of $300,000; $200,000; $200,000; $400,000; $75,000; $150,000; $85,000; $120,000 and $70,000, resulting in aggregate net proceeds
of $1,500,000. The Company received aggregate net proceeds of $1,200,000 and $300,000 during the years ended December 31, 2018
and 2017, respectively. As an investment incentive, the Company issued 1,100,000 five-year warrants, exercisable at $2.40 per share,
with certain reset provisions. As of June 30, 2020, the warrants had an exercise price of $0.0085 for 5,274,146 total warrants.

The
promissory notes are convertible, at any time at the lender’s option, at $2.40 per share. However, in the event the Company’s
market capitalization (as defined) falls below $30,000,000, the conversion rate pursuant to the promissory notes will be 60% of
the 3 lowest closing trade prices from the 20 trading days immediately preceding the date of conversion. In addition, the promissory
notes include certain anti-dilution provisions should the Company subsequently issue any common stock or equivalents at an effective
price less than the lender conversion price. The Company has a right to prepayment of the note, subject to a 20% prepayment premium
and is secured by a trust deed of certain assets of the Company.

On
November 5, 2018, $250,000 of principal and accrued interest was assigned to John Fife as an individual with all the terms and
conditions of the original note issued to St George. On March 21, 2019, $150,959 of principal and $4,963 of accrued interest along
with $160,454 of derivative liabilities valued as of the respective conversion date were converted into 394,460 shares of common
stock.

During
the nine months ended September 30, 2020, $550,000 of principal, $122,694 of accrued interest and $441,394 of derivative liabilities
valued as of the respective conversion dates were converted into 1,710,897 shares of common stock, resulting in a gain on debt
settlement of $21,586. As of September 30, 2020, the Company owed $0 of principal and
$0 of accrued interest on this convertible promissory note. Although this note was in default until it was repaid, the lender did
not enforce the default interest rate. 

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

On
August 28, 2018, the Company issued a secured convertible promissory note in the amount of $1,128,518 (including overfunding of
$23,518) to St. George Investments LLC (“St. George”). The promissory note bears interest at 10% compounded daily,
was due upon maturity on June 30, 2019, and includes an original issue discount of $100,000. In addition, the Company agreed to
pay $5,000 for legal, accounting and other transaction costs of the lender. During the year ended December 31, 2018, the Company
received aggregate net proceeds of $825,000. During the nine months ended September 30, 2020, an additional $218,518 was funded
under this note resulting in net proceeds of $198,518.

As
an investment incentive to St. George, the Company issued to St. George 750,000 five-year warrants, exercisable at $2.40 per share,
with certain reset provisions. The aggregate fair value of the issued warrants was $1,588,493. The face value of the debt was then
allocated, on a relative fair value basis, between the debt and the warrants. The portion allocated to warrants has been added
to the debt discount with a resulting increase in additional paid-in capital. As of the funding date of each tranche of this note,
the Company determined the fair value of the embedded derivative associated with the convertibility of this note. The fair value
of the embedded derivative has been added to the debt discount (total debt discount is limited to the face value of the debt) with
any excess of the derivative liability recognized as interest expense. As of the aggregate debt discount of $1,114,698 is being
amortized to interest expense over the respective term of each tranche. As of June 30, 2020, the warrants had an exercise price
of $0.0085 for 3,750,000 total warrants.

The
promissory notes are convertible, at any time at St. George’s option, at $2.40 per share. However, in the event the Company’s
market capitalization falls below $30,000,000, the conversion rate will be 60% of the 3 lowest closing trade prices due the 20
trading days immediately preceding date of conversion, subject to additional adjustments, as defined. In addition, the promissory
notes include certain anti-dilution provisions should the Company subsequently issue any common stock or equivalents at an effective
price less than the lender conversion price. The Company has a right to prepayment of the note, subject to a 15% prepayment premium
and is secured by a trust deed of certain assets of the Company.

During
the nine months ended September 30, 2020, $1,000,859 of principal and $840,299 of derivative liabilities valued as of the respective
conversion dates were converted into 4,475,543 shares of common stock, resulting in a loss on debt settlement of $612,034. As of
September 30, 2019, the Company owed $828,518 of principal and $28,138 of accrued interest on this convertible promissory note.
As of September 30, 2019, this note was in default, but the lender has not enforced the default interest rate.

On
January 29, 2019, the Company issued a secured convertible promissory note in the amount of $2,205,000 to St. George Investments
LLC (“St. George”). The promissory note bears interest at 10% compounded daily, is due upon maturity on December 5,
2019, and includes an original issue discount of $200,000. In addition, the Company agreed to pay $5,000 for legal, accounting
and other transaction costs of the lender. During the nine months ended September 30, 2020, the promissory note was funded in eight
tranches totaling $1,406,482, resulting in aggregate net proceeds of $1,276,482. As an investment incentive to St. George, the
Company issued to St. George 1,500,000 5-year warrants, exercisable at $2.40 per share, with certain reset provisions. As of September
30, 2020, the warrants had an exercise price of $0.0085 for 7,500,000 total warrants. The aggregate fair value of the issued warrants
was $999,838. The face value of the debt was then allocated, on a relative fair value basis, between the debt and the warrants.
The portion allocated to warrants has been added to the debt discount with a resulting increase in additional paid-in capital.
As of the funding date of each tranche of this note, the Company determined the fair value of the embedded derivative associated
with the convertibility of this note. The fair value of the embedded derivative has been added to the debt discount
(total debt discount is limited to the face value of the debt) with any excess of the derivative liability recognized as interest
expense.

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

The
promissory notes are convertible, at any time at the lender’s option, at $2.40 per share. However, in the event the Company’s
market capitalization (as defined) falls below $30,000,000, the conversion rate will be 60% of the 3 lowest closing trade prices
due the 20 trading days immediately preceding date of conversion, subject to additional adjustments, as defined. In addition, the
promissory note includes certain anti-dilution provisions should the Company subsequently issue any common stock or equivalents
at an effective price less than the lender conversion price. The Company has a right to prepayment of the note, subject to a 15%
prepayment premium and is secured by a trust deed of certain assets of the Company.

On
March 25, 2019, the Company issued a secured convertible promissory note in the amount of $580,000 to St. George Investments LLC
(“St. George”). The promissory note bears interest at 10% compounded daily, is due upon maturity on January 24, 2020
and includes an original issue discount of $75,000. In addition, the Company agreed to pay $5,000 for legal, accounting and other
transaction costs of the lender. During the nine months ended September 30, 2019, the promissory note was funded in the amount
of $580,000 resulting in net proceeds of $500,000. As an investment incentive, the Company issued 375,000 five-year warrants, exercisable
at $2.40 per share, with certain reset provisions. As of September 30, 2020, the warrants had an exercise price of $0.0085 for
1,875,000 total warrants. The aggregate fair value of the issued warrants was $258,701. The face value of the debt was then allocated,
on a relative fair value basis, between the debt and the warrants. The portion allocated to warrants has been added to the debt
discount with a resulting increase in additional paid-in capital. As of the funding date of this note, the Company determined the
fair value of the embedded derivative associated with the convertibility of this note. The fair value of the embedded derivative
has been added to the debt discount (total debt discount is limited to the face value of the debt) with any excess of the derivative
liability recognized as interest expense. The aggregate debt discount of $483,966 is being amortized to interest expense over the
term of the note.

The
promissory notes are convertible, at any time at St. George’s option, at $2.40 per share. However, in the event the Company’s
market capitalization (as defined) falls below $30,000,000, the conversion rate will be 60% of the 3 lowest closing trade prices
from the 20 trading days immediately preceding the date of conversion, subject to additional adjustments. In addition, the promissory
note includes certain anti-dilution provisions should the Company subsequently issue any common stock or equivalents at an effective
price less than the lender conversion price. The Company has a right to prepayment of the note, subject to a 15% prepayment premium
and is secured by a trust deed of certain assets of the Company. As of September 30, 2020, and December 31, 2019, the Company owed
principal of $1,977,208 and $ 2,947,890 respectively. As of September 30, 2020, the Company owed $391,986 of accrued interest.

Convertible
notes payable – Robert L. Hymers III

On
December 23, 2019, the Company issued convertible promissory notes in the aggregate principal amount of $96,552.70 to Robert L.
Hymers III (“Hymers”) in satisfaction of funds owed to Mr. Hymers from his consulting contract with the Company for
past services rendered and completed. The promissory notes bear interest at 10% per annum, and are due six months from the respective
issuance date of the note along with accrued and unpaid interest. Principal and interest are payable to Hymers six months after
the date of issuance. Hymers has the option to convert all or any portion of the unpaid principal amount of the note, plus accrued
interest, into shares of the Company’s common stock. The conversion price will be equal to a 50% discount to the lowest closing
bid of the previous 15 day trading period. The aggregate debt discount of $92,332 is being amortized to interest expense over the
respective terms of the notes. As of September 30, 2020, and December 31, 2019, the Company owed an aggregate of $ 205,803 and
$96,553 of principal respectively. As of September 30, 2020, the Company owed $422 in accrued interest.

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

NOTE
8 – DERIVATIVE LIABILITIES

 

As described
in Note 7, the Company issued convertible notes and warrants that contained conversion features and a reset provisions. The accounting
treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception
date and to fair value as of each subsequent reporting date. See Note 10 for further details.

  

NOTE
9 – STOCKHOLDERS’ DEFICIT

 

Preferred
stock

 

The Company
is authorized to issue 50,000,000 shares of $0.001 par value preferred stock as of September 30, 2020 and December 31, 2019. As
of September 30, 2020, and December 31, 2019, the Company designated and issued 10,000,000 shares of Class A Preferred Stock.

 

Each
share of Class A Preferred Stock is entitled to 100 votes on all matters submitted to a vote to the stockholders of the Company,
does not have conversion, dividend or distribution upon liquidation rights.

 

On October 28, 2019, Donald Steinberg, Charles
Larsen and the Company agreed, in exchange for a mutual release of all claims, to cancel and return to treasury Messrs. Steinberg
and Larsen’s respective 5,000,000 shares of Preferred Class A common stock. The Board of Directors subsequently issued pro
rata, 10 million Class A Preferred shares of common stock to directors Robert Coale, Edward Manolos and Jesus Quintero. On May
20, 2020, Robert Coale resigned his position as a director. As part of a severance agreement, Mr. Coale returned to treasury 3,333,333
shares of Class A Preferred Shares. On July 10, 2020, the Company issued 3,333,333 Class A Preferred Shares to Jesus M. Quintero.

 

On November 9, 2020, the Company issued 2,000,000 shares of its
Class B Preferred Common Stock to Jesus Quintero. The Class B Preferred Stock carries a voting preference of One Thousand (1,000)
times that number of votes on all matters submitted to the shareholders that is equal to the number of shares of Common Stock (rounded
to the nearest whole number), at the record date for the determination of the shareholders entitled to vote on such matters or,
if no such record date is established, at the date such vote is taken or any written consent of such shareholders is affected.
The issuance constitutes a change of control of the Company, as the voting preference of the issued Class B Preferred Stock provides
Mr. Quintero with the right to control a majority of the votes of shareholders eligible to cast votes on any matter brought before
the stockholders.

 

Common
stock

 

The Company is authorized to issue 5,000,000,000
shares of $0.001 par value common stock. As of September 30, 2020, and December 31, 2019, the Company had 1,913,880,887 and 77,958,081
shares issued and outstanding, respectively. All references to our common stock in this filing reflect a 1:60 reverse stock split
effective September 3, 2019.

During the nine months
ended September 30, 2020, the Company issued an aggregate of 156,444,047 shares of its common stock for services rendered with
an estimated fair value of $665,767.

During the nine months
ended September 30, 2020, the Company issued an aggregate of 21,384,103 shares of its common stock, in settlement of outstanding
related party notes payable, for a total aggregate value of $50,613.

During the nine months
ended September 30, 2020, the Company issued 1,469,725,298 shares of its common stock in settlement of convertible notes payable,
accrued interest of $2,635,647.

During the nine months
ended September 30, 2020, the Company issued 51,054,214 shares of its common stock in exchange for exercise of warrants on a cashless
basis with an aggregate value of $427,500.

During the nine
months ended September 30, 2020, the Company sold an aggregate of 127,012,847 shares of its common stock for net proceeds of
$153,686.  On November 9, 2020, the Company issued 2,000,000 shares of its
Class B Preferred Common Stock to Jesus Quintero. The Class B Preferred Stock carries a voting preference of One Thousand (1,000)
times that number of votes on all matters submitted to the shareholders that is equal to the number of shares of Common Stock (rounded
to the nearest whole number), at the record date for the determination of the shareholders entitled to vote on such matters or,
if no such record date is established, at the date such vote is taken or any written consent of such shareholders is affected.
The issuance constitutes a change of control of the Company, as the voting preference of the issued Class B Preferred Stock provides
Mr. Quintero with the right to control a majority of the votes of shareholders eligible to cast votes on any matter brought before
the stockholders.

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

 

Warrants

The following table presents
information related to warrants at September 30, 2020:

 

Warrants Outstanding 
 Warrants Exercisable 

Exercise

     Price

 
 

Number of

Options

  
 

Weighted Average

Remaining Life

In Years

  
 

Exercisable

Number of

Options

 $.01-1.00 
 61,111  
 2.18  
 61,111 $1.01-2.00 
 41,891  
 1.86  
 41,891 $2.01-3.00 
 3,499,146  
 3.99  
 3,499,146   
 3,602,148  
    
 3,602,148 

 

NOTE 10 — FAIR VALUE MEASUREMENT 

The
Company adopted the provisions of Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”)
on January 1, 2008. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements
for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous
market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability,
such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires
an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10
establishes three levels of inputs that may be used 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 with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant
inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term
of the assets or liabilities.

Level
3 – Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

All
items required to be recorded or measured on a recurring basis are based upon level 3 inputs.

To
the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination
of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of
the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value
hierarchy within which the
fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

 

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

Upon
adoption of ASC 825-10, there was no cumulative effect adjustment to beginning retained earnings and no impact on the financial
statements.

The
carrying value of the Company’s cash and cash equivalents, accounts receivable, accounts payable, short-term borrowings (including
convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.

As
of September 30, 2020, and December 31, 2019, the Company did not have any items that would be classified as level 1 or 2 disclosures.

The
Company recognizes its derivative liabilities as level 3 and values its derivatives using the methods discussed in note 7. While
the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that
the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in
a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values
using the methods discussed in Note 6 are that of volatility and market price of the underlying common stock of the Company. 

As
of September 30, 2020, and December 31, 2019, the Company did not have any derivative instruments that were designated as hedges.

The derivative liability as
of September 30, 2020 in the amount of $3,426,888, has a level 3 classification.

 

The following
table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities for the two years ended
September 30, 2020:

 

 
 
Debt Derivative  Balance, December 31, 2019 
$5,693,071 Initial fair value of debt derivative at note issuance 
 1,308,157 Mark-to-market at September 30, 2020 
 7,001,228 Transfers out of Level 3 upon conversion or payoff of notes payable 
 (3,886,971)Net loss in fair value included in earnings related to derivative liabilities during the nine months ended September 30, 2020 
$312,631 Balance, September 30, 2020 
$3,426,888 

 

Fluctuations
in the Company’s stock price are a primary driver for the changes in the derivative valuations during each reporting period.
During the period ended September 30, 2020, the Company’s stock price decreased
significantly from initial valuations.
As the stock price decreases for each of the related derivative instruments, the value to the holder of the instrument generally
decreases. Stock price is one of the significant unobservable inputs used in the fair value measurement of each of the Company’s
derivative instruments.

 

 

 

 

MARIJUANA COMPANY OF AMERICA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2020

(unaudited)

 

NOTE
11 — RELATED PARTY TRANSACTIONS

The
Company’s current officers and stockholders advanced funds to the Company for travel related and working capital purposes.
As of September 30, 2020, and December 31, 2019, there were no related party advances outstanding.

As
of September 30, 2020, and December 31, 2019, accrued compensation due officers and executives was accrued compensation was $125,738
and $4,875, respectively.

During
the nine months ended September 30, 2020, the Company issued an aggregate of 21,384,103 shares of its common stock in settlement
of outstanding related party notes payable of $50,613.

On November
9, 2020, the Company issued 2,000,000 shares of its Class B Preferred Common Stock to Jesus Quintero, our CEO and CFO. The Class
B Preferred Stock carries a voting preference of One Thousand (1,000) times that number of votes on all matters submitted to the
shareholders that is equal to the number of shares of Common Stock (rounded to the nearest whole number), at the record date for
the determination of the shareholders entitled to vote on such matters or, if no such record date is established, at the date
such vote is taken or any written consent of such shareholders is affected. The issuance constitutes a change of control of the
Company, as the voting preference of the issued Class B Preferred Stock provides Mr. Quintero with the right to control a majority
of the votes of shareholders eligible to cast votes on any matter brought before the stockholders.

NOTE
12 – SUBSEQUENT EVENTS

Share Exchange Agreement
with Cannabis Global

On September 30, 2020,
the Company entered into a Share Exchange Agreement with Cannabis Global, Inc., a Nevada corporation quoted on OTC Markets Pink
(“CBGL”) dated September 30, 2020, to acquire the number of shares of CBGL’s common stock, par value $0.001,
equal in value to $650,000 based on the closing price for the trading day immediately preceding the effective date, in exchange
for the number of shares of Company common stock, par value $0.001, equal in value to $650,000 based on the closing price for the
trading day immediately preceding the effective date (the “Share Exchange Agreement”). For both parties, the Share
Exchange Agreement contains a “true-up” provision requiring the issuance of additional common stock in the event that
a decline in the market value of either parties’ common stock should cause the aggregate value of the stock acquired pursuant
to the Share Exchange Agreement to fall below $650,000.

Complementary to the
Share Exchange Agreement, the Company and CBGL entered into a Lock-Up Agreement dated September 30, 2020, providing that the shares
of common stock acquired pursuant to the Share Exchange Agreement shall be subject to a lock-up period preventing its sale for
a period of 12 months following issuance, and limiting the subsequent sale to aggregate maximum sale value of $20,000 per week,
or $80,000 per month.

Brazil
and Uruguay Joint Ventures

On October
1, 2020, the Company entered into two Joint Venture Agreements with Marco Guerrero, a director of the Company (“Guerrero”)
dated September 30, 2020, to form joint venture operations in Brazil and in Uruguay (the “Joint Venture Agreements”)
to produce, manufacture, market and sell the Company’s hempSMART™ products in Latin America, and will also work to
develop and sell hempSMART™ products globally. The Joint Venture Agreements contain equal terms for the formation of joint
venture entities in Uruguay and Brazil. The Brazilian joint venture will be headquartered in São Paulo, Brazil, and will
be named HempSmart Produtos Naturais Ltda. (“HempSmart Brazil”). The Uruguayan joint venture will be headquartered
in Montevideo, Uruguay and will be named Hempsmart Uruguay S.A.S. (“HempSmart Uruguay”).

Under
the Joint Venture Agreements, the Company will acquire a 70% equity interest in both HempSmart Brazil and HempSmart Uruguay. A
minority 30% equity interest in both HempSmart Brazil and HempSmart Uruguay will be held by newly formed entities controlled by
Guerrero, a director of the Company, who is a successful Brazilian entrepreneur. The Company will provide capital in the amount
of $50,000 to both HempSmart Brazil and HempSmart Uruguay under the Joint Venture Agreements, for a total capital outlay obligation
of $100,000. It is expected that the proceeds of the initial capital contribution will be used for contracting with third-party
manufacturing facilities in Brazil and Uruguay, and related infrastructure and employment of key personnel. 
 

On November
9, 2020, the Company issued 2,000,000 shares of its Class B Preferred Common Stock to Jesus Quintero. The Class B Preferred Stock
carries a voting preference of One Thousand (1,000) times that number of votes on all matters submitted to the shareholders that
is equal to the number of shares of Common Stock (rounded to the nearest whole number), at the record date for the determination
of the shareholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken
or any written consent of such shareholders is affected. The issuance constitutes a change of control of the Company, as the voting
preference of the issued Class B Preferred Stock provides Mr. Quintero with the right to control a majority of the votes of shareholders
eligible to cast votes on any matter brought before the stockholders.

 

 

 

MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion
and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Management’s
current views with respect to future events and financial performance. You can identify these statements by forward-looking words
such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate”
and “continue,” or similar words. Those statements include statements regarding the intent, belief or current expectations
of us and members of our management team as well as the assumptions on which such statements are based. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties,
and that actual results may differ materially from those contemplated by such forward-looking statements.

Readers are urged to carefully
review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange
Commission. Important factors currently known to Management could cause actual results to differ materially from those in forward-looking
statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence
of unanticipated events or changes in the future operating results over time. We believe that our assumptions are based upon reasonable
data derived from and known about our business and operations. No assurances are made that actual results of operations or the
results of our future activities will not differ materially from our assumptions. Factors that could cause differences include,
but are not limited to, expected market demand for our products, fluctuations in pricing for materials, and competition.

Business Overview

Plan of Operations – Marijuana
Company of America and subsidiaries is a publicly listed company quoted on the OTC Pink tier Exchange under the symbol “MCOA”.
We are based in Escondido, California. Our business plan and operation focuses in part on the development, manufacturing, marketing
and sale of non-psychoactive industrial hemp, and hemp-derived consumer products containing CBD. Our business includes the research
and development of (1) varieties of various species of hemp; (2) beneficial uses of hemp and hemp derivatives; (3) indoor and outdoor
cultivation methods for hemp; (4) technology used for cultivation and harvesting of different species of hemp, including but not
limited to lighting, venting, irrigation, hydroponics, nutrients and soil; (5) different industrial hemp derived CBD, and the possible
health benefits thereof; (6) new and improved methods of hemp CBD extraction omitting or eliminating the delta-9 tetrahydrocannabinol
“THC” molecule.

hempSMART,™ Inc.

The Company operates two distinct and separate
business divisions related to its two wholly owned subsidiaries, H Smart, Inc. and MCOA CA, Inc.

Through our wholly owned subsidiary
H Smart, Inc., we develop consumer products that include industrial hemp derived, non-psychoactive CBD as an ingredient, under
the brand name “hempSMART™. Our industrial hemp-based products are specifically developed with an enriched CBD molecular
composition with a THC concentration of three-tenths of one percent or less by dry weight. We market and sell our hempSMART™
products directly through our web site, and through our affiliate marketing program, where qualified sales affiliates use a secure
multi-level-marketing sales software program that facilitates order placement over the internet via a web site, and accounts for
affiliate orders and sales; calculates referral benefits apportionable to specific sales associates, and calculates and accounts
for loyalty and rewards benefits for returning customers. We also retained a full-service marketing company that uses a multi-channel
transactional marketing campaign focused on digital advertising, infographics, content marketing, customer incentives and acquisition,
a broad social media presence, as well as search engine marketing and optimization that includes comprehensive research and analytics
and order fulfillment in order to boost direct sales.

Results of Operations

We anticipate that our results of
operations will fluctuate for the foreseeable future due to several factors, such as the progress of our hempSMART™ product
sales and research and development efforts. Due to these uncertainties, accurate predictions of future operations are difficult
or impossible to make.

 

Three Months Ended September
30, 2020 Compared to Three Months Ended September 30, 2019

Revenues

Total revenues for the three months ended September
30, 2020 and 2019, were $53,195 and $229,371, respectively, a decrease of $176,176. This decrease continues to be attributed to
the Company’s restructuring of its sales team and new sales programs since the 1st quarter 2020 as well as the
effects of the slowing general market demand due to the COVID-19 pandemic during the third quarter ended September 30, 2020. In
addition, the Company’s continued changes to the sales strategy implemented includes rebranding of hempSMART products. However,
the Company continues to make progress with its sales program as it continues to promote and support its affiliate marketing sales
program and direct sales through its website.

 

During the third quarter ended September 30,
2020 the Company released a new industrial hemp based hempSMART Drink Mix product.

 

The following table identifies a comparison
of our sales of products during the three months ended September 30, 2020 and 2019, respectively:

 

For the three months ended September 30, 2020 and 2019 
 
 
 
 
 
  
 
 
2020
 
 
 
2019
 
 
 Body Lotion
 
$
679
 
 
$
7,299
 
 
 Brain Capsules
 
 
4,610
 
 
 
20,569
 
 
 Industrial hemp Drink
 
 
563
 
 
 
0
 
 
 New Product in 2020Drops
 
 
25,541
 
 
 
96,885
 
 
 Face Moisturizer
 
 
1,606
 
 
 
8,848
 
 
 Pain Capsules
 
 
2,714
 
 
 
9,840
 
 
 Pain Cream
 
 
14,911
 
 
 
63,449
 
 
 Pet Drops
 
 
2,571
 
 
 
22,481
 
 
 TOTALS
 
$
53,195
 
 
$
229,371
 
 
 

 

Related Party Sales

Related party sales contributed $3,262
and $4,015 to the revenues for the three months ended September 30, 2020 and 2019, respectively. Related party sales are comprised
of sales of our hempSMART products to our directors, officers, employees, and sales team members. No related party sales were for
services. All sales made at listed retail prices and were for cash considerations.

Cost of Sales

Cost of sales primarily consist of
inventory cost and overhead, manufacturing, packaging, warehousing, shipping, and direct labor costs directly attributable to our
hempSMART products. For the three months ended September 30, 2020 and 2019, our total costs of sales were $37,170 and $90,843,
respectively. The high costs reflect product discounts and cost incentive on products sold due to the COVID-19 pandemic.

Gross Profit

For the three months ended September
30, 2020 and 2019, gross profit was $16,025 and $138,528, respectively. This decrease was primarily attributed to new pricing and
promotions associated with the company’s continued sales restructuring and strategies from 1st quarter 2020, along
with the effects of the COVID-19 pandemic during the three months ended September 30, 2020. As a result, the gross margins were
30.1% and 60.4% for the three months ended September 30, 2020 and 2019, respectively. However, the Company will continue to market
its products aggressively as it continues to support its affiliate sales program in the near future.

Selling and marketing expenses

For the three months ended September
30, 2020 and 2019, selling and marketing expenses was $125,942 and $376,342, respectively. This decrease of $250,400 is due primarily
to the effects of the Company’s restructuring of its sales team and new sales strategies during the three months ended September
30, 2020, as well as the discontinuation of the VivaBuds delivery business at the end of 2019. This include elimination of redundant
expenses of our sales operations in the United Kingdom, reduction in media costs, reduction in sample product costs and reduced
overhead pertaining to the VivaBuds joint venture. These reductions were implemented to reduce overhead as the Company aggressively
works towards more cost effective strategies to sell its hempSMART’s products.

Payroll and related expenses

For the three months ended September 30, 2020
and 2019, payroll and related expenses were $62,000 and $90,000, respectively. This decrease of $28,000 is attributed to the current
CEO’s compensation being reduced compared to the prior CEO’s higher salary in 2019, marginally offset by new hires
as of the third quarter ended September 30, 2020 versus $0 during the same period in 2019.

 

 

 

Stock-based compensation

The Company measures the cost of services received
in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value
of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting
dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over
the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based
compensation expense is recorded by the Company in the same expense classifications in the statements of operations, as if such
amounts were paid in cash. For the three months ended September 30, 2020 and 2019, stock-based compensation was $123,000 and $0,
respectively. This increase of $123,000 is due to shares issued to the Company’s new officers, directors and vendors to pay
compensation due to the Company’s low cash positions during the three months ended September 30, 2020.

 

General and administrative expenses

Other general and administrative expenses increased
to $294,921 for the three months ended September 30, 2020 compared to $295,113 for the three months ended September 30, 2019. General
and administrative expenses include research and development, building rent, utilities, legal fees, office supplies, subscriptions,
and office equipment. The increase of $79,798 was mainly attributed to issuance of the Company’s shares to consultants for
services provided to the Company. The shares were issued to pay compensation due to the Company’s low cash positions during
the three months ended September 30, 2020.

 

Gain/Loss on change in fair
value of derivative liabilities

During 2020 and 2019, we issued convertible
promissory notes and warrants with an embedded derivative, all requiring us to fair value the derivatives each reporting period,
and mark to market as a non-cash adjustment to our current period operations. This resulted in losses of $1,454,903 and $1,668,112
change in fair value of derivative liabilities for the three months ended September 30, 2020 and 2019, respectively.

 

Loss on equity investment

During the three months ended September 30,
2020 and 2019, we adjusted the carrying value of our investment for our pro rata share of loss and gain on equity investments of
$240,198 and $122,864, respectively.

 

Gain and loss on settlement
of debt

During the three months ended September 30,
2020 and 2019, the Company realized a gain and a loss on settlement of debt of $383,440 and $612,034, respectively.

 

Interest Expense

Interest expense during the three months ended
September 30, 2020 was $688,090 compared to $1,559,720 for the three months ended September 30, 2019. Interest expense primarily
consists of interest incurred on our convertible and other debt. The debt discounts amortization incurred during the three months
ended September 30, 2020 and 2019 was $429,227 and $864,386, respectively. In addition, we incurred a non-cash interest of $0 and
$444,585 non-cash interest in connection with convertible notes for the three months ended September 30, 2020 and 2019, respectively.

 

Net Loss

The Company’s net loss for the three months ended September
30, 2020 and 2019 was $1,872,271 and $6,226,622, respectively, a decrease of $4,354,351. The net loss of $1,872,271 for the three
months ended September 30, 2020, represents 3,520% of total revenues for the period. The net loss of $6,226,622 for the three months
ended September 30, 2019 represents 2,715% of the total revenues for the period.

 

Nine Months Ended
September 30, 2020 Compared to Nine Months Ended September 30, 2019

 

Total Revenues – Total revenues were
$217,972 for the nine months ended September 30, 2019 as compared to $552,761 for the nine months ended September 30, 2019, a decrease
of $334,789. Although the reported revenues for each period also reflect the Company’s initial steps towards marketing and
selling its hempSMART™ products, the decrease in total revenues of hempSMART™ products was due to the volume of sales
being impacted by COVID-19 pandemic. However, management plans to expand its marketing and selling efforts for the remainder of
2020 and expects revenues to increase during the coming months.

 

 

 

The following table identifies our product
offerings and the revenues related to these products for the nine months ended September 30, 2020 and 2019, respectively:

 

For the nine months ended
September 30, 2020 and 2019

 
 
 
2020
 
 
 
2019
 
 
 Body Lotion
 
$
3,131
 
 
$
7,294
 
 
 Brain Capsules
 
 
24,284
 
 
 
55,564
 
 
 Drink
 
 
2,615
 
 
 
0
 
 
 New Product in 2020Drops
 
 
111,673
 
 
 
223,154
 
 
 Face Moisturizer
 
 
8,915
 
 
 
29,486
 
 
 Pain Capsules
 
 
6,360
 
 
 
37,612
 
 
 Pain Cream
 
 
46,817
 
 
 
151,596
 
 
 Pet Drops
 
 
14,177
 
 
 
48,055
 
 
 TOTALS
 
$
217,972
 
 
$
552,761
 
 
 

 

Related Party Sales

Related party sales contributed $11,565
and $12,363 to the revenues for the nine months ended September 30, 2020 and 2019, respectively. Related party sales are comprised
of sales of our hempSMART products to our directors, officers, employees, and sales team members. No related party sales were for
services. All sales made at listed retail prices and were for cash considerations.

Cost of sales primarily consist of
inventory cost and overhead, manufacturing, packaging, warehousing, shipping, and direct labor costs directly attributable to our
hempSMART products. For the nine months ended September 30, 2020 and 2019, our total costs of sales were $110,563 and $159,859,
respectively. The cumulative high costs for the nine months ended September 30, 2020 reflects product discounts and cost incentive
on products sold due to the COVID-19 pandemic.

Gross Profit

For the nine months ended September
30, 2020 and 2019, gross profit was $107,409 and $392,902, respectively. This decrease was primarily attributed to new pricing
and promotions associated with the company’s continued sales restructuring and strategies during 2020, along with the effects
of the COVID-19 pandemic during the nine months ended September 30, 2020. As a result, the gross margins were 49.3% and 71.1% for
the nine months ended September 30, 2020 and 2019, respectively. However, the Company will continue to market its products aggressively
as it continues to support its affiliate sales program in the near future.

Selling and marketing expenses

For the nine months ended September 30, 2020
and 2019, selling and marketing expenses was $326,608 and $1,462,104, respectively. This decrease of $1,135,496 is due primarily
to the effects of the Company’s restructuring of its sales team and new sales strategies during the nine months ended September
30, 2020. This include reduction of over $460,000 of redundant expenses of our sales operations in the United Kingdom, over $432,000
in reductions in media costs, $105,000 decrease in commissions due to sales levels for the nine months ended September 30, 2020
and a $60,663 reduction in sample product costs during the nine months of 2020. These reductions were implemented to streamline
expenses as the company aggressively works towards more cost-effective strategies to improve the sale of its hempSMART’s
products.

 

Payroll and related expenses

For the nine months ended September 30, 2020
and 2019, payroll and related expenses was $258,842 and $310,000, respectively. This decrease of $51,158 is attributed to the elimination
of redundant positions within the Company during the nine months ended September 30, 2020 as compared to the nine months ended
September 30, 2019.

 

Stock-based compensation

The Company measures the cost of services received
in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value
of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting
dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over
the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based
compensation expense is recorded by the Company in the same expense classifications in the statements of operations, as if such
amounts were paid in cash. For the nine months ended September 30, 2020, stock-based compensation was $665,767 and $100,350, respectively.
This increase of $485,427 is due to shares issued to the Company officers, directors and vendors due to the Company’s low
cash positions during the nine months ended September 30, 2020.

 

 

 

General and administrative expenses

Other general and administrative expenses decreased
to $710,094 for the nine months ended September 30, 2020 compared to $1,353,757 for the nine months ended September 30, 2019. General
and administrative expenses include research and development, building rent, utilities, legal fees, office supplies, subscriptions,
and office equipment. The decrease of $563,673 is attributed cost saving measures to eliminate redundancy such as a reduction of
approximately $ 88,000 in bank fees due to less wire transfers fees incurred during the nine months ended September 30, 2020; also
a decrease of approximately $396,000 in Consulting fees during the nine months ended September 30, 2020 as the company utilized
internal resources instead of outside services and a reduction in our Board of Director fees by $56,000 during the nine months
ended September 30, 2020 versus the nine months ended September 30, 2019. These costs were higher during the nine months ended
September 30, 2019.

 

Loss on change in fair value
of derivative liabilities

During 2020 and 2019, we issued convertible
promissory notes and warrants with an embedded derivative, all requiring us to fair value the derivatives each reporting period,
and mark to market as a non-cash adjustment to our current period operations. This resulted in losses of $312,631 and $2,148,262
change in fair value of derivative liabilities for the nine months ended September 30, 2020 and 2019, respectively.

 

Loss on equity investment

During the nine months ended September 30,
2020 and 2019, we adjusted the carry value of our investment for our pro rata share of a gain and a loss for our equity investment
of $106,305 and $107,961, respectively.

 

Gain and loss on settlement
of debt

During the nine months ended September 30,
2020 and 2019, the company realized a gain and loss on settlement of debt of $386,930 and $612,034, respectively. This was related
to the payoff of a settlement agreements made in the ordinary course of its business during the nine months ended September 30,
2020 and 2019.

 

Interest Expense

Interest expense during the nine months ended
September 30, 2020 was $2,460,185 as compared to $3,001,972 for the nine months ended September 30, 2019. Interest expense primarily
consists of interest incurred on our convertible and other debt. The debt discounts amortization incurred during the nine months
ended September 30, 2020 and 2019 was $1,458,158 and $2,172,936, respectively. In addition, we incurred a non-cash interest of
$0 and $1,886,837 non-cash interest in connection with convertible notes for the nine months ended September 30, 2020 and 2019,
respectively.

 

Net Loss

The Company’s net loss for the nine months
ended September 30, 2020 and 2019 was $4,177,391 and $10,878,622, respectively, a decrease of $6,701,231. The net loss of $4,177,391
for the nine months ended September 30, 2020, represents 1,916 % of total revenues for the period. The net loss of $10,878,622
for the nine months ended September 30, 2019 represents 1,968% of the total revenues for the period.

 

Liquidity and Capital Resources
– The Company has generated a net loss from continuing operations for the nine months ended September 30, 2020 of $4,177,391
and used $1,262,358 cash for operations. As of September 30, 2020, the Company had total assets of $2,013,287, which included Short-term
investments of $130,060, Accounts receivable of $8,563, Inventory of $145,523, Prepaid insurance of $66,131, an Investment receivable
of $54,940, Notes receivable of $75,000, Other current assets of $22,508, which represents advance payments, Long-term investments
of $1,343,915, Right-to-use-assets of $11,642 and a Security deposit of $2,500.

During the nine months ended September
30, 2020 and 2019, the Company has met its capital requirements through a combination of loans and convertible debt instruments.
The Company will need to secure additional external funding in order to continue its operations. Our primary internal sources of
liquidity were provided by an increase in proceeds from the issuance of note payables of $876,302 for the nine months ended September
30, 2020, as compared to $2,257,000 for the nine months ended September 30, 2019. During the nine months ended September 30, 2019,
we entered into several separate financing arrangements with St. George Investments, LLC, a Utah limited liability company. Our
ability to rely upon external financing arrangements to fund operations is not certain, and this may limit our ability to secure
future funding from external sources without changes in terms requested by counterparties, changes in the valuation of collateral,
and associated risk, each of which is reasonably likely to result in our liquidity decreasing in a material way. We intend to utilize
cash on hand, loans and other forms of financing such as the sale of additional equity and debt securities and other credit facilities
to conduct our ongoing business, and to also conduct strategic business development and implementation of our business plans generally.

 

Operating Activities – For
the nine months ended September 30, 2020, the Company used cash in operating activities of $1,262,358. For the nine months ended
September 30, 2019, the Company used cash in operating activities of $1,884,004. This decrease is due primarily to loss for the
period which was offset by stock-based compensation and continued implementation of our business plans, operations, management,
personnel and professional services.

Investing Activities – During
the nine months ended September 30, 2020, cash provided from investing activities was $123,759 which consisted of payments of $1,271
related to equipment purchases and proceeds from investment in joint venture of $125,000. During the nine months ended September
30, 2019, we spent $687,752, primarily on equipment purchases of $2,703 and investments of $685,049.

Financing Activities – During
the nine months ended September 30, 2020 the Company had cash provided from financing of $1,076,342 consisting of funds from the
issuance of notes payable of $876,302, proceeds from the sale of common stock of $153,685, proceeds from the sale of trading securities
of $10,854 and proceeds from a government loan due to COVID-19 of $35,500. For the nine months ended September 30, 2019 the Company
received proceeds of $2,257,000 from the issuance of notes payable.

The Company’s business plans
have not generated significant revenues and as of the date of this filing are not sufficient to generate adequate amounts of cash
to meet its needs for cash. The Company’s primary source of operating funds in 2020 and 2019 have been from revenue generated from
proceeds from the sale of common stock and the issuance of convertible and other debt. The Company has experienced net losses from
operations since inception, but expects these conditions to improve during the remainder of 2020 and beyond as it develops its
affiliate marketing program and other direct sales and marketing programs. The Company has stockholders’ deficiencies at September
30, 2020 and requires additional financing to fund future operations. As of the date of this filing, and due to the early stages
of operations, the Company has insufficient sales data to evaluate the amounts and certainties of cash flows, as well as whether
there has been material variability in historical cash flows.

We currently do not have sufficient
cash and liquidity to meet our anticipated working capital for the next twelve months. Historically, we have financed our operations
primarily through private sales of our common stock and. If our sales goals for our hempSMART™ products do not materialize
as planned, and we are not able to achieve profitable operations at some point in the future, we may have insufficient working
capital to maintain our operations as we presently intend to conduct them or to fund our expansion, marketing, and product development
plans. There can be no assurance that we will be able to obtain such financing on acceptable terms, or at all.

Off Balance Sheet Arrangements

As of September 30, 2020, and December
31, 2019, we did 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.

Recent
Government Decriminalization and Legalization of Hemp

On December 20, 2018, President Donald J. Trump
signed into law the Agriculture Improvement Act of 2018, otherwise known as the “Farm Bill.” Prior to its passage,
hemp, a member of the cannabis family, and hemp derived CBD, were classified as Schedule 1 controlled substances, and so illegal
under the Controlled Substances Act, 21 U.S.C. § 811 (hereafter referred to as the “CSA”).

 

With the passage of the Farm Bill, hemp cultivation
is now broadly permitted. The Farm Bill explicitly allows the transfer of hemp-derived products across state lines for commercial
or other purposes. It also puts no restrictions on the sale, transport, or possession of hemp-derived products, so long as those
items are produced in a manner consistent with the law.

 

Under Section 10113 of the Farm Bill, hemp
cannot contain more than 0.3 percent THC, the chemical compound found in cannabis that produces the psychoactive “high”
associated with cannabis. Any cannabis plant that contains more than 0.3 percent THC would be considered non-hemp cannabis—or
marijuana—illegal under the CSA.

 

Additionally, there will be significant, shared
state-federal regulatory power over hemp cultivation and production. Under Section 10113 of the Farm Bill, state departments of
agriculture must consult with the state’s governor and chief law enforcement officer to devise a plan that must be submitted
to the Secretary of the United States Department of Agriculture (hereafter referred to as the “USDA”). A state’s
plan to license and regulate hemp can only commence once the Secretary of USDA approves that state’s plan. In states opting
not to devise a hemp regulatory program, USDA will construct a regulatory program under which hemp cultivators in those states
must apply for licenses and comply with a federally-run program. This system of shared regulatory programming is similar to options
states had in other policy areas such as health insurance marketplaces under Affordable Care Act, or workplace safety plans under
Occupational Health and Safety Act—both of which had federally-run systems for states opting not to set up their own systems.

 

The Farm Bill outlines actions that are considered
violations of federal hemp law (including such activities as cultivating without a license or producing cannabis with more than
0.3 percent THC). The Farm Bill details possible punishments for such violations, pathways for violators to become compliant, and
even which activities qualify as felonies under the law, such as repeated offenses.

 

One of the goals of the previous 2014 Farm
Bill was to generate and protect research into hemp. The 2018 Farm Bill continues this effort. Section 7605 re-extends the protections
for hemp research and the conditions under which such research can and should be conducted.

 

 

 

Further, section 7501 of the Farm Bill extends
hemp research by including hemp under the Critical Agricultural Materials Act. This provision recognizes the importance, diversity,
and opportunity of the plant and the products that can be derived from it, but also recognizes that there is a still a lot to learn
about hemp and its products from commercial and market perspectives.

 

We currently operate two divisions within the
regulated hemp industry: (i) the development, manufacturing, marketing and sale of our hempSMART™ consumer products that
include non-psychoactive industrial hemp-based CBD as an ingredient; and, (ii) professional financial consulting and property management
services.

 

The United States Food & Drug Administration
(“FDA”) is generally responsible for protecting the public health by ensuring the safety, efficacy, and security of
(1) prescription and over the counter drugs; (2) biologics including vaccines, blood & blood products, and cellular and gene
therapies; (3) foodstuffs including dietary supplements, bottled water, and baby formula; and, (4) medical devices including heart
pacemakers, surgical implants, prosthetics, and dental devices.

 

Regarding its regulation of drugs, the FDA
process requires a review that begins with the filing of an “Investigational New Drug” (IND) application, with follow
on clinical studies and clinical trials that the FDA uses to determine whether a drug is safe and effective, and therefore subject
to approval for human use by the FDA.

 

Aside from the FDA’s mandate to regulate
drugs, the FDA also regulates dietary supplement products and dietary ingredients under the Dietary Supplement Health and Education
Act of 1994. This law prohibits manufacturers and distributors of dietary supplements and dietary ingredients from marketing products
that are adulterated or misbranded. This means that these firms are responsible for evaluating the safety and labeling of their
products before marketing to ensure that they meet all the requirements of the law and FDA regulations, including, but not limited
to the following labeling requirements: (1) identifying the supplement; (2) nutrition labeling; (3) ingredient labeling; (4) claims;
and, (5) daily use information.

 

The FDA has not approved cannabis, hemp or
CBD derived from industrial hemp as a safe and effective drug for any indication. As of the date of this filing, we have not, and
do not intend to file an IND with the FDA, concerning any of our consumer products that contain CBD derived from industrial hemp.

 

The FDA has concluded that products containing
industrial hemp derived CBD are excluded from the dietary supplement definition under sections 201(ff)(3)(B)(i) and (ii) of the
U.S. Food, Drug & Cosmetic Act, respectively. The FDA’s position is that products containing industrial hemp derived
CBD are Schedule 1 drugs under the Controlled Substances Act, and so are illegal drugs that are under the purview of the U.S. Drug
Enforcement Agency and U.S. Justice Dept., who are charged with enforcing the Controlled Substances Act. However, at some indeterminate
future time, the FDA may choose to change its position concerning cannabis generally, and specifically products containing industrial
hemp derived CBD, and may choose to enact regulations that are applicable to such products as either drugs or supplements. In this
event, our industrial hemp-based products containing CBD may be subject to regulation (See Risk Factors, Item IA).

 

Critical Accounting Policies
– The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Note 1 to the Consolidated Financial Statements describes the significant accounting policies and
methods used in the preparation of the Consolidated Financial Statements. Estimates are used for, but not limited to, contingencies
and taxes. Actual results could differ materially from those estimates. The following critical accounting policies are impacted
significantly by judgments, assumptions, and estimates used in the preparation of the Consolidated Financial Statements.

Stock-Based Compensation – The
Company also issues restricted shares of its common stock for share-based compensation programs to employees and non-employees.
The Company measures the compensation cost with respect to restricted shares to employees based upon the estimated fair value at
the date of the grant, and is recognized as expense over the period which an employee is required to provide services in exchange
for the award. For non- employees, the Company measures the compensation cost with respect to restricted shares based upon the
estimated fair value at measurement date which is either a) the date at which a performance commitment is reached, or b) at the
date at which the necessary performance to earn the equity instruments is complete.

 

Recent Accounting Pronouncements
– See Note 3 of the condensed consolidated financial statements for discussion of recent accounting pronouncements.

 

 

 

DESCRIPTION OF BUSINESS

 

Marijuana Company of America, Inc. (The “Company”)
was incorporated under the laws of the State of Utah in October 1985 under the name Mormon Mint, Inc. The corporation was originally
a startup company organized to manufacture and market commemorative medallions related to the Church of Jesus Christ of Latter
Day Saints. On January 5, 1999, Bekam Investments, Ltd. acquired one hundred percent of the common shares of the Company and spun
the Company off changing its name Converge Global, Inc. From August 13, 1999 until November 23, 2002, the Company focused on the
development and implementation of Internet web content and e-commerce applications. In October 2009, in a 30 for 1 exchange, the
Company merged with Sparrowtech, Inc. for the purpose of exploration and development of commercially viable mining properties.
From 2009 to 2014, we operated primarily in the mining exploration business.

 

In 2015, the Company changed its business model
to a marketing and distribution company for medical marijuana. In conjunction with the change, the Company changed its name to
Marijuana Company of America, Inc. At the time of the transition in 2015, there were no remaining assets, liabilities or operating
activities of the mining business.

 

On September 21, 2015, the Company formed H
Smart, Inc., a Delaware corporation as a wholly owned subsidiary for the purpose of operating the hempSMART™ brand.

 

On February 1, 2016, the Company formed MCOA
CA, Inc., a California corporation as a wholly owned subsidiary to facilitate mergers, acquisitions and the offering of investments
or loans to the Company.

 

On May 3, 2017, the Company formed Hempsmart
Limited, a United Kingdom corporation as a wholly owned subsidiary for the purpose of future expansion into the European market.

 

The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries: H Smart, Inc., Hempsmart Limited and MCOA CA, Inc. All significant
intercompany balances and transactions have been eliminated in consolidation.

 

The condensed balance sheet as of December
31, 2019 has been derived from audited financial statements.

 

Operating results for the six months ended
June 30, 2020 are not necessarily indicative of results that may be expected for the year ending December 31, 2020. These condensed
financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2019.

 

Our Products and Services

 

Our primary business strategy is to develop,
manufacture, and market non-psychoactive industrial hemp, and hemp-derived consumer products containing cannabinoids (hereafter
referred to as “CBD”), with a THC content of less than 0.3%, while tactically investing in related business via joint
ventures and minority ownership positions.

 

Our current business operations included the
following:

 

hempSMART™

 

Our consumer products containing hemp and CBD
are sold through our wholly owned subsidiary H Smart, Inc. under the brand name hempSMART™. We market and sell our hempSMART™
products directly through our web site, and through our affiliate marketing program, where qualified sales affiliates use a secure
multi-level-marketing sales software program that facilitates order placement over the internet via a web site, and accounts for
affiliate orders and sales; calculates referral benefits apportionable to specific sales associates and calculates and accounts
for loyalty and rewards benefits for returning customers.

 

Our current hempSMART™ wellness products
offerings include the following:

 

 

hempSMART Brain™ a proprietary patented and formulated personal care consumer product encapsulated with enriched non-psychoactive industrial hemp derived CBD. This encapsulation is combined with other high quality, proprietary natural ingredients to compliment CBD to support brain wellness.

 

 

hempSMART Pain™ capsules formulated with 10mg of Full Spectrum, non-psychoactive CBD per serving, derived from industrial hemp, which along with a proprietary blend of other natural ingredients, delivers an all-natural formulation for the temporary relief of minor discomfort associated with physical activity.

 

 

hempSMART Pain Cream™ each container formulated with 300 mg of full spectrum non-psychoactive CBD derived from industrial hemp. The newly developed product contains a synergistic combination of natural botanicals and full spectrum hemp extract featuring CBD, CBG and a broad range of terpenes. The Company’s proprietary blend of Ayurvedic herbs along with Menthol, Cayenne Pepper Extract, Rosemary Oil, Aloe Gel, White Willow Bark, Arnica, Wintergreen Extract and Tea Tree Oil, provides an immediate cooling and soothing sensation. This topical wellness consumer product is formulated to help reduce minor discomfort and promote muscle relaxation on areas that it is applied.

 

 

 

 

hempSMART Drops™ full Spectrum Hemp CBD Oil Tincture Drops, available in 250mg and 500mg bottles, enriched with non-psychoactive industrial hemp derived CBD, and available in four different flavors: lemon, mint, orange and strawberry that is free of the THC isolate.

 

 

hempSMART Pet Drops™ for cats and dogs, formulated with 250mg of full spectrum non-psychoactive CBD derived from industrial hemp. This new specially formulated product contains naturally occurring CBD derived from hemp seed oil, full spectrum hemp extract, fractionated coconut oil, and a rich bacon flavor.

 

 

hempSMART Face™ a nourishing facial moisturizer combines full spectrum CBD from hemp, with a unique blend of Ayurvedic herbs and botanicals. Designed to refresh, replenish and restore the skin providing long lasting hydration and balance.

 

Consulting Services

 

We also provide financial accounting and property
management services for companies associated with the cannabis industry in all stages of development. Our services include the
following:

 

 

Financial Accounting and Bookkeeping. Our business accounting services provide financial accounting, bookkeeping and reporting protocols in order to allow licensed cannabis and/or hemp operators, in those states where cannabis has been legalized for medicinal and/or recreational use, to report collect, verify and state effective financial records and disclosure. We provide a comprehensive accounting strategy based on best accounting practices. We understand the challenges and complexities of financial accounting in the regulated commercial cannabis market and we have the expertise to help client businesses report their financial operations consistent with GAAP. As of the date of this filing, we have not offered any consulting, bookkeeping or financial accounting consulting services that have generated reportable revenues. As of the date of this report we have not provided such services.

 

 

Property Management Consulting. Our property management consulting services consist of providing planning, budgeting, acquisition, accounting and management services to licensed cannabis and/or hemp operators in those states where cannabis and/or hemp has been legalized for medicinal and/or recreational use, and who are searching for appropriate real property to conduct operations. As of the date of this filing, we have not offered any real property management consulting services that have generated reportable revenues. As of the date of this report, we have not provided such services.

 

DESCRIPTION OF PROPERTY

 

We maintain a lease for our principal
office located at 1340 West Valley Parkway #205, Escondido, CA 92029. On July 1, 2019, we entered into an extension of our office
lease until June 30, 2021. Pursuant to the terms of the extension, our monthly rent is $1,309 until June 30, 2020. From July
1, 2020 until June 30, 2021, our rent is $1,348 per month.

 

We believe that our existing office facilities
are adequate for our needs. Should we require additional space at that time, or prior thereto, we believe that such space can be
secured on commercially reasonable terms.

 

DIRECTORS AND EXECUTIVE OFFICERS

 

Our Board of Directors

  

The following table sets forth information
regarding our directors and each director nominee, as of July 2, 2020

 

Name
 
Principal Occupation
 
Age
 
Director SinceJesus M. Quintero
 
Director, Chairman of the Board, Principal Executive Officer
 
59 
 
2019Edward Manolos(1)
 
Director
 
47 
 
2019Marco Guerrero(2)
 
Director
 
48
 
2020Themistocles Psomiadis(3)
 
Director
 
73
 
2020

   

(1) On April 23, 2019, Edward
Manolos was appointed as an independent member to the registrant’s board of directors.

(2) On June 12, 2020, the
registrant appointed Marco Guerrero as an independent member of its board of directors.

(3) On February 28, 2020,
Themistocles Psomiadis were appointed as independent members to the registrant’s board of directors.

 

 

 

Jesus M. Quintero, Director, Chief
Executive Officer, and Chief Financial Officer from November 2318 to present. Mr. Quintero also serves as Chief Financial
officer of Massroots, Inc. and has served as Brazil Interactive Media’s Chief Financial Officer. He has previously served
as a financial consultant to several multi-million dollar businesses in Florida. Mr. Quintero has extensive experience in public
company reporting and SEC/SOX compliance, and held senior finance positions with Avnet, Inc., Latin Node, Inc., Globetel Communications
Corp. and Telefonica of Spain. His prior experience also includes tenure with PricewaterhouseCoopers and Deloitte & Touche.
Mr. Quintero earned a B.S. in Accounting from St. John’s University and is a certified public accountant. He is fluent in
English and Spanish, and conversant in Brazilian Portuguese.

 

Edward Manolos, Director,
Mr. Edward Manolos opened the very first Medical Marijuana Dispensary in Los Angeles County in 2004 called CMCA. He is also credited
with starting Los Angeles’ first Medical Marijuana farmer’s market referred to as “The California Heritage Farmer’s Market,”
which attracted local and international media attention and was the first of its kind. Mr. Manolos is also the founder of many
successful companies, such as Everest Biosynthesis Group and Natural Plant Extracts USA (NPE), a leading producer of pharmaceutical
grade CBD that holds the largest market share in the USA. He also Co-founded Ocean Communications Inc. in 1997 (NASDAQ: OCEN),
an Asia-focused internet communications service provider transmitting voice, fax, and data communications for consumers, carriers
and corporations. His diverse entrepreneurial focus led him on to launch the KIWIBERRI Frozen yogurt franchise in 2005. The company
is a California-based frozen yogurt franchised that has opened several locations throughout Los Angeles, Nevada, and Florida. On
April 23, 2019, Edward Manolos and Themistocles Psomiadis were appointed as independent members to the registrant’s board
of directors. 

 

Marco Guerrero, Director,
Mr. Guerrero holds a bachelor’s degree in business administration and a post graduate degree in Controllership from Instituto
Presbiteriano Mackenzie, in Brazil. He studied in the UK and worked for several years in the USA in partnership with reinsurance
agents. He is a professional executive with more than 20 years of experience in insurance and reinsurance. He is the co-founder
of Truster Brasil, a reputable reinsurance company specializing in Latin America and the Caribbean.

 

Themistocles Psomiadis, Director,
Mr. Psomiadis has 25 years’ experience as a financial consultant and banker. From 1970 through 2010, Mr. Themistocles Psomiadis
worked in the Financial Sector as Chief Financial Officer of County Trust Company, and from 2005 to 2010, he served with New York
Life Securities, where he was a partner. Since 2009, Mr. Psomiadis has been the Executive Director of Brazilian Investment Group,
LLC. He has been an active investor and consultant in Brazil and Latin America and has assisted international clients in structuring
transactions within the region. Mr. Psomiadus also served as Chief Financial Officer of a midsize public bank in New Jersey. On
April 2, 2020, the Registrant appointed director Themistocles Psomiadis to lead the Registrant’s internal audit sub-committee.
Mr. Psomiadis accepted the appointment, and will be responsible for reviewing and confirming the interim work of the subcommittee
through the December 31, 2019 year-end and to date. Mr. Psomiadis is fluent in Portuguese, Spanish and Greek. Mr. Psomiadis attended
New York University and Quinnipiac University.

 

Director Independence

 

We currently act with four directors on our
board of directors, consisting of Jesus M. Quintero, Edward Manolos, Marco Guerrero and Themistocles Psomiadis. Our common stock
is quoted on the OTCQB, which imposes director independence requirements for at least two directors. Under NASDAQ Rule 5605(a)(2),
a director is not independent if he or he is also an executive officer or employee of the corporation or was, at any time during
the past three years, employed by the corporation. Using this definition of independent director, we have two independent directors:
Edward Manolos and Themistocles Psomiadis.

 

The following table sets forth information
regarding our current directors and each director nominee, as of December 31, 2019.

 

Name
 
Principal Occupation
 
Age
 
Director SinceDonald Steinberg(1)
 
Director, Chairman of the Board, CEO
 
70
 
2015Charles Larsen(2)
 
Director
 
61
 
2015Robert Coale(3)
 
Director
 
60
 
2018Edward Manolos
 
Director
 
46
 
2019Jesus M. Quintero(4)
 
Director, Chairman of the Board, CEO, CFO
 
59
 
2019

  

 

 

 

 

Donald Steinberg, Director. Mr.
Steinberg’s business experience began in 1986 when he developed stock option volatility analysis and trading programs. His
work led him to a management position of floor traders on multiple options exchanges, including the Chicago Board of Options Exchange
and the Pacific Options Exchange. Ultimately, Mr. Steinberg used his trading and volatility programs to manage options trading
centers in Chicago, Philadelphia and California, where he managed and directed floor traders. This experience gave Mr. Steinberg
the fundamental knowledge of finance and operations and gave him insight into the management skills necessary to operate a company
with discrete centers and many employees. Beginning in the early 90’s, Mr. Steinberg co-founded Globalcom 2000 and entered
into the prepaid phone card business. Globalcom 2000 became one of the largest and fastest growing phone card companies in the
United States. Among the many firsts accomplished in that business was an account with 7-11, which Mr. Steinberg personally closed,
and which made Globalcom 2000 the first phone card in the country with a corporate logo.

In 1994, Mr. Steinberg developed
an interest in the telecom “Callback” business and co-founded “One World Communications.” Mr. Steinberg
subsequently created an international multi-level-marketing (“MLM”) global sales force selling telecom services. In
2006, Mr. Steinberg formed Club Vivanet as an International MLM, selling a variety of services. In 2009, he merged Club Vivanet
with a publicly traded company. In 2008, Mr. Steinberg recognized the emerging opportunities in the medical marijuana industry
and changed the name of Club Vivanet to Medical Marijuana Inc. (OTC: MJNA), which is believed to be America’s first publicly
traded company in the medical marijuana industry. Mr. Steinberg left Medical Marijuana, Inc. in 2011 and in 2013, Mr. Steinberg
launched Global Hemp Group, Inc. (OTC: GBHPF) with Mr. Charles Larsen, as they recognized the momentum building in the emerging
global hemp industry. Mr. Steinberg resigned as a director of the Company on December 6, 2019.

Charles Larsen, Director. Mr.
Larsen attended the Pepperdine University Graziadio School of Business in Los Angeles and served in the U.S. Coast Guard from
1981 through 1988. From 1989 through 1991, Mr. Larsen served as operations manager with the Commodity Trading Advisor (CTA) Peskin
& Associates in Chicago, Illinois, where his primary duties included organization and management of investment operations,
management of client billing, the development of a custom trade order management system, monitoring of trading operations and
floor broker communications. From 1991 through 1995, Mr. Larsen served as an implementation consultant for Integrated Decision
Systems in Los Angeles, CA. In this capacity, Mr. Larsen implemented portfolio management and trade order management systems,
determined operational deficiencies and solutions, and managed custom training programs and development projects. From 1995 through
2006, Mr. Larsen served as Senior Vice President of Operations and Business Development for Tower Asset Management in Beverly
Hills, CA. Here, Mr. Larsen managed operations, client billing, daily portfolio reconciliation, compliance and regulatory reporting.
Mr. Larsen also was a member of Tower’s Investment Committee and Executive Management Committee. From 2006 through 2007,
Mr. Larsen was Chief Operating Officer and Chief Financial Officer at Financial Management Advisors of Century City, CA, where
his duties focused on management of operations, finance and compliance. From 2007 to 2009, Mr. Larsen worked for Polaris International
Holdings in Huntington Beach, CA focused on the preparation of corporate financials and regulatory compliance. In 2009 Mr. Larsen
helped found Medical Marijuana, Inc. and focused on operations, compliance and acquisition sourcing and due diligence. From 2012
through 2013, Mr. Larsen was an independent business consultant serving corporations including Global Payout, Inc., of San Diego,
CA and BG Medical Technologies, Inc. of Los Angeles, CA. Beginning in 2013, Mr. Larsen co-founded and remains the President and
Chief Executive Officer of Global Hemp Group, Inc. (OTC: GBHPF). With Global Hemp Group, Mr. Larsen’s duties include corporate
compliance and administration, hemp and medical marijuana compliance, and business development in Canada and internationally,
all positions he continues in as of the date of this filing. Mr. Larsen resigned from our board of directors on February 7, 2019.
Mr. Larsen passed away on May 15, 2020. 

Robert Coale, Director. Mr.
Coale is the President of CFS Capital Group, Inc., a firm focused on business consulting, private equity investments, financial
and strategic joint venture facilitation, including telecommunications, banking, fund raising, non-profit, retirement, entertainment,
licensing, gateway interface/merchant processing, real estate development, and strategic planning. Mr. Coale holds a Master’s
in Business Administration, with an emphasis on International Marketing and Strategic Planning from Pepperdine University awarded
in 1992; a Bachelor of Science with an emphasis in Finance from the University of Southern California awarded in 1982, and is
currently a member of the Advisory Board to Everlert, Inc. (OTC: EVLI). Mr. Coale resigned from the board of directors on March
30, 2020. 

Jesus M. Quintero, Director. From
January, 2013 to September, 2014, Mr. Quintero served as the Chief Financial Officer of Brazil Interactive Media, Inc. Mr. Quintero
is also the current CFO for Mass Roots Inc. (OTC: MSRT ). From 2011 to the present, Mr. Quintero has served as a financial consultant
to several multi-million dollar businesses in South Florida. He has extensive experience in public company reporting and SEC/SOX
compliance, and held senior finance positions with Avnet, Inc. (NYSE: AVT), Latin Node, Inc., Globetel Communications Corp. (AMEX:
GTE) and Telefonica of Spain. His prior experience also includes tenure with Price Waterhouse and Deloitte & Touche. Mr. Quintero
earned a B.S. in Accounting from St. John’s University and is a certified public accountant.

 

 

 

Edward Manolos, Director. Mr.
Manolos is an 18.8% owner of Natural Plant Extracts, Inc., a California corporation and investment of the registrant, making it
a related party investment. The registrant has not and is not expected to be named to any board committees. The registrant and
Mr. Manolos entered into an independent director agreement whereby the registrant agreed to compensate Mr. Manolos with ten thousand
dollars paid quarterly, and a one-time issuance upon signing of five million shares of registrant common stock.

Mr. Edward Manolos opened the very
first Medical Marijuana Dispensary in Los Angeles County in 2004 called CMCA. He is also credited with starting Los Angeles’ first
Medical Marijuana farmer’s market referred to as “The California Heritage Farmer’s Market,” which attracted local and
international media attention and was the first of its kind.

Mr. Manolos is also the founder
of many successful companies, such as Everest Biosynthesis Group and Natural Plant Extracts USA (NPE), a leading producer of pharmaceutical
grade CBD that holds the largest market share in the USA. He also Co-founded Ocean Communications Inc. in 1997 (NASDAQ: OCEN),
an Asia-focused internet communications service provider transmitting voice, fax, and data communications for consumers, carriers
and corporations. His diverse entrepreneurial focus led him on to launch the KIWIBERRI Frozen yogurt franchise in 2005. The company
is a California based frozen yogurt franchised that has opened several locations throughout Los Angeles, Nevada, and Florida.

Mr. Manolos has provided consulting
services to several companies and has helped them obtain marijuana retail and production licenses in California and Washington,
including Cannabis Strategic Ventures (OTC: NUGS). He graduated from the University of California Riverside with a double major
in Computer Science and Business Management. Mr. Manolos also serves as a director of Cannabis Global Inc. (OTC: CBGL).

(1) Charles Larsen resigned
as a director on February 27, 2019.

(2) Donald Steinberg resigned
as a director and CEO on December 6, 2019.

(3) Robert Coale resigned
on March 30, 2020.

(4) The Company appointed
Jesus M. Quintero CEO on December 6, 2019 and CFO on September 1, 2018.

 

Compensation of Directors

 

The following table sets forth information
concerning the compensation earned during 2019 by each individual who served as a non-employee director at any time during the
fiscal year:

 

2019 DIRECTOR COMPENSATION

 

 

 

Name

 
Fees Earned or Paid in Cash ($) 

 

Stock Awards ($)

 

 

Total ($)

Donald Steinberg(1) 
 0  
 1,367,204  
 1,367,400 Charles Larsen(2) 
 0  
 40,000  
 40,000 Robert Coale 
 58,650  
 266,333  
 324,983 Edward Manolos 
 20,000  
 356,833  
 376,833 Jesus M. Quintero 
 49,000  
 262,333  
 311,333 

 

(1) Mr. Steinberg resigned
as director on December 6, 2019.

(2) Mr. Larsen resigned
as director on February 27, 2019.

 

Director Marco Guerrero, pursuant to a
June 12, 2020 Independent Director Agreement, receives a quarterly payment of five thousand dollars ($5,000.00) which shall be
paid either in cash, or, in the Company’s discretion, in shares of common stock of the Company, with the number of shares
to be issued determined as of the closing price of the Company’s common stock as reported on the OTC Markets on the last
trading day of each quarter. 

 

Director Themistocles Psomiadis receives
$5,000 per quarter in cash, or at the discretion of the Company, in restricted common stock for serving as a director.

 

On March 30, 2020, Robert Coale resigned
as a member of the board of directors.

 

 

 

On February 28, 2020, Edward Manolos and
Themistocles Psomiadis were appointed as independent members to the registrant’s board of directors. On this date, Mr. Manolos
and Mr. Psomiadis entered into a written agreement providing compensation of $5,000 paid quarterly. The Company has discretion
to substitute an issuance of its common stock in lieu of cash payments. The amount of common stock issuable is determined by the
closing price of the registrant’s common stock on the last trading day of each quarter. The term of the agreements is for
a period of one year, terminating on February 28, 2021.

 

The following table sets forth information
known to us regarding the beneficial ownership of our common stock as of September 4, 2020 by (1) each stockholder who is
known by us to beneficially own more than 5% of our common stock, (2) each of our directors, (3) each of our executive
officers named in the Summary Compensation Table above, and (4) all of our directors and executive officers as a group.

 

Beneficial Owner(1) 

Number of  Shares

Beneficially Owned(2)

 
Percent(3)Named Executive Officers and Directors: 
    
   Jesus M. Quintero(5) 
 11,713,629  
 0.78%Edward Manolos 
 2,766,667  
 *  Marco Antonio Guerrero 
 107,507  
 *  Themistocles Psomiadis 
 3,504,061  
 *  All executive officers and directors as a group (5 persons) 
 16,590,864  
 1.11%

  

*Denotes less than 1%

(1)
Except
as otherwise indicated, the persons named in this table have sole voting and investment power with respect to all shares of
common stock shown as beneficially owned by them, subject to community property laws where applicable and to the information
contained in the footnotes to this table. Readers should refer to the table below for disclosures of the ownership of Preferred
Class A shares which carry separate voting rights and preferences.
(2)
Under
SEC rules, a person is deemed to be the beneficial owner of shares that can be acquired by such person within 60 days
upon the exercise of options or the settlement of other equity awards.

 (3)

 

Calculated
on the basis of 1,501,192,862 shares of common stock outstanding as of September 1, 2020, plus any additional shares
of common stock that a stockholder has the right to acquire within 60 days after September 1, 2020. 
(4)
Jesus
M. Quintero was appointed CFO on September 1, 2018 and President and Principal Executive Officer on December 6, 2019.

  

Our Executive Officers

 

The following table sets forth information
regarding our executive officers as of July 1, 2020.

 

Name 
Principal Occupation 
Age 
Officer SinceJesus M. Quintero 
CEO, CFO, Treasurer 
 59  
 2018 

  

Jesus M. Quintero, Director, Chief
Financial Officer from November 2318 to present. Mr. Quintero also serves as Chief Financial officer of Massroots, Inc. and has
served as Brazil Interactive Media’s Chief Financial Officer. He has previously served as a financial consultant to several
multi-million dollar businesses in Florida. Mr. Quintero has extensive experience in public company reporting and SEC/SOX compliance,
and held senior finance positions with Avnet, Inc., Latin Node, Inc., Globetel Communications Corp. and Telefonica of Spain. His
prior experience also includes tenure with PricewaterhouseCoopers and Deloitte & Touche. Mr. Quintero earned a B.S. in Accounting
from St. John’s University and is a certified public accountant. He is fluent in English and Spanish, and conversant in Brazilian
Portuguese.

 

The following table sets forth information
regarding our executive officers as of December 31, 2019.

 

Name 
Principal Occupation 
Age 
Officer SinceDonald Steinberg(1) 
CEO, Treasurer 
 70  
 2015 Jesus M. Quintero(2) 
CEO, Treasurer 
 59  
 2019 Jesus M. Quintero 
CFO 
 59  
 2018 

 

(1) Mr. Steinberg resigned
as CEO and Treasurer on December 6, 2019.

(2) Mr. Quintero was appointed
CEO and Treasurer on December 6, 2019.

  

 

 

 

EXECUTIVE COMPENSATION

   

Summary Compensation Table

 

The following table sets forth information
concerning the compensation of our principal executive officer, our principal financial officer and each of our other executive
officers during 2019.

 

Name and Principal Position 
Year 
Salary ($) 
Bonus ($) 
Stock Awards ($) 
Non-Equity Incentive Plan Compensation ($) 
All Other Compensation ($) 
Total ($)Donald Steinberg, 
 2019  
 333,871  
    
 1,033,333  
 —    
 —    
 1,367,204 Principal 
 2018  
 360,000  
 —    
    
 —    
 —    
 360,000 Executive Officer(1) 
 2017  
 180,000  
 —    
 5,676,000  
 —    
 —    
 5,856,000   
    
    
    
    
    
    
   Jesus M. Quintero 
 2019  
 46,500  
$2,500  
 262,333  
 —    
 —    
 311,333 Principal Financial Officer, Principal Executive Officer(2) 
 2018  
 7,500  
$1,500  
 8,700  
 —    
 —    
 17,700   
 2017  
 —    
 —    
 —    
 —    
 —    
 —   

 

(1) Donald Steinberg resigned
as CEO on December 6, 2019.

(2) The Company appointed
Jesus M. Quintero CFO on August 31, 2018 and CEO on December 6, 2019.

 

Our Chief Principal Officer, Jesus M.
Quintero, entered in an Executive Employment Agreement with the Company in February 3, 2020. Under the terms of the agreement,
Mr. Quintero shall be compensated with a gross monthly salary of fifteen thousand dollars ($15,000.00). The monthly salary shall
be paid as follows: twelve thousand dollars ($12,000) in cash, and an equivalent of three thousand dollars’ ($3,000) worth
of Company restricted common stock, determined as of the closing price of the Company’s common stock on the final trading day of
each month as reported on the OTC Markets Listing Service. Such cash monthly salary shall be payable consistent with the payroll
practices as established by the Company. A copy this agreement is included as an exhibit.

 

Retirement Benefits

 

We do not currently provide our named
executive officers with supplemental or other retirement benefits. 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

 

The following table sets forth information
known to us regarding the beneficial ownership of our common stock as of November 18, 2020 by (1) each stockholder who is
known by us to beneficially own more than 5% of our common stock, (2) each of our directors, (3) each of our executive
officers, and (4) all of our directors and executive officers as a group. This table is based on 2,053,481,896 common shares
issued and outstanding as of November 23, 2020.

 

Beneficial Owner and address 
Number of Shares Beneficially Owned 
Percent Owned (1)Named Executive Officers and Directors: 
    
   Jesus M. Quintero, Principal Officer, Director 
 11,713,629  
 0.78%Edward Manolos, Director 
 2,766,667  
 *%Marco Guerrero, Director 
 107,507  
 * Themistocles Psomiadis 
 3,504,061  
 * All executive officers and directors as a group (3 persons) 
 16,590,864  
 4.5%

 

(1) This table is based on 2,053,481,896
common shares issued and outstanding as of November 23, 2020.

  

 

 

The following table sets forth information
known to us regarding the beneficial ownership of our Class A Preferred Stock as of November 23, 2020.

 

Title of Class 
Name and
address of beneficial owner (1)
 
Amount and nature of beneficial ownership 
Percent of ClassClass A Preferred Stock 
Jesus M. Quintero
16860 Southwest 1st Street
Pembroke Pines, FL 33027 
 6,666,666  
 66.7%Class A Preferred Stock 
Edward Manolos
1100 Wilshire Boulevard
#2808
Los Angeles CA 90017 
 3,333,333  
 33.3%

  

 

 (1)   

Except as otherwise indicated, the persons
named in this table have sole voting and investment power with respect to all shares of Class A preferred common
stock shown as beneficially owned by them, subject to community property laws where applicable and to the information contained
in the footnotes to this table. The holders of the Class A Preferred Stock shall vote for the election of directors,
and shall have full voting rights, except that each Class A Preferred share shall entitle the holder to exercise
one hundred (100) votes for each one (1) Class A Preferred Share held. Mr. Jesus M. Quintero, and Mr. Edward Manolos, each own
3,333,333 Class A Preferred Shares. These shareholders control in excess of 50% of the votes eligible to be cast
on any decision regarding corporate actions under Utah law that are assigned to a vote of the stockholders, including but not limited
to: (i) the sale of all or substantially all of its property; (ii) the election of directors; (iii) dissolving the corporation;
(iv) amending the articles of incorporation; and, (v) approving a merger or consolidation. The beneficial owners of the Class A
Preferred Stock vote with the common stockholders and the designated preferences cannot be modified but for a majority vote of
the common shares eligible to vote as a class. 

 

 (2)
Under SEC rules, a person is deemed to be the beneficial owner of shares that can be acquired by such person within 60 days upon the exercise of options or the settlement of other equity awards. 

 

The following table sets forth information
known to us regarding the beneficial ownership of our Class B Preferred Stock as of November 23, 2020.

 

Title of Class 
Name and address of beneficial owner (1) 
Amount and nature of beneficial ownership (2) 

 

 

Percent of Class

Class B Preferred Stock 
Jesus M. Quintero
16860 Southwest 1st Street
Pembroke Pines, FL 33027 
 2,000,000  
 100%

  

 (1)   

Except as otherwise indicated, the person
named in this table has sole voting and investment power with respect to all shares of Class B Preferred Stock shown as beneficially
owned, subject to community property laws where applicable and to the information contained in the footnotes to this table. The
holders of the Class B Preferred Stock have One Thousand (1,000) times that number of votes on all matters submitted to the shareholders
that is equal to the number of shares of Common Stock (rounded to the nearest whole number), at the record date for the determination
of the shareholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken
or any written consent of such shareholders is affected. 

 

 (2)
Under SEC rules, a person is deemed to be the beneficial owner of shares that can be acquired by such person within 60 days upon the exercise of options or the settlement of other equity awards. 

 

 

 

Equity Compensation Plan Information

    

 

  Plan Category

 
Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) 
 Weighted-average exercise price of outstanding options, warrants and rights (2) 
Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) (3)Equity compensation plans approved by security holders 
 —    
 —    
 —     
    
    
   Equity compensation plans not approved by security holders 
 —    
 —    
 —        Total 
 —    
 —    
 —   

  

 
(1)   
Historically, the Company has granted restricted shares that are subject to forfeiture. Pursuant to SEC guidance, these RSUs are not reportable in the table above. 
 
  
(2)
Historically, the Company has granted restricted shares that are subject to forfeiture. Pursuant to SEC guidance, these RSUs are not reportable in the table above. Restricted shares subject to forfeiture have a weighted average exercise price of $0.00. 
 
  
(3)

The Company equity compensation grants
to date have been approved on a grant-by-grant basis, as opposed to under an umbrella equity compensation plan establishing a total
number of grants available.

 

 
(4)
On February 27, 2019, Donald Steinberg and Charles Larsen cancelled options totaling in the aggregate 1,000,000,000 options.

 

Long-Term Incentive Plans

 

There are no arrangements or plans in
which we provide pension, retirement or similar benefits for directors or executive officers, except that our directors and executive
officers receive stock, warrants and stock options at the discretion of our Board.

 

We have no plans or arrangements in respect
of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination
of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of
control, where the value of such compensation exceeds $60,000 per executive officer.

     

PLAN OF DISTRIBUTION

 

Our Shares of common stock
subject to the Offering are referred to herein collectively as our “Shares.” The Shares will be sold in a “Offering”
through our Chief Executive Officer, Jesus M. Quintero, who may be considered an underwriter as that term is defined in Section
2(a) (11). Mr. Quintero will not receive any commission in connection with the sale of Shares, although we may reimburse him for
direct expenses incurred by him in connection with the offer and sale of the Shares. We estimate our total offering registration
costs to be approximately $141.15 and our legal, auditor, miscellaneous and related fees will be $19,865.91 equaling at total expense
to the Company of $20,000.00 relating to the registration. There is no minimum number of Shares that must be sold by us for the
offering to proceed. The Company will retain any proceeds from the Offering.

 

Mr. Quintero will be relying
on, and complying with, Rule 3a4-1(a)(4)(ii) of the Exchange Act as a “safe harbor” from registration as a broker-dealer
in connection with the offer and sale of the Shares. In order to rely on such “safe harbor” provisions provided by
Rule 3a4-1(a) (4) (ii), he must be in compliance with all of the following:

 

 
·
 
he must not be subject to a statutory disqualification; 
·
 
he must not be compensated in connection with such selling participation by payment of commissions or other payments based either directly or indirectly on such transactions; 
·
 
he must not be an associated person of a broker-dealer; 
·
 
he must primarily perform, or is intended primarily to perform at the end of the Offering, substantial duties for or on behalf of the Company otherwise than in connection with transactions in securities; and 
·
 
he must perform substantial duties for the Company after the close of the Offering not connected with transactions in securities, and not have been an associated person of a broker or dealer for the preceding 12 months, and not participate in selling an offering of securities for any issuer more than once every 12 months.

 

Mr. Quintero will comply
with the guidelines enumerated in Rule 3a4-1(a) (4) (ii). Neither Mr. Quintero nor any of his affiliates will be purchasing Shares
in the Offering.

 

 

 

 

You may purchase Shares
by completing and manually executing a simple subscription agreement and delivering it with your payment in full for all Shares
you wish to purchase to our offices. A copy of the form of that subscription agreement is attached as an exhibit to our registration
statement of which this Prospectus is a part. Your subscription shall not become effective until accepted by us and approved by
our counsel. Our subscription process is as follows:

 

 
·
This Prospectus, with subscription agreement, is delivered by the Company to each offeree; 
·
the subscription is completed by the offeree, and submitted with check back to the Company where the subscription and a copy of the check is faxed to counsel for review; 
·
each subscription is reviewed by counsel for the Company to confirm the subscribing party completed the form, and to confirm the state of acceptance; 
·
once approved by counsel, the subscription is accepted by Mr. Quintero, and the funds shall be deposited within four (4) days of acceptance; 
·
subscriptions not accepted are returned with all funds sent with the subscription within three business days of the Company’s receipt of the subscription, without interest or deduction of any kind.

   

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

Pursuant to Item 404(d) of Reg. SK, we
have entered into the following related party transactions for the fiscal years ended December 31, 2018 and 2017, respectively:

 

On September 5, 2017, we announced our
agreement to participate in a joint venture with Global Hemp Group, Inc., a Canadian corporation, in a multi-phase industrial hemp
project on the Acadian peninsula of New Brunswick, Canada. The joint venture agreement required us to pay for one-half of the phase
1 costs of the project, which amounted to $13,500. We expect that we will make subsequent contributions to the project, as it moves
into succeeding phases. Our former director Charles Larsen was a Director and control person of Global Hemp Group. Additionally,
our former Directors and Officers Donald Steinberg and Robert L. Hymers, III, are stockholders owning less than 10% of equity in
Global Hemp Group, Inc., respectively. Mr. Hymers resigned his positions with our company on June 18, 2018.

 

On December 31, 2017, our then Director
and Officer Robert L. Hymers, III, loaned the Company $106,076.26, together with accrued interest of 5% per annum, as provided
in a fixed promissory note due and payable by December 31, 2018. Mr. Hymers resigned his positions with our company on June 18,
2018.

 

On December 31, 2017, our former Director
and Officer Donald Steinberg, loaned the Company $272,623.16, together with accrued interest of 5% per annum, as provided in a
fixed promissory note due and payable by December 31, 2018.

 

On December 31, 2017, our former Director
Charles Larsen, loaned the Company $163,873.46, together with accrued interest of 5% per annum, as provided in a fixed promissory
note due and payable by December 31, 2018.

 

On May 8, 2018, the Company, Global Hemp
Group, Inc., a Canadian corporation, and TTO Enterprises, Ltd., an Oregon corporation entered into a Joint Venture Agreement. The
purpose of the joint venture is to develop a project to commercialize the cultivation of industrial hemp on a 109 acre parcel of
real property owned by the Company and Global Hemp Group in Scio, Oregon, and operating under the Oregon corporation Covered Bridges,
Ltd. The joint venture is in the development stage. On May 30, 2018, the joint venture purchased TTO’s 15% interest in the
joint venture for $30,000. The Company and Global Hemp Group, Inc. now have an equal 50-50 interest in the joint venture. Our former
director Charles Larsen was a Director and control person of Global Hemp Group. Additionally, our then Directors and Officers Donald
Steinberg and Robert L. Hymers, III, are stockholders owning less than 10% of equity in Global Hemp Group, Inc., respectively.
Mr. Hymers resigned his positions with our company on June 18, 2018.

 

As of September 30, 2018, and December
31, 2017, the Company’s officers and directors have provided advances and incurred expenses on behalf of the Company. The
issued notes are unsecured, due on demand and bear 5% interest.

 

As of September 30, 2018 and, December
31, 2017 there were an aggregate of $173,175 and $542,573 notes payable due to officers. The notes are at 5% per annum and non-interest
bearing, respectively, and are due on demand.

 

During the nine months ended September
30, 2018, the Company issued an aggregate of 75,928,246 shares of its common stock in settlement of outstanding related party notes
payable of $564,283 and accrued compensation of $195,000. 

 

On April 15, 2019, we entered into a joint
venture with Natural Plant Extract of California, Inc., and subsidiaries, to operate a licensed psychoactive cannabis retail delivery
operation in Lynwood, California. California legalized THC psychoactive cannabis for medicinal and recreational use on January
1, 2018. As disclosed in greater detail below, on February 3, 2020, we terminated the Viva Buds joint venture (See Item 7, Management’s
Discussion & Analysis; Legal Settlement Expense).

 

 

 

 

The Company’s current officers and
stockholders advanced funds to the Company for travel related and working capital purposes. As of December 31, 2019, and 2018,
there were no related party advances outstanding. As of December 31, 2019, and 2018, accrued compensation due officers and executives
included as accrued compensation was $4,875 and $454,316, respectively. For the years ended December 31, 2019 and 2018, the Company
had sales to related parties of $21,157 and $11,683, respectively.

 

On September 30, 2020, the Company entered
into a Share Exchange Agreement with Cannabis Global, Inc., a Nevada corporation. Complementary to the Share Exchange Agreement,
the Company and Cannabis Global, Inc. entered into a Lock-Up Agreement dated September 30, 2020.

 

One of directors of the Company is also
a director of Cannabis Global, Inc. and thus a related party. Our director, Mr. Edward Manolos, serves as a member of the board
of directors of Cannabis Global, Inc.. In its action approving and authorizing the Share Exchange Agreement, the board of directors
of the Company considered full disclosure of Mr. Manolos’ relationship with Cannabis Global, Inc. in light of his related
party status and Utah state law governing transactions where a conflicting interest of a director may be reasonably expected to
exert an influence on the director’s judgment and requiring specific disclosures pursuant to Section 16-10a-852 of the Utah
Revised Business Corporation Act. In consideration of such disclosure, a unanimity of the Company’s qualified, uninterested
directors approved the transaction.

 

On October 1, 2020, the Company entered
into two Joint Venture Agreements with Marco Guerrero, a director of the Company to form joint venture operations in Brazil and
in Uruguay to produce, manufacture, market and sell the Company’s hempSMART™ products in Latin America, and will also
work to develop and sell hempSMART™ products globally. The Joint Venture Agreements contain equal terms for the formation
of joint venture entities in Uruguay and Brazil. Mr. Guerrero, a director of the Company, is a party to both Joint Venture Agreements
and will, through his controlling interests in the joint venture partners in Brazil and Uruguay, own 30% of HempSmart Brazil and
HempSmart Uruguay. In its action approving and authorizing the Share Exchange Agreements, the board of directors of the Company
considered full disclosure of Mr. Guerrero’s conflicting interest and his related party status and Utah state law governing
transactions where a conflicting interest exists that could reasonably be expected to exert an influence on the director’s
judgment and requiring specific disclosures pursuant to Section 16-10a-852 of the Utah Revised Business Corporation Act. In consideration
of such disclosure, a unanimity of the Company’s qualified, uninterested directors approved the transaction.

 

On November 9, 2020, the Company authorized
the issuance of 2,000,000 shares of its Class B Preferred Common Stock to Jesus Quintero. The Class B Preferred Stock carries a
voting preference of one thousand (1,000) times that number of votes on all matters submitted to the shareholders that is equal
to the number of shares of Common Stock (rounded to the nearest whole number), at the record date for the determination of the
shareholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken or any
written consent of such shareholders is affected. The issuance constitutes a change of control of the Company, as the voting preference
of the issued Class B Preferred Stock provides Mr. Quintero with the right to control a majority of the votes of shareholders eligible
to cast votes on any matter brought before the stockholders. 

 

DESCRIPTION OF SECURITIES

 

Capital Stock

 

We are authorized to issue 15,000,000,000
shares of common stock, $0.001 par value; 10,000,000 shares of Class A Preferred Stock, par value $0.001; and, 5,000,000 shares
of Class B Preferred Stock, par value $0.001.

 

Common Sock

 

As of the November 23, 2020, the date
of this filing, and immediately before this Offering, there are 2,053,481,896 common shares outstanding.

 

 

 

Preferred Stock

 

Class A Preferred
Stock

 

As of November 23, 2020, we have designated
10,000,000 as Class A Preferred Stock, par value $0.001. There are 9,999,999 shares of Class A Preferred Stock issued
and outstanding.

 

The Class A Preferred Stock
carries the following rights and preferences.

 

Dividends

 

Class A Preferred Stock
is not eligible for receipt of dividends.

 

Voting Rights

 

The holders of the Class A
Preferred Stock shall vote for the election of directors, and shall have full voting rights, except that each Class A
Preferred share shall entitle the holder to exercise one hundred (100) votes for each one (1) Class A Preferred Share held. Of
our two current Directors, Mr. Jesus M. Quintero owns 6,666,666 and Edward Manolos owns 3,333,333 of Class A Preferred
Shares, respectively, and are eligible to vote on any decision regarding corporate actions under Utah law that are assigned to
a vote of the stockholders, including but not limited to: (i) the sale of all or substantially all of its property; (ii) the election
of directors; (iii) dissolving the corporation; (iv) amending the articles of incorporation; and, (v) approving a merger or consolidation.
The beneficial owners of the Class “ Preferred Stock vote with the common stockholders and the designated preferences
cannot be modified but for a majority vote of the common shares eligible to vote as a class. Thus, Mr. Quintero and Mr. Manolos
control 100% of the votes eligible to be cast on any decision regarding corporate actions under Utah law.

 

Redemptive Rights

 

The Class A Preferred Stock
shall not be redeemable.

 

Conversion Rights

 

Class A Preferred Stock
is not convertible into any other class of preferred stock or common stock.

 

Other Provisions

 

The shares of Class A Preferred
Stock shall be duly and validly issued, fully paid and non-assessable. The holders of the Class A Preferred Stock
shall not have pre-emptive rights with respect to any shares of capital stock of the Company or any other securities of the Company
convertible into Common Stock or rights or options to purchase any such shares.

 

Class B Preferred
Stock

 

As of November 23, 2020, we have designated
5,000,000 shares of the Company’s authorized preferred stock as Class B Preferred Stock, par value $0.001.
There are 2,000,000 shares of Class B Preferred Stock issued and outstanding.

 

The Class B Preferred Stock
carries the following rights and preferences.

 

Dividends

 

Class B Preferred Stock
is not eligible for receipt of dividends.

 

Voting Rights

 

Holders of the Series B
Preferred Stock shall have One Thousand (1,000) times that number of votes on all matters submitted to the shareholders that is
equal to the number of shares of Common Stock (rounded to the nearest whole number), at the record date for the determination of
the shareholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken or
any written consent of such shareholders is affected. 

 

Redemptive Rights

 

The Class B Preferred Stock
shall not be redeemable.

 

 

 

Conversion Rights

 

Class B Preferred Stock
is not convertible into any other class of preferred stock or common stock.

  

Other Provisions

 

The shares of Class B Preferred
Stock shall be duly and validly issued, fully paid and non-assessable. The holders of the Class B Preferred Stock
shall not have pre-emptive rights with respect to any shares of capital stock of the Company or any other securities of the Company
convertible into Common Stock or rights or options to purchase any such shares.

 

Common Stock

 

As of November 23, 2020, there are 2,053,481,896
shares of common stock issued and outstanding.

 

Holders of shares of common stock are
entitled to share ratably in dividends, if any, as may be declared, from time to time, by the Board of Directors in its discretion,
from funds legally available, therefore. The Company does not currently anticipate paying any dividends on its Common Stock. In
the event of a liquidation, dissolution or winding up of the Company, the holders of shares of common stock are entitled to share
pro rata all assets remaining after payment in full of all liabilities. Holders of common stock have no preemptive rights to purchase
the Company’s common stock. There are no conversion rights or redemption or sinking fund provisions with respect to the common
stock. All of the outstanding shares of common stock are fully paid and non-assessable.

 

Shares of Common Stock are registered
at the office of the Company and are transferable at such office by the registered holder (or duly authorized attorney) upon surrender
of the Common Stock certificate, properly endorsed. No transfer shall be registered unless the Company is satisfied that such transfer
will not result in a violation of any applicable federal or state securities laws. The Company’s transfer agent is Pacific Stock
Transfer Company, 6725 Via Austi Pkwy, Suite 300, Las Vegas NV 89119.

 

Dividends

 

We have not paid any cash dividends to
our shareholders. The declaration of any future cash dividends is at the discretion of our Board and depends upon our earnings,
if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is
our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our
business operations. Dividend rights of both our common and preferred shareholders will entitle them to the same dividend that
other shareholders of the same class receive.

 

Warrants

 

The following table summarizes the stock
warrant activity for the two years ended December 31, 2019: 

 

  
Shares 

Weighted

Average

Exercise Price

 

Weighted Average

Remaining

Contractual Term

 

Aggregate

Intrinsic Value

Outstanding at December 31, 2017 
 186,550  
$2.40  
    
$1,873,492 Granted 
 1,827,564  
 2.34  
    
   Forfeitures or expirations 
 (166,667) 
$1.50  
    
   Outstanding at December 31, 2018 
 1,847,447  
    
    
   Granted 
 2,370,298  
 1.98  
    
   Exercised 
 (192,521) 
 1.78  
    
   Forfeitures or expirations 
 (14,113) 
 1.80  
    
   Outstanding at December 31, 2019 
 4,011,111  
$2.15  
 3.60  
$—   Exercisable at December 31, 2019 
 4,011,111  
$2.15  
 3.60  
$—   

 

The aggregate intrinsic value in the preceding
tables represents the total pretax intrinsic value, based on warrants with an exercise price less than the Company’s stock
price of $0.07 and $1.22 as of December 31, 2019 and 2018, respectively, which would have been received by the warrant holders
had those option holders exercised their warrants as of that date.

 

 

 

 

The following table presents information
related to warrants at December 31, 2019:

 

Warrants Outstanding
 
 
Warrants Exercisable
 

Exercise

Price

 
 

Number of

Warrants

 
 

Weighted Average

Remaining Life

In Years

 
 

Exercisable

Number of

Warrants

 
$0.01 – $1.00
 
 
 
484,187
 
 
2.70
 
 
 
484,187
 
$1.01 – $2.00
 
 
 
27,778
 
 
2.50
 
 
 
27,778
 
$2.01 – $3.00
 
 
 
3,499,146
 
 
3.74
 
 
 
3,499,146
 

 

In connection with the issuance of convertible
notes payable, the Company issued an aggregate of 2,370,298 warrants to purchase the Company’s common stock from $0.26 to
$2.40, vesting immediately and expiring 5 years from the date of issuance.

 

Options

 

The following table presents information
related to stock options at December 31, 2019(1):

 

Options Outstanding(1)
 
 
Options Exercisable
 

     
Exercise

     Price

 
 

Number of

Options

 
 

Weighted Average

Remaining Life

In Years

 
 

Exercisable

Number of

Options

 
$-
 
 
 

 
 

 
 
 

  
 
 
 
 
 
 
 
 
 
 
 
 
 

  

The stock-based compensation expense related
to option grants was $0 and $450,000 during the years ended December 31, 2019 and 2018, respectively.

 

(1) On February 27, 2019, Donald Steinberg
and Charles Larsen cancelled previously issued options to purchase an aggregate of 16,666,667 shares at an average exercise price
of $0.30 per share, representing 100% of all previously issued options.

 

LEGAL MATTERS

 

The validity of the shares of common stock
will be passed upon for us by Independent Law PLLC.

 

EXPERTS

 

Except as disclosed herein, no expert or counsel
named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity
of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock
was employed on a contingency basis or had, or is to receive, in connection with the offering, a substantial interest, directly
or indirectly, in the registrant or its subsidiary. Nor was any such person connected with the Company or any of its parents, or
subsidiaries, as a promoter, managing or principal underwriter, voting trustee, director, officer or employee.

 

The financial statements of our company
included in this prospectus for the fiscal year ended December 31, 2019 and 2018 were audited by L&L CPAs, PA.

  

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

The Company engaged L&L CPAs to audit
its financial statements in 2016. Since that time, there were no disagreements (as defined in Item 304(a)(1)(4) of Regulation S-K)
with L&L CPAs on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of L&L CPAs, would have caused L&L CPAs to make reference on the
subject matter of the disagreements in its reports.

 

 

 

 

WHERE YOU CAN FIND MORE INFORMATION

 

We have filed a registration statement on Form
S-1 under the Securities Act with the SEC for the securities offered hereby. This prospectus, which constitutes a part of the registration
statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules which
are part of the registration statement. For additional information about our securities, and us we refer you to the registration
statement and the accompanying exhibits and schedules. Statements contained in this prospectus regarding the contents of any contract
or any other documents to which we refer are not necessarily complete. In each instance, reference is made to the copy of the contract
or document filed as an exhibit to the registration statement, and each statement is qualified in all respects by that reference.
Copies of the registration statement and the accompanying exhibits and schedules may be inspected without charge (and copies may
be obtained at prescribed rates) at the public reference facility of the SEC at Room 1024, 100 F Street, N.E. Washington, D.C.
20549.

 

You can request copies of these documents upon
payment of a duplicating fee by writing to the SEC. You may call the SEC at 1-800-SEC-0330 for further information on the operation
of its public reference rooms. Our filings, including the registration statement, will also be available to you on the Internet
web site maintained by the SEC at http://www.sec.gov.

 

Marijuana Company of America, Inc.

 

PROSPECTUS

 

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED
IN THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT.
THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.

  

The Date of This Prospectus is November 23, 2020

    

 

 

 

 

PART II

  

INFORMATION NOT REQUIRED IN THE PROSPECTUS

 

 

ITEM 13. OTHER EXPENSES OF ISSUANCE AND
DISTRIBUTION

 

Securities and Exchange Commission Registration Fee 
$141.15 Transfer/Edgar Agent Fees 
 1,000.00 Accounting Fees and Expenses 
 5,000.00 Legal Fees 
 5,000.00 Estimated Miscellaneous 
 8,858.85 Total 
$20,000.00 

 

All amounts are estimates other than the Commission’s
registration fee. We are paying all expenses of the offering listed above.

 

ITEM 14. INDEMNIFICATION OF DIRECTORS AND
OFFICERS

 

Utah Statutes

 

Except as otherwise provided in the Utah Revised
Business Corporation Act (URBCA), a corporation may indemnify an individual made a party to a proceeding because the individual
is or was a director of the corporation against liability incurred in the proceeding if:

 

 

His conduct was in good faith.

 

 

He reasonably believed that his conduct was in, or not opposed to, the corporation’s best interests.

 

 

In the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful.

  

However, a corporation may not indemnify a
director in connection with either:

 

 

A proceeding by or in the right of the corporation in which the director was determined to be liable to the corporation.

 

 

Any other proceeding charging that the director derived an improper personal benefit (whether or not the proceeding involved action in the director’s official capacity), in which proceeding the director was determined to be liable on the basis that the director derived an improper personal benefit.

 

 

 

 

A corporation may pay for or reimburse reasonable
expenses incurred by a director who is a party to a proceeding in advance of a final disposition if:

 

 

The director furnishes the corporation a written affirmation of his good faith belief that he has met the applicable standard of conduct described in Section 16-10a-902 of the Utah Code.

 

 

The director furnishes to the corporation a written undertaking, executed personally or on his behalf, to repay the advance if it is ultimately determined that he did not meet the standard of conduct.

 

 

A determination is made that the facts then known to those making the determination would not preclude indemnification.

 

A corporation must indemnify a director who
was successful in the defense of any proceeding or claim to which the director was a party because of the director’s status
as a director of the corporation against reasonable expenses incurred in defending the proceeding or claim for which the director
was successful.

 

Unless a corporation’s articles of incorporation
provide otherwise:

 

 

An officer of a corporation is entitled to mandatory indemnification to the same extent as a director of the corporation. 
 
  

A corporation may indemnify and advance expenses to an officer, employee, fiduciary, or agent of the corporation to the same extent as to a director. 
 
  

A corporation may indemnify and advance expenses to an officer, employee, fiduciary, or agent who is not a director to a greater extent than to a director. However, this must be consistent with public policy and provided for in the corporation’s articles of incorporation, bylaws, action of its board of directors, or contract.

 

Company Articles and By Laws.

 

Article III, Section 6 of the Company’s
By Laws provides that The Corporation shall have power to indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation,
and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.

   

The Corporation shall have the power to indemnify
any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by
or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorney fees)
actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable
to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.

 

Any indemnification under the provisions of
subsection (a) or (b) of this section (unless ordered by a court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth above. Such determination shall be made: (1) by the Board of Directors
by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceedings; (2) if such a
quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in
a written opinion; or (3) by the shareholders.

 

 

 

Expenses incurred by an officer or director
in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized by the provisions
of this section. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as
the Board of Directors deems appropriate.

 

For purposes of this indemnity, references
to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation, including
any constituent of a constituent, absorbed in a consolidation or merger which, if its separate existence had continued, would have
had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was sewing at the request of such constituent corporation,
as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall
stand in the same position under the provisions of this section with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence had continued.

 

ITEM 15. RECENT SALE OF UNREGISTERED SECURITIES

 

The following sales of unregistered securities
were completed by virtue of convertible notes issued by the Company. The issuances were made in reliance on the exemption from
registration provided by Section 4.2. Each beneficial note holder was an “accredited investor” and/or “sophisticated
investor” pursuant to Section 501(a)(b) of the Securities Act, who provided the Company with representations, warranties
and information concerning their respective qualifications as a “sophisticated investor” and/or “accredited investor.”
The Company provided and made available to each note holder full information regarding its business and operations. There was no
general solicitation in connection with the offer or sale of the restricted securities. The note holders acquired the restricted
common stock for their own account, for investment purposes and not with a view to public resale or distribution thereof.

Power Up Lending
Group

On July 7,
2020, the Company issued 10,416,667 shares of common stock to Power Up Lending Group.

On July 8,
2020, the Company issued 8,333,333 shares of common stock to Power Up Lending Group.

On July 9,
2020, the Company issued 6,913,043 shares of common stock to Power Up Lending Group.

On August
4, 2020, the Company issued 25,510,204 shares of common stock to Power Up Lending Group.

On August
5, 2020, the Company issued 25,510,204 shares of common stock to Power Up Lending Group.

On August
6, 2020, the Company issued 34,673,913 shares of common stock to Power Up Lending Group.

On September 8, 2020,
the Company issued 31,645,570 shares of common stock to Power Up Lending Group.

On September 9, 2020,
the Company issued 18,860,759 shares of common stock to Power Up Lending Group.

GS Capital
Partners

On July 8,
2020, the Company issued 9,714,032 shares of common stock to GS Capital Partners.

On July 20,
2020, the Company issued 21,959,447 shares of common stock to GS Capital Partners.

On July 27,
2020, the Company issued 21,030,617 shares of common stock to GS Capital Partners.

On August
10, 2020, the Company issued 30,876,821 shares of common stock to GS Capital Partners.

On August
11, 2020, the Company issued 23,081,373 shares of common stock to GS Capital Partners.

On August
12, 2020, the Company issued 44,694,444 shares of common stock to GS Capital Partners.

On August
20, 2020, the Company issued 19,313,512 shares of common stock to GS Capital Partners.

GW Holdings
Group, LLC

On July 24,
2020, the Company issued 8,216,696 shares of common stock to GW Holdings Group, LLC.

On July 29,
2020, the Company issued 19,128,449 shares of common stock to GW Holdings Group, LLC.

On July 24,
2020, the Company issued 8,216,696 shares of common stock to GW Holdings Group, LLC.

On August
10, 2020, the Company issued 27,747,553 shares of common stock to GW Holdings Group, LLC.

 

 

BHP Capital

On July 23,
2020, the Company issued 12,250,733 shares of common stock to BHP Capital.

On July 28, 2020,
the Company issued 17,504,341 shares of common stock to BHP Capital.

 

Jefferson Capital

 

On July 28, 2020,
the Company issued 15,036,231 shares of common stock to Jefferson Capital.

 

On August
4, 2020, the Company issued 22,501,222 shares of common stock to Jefferson Capital.

LG Capital
Funding, LLC

On September
9, 2020, the Company issued 72,811,566 shares of common stock to LG Capital Funding, LLC.

St. George
Investments, LLC

On July 2,
2020, the Company issued 43,994,720 shares of common stock to St. George Investments, LLC.

On July 28,
2020, the Company issued 57,603,687 shares of common stock to St. George Investments, LLC.

On August
6, 2020, the Company issued 85,227,273 shares of common stock to St. George Investments, LLC.

On August
11, 2020, the Company issued 99,132,590 shares of common stock to St. George Investments, LLC.

On September
1, 2020, the Company issued 129,870,130 shares of common stock to St. George Investments, LLC.

Crown Bridge
Partners

On July 30,
2020, the Company issued 7,500,000 shares of common stock to Crown Bridge Partners.

On August
10, 2020, the Company issued 12,500,000 shares of common stock to Crown Bridge Partners.

On August
11, 2020, the Company issued 15,000,000 shares of common stock to Crown Bridge Partners.

On August
12, 2020, the Company issued 18,793,103 shares of common stock to Crown Bridge Partners.

On September
2, 2020, the Company issued 12,500,000 shares of common stock to Crown Bridge Partners.

On September
22, 2020, the Company issued 15,000,000 shares of common stock to Crown Bridge Partners.

On September 22,
2020, the Company issued 17,000,000 shares of common stock to Crown Bridge Partners.

On September 30,
2020, the Company issued 15,000,000 shares of common stock to Crown Bridge Partners.

Natural Plant
Extract

On August
5, 2020, the Company issued 46,666,667 shares of common stock to Natural Plant Extract.

On August
25, 2020, the Company issued 36,930,591 shares of common stock to Natural Plant Extract.

Nellcote Capital,
LLC

On August
25, 2020, the Company issued 17,025,641 shares of common stock to Nellcote Capital, LLC.

Robert L. Hymers,
III

On July 15,
2020, the Company issued 25,000,000 shares of common stock to Robert L. Hymers, III.

On July 24, 2020,
the Company issued 16,702,305 shares of common stock to Robert L. Hymers, III.

 

Jesus M. Quintero

 

On November 9, 2020, the Company
issued 2,000,000 shares of its Class B Preferred Common Stock to Jesus Quintero, our CEO and CFO. The Class B Preferred Stock
carries a voting preference of One Thousand (1,000) times that number of votes on all matters submitted to the shareholders that
is equal to the number of shares of Common Stock (rounded to the nearest whole number), at the record date for the determination
of the shareholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken
or any written consent of such shareholders is affected. The issuance constitutes a change of control of the Company, as the voting
preference of the issued Class B Preferred Stock provides Mr. Quintero with the right to control a majority of the votes of shareholders
eligible to cast votes on any matter brought before the stockholders.

 

ITEM 16. EXHIBITS

 

Exhibits

 

Exhibit
Number 
Description (3) 
Certificate of Incorporation and Bylaws 3.1 
Certificate of Incorporation (incorporated by reference from our Registration Statement on Form 1012g filed on  May 23, 2017). 3.2 
Amendment to Certificate of Incorporation dated February 2009 (incorporated by reference to our Form 1012g filed on May 23, 2017). 3.3 
Amendment to Certificate of Incorporation dated July 2013 (incorporated by reference to our Form 1012g filed on May 23, 2017). 3.4 
Amendment to Certificate of Incorporation dated August 2015 (incorporated by reference to our Form 1012g filed on May 23, 2017). 3.5 
Amendment to Certificate of Incorporation dated September 2015 (incorporated by reference to our Form  1012g filed on May 23, 2017). 3.6 
By Laws (incorporated by reference to our Form  1012g filed on May 23, 2017). 3.7 

Amendment to Certificate of Incorporation dated July 1, 2019 *

 3.8 
Certificate of Amendment dated June 30, 2020 (incorporated by reference from our Form 8-K filed on June 29, 2020). (5) 
Opinion regarding Legality 5.1* 
Opinion of Independent Law PLLC regarding the legality of the securities being registered.* (10) 
Material Contracts 10.1 
St. George Investments, LLC Forbearance Agreement (incorporated by reference to our Form 10-Q filing on August 21, 2017). 10.2 
St. George Investments, LLC Convertible Promissory Note (incorporated by reference to our Form 10-Q filing on August 21, 2017). 10.3 
Executed Independent Director Agreement with Edward Manolos dated April 24, 2019 (incorporated by reference to our Form S-1/A filed on May 3, 2019). 10.4 
Material Definitive Agreement dated April 15, 2019 with Natural Plant Extracts of California, Inc. (incorporated by reference from our Current Report on Form 8-K filed on April 17, 2019). 10.5 
Executive Independent Director Agreement with Marco Guerrero (incorporated by reference from our Current Report on Form 8-K filed June 16, 2020). 10.6 
Executive Independent Director Agreement with Themistocles Psomiadis (incorporated by reference from our Current Report on Form 8-K filed March 6, 2020). 10.7 
Executive Employment Agreement, as revised, with Jesus Quintero (incorporated by reference from our Current Report on Form 8-K/A filed March 32 2020). 10.8 
Joint Venture Agreement, dated September 30, 2020, by and between the Company, Marco Guerrero, and MR Hemp Ltda. (incorporated by reference from our Current Report on Form 8-K filed October 5, 2020). 10.9 
Joint Venture Agreement, dated September 30, 2020, by and between the Company, Marco Guerrero, and MR Hemp Uruguay S.A.S. (incorporated by reference from our Current Report on Form 8-K filed October 5, 2020). 10.10 
Share Exchange Agreement dated September 30, 2020 with Cannabis Global, Inc. (incorporated by reference from our Current Report on Form 8-K filed October 8, 2020). 10.11 
Lock-Up Agreement, dated September 30, 2020, by and between the Company and Cannabis Global, Inc. (incorporated by reference from our Current Report of Form 8-K filed October 8, 2020). 10.12 
Form of Subscription Agreement * (21) 
Subsidiaries of Registrant 21.1 
List of Subsidiaries (incorporated by reference to our Form 1012g filed on May 23, 2017). (23) 
Consents of experts and counsel 23.1* 
Consent of L&L CPA, PA* 23.2* 
Consent of Independent Law PLLC (included in Exhibit 5.1).*

* Filed herewith.

 

 

 

ITEM 17. UNDERTAKINGS

  

The undersigned registrant hereby undertakes
to:

 

(1)
File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:

 

 
(i)
Include any prospectus required by Section 10(a)(3) of the Securities Act; 
 
  
(ii)
Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

 

 
(iii)
Include any additional or changed material information on the plan of distribution.

 

(2)
For determining liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement of the securities offered, and the offering of the securities at that time shall be deemed to be the initial bona fide offering. 
 (3)
File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. 
 (4)
For determining liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a Offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

 

 
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; 
 
  
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; 
 
  
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and 
 
  
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

 

Insofar as indemnification for liabilities
arising under the Securities Act of 1933 (the “Act”) may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

 

In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

 

 

That, for the purpose of determining liability
under the Securities Act to any purchaser:

 

Each prospectus filed pursuant to Rule 424(b)
as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the
date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior
to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of
the registration statement or made in any such document immediately prior to such date of first use.

 

Signatures

 

Pursuant to the requirements of the Securities
Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized.  

 

 
MARIJUANA COMPANY OF AMERICA, INCDate:   November 23, 2020
 
  
By:
/s/Jesus M. Quintero 
 
Jesus M. Quintero 
 
Principal Executive OfficerDate:   November 23, 2020
 
  
By:
/s/Jesus M. Quintero 
 
Jesus M. Quintero 
 
Chief Financial Officer

 

KNOW ALL PERSONS BY THESE PRESENTS, that each
person whose signature appears below constitutes and appoints Jesus M. Quintero and each of them, with full power of substitution
and re-substitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in
his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated
below, and to file, any and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying
and confirming all that said attorneys-in-fact and agents or any of them or their and his or her substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.

 

Pursuant to the requirements of the Securities
Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

 

  

Signature
 
Title
Date 
 
 
 /s/ Jesus M Quintero
 

 

Chief Executive Officer and Director

November 23, 2020Jesus M. Quintero
 
(Principal Executive Officer)
  
 
 
 /s/ Edward Manolos
 
 
November 23, 2020Edward Manolos
 
(Director)
  
 
 
 /s/ Marco Guerrero
 
 
November 23, 2020Marco Guerrero
 
Director
  
 
 
 /s/ Themistocles Psomiadis
 
 
 Themistocles Psomiadis
 
Director
November 23, 2020

 

 

 

 

Exhibit 3.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 5.1

 

 

 

 

 

 

 

Independent Law PLLC

Alan T. Hawkins, Esq.

2106 NW 4th Pl

Gainesville, FL 32603

ahawkins@independent.law

(352) 353-4048

 

 

 

 

 

 

November 23, 2020

 

MARIJUANA COMPANY OF AMERICA, INC.

1340 West Valley Parkway, Suite 205

Escondido, CA 92029

 

Ladies and Gentlemen:

 

You have requested our opinion as counsel
to Marijuana Company of America, Inc., a Utah corporation, (the “Company”) in connection with the Company’s
registration statement on Form S-1 filed on November 23, 2020 with the U.S. Securities and Exchange Commission (the “Commission”)
under the Securities Act of 1933, as amended (the “Securities Act”) (the “Registration Statement”)
with respect to the registration of 646,883,314 shares of the Company’s common stock, par value $0.001 per share (the “Shares”)
that will be offered by the Company pursuant to the Registration Statement. This opinion is being furnished in connection with
the requirements of Item 601(b)(5) of Regulation S-K under the Act, and no opinion is expressed herein as to any matter pertaining
to the contents of the Registration Statement or related prospectus (the “Prospectus”), other than as expressly
stated herein with respect to the issue of the Shares. 

 

In connection with this opinion, we have
examined and relied upon the originals or copies of such documents, corporate records, and other instruments as we have deemed
necessary or appropriate for the purpose of this opinion, including, without limitation, the following: (a) the articles of incorporation
of the Company, including all amendments thereto; (b) the bylaws of the Company; (c) the Registration Statement, including all
exhibits thereto.

 

In our examination, we have assumed the
genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity
of the originals of such documents, and the accuracy and completeness of the corporate records made available to us by the Company.
As to any facts material to the opinions expressed below, with your permission we have relied solely upon, without independent
verification or investigation of the accuracy or completeness thereof, any certificates and oral or written statements and other
information of or from public officials, officers or other representatives of the Company and others. 

 

Subject to the foregoing and in reliance
thereon, it is our opinion that, as of the date hereof, when the Shares shall have been duly registered on the books of the transfer
agent and registrar therefor in the name or on behalf of the purchasers and have been issued by the Company against payment therefor
(for not less than par value) in the circumstances contemplated by the Registration Statement, the issue and sale of the Shares
will have been duly authorized by all necessary corporate action of the Company, and the Shares will be validly issued, fully paid
and nonassessable. 

 

The opinion expressed herein is limited
to the laws of the State of Utah, all applicable provisions of the statutory provisions thereof, reported judicial decisions interpreting
those laws, and federal securities laws. This opinion is limited to the laws in effect as of the date hereof and is provided exclusively
in connection with the registration of the Shares contemplated by the Registration Statement. 

 

We assume no obligation to update or supplement
this opinion letter if any applicable laws change after the date of this opinion letter, or if we become aware after the date of
this opinion letter of any facts, whether existing before or arising after the date hereof, that might change the opinions expressed
above.

 

This opinion letter is furnished in connection
with the filing of the Registration Statement and may not be relied upon for any other purpose without our prior written consent
in each instance. Further, no portion of this letter may be quoted, circulated or referred to in any other document for any other
purpose without our prior written consent.

 

We hereby consent to the filing of this
opinion with the Commission as an exhibit to the Registration Statement and to the use of our name as it appears in the Prospectus
included in the Registration Statement. In giving such consent, we do not thereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder.
This opinion is expressed as of the date hereof unless otherwise expressly stated, and we disclaim any undertaking to advise you
of any subsequent changes in the facts stated or assumed herein or of any subsequent changes in applicable laws.

 

Very truly yours,

 

 

 

/s/ Alan T. Hawkins, Esq.

Alan T. Hawkins

Independent Law PLLC

 

Copy: Marijuana Company of America, Inc.,
Mr. Jesus M. Quintero

  

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.12

 

 

 

MARIJUANA COMPANY OF AMERICA, INC.

SUBSCRIPTION AGREEMENT

 

The undersigned (the “Investor”)
hereby confirms its agreement with Marijuana Company of America, Inc., a Utah corporation (the “Company”), as
follows:

 

1. This Subscription Agreement, including
the Terms and Conditions for Purchase of Securities attached hereto as Annex I (collectively, this “Agreement”)
is made as of the date set forth below between the Company and the Investor.

 

2. The Company has authorized the sale
and issuance to certain investors of up to a maximum of 646,883,314 authorized and unissued shares (the “Shares”)
of its common stock, par value $0.001 per share (the “Common Stock”), at a public offering price of $0.002 per
Share (the “Purchase Price”).

 

3. The offering and sale of the Shares
(the “Offering”) are being made pursuant to (1) an effective Registration Statement on Form S-1, File No. 333-                    (the
“Registration Statement”) filed under the Securities Act of 1933, as amended (the “Securities Act”),
and by the Company with the U.S. Securities and Exchange Commission (the “Commission”) (including the preliminary
prospectus contained therein (the “Preliminary Prospectus”)), and (2) if applicable, certain “free
writing prospectuses” (as that term is defined in Rule 405 under the Securities Act), that have been filed with the Commission
and delivered to the Investor on or prior to the date hereof (the “Issuer Free Writing Prospectus”), containing
certain supplemental information regarding the Shares, the terms of the Offering and the Company, and (3) a final prospectus
(the “Prospectus”) that has been or will be filed with the Commission and delivered to the Investor (or made
available to the Investor by the filing by the Company of an electronic version thereof with the Commission).

 

4. The Company and the Investor agree
that at the Closing (as defined in Section 3.1 of Annex I), the Investor will purchase from the Company and the Company
will issue and sell to the Investor the Shares set forth below for the aggregate Purchase Price set forth below. The Shares shall
be purchased pursuant to the Terms and Conditions for Purchase of Securities attached hereto as Annex I and incorporated
herein by this reference as if fully set forth herein. The Investor acknowledges that the Offering is not being underwritten by
any underwriter, as disclosed in the Prospectus.

 

5. The manner of settlement of the Shares
purchased by the Investor shall be determined by such Investor as follows (check one):

 

[    ]
A. Delivery by crediting the account of the Investor’s prime broker (as specified by such Investor on Exhibit A annexed hereto) with the Depository Trust Company (“DTC”) through its Deposit/Withdrawal At Custodian (“DWAC”) system, whereby Investor’s prime broker shall initiate a DWAC transaction on the Closing Date using its DTC participant identification number, and released by DTC, the Company’s transfer agent (the “Transfer Agent”), at the Company’s direction. NO LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:

 

 
(I)
DIRECT THE BROKER-DEALER AT WHICH THE ACCOUNT OR ACCOUNTS TO BE CREDITED WITH THE SHARES ARE MAINTAINED TO SET UP A DWAC INSTRUCTING THE TRANSFER AGENT TO CREDIT SUCH ACCOUNT OR ACCOUNTS WITH THE SHARES, AND

 

 
(II)
REMIT BY WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE SHARES BEING PURCHASED BY THE INVESTOR TO THE FOLLOWING ACCOUNT:

 

 

 

 

Bank Name:   

ABA Number:                         

A/C Name:     

A/C Number:                       

FBO: Investor Name:                                          
               

Social Security Number or

Employer Identification Number:                                         

 

—OR—

 

[    ]

B. Delivery versus payment (“DVP”)
through DTC (i.e., on the Closing Date, the Company shall issue Shares registered in the Investor’s name and address as set
forth below and released by the Transfer Agent directly to the account(s) identified by the Investor; upon receipt of such Shares.

 

NO LATER THAN ONE (1) BUSINESS DAY
AFTER THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:

 

 
(I)
NOTIFY AGENT OF THE ACCOUNT OR ACCOUNTS TO BE CREDITED WITH THE SHARES BEING PURCHASED BY SUCH INVESTOR, AND

 

 
(II)
CONFIRM THAT THE ACCOUNT TO BE CREDITED WITH THE SHARES BEING PURCHASED BY THE INVESTOR HAVE A MINIMUM BALANCE EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE SHARES BEING PURCHASED BY THE INVESTOR.

 

IT IS THE INVESTOR’S RESPONSIBILITY
TO (A) MAKE THE NECESSARY WIRE TRANSFER OR CONFIRM THE PROPER ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR
SETTLEMENT BY WAY OF DWAC OR DVP IN A TIMELY MANNER. IF THE INVESTOR DOES NOT DELIVER THE AGGREGATE PURCHASE PRICE FOR THE SHARES
OR DOES NOT MAKE PROPER ARRANGEMENTS FOR SETTLEMENT IN A TIMELY MANNER, THE SHARES MAY NOT BE DELIVERED AT CLOSING TO THE INVESTOR
OR THE INVESTOR MAY BE EXCLUDED FROM THE CLOSING ALTOGETHER.

 

6. The Investor represents that, except
as set forth below, (a) it has had no position, office or other material relationship within the past three years with the
Company or persons known to it to be affiliates of the Company, (b) it is not a member of the Financial Industry Regulatory
Authority, Inc. (“FINRA”) or an Associated Person (as such term is defined under the FINRA’s NASD Membership
and Registration Rules Section 1011) as of the Closing, and (c) neither the Investor nor any group of Investors (as identified
in a public filing made with the Commission) of which the Investor is a part in connection with the Offering, acquired, or obtained
the right to acquire, 20% or more of the Common Stock (or securities convertible into or exercisable for Common Stock) or the voting
power of the Company on a post-transaction basis. Exceptions:

 

(If no exceptions, write “none.”
If left blank, response will be deemed to be “none.”)

 

7. The Investor represents that it has
received (or otherwise had made available to it by the filing by the Company of an electronic version thereof with the Commission)
the Preliminary Prospectus which is a part of the Company’s Registration Statement, the documents incorporated by reference
therein and any free writing prospectus (collectively, the “Disclosure Package”), prior to or in connection
with the receipt of this Agreement. The Investor acknowledges that, prior to the delivery of this Agreement to the Company, the
Investor will receive certain additional information regarding the Offering, including pricing information (the “Offering
Information”). Such information may be provided to the Investor by any means permitted under the Securities Act, including
the Prospectus, a free writing prospectus and oral communications.

 

 

 

8. No offer by the Investor to buy Shares
will be accepted and no part of the Purchase Price will be delivered to the Company until the Investor has received the Offering
Information and the Company has accepted such offer by countersigning a copy of this Agreement, and any such offer may be withdrawn
or revoked, without obligation or commitment of any kind, at any time prior to the Company (or Agent on behalf of the Company)
sending (orally, in writing or by electronic mail) notice of its acceptance of such offer. An indication of interest will involve
no obligation or commitment of any kind until the Investor has been delivered the Offering Information and this Agreement is accepted
and countersigned by or on behalf of the Company.

 

 
 
 
 
 Number of Shares:
 
 
 
 Purchase Price per Share:
 

 

$

 
 Aggregate Purchase Price:
 

 

$

 
 

 

Please confirm that the foregoing correctly
sets forth the agreement between us by signing in the space provided below for that purpose.

 

 
 
 Dated as of:                     , 2020  INVESTOR 
 By:
 
 Print Name:
 
 Title:
 
 Address:
 
  
 
  
 
 

Agreed and Accepted this             day
of                     2020:

 

 
 
 MARIJUANA COMPANY OF AMERICA, INC. 
 By:    
 
  
 
Name: 
 
Title:

 

 

 

ANNEX I

 

TERMS AND CONDITIONS FOR PURCHASE OF
SECURITIES

 

1. Authorization and Sale of the Shares.
Subject to the terms and conditions of this Agreement, the Company has authorized the sale of the Shares.

 

2. Agreement to Sell and Purchase the
Shares.

 

2.1 At the Closing (as defined in Section 3.1),
the Company will sell to the Investor, and the Investor will purchase from the Company, upon the terms and conditions set forth
herein, the number of Shares set forth on the last page of the Agreement to which these Terms and Conditions for Purchase of Securities
are attached as Annex I (the “Signature Page”) for the aggregate purchase price therefor set forth on
the Signature Page.

 

2.2 The Company proposes to enter into
substantially this same form of Subscription Agreement with certain other investors (the “Other Investors”)
and expects to complete sales of Shares to them. The Investor and the Other Investors are hereinafter sometimes collectively referred
to as the “Investors,” and this Agreement and the Subscription Agreements executed by the Other Investors are hereinafter
sometimes collectively referred to as the “Agreements.”

 

3. Closings and Delivery of the Securities
and Funds.

 

3.1 Closing. The completion
of the purchase and sale of the Shares (the “Closing”) shall occur at a place and time (the “Closing
Date”) to be specified by the Company and the Investors At the Closing, (a) the Company shall cause the Company’s
Transfer Agent to deliver to the Investor the number of Shares purchased by the Investor as set forth on the Signature Page registered
in the name of the Investor or, if so indicated on the Investor Questionnaire attached hereto as Exhibit A, in the name
of a nominee designated by the Investor, and (b) the aggregate purchase price for the Shares being purchased by the Investor
will be delivered by or on behalf of the Investor to the Company.

 

3.2 Conditions to the Obligations of
the Parties.

 

(a) Conditions to the Company’s
Obligations. The Company’s obligation to issue and sell the Shares to the Investor shall be subject to: (i) the
receipt by the Company of the purchase price for the Shares being purchased hereunder as set forth on the Signature Page and (ii) the
accuracy of the representations and warranties made by the Investor and the fulfillment of those undertakings of the Investor to
be fulfilled prior to the Closing Date, all as set forth in this Annex I and in the Subscription Agreement to which it is
attached.

 

(b) Conditions to the Investor’s
Obligations. The Investor’s obligation to purchase the Shares will be subject to the accuracy of the representations
and warranties made by the Company and the fulfillment of those undertakings of the Company to be fulfilled prior to the Closing
Date. The Investor’s obligations are expressly not conditioned on the purchase by any Other Investor of the Shares that such
Other Investor has agreed to purchase from the Company, but are explicitly conditioned on the purchase by Investors and sale by
the Company of not less than             Shares in the offering.

 

3.3 Delivery of Funds.

 

(a) DWAC Delivery. If the Investor
elects to settle the Shares purchased by such Investor through DTC’s Deposit/Withdrawal at Custodian (“DWAC”)
delivery system, no later than one (1) business day after the execution of this Agreement by the Investor and the Company,
the Investor shall remit by wire transfer the amount of funds equal to the aggregate purchase price for the Shares being purchased
by the Investor to the following Escrow Account designated by the Company:

 

 

 

Bank Name:

ABA Number:

A/C Name:

A/C Number:

FBO: Investor Name:                                          
       

Social Security Number or

Employer Identification Number:                              

 

3.4 Delivery of Shares.

 

(a) DWAC Delivery. If the Investor
elects to settle the Shares purchased by such Investor through DTC’s DWAC delivery system, no later than one (1) business
day after the execution of this Agreement by the Investor and the Company, the Investor shall direct the broker-dealer
at which the account or accounts to be credited with the Shares being purchased by such Investor are maintained, which broker/dealer
shall be a DTC participant, to set up a DWAC instructing the Transfer Agent to credit such account or accounts with the Shares.
Such DWAC instruction shall indicate the settlement date for the deposit of the Shares. Upon the closing of the Offering, the Company
shall direct the Transfer Agent to credit the Investor’s account or accounts with the Shares pursuant to the information
contained in the DWAC.

 

(b) Delivery Versus Payment through
The Depository Trust Company. If the Investor elects to settle the Shares purchased by such Investor by delivery versus payment
through DTC, no later than one (1) business day after the execution of this Agreement by the Investor and the Company,
the Investor shall notify the Company of the account to be credited with the Shares being purchased by such Investor. On the Closing
Date, the Company shall deliver the Shares to the Investor through DTC directly to the account(s) identified by Investor.

 

4. Representations, Warranties and
Covenants of the Investor.

The Investor acknowledges, represents
and warrants to, and agrees with, the Company that:

 

4.1 The Investor (a) has answered
all questions in this Subscription Agreement, including this Annex I and the Investor Questionnaire in Exhibit A,
and the answers thereto are true and correct as of the date hereof and will be true and correct as of the Closing Date and (b) in
connection with its decision to purchase the Shares set forth in the Subscription Agreement, has received and is relying only upon
the Disclosure Package and the documents incorporated by reference therein and the Offering Information.

 

4.2(a) No action has been or will be taken
in any jurisdiction outside the United States by the Company that would permit an offering of the Shares, or possession or distribution
of offering materials in connection with the issue of the Shares in any jurisdiction outside the United States where action for
that purpose is required, (b) if the Investor is outside the United States, it will comply with all applicable laws and regulations
in each foreign jurisdiction in which it purchases, offers, sells or delivers Shares or has in its possession or distributes any
offering material, in all cases at its own expense.

 

4.3(a) The Investor has full right, power,
authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary
action to authorize the execution, delivery and performance of this Agreement, and (b) this Agreement constitutes a valid
and binding obligation of the Investor enforceable against the Investor in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at law) and except as to the enforceability of any rights
to indemnification or contribution that may violate the public policy underlying any law, rule or regulation (including any federal
or state securities law, rule or regulation).

 

 

 

4.4 The Investor understands that nothing
in this Agreement, the Preliminary Prospectus, the Disclosure Package, the Offering Information, the Prospectus or any other materials
presented to the Investor in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. The
Investor has consulted such legal, tax and investment advisors and made such investigation as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of Shares.

 

5. Survival of Representations, Warranties
and Agreements; Third Party Beneficiary. Notwithstanding any investigation made by any party to this Agreement, all covenants,
agreements, representations and warranties made by the Company and the Investor herein will survive the execution of this Agreement,
the delivery to the Investor of the Shares and the payment therefor.

 

6. Notices. All notices, requests,
consents and other communications hereunder will be in writing, will be mailed (a) if within the domestic United States by
first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, or by facsimile
or (b) if delivered from outside the United States, by International Federal Express or facsimile, and will be deemed given
(i) if delivered by first-class registered or certified mail domestic, three business days after so mailed, (ii) if delivered
by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal
Express, two business days after so mailed, and (iv) if delivered by facsimile, upon electronic confirmation of receipt and
will be delivered and addressed as follows:

 

(a) if to the Company, to:

 

Marijuana Company of America,
Inc.

Attention: Jesus Quintero

1340 West Valley Parkway, Suite
205

Escondido, CA 92029

Telephone: (888) 777-4362

 

(b) if to the Investor, at its address
on the Signature Page hereto, or at such other address or addresses as may have been furnished to the Company in writing.

 

7. Changes. This Agreement may
not be modified or amended except pursuant to an instrument in writing signed by the Company and the Investor.

 

8. Headings. The headings of the
various sections of this Agreement have been inserted for convenience of reference only and will not be deemed to be part of this
Agreement.

 

9. Severability. In case any provision
contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions contained herein will not in any way be affected or impaired thereby.

 

10. Governing Law. This Agreement
will be governed by, and construed in accordance with, the internal laws of the State of Utah, without giving effect to the principles
of conflicts of law that would require the application of the laws of any other jurisdiction.

 

11. Counterparts. This Agreement
may be executed in two or more counterparts, each of which will constitute an original, but all of which, when taken together,
will constitute but one instrument, and will become effective when one or more counterparts have been signed by each party hereto
and delivered to the other parties. The Company and the Investor acknowledge and agree that the Company shall deliver its counterpart
to the Investor along with the Prospectus (or the filing by the Company of an electronic version thereof with the Commission).

 

12. Confirmation of Sale. The Investor
acknowledges and agrees that such Investor’s receipt of the Company’s signed counterpart to this Agreement, together
with the Prospectus (or the filing by the Company of an electronic version thereof with the Commission), shall constitute written
confirmation of the Company’s sale of the Shares to such Investor.

  

 

 

 

EXHIBIT A

 

MARIJUANA COMPANY OF AMERICA, INC.

INVESTOR QUESTIONNAIRE

 

Pursuant to Section 3 of Annex
I to the Agreement, please provide us with the following information:

 

 
 
 
 
 1.
 
The exact name that your Shares are to be registered in. You may use a nominee name if appropriate:
 
  
 
 2.
 
The relationship between the Investor and the registered holder listed in response to item 1 above:
 
  
 
 3.
 
The mailing address of the registered holder listed in response to item 1 above:
 
  
 
 4.
 
The Social Security Number or Tax Identification Number of the registered holder listed in the response to item 1 above:
 
  
 
 5.
 
Name of DTC Participant (broker-dealer at which the account or accounts to be credited with the Shares are maintained):
 
  
 
 6.
 
DTC Participant Number:
 
  
 
 7.
 
Name of Account at DTC Participant being credited with the Shares:
 
  
 
 8.
 
Account Number at DTC Participant being credited with the Shares:
 
 

 

 

 

 

Exhibit 23.1

 

 

CONSENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

 

We hereby consent to the inclusion in this Registration
Statement on Form S-1 of Marijuana Company of America, Inc. of our report dated May 14, 2020 relating to our audits of the December
31, 2019 and 2018 consolidated financial statements, which report appears in the Prospectus that is part of this Registration Statement.

We also consent to the reference to our firm under
the caption “Experts” in such Prospectus.

 

/s/ L&L CPAs, PA
L&L CPAs, PA
Plantation, FL
November 23, 2020

 

 

 



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