$MJMJ Form 10-Q

The following discussion and analysis provides information which our management believes to be relevant to an assessment and understanding of our results of operations and financial condition. This discussion should be read together with our financial statements and the notes to the financial statements, which are included in this Quarterly Report on Form 10-Q (the “Report”). This information should also be read in conjunction with the information contained in our Form 10-K/A filed with the Securities and Exchange Commission (the “SEC”) on August 29, 2014, including the audited consolidated financial statements and notes included therein as of and for the year ended April 30, 2014. The reported results will not necessarily reflect future results of operations or financial condition.

Throughout this Report, the terms “we,” “us,” “our,” “our Company,” or “The Mary Jane Group,” refers to The MaryJane Group, Inc., a Nevada corporation, and unless otherwise specified, includes our wholly owned operating subsidiaries listed below.

We maintain a website at www.themaryjanegrp.com and our Common Stock trades on the OTCQB under the symbol “MJMJ.”

Overview of Operating Businesses

We were incorporated in Nevada on February 16, 2012 under the name of Pladeo Corp. for the purpose of developing online chat systems free of charge. Through a series of transactions in February and March of 2014, we changed our focus to provide lodging and hospitality services to the recreational marijuana industry and changed our name to The MaryJane Group, Inc.

On January 1, 2014, the State of Colorado became the first state to legalize the use of recreational marijuana. Colorado residents, who are at least 21 years of age with photo identification, may purchase as much as one ounce of marijuana in a single transaction. Non-Colorado residents, bearing the same identification, may purchase as much as one-quarter ounce. Marijuana cannot be consumed in any public space, including the shops where it was purchased. Our operating subsidiaries outlined below were formed for the purpose of providing cannabis-friendly lodging and to provide value added services of information and entertainment to consumers supporting the recreational marijuana industry. Currently, the states and jurisdictions allowing the use of recreational marijuana are Colorado, Washington, Oregon, Alaska and Washington, D.C.

Current Operations

Mary Jane Entertainment, LLC, organized on May 21, 2013 as a Colorado limited liability company (“Mary Jane Entertainment”), was formed to provide contracted limousine and party-bus services. Currently, Mary Jane Entertainment is operating on a limited basis as a concierge service. In July 2014, we moved the operations of Mary Jane Tours, LLC, a Colorado limited liability company providing unique cannabis-related tours, into Mary Jane Entertainment and we dissolved Mary Jane Tours, LLC.

Capital Growth Corporation, organized on February 4, 2014 as a Colorado corporation (“Capital Growth”), was formed for the purpose of providing short- and long-term financing to assist growers and retail establishments engaged in the manufacture and distribution of recreational marijuana within the State of Colorado. Since its formation, Capital Growth has not entered into any funding transactions and we do not intend to do so in the future. Going forward, we intend to use Capital Growth as a business development company.

Bud and Breakfast, LLC, organized on April 10, 2014 as a Colorado limited liability company (“Bud and Breakfast”), was formed to operate and manage our marijuana-friendly bed and breakfast located at The Adagio, 1430 Race Street, Denver, Colorado. This is our most successful business operation and we plan to focus a majority of our efforts pursuing and developing this opportunity. We are actively seeking additional locations to expand our line of lodging. To that end, on September 4, 2014, we entered into a one year lease with the owners of the Mountain Vista Bed and Breakfast, located at 358 Lagoon Lane, Silverthorne Colorado. The Lease commenced on October 1, 2014 and expires September 30, 2014.

MaryJane Hospitality, LLC, organized on July 22, 2014 as Colorado limited liability company, was formed to seek additional lodging and hospitality businesses that are not only located within the State of Colorado, but in other jurisdictions as recreational marijuana becomes legal in other states.

MaryJane Events, LLC, organized on July 22, 2014 as a Colorado limited liability company, was formed for the purpose of planning private and corporate events focused upon, but not limited to, the recreational/medicinal marijuana industry.

MaryJane Designs, LLC, organized on August 28, 2014 as a Colorado limited liability company (“Mary Jane Designs”), was formed to operate our apparel division that creates clothing items with our logo to be sold at our lodging facilities. In July, 2014, we folded the sandblasting operations of Mary Jane Glassworks, LLC, a Colorado limited liability company formed for the purpose of providing hand-blown glass products used in the recreational marijuana industry, into Mary Jane Designs, and we dissolved Mary Jane Glassworks, LLC in November 2014.

Former Operations

Dab City Radio (“Dab City Radio”) and Mile High Life, LLC f/k/a Mile High Times, LLC, organized on February 16, 2014 and October 13, 2013, respectively, were formed to be the promotional arms of Mary Jane Tours and Mary Jane Entertainment. Through Dab City Radio and Mile High Life, we advertised and marketed Mary Jane Tours and the Bud and Breakfast through Internet radio broadcasting and newsprint. In November 2013, Mile High Life (under the name Mile High Times) released its first newspaper in print. On June 9, 2014, we terminated the operations of Mile High Times due to continued losses in our operations and our inability to adequately compete with the larger and more established newspapers/magazines in the cannabis sector. We dissolved Mile High Life, LLC in November 2014. The operations of Dab City Radio were also terminated due to continued losses and our inability to generate enough advertising income to cover the cost of operations. We dissolved Dab City Radio in November, 2014.

Funding During Three Months Ended January 31, 2015

On November 26, 2014, we issued an 8% Convertible Note in the principal amount of $50,000. The 8% Convertible Note matures on August 26, 2015 and is convertible into shares of our Common Stock at a 45% discount to the market price of our Common Stock. “Market Price” as defined in the 8% Convertible Note means the average lowest two (2) trading prices for our Common Stock during the twenty-five trading day period ending on the latest complete trading day prior to the date of conversion. We received net proceeds of $44,250 from this transaction after payment of $2,750 in expenses and $3,000 in legal fees. The proceeds from the sale of the 8% Convertible Note are being used as working capital.

On December 22, 2014, we issued a 10% Original Issue Discount Convertible Promissory Note in the principal amount of $220,000. Of the $220,000, $50,000 has been funded to date. This Note matures on December 22, 2015 and is convertible at the lower of $.08 or 50% of the lowest trading price of our Common Stock for the 20 consecutive days prior to the date of conversion. We received net proceeds of

$45,000 from this transaction after the payment of the original discount of $5,000. We also paid a finder’s fee of $5,000 to a non-affiliated third party in connection with this transaction. The proceeds from the sale of the securities are being used as working capital.

Recent Events Since January 31, 2015

On February 5, 2015, we entered into a Consulting Services Agreement with an entity (the “Consultant”) to assist us in preparing and implementing a Standard Operating Procedure Manual, among other tasks to be assigned to the Consultant by management from time to time. As consideration for the Consultant’s services, we agreed to pay the Consultant $2,500 per month and will issue the Consultant 25,000 shares of our Common Stock for each month we use the Consultant’s services.

On February 12, 2015, we issued an 8% Original Issue Discount Convertible Promissory Note in the principal amount of $27,500 (the “February Note”) and a Common Stock Purchase Warrant for the purchase of 458,333 shares of our Common Stock to an entity (the “OID Warrant”). The February Note matures on July 9, 2016 and is convertible into shares of our Common Stock at a 60% discount to the lowest daily volume weighted average price of our Common Stock for (i) the 20 trading days immediately prior to the original issue date or (ii) the 20 trading days prior to the date of conversion. The five-year OID Warrant is exercisable at $0.06 per share and contains provisions for a cashless exercise. We received net proceeds of $25,000 from this transaction after the payment of the original discount of $2,500. The proceeds from the sale of the securities are being used as working capital.

On February 12, 2015, we entered into a loan agreement and borrowed $39,000. Pursuant to the terms of the loan agreement, we are required to make 100 equal installments of $553, or an aggregate of $55,300, to repay the principal balance and interest in full. The proceeds of this loan were used to pay the deposit on the purchase of the Adagio, as described below.

On February 27, 2015, we entered into a contract to purchase the Adagio bed and breakfast, located at 1430 Race Street, Denver Colorado, the location of our first Bud and Breakfast�. The purchase price for the Adagio is $1,500,000 and the owner has agreed to finance $1,000,000 of the purchase price. We deposited $50,000 with the seller upon signing the contract and expect that the closing will take place on or about May 15, 2015.

On February 27, 2015, we sold 200,000 shares of our Common Stock to a non-affiliate for $10,000, or $.05 per share.

Results of Operations

Three months ended January 31, 2105 compared to three months ended January 31, 2014

Net Revenue

Net revenue for the three months ended January 31, 2015 totaled $140,086 compared to $0 in the comparable period in 2014. Our net revenue decreased $24,207 from net revenue of $164,293 during the three months ended October 31, 2014, representing a decline of 15%. This decrease is primarily a result of reduced revenue from our bed and breakfast operations during the off-season month of November 2014.

Cost of Goods Revenue

Cost of revenue for the three months ended January 31, 2015 totaled $122,269 compared to $0 in the comparable period in 2014. Our cost of revenue increased by $28,117 from cost of revenue of $94,152 during the quarter ended January 31, 2014. Cost of revenue as a percentage of sales for the three months ended January 31, 2015 was 87% compared to 57% for the three months ended January 31, 2014.

The reduction of our gross profit is a result of the initial costs related to the startup of the Mountain Vista Bed and Breakfast and lower revenues at the Adagio for the month of November 2014.

General and Administrative

General and administrative costs for the three months ended January 31, 2015 increased by $89,718 to $92,603 from $2,885 in the comparable period in 2014. This increase is directly attributable to the commencement of operations in 2014.

Sales and Marketing

Sales and marketing costs for the three months ended January 31, 2015 were $5,789 compared to $0 for the comparable period in 2014.

Depreciation

Depreciation expense for the three months ended January 31, 2015 was $1,764 compared to $0 for the comparable period in 2014.

Other Income (Expense)

Other income (expense) for the three months ended January 31, 2015 was $(299,894) compared to $0 for the comparable period in 2014, primarily a result of interest expense and loan closing costs associated with our debt funding.

Net Loss

Net loss for the three months ended January 31, 2015 was $382,233 compared to $2,885 for the comparable period in 2014.

Nine months ended January 31, 2015 compared to nine months ended January 31, 2014

Net Revenue

Net revenue for the nine months ended January 31, 2015 totaled $417,318 compared to $0 in the comparable period in 2014. These increases are primarily a result of revenue from our bed and breakfast operations.

Cost of Goods Revenue

Cost of revenue for the nine months ended January 31, 2015 totaled $303,518 compared to $0 in the comparable period in 2014. Cost of revenue as a percentage of sales for the nine months ended January 31, 2015 was 73%.

General and Administrative

General and administrative costs for the nine months ended January 31, 2015 increased by $1,640,346 to $1,665,457 from $25,111 in the comparable period in 2015. This increase is directly attributable to the commencement of operations in 2014 and costs associated with the issuance of shares of our Common Stock to employees, consultants and vendors totaling approximately $742,950.

Sales and Marketing

Sales and marketing costs for the nine months ended January 31, 2015 were $15,421 compared to $0 for the comparable period in 2014.

Depreciation

Depreciation expense for the nine months ended January 31, 2015 was $3,779 compared to $0 for the comparable period in 2014.

Other Income (Expense)

Other income (expense) for the nine months ended January 31, 2015 was $(511,218) compared to $0 for the comparable period in 2014, primarily a result of interest expense and loan closing costs associated with our debt funding.

Net Loss

Net loss for the nine months ended January 31, 2015 was $2,082,075 compared to $25,111 for the comparable period in 2014.

Liquidity and Capital Resources

We are dependent upon obtaining additional financing in order to adequately fund working capital, infrastructure, expansion expenses and significant marketing/investor related expenditures to gain market recognition, so that we can achieve a level of revenue adequate to support our cost structure, none of which can be assured. We believe that we will need approximately $2 million over the next twelve months. While initial operations have been funded with private placements of equity and bridge loans, there can be no assurance that adequate financing will continue to be available, and, if available, be on terms that are favorable. As of January 31, 2015, we had $325 on deposit.

As of January 31, 2015, our working capital deficit was $431,139, our accumulated deficit was $2,335,539, and our stockholders’ deficit was $1,340,801. Operating loss was $382,233 and $2,082,075 for the three and nine months ended January 31, 2015, respectively.

We reduced our net cash flows used in operation during the three months ended January 31, 2015 from the three months ended October 31, 2014. We expect additional improvement during the fiscal year ended April 31, 2015 as Mountain Vista increases occupancy during the winter months; however, due to conditions and influences out of our control, including the current state of the national economy, we cannot guarantee that this improvement will be achieved or that it will be achieved in the stated time frame, nor is there any assurance that such an operating level can ever be achieved.

Off-Balance Sheet Arrangements

As of January 31, 2015, we had no material off-balance sheet arrangements.

In the normal course of business, we may be confronted with issues or events that may result in a contingent liability generally related to lawsuits, claims, environmental actions or the actions of various regulatory agencies. We consult with counsel and other appropriate experts to assess these claims. If, in our opinion, we have incurred a probable loss as set forth by generally accepted accounting principles in the U.S. (“GAAP”), an estimate is made of the loss and the appropriate accounting entries are reflected in our financial statements. After consultation with legal counsel, we do not anticipate that liabilities arising out of currently threatened lawsuits and claims, if any, will have a material adverse effect on our financial position, results of operations or cash flows.

Critical Accounting Estimates

Please refer to our Annual Report on Form 10-K/A for the year ended April 30, 2014 filed with the Commission on August 29, 2014, and incorporated herein by reference, for detailed explanations of our critical accounting estimates, which have not changed significantly during the three months ended January 31, 2015.

New Accounting Pronouncements

There have been no material changes to our significant accounting policies as summarized in our Annual Report on Form 10-K/A for the year ended April 30, 2014. We do not expect that the adoption of any recent accounting pronouncements will have a material impact on our condensed consolidated financial statements.