UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 1-SA

☒     SEMIANNUAL REPORT PURSUANT TO REGULATION A

or

☐     SPECIAL FINANCIAL REPORT PURSUANT TO REGULATION A

For the fiscal semiannual period ended: June 30, 2020

Item 1. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of our operations together with our financial statements and related notes appearing at the end of this Semi-Annual Report. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed elsewhere in this Semi-Annual Report.

Med-X, Inc. (“Med-X”, “we”, “us”, “our”, or the “Company”) is a Nevada corporation formed in February 2014 and is engaged in the business of green scene product development, distribution, and marketing.

Its business is expected to expand significantly as a result of the closing of its merger with Pacific Shore Holdings, Inc. (“PSH” or “Pacific Shore”), its wholly owned subsidiary, on April 16, 2018. The Company and PSH have developed a series of proprietary natural “green” branded products under division names Nature-Cide®, Thermal-Aid®, Home Spa™ and Maliblu Brands. Nature-Cide® products are all-natural essential oil blends of indoor and outdoor pesticide/insecticide/repellent developed for multiple industries, including professional pest control, janitorial, hospitality, transportation and agriculture, as well as the cannabis cultivation industry. Thermal-Aid®, Thermal-Aid Zoo® and the Thermal-Aid Headache Relief System® are 100% natural heating/cooling pain and physical therapy products for painful ailments affecting adults, children and animals. Nature-Cide® and Thermal-Aid® are distributed through ecommerce platforms and through national distribution outlets positioned around the United States. Home Spa Shower Sprays are essential oil-based products distributed through various ecommerce platforms. Maliblu Brands are all-natural essential oils, including Hemp and CBD oil products, designed for various ailments and are still in the development stage. The Company also operates the MJT Network® through the Company’s online media platform, www.marijuanatimes.org, which publishes high quality media content regarding cannabis to generate revenue from advertisers and traffic optimizing venues. The network includes smart phone and tablet applications and also publishes a daily news video through social and news applications. Med-X also plans, to the extent it is legal to do so, to cultivate high quality custom-bred cannabis for the medical market to treat such aliments as pain, sleep deprivation, appetite disorders, and neurological pathologies or their symptoms.

The Company has created the National Investor Network at www.nationalinvestornetwork.com. The National Investor Network is a membership based digital platform that is designed to offer its members highly curated business news content. Each member controls their own news feed based on the companies or industry categories they chose. The platform is built on a robust database that will allow for the tracking of member behavior giving the system the tools it needs to recommend marketing strategies in proprietary ways. Member profiles are then curated and scored as potential leads for the Company’s current crowdfunding efforts. The platform gives other companies in the equity crowdfunding or stock trading space the opportunity to publish their own content in the hopes of driving traffic or raising awareness of their company or crowdfunding initiatives. This acts as a marketing tool for other companies that are looking to be recognized as a company raising capital using the exemptions promulgated under the Jobs Act of 2012 which permit crowdfunding. The Company later expects to also assist in marketing various companies with targeted campaigns inside the National Investor Network platform to certain members as a service. In exchange for these services, the Company hopes to generate revenue and small percentages of equity in each company with the hope that more exposure will help them with their equity crowdfunding efforts. The Company’s media division, the MJT Network, could be profitable if and to the extent that the revenue from advertisers, sponsors, product sales and service fees exceeds the cost of the content (expected to be writers’ and content licensing fees) and products offered for online sale. We do not anticipate stocking an inventory of third-party products for sale, rather, we expect to fill orders on a real time basis directly from third party fulfillment sources.

We intend to position Malibu Brands as a homeopathic, botanical, topical, all-natural alternative to traditional everyday pain management methods for consumers of all ages who may suffer from various ailments including but not limited to arthritis, joint pain, headaches and back pain. The Company intends to launch the Malibu Brands topical product, “Pacific Pain Relief Cream”, first. After the launch of the first product, the Company plans to develop other versions of the product that potentially contain full spectrum Cannabidiol (CBD) extracted from industrial hemp and cannabis. The Company is currently preparing to ramp up product and brand awareness by launching a strategic product crowdfunding campaign that will allow investors, supporters and early adapters to buy the first “Pacific Pain Relief Cream” product at a discounted rate. Social media marketing, advertising and public relations will be used to spread awareness and drive traffic to the product launch. The hope is we can build loyalty and social proof around the product from our core, first early adapters, and take that feedback to pharmacy retailers and government and insurance-based providers that could cover the cost of the Malibu Brands “Pacific Pain Relief Cream” for the consumer patients. We plan to attend distribution and pharmacy tradeshows and educational programs as well as provide support to the public movement to hold pharmaceutical companies accountable and to help curb the opioid epidemic by educating health care providers and communities on the availability of alternative everyday pain relief products like the “Pacific Pain Relief Cream.”

Besides supplying Nature-Cide products to pest control, hospitality, janitorial and agricultural industries, Med-X also plans to supply proprietary and non-proprietary products, including Nature-Cide insecticides, pesticides, granular and soil blends to legally operating hemp and cannabis agricultural operators. As these core businesses evolve, and it becomes legal to do so, we will seek to develop and monetize techniques for the recognition and extraction of hemp and cannabis compounds for the medical industry.

We expect the demand for the Company’s proprietary products to increase significantly. The Company and its subsidiary, Pacific Shore, are currently generating revenue from the Nature-Cide, Thermal-Aid and The MJT Network divisions.

The Company is actively positioning the Nature-Cide and Thermal-Aid brands with major distribution and marketing. Med-X and PSH also plan to address the needs required to support the fast-paced emerging cannabis hemp industries. These potential innovations include new products for consumer health and welfare utilizing hemp oil and other Cannabidiol (CBD) compounds. The Company plans to utilize 100 plus acres in Northern and Southern California owned by Dr. David Toomey, our Chief Executive Officer, for hemp and other cannabis cultivation, operations, and production. Once the federal government finalizes methods and protocols for hemp Cannabidiol (CBD) extraction production, and the Company has capital to do so, the Company plans to obtain the proper government licenses for indoor and outdoor farm property in California to grow, harvest and sell high quality, custom-bred organic hemp for the California medical and Cannabidiol (CBD) compound markets.

In a 2019 study conducted by the Journal of the Florida Mosquito Control Association, the Nature-Cide All-Purpose Concentrate outperformed all other products in a testing protocol on Aedes albopictus, also known as the Asian Tiger Mosquito. Until recently, only the use of toxic pyrethroids with brand names such as Onslaught (produced by MGK), Cyzmic CS (produced by Control Solutions Inc.), Delta-Gard (produced by Bayer), and others in the respected chemical manufacturing world, have been the only option for barrier sprays in mosquito control world-wide. In light of the suggestion of the published study stating “the positive results using Nature-Cide as an outdoor residual treatment in this study demonstrates that botanically based formulations are ready to be investigated further and possibly incorporated operationally into mosquito control programs”, the Nature-Cide liquid concentrates are undergoing various toxicity testing as a first step to enable the product to be exported. The concentrated formula is already registered with multiple state EPA offices where required for use and sale. The product is being offered to Vector Control companies available in multiple countries that are requesting importation.

Med-X also plans, to the extent it is legal to do so, to cultivate high quality custom-bred hemp and cannabis for the medical market to treat such aliments as pain, sleep deprivation, appetite disorders, and neurological pathologies or their symptoms. Recently the federal government passed the 2018 Farm Bill, which now allows the cultivation of hemp. Once the guidelines have been established, and the Company has sufficient funding to do so, the Company plans to cultivate and extract hemp Cannabidiol (CBD) for the patient and medical communities. The Farm Bill ensures that any cannabinoid or the chemical compounds that make up the cannabis plant that come directly from hemp will be legal, if and only if that hemp is produced in a manner consistent with the Farm Bill, associated federal regulations, associated state regulations, and by a licensed cultivator. It explicitly allows the transfer of hemp-derived products across state lines for commercial or other purposes. It also imposes 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, state departments of agriculture must consult with the state’s governor and chief law enforcement officer to devise a plan that is submitted to the Secretary of United States Department of Agriculture (“USDA”). A state’s plan to license and regulate hemp can only commence once the Secretary of USDA approves that state’s plan. Once the state of California finalizes its hemp regulations, methods and protocols for growing hemp, and the USDA approves it, the Company plans to obtain the proper government licenses to commence farming operations on an indoor and outdoor farm property in California to grow, harvest and sell high quality, proprietary, organic hemp for the US medical and Cannabidiol (CBD) compound markets. Management is planning to produce various hemp Cannabidiol (CBD) products, such as topicals and supplements for pain management, if and when the Company has capital to do so. Over the past 20 years, 33 states have legalized cannabis for medical use, and over the past several years, ten states have legalized cannabis for adult use. Every one of those programs is illegal under federal law, with no exceptions, and the Farm Bill does nothing to change that situation. That said, many in the cannabis community hope that the reforms to hemp policy under the Farm Bill serve as a first step toward broader cannabis reform. Source for information above: www.brookings.edu/blog/fixgov/2018/12/14/the-farm-bill-hemp-and-cbd-explainer/. The Company will not market or sell any of these compounds, supplements or medicines made from these compounds, until it is clearly legal to do so under federal, state and applicable local law. Consequently, such products, even if successfully developed by the Company, are not expected to generate revenue in the short term.

In the future Med-X plans to research, develop and license or otherwise monetize cannabis and hemp compound identification and extraction techniques for the cannabis/hemp medical industry. Management believes that Med-X, if and when the federal government changes its stance and reschedules cannabis from a Schedule 1 to a Schedule 2 or 3 drug, or de-schedules it all together, will eventually earn substantial revenue from growing, harvesting and selling high quality, custom-bred organic cannabis for the California medical and recreational markets. As applicable cannabis licensing and tax regulations in California are published and licenses become available, we intend to launch our planned cultivation operations in that state. As part of its growth strategy, the Company may acquire from third parties other businesses and products that fit into the Company’s business model to generate more revenue and enhance the value of the Company.

Results of Operations

The period of January 1, 2019 to June 30, 2019

Revenue. Revenue for the period of January 1, 2019 to June 30, 2019 was $268,500. Revenue for the six-month period ended June 30, 2019 was comprised of $198,384 from Nature-Cide and $56,866 from our Thermal-Aid product line with revenue of $8,606 from our new Malibu Brands product line and with revenue from advertisers in The Marijuana Times of $4,644.

Operating Expenses. Operating expenses for the period of January 1, 2019 to June 30, 2019 were $2,403,520.Operating expenses for the period were comprised of sales and marketing costs of $816,720 to support and promote the continued growth of Nature-Cide on a national basis with major pest control distributors, marketing efforts associated with the launch of the Company’s new product line known as Malibu Brands, non-cash compensation of $41,835 for stock options along with personnel expenses, general and administrative expenses and professional outside service fees of $1,544,965. The increase of nearly 48% in operating expenses in 2019 compared to 2018 was mostly caused by significant growth in costs associated with sales and marketing efforts for the Nature-Cide product line, the launch of the new Malibu Brands product line, as well as an increase in personnel and outside service expense offset by a slight decrease in expenses related to stock options.

Net Loss. Net loss for the period of January 1, 2019 to June 30, 2019 was ($2,328,660). This net loss was the result of revenue of $268,500 and $2,403,520 of operating expenses. Currently operating costs exceed revenue because of slower sales growth than anticipated while operating expenses increased significantly. We cannot assure when or if revenue will exceed operating costs.

The period of January 1, 2020 to June 30, 2020

Revenue. Revenue for the period of January 1, 2020 to June 30, 2020 was $556,334.Revenue for the six-month period ended June 30, 2020 was comprised of $409,585 from Nature-Cide and $144,504 from our Thermal-Aid product line with revenue of $959 from our new Malibu Brands product line and with revenue from advertisers in The Marijuana Times of $1,286.

Operating Expenses. Operating expenses for the period of January 1, 2020 to June 30, 2020 were $1,573,416. Operating expenses for the period were comprised of sales and marketing costs of $413,262 to support and promote the continued growth of Nature-Cide on a national basis with major pest control distributors, marketing efforts associated with the launch of the Company’s new product line known as Malibu Brands, along with personnel expenses, general and administrative expenses and professional outside service fees of $1,160,154. The decrease of nearly 35% in operating expenses in 2020 compared to 2019 was mostly related to a decrease in costs associated with sales and marketing efforts for the Nature-Cide product line, the introduction of the new Malibu Brands product line, as well as a significant reduction in personnel and outside service expenses related to the impact of COVID-19.

Net Loss. Net loss for the period of January 1, 2020 to June 30, 2020 was ($1,062,330). This net loss was the result of revenue of $556,334 and $1,573,416 of operating expenses offset by the extinguishment of debt related to funding under the COVID-19 Payroll Protection Plan (“PPP”).Currently operating costs exceed revenue because of slower sales growth than anticipated while operating expenses increased significantly. We cannot assure when or if revenue will exceed operating costs.

Liquidity and Capital Resources

We had net cash of $219,983 at December 31, 2019 and $228,775 at June 30, 2020 primarily from an increase in capital raised through our Regulation A+ and our private placement pursuant to Rule 506(c) of the Securities Act of 1933.

During the period of January 1, 2019 to June 30, 2019, we used ($2,236,263) of cash for operating activities. A large portion of the funds were used for sales and marketing costs to support and promote the growth of Nature-Cide on a national basis with major pest control distributors, general and administrative expenses and professional outside service fees and expenses related to the acquisition of Pacific Shore Holdings, Inc.

During the period of January 1, 2020 to June 30, 2020, we used ($1,085,100) of cash for operating activities. A portion of the funds were used for continued but reduced sales and marketing efforts to support and promote the growth of Nature-Cide on a national basis with major pest control distributors as well as the launch of the Company’s new product line Malibu Brands., General and administrative expenses including legal fees increased slightly while personnel and outside services decreased significantly partly due to the Company’s management taking a significant reduction in compensation due to COVID-19 and lower outside services.

Cash provided by financing activities was $2,024,320 mainly from the issuance of shares of common stock during the period of January 1, 2019 to June 30, 2019 under Regulation A+ and through a private placement of common stock at $.60 per share under Rule 506(c). Cash provided by financing activities was $1,093,892 mainly from the issuance of shares of common stock during the period of January 1, 2020 to June 30, 2020 under Regulation A+ and through a private placement of common stock at $.60 per share under Rule 506(c). Our initial Regulation A+ Offering was completed by the end of June 2019 and a new Regulation A+ Offering was qualified in July 2019. Since inception, our capital needs have primarily been met from the private placement of our common stock initially offered at $0.50 per share which commenced in September 2014 and ended when the offering under Regulation A+ commenced in February 2016, pursuant to which we sold shares of common stock at $0.60 per share. During 2017 and 2018 the Company raised capital under Regulation A+ pursuant to which we sold shares of common stock at $0.60 per share and through a private placement of common stock at $.60 per share under Rule 506(c). Under the current Regulation A+ Offering common shares are being sold at $.80 per share.

We will have additional capital requirements during 2020 and 2021.We do not expect to be able to satisfy our cash requirements through online sales, and therefore we will attempt to raise additional capital through the sale of our common stock. In February 2016, we commenced an offering of 25,000,000 shares at $0.60 per share under Regulation A+ (Tier 2) of the Securities Act of 1933, as amended. As of September 10, 2016, we had raised approximately $840,000 from the sale of approximately 1,400,000 shares in our Regulation A+ offering, which was scheduled to terminate on October 15, 2016. We filed a post-qualification amendment to the Offering Statement under Regulation A+ to extend the offering for up to another year which was reviewed and qualified by the Securities and Exchange Commission (“SEC”) on June 30, 2017. We are currently raising capital through our Regulation A+ as well as our Private Placement pursuant to Rule 506(c) of the Securities Act of 1933. Our initial Regulation A+ was completed by the end of June 2018. On August 12, 2019 the Securities and Exchange Commission qualified our filing for a new Regulation A+ Offering under which we are currently raising capital.

We cannot assure that we will have sufficient capital to finance our growth and business operations or that such capital will be available on terms that are favorable to us or at all. We are currently incurring operating deficits that are expected to continue for the foreseeable future.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies

We have identified the policies outlined below as critical to our business operations and an understanding of our results of operations. The list is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management's judgment in their application. The impact and any associated risks related to these policies on our business operations is discussed throughout management's Discussion and Analysis or Plan of Operation where such policies affect our reported and expected financial results. Note that our preparation of the financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.

Revenue Recognition

Revenue includes advertising, trade show publication and product sales. The Company recognizes revenue from product sales in accordance with Topic 605 “Revenue Recognition in Financial Statements.” Accordingly, revenue is recognized at the time customers are invoiced at shipping point, provided title and risk of loss has passed to the customer, evidence of an arrangement exists, fees are contractually fixed or determinable, collection is reasonably assured through historical collection results and regular credit evaluations, and there are no uncertainties regarding customer acceptance. Revenue from advertising and trade show publications is recognized at the time the advertisement is published and the trade show publication is recognized at the point when the trade show is being held.

Stock Based Compensation Expense

We account any share-based compensation pursuant to SFAS No. 123 (revised 2004) Share-Based Payment, or SFAS No. 123R. SFAS No. 123R requires measurement of all employee share-based payments awards using a fair-value method. When a grant date for fair value is determined we will use the Black-Scholes-Merton pricing model. The Black-Scholes-Merton valuation calculation requires us to make key assumptions such as future stock price volatility, expected terms, risk-free rates and dividend yield. The weighted-average expected term for stock options granted was calculated using the simplified method in accordance with the provisions of Staff Accounting Bulletin No. 107, Share-Based Payment. The simplified method defines the expected term as the average of the contractual term and the vesting period of the stock option. We will estimate the volatility rates used as inputs to the model based on an analysis of the most similar public companies for which Med-X has data. We will use judgment in selecting these companies, as well as in evaluating the available historical volatility data for these companies.

SFAS No. 123R requires us to develop an estimate of the number of share-based awards which will be forfeited due to employee turnover. Annual changes in the estimated forfeiture rate may have a significant effect on share-based payments expense, as the effect of adjusting the rate for all expense amortization after January 1, 2006 is recognized in the period the forfeiture estimate is changed. If the actual forfeiture rate is higher than the estimated forfeiture rate, then an adjustment is made to increase the estimated forfeiture rate, which will result in a decrease to the expense recognized in the financial statements. If the actual forfeiture rate is lower than the estimated forfeiture rate, then an adjustment is made to decrease the estimated forfeiture rate, which will result in an increase to the expense recognized in the financial statements. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. We have never paid cash dividends, and do not currently intend to pay cash dividends, and thus have assumed a 0% dividend yield.

Med-X will continue to use judgment in evaluating the expected term, volatility and forfeiture rate related to its stock-based awards on a prospective basis, and in incorporating these factors into the model. If our actual experience differs significantly from the assumptions used to compute its stock-based compensation cost, or if different assumptions had been used, we may record too much or too little share-based compensation cost. Med-X recognizes expense using the straight-line attribution method.

Item 2. Other Information

In December 2019, a Coronavirus (COVID-19) was reported in China, and in January 2020, the World Health Organization declared it a Public Health Emergency of International Concern. This contagious disease outbreak, which has continued to spread to other countries, and related adverse public health developments, could adversely affect the Company and its customers and suppliers as a result of quarantines, facility closures, and travel and logistics restrictions in connection with the outbreak. More broadly, the outbreak could affect workforces, customers, economies and financial markets globally, potentially leading to an economic downturn. This could decrease spending, adversely affect demand for our products and services, and harm our business and results of operations. The restrictions required us to furlough all but two employees. Our operations were deemed Essential, so these two employees handled our product fulfillment. Also, the Company’s CEO, COO, CFO, CMO and Executive VP supported business efforts remotely without drawing a salary for one month. After one month, the executive management team agreed as a group to take a significant reduction (approximately 48%) in compensation which as of the date of this Semi-Annual Report is still in effect and is planned to continue. Our supply chain that supports our main product lines was impacted as well by COVID-19 which resulted in significant delays in delivery of materials for our product production causing delays in delivery to our customers. Our ability to raise capital through our Regulation A+ (Tier 2) Offering and under Regulation 506(c) of Regulation D of the Securities Act was negatively impacted as potential investors, who were impacted by COVID-19 themselves, became hesitant to invest or were not in a position to invest due to the state of the country’s economy. This resulted in the Company needing to delay payments to vendors which impacted our credit with some of our vendors.

Item 3. Financial Statements

The Financial Statements provided for the six months ended June 30, 2020 and June 30, 2019 were prepared by Management and were not reviewed by our independent certified public accounting firm, Prager Metis CPAs, LLP.

Item 4. Exhibits

INDEX OF EXHIBITS

___________

*Filed with the original Offering Statement on Form 1-A on August 26, 2015 or with subsequent amendments to such Offering Statement.

**Filed with the Company’s Annual Report on Form 1-K for the fiscal year ending December 31, 2015.

SIGNATURES

Pursuant to the requirements of Regulation A, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of Regulation A, this report has been signed below by the following persons on behalf of the issuer and in the capacities and on the dates indicated.