Notes receivable at September 30, 2015 and December 31, 2014 was comprised of the following:

The Dixie Botanicals note related to an accounts receivable balance that was due on December 31, 2013. On January 10, 2014, MJNA, a Company stockholder, agreed to assume $725,000 of the accounts receivable balance and the Company wrote-off $11,496. MJNA paid the Company $125,000 on January 17, 2014 towards this balance. The remaining $600,000 was subject to a promissory note between the parties, whereby MJNA made monthly payments including interest at 7% per annum over a two year period. A final payment of $150,000 was made by MJNA to the Company in September 2015 in full satisfaction of the note.

The MediJane Holdings (“MJMD”) note relates to the sale of Company products in exchange for a convertible promissory note in the amount of $1,200,000. The full amount of $1,200,000 was due on June 23, 2015 along with accrued interest at 10%. The Company has the option to convert the full amount of the note, along with accrued interest into shares of common stock of MJMD. (See Note 12)

The MJNA settlement note relates to an agreement as reported in the Company’s Form 8-K filed with the SEC on July 20, 2015 (the “July Form 8-K”). As further discussed in the July Form 8-K, on July 14, 2015, the Company entered into a settlement agreement with MJNA, HempMeds PX, LLC, Kannaway, LLC, General Hemp, LLC, HDDC Holdings, LLC, Rabbit Hole Technologies, Inc., Hemp Deposit and Distribution Corporation and MJNA Holdings, LLC (collectively, the “MJNA Parties”) to settle multiple litigation matters between the Company and certain MJNA Parties (the “Settlement Agreement”). In particular, the Settlement Agreement provides for the dismissal with prejudice of all claims and counterclaims alleged in litigation previously reported in the Company’s Report on Form 10-Q for the period ended March 31, 2015. As a result of the Settlement Agreement, the Company recognized a gain of $756,714 in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2015.

Pursuant to the Settlement Agreement, the MJNA Parties paid the Company the sum of $150,000 and delivered a promissory note in the principal amount of $600,000, bearing interest at the rate of 6% per annum, payable in six equal monthly installments of $101,757 commencing August 15, 2015. The promissory note is secured by shares of the Company’s common stock held by the MJNA Parties. Also pursuant to the Settlement Agreement, the MJNA Parties assigned and transferred to the Company certain domain names previously owned by the MJNA Parties related to the Company’s products, and the Company assigned and transferred to Medical Marijuana, Inc. all of the Company’s right, title and interest in and to certain trademarks including those bearing the name Real Scientific Hemp Oil™, RSHO™, Cannabis Beauty™ and Cannabis Beauty Defined™.

On August 24, 2015, Company products were sold to MJNA totaling $2,000,000 in exchange for a promissory note. The note bears interest at 6% per annum, and is payable in twelve equal monthly installments commencing November 1, 2015, and is secured by 2,000,000 shares of Company common stock.