PART II AND III 2 cbdzpostqualificationamend2.htm POST QUALIFICATION AMENDMENT NO.2 cbdzpostqualificationamend2.htm - Generated by SEC Publisher for SEC Filing

 

Post-Qualification Offering Circular Amendment No. 2

 

File No. 024-10924

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

REGULATION A OFFERING CIRCULAR

UNDER THE SECURITIES ACT OF 1933

 

CANNABINOID BIOSCIENCES, INC.

(Exact name of issuer as specified in its charter)

 

 

California

 

 

(State or other jurisdiction of incorporation or organization)

 

 

 

370 Amapola Ave., Suite 200A, Torrance

California 90501; (323) 868-6762; (310) 895-1839

 

 

(Address, including zip code, and telephone number,

including area code, of issuer’s principal executive office)

 

 

 

Patience C Ogbozor

370 Amapola Ave., Suite 200A

Torrance, California 90501

Telephone: (310) 895-1839

 (Name, address, including zip code, and telephone number,

including area code, of agent for service)

 

Copy to:

 

Law Office of Mary Shea

1701 Broadway, #334

Vancouver, Wa 9863

541-450-9943; ###-##-####

 

2834

 

47-1077576

(Primary Standard Industrial

 

(IRS Employer

Classification Code Number)

 

Identification Number)

 

 

 

 


 

This Offering Circular shall only be qualified upon order of the Commission, unless a subsequent amendment is filed indicating the intention to become qualified by operation of the terms of Regulation A.

 

 

Preliminary Offering Circular dated May 20, 2020

 

An Offering Statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission. Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the Offering Statement filed with the Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the Offering Statement in which such Final Offering Circular was filed may be obtained.

 

 

CANNABINOID BIOSCIENCES, Inc.

 

Maximum Offering Amount: $50,000,000

 

 

This Post-Qualification Offering Circular Amendment No.2 (this “Offering Circular Amendment No.2”) amends the Post-Qualification Offering Circular Amendment No.1 (the “Offering Circular Amendment No.1”) filed on May 1, 2020.  The Offering Circular Amendment No.1 included Audit Reports that covered only 2019 and did not include the year 2018.   This Offering Circular Amendment No.2 includes Audit Reports for both 2019 and 2018.

 

This Offering Circular Amendment No.2 amends the offering circular of Cannabinoid Biosciences, Inc dated April 9, 2019, as last qualified on April 16, 2019. February 13, 2019, and as may be amended and supplemented from time to time (the “Offering Circular”), to add, update and/or replace information contained in the Offering Circular as expressly set forth herein. Unless otherwise defined below, capitalized terms used herein shall have the same meanings as set forth in the Offering Circular. See “Incorporation by Reference of Offering Circular” below.

 

Incorporation by Reference of Offering Circular

 

The Offering Circular, including this Offering Circular Amendment No. 2, is part of an offering statement (File No. 024-10924) that we filed with the Securities and Exchange Commission (the “Commission”). We hereby incorporate by reference into this Offering Circular Amendment No. 2 all the information contained in Offering Circular Amendment No. 1. Please note that any statement that we make in this Offering Circular Amendment No. 1 (or have made in the Offering Circular) will be modified or superseded by any inconsistent statement made by us in a subsequent offering circular supplement or post-qualification amendment.

 

This is the public offering of securities of Cannabinoid Biosciences, Inc., a California corporation (the “Company”). We are offering a maximum of Fifty Million (50,000,000) shares (the “Maximum Offering”) of our common stock, par value $0.0001 (the “Common Stock”) at an offering price of One Dollars ($1.00) per share (the “Shares”) on a “best efforts” basis. This Offering will terminate on the earlier of (i) April 9, 2021, subject to extension for up to one hundred-eighty (180) days in the sole discretion of the Company; or (ii) the date on which the Maximum Offering is sold (in either case, the “Termination Date”).  The minimum purchase requirement per investor is 100 Offered Shares ($100); however, we can waive the minimum purchase requirement on a case-by-case basis in our sole discretion.

 

We previously offered to sell a maximum of Five Million (5,000,000) shares (the “Maximum Offering”) of our common stock, par value $0.0001 (the “Common Stock”) at an offering price of One Dollar ($10.00) per share (the “Shares”) on a “best efforts” basis.  By this post-qualification amendment No.2, we are  hereby changes our offering a maximum of Fifty Million (50,000,000) shares (the “Maximum Offering”) of our common stock, par value $0.0001 (the “Common Stock”) at an offering price of One Dollars ($1.00) per share (the “Shares”) on a “best efforts” basis.

 

These securities are speculative securities. Investment in the Company’s stock involves significant risk. You should purchase these securities only if you can afford a complete loss of your investment. See the “Risk Factors” section on page 4 of this Offering Circular.

 

No Escrow

 

The proceeds of this offering will not be placed into an escrow account. We will offer the Offered Shares on a best efforts basis. As there is no minimum offering, upon the approval of any subscription to this offering, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds.

 

Subscriptions are irrevocable and the purchase price is non-refundable as expressly stated in this Offering Circular. The Company, by determination of the Board of Directors, in its sole discretion, may issue the Offered Shares under this offering for cash, promissory notes, services, and/or other consideration without notice to subscribers. All proceeds received by the Company from subscribers for this offering will be available for use by the Company upon acceptance of subscriptions for the Offered Shares by the Company. 

 

Generally, no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A as amended. For general information on investing, we encourage you to refer to www.investor.gov.

 

Sale of the Offered Shares will commence within two calendar days of the qualification date and it will be a continuous offering pursuant to Rule 251(d)(3)(i)(F).

 

This offering will be conducted on a “best-efforts” basis, which means our officers will use their commercially reasonable best efforts in an attempt to offer and sell the Offered Shares. Our officers will not receive any commission or any other remuneration for these sales. In offering the Offered Shares on our behalf, the officers will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

This Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sales of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful, prior to registration or qualification under the laws of any such state.

 

No public market currently exists for shares of our Common Stock. The Company’s senior management will manage this offering.   The Company has set a minimum investment requirement of $100. Subscribers may start funding their investment account with as little as $50, but their shares will not be issued until their individual account has a minimum balance of $100. At any time prior to reaching the minimum of $100, a Subscriber may ask for a return of funds. Purchasers of shares of our Common Stock qualified hereunder may be unable to sell their securities, because there may not be a public market for our securities. Any purchaser of our securities should be in a financial position to bear the risks of losing their entire investment.

 

Investing in our Common Stock involves a high degree of risk. See “Risk Factors” for a discussion of certain risks that you should consider in connection with an investment in our Common Stock.

   

 

  

Price to Public(3)(4)

 

Commissions(1)(5)

 

Proceeds to Company(2)

Per Share

 $  1.00

 

 $   0.10

 

 $  0.90

Maximum Offering

 $  50,000,000

 

 $  5,000,000

 

 $ 45,000,000

 

 

 

 

 

 

 

(1) Includes up to a maximum of ten percent (10%) of the gross proceeds of this Offering for sales commissions, provided that at this time the Company has not determined if it will require these services or such selected service providers. The Company reserves the right to engage one or more FINRA-member broker-dealers or placement agents in its discretion. 

 

(2) Does not include expenses of the Offering, including but not limited to, fees and expenses for marketing and advertising of the Offering, media expenses, fees for administrative, accounting, audit and legal services, FINRA filing fees, fees for EDGAR document conversion and filing, and website posting fees, estimated to be as much as $2,000,000.

 

(3) We are offering the Offered Shares on a continuous basis. See “Distribution – Continuous Offering.”

 

(4) This is a “best efforts” offering. The proceeds of this offering will not be placed into an escrow account. We will offer the Offered Shares on a best efforts basis primarily through an online platform or otherwise. As there is no minimum offering, upon the approval of any subscription to this offering, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds. See “How to Subscribe.”

 

(5) We are offering these securities without an underwriter.

 

Our Board of Directors used its business judgment in setting a value of $1.00 per share to the Company as consideration for the Common Stock to be issued under the offering. The sales price per share bears no relationship to our book value or any other measure of our current value or worth.

  

The Company is considered an “emerging growth company” under Section 101(a) of the Jumpstart Our Business Startups Act as it is an issuer that had total annual gross revenues of less than $1 billion during its most recently completed fiscal year.

 

Some of our Risk Factors include:

 

 

We are an emerging growth company with a limited operating history.

 

Subscribers will have limited control in our company with limited voting rights.

 

We may require additional financing, such as bank loans, outside of this offering in order for our operations to be successful.

 

We have conducted limited revenue-generating activities and as such have not generated any revenue since inception.

 

Our offering price is arbitrary and does not reflect the book value of shares of our Common stock.

 

Investments in finance, lending and services related business or assets are speculative and we will be highly dependent on the performance of the lending and finance market.

 

The Company does not currently own any assets.

 

THE U.S. SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.

 

NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN TEN PERCENT (10%) OF THE GREATER OF YOUR ANNUAL INCOME OR YOUR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.

 

THE SECURITIES UNDERLYING THIS OFFERING STATEMENT MAY NOT BE SOLD UNTIL QUALIFIED BY THE SECURITIES AND EXCHANGE COMMISSION. THIS OFFERING CIRCULAR IS NOT AN OFFER TO SELL, NOR SOLICITING AN OFFER TO BUY, ANY SHARES OF OUR COMMON STOCK IN ANY STATE OR OTHER JURISDICTION IN WHICH SUCH SALE IS PROHIBITED.

 

INVESTMENT IN SMALL BUSINESS INVOLVES A HIGH DEGREE OF RISK, AND INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. SEE “RISK FACTORS” FOR A DISCUSSION OF CERTAIN RISKS YOU SHOULD CONSIDER BEFORE PURCHASING ANY SHARES IN THIS OFFERING.

 

AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION, WHICH WE REFER TO AS THE COMMISSION. INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF ANY SUCH STATE. WE MAY ELECT TO SATISFY OUR OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO (2) BUSINESS DAYS AFTER THE COMPLETION OF OUR SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.

 

The date of this Offering Circular is May 20, 2020.

 


 

ITEM 2.  TABLE OF CONTENTS

 

 

 

Page

   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

7

SUMMARY

8

THE OFFERING

16

RISK FACTORS

21

DILUTION

75

PLAN OF DISTRIBUTION

78

USE OF PROCEEDS

80

DESCRIPTION OF BUSINESS

83

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

          86

DIRECTORS, EXECUTIVE OFFICERS & CORPORATE GOVERNANCE

96

EXECUTIVE COMPENSATION

104

SECURITY OWNERSHIP OF MANAGEMENT & CERTAIN SECURITY HOLDERS

106

CERTAIN RELATIONSHIPS & RELATED PARTY TRANSACTIONS

108

DESCRIPTION OF SECURITIES

108

DIVIDEND POLICY

110

ADDITIONAL INFORMATION ABOUT THE OFFERING

110

LEGAL MATTERS

113

EXPERTS

113

WHERE YOU CAN FIND MORE INFORMATION

113

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

F-1

 

 

 


 

We are offering to sell, and seeking offers to buy, our securities only in jurisdictions where such offers and sales are permitted. You should rely only on the information contained in this Offering Circular. We have not authorized anyone to provide you with any information other than the information contained in this Offering Circular. The information contained in this Offering Circular is accurate only as of its date, regardless of the time of its delivery or of any sale or delivery of our securities. Neither the delivery of this Offering Circular nor any sale or delivery of our securities shall, under any circumstances, imply that there has been no change in our affairs since the date of this Offering Circular. This Offering Circular will be updated and made available for delivery to the extent required by the federal securities laws.

 

Unless otherwise indicated, data contained in this Offering Circular concerning the business of the Company are based on information from various public sources. Although we believe that these data are generally reliable, such information is inherently imprecise, and our estimates and expectations based on these data involve a number of assumptions and limitations. As a result, you are cautioned not to give undue weight to such data, estimates or expectations.

 

In this Offering Circular, unless the context indicates otherwise, references to “Cannabinoid Biosciences” “we,” the “Company,” “our,” and “us” refer to the activities of and the assets and liabilities of the business and operations of Cannabinoid Biosciences, Inc.


 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

Some of the statements under “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” "Our Business" and elsewhere in this Offering Circular constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate”, “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will” and “would” or the negatives of these terms or other comparable terminology.

 

You should not place undue reliance on forward looking statements. The cautionary statements set forth in this Offering Circular, including in “Risk Factors” and elsewhere, identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:

 

 

Our ability to effectively execute our business plan, business model, products and service offerings, and respond to the highly competitive and rapidly evolving marketplace and regulatory environment in which we intend to operate;

 

 

Our ability to manage our research, development, expansion, growth and operating expenses;

 

 

Our ability to evaluate and measure our business, prospects and performance metrics, and our ability to differentiate our business model and service offerings;

 

 

Our ability to compete, directly and indirectly, and succeed in the highly competitive and evolving industry covering cannabidiol, endocannabinoids, phytocannabinoids, and synthetic cannabinoids suitable for specific treatments for diseases and medical conditions;

 

 

Our ability to respond and adapt to changes in laws, technology and customer behavior; and

 

 

Our ability to protect our intellectual property and to develop, maintain and enhance a strong brand.

 

Although the forward-looking statements in this Offering Circular are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. We undertake no obligation, other than as may be required by law, to re-issue this Offering Circular or otherwise make public statements updating our forward-looking statements.

 

 

 

 


 

SUMMARY

 

This summary highlights selected information contained elsewhere in this Offering Circular. This summary is not complete and does not contain all the information that you should consider before deciding whether to invest in our Common Stock. You should carefully read the entire Offering Circular, including the risks associated with an investment in the company discussed in the “Risk Factors” section of this Offering Circular, before making an investment decision. Some of the statements in this Offering Circular are forward-looking statements. See the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

 

Company Information

 

The Company was formed on May 6, 2014 under the name “CANNABINOID BIOSCIENCES, INC” a “C” corporation formed under the laws of the State of California.

 

Our mailing address is Cannabinoid Biosciences, Inc., 370 Amapola Ave., Suite 200A, Torrance, California 90501.  Our corporate websites are http://www.cbdxfund.com. Our telephone number is (323) 868-6762 and our email address is invest@cbdxfund.com.

 

We do not incorporate the information on or accessible through our websites into this Offering Circular, and you should not consider any information on, or that can be accessed through, our websites a part of this Offering Circular.

 

Our Business

 

Cannabinoid Biosciences, Inc. (“CBDZ”) is a biopharmaceutical company, which intends to engage in the discovery, development, and commercialization of cures and novel therapeutics from proprietary cannabinoid, cannabidiol, endocannabinoids, phytocannabinoids, and synthetic cannabinoids product platform suitable for specific treatments in a broad range of disease areas. Our business plan is primarily, to engage in biopharmaceutical research and development operation with aim of identifying viable drug candidates to go into clinical trials and if successful, be submitted to the FDA for approval.  Secondarily, the company also plans to roll-up CBD operations across the United States.  The Company seeks to revolutionize and standardize the pharmaceuticals and non-pharmaceutical CBD products formulations and applications across the CBD market in the United States of America. The company intends to engage in the following areas of the legal CBD business: (1) Ownership interest in certain businesses that extract, purchase and distribute Bulk Pure CBD, Isolate, Hemp Oil, THC-free CBD Distillate and Crude CBD Oil; and (2) Partnerships with local farmers to grow 2018 “Farm Bill” compliant hemp biomass.

 

While we are slowly navigating the strict regulatory environment, we intend to tweak our business strategy to include: (1) building and managing a portfolio of revenue-generating cloud-based, internet/web powered or online health and wellness businesses; and (2) rollup of profitable CBD businesses and operations across the United States. 

 

By this post-qualification amendment No.1, we are  hereby change our offering a maximum of Fifty Million (50,000,000) shares (the “Maximum Offering”) of our common stock, par value $0.0001 (the “Common Stock”) at an offering price of One Dollars ($1.00) per share (the “Shares”) on a “best efforts” basis.  Our goal is to change our offering price and quantity.  We previously offered to sell a maximum of Five Million (5,000,000) shares (the “Maximum Offering”) of our common stock, par value $0.0001 (the “Common Stock”) at an offering price of One Dollar ($10.00) per share (the “Shares”) on a “best efforts” basis. 

 

We have also recently changed our business plan to remove from our goals the following lines of business: (1) providing financial products in form of asset-backed loans, business property mortgages and other financial products to qualified individuals/businesses in the legal-cannabis businesses; and (2) providing professional bookkeeping, top-level financial reporting, Accounting, CSE Reporting, Business Valuation, Mergers & Acquisitions, GAAP/ IFRS Conversion, Pre IPO/RTO Prep, Section 280E Tax, and Biological Assets Valuation to cannabis businesses and investors in California and other states that has legalized cannabis. 

 


 

We decided to reduce our focus and concentrate on (a) biopharmaceutical research and development; (b) building and managing a portfolio of revenue-generating cloud-based, internet/web powered or online health and wellness businesses; and (c) rollup of profitable CBD businesses and operations across the United States.

 

Going forward, Cannabinoid Biosciences, Inc. (hereinafter the “Company”) a biopharmaceutical company, intends to engage in the discovery, development, and commercialization of cures and novel therapeutics from proprietary cannabinoid, cannabidiol, endocannabinoids, phytocannabinoids, and synthetic cannabinoids product platform suitable for specific treatments in a broad range of disease areas. Our business plan is primarily, to engage in biopharmaceutical research and development operation with aim of identifying viable drug candidates to go into clinical trials and if successful, be submitted to the FDA for approval.  Secondarily, the company also plans to roll-up CBD operations across the United States.  The Company seeks to revolutionize and standardize the pharmaceuticals and non-pharmaceutical CBD products formulations and applications across the CBD market in the United States of America. The company intends to engage in the following areas of the legal CBD business: (1) Ownership interest in certain businesses that extract, purchase and distribute Bulk Pure CBD, Isolate, Hemp Oil, THC-free CBD Distillate and Crude CBD Oil; and (2) Partnerships with local farmers to grow 2018 “Farm Bill” compliant hemp biomass.

 

As at the date of this company does not currently, nor does it intend, in the future to, maintain an ownership interest in any marijuana dispensaries or production facilities.

 

At this time, Cannabinoid Biosciences does not grow, process, own, handle, transport, or sell marijuana, cannabidiol, endocannabinoids, phytocannabinoids, and synthetic cannabinoids as the Company is organized and directed to operate strictly in accordance with all applicable state and federal laws.

 

In late 2019, the company acquired two CBD marketplaces that it intends to further develop and monetize in the near future.  Although the marketplaces, www.cbdhempextra.com and www.cannabidiolhemp.net are up and running, lots of development work are still needed before we could monetize the sites.

 

Furthermore, during the last quarter of 2019, we entered into non0binding Letter of Intent (LOIs) with 5 CBD operations to acquire their businesses. The targets’ potential revenue and net income as follows:

 

(1) Target-1 = CBD Marketplace; Revenue = $241,211; Net Profit = $206,167; and FFE/REAL ESTATE = $0;

 

(2) Target-2 = Hemp Farm and CBD manufacturer with Real Estate:  Revenue = $27,493,000; Net Profit = $7,972,970; and FFE/REAL ESTATE = $15,300,000

 

(3) Target-3 = Hemp farm and CBD manufacturing plant:  Revenue = $1,500,000; Net Profit = $850,000; and FFE/REAL ESTATE = $2,200,000;

 

(4) Target-4 = Hemp grower and unique CDB technology: Revenue = $1,450,000; Net Profit = $420,500; and FFE/REAL ESTATE = $1,300,000.

 

Subsequently, as we were pulling together financing for the acquisition, COVID-19 exploded and crippled most business transactions across the world. As a result of the disruptions occasioned by COVID-19, the operations of our major financier coming from New York and London came under the lockdown.  We have informed the sellers about this situation and advised that they move on to other potential acquirers as we are completely uncertain about the where things would be after the end of COVID-19 pandemic.  There is no guarantee that we could be able to acquire one or more of these businesses, or that these businesses would still be available to us to acquire in the future, or at the initially contemplated price. 

 

On the biopharmaceutical aspect of our business plan, the Company has started gradually building positions in several biopharma operations and other businesses.  

 

In October 2019, the Company acquired controlling stake in KID Castle Education Corporation for $55,000.  This acquisition was in pursuit of the Company’s goal of getting listed or up-listed on the Nasdaq within the next 12 months, we acquired voting control of Kid Castle (OTCPINK: KDCE) on October 21, 2019.  On December 29, 2019, the Company’s board resolved and approve to spin out the shares of Kid Castle to the Company’s shareholders immediately. 


 

 

Furthermore, as at December 31, 2019, the Company has established both trading and holding positions in the following biotechnology companies: Entest BioMedical, Inc., Accuray Incorporated, Acer Therapeutics Inc., Achieve Life Sciences, Inc., Acorda Therapeutics, Inc., Adamas Pharmaceuticals, Inc., Adamis Pharmaceuticals Corporation, AgeX Therapeutics, Inc., Akari Therapeutics, Plc, Akerna Corp., Allena Pharmaceuticals, Inc., Allogene Therapeutics, Inc., Amicus Therapeutics, Inc., Amyris, Inc., Anika Therapeutics, Inc., Anixa Biosciences, Inc., Arcturus Therapeutics Holdings Inc., Armata Pharmaceuticals, Inc., Artelo Biosciences, Inc., ASLAN Pharmaceuticals Limited, Assertio Therapeutics, Inc., aTyr Pharma, Inc., Axonics Modulation Technologies, Inc., Aytu BioScience, Inc., Biocept, Inc., BioCryst Pharmaceuticals, Inc., Can-Fite BioPharma Ltd., Capricor Therapeutics, Inc., Celldex Therapeutics, Inc., Cerus Corporation, Checkpoint Therapeutics, Inc., Chimerix, Inc., Correvio Pharma Corp., Curis, Inc., CymaBay Therapeutics, Inc., DBV Technologies S.A., Endologix, Inc., EyePoint Pharmaceuticals, Inc., Novavax, Inc., Radius Health, Inc., and Puma Biotechnology, Inc. 

 

The Company looks to serve its investors by working to maximize their income while at the same time controlling expenses. The funds required for organizing the Company and this Offering have been provided by the Manager of the Company.

  

This business plan is based on two vital components:

 

 

1.

Making concentrated direct investments in distressed biopharma businesses through the public market as well as through the private market channels. This requires an in-depth knowledge of the market and how to keep gaining a greater share of that market; and

     

 

2.

Building upon a cost-conscious financial model designed to control/reduce cost, streamline operations, manage and improve the fortunes of distressed / failed biopharma businesses on lean budget.

 

Objectives

 

The Company has definite objectives to fulfill its strategy. These include:

 

 

Employing qualified individuals who are interested in achieving financial success by taking advantage of market divergence and irrational treatment meted on biopharma business who that failed in Phase 2 or Phase 3 clinical trails; and

     

 

Making timely acquisitions and taking profits from the risk arbitrage from acquiring those businesses.

 

 

The Company will look to become a biopharmaceutical portfolio manager with operational capacity to turnaround distressed biotech companies, such as those that failed 2nd and 3rd phase of clinical trials. We intend to acquire these businesses at or below their book-value or at steeper discount, thereby giving the Company an instant competitive advantage before it even begin to implement its turnaround expertise. A potential investor should note that the above criteria is subject to change according to market conditions and there is no guarantee of generating any positive result from the above articulated business plan.

 

Mission Statement

 

Our vision is to revolutionize and standardize the pharmaceuticals and non-pharmaceutical CBD products formulations and applications across the CBD market while developing robust capitalization to finance a more professional ecosystem within the CBD, Hemp and CBD/Hemp industry, creating a better work environment for our clients, as well as creating improved patient experiences, and a clear choice for investors in the sector. 

 


 

Our goal is to bring standardization to the CBD industry, the same way that John D Rockefeller’s Standard Oil brought standardization to crude refining in the United States in the nineteenth century.  Our process standardization would entail steps that include (a) ethanol extraction system, (b) winterization to remove fats; (c) multiple rounds of rotary evaporation are used to remove plant material and other unnecessary components; (d) extract decarboxylation to transform into a crystalline structure with a proprietary post-processing technique; and (e) get the extract tested by third-party laboratories, package it, and get it ready for shipment.

 

Keys to Success

 

Management Experience

 

Our experienced management team has a combined thirty-two years of successful experience in the legal Cannabis industry in California. Cannabinoid Biosciences is launching its array of investments and services to CBD/Hemp industry across the United States.

 

Early mover advantage

 

The CBD market in the US is very fragmented, lack established process control and protocols, and is without formulations standardization.  CBDZ is stepping into this space to standardize and reorganize this market, establish process control (benchmarks and protocols), and create formulation standards for the industry.  Since the company would be one of the early vertically integrated biopharma CBD operations in the United States, the Company would have an early mover advantage in the industry. 

 

 

 

 

Special Purpose Entities

 

When the Company does acquire businesses and operating assets, it intends to hold title to the properties through separate LLCs or through special purpose entities (“SPE’s”) holding several similar asset types. Each separate LLC or SPE will be a 100% wholly-owned subsidiary of the Company. If a joint venture is undertaken, the Company will record a first position deed instead of holding actual title.

 

 

Each business/operation acquired is its own entity and is structured as its own business structure while Cannabinoid Biosciences, Inc. serves as the parent Company that bundles all the ownership interests into a single corporation.

     

 

Each business/operation is managed by Cannabinoid Biosciences, Inc. or its authorized agents.

 

Leverage

 

Leverage represents an important vehicle for maximizing returns; however, the Company will evaluate the appropriate amount of debt based on market conditions, feasibility of the project, and determined risk. The Company may borrow up to 150% of the value of the underlying assets of the Company. We may incur indebtedness in the form of bank borrowings, purchase money obligations to the sellers of properties and publicly or privately placed debt instruments or financing from institutional investors or other lenders. The indebtedness may be secured or unsecured. Security may be in the form of mortgages or other interests in our properties; equity interests in entities which own our properties or investments; cash or cash equivalents; securities; letters of credit; guarantees or a security interest in one or more of our other assets.

 

The Company may use borrowing proceeds to finance acquisitions of new businesses or operations, make other investments, trade in stocks, futures, options and forex, make payments to the officers and management, pay for capital improvements, repairs, refinance existing indebtedness, pay distributions or provide working capital. The form of our indebtedness may be long-term or short-term debt or in the form of a revolving credit facility.

 

Financing Strategy


 

 

Once the proceeds of this Offering have been fully invested, the Company expects our debt financing will be in the range of approximately 45% to 95% of the aggregate value of targeted business, operation, investments and other assets. Financing for acquisitions and investments may be obtained at the time an asset is acquired or an investment is made or at such later time as the management determines to be appropriate.

 

Our proprietary trading account utilizes Regulation T margin in its trading accounts.  We plan to upgrade to “Portfolio Margin” because of the flexibilities accorded to that by the broker-dealers.

 

In addition, debt financing may be used from time to time for property improvements, lease inducements and other working capital needs, including the payment of distributions. Additionally, the amount of debt placed on an individual business operation or related to a particular investment, including our pro rata share of the amount of debt incurred by an individual entity in which the Company invests, may be less than 75% or more than 95% of the value of such property/investment or the value of the assets owned by such entity, depending on market conditions and other factors.

 

The Company intends to limit borrowing to 150% of the value of Company assets.

 

Notwithstanding the above, depending on market conditions and other factors, management may choose not to place debt on our portfolio or assets and may choose not to borrow to finance operations or to acquire businesses. The Company financing strategy and policies do not eliminate or reduce the risks inherent in using leverage to purchase businesses.

 

Geographic Scope

 

The Company will not limit itself geographically, however it intends to invest primarily in metropolitan areas in urban neighborhoods within the United States. The Company will search arbitrage opportunities that it may purchase at a discount. The Company believes it can successfully identify such a potential target acquisition based upon the depth and the breadth of the industry experience, contacts and industry knowledge of the Company’s Senior Management.

  

Competition

 

We will face competition from other owners, investors and researchers that are looking to acquire similar operations and who may implement or are already implementing a similar business plan to ours. Further, we may be at a disadvantage to our competition who may have greater capital resources than we do, specifically cash. It has become increasingly difficult to obtain lending on many businesses that are able to close without financing and pay the full purchase price of a business in cash may be able to close on more business or will be able to negotiate better purchasing terms.

 

Section 15(g) of the Securities Exchange Act of 1934

 

The Offered Shares are covered by section 15(g) of the Exchange Act that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser’s written agreement to the transaction prior to the sale. Consequently, the rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.

 

Section 15(g) of the Exchange Act also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one-page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as bid and offer quotes, a dealers spread and broker/dealer compensation; the broker/dealer compensation, the broker/dealers’ duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers’ rights and remedies in cases of fraud in penny stock transactions; and, the FINRA’s toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.


 

 

Dividends

 

We have not declared or paid a cash dividend to stockholders since we were organized and we do not know if ever, we could be able to declare or to pay dividends in the foreseeable future. Our Board of Directors presently will prioritize to retain any earnings to finance our operations above a prospect of authorizing cash dividends in the foreseeable future. Any payment of cash dividends in the future will depend upon our earnings, capital requirements and other factors.

 

Risks Related to Our Business

 

Our business and our ability to execute our business strategy are subject to a number of risks as more fully described in the section titled “Risk Factors.” These risks include, among others:

 

 

We have no operating history by which potential investors may measure our chances of achieving success in our contemplated business model. In addition, our executive offices have a lack of experience in managing companies similar to the Company. We were recently organized and have no history of operations. We therefore should be considered a “Development Stage Company,” and our operations will be subject to all the risks inherent in the establishment of a new business enterprise, including, but not limited to, hurdles or barriers to the implementation of our business plans. Further, because there is no history of operations there is also no operating history from which to evaluate our executive management’s ability to manage our business and operations and achieve our goals or the likely performance of the Company.

 

 

Our management team has not previously developed or managed similar business. Our management team’s limited prior managerial experience within a biopharma industry, subjects our Company to certain qualitative risks and uncertainties.

 

 

We do not have any products or services for commercial sale and may fail to generate any revenues from product or service sales in the foreseeable future, if ever.

 

 

We anticipate, pursuant to our business plan, that we will generate substantially all of our revenue from investing in biopharma operations, proprietary trading and rollup of profitable CBD operations. Any deterioration in any of these industries could harm our business and adversely affect the value of our stock.

 

 

In pursuing our business plan, we may commercially fail to develop, continue, enhance or improve the development, performance, functionality and reliability of our business model, as set forth in the Company’s business plan.

 •     No active market for our common stock exists or may develop, and you may not be able to resell your common stock at or above the initial public offering price.

 

 

 


 

 

 

EXEMPTIONS UNDER JUMPSTART OUR BUSINESS STARTUPS ACT

 

We are an emerging growth company. An emerging growth company is one that had total annual gross revenues of less than $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) during its most recently completed fiscal year. We would lose our emerging growth status if we were to exceed $1,000,000,000 in gross revenues. We are not sure this will ever take place.

 

Because we are an emerging growth company, we have the exemption from Section 404(b) of Sarbanes-Oxley Act of 2002 and Section 14A(a) and (b) of the Securities Exchange Act of 1934. Under Section 404(b), we are now exempt from the internal control assessment required by subsection (a) that requires each independent auditor that prepares or issues the audit report for the issuer shall attest to, and report on, the assessment made by the management of the issuer. We are also not required to receive a separate resolution regarding either executive compensation or for any golden parachutes for our executives so long as we continue to operate as an emerging growth company.

 

We hereby elect to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1).

 

We will lose our status as an emerging growth company in the following circumstances:

 

The end of the fiscal year in which our annual revenues exceed $1 billion.

 

The end of the fiscal year in which the fifth anniversary of our IPO occurred.

 

The date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt.

 

The date on which we qualify as a large accelerated filer.

 

 


 

REGULATION A+

 

We are offering our Common Stock pursuant to recently adopted rules by the Securities and Exchange Commission mandated under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. These offering rules are often referred to as “Regulation A+.” We are relying upon “Tier 2” of Regulation A+, which allows us to offer of up to $50 million in a 12-month period.

 

In accordance with the requirements of Tier 2 of Regulation A+, we will be required to publicly file annual, semiannual, and current event reports with the Securities and Exchange Commission after the qualification of the offering statement of which this Offering Circular forms a part.

 

 

THE OFFERING

 

Issuer:

 

Cannabinoid Biosciences, Inc.

     

Shares Offered:

 

A maximum of Fifty Million (50,000,000) shares of our Common Stock (the “Maximum Offering”), at an offering price of One Dollar ($1.00) per share (the “Shares”).

     

Number of shares of Common Stock Outstanding before the Offering:

 

Nineteen Million Seven Hundred Thousand (19,700,000) shares of Common Stock.

     

Number of shares of Common Stock to be Outstanding after the Offering (1):

 

Sixty Nine Million Seven Hundred Thousand (69,700,000) shares of Common Stock if the Maximum Offering is sold.

     

Price per Share:

 

One Dollar ($1.00).

     

Maximum Offering:

 

Fifty Million (50,000,000) shares of our Common Stock (the “Maximum Offering”), at an offering price of One Dollar ($1.00) per share (the “Shares”), for total gross proceeds of Fifty Million Dollars ($50,000,000).

     

Use of Proceeds:

 

If we sell all of the Shares being offered, our net proceeds (after our estimated commissions, if any, but excluding our estimated Offering expenses) will be approximately Forty-Five Million Dollars ($45,000,000). We will use these net proceeds the execution of our business plan, expenses associated with the marketing and advertising of the Offering, working capital and general corporate purposes, and such other purposes described in the “Use of Proceeds” section of this Offering Circular.

     

Risk Factors:

 

Investing in our Common Stock involves a high degree of risk. See “Risk Factors.”

 

 

 


 

ITEM 3.      SUMMARY OF RISK FACTORS

 

The following is only a brief summary of the risks involved in investing in our Company.  An investment in our Common Stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this Offering Circular, before making an investment decision. The risks and uncertainties described below are not the only ones that impact our operations and business. Additional risks and uncertainties not presently known to us, or that we currently consider immaterial, may also impair our business or operations. If any of the following risks, uncertainties, and other factors actually occurs, it could materially and adversely affect us and our business, financial condition, results of operations, cash flows, or prospects could suffer. In that case, the value or trading price of our shares of common stock could decline and you may lose all or part of your investment. See “Cautionary Note Regarding Forward Looking Statements” above for a discussion of forward-looking statements and the significance of such statements in the context of this Offering Circular.

 

 

Risks Related to Our Company

We face risks and uncertainties that could affect us and our business as well as the real estate industry generally.  These risks are outlined under the heading “Risk Factors” contained in our offering circular here, which may be updated from time to time by our future filings under Regulation A.  In addition, new risks may emerge at any time, and we cannot predict such risks or estimate the extent to which they may affect our financial performance.   These risks could result in a decrease in the value of our units.

 

Going Concern

 

Our financial statements appearing elsewhere in this filing 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. The Company has generated little and insignificant revenues or profits since inception, and has sustained a net loss of $162,390 for the period from May 6, 2014 (inception) to December 31, 2019. The Company’s ability to continue as a going concern for the next twelve months is dependent upon its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and its ability to obtain additional capital financing from investors. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time.  

 

We have no operating history on which to judge our business prospects and management.

 

The Company was incorporated on May 6, 2014 and has not conducted any major operations since then. The Company was incorporated pursuant to the simultaneous filing of the Company’s certificate of incorporation, as filed and stamped by the California Secretary of State on May 6, 2014.  Accordingly, we have limited operating history upon which to base an evaluation of our business and prospects. Operating results for future periods are subject to numerous uncertainties and we cannot assure you that the Company will achieve or sustain profitability. The Company’s prospects must be considered in light of the risks encountered by companies in the early stage of development, particularly companies in new and rapidly evolving markets. Future operating results will depend upon many factors, including our success in attracting and retaining motivated and qualified personnel, our ability to establish short term credit lines or obtain financing from other sources, such as the contemplated Regulation A+ offering, our ability to develop and market new products, control costs, and general economic conditions. We cannot assure you that the Company will successfully address any of these risks.

 

We are subject to all of the risks of a development stage Company.

 

We should be considered a “Development Stage Company,” and our operations will be subject to all the risks inherent in the establishment of a new business enterprise, including, but not limited to, hurdles or barriers to the implementation of our business plans. Further, because there is no history of operations there is also no operating history from which to evaluate our executive management’s ability to manage our business and operations and achieve our goals or the likely performance of the Company. Prospective investors should also consider the fact that our management team has not previously developed or managed similar companies. No assurances can be given that we will be able to achieve or sustain profitability.


 

 

Our continuing as a going concern depends upon financing.

 

If we are not able to raise additional capital, we will be unable to operate our business or continue as a going concern. In additional, if we do not raise sufficient capital and we continue to experience pre-operating losses, there will most likely be substantial doubt as to our ability to continue as a going concern. Because we have generated no revenue, all expenditures during our development stage have been recorded as pre-operating losses. Revenue operations have not commenced because we have not raised the necessary capital to acquire the facilities needed for our biopharmaceutical research and development operations.

 

Inadequacy of capital.

 

The expected gross offering proceeds of a maximum of $45,000,000 to $50,000,000 may never be realized. While we believe that such proceeds will capitalize and sustain us to allow for the continued development and implementation of our business plan, if only a fraction of this Offering is sold, or if certain assumptions contained in the business plans prove to be incorrect, we may have inadequate funds to fully develop our business. Although we believe that the proceeds from this Offering will be sufficient to help sustain our development process and business operations, there is no guarantee that we will raise all the funds needed to adequately fund our business plan.

 

We will require substantial additional funding which may not be available to us on acceptable terms, or at all. If we fail to raise the necessary additional capital, we may be unable to complete the development and commercialization of our products, or continue our development programs.

 

We expect to significantly increase our spending to advance our financing products and services. We will require additional capital for the further promotion of our products, as well as to fund our other operating expenses and capital expenditures. We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the promotion of our products and services. We may also seek collaborators for the products at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available. Any of these events could significantly harm our business, financial condition and prospects. Our future capital requirements will depend on many factors, including:

 

The time and costs involved in obtaining regulatory approvals for our biopharma product candidates, if any;

Our plans to establish sales, marketing and/or manufacturing capabilities;

The effect of competing financial products, technological and market developments;

The terms and timing of any collaborative, licensing and other arrangements that we may establish;

Our ability to establish, enforce and maintain selected strategic alliances required for our product promotion; and

Our revenues, if any, from our financial products and services.

 

 

If we raise additional funds by issuing equity or convertible debt securities, we will reduce the percentage of ownership of the then-existing shareholders, and the holders of those newly-issued equity or convertible debt securities may have rights, preferences, or privileges senior to those possessed by our then-existing shareholders. Additionally, future sales of a substantial number of shares of our Common Stock, or other equity-related securities in the public market could depress the market price of our Common Stock and impair our ability to raise capital through the sale of additional equity or equity-linked securities. We cannot predict the effect that future sales of our Common Stock, or other equity-related securities would have on the market price of our Common Stock at any given time.


 

  

We will need but may be unable to obtain additional funding on satisfactory terms, which could dilute our shareholders or impose burdensome financial restrictions on our business.

 

We have relied upon cash from financing activities and in the future, we expect to rely on the proceeds from this Offering, future debt and/or equity financings, and we hope to rely on revenues generated from operations to fund all of the cash requirements of our activities. However, there can be no assurance that we will be able to generate any significant cash from our operating activities in the future. Future financings may not be available on a timely basis, in sufficient amounts or on terms acceptable to us, if at all. Any debt financing or other financing of securities senior to the Common Stock will likely include financial and other covenants that will restrict our flexibility. Any failure to comply with these covenants would have a material adverse effect on our business, prospects, financial condition and results of operations because we could lose our existing sources of funding and impair our ability to secure new sources of funding. However, there can be no assurance that the Company will be able to generate any investor interest in its securities. If we do not obtain additional financing, our business will never commence, in which case you would likely lose the entirety of your investment in us.

  

We are at an early stage of development as a company and currently have no source of revenue and may never become profitable.

 

We are a development-stage technology company that has little to no operation since inception in 2014. As a recently formed development-stage company, we are subject to all of the risks and uncertainties of a new business, including the risk that we may never develop, complete development or market any of our products or services and we may never generate product or services related revenues. Accordingly, we have only a limited history upon which an evaluation of our prospects and future performance can be made. If we are unable to generate revenue, we will not become profitable, and we may be unable to continue our operations. Furthermore, our proposed operations are subject to all business risks associated with new enterprises. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the expansion of a business, operation in a competitive industry, and the continued development of advertising, promotions and a corresponding customer base. There can be no assurances that we will operate profitably.

 

We rely on our management team, which has limited experience working together.

 

We depend on a small number of executive officers and other members of management to work effectively as a team, to execute our business strategy and business plan, and to manage employees and consultants. Our success will be dependent on the personal efforts of our Chief Executive Officer (and controlling shareholder), Ms. Ogbozor, our Chairman, Dr. Mbagwu, our General Counsel, Mr. Uzoh, our CFO Mr. Igwealor and other key personnel.  Any of our officers or employees can terminate his or her employment relationship at any time, and the loss of the services of such individuals could have a material adverse effect on our business and prospects. Moreover, after the termination of this Offering, our CEO and controlling shareholder, Ms. Ogbozor, may elect to remove or replace certain members of our Board of Directors under certain circumstances pursuant to our Bylaws. The ability to control a shareholder vote and remove one or more of our directors, also, indirectly enables our controlling shareholder to terminate and/or replace our executive officers. As a result, Ms. Ogbozor holds significant power to control or effectuate significant changes to the composition of our Board of Directors and our management team. Our management team has worked together for only a very short period of time, and may not work well together as a management team.

 

We have no long-term employment agreements in place with our executive officers.

 

As of the date of this Offering Circular we only have unwritten short-term, interim employment arrangements with our senior executive officers that expire on December 31, 2020. We are currently negotiating compensation packages and the terms of formal employment agreements with our executive officers and we anticipate the any such employment agreement entered into with our executive officers will be on terms no less favorable to our executive officers than the terms of their respective interim arrangement. There is a risk that the Company and any one or more of our executive officers will not reach an agreement with respect to their employment agreements, in part because we expect their compensation packages will be comprised of cash compensation, equity compensation (e.g. stock options, warrants or stock grants), as well as standard benefits and other terms customary for executive officers of similar experience and tenure. Although we intend to finalize negotiations with respect to these employment agreements with each of our executive officers in the near future, if we fail to reach mutually satisfactory agreements in this regard, any one or more of such persons may terminate their association with the Company. Additionally, we are also highly dependent on certain consultants and service providers, including our development partners and our marketing and advertising service providers, some of which are affiliates of the Company and our officers and directors. The loss of any one or more of these experienced executives, consultants, service providers and/or development partners would have a material and adverse effect on our Company and our business prospects. See “Certain Relationships and Related Party Transactions” and“ Directors, Executive Officers and Corporate Governance”.


 

 

Our ability to succeed depends on our ability to grow our business and achieve profitability.

 

We may not be successful in executing our development and/or growth strategy, and even if we are successful in the development and commercialization of services and achieve targeted growth, we may not be able to achieve or sustain profitability. Failure to successfully execute any material part of our development strategy or growth strategy would significantly impair our future growth and our ability to attract and sustain investments in our business.

 

Raising additional capital by issuing additional securities may cause dilution to our current and future shareholders.

 

We will need to, or desire to, raise substantial additional capital in the future. Our future capital requirements will depend on many factors, including, among others:

 

Our degree of success in selling our financial products and related services;

The costs of establishing or acquiring sales, and marketing for our services;

The extent to which we acquire or invest in businesses, products, or technologies, and other strategic relationships; and

The costs of financing unanticipated working capital requirements and responding to competitive pressures.

 

If we raise additional funds by issuing equity or convertible debt securities, we will reduce the percentage of ownership of the then-existing shareholders, and the holders of those newly-issued equity or convertible debt securities may have rights, preferences, or privileges senior to those possessed by our then-existing shareholders. Additionally, future sales of a substantial number of shares of our Common Stock, or other equity-related securities in the public market could depress the market price of our Common Stock and impair our ability to raise capital through the sale of additional equity or equity-linked securities. We cannot predict the effect that future sales of our Common Stock, or other equity-related securities would have on the market price of our Common Stock at any given time.

 

We are significantly influenced by our officers, directors and entities affiliated with them.

 

In the aggregate, ownership of the Company’s shares of Common Stock by management and affiliated parties, assuming the sale of the Maximum Offering, will represent approximately 23.96% of the issued and outstanding shares of Common Stock. These shareholders, if acting together, will be able to significantly influence all matters requiring approval by shareholders, including the election of directors and the approval of mergers or other business combinations transactions. Please see “Security Ownership of Management & Certain Security Holders” below for more information.

 

Our future performance is dependent on the ability to retain key personnel. The Company’s performance is substantially dependent on the performance of senior management. The loss of the services of any of its executive officers or other key employees could have a material adverse effect on the Company's business, results of operations and financial condition.


 

 

Risks of borrowing.

 

As of the date of this Offering Circular, we have incurred certain debt obligations to Goldstein Franklin, Inc., and to vendors and service providers in the ordinary course of our business. While we don’t intend to incur any additional debt from the equity commitments provided in this Offering, should we obtain secure bank debt in the future, possible risks could arise. If we incur additional indebtedness, a portion of our future revenues will have to be dedicated to the payment of principal and interest on such indebtedness. Typical loan agreements also might contain restrictive covenants, which may impair our operating flexibility. Such loan agreements would also provide for default under certain circumstances, such as failure to meet certain financial covenants. A default under a loan agreement could result in the loan becoming immediately due and payable and, if unpaid, a judgment in favor of such lender which would be senior to our rights. A judgment creditor would have the right to foreclose on any of our assets resulting in a material adverse effect on our business, ability to generate revenue, operating results or financial condition.

 

Unanticipated obstacles to execution of our business plan.

 

Our business plan may change significantly. Many of our potential business endeavors are capital intensive and may be subject to statutory or regulatory requirements. Our Board of Directors believes that the chosen activities and strategies are achievable in light of current economic and legal conditions with the skills, background, and knowledge of our principals and advisors. Our Board of Directors reserve the right to make significant modifications to our stated strategies depending on future events.

 

Controlling shareholder.

 

As of the date of this Offering Circular, our CEO, Ms. Patience Ogbozor and affiliate organization owned approximately 55.84% of our outstanding Common Stock shares. Upon completion of this Offering, assuming all 50,000,000 shares of our Common Stock are sold in this Offering, she will own approximately 23.96% of the issued and outstanding Common Stock shares. As a result, Ms. Ogbozor could be able to control a substantial voting power compared to other shareholder, and she may influence decision which may be required for the foreseeable future, which means, following the termination of this Offering, Ms. Ogbozor, alongside additional 27% vote, will be able to remove and replace members of our Board of Directors, and indirectly, through his exertion of control over our Board of Directors, terminate and replace our executive officers. Potential investors in this Offering will not have the ability to control either a vote of our Common Stock, our Board of Directors or otherwise influence or control the decisions of our appointed officers.

 

Risks of operations.

 

Our future operating results may be volatile, difficult to predict and may fluctuate significantly in the future due to a variety of factors, many of which may be outside of our control. Due to the nature of our target market, we may be unable to accurately forecast our future revenues and operating results. Furthermore, our failure to generate revenues would prevent us from achieving and maintaining profitability. There are no assurances that we can generate significant revenue or achieve profitability. We anticipate having a sizeable amount of fixed expenses, and we expect to incur losses due to the execution of our business strategy, continued development efforts and related expenses. As a result, we will need to generate significant revenues while containing costs and operating expenses if we are to achieve profitability. We cannot be certain that we will ever achieve sufficient revenue levels to achieve profitability.

 

Absence of immediate significant revenues.

 

We anticipate that we will incur substantial costs in establishing our business. We currently expect that as a result of the incurrence and payment of our initial expenses and Offering related expenses, we will have significant operating losses in year one since the costs of this Offering must be borne by us until such time, if at all, we are able to generate adequate revenues from operations.


 

 

No minimum capitalization.

 

We do not have a minimum capitalization and we may use the proceeds from this Offering immediately following our acceptance of the corresponding subscription agreements. It is possible we may only raise a minimum amount of capital, which could leave us with insufficient capital to implement our business plan, potentially resulting in greater operating losses unless we are able to raise the required capital from alternative sources. There is no assurance that alternative capital, if needed, would be available on terms acceptable to us, or at all.

 

Minimal employees or infrastructure.

 

We currently only have a small number of employees and are in the process of establishing our human resources procedures, policies, processes and registrations, which are not yet complete. However, we expect to hire additional employees upon receipt of the proceeds from this Offering. We also have minimal operational infrastructure and no prior operating history. We intent to rely on our management team, our advisors, third-party consultants, third-party developers, service providers, technology partners, outside attorneys, advisors, accountants, auditors, and other administrators. The loss of services of any of such personnel may have a material adverse effect on our business and operations and there can be no assurance that if any or all of such personnel were to become unavailable, that qualified successors can be found, on acceptable terms.

  

Limitation on remedies; indemnification.

 

Our Certificate of Incorporation, as amended from time to time, provides that officers, directors, employees and other agents and their affiliates shall only be liable to the Company and its shareholders for losses, judgments, liabilities and expenses that result from the fraud or other breach of fiduciary obligations. Additionally, we intend to enter into corporate indemnification agreements with each of our officers and directors consistent with industry practice. Thus, certain alleged errors or omissions might not be actionable by the Company. Our governing instruments also provide that, under the broadest circumstances allowed under law, we must indemnify its officers, directors, employees and other agents and their affiliates for losses, judgments, liabilities, expenses and amounts paid in settlement of any claims sustained by them in connection with the Company, including liabilities under applicable securities laws.

 

No dividends or return of profits.

 

We have limited operations and no significant operating activities are expected to be made until after significant proceeds from this Offering have been obtained.  $2 million is significant enough to enable us to undertake significant operating activities.  Accordingly, we have not had any profits from our limited operations to date. We have never declared or paid any cash dividends on our Common Stock. We currently intend to retain future earnings, if any, to finance the expansion of our operations. As a result, we do not anticipate paying any cash dividends in the foreseeable future.

 

Force Majeure.

 

Our business is uniquely susceptible to unforeseen delays or failures that are caused by forces of nature and related circumstances. These factors are outside and beyond our control. The delay or failure to commence the deployment of our financial products and services may be due to any act of God, fire, war, terrorism, flood, strike, labor dispute, disaster, transportation or laboratory difficulties or any similar or dissimilar event beyond our control. We will not be held liable to any shareholder in the event of any such failure.

 

We may incur substantial operating and net losses due to substantial expenditures.

 

We intend to expend money on our operating expenses and capital expenditures in order to commence the deployment of our financial products and services and expand our market presence. We may incur substantial operating and net losses in the foreseeable future. There can be no assurance that we will achieve or sustain profitability or positive cash flow from our operations.


 

 

We may not be able to carry out our proposed plan of operations.

 

Our proposed plan of operation and prospects will depend largely upon our ability to successfully establish a noticeable presence in the legal-cannabis industry on a timely fashion, retain and continue to hire skilled management, technical, marketing and other personnel; and attract and retain significant numbers of quality business partners. We have limited experience in the deployment of our financial products and services and there is limited information available concerning the potential performance or market acceptance of our financial products and there can be no assurance that we will be able to successfully implement our business plan or develop or maintain future business relationships, or that unanticipated expenses, problems or technical difficulties which would result in material delays in implementation will not occur.

 

We may not be able to manage our growth effectively.

 

Our growth is expected to place, a significant strain on our managerial, operational and financial resources. As the number of our clients, partners and other business partners grows, we must increasingly manage multiple relationships with various customers, strategic partners and other third parties. There can be no assurance that our systems, procedures or controls will be adequate to support our operations or that our management will be able to achieve the rapid execution necessary to successfully offer our services and implement our business plan. Our future operating results will also depend on our ability to expand sales and marketing commensurate with the growth of our business and the legal-cannabis industry. If we are unable to manage growth effectively, our business, results of operations and financial condition will be adversely affected.

 

 Risks Relating to Biopharmaceutical Industry

                                                                                                         

We are a specialty pharmaceutical company with a limited operating history, and it is difficult for potential investors to evaluate our business.

We are a specialty pharmaceutical company founded in May 2014 and have not commenced revenue-producing operations. To date, our operations have consisted of the preliminary formulation, testing and development of our initial product candidates. Our limited operating history makes it difficult for potential investors to evaluate our initial product candidates or our prospective operations. As an early stage company, we are subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays in a new business. Further, biopharmaceutical product development is a highly speculative undertaking, involves a substantial degree of risk, and is a capital-intensive business. Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies in the early stages of development, especially clinical-stage biopharmaceutical companies such as ours.  Potential investors should carefully consider the risks and uncertainties that a company with a limited operating history will face. In particular, potential investors should consider that we may be unable to:

 

 

successfully implement or execute our current business plan, or develop a business plan that is sound;

 

 

successfully complete clinical trials and obtain regulatory approval for the marketing of our product candidates;

 

 

successfully contract for the manufacture of our clinical drug products and establish a commercial drug supply;

 

 

secure market exclusivity or adequate intellectual property protection for our product candidates;

 

 

attract and retain an experienced management and advisory team; or

 

 

raise sufficient funds in the capital markets to effectuate our business plan, including clinical development, regulatory approval and commercialization for our product candidates.


 

 

Risks Related to Product Development, Regulatory Approval, Manufacturing and Commercialization

 

We depend entirely on the success of our product candidates, which have not yet demonstrated efficacy for their target or any other indications. If we are unable to generate revenues from our product candidates, our ability to create stockholder value will be limited. 

 

We have not submitted any product candidate to FDA for approval.  Our product candidates have not yet entered the early stages of development and as of the date of this prospectus we do not generate revenues from any FDA approved drug products. We are required to submit our product candidates for clinical trials. We must submit our clinical trial protocols to FDA and receive approvals from the FDA and international regulatory authorities before we commence any clinical trials. We may not be successful in obtaining acceptance from the FDA or comparable foreign regulatory authorities to start our clinical trials. If we do not obtain such acceptance, the time in which we expect to commence clinical programs for any product candidate will be extended and such extension will increase our expenses and increase our need for additional capital. Moreover, there is no guarantee that our clinical trials, when we submit one, will be successful or that we will continue clinical development in support of an approval from the FDA or comparable foreign regulatory authorities for any indication. We note that most product candidates never reach the clinical development stage and even those that do commence clinical development have only a small chance of successfully completing clinical development and gaining regulatory approval. Therefore, our business currently depends entirely on the successful development, regulatory approval and commercialization of our product candidates, which may never occur.

 

If we are not able to obtain any required regulatory approvals for our product candidates, we will not be able to commercialize our product candidate and our ability to generate revenue will be limited.

 

Once we commence operations, we must successfully complete clinical trials for our product candidates before we can apply for marketing approval. Even if we complete our clinical trials, it does not assure marketing approval. Our clinical trials may be unsuccessful, which would materially harm our business. Even if our initial clinical trials are successful, we would be required to conduct additional clinical trials to establish our product candidates’ safety and efficacy, before an NDA or Biologics License Application, or BLA, or their foreign equivalents can be filed with the FDA or comparable foreign regulatory authorities for marketing approval of our product candidates.

 

Clinical testing is expensive, is difficult to design and implement, can take many years to complete and is uncertain as to outcome. Success in early phases of pre-clinical and clinical trials does not ensure that later clinical trials will be successful, and interim results of a clinical trial do not necessarily predict final results. A failure of one or more of our clinical trials can occur at any stage of testing. We may experience numerous unforeseen events during, or as a result of, the clinical trial process that could delay or prevent our ability to receive regulatory approval or commercialize our product candidates. The research, testing, manufacturing, labeling, packaging, storage, approval, sale, marketing, advertising and promotion, pricing, export, import and distribution of drug products are subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries, which regulations differ from country to country. We would not be permitted to market our product candidates as prescription pharmaceutical products in the United States until we receive approval of an NDA from the FDA, or in any foreign countries until we receive the requisite approval from such countries. In the United States, the FDA generally requires the completion of clinical trials of each drug to establish its safety and efficacy and extensive pharmaceutical development to ensure its quality before an NDA is approved. Regulatory authorities in other jurisdictions impose similar requirements. Of the large number of drugs in development, only a small percentage result in the submission of an NDA to the FDA and even fewer are eventually approved for commercialization. As of the date of this prospectus, no NDA has been submitted to the FDA for any product candidate, and there can be no assurance that we would be able to submit an NDA in the future or that the NDA would be approved by the FDA. If our development efforts for our product candidates, including regulatory approval, are not successful for their planned indications, or if adequate demand for our product candidates is not generated, our business will be materially adversely affected.

 

Our success depends on the receipt of regulatory approval and the issuance of such regulatory approvals is uncertain and subject to a number of risks, including the following:


 

 

 

the results of toxicology studies may not support the filing of an IND for our product candidates;

 

 

the FDA or comparable foreign regulatory authorities or Institutional Review Boards, or IRB, may disagree with the design or implementation of our clinical trials;

 

 

we may not be able to provide acceptable evidence of our product candidates’ safety and efficacy;

 

 

the results of our clinical trials may not be satisfactory or may not meet the level of statistical or clinical significance required by the FDA, European Medicines Agency, or EMA, or other regulatory agencies for marketing approval;

 

 

the dosing of our product candidates in a particular clinical trial may not be at an optimal level;

 

 

patients in our clinical trials may suffer adverse effects for reasons that may or may not be related to our product candidates;

 

 

the data collected from clinical trials may not be sufficient to support the submission of an NDA, BLA or other submission or to obtain regulatory approval in the United States or elsewhere;

 

 

the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and

 

 

the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

 

Failure to obtain regulatory approval for our product candidates for the foregoing, or any other reasons, will prevent us from commercializing our product candidates, and our ability to generate revenue will be materially impaired. We cannot guarantee that regulators will agree with our assessment of the results of the clinical trials we intend to conduct in the future or that such trials will be successful. The FDA, EMA and other regulators have substantial discretion in the approval process and may refuse to accept any application or may decide that our data is insufficient for approval and require additional clinical trials, or pre-clinical or other studies. In addition, varying interpretations of the data obtained from pre-clinical and clinical testing could delay, limit or prevent regulatory approval of our product candidates.

 

We face competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively.

 

The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. We have existing competitors and potential new competitors in a number of jurisdictions, many of which have or will have substantially greater name recognition, commercial infrastructures and financial, technical and personnel resources than we have. Established competitors may invest heavily to quickly discover and develop novel compounds that could make any of our product candidates obsolete or uneconomical. In addition, mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among a smaller number of our competitors, potentially reducing or eliminating our commercial opportunity. Furthermore, such potential competitors may enter the market before us, and their products may be designed to circumvent our granted patents and pending patent applications. They may also challenge, narrow or invalidate our granted patents or our patent applications, and such patents and patent applications may fail to provide adequate protection for our product candidates. Any new product that competes with an approved product may need to demonstrate compelling advantages in efficacy, cost, convenience, tolerability and safety to be commercially successful. Other competitive factors, including generic competition, could force us to lower prices or could result in reduced sales. In addition, new products developed by others could emerge as competitors to our product candidates. If we are not able to compete effectively against our current and future competitors, our business will not grow and our financial condition and operations will suffer.


 

 

Current and future legislation may increase the difficulty and cost for us to file NDA with the FDA and to obtain marketing approval of and commercialize our product candidates and affect the prices we may obtain.

 

In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval for our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell our product candidates. Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We do not know whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.

 

In the United States, the Medicare Modernization Act, or MMA, changed the way Medicare covers and pays for pharmaceutical products. The legislation expanded Medicare coverage for drug purchases by the elderly and introduced a new reimbursement methodology based on average sales prices for drugs. In addition, this legislation authorized Medicare Part D prescription drug plans to use formularies where they can limit the number of drugs that will be covered in any therapeutic class. As a result of this legislation and the expansion of federal coverage of drug products, we expect that there will be additional pressure to contain and reduce costs. These cost reduction initiatives and other provisions of this legislation could decrease the coverage and price that we receive for our product candidates and could seriously harm our business. While the MMA applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates, and any reduction in reimbursement that results from the MMA may result in a similar reduction in payments from private payors.

  

The policies of the FDA or similar regulatory authorities may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. For example, in December 2016, the 21st Century Cures Act, was signed into law. The 21st Century Cures Act, among other things, is intended to modernize the regulation of drugs and biologics and spur innovation, but it has not yet been fully implemented and its ultimate implementation is unclear. Furthermore, the Trump administration has taken several executive actions, including the issuance of a number of Executive Orders, that could impose significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine regulatory and oversight activities such as implementing statutes through rulemaking, issuance of guidance, and review and approval of marketing applications. If these executive actions impose constraints on FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, our product candidates may lose any regulatory approval that may have been obtained and we may not achieve or sustain profitability, which would adversely affect our business. 

 

Risks Related to the Company


Substantial doubt exists about our ability to continue our business as a going concern.


We believe our current capital is insufficient to develop our business, execute our business strategy, and satisfy our near-term working capital requirements. If we fail to raise sufficient capital, we will likely need to raise additional financing in order to continue to implement our business model.  If such funds are not available to us, we may be forced to curtail or cease our activities, which would likely result in the loss to our investors of all or a substantial portion of their investment. These conditions create uncertainty as to our ability to continue as a going concern.


The Company’s forecasts are highly speculative in nature and it cannot predict results with a high degree of accuracy.


Any financial projections, especially those based on ventures with minimal operating history, are inherently subject to a high degree of uncertainty, and their ultimate achievement depends on the timing and occurrence of a complex
series of future events, both internal and external to the enterprise. There can be no assurance that potential revenues or expenses the Company projects will, in fact, be received or incurred.


 

 

Our trade secrets may be difficult to protect.


Our success depends upon the skills, knowledge, and experience of our personnel, our consultants, and advisors. Because we operate by providing services to legal cannabis industry participants, we rely in part on trade secrets to provide such services and to identify industry participants. However, trade secrets are difficult to protect. We try to protect our trade secrets by entering into confidentiality or non-disclosure agreements with certain partners, employees, consultants, and other advisors. These agreements generally require that the receiving party keep confidential, and not disclose to third parties 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.

 

The confidentiality, non-disclosure, and other similar 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.

 

 

Risks Related to this Offering

 

There has been no public market for our Common Stock prior to this Offering, and an active market in which investors can resell their shares may not develop.

 

Prior to this Offering, there has been no public market for our Common Stock. We cannot predict the extent to which an active market for our Common Stock will develop or be sustained after this Offering, or how the development of such a market might affect the market price of our Common Stock. The initial offering price of our Common Stock in this offering is based on a number of factors, including market conditions in effect at the time of the offering, and it may not be in any way indicative of the price at which our shares will trade following the completion of this offering. Investors may not be able to resell their shares at or above the initial offering price.

 

Investors in this Offering will experience immediate and substantial dilution.

 

If all of the shares of Common Stock offered hereby are sold, investors in this Offering will own 71.73% of the then outstanding shares of Common Stock, but will have paid over 99.95% of the total consideration for our outstanding shares, resulting in a dilution of ($0.72) per share. See “Dilution” and “Description of Securities” within this Offering Circular.

 

The market price of our Common Stock may fluctuate, and you could lose all or part of your investment.

 

The offering price for our Common Stock is based on a number of factors. The price of our Common Stock may decline following this Offering. The stock market in general, and the market price of our Common Stock, will likely be subject to fluctuation, whether due to, or irrespective of, our operating results, financial condition and prospects. Our financial performance, our industry’s overall performance, changing consumer preferences, technologies and advertiser requirements, government regulatory action, tax laws and market conditions in general could have a significant impact on the future market price of our Common Stock. Some of the other factors that could negatively affect our share price or result in fluctuations in our share price includes:

 

·         actual or anticipated variations in our periodic operating results;

·         increases in market interest rates that lead purchasers of our Common Stock to demand a higher yield;

·         changes in earnings estimates;

·         changes in market valuations of similar companies;

·         actions or announcements by our competitors;

·         adverse market reaction to any increased indebtedness we may incur in the future;

·         additions or departures of key personnel;

·         actions by stockholders;

·         speculation in the press or investment community; and

·         our intentions and ability to list our Common Stock on a national securities exchange and our subsequent ability to maintain such listing.


 

 

We do not expect to declare or pay dividends in the foreseeable future.

 

We do not expect to declare or pay dividends in the foreseeable future, as we anticipate that we will invest future earnings in the development and growth of our business. Therefore, holders of our Common Stock will not receive any return on their investment unless they sell their securities, and holders may be unable to sell their securities on favorable terms or at all.

 

Sales of our Common Stock under Rule 144 could reduce the price of our stock.

 

In general, persons holding “restricted securities,” including affiliates, must hold their shares for a period of at least six (6) months, may not sell more than one percent (1%) of the total issued and outstanding shares in any ninety (90) day period, and must resell the shares in an unsolicited brokerage transaction at the market price. However, Rule 144 will only be available for resale in the ninety (90) days after the Company files its semi-annual reports on Form 1-SA and annual reports on Form 1-K, unless the Company voluntarily files interim quarterly reports on Form 1-U, which the Company has not yet decided to do. The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.

 

Because we do not currently have an audit committee, compensation committee or any other form of corporate governance committee, shareholders will have to rely on our directors, none of whom is independent, to perform these functions.

 

We do not have an audit committee, compensation committee or any form of corporate governance committees comprised of an independent director. The Board performs these functions as a whole and no members of the Board are an independent director. Our Board has recently passed a resolution and is in the process of establishing certain committees, including an audit and compliance committee, a finance committee, a hiring and compensation committee and an executive committee, and plans to implement additional corporate governance controls. However, until such committees and controls are formally established, there is a significant risk that certain members of the Board of Directors, executive management and/or our controlling shareholder could thwart such plans and prevent such committees and controls from being implemented. Thus, there is a potential conflict in that board members who are also part of management will participate in discussions concerning management compensation and audit issues that may affect management decisions.

 

Our failure to maintain effective internal controls over financial reporting could have an adverse impact on us.

 

We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely impact our public disclosures regarding our business, financial condition or results of operations. In addition, management's assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, disclosure of management's assessment of our internal controls over financial reporting or disclosure of our public accounting firm's attestation to or report on management's assessment of our internal controls over financial reporting may have an adverse impact on the price of our Common Stock.

 

Management discretion as to the actual use of the proceeds derived from this Offering.

 

The net proceeds from this Offering will be used for the purposes described under “Use of Proceeds.” However, we reserve the right to use the funds obtained from this Offering for other similar purposes not presently contemplated which we deem to be in the best interests of the Company and our shareholders in order to address changed circumstances or opportunities. As a result of the foregoing, our success will be substantially dependent upon the discretion and judgment of the Board of Directors with respect to application and allocation of the net proceeds of this Offering. Investors who purchase our Common Stock will be entrusting their funds to our Board of Directors, upon whose judgment and discretion the investors must depend.


 

 

The offering price of our Common Stock was arbitrarily determined and does not reflect the value of the Company, our assets or our business.

 

The offering price of our Common Stock was arbitrarily determined by our management and is not based on book value, assets, earnings or any other recognizable standard of value. We arbitrarily established the offering price considering such matters as the state of our business development and the general condition of, and opportunities present in, the industry in which we operate. No assurance can be given that our Common Stock Shares, or any portion thereof, could be sold for the offering price or for any amount. If profitable results are not achieved from our operations, of which there can be no assurance, the value of our Common Stock sold pursuant to this Offering will fall below the offering price and become worthless. Prospective investors should not consider the offering price of the Common Stock as indicative of their actual value. The offering price bears little relationship to our assets, net worth, or any other objective criteria.

  

General securities investment risks.

 

All investments in securities involve the risk of loss of capital. No guarantee or representation is made that an investor will receive a return of its capital. The value of our Common Stock can be adversely affected by a variety of factors, including development problems, regulatory issues, technical issues, commercial challenges, competition, legislation, government intervention, industry developments and trends, and general business and economic conditions.

 

Multiple securities offerings and potential for integration of our offerings.

 

We are currently and will in the future be involved in one or more additional offers of our securities in other unrelated securities offerings. Any two or more securities offerings undertaken by us could be found by the SEC, or a state securities regulator, agency, to be “integrated” and therefore constitute a single offering of securities, which finding could lead to a disallowance of certain exemptions from registration for the sale of our securities in such other securities offerings. Such a finding could result in disallowance of one or more of our exemptions from registration, which could give rise to various legal actions on behalf of a federal or state regulatory agency and the Company.

 

Offering not reviewed by independent professionals.

 

We have not retained any independent professionals to review or comment on this Offering or otherwise protect the interest of the investors hereunder. Although we have retained our own counsel, neither such counsel nor any other counsel has made, on behalf of the investors, any independent examination of any factual matters represented by management herein. Therefore, for purposes of making a decision to purchase our Common Stock, you should not rely on our counsel with respect to any matters herein described. Prospective investors are strongly urged to rely on the advice of their own legal counsel and advisors in making a determination to purchase our Common Stock.

 

We cannot guarantee that we will sell any specific number of Common Stock shares in this Offering.

 

There is no commitment by anyone to purchase all or any part of the Common Stock Shares offered hereby and, consequently, we can give no assurance that all of the Common Stock shares in this Offering will be sold. Additionally, there is no underwriter for this Offering; therefore, you will not have the benefit of an underwriter's due diligence efforts that would typically include the underwriter being involved in the preparation of this Offering Circular and the pricing of our Common Stock shares offered hereunder. Therefore, there can be no assurance that this Offering will be successful or that we will raise enough capital from this Offering to further our development and business activities in a meaningful manner. Finally, prospective investors should be aware that we reserve the right to withdraw, cancel, or modify this Offering at any time without notice, to reject any subscription in whole or in part, or to allot to any prospective purchaser fewer Common Stock Shares than the number for which he or she subscribed.


 

 

Investors will experience immediate and substantial dilution in the book value of their investment, and will experience additional dilution in the future.

 

If you purchase our Common Stock in this Offering, you will experience immediate and substantial dilution because the price you pay will be substantially greater than the net tangible book value per share of the shares you acquire. Since we will require funds in addition to the proceeds of this Offering to conduct our planned business, we will raise such additional funds, to the extent not generated internally from operations, by issuing additional equity and/or debt securities, resulting in further dilution to our existing stockholders (including purchasers of our Common Stock in this Offering).

 

We may terminate this Offering at any time during the offering period.

 

We reserve the right to terminate this Offering at any time, regardless of the number of Common Stock shares sold. In the event that we terminate this Offering at any time prior to the sale of all of the Common Stock shares offered hereby, whatever amount of capital that we have raised at that time will have already been utilized by the Company and no funds will be returned to subscribers.

 

We may be unable to meet our current and future capital requirements from capital raised by this Offering.

 

Our capital requirements depend on numerous factors, including but not limited to the rate and success of our business plan execution efforts, marketing efforts, market acceptance of financial products and services, our ability to establish and maintain a client base and other factors. The capital requirements relating to the implementation of our business plan will be significant. We cannot accurately predict the timing and amount of such capital requirements. However, we are dependent on the proceeds of this Offering as well as additional financing that will be required in order to fully implement our proposed business plans. However, in the event that our plans change, our assumptions change or prove to be inaccurate, or if the proceeds of this Offering prove to be insufficient to implement our business plan, we would be required to seek additional financing sooner than currently anticipated. There can be no assurance that any such financing will be available to us on commercially reasonable terms, or at all. Furthermore, any additional equity financing may dilute the equity interests of our existing shareholders (including those purchasing shares pursuant to this Offering), and debt financing, if available, may involve restrictive covenants with respect to dividends, raising future capital and other financial and operational matters. If we are unable to obtain additional financing as and when needed, we may be required to reduce the scope of our operations or our anticipated business plans, which could have a material adverse effect on our business, future operating results and financial condition.

 

No active market for our Common Stock exists or may develop, and you may not be able to resell your Common Stock at or above the initial public offering price.

 

Prior to this Offering, there has been no public market for shares of our Common Stock. We anticipate that we will apply for quoting of our common stock on the OTC Markets or an approved secondary marketplace upon the qualification of the offering statement of which this Offering Circular forms a part. However, there can no assurance that our Common Stock shares will be quoted. If no active trading market for our Common Stock develops or is sustained following this Offering, you may be unable to sell your shares when you wish to sell them or at a price that you consider attractive or satisfactory. The lack of an active market may also adversely affect our ability to raise capital by selling securities in the future, or impair our ability to license or acquire other product candidates, businesses or technologies using our shares as consideration.

 

The market price of our Common Stock may fluctuate significantly, and investors in our Common Stock may lose all or a part of their investment.

 


 

If a market for our Common Stock develops following this Offering, the trading price of our Common Stock could be subject to wide fluctuations in response to various factors, some of which are beyond our control. The market prices for securities of biotechnology companies and companies in the cannabis industry have historically been highly volatile, and the market has from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. The market price of our common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, such as:

 

actual or anticipated adverse results or delays in legalization efforts of some of our potential clients;

 

our failure to effectively implement our business plan;

 

unanticipated serious safety concerns related to our services;

 

adverse regulatory decisions;

 

legal disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our intellectual property, government investigations and the results of any proceedings or lawsuits, including patent or stockholder litigation;

 

changes in laws or regulations applicable to legal-cannabis;

 

our dependence on third parties;

 

announcements of the introduction of new products and services by our competitors;

 

market conditions in the legal-cannabis industry/sectors;

 

announcements concerning product development results or intellectual property rights of others;

 

future issuances of our Common Stock or other securities;

 

the addition or departure of key personnel;

 

actual or anticipated variations in quarterly operating results;

 

announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors;

 

our failure to meet or exceed the estimates and projections of the investment community;

 

issuances of debt or equity securities;

 

trading volume of our Common Stock;

 

sales of our Common Stock by us or our stockholders in the future;

 

overall performance of the equity markets and other factors that may be unrelated to our operating performance or the operating performance of our competitors, including changes in market valuations of similar companies;

 

failure to meet or exceed any financial guidance or expectations regarding development milestones that we may provide to the public;

 

ineffectiveness of our internal controls;

 

general political and economic conditions;

 

effects of natural or man-made catastrophic events;

 

other events or factors, many of which are beyond our control; and

 

publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts.

 

Further, price and volume fluctuations result in volatility in the price of our common stock, which could cause a decline in the value of our Common Stock. Price volatility of our common stock might worsen if the trading volume of our Common Stock is low. The realization of any of the above risks or any of a broad range of other risks, including those described in these “Risk Factors,” could have a dramatic and material adverse impact on the market price of our Common Stock.

 

We have not paid cash dividends in the past and do not expect to pay cash dividends in the foreseeable future. Any return on investment may be limited to the value of our Common Stock.


 

 

We have never paid cash dividends on our Common Stock and do not anticipate paying cash dividends on our Common Stock in the foreseeable future. The payment of dividends on our capital stock will depend on our earnings, financial condition and other business and economic factors affecting us at such time as the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if the Common Stock price appreciates.

 

Our strategic investments, if any are pursued by the Company, may result in losses.

 

We may elect periodically to make strategic investments in various public and private companies with businesses or technologies that may complement our business. The market values of these strategic investments may fluctuate due to market conditions and other conditions over which we have no control. Other-than-temporary declines in the market price and valuations of the securities that we hold in other companies would require us to record losses related to our investment. This could result in future charges to our earnings. It is uncertain whether or not we will realize any long-term benefits associated with these strategic investments.

 

A sale of a substantial number of shares of the Common Stock may cause the price of our Common Stock to decline.

 

If our stockholders sell, or the market perceives that our stockholders intend to sell for various reasons, substantial amounts of our Common Stock in the public market, including shares issued in connection with the exercise of outstanding options or warrants, the market price of our Common Stock could fall. Sales of a substantial number of shares of our Common Stock may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. We may become involved in securities class action litigation that could divert management’s attention and harm our business. The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the Common Stock of pharmaceutical companies. These broad market fluctuations may cause the market price of our Common Stock to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of a company’s securities. We may become involved in this type of litigation in the future. Litigation often is expensive and diverts management’s attention and resources, which could adversely affect our business.

 

Our quarterly operating results may fluctuate significantly.

 

We expect our operating results to be subject to quarterly fluctuations. Our net loss and other operating results will be affected by numerous factors, including:

 

 

variations in the level of expenses related to our development programs;

 

any intellectual property infringement lawsuit in which we may become involved;

 

regulatory developments affecting our App and related services; and

 

our execution of any collaborative, licensing or similar arrangements, and the timing of payments we may make or receive under these arrangements.

  

If our quarterly operating results fall below the expectations of investors or securities analysts, the price of our Common Stock could decline substantially. Furthermore, any quarterly fluctuations in our operating results may, in turn, cause the price of our Common Stock to fluctuate substantially.

 

Directors, executive officers, principal stockholders and affiliated entities own a significant percentage of our capital stock, and they may make decisions that you do not consider to be in your best interests or those of our other stockholders.

 

As of the date of this Offering Circular, our directors, executive officers and principal stockholders beneficially owned, in the aggregate, substantially all of our outstanding voting securities. As a result, if some or all of them acted together, they would have the ability to exert significant influence over the election of our board of directors and the outcome of issues requiring approval by our stockholders. This concentration of ownership may also have the effect of delaying or preventing a change in control of our company that may be favored by other stockholders. This could prevent transactions in which stockholders might otherwise recover a premium for their shares over current market prices.


 

 

Our ability to use our net operating loss carry forwards may be subject to limitation.

 

Generally, a change of more than fifty percent (50%) in the ownership of a company’s stock, by value, over a three-year period constitutes an ownership change for U.S. federal income tax purposes. An ownership change may limit our ability to use our net operating loss carryforwards attributable to the period prior to the change. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards to offset U.S. federal taxable income may become subject to limitations, which could potentially result in increased future tax liability for us.

 

Our bylaws provide for indemnification of officers and directors at our expense and limits their liability, which may result in a major cost to us and hurt the interests of our stockholders because corporate resources may be expended for the benefit of our officers and/or directors.

 

Our Bylaws and applicable California law provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney’s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person’s promise to repay us, therefore if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us, which we will be unable to recover. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of our Company pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer, or controlling person of our Company 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 of 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.

 

Our Common Stock may be traded on a closed trading system with limited volume and liquidity.

 

Our Common Stock may not be freely quoted for trading on any stock exchange or through any other traditional trading platform. Our Common Stock may be issued, available for purchase and may be traded exclusively on a specific trading system that is registered with the SEC as an alternative trading system (an “ATS”). We do not currently have any plans to trade our Common Stock on a specific ATS. Any disruption to the operations of an ATS or a broker-dealer's customer interface with an ATS would materially disrupt trading in, or potentially result in a complete halt in the trading of, our Common Stock. Because our Common Stock may be traded exclusively on a closed trading system, it is a possibility that there will be a limited number of holders of our Common Stock. In addition, an ATS is likely to experience limited trading volume with a relatively small number of securities trading on the ATS platform as compared to securities trading on traditional securities exchanges or trading platforms. As a result, this novel trading system may have limited liquidity, resulting in a lower or higher price or greater volatility than would be the case with greater liquidity. You may not be able to resell your Common Stock s on a timely basis or at all.

 

The number of securities traded on an ATS may be very small, making the market price more easily manipulated.

 

While we understand that many ATS platforms have adopted policies and procedures such that security holders are not free to manipulate the trading price of securities contrary to applicable law, and while the risk of market manipulation exists in connection with the trading of any securities, the risk may be greater for our Common Stock because the ATS we choose may be a closed system that does not have the same breadth of market and liquidity as the national market system. There can be no assurance that the efforts by an ATS to prevent such behavior will be sufficient to prevent such market manipulation.


 

 

An ATS is not a stock exchange and has limited quoting requirements for issuers or for the securities traded.

 

Unlike the more expansive listing requirements, policies and procedures of the Nasdaq Global Market and other trading platforms, there are no minimum price requirements and limited listing requirements for securities to be traded on an ATS. As a result, trades of our Common Stock on an ATS may not be at prices that represent the national best bid or offer prices of securities that could be considered similar securities.

 

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.

 

As a public company, we will incur significant legal, accounting and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements. We also will incur costs associated with the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Act and related rules implemented or to be implemented by the SEC. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect the rules and regulations associated with being a public company to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept constraints on policy limits and coverage or incur substantially higher costs to obtain coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our Board, our board committees or as our executive officers and may divert management’s attention. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our Common Stock, fines, sanctions and other regulatory action and potentially civil litigation.

 

The preparation of our financial statements involves the use of estimates, judgments and assumptions, and our financial statements may be materially affected if such estimates, judgments or assumptions prove to be inaccurate.

 

Financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) typically require the use of estimates, judgments and assumptions that affect the reported amounts. Often, different estimates, judgments and assumptions could reasonably be used that would have a material effect on such financial statements, and changes in these estimates, judgments and assumptions may occur from period to period over time. These estimates, judgments and assumptions are inherently uncertain and, if our estimates were to prove to be wrong, we would face the risk that charges to income or other financial statement changes or adjustments would be required. Any such charges or changes could harm our business, including our financial condition and results of operations and the price of our securities. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of the accounting estimates, judgments and assumptions that we believe are the most critical to an understanding of our consolidated financial statements and our business.

 

If securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market trading volume of our Common Stock could be negatively affected.

 

Any trading market for our Common Stock will be influenced in part by any research reports that securities industry analysts publish about us. We do not currently have and may never obtain research coverage by securities industry analysts. If no securities industry analysts commence coverage of us, the market price and market trading volume of our Common Stock could be negatively affected. In the event we are covered by analysts, and one or more of such analysts downgrade our securities, or otherwise reports on us unfavorably, or discontinues coverage or us, the market price and market trading volume of our Common Stock could be negatively affected.

 


 

Our management has broad discretion as to the use of certain of the net proceeds from this Offering.

 

We intend to use a significant portion of the net proceeds from this Offering (if we sell all of the shares being offered) for working capital and other general corporate purposes. However, we cannot specify with certainty the particular uses of such proceeds. Our management will have broad discretion in the application of the net proceeds designated for use as working capital or for other general corporate purposes. Accordingly, you will have to rely upon the judgment of our management with respect to the use of these proceeds. Our management may spend a portion or all of the net proceeds from this Offering in ways that holders of our Common Stock may not desire or that may not yield a significant return or any return at all. The failure by our management to apply these funds effectively could harm our business. Pending their use, we may also invest the net proceeds from this offering in a manner that does not produce income or that loses value. Please see “Use of Proceeds” below for more information.

 

Risks Related to Discovery, Development, Regulatory Approval and Commercialization of Cures and Novel Therapeutics From Proprietary Cannabinoid, Cannabidiol, Endocannabinoids, Phytocannabinoids, and Synthetic Cannabinoids Product

 

Clinical trials for our product candidates are expensive, time-consuming, uncertain and susceptible to change, delay or termination. The results of clinical trials are open to differing interpretations

 

Once we reach the stage to start our research, development, Commercialization of Cures and Novel Therapeutics From Proprietary Cannabinoid, Cannabidiol, Endocannabinoids, Phytocannabinoids, and Synthetic Cannabinoids Product, we would be involved in clinical trials.  Clinical trials are expensive, time consuming and difficult to design and implement. Regulatory agencies may analyze or interpret the results differently than us. Even if the results of our clinical trials are favorable, the clinical trials for a number of our product candidates are expected to continue for several years and may take significantly longer to complete. In addition, we, the FDA or other regulatory authorities, including state and local authorities, or an Institutional Review Board, may suspend, delay or terminate our clinical trials at any time, require us to conduct additional clinical trials, require a particular clinical trial to continue for a longer duration than originally planned, require a change to our development plans such that we conduct clinical trials for a product candidate in a different order  or the DEA could suspend or terminate the registrations and quota allotments we require in order to procure and handle controlled substances, for various reasons, including:

 

·         delays in obtaining regulatory authorization to commence a trial, including “clinical holds” or delays requiring suspension or termination of a trial by a regulatory agency, such as the FDA, before or after a trial is commenced;

·         DEA-related recordkeeping, reporting or security violations at a clinical site, leading the DEA or state authorities to suspend or revoke the site’s controlled substance license and causing a delay or termination of planned or ongoing trials;

·         changes in applicable regulatory policies and regulation, including changes to requirements imposed on the extent, nature or timing of studies;

·         delay or failure to supply product for use in clinical trials which conforms to regulatory specification;

·         failure of our contract research organizations, or CROs, or other third-party contractors to comply with all contractual requirements or to perform their services in a timely or acceptable manner;

·         failure by our employees, our CROs or their employees to comply with all applicable FDA or other regulatory requirements relating to the conduct of clinical trials or the handling, storage, security and recordkeeping for controlled substances;

·         regulatory concerns with cannabinoid products generally and the potential for abuse;

·         insufficient data to support regulatory approval;

·         inability or unwillingness of medical investigators to follow our clinical protocols; or

 

Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

 

Any failure by us to comply with existing regulations could harm our reputation and operating results

 


 

We would be subject to extensive regulation by U.S. federal and state governments in each of the markets where we intend or plan to sell products, as applicable.

 

We must also adhere to all regulatory requirements including FDA’s GLP, GCP, and cGMP requirements, pharmacovigilance requirements, advertising and promotion restrictions, reporting and recordkeeping requirements. If we or our suppliers fail to comply with applicable regulations, including FDA pre-or post-approval cGMP requirements, then the FDA could sanction us. Even if any of our product candidates is FDA-approved, regulatory authorities may impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-marketing trials.  Cannabis-based products or drug candidates that may be approved in the U.S. in the future, will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, distribution, import, export, advertising, promotion, sampling, recordkeeping and submission of safety and other post-market information, including both federal and state requirements in the U.S. In addition, manufacturers and manufacturers’ facilities are required to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to GMP.  If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may:

 

·         issue warning letters;

·         impose civil or criminal penalties; • suspend regulatory approval; • suspend any of our ongoing clinical trials;

·         refuse to approve pending applications or supplements to approved applications submitted by us;

·         impose restrictions on our operations, including by requiring us to enter into a Corporate Integrity Agreement or closing our contract manufacturers’ facilities, if any; or

·         seize or detain products or require a product recall.

 

In addition, Cannabinoid, Cannabidiol, Endocannabinoids, Phytocannabinoids, and Synthetic Cannabinoids products are regulated by the DEA, under the Controlled Substances Act. DEA scheduling is a separate process that can delay when a drug may become available to patients beyond an NDA approval date, and the timing and outcome of such DEA process is uncertain. See also “Risks Related to Controlled Substances”. In addition, any government investigation of alleged violations of law could require us to expend significant time and resources in response, and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenue from Cannabinoid, Cannabidiol, Endocannabinoids, Phytocannabinoids, and Synthetic Cannabinoids Product and product candidates. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our business and our operating results may be adversely affected.

 

Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, divert our management’s attention from the operation of our business and damage our reputation. We expend significant resources on compliance efforts and such expenses are unpredictable and might adversely affect our results. Changing laws, regulations and standards might also create uncertainty, higher expenses and increase insurance costs. As a result, we intend to invest all reasonably necessary resources to comply with evolving standards, and this investment might result in increased management and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

 

We are subject to federal, state laws and regulations and implementation of or changes to such laws and regulations could adversely affect our business and results of operations.

 

In the U.S., the DEA regulates the cultivation, possession and supply of cannabis for medical research and commercial development, including the requirement of annual registrations to manufacture or distribute pharmaceutical products derived from cannabis extracts. See also “Risks Related to Controlled Substances”.

 

Risks Related to Controlled Substances

 

Controlled substance legislation may restrict or limit our ability to sell our product candidates.

 


 

Most countries are parties to the Single Convention on Narcotic Drugs 1961, which governs international trade and domestic control of narcotic substances, including cannabis extracts. Countries may interpret and implement their treaty obligations in a way that creates a legal obstacle to our obtaining regulatory approval for Cannabinoid based products in those countries. These countries may not be willing or able to amend or otherwise modify their laws and regulations to permit Cannabinoid products to be marketed, or achieving such amendments to the laws and regulations may take a prolonged period of time. In the case of countries with similar obstacles, we would be unable to market Cannabinoid product candidates in countries in the near future or perhaps at all if the laws and regulations in those countries do not change.

 

Cannabinoid-based product candidates that we intend to develop will be subject to U.S. controlled substance laws and regulations and failure to comply with these laws and regulations, or the cost of compliance with these laws and regulations, may adversely affect the results of our business operations, both during clinical development and post approval, and our financial condition.

 

Cannabinoid, Cannabidiol, Endocannabinoids, Phytocannabinoids, and Synthetic Cannabinoids product candidates that we intend to develop would contain controlled substances as defined in the federal Controlled Substances Act of 1970, or CSA. Controlled substances that are pharmaceutical products are subject to a high degree of regulation under the CSA, which establishes, among other things, certain registration, manufacturing quotas, security, recordkeeping, reporting, import, export and other requirements administered by the DEA. The DEA classifies controlled substances into five schedules: Schedule I, II, III, IV or V substances. Schedule I substances by definition have a high potential for abuse, no currently “accepted medical use” in the U.S., lack accepted safety for use under medical supervision, and may not be prescribed, marketed or sold in the U.S. Pharmaceutical products approved for use in the U.S. which contain a controlled substance are listed as Schedule II, III, IV or V, with Schedule II substances considered to present the highest potential for abuse or dependence and Schedule V substances the lowest relative risk of abuse among such substances. Schedule I and II drugs are subject to the strictest controls under the CSA, including manufacturing and procurement quotas, security requirements and criteria for importation. In addition, dispensing of Schedule II drugs is further restricted. For example, they may not be refilled without a new prescription.

 

While cannabis is a Schedule I controlled substance, products approved for medical use in the U.S. that contain cannabis or cannabis extracts should be placed in Schedules II-V, since approval by the FDA satisfies the “accepted medical use” requirement. If and when any of our product candidates receive FDA approval, the DEA will make a scheduling determination. The manufacture, importation, exportation, domestic distribution, storage, sale and legitimate use of Cannabinoid, Cannabidiol, Endocannabinoids, Phytocannabinoids, and Synthetic Cannabinoids will be subject to specific and potentially significant levels of regulation by the DEA.

 

DEA registration and inspection of facilities. Facilities conducting research, manufacturing, distributing, importing or exporting, or dispensing controlled substances must be registered (licensed) to perform these activities and have the security, control, recordkeeping, reporting and inventory mechanisms required by the DEA to prevent drug loss and diversion. All these facilities must renew their registrations annually, except dispensing facilities, which must renew every three years. The DEA conducts periodic inspections of certain registered establishments that handle controlled substances. Obtaining and maintaining the necessary registrations may result in delay of the importation, manufacturing or distribution of Cannabinoid, Cannabidiol, Endocannabinoids, Phytocannabinoids, and Synthetic Cannabinoids products. Furthermore, failure to maintain compliance with the CSA, particularly non-compliance resulting in loss or diversion, can result in regulatory action that could have a material adverse effect on our business, financial condition and results of operations. The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to restrict, suspend or revoke those registrations. In certain circumstances, violations could lead to criminal proceedings.

 

State-controlled substances laws. Individual states have also established controlled substance laws and regulations. Though state-controlled substances laws often mirror federal law, because the states are separate jurisdictions, they may separately schedule Cannabinoid, Cannabidiol, Endocannabinoids, Phytocannabinoids, and Synthetic Cannabinoids product candidates as well. We or our partners must also obtain separate state registrations, permits or licenses in order to be able to obtain, handle, and distribute controlled substances for clinical trials or commercial sale, and failure to meet applicable regulatory requirements could lead to enforcement and sanctions by the states in addition to those from the DEA or otherwise arising under federal law.


 

 

Clinical trials. Because when we start our R&D, our products would be controlled substances in the U.S., to conduct clinical trials in the U.S., each of our research sites must submit a research protocol to the DEA and obtain and maintain a DEA researcher registration that will allow those sites to handle and dispense our products and to obtain product from our importer. If the DEA delays or denies the grant of a research registration to one or more research sites, the clinical trial could be significantly delayed, and we could lose clinical trial sites. The importer for the clinical trials must also obtain an importer registration and an import permit for each import.

 

Importation.  If one of our product candidates is approved and classified as a Schedule II or III substance, an importer can import for commercial purposes if it obtains an importer registration and files an application for an import permit for each import. The DEA provides annual assessments/estimates to the International Narcotics Control Board which guides the DEA in the amounts of controlled substances that the DEA authorizes to be imported. The failure to identify an importer or obtain the necessary import authority, including specific quantities, could affect product availability and have a material adverse effect on our business, results of operations and financial condition. In addition, an application for a Schedule II importer registration must be published in the Federal Register, and there is a waiting period for third party comments to be submitted. It is always possible that adverse comments may delay the grant of an importer registration.

 

If one of our product candidates is approved and classified as a Schedule II controlled substance, federal law may impose additional restrictions on importation for commercial purposes.

 

Manufacture in the U.S. If, because of a Schedule II classification or voluntarily, we were to conduct manufacturing or repackaging/relabeling in the U.S., our contract manufacturers would be subject to the DEA’s annual manufacturing and procurement quota requirements. Additionally, regardless of the scheduling of cannabinoid, cannabis and the BDSs comprising the active ingredient in the final dosage form are currently Schedule I controlled substances and would be subject to such quotas as these substances could remain listed on Schedule I. The annual quota allocated to us or our contract manufacturers for the active ingredients in our products may not be sufficient to complete clinical trials or meet commercial demand. Consequently, any delay or refusal by the DEA in establishing our, or our contract manufacturers’, procurement and/or production quota for controlled substances could delay or stop our clinical trials or product launches, which could have a material adverse effect on our business, financial position and results of operations.

 

Distribution in the U.S. If any of our product candidates is scheduled as Schedule II or III, we would also need to identify wholesale distributors with the appropriate DEA and state registrations and authority to distribute the product to pharmacies and other health care providers. We would need to identify distributors to distribute the product to pharmacies; these distributors would need to obtain Schedule II or III distribution registrations. The failure to obtain, or delay in obtaining, or the loss any of those registrations could result in increased costs to us. If any of our product candidates is a Schedule II drug, pharmacies would have to maintain enhanced security with alarms and monitoring systems and they must adhere to recordkeeping and inventory requirements. This may discourage some pharmacies from carrying either or both of these products. Furthermore, state and federal enforcement actions, regulatory requirements, and legislation intended to reduce prescription drug abuse, such as the requirement that physicians consult a state prescription drug monitoring program may make physicians less willing to prescribe, and pharmacies to dispense, Schedule II products.

 

New Laws and Regulations. 

 

From time to time, various types of federal and state legislation are proposed and new regulations are introduced that could result in additional regulation of, and restrictions on, the business of consumer lending. We cannot predict whether any such legislation or regulations will be adopted or how this would affect our business or our important relationships with third parties. In addition, the interpretation of existing legislation may change or may prove different than anticipated when applied to our business model. Compliance with such requirements could involve additional costs, which could have a material adverse effect on our business. As a consequence of the extensive regulation of commercial lending in the United States, our business is particularly susceptible to being affected by federal and state legislation and regulations that may increase the cost of doing business.


 

 

 

DETERMINATION OF OFFERING PRICE

 

Our Offering Price is arbitrary with no relation to value of the company. This Offering is a self-underwritten offering, which means that it does not involve the participation of an underwriter to market, distribute or sell the Common Stock offered under this offering.

 

 

ITEM 4.           DILUTION

 

If you purchase shares in this Offering, your ownership interest in our Common Stock will be diluted immediately, to the extent of the difference between the price to the public charged for each share in this Offering and the net tangible book value per share of our Common Stock after this Offering.

 

As at December 31, 2019, December 31, 2018 and date of this filing, there were an aggregate of 19,722,927 and 16,700,000 shares of Company Common Stock issued and outstanding respectively.

 

Our net tangible book value as of December 31, 2019 and December 31, 2018 was $38,546.61 or $0.00195 and $(4,308.28) or $(0.00026) respectively per then-outstanding share of our Common Stock, based on 19,722,927 and 16,700,000 outstanding shares of Common Stock at December 31, 2019 and December 31, 2018. Our net tangible book value as of the date of this Offering Circular Amendment was $38,546.61 or $0.00195 per share of our Common Stock, based on 19,722,927 outstanding shares of Common Stock as at the date of this Offering Circular. Net tangible book value per share equals the amount of our total tangible assets less total liabilities, divided by the total number of shares of our Common Stock outstanding, all as of the date specified.

 

If the maximum 50,000,000 shares of Common Stock in this Offering at the initial public offering price of $1.00 per share, after deducting approximately $5,000,000 in maximum sales commissions and other offering expenses payable by us, our pro forma as adjusted net tangible book value would have been approximately $44,775,598 or $0.6424 per share as at December 31, 2019. This amount represents an immediate increase in pro forma net tangible book value of $0.6405 per share to our existing stockholders at the date of this Offering Circular, and an immediate dilution in pro forma net tangible book value of approximately $0.00195 per share to new investors purchasing shares of Common Stock in this Offering at a price of $1.00 per share.

 

The following table illustrates the per share dilution to new investors discussed above, assuming the sale of, respectively, 100%, 75%, 50% and 25% of the shares offered for sale in this offering (after our estimated offering expenses of $5,500,000, $4,125,000, $2,750,000 and $1,375,000, respectively):

 

The following table illustrates the per share dilution to new investors discussed above, assuming the sale of, respectively, 100%, 75%, 50% and 25% of the shares offered for sale in this offering (after our estimated offering expenses of $5,500,000, $4,125,000, $2,750,000 and $1,375,000, respectively):

 

 

Funding Level

 

 

$50,000,000

 

 

$37,500,000

 

 

$25,000,000

 

 

$12,500,000

 

Offering Price

 

$

1.00

 

$

1.00

 

$

1.00

 

$

1.00

 

Pro forma net tangible book value per Common Stock share before the Offering

 

$

0.00195

 

$

0.00195

 

$

0.00195

 

$

0.00195

 

Increase per common share attributable to investors in this Offering

 

 

0.6405

 

 

0.5776

 

 

0.4908

 

 

0.3366

 

Pro forma net tangible book value per Common Stock share after the Offering

 

$

0.6424

 

$

0.5796

 

 

0.4927

 

 

0.3385

 

Dilution to investors

 

$

(0.36)

 

$

(0.42)

 

$

(0.51)

 

$

(0.66)

 

Dilution as a percentage of Offering Price

 

 

(35.76)

%

 

(42.04)

%

 

(50.73)

%

 

(66.15)

%


 

 

1) FUNDING LEVEL - total price raised if 100%, 75%, 50% or 25% of share sold.

 

2) OFFERING PRICE - price offered per one share to buyer.

 

3) NET TANGIBLE BOOK VALUE PER COMMON SHARE BEFORE OFFERING - A method of valuing a company that excludes intangible assets, such as good will. To compute, divide total tangible assets by the total number of shares outstanding. This is the value per share if the company were to go bankrupt and have to liquidate its assets.

 

4) INCREASE IN NET TANGIBLE BOOK VALUE PER COMMON SHARE ATTRIBUTABLE TO INVESTORS - THE NUMBER INDICATES by how much net tangible book value increased. How to calculate: PRO FORMA NET TANGIBLE VALUE PER COMMON SHARE AFTER OFFERING - (MINUS) NET TANGIBLE BOOK PER COMMON SHARE BEFORE OFFERING.

 

5) NET TANGIBLE BOOK VALUE PER COMMON SHARE AFTER OFFERING - A method of valuing a company that excludes intangible assets, such as good will after the offering (after 100%, 75%, 50% or 25% of shares are sold). To compute, divide total tangible assets including raised funds by the new total number of shares outstanding. This is the value per share if the company were to go bankrupt and have to liquidate its assets.

 

6) AMOUNT OF IMMEDIATE DILUTION TO INVESTORS - A reduction in the ownership percentage of a share of stock caused by the issuance of new stock. Dilution can also occur when holders of stock options (such as company employees) or holders of other optional securities exercise their options. When the number of shares outstanding increases, each existing stockholder will own a smaller, or diluted, percentage of the company, making each share less valuable. Dilution also reduces the value of existing shares by reducing the stock's earnings per share.

 

7) DILUTION TO NEW SHAREHOLDERS AS A PERCENTAGE OF OFFERING PRICE - A reduction in the ownership percentage of a share of stock caused by the issuance of new stock. Dilution can also occur when holders of stock options (such as company employees) or holders of other optional securities exercise their options. When the number of shares outstanding increases, each existing stockholder will own a smaller, or diluted, percentage of the company, making each share less valuable. Dilution also reduces the value of existing shares by reducing the stock's earnings per share.

 

The following tables set forth, assuming the sale of, respectively, 100%, 75%, 50% and 25% of the shares offered for sale in this offering (after our estimated offering expenses of $5,500,000, $4,125,000, $2,750,000 and $1,375,000, respectively), the total number of shares previously sold to existing stockholders, the total consideration paid for the foregoing and the respective percentages applicable to such purchased shares and consideration paid based on an average price of $0.0063 per share paid by existing stockholders and $1.00 per share paid by investors in this Offering.


 
   

Shares Purchased

Total Consideration

   

Number

 

Percentage

 

Amount

Percentage

Assuming 100% of Shares Sold:

 

 

 

 

 

 

 

 

 

 

 

 

Existing stockholders

 

 

19,722,927

 

28.29%

%

 

$

290,649

 

0.578%

%

New Investors

 

 

50,000,000

 

71.71%

%

 

$

50,000,000

 

99.42%

%

Total

 

 

69,722,927

 

100

%

 

50,290,649

 

100

%

                         
   

Shares Purchased

 

Total Consideration

   

Number

 

Percentage

   

Amount

Percentage

 

Assuming 75% of Shares Sold:

 

 

 

 

 

 

 

 

 

 

 

 

Existing Stockholders

 

 

19,722,927

 

34.47%

%

 

$

290,649

 

0.769%

%

New Investors

 

 

37,500,000

 

65.53%

%

 

$

37,500,000

 

99.23%

%

Total

 

 

57,222,927

 

100

%

 

$

37,790,649

 

100

%

                         
   

Shares Purchased

 

Total Consideration

   

Number

 

Percentage

   

Amount

Percentage

Assuming 50% of Shares Sold:

 

 

 

 

 

 

 

 

 

 

 

 

Existing Stockholders

 

 

19,722,927

 

44.10%

%

 

$

290,649

 

1.149%

%

New Investors

 

 

25,000,000

 

55.90%

%

 

$

25,000,000

 

98.85%

%

Total

 

 

44,722,927

 

100

%

 

$

25,290,649

 

100

%

                         
   

Shares Purchased

 

Total Consideration

   

Number

 

Percentage

   

Amount

Percentage

Assuming 25% of Shares Sold:

 

 

 

 

 

 

 

 

 

 

 

 

Existing Stockholders

 

 

19,722,927

 

61.21%

%

 

$

290,649

 

2.272%

%

New Investors

 

 

12,500,000

 

38.79%

%

 

$

12,500,000

 

97.73%

%

Total

 

 

32,222,927

 

100

%

 

$

12,790,649

 

100

%


 

 

 

ITEM 5.    PLAN OF DISTRIBUTION

 

The shares are being offered by us on a “best-efforts” basis by our officers, directors and employees, with the assistance of independent consultants, and possibly through registered broker-dealers who are members of the Financial Industry Regulatory Authority (“FINRA”) and finders. As of the date of this Offering Circular, unless otherwise permitted by applicable law, we do not intend to accept subscriptions from investors in this Offering who reside in certain states, unless and until the Company has complied with each such states’ registration and/or qualification requirements or a FINRA-member broker-dealer has been engaged by the Company to consummate and process sales to investors in such states. We reserve the right to temporarily suspend and/or modify this Offering and Offering Circular in the future, during the Offering Period, in order to take such actions necessary to enable the Company to accept subscriptions in this Offering from investors residing in such states identified above.

 

The shares are being offered by us are self-underwritten and are being offered and sold by the Company’s officers. No compensation will be paid to any officer, director, or any affiliated company or party with respect to the sale of this offering. This means that no compensation will be paid, with respect to the sale of the shares are being offered, to Ms. Ogbozor, Mssr. Mbagwu, Uzoh, Igwealor or affiliated companies. We are relying on Rule 3a4-1 of the Securities Exchange Act of 1934, Associated Persons of an Issuer Deemed not to be Brokers. The applicable portions of the rule state that associated persons (including companies) of an issuer shall not be deemed brokers if they a) perform substantial duties at the end of the offering for the issuer; b) are not broker dealers; and c) do not participate in selling securities more than once every 12 months, except for any of the following activities: i) preparing written communication, but no oral solicitation; or ii) responding to inquiries provided that the content is contained in the applicable registration statement; or iii) performing clerical work in effecting any transaction.  Neither the Company, its Officers, nor any affiliates conduct any activities that fall outside of Rule 3a4-1 and are therefore not brokers nor are they dealers.

 

There is no aggregate minimum to be raised in order for the Offering to become effective and therefore the Offering will be conducted on a “rolling basis.” This means we will be entitled to begin applying “dollar one” of the proceeds from the Offering towards our business strategy, offering expenses, reimbursements, and other uses as more specifically set forth in the “Use of Proceeds” contained elsewhere in this Offering Circular.

 

We may pay selling commissions to participating broker-dealers who are members of FINRA for shares sold by them, equal to a percentage of the purchase price of the Common Stock shares. We may pay finder’s fees to persons who refer investors to us. We may also pay consulting fees to consultants who assist us with the Offering, based on invoices submitted by them for advisory services rendered. Consulting compensation, finder’s fees and brokerage commissions may be paid in cash, Common Stock or warrants to purchase our Common Stock. We may also issue shares and grant stock options or warrants to purchase our common stock to broker-dealers for sales of shares attributable to them, and to finders and consultants, and reimburse them for due diligence and marketing costs on an accountable or non-accountable basis. We have not entered into selling agreements with any broker-dealers to date, though we may engage a FINRA registered broker-dealer firm for offering administrative services. Participating broker-dealers, if any, and others may be indemnified by us with respect to this offering and the disclosures made in this Offering Circular.

 

Our Offering will expire on the first to occur of (a) the sale of all 50,000,000 shares of Common Stock offered hereby, (b) April 9, 2021, subject to extension for up to one hundred-eighty (180) days in the sole discretion of the Company, or (c) when our board of directors elects to terminate the Offering.

 

The Company, subject to Rule 255 of the 33 Act and corresponding state regulations, is permitted to generally solicit investors by using advertising mediums, such as print, radio, TV, and the Internet. We will offer the securities as permitted by Rule 251 (d)(1)(iii) whereby offers may be made after this Offering has been qualified, but any written offers must be accompanied with or preceded by the most recent offering circular filed with the Commission for the Offering. The Company plans to solicit investors using the Internet through a variety of existing internet advertising mechanisms, such as search based advertising, search engine optimization, and the Company website. The Company website is in the process of being developed.


 

 

Please note that the Company will not communicate any information to prospective investors without providing access to the Offering. The Offering may be delivered through the website that is in the process of being developed, through email, or by hard paper copy.

 

However received or communicated, all of our communications will be Rule 255 compliant and not amount to a free writing prospectus. We will not orally solicit investors and no sales will be made prior to this offering statement being declared qualified and a final Offering is available.

 

Prior to the acceptance of any investment dollars or Subscription Agreements, the Company will determine which state the prospective investor resides. Investments will be processed on a first come, first served basis, up to the Offering Amount of $50,000,000.

 

The Offering Period will commence upon the Offering Statement being declared qualified.

 

No sale will be made to a prospective investor if the aggregate purchase price payable is more than 10% of the greater of the prospective investor’s annual income or net worth. Different rules apply to accredited investors and non-natural persons.

 

Quarterly, the Company will report to the shareholders and will supplement this Offering with material and/or fundamental changes to our operations. We will also provide updated financial statements to all shareholders and prospective shareholders.

 

In compliance with Rule 253(e) of Regulation A, the Company shall revise this Offering Statement during the course of the Offering whenever information herein has become false or misleading in light of existing circumstances, material developments have occurred, or there has been a fundamental change in the information initially presented. Such updates will not only correct such misleading information but shall also provide update financial statements and shall be filed as an exhibit to the Offering Statement and be requalified under Rule 252.

 

 

ITEM 6.  USE OF PROCEEDS

 

Assuming the sale by us of the Maximum Offering of $50,000,000 and estimated commissions and expenses of $5,000,000, the total net proceeds to us would be $45,000,000 (excluding certain Offering related expenses, including without limitation, media expenses, website posting fees, and professional fees, which could equal or exceed $2,000,000), which we currently intend to use as set forth below. We expect from time to time to evaluate the acquisition of businesses, products and technologies for which a portion of the net proceeds may be used.  We are currently negotiating the acquisitions of four businesses we identified in Item 1, which would cost CBDZ about $1 million to acquire. As of the date of this Offering Circular, we cannot specify with certainty all of the particular uses for the net proceeds to us from the sale of Common Stock. Accordingly, we will retain broad discretion over the use of these proceeds, if any. The following table represents management’s best estimate of the uses of the net proceeds received from the sale of Common Stock assuming the sale of, respectively, 100%, 75%, 50% and 25% of the Common Stock shares offered for sale in this Offering.

 

 

Percentage of Offering Sold and Budgeted Use of Proceeds

 

 

100%

 

 

75%

 

 

50%

 

 

25%

Marketing Expenses(3)

$

1,000,000

 

$

750,000

 

$

500,000

 

$

250,000

Research & Development

$

500,000

 

$

375,000

 

$

250,000

 

$

125,000

Offering Expenses(4)

$

2,000,000

 

$

1,250,000

 

$

1,000,000

 

$

500,000

SG&A Expenses and Working Capital(1)

$

5,500,000

 

$

4,675,000

 

$

2,750,000

 

$

1,275,000

Financing Capital to Finance Products (2)

$

30,700,000

 

$

22,725,000

 

$

15,350,000

 

$

7,775,000

Strategic Partnerships/Acquisitions(5)

$

5,000,000

 

$

3,750,000

 

$

2,500,000

 

$

1,250,000

Miscellaneous Operating Expenses

$

300,000

 

$

225,000

 

$

150,000

 

$

75,000

TOTAL

$

45,000,000

 

$

33,750,000

 

$

22,500,000

 

$

11,250,000


 

 

 

 

(1)

Includes up to $1,500,000 that will be used to pay salaries and related compensation of executive officers and directors of the Company during 2020-2021, pursuant to contemplated unwritten employment agreements with such persons. See “Management – Executive Compensation” elsewhere in this Offering Circular.

 

 

 

 

(2)

Represents the estimated portion of the proceeds from this Offering that would be allocated to Financing Capital to be used for our financial products and services.

 

 

 

 

(3)

Represents the estimated portion of the proceeds from this Offering that would be allocated to marketing expenses, including social media and print marketing.

 

 

 

 

(4)

Represents the estimated portion of the proceeds from this Offering that would be allocated to organizing offering promotion activities including events, seminars, conferences, workshops, and other events.

 

 

 

 

(5)

Represents the estimated portion of the proceeds from this Offering that would be allocated to acquisitions of businesses and assets that would help us to execute our business plan.

 

The amounts set forth above are estimates, and we cannot be certain that actual costs will not vary from these estimates. Our management has significant flexibility and broad discretion in applying the net proceeds received in this Offering. We cannot assure you that our assumptions, expected costs and expenses and estimates will prove to be accurate or that unforeseen events, problems or delays will not occur that would require us to seek additional debt and/or equity funding, which may not be available on favorable terms, or at all. See “Risk Factors.”

 

This expected use of the net proceeds from this Offering represents our intentions based upon our current financial condition, results of operations, business plans and conditions. As of the date of this Offering Circular, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon the closing of this Offering or the amounts that we will actually spend on the uses set forth above. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors. As a result, our management will retain broad discretion over the allocation of the net proceeds from this Offering.

 

We may also use a portion of the net proceeds for the investment in strategic partnerships and possibly the acquisition of complementary businesses, products or technologies, although we have no present commitments or agreements for any specific acquisitions or investments. Pending our use of the net proceeds from this Offering, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term, investment grade, interest bearing instruments and U.S. government securities.

 

 


 

ITEM 7. DESCRIPTION OF BUSINESS

 

 

OUR BUSINESS

 

Organization Overview

 

Cannabinoid Biosciences, Inc., a California corporation (the “Company,” “Cannabinoid Biosciences,” “we,” “us” and “our”), is a start-up biotechnology holding and investment company. The Company has elected its fiscal year end to be December 31st.

 

Business Strategy

  

Cannabinoid Biosciences, Inc. (“CBDZ”) is a biopharmaceutical company, which intends to engage in the discovery, development and commercialization of cures and novel therapeutics from proprietary cannabinoid, cannabidiol, endocannabinoids, phytocannabinoids, and synthetic cannabinoids product platform suitable for specific treatments in a broad range of disease areas. The Company intends to operate through Research and Development, and Pipeline Acquisition. The Company intends to commercialize its products through collaborations with pharmaceutical companies for the specific treatments of diseases and medical conditions.  As a cannabinoid-focused biopharmaceutical company, our nascent operation is slowly taking shape because of the strict regulatory environment for our research into and development of cannabinoids, cannabidiol, endocannabinoids, phytocannabinoids, and synthetic cannabinoids suitable for specific treatments for diseases and medical conditions. 

 

While we are slowly navigating the strict regulatory environment, we intend to tweak our business strategy to include: (1) building and managing a portfolio of revenue-generating cloud-based, internet/web powered or online health and wellness businesses; and (2) rollup of profitable CBD businesses and operations across the United States. 

 

We have also recently changed our offering price and quantity.  We previously offered to sell a maximum of Five Million (5,000,000) shares (the “Maximum Offering”) of our common stock, par value $0.0001 (the “Common Stock”) at an offering price of One Dollar ($10.00) per share (the “Shares”) on a “best efforts” basis.  By this post-qualification amendment No.1, we are  hereby changes our offering a maximum of Fifty Million (50,000,000) shares (the “Maximum Offering”) of our common stock, par value $0.0001 (the “Common Stock”) at an offering price of One Dollars ($1.00) per share (the “Shares”) on a “best efforts” basis.

 

We have also recently changed our business plan to remove from our goals the following lines of business: (1) providing financial products in form of asset-backed loans, business property mortgages and other financial products to qualified individuals/businesses in the legal-cannabis businesses; and (2) providing professional bookkeeping, top-level financial reporting, Accounting, CSE Reporting, Business Valuation, Mergers & Acquisitions, GAAP/ IFRS Conversion, Pre IPO/RTO Prep, Section 280E Tax, and Biological Assets Valuation to cannabis businesses and investors in California and other states that has legalized cannabis. 

 

We decided to reduce our focus and concentrate on (a) biopharmaceutical research and development; (b) building and managing a portfolio of revenue-generating cloud-based, internet/web powered or online health and wellness businesses; and (c) rollup of profitable CBD businesses and operations across the United States.

 

As at the date of this company does not currently, nor does it intend, in the future to, maintain an ownership interest in any marijuana dispensaries or production facilities.

 

At this time, Cannabinoid Biosciences does not grow, process, own, handle, transport, or sell marijuana, cannabidiol, endocannabinoids, phytocannabinoids, and synthetic cannabinoids as the Company is organized and directed to operate strictly in accordance with all applicable state and federal laws.

 

In late 2019, the company acquired two CBD marketplaces that it intends to further develop and monetize in the near future.  Although the marketplaces, www.cbdhempextra.com and www.cannabidiolhemp.net are up and running, lots of development work are still needed before we could monetize the sites.


 

 

Furthermore, during the last quarter of 2019, we entered into non0binding Letter of Intent (LOIs) with 5 CBD operations to acquire their businesses. The targets’ potential revenue and net income as follows:

 

(1) Target-1 = CBD Marketplace; Revenue = $241,211; Net Profit = $206,167; and FFE/REAL ESTATE = $0;

 

(2) Target-2 = Hemp Farm and CBD manufacturer with Real Estate:  Revenue = $27,493,000; Net Profit = $7,972,970; and FFE/REAL ESTATE = $15,300,000

 

(3) Target-3 = Hemp farm and CBD manufacturing plant:  Revenue = $1,500,000; Net Profit = $850,000; and FFE/REAL ESTATE = $2,200,000;

 

(4) Target-4 = Hemp grower and unique CDB technology: Revenue = $1,450,000; Net Profit = $420,500; and FFE/REAL ESTATE = $1,300,000.

 

Subsequently, as we were pulling together financing for the acquisition, COVID-19 exploded and crippled most business transactions across the world. As a result of the disruptions occasioned by COVID-19, the operations of our major financier coming from New York and London came under the lockdown.  We have informed the sellers about this situation and advised that they move on to other potential acquirers as we are completely uncertain about the where things would be after the end of COVID-19 pandemic.  There is no guarantee that we could be able to acquire one or more of these businesses, or that these businesses would still be available to us to acquire in the future, or at the initially contemplated price. 

 

On the biopharmaceutical aspect of our business plan, the Company has started gradually building positions in several biopharma operations and other businesses.  

 

In October 2019, the Company acquired controlling stake in KID Castle Education Corporation for $55,000.  This acquisition was in pursuit of the Company’s goal of getting listed or up-listed on the Nasdaq within the next 12 months, we acquired voting control of Kid Castle (OTCPINK: KDCE) on October 21, 2019.  On December 29, 2019, the Company’s board resolved and approve to spin out the shares of Kid Castle to the Company’s shareholders immediately. 

 

Furthermore, as at December 31, 2019, the Company has established both trading and holding positions in the following biotechnology companies: Entest BioMedical, Inc., Accuray Incorporated, Acer Therapeutics Inc., Achieve Life Sciences, Inc., Acorda Therapeutics, Inc., Adamas Pharmaceuticals, Inc., Adamis Pharmaceuticals Corporation, AgeX Therapeutics, Inc., Akari Therapeutics, Plc, Akerna Corp., Allena Pharmaceuticals, Inc., Allogene Therapeutics, Inc., Amicus Therapeutics, Inc., Amyris, Inc., Anika Therapeutics, Inc., Anixa Biosciences, Inc., Arcturus Therapeutics Holdings Inc., Armata Pharmaceuticals, Inc., Artelo Biosciences, Inc., ASLAN Pharmaceuticals Limited, Assertio Therapeutics, Inc., aTyr Pharma, Inc., Axonics Modulation Technologies, Inc., Aytu BioScience, Inc., Biocept, Inc., BioCryst Pharmaceuticals, Inc., Can-Fite BioPharma Ltd., Capricor Therapeutics, Inc., Celldex Therapeutics, Inc., Cerus Corporation, Checkpoint Therapeutics, Inc., Chimerix, Inc., Correvio Pharma Corp., Curis, Inc., CymaBay Therapeutics, Inc., DBV Technologies S.A., Endologix, Inc., EyePoint Pharmaceuticals, Inc., Novavax, Inc., Radius Health, Inc., and Puma Biotechnology, Inc. 

 

 

Competition


We would be competing for industry participants with other companies with similar business plan. We anticipate that competition will increase, and will increase even more if and when we start recording significant success because of the tendency of some operators to copycat.

Intellectual Property and Proprietary Rights

 

Our intellectual property and proprietary rights consist of, among other things, client databases, trading ideas, operational and technology knowhow, industry network and database, trade secrets and others.   


 

 

We intend to have a policy of entering into confidentiality and non-disclosure agreements with our employees and some of our vendors and customers as we deem necessary. These agreements and policies are intended to protect our intellectual property, but we cannot ensure that these agreements or the other steps we have taken to protect our intellectual property will be sufficient to prevent theft, unauthorized use or adverse infringement claims. We cannot prevent piracy of our methods and features, and we cannot fully determine the extent to which our methods and features are being pirated.

 

Research and Development

 

We have not spent any amounts on research and development activities.  We have recently engaged two Scientist (1) Henry T. Mayers, a CBD expert with extensive experience in CBD extraction and product formulation; and (2) Leke Bosoro, MD, a clinical research professional with background Oncology and Hematology, Cardiovascular System, Neurology, Nephrology, and Inflammation.  These two are already in advanced stage of discussion with CBDZ about their part in our effort of discovery, development and commercialization of cures and novel therapeutics from proprietary cannabinoid, cannabidiol, endocannabinoids, phytocannabinoids, and synthetic cannabinoids product platform suitable for specific treatments in a broad range of disease areas.

 

 

 Employees

 

As of the date of this Amendment No.1 to our Offering Circular, we had five (5) full-time and part-time employees and eight (8) consultants. We are also prioritizing a list of potential scientist to join our R&D department.  None of our employees is subject to a collective bargaining agreement, and we believe that our relations with our employees generally are good.

 

 

ITEM 8.  DESCRIPTION OF PROPERTY

 

Property

 

We lease and maintain our primary offices at 370 Amapola Ave, Suite 200A, Torrance, California 90501. We do not currently own any real estate.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

ITEM 9.  MANAGEMENT'S DISCUSSION & ANALYSIS OF  FINANCIAL

                 CONDITION & RESULTS OF OPERATIONS

 

You should read the following discussion and analysis of our financial condition and results of our operations together with our consolidated financial statements and the notes thereto appearing elsewhere in this Offering Circular. This discussion contains forward-looking statements reflecting our current expectations, whose actual outcomes involve risks and uncertainties. Actual results and the timing of events may differ materially from those stated in or implied by these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors,” "Cautionary Statement regarding Forward-Looking Statements" and elsewhere in this Offering Circular. Please see the notes to our Financial Statements for information about our Significant Accounting Policies and Recent Accounting Pronouncements.

 

Summary of Results

 

The following table summarizes the results of our operations for the period from inception on May 6, 2014 (inception) to December 31, 2019.

 

Cannabinoid Biosciences, Inc.

Statement of Operations  

 

May 6, 2014 (Inception) to December 31, 2019  

 
         

REVENUE

 

$

6189

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

Occupancy

 

 

30,200

 

Advertising

 

 

46,279

 

Professional fees

 

 

26,680

 

Payeoll expenses

 

 

26,259

 

Other operating expense

 

 

33,424

 

Total Operating Expenses

 

 

162,841

 

Net Loss

 

$

(156,652

)

Basic and diluted weighted average common shares outstanding

 

 

19,722,927

 

Basic and diluted loss Per Share

 

$

(0.00794

)

 

 

 

For the period from May 6, 2014 (inception) to December 31, 2019.

 

Revenues. Cannabinoid Biosciences, Inc., is a development stage company with limited operations, purposed to engage in biopharmaceutical research and development, building and managing a portfolio of revenue-generating cloud-based, internet/web powered or online health and wellness businesses.  Company’s reported revenue of $6,189 since inception on May 6, 2014 (inception) to December 31, 2019.

 

Cost of Goods Sold. The Company remains in developmental stage and, in conjunction with not having significant operational revenue, it has incurred no Cost of Goods and Services Sold.

 


 

General and Administrative expenses. General and administrative expenses for the period of May 6, 2014 (inception) to December 31, 2019 were $162,841. 

 

Selling and Marketing Expenses. Selling and marketing expenses for the period of May 6, 2014 (inception) to December 31, 2019 were $0.

 

 Net Loss. For the foregoing reasons, our net loss was $156,652 for the period from May 6, 2014 (inception) to December 31, 2019.

 

 Liquidity, Capital Resources and Twelve Months Plan of Operations

 

Going Concern

 

Our financial statements appearing elsewhere in this Offering Circular 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. The Company's ability to continue as a going concern is contingent upon its ability to raise additional capital as required. During period from May 6, 2014 (inception) to December 31, 2019, the Company incurred net losses of $156,652. Initially, we intend to finance our operations through equity and debt financings.

 

As at December 31, 2019, our cash and cash equivalents was $10,878.  Unless we receive additional private financing or we receive a minimum of $2,000,000 from the proceeds of this Offering, we will not be able to conduct our planned operations. We estimate that if we receive a minimum of $2,000,000 of private financing or from the proceeds of this Offering, our existing capital resources will permit us to conduct our planned operations for only approximately 180 days following the date of this Offering Circular. Accordingly, our business plan is dependent on our raising sufficient proceeds from this Offering. In addition, we may have to raise additional interim capital from other private sources. There can be no assurance that such needed capital will be available or even if available that it will not be extremely dilutive to the equity of potential investors in this Offering.

 

These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

 

Financings and Securities Offerings

 

The Company presently intends to raise additional capital to fund its operating expenses prior to the commencement of this Offering under Regulation A+, and plans to conduct a private placement of debt securities or its Common Stock pursuant to Regulation D and/or Regulation S prior to the qualification of this Offering by the SEC. The Company must raise additional equity or debt financing, both now and in the future following this Offering. However, no assurances can be made that the Company will be successful obtaining additional equity or debt financing, or that ultimately the Company will achieve profitable operations and positive cash flow.

 

Since inception, our principal sources of operating funds have been proceeds from equity financing including the sale of our Common Stock to initial investors known to management and principal shareholders of the Company. We do not expect that our current cash on hand will fund our existing operations. We will need to raise additional capital in order execute our business plan and growth goals for at least the next twelve-month period thereafter. If the Company is unable to raise sufficient additional funds, it will have to execute a slower than planned growth path, reduce overhead and scale back its business plan until sufficient additional capital is raised to support further operational expansion and growth. There can be no assurance that such a plan will be successful.

 

 

Twelve Months Plan of Operations

 

As CBDZ moves ahead to implement its business plan, CBDZ will begin to: (1) conduct research into and development of cannabinoids, cannabidiol, endocannabinoids, phytocannabinoids, and synthetic cannabinoids suitable for specific treatments for diseases and medical conditions; (2) build and manage a portfolio of revenue-generating cloud-based, internet/web powered or online businesses; (3) increase the proprietary trading capital to increase trading activities.


 

 

During the first stages of our growth (until we raise $1 million or more), our officers and directors will provide all of the labor required to execute our business plan at our current location. Our officers will be devoting at least 15 hours per week to our operations. Depending on how much funds we would be able to secure, we also plan to acquire four businesses that we have identified to complement our service offerings to our clients. We do not require any additional office space, until we have finished the phase of deploying all the proceeds from this offering.  Once we reach this threshold (raising $1 million), our officers have agreed to commit more time as required, plus additional stuff could be hired to execute our business plan. 

 

We intend to implement the following tasks within the next twelve months:

 

  1. Month 1-3: Phase 1 (1-3 months in duration; $600,000 to $1 million in estimated fund receipt)
    1. Hire the 2 scientists, Henry and Leke, hire 1 bookkeepers, business development manager and officer manager to implement our business plan.
    2. Acquire and consolidate stakes in the operations of at least ten select biopharma businesses.
  2. Month 3-6 Phase 2 (1-3 months in duration; cost control, process improvements, admin & management.).
    1. Integrate acquired business into the Company’s model – consolidate the operations of the businesses including integration of their accounting and finance systems, synchronization of their operating systems, and harmonization of their human resources functions.
    2. Sell additional $18 million of offering and use the proceeds to effectuate our business plan.
    3. Complete and file quarterly reports and other required filings for the quarter
  3. Month 6-9:  Phase 3 (1-3 months in duration; $30 million in estimated fund receipt)
    1. Identify and acquire complementary/similar businesses or assets in the target market
  4. Month 9-12: Phase 4  (1-3 months duration; use acquired businesses’ free cash flow for more acquisitions)
    1. Run the businesses efficiently, giving employees a conducive and friendly workplace and add value to investors and shareholders by identifying and reducing excesses and also identifying and executing growth strategies
    2. Acquire service-providers in the industry at or below their book-value or undervalued businesses, restructure the businesses, and sell the businesses for profit or hold them for cash flow.
  5. Operating expenses during the twelve months would be as follows:
    1. For the six months through September 30, 2020, we anticipate to incur general and other operating expenses of $238,000. 
    2. For the six months through March 31, 2020 we anticipate to incur additional general and other operating expenses of $328,000. 

 

As noted above, the execution of our current plan of operations requires us to raise significant additional capital immediately. If we are successful in raising capital through the sale of shares offered for sale in this Offering Circular we believe that the Company will have sufficient cash resources to fund its plan of operations for the next twelve months. If we are unable to do so, our ability to continue as a going concern will be in jeopardy, likely causing us to curtail and possibly cease operations.

 

We continually evaluate our plan of operations discussed above to determine the manner in which we can most effectively utilize our limited cash resources. The timing of completion of any aspect of our plan of operations is highly dependent upon the availability of cash to implement that aspect of the plan and other factors beyond our control. There is no assurance that we will successfully obtain the required capital or revenues, or, if obtained, that the amounts will be sufficient to fund our ongoing operations. The inability to secure additional capital would have a material adverse effect on us, including the possibility that we would have to sell or forego a portion or all of our assets or cease operations. If we discontinue our operations, we will not have sufficient funds to pay any amounts to our stockholders.

 

Even if we raise additional capital in the near future, if our current business plan is not successfully executed, our ability to fund our biopharmaceutical research and development, or our financial product deployment and services efforts would likely be seriously impaired. The ability of a biopharmaceutical research and development business and continuing operations is conditioned upon moving the development of products and services toward commercialization. If in the future we are not able to demonstrate adequate progress in the development and commercialization of our product, we will not be able to raise the capital we need to continue our business operations and business activities, and we will likely not have sufficient liquidity or cash resources to continue operating.


 

 

Because our working capital requirements depend upon numerous factors there can be no assurance that our current cash resources will be sufficient to fund our operations. At present, we have no committed external sources of capital, and do not expect any significant product revenues for the foreseeable future. Thus, we will require immediate additional financing to fund future operations. There can be no assurance, however, that we will be able to obtain funds on acceptable terms, if at all.

 

Credit Facilities and Accounts Payable

 

We do not have any credit facilities or other access to bank credit. We do not have any account payable balance as at May 20, 2020.

 

Capital Expenditures

 

We do not have any contractual obligations for ongoing capital expenditures at this time. We may, however, purchase equipment and software necessary to conduct our operations on an as needed basis.

 

Contractual Obligations, Commitments and Contingencies

 

As of the date of this Offering Circular, we do not have any contractual obligations, commitments or contingencies.

 

Off-Balance Sheet Arrangements

 

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements.

 

Quantitative and Qualitative Disclosures about Market Risk

 

As a company that intend to provide financing to other small businesses, in the ordinary course of our lending business, we would typically be exposed to market risk of the sort that may arise from changes in interest rates.  However, since we have not started our planned lending business, we are not exposed to market risk of the sort that may arise from changes in interest rates or foreign currency exchange rates, or that may otherwise arise from transactions in derivatives.

 

Contingencies

 

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company's management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

 

Relaxed Ongoing Reporting Requirements


 

 

Upon the completion of this Offering, we may elect to become a public reporting company under the Exchange Act. If we elect to do so, we will be required to publicly report on an ongoing basis as an “emerging growth company” (as defined in the Jumpstart Our Business Startups Act of 2012, which we refer to as the “JOBS Act”) under the reporting rules set forth under the Exchange Act. As defined in the JOBS Act, an emerging growth company is defined as a company with less than $1.0 Billion in revenue during its last fiscal year. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies.

 

For so long as we remain an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not “emerging growth companies,” including but not limited to:

 

 

not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;

 

 

taking advantage of extensions of time to comply with certain new or revised financial accounting standards;

  

 

being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and

 

 

being exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

 

If we are required to publicly report under the Exchange Act as an “emerging growth company”, we expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We would remain an “emerging growth company” for up to five years, though if the market value of our Common Stock that is held by non-affiliates exceeds $700 million, we would cease to be an “emerging growth company”.

 

If we elect not to become a public reporting company under the Exchange Act, we will be required to publicly report on an ongoing basis under the reporting rules set forth in Regulation A for Tier 2 issuers. The ongoing reporting requirements under Regulation A are more relaxed than for “emerging growth companies” under the Exchange Act. The differences include, but are not limited to, being required to file only annual and semi-annual reports, rather than annual and quarterly reports. Annual reports are due within one hundred twenty (120) calendar days after the end of the issuer's fiscal year, and semi-annual reports are due within ninety (90) calendar days after the end of the first six (6) months of the issuer's fiscal year.

 

 

 

 

 

 

 

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS & CORPORATE GOVERNANCE

 

The following is a list of our currently active, interim, and planned executive officers and directors and their respective ages and positions as of the date of this Offering Circular. Some of the officers listed below are currently engaged on a part-time or interim basis, however, it is the Company’s intent that all of the officers listed below will become full-time officers upon the successful completion of this Offering.

 

Name

 

Position

 

Term of Office

Executive Officers:

       

Dr. Solomon Mbagwu, MD

 

Executive Chairman

 

Since November 2018

Azuka L Uzoh, Esq.

 

General Counsel, Vice Chairman

 

Since November 2018

Patience C Ogbozor

 

President and Chief Executive Officer

 

Since November 2018

Frank I Igwealor, CPA, CMA, JD, MBA, MSRM

 

Vice President and Chief Financial Officer

 

Since November 2018

         
         

Directors:

       

Dr. Solomon Mbagwu, MD

 

Director  (Board Chairman)

 

Since November 2018

Azuka L Uzoh, Esq.

 

Director  (Board Vice Chairperson)

 

Since May 2014

Patience C Ogbozor

 

Director

 

Since May 2015

Frank I Igwealor, CPA, CMA, JD, MBA, MSRM

 

Director

 

Since May 2014


 

 

 

During the past five (5) years, none of the persons identified above has been involved in any bankruptcy or insolvency proceeding or convicted in a criminal proceeding, excluding traffic violations and other minor offenses. There is no arrangement or understanding between the persons described above and any other person pursuant to which the person was selected to his or her office or position.

 

Executive Officers and Directors

 

Dr. Solomon KN Mbagwu, Chairman:  Solomon KN Mbagwu, MD, is the Executive Chairman of Cannabinoid Biosciences, Inc.  Dr. Mbagwu joined the Company and was elected chairman of the Company’s board of directors in November 2018.  Dr. Mbagwu is a medical practitioner in Los Angeles, California.  In the last twenty four years, Dr. Mbagwu has owned and operated two medical clinics in South Los Angeles.  Prior to starting and running his own clinics, Dr. Mbagwu has over ten years of experience in community healthcare management; delivering babies and performing numerous obstetrical and gynecological surgeries while working at Centinela Hospital in Inglewood and other community health centers across Los Angeles County.   Dr. Mbagwu graduated from the University Of California, San Francisco, School Of Medicine in 1979.  Since finishing his residency at King Drew Medical Center, Los Angeles, in 1983, Dr. Mbagwu has actively practiced medicine in Los Angeles County.  Dr. Mbagwu is certified by the Board of Obstetrics and Gynecology since 1988.    During the past five years, Dr. Mbagwu held the following directorships:

 

  1. Board of Obstetrics and Gynecology at Centinela Hospital in Inglewood – March 2010 to Present.
  2. K N Solomon Mbagwu MD – July 1994 to Present.
  3. American Renaissance Capital, Inc. – June 2014 to present

 

Ms. Patience C. Ogbozor, President and CEO: Ms. Ogbozor joined Cannabinoid Biosciences in May 2015 as a Finance Manager and became the President and CEO in November 2018.  Ms. Ogbozor is the Chief Executive Officer, Director and controlling shareholder of the Company. Prior to joining the company, Ms. Ogbozor was with New Haven Pharmacy, Abuja, from 2013 to 2015. During the past five years, Ms. Ogbozor held the following directorships:

 

  1. Goldstein Franklin, Inc. – May 2015 to Present.

 

Mr. Azuka L. Uzoh, Esq. Vice Chairman and General Counsel:  Mr. Uzoh was the founding President (may 2014 to November 2018) and CEO of the company and has been a director of the company since May 2014.  Mr. Uzoh became the Vice Chairman and General Counsel of the Company in November 2018.    Mr. Uzoh has been the principal at the Law Offices of Azuka L. Uzoh A Professional Corporation (APC), since 2017.  Prior to that, Mr. Uzoh has been the owner of the Law Offices of Azuka L. Uzoh since 2007.  During the past five years, Mr. Uzor held the following directorships:

 

  • Law Offices of Azuka L. Uzoh A Professional Corporation (APC) – 2017 to Present.

 

 

 

Frank Igwealor, CPA, CMA, JD, MBA, MSRM is a Vice President and Chief Financial Officer of the Company.  Mr. Igwealor has been with the company since its founding in May 2014 and has served in various capacities until November 2018 when he became the CFO. Mr. Igwealor is a financial manager with broad technical and management experience in accounting, finance, and business advisory.  Mr. Igwealor is a Certified Financial Manager, Certified Management Accountant, and Certified Public Accountant. 

 

Frank has an extensive freelance consulting experience for the cannabis industry.  As a CPA, CMA, CFM consultant, Frank have provided top-level financial reporting, Accounting, SEC Reporting, Business Valuation, Mergers & Acquisitions, GAAP/ IFRS Conversion, Pre IPO/RTO Prep, 280E Tax, and Biological Assets Valuation to more than 26 cannabis businesses across 21 states.  Frank have substantial experience with Section 280E of the Internal Revenue Code, having worked for/with investors in the cannabis industry and helped them analyze the COGS and Operating expenses of dispensaries.  Frank has been part of a team that shepherded both big and small cannabis investments through the required audit and conducted all the filings to take them public through IPO, DPO or RTO transactions. I have worked with single dispensaries with cultivation as well as ROLL-UP of multiple dispensaries that wanted to achieve revenue scale at debut on the exchanges.  Frank has been an important part of the team that successfully delivered on the following:

 

·         Helped Cannabis business owners and investors with top-level financial reporting for SEC and Canadian Securities Exchanges (CSE), and investor consumption.

·         Consolidated dispensaries and cultivations and shepherd the consolidated holding company through GAAP and IFRS audit and get them listed on the US and Canadian exchanges.

·         Prepared complete audit packages, which includes workpapers and all necessary documentation. Frank does not do audits or any attest work. This is as a result of Sarbanes-Oxley legislation which prohibits auditors from preparing financial statements or conducting any accounting work for their clients.

·         Help dispensaries and cultivation owners to set up standardized (best practice) accounting and financial reporting systems.

·         Frank continues to have ongoing consulting project for legal-cannabis businesses such as managing the filing of Form 10-K , 10-Q and the associated audit, or just assisting on a technical accounting question such as providing a journal entry for a specific transaction.

 

Frank has been an accountant at Goldstein Franklin, a Los Angeles based local CPA firm since November 2011.  Before Goldstein Franklin, Mr. Igwealor was the Sr. Vice President and CFO of Los Angeles Neighborhood Housing between May 2007 and October 2011.  During the sixteen years prior to his joining Los Angeles Neighborhood Housing as the chief financial officer, Mr. Igwealor worked in various financial management, accounting, strategic planning, risk management, restructuring, recapitalization and turnaround capacities for various big and small businesses where he helped save or preserve about 252 American jobs that would have otherwise been lost through liquidations.  Mr. Igwealor’s business and professional experience include:

 

(a)     7/2007 to 10/2011 - SVP & CFO at Los Angeles Neighborhood Housing, Inc., one of Los Angeles largest affordable housing nonprofit agency.

(b)     11/2004 to present – President and CEO of Igwealth Franklin, Inc., a Los Angeles private equity firm

(c)     03/2008 to present – Director at Poverty Solutions, Inc., a Los Angeles based nonprofit that designs and deploys programs that help low income families divest poverty through education, employment, and entrepreneurship.

(d)     11/2006 to 04/2007 – Assistant Controller at SDI Media Group, a Culver City, CA based translation and dubbing company.

(e)     03/2006 to 09/2006 – SEC Financial reporting analyst at OSI Systems, Inc., a Hawthorne CA based manufacturer.

(f)      11/2003 to 11/2004 – Financial Advisor at Morgan Stanley

(g)     05/1990 to 02/1998 – Finance Manager at Beloved Trading Co., an Onitsha based trading firm doing wholesale and retail.

 


 

Over the past 24 years in accounting and finance, Mr. Igwealor has always operated on the premise that a country’s most valuable asset is her human capital – and that job creation is the essential element to a true and sustainable economic and prosperity.  During the past five years, Mr. Igwealor held the following directorships:

 

  • American Biopharmaceuticals Holdings Inc.  – November 2004 to Present.
  • Poverty Solutions, Inc.  – March 2008 to Present.
  • Los Angeles Community Capital – April 2012 to Present.
  • American Community Capital, LP.  – August 2013 to Present.
  • Goldstein Franklin, Inc. – April 2012 to Present.
  • American Renaissance Capital, Inc. – June 2012 to Present

 

Mr. Igwealor’s professional education includes (1) BA in Accounting from Union Institute & University; (2) BA in Economics from Union Institute & University; (3) MBA finance from California State University, Dominguez Hills; (4) Masters in Risk Management at New York University; and (5) Juris Doctor from Southwestern School of Law. 

 

The company believes that someone with finance and accounting expertise as Mr. Igwealor would be invaluable to the company’s need of identifying the right acquisition and partnership candidates as well as performing due diligence on those targets.

 

 

Board Leadership Structure and Risk Oversight

 

The Board oversees our business and considers the risks associated with our business strategy and decisions. The Board currently implements its risk oversight function as a whole. Each of the Board committees, when established, will also provide risk oversight in respect of its areas of concentration and reports material risks to the board for further consideration.

 

Term of Office

 

Directors serve until the next annual meeting and until their successors are elected and qualified. Officers are appointed to serve for one (1) year until the meeting of the Board following the annual meeting of shareholders and until their successors have been elected and qualified.  All officers are appointed annually by the board of directors and, subject to existing employment agreements (of which there are currently none), serve at the discretion of the board. Currently, directors receive no compensation for their role as directors but may receive compensation for their role as officers.

 

Currently, our board of directors comprises Ms. Ogbozor, Dr. Mbagwu and Messrs. Uzoh and Igwealor.

 

 

Director Independence

 

We use the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship which, in the opinion of the Company’s Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:

 

 

 

 

the director is, or at any time during the past three (3) years was, an employee of the company;

the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of twelve (12) consecutive months within the three (3) years preceding the independence determination (subject to certain exemptions, including, among other things, compensation for board or board committee service);

the director or a family member of the director is a partner in, controlling shareholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exemptions;

the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three (3) years, any of the executive officers of the company served on the compensation committee of such other entity; or

the director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three (3) years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.


 

 

 

Under such definitions, we have no independent directors. However, our Common Stock is not currently quoted or listed on any national exchange or interdealer quotation system with a requirement that a majority of our Board be independent and, therefore, the Company is not subject to any director independence requirements.

 

Possible Potential Conflicts

 

Our board could decide to list our stock on the OTCBB.  If and when they make such decision, our board’s independence would not be an issue because the OTCBB on which our board could plan to have our shares of common stock quoted does not currently have any director independence requirements.

 

No member of management will be required by us to work on a full time basis. Accordingly, certain conflicts of interest may arise between us and our officer(s) and director(s) in that he may have other business interests in the future to which he devotes his attention, and he may be expected to continue to do so although management time must also be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through exercise of such judgment as is consistent with each officer's understanding of his fiduciary duties to the Company.

 

Currently we have only six officers.  Three of our current officers are also our company directors.  We will seek to add additional officer(s) and/or director(s) as and when the proper personnel are located and terms of employment are mutually negotiated and agreed, and we have sufficient capital resources and cash flow to make such offers.

 

In an effort to resolve such potential conflicts of interest, our officers and directors have agreed that any opportunities that they are aware of independently or directly through their association with us (as opposed to disclosure to them of such business opportunities by management or consultants associated with other entities) would be presented by them solely to us.

 

We cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective.

 

Family Relationships

 

Frank Igwealor, our CFO has spousal relationship with Patience C Ogbozor, our President and CEO.  Other than the spousal relationship between Frank and Patience, there are no family relationships among any of our officers or directors.

 

Involvement in Certain Legal Proceedings

 

From time to time we may be involved in litigation relating to claims arising out of the operation of our business in the normal course of business. Other than as described below, as of the date of this Registration Statement we are not aware of potential dispute or pending litigation and are not currently involved in a litigation proceeding or governmental actions the outcome of which in management’s opinion would be material to our financial condition or results of operations. An adverse result in these or other matters may have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.


 

 

On February 20, 2019, Plaintiff maria De Lourdes Perez filed a complaint against defendants City of Carson, Goldstein Franklin, Inc., Frank Igwealor, Healthy Foods Markets, LLC, Optimal Foods, LLC, and Blockchain Capital LLC.  The complaint alleged statutory liability pursuant to government code section 835, gross negligence, and premises liability for a trip-and-fall that occurred on April 11, 2018 at a property owned and controlled by Healthy Foods Markets, LLC. Defendants Goldstein Franklin, Inc., Frank Igwealor, Optimal Foods, LLC, and Blockchain Capital LLC. had answered the complaint and also requested a demurrer on the grounds that (1) Defendants are not a proper party in interest and there was a misjoinder of defendants.  Our attorney has advised that the complaint would not have an adverse impact on Mr. Igwealor or the Company because the scope of liability is restricted to healthy Food Markets, LLC.

 

As of December 31, 2019, except for the complaint listed above, there was no material proceeding to which any of our directors, officers, affiliates or stockholders is a party adverse to us. 

 

None of our current directors or executive officers has, during the past ten (10) years:

 

 

been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

 

 

had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two (2) years prior to that time;

 

 

been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

 

 

been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

 

 

been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

 

 

been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Except as set forth above and in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

 

We are not currently a party to any legal proceedings, the adverse outcome of which, individually or in the aggregate, we believe will have a material adverse effect on our business, financial condition or operating results.

 

Code of Business Conduct and Ethics


 

 

On August 1, 2014, we adopted a Code of Ethics and Business Conduct which is applicable to our future employees and which also includes a Code of Ethics for our chief executive and principal financial officers and any persons performing similar functions. A code of ethics is a written standard designed to deter wrongdoing and to promote:

honest and ethical conduct,

full, fair, accurate, timely and understandable disclosure in regulatory filings and public statements,

compliance with applicable laws, rules and regulations,

the prompt reporting violation of the code, and

accountability for adherence to the code.

 

A copy of our Code of Business Ethics has been filed with the Securities and Exchange Commission as Exhibit 1.3 to our Registration Statement of which this prospectus is a part.

 

Committees of the Board of Directors

 

Concurrent with having sufficient members and resources, our board of directors will establish an audit committee and a compensation committee. We believe that we will need a minimum of seven directors to have effective committee systems. The audit committee will review the results and scope of the audit and other services provided by the independent auditors and review and evaluate the system of internal controls. The compensation committee will manage any stock option plan we may establish and review and recommend compensation arrangements for the officers. No final determination has yet been made as to the memberships of these committees or when we will have sufficient members to establish committees.

 

We will reimburse all directors for any expenses incurred in attending directors' meetings provided that we have the resources to pay these fees. We will consider applying for officers and directors liability insurance at such time when we have the resources to do so.

 

 

ITEM 11.   EXECUTIVE COMPENSATION

 

The following table represents information regarding the total compensation our executive officers and director of the Company from May 6, 2014 (inception) to December 31, 2019:

 

   

5/6/14 - 12/31/19

 

5/6/14 -12/31/19

 

5/6/14 -12/31/19

   

Cash

 

Other

 

Total

   

Compensation

 

Compensation

 

Compensation

Name and Principal Position

 

($)

 

($)

 

($)(1)

             

Dr. Solomon Mbagwu, MD,  Executive Chairman

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Azuka L Uzoh, Esq., General Counsel, Vice Chairman

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patience C Ogbozor, President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frank I Igwealor, CPA, CMA, JD, MBA, MSRM, Vice President and Chief Financial Officer

 

 

 

 

 

 

 

 

 

(1)

Any values reported in the “Other Compensation”, if applicable, column represents the aggregate grant date fair value, computed in accordance with Accounting Standards Codification ("ASC") 718 Share Based Payments, of grants of stock options to each of our named executive officers and directors.


 

 

 

Employment Offer Letters & Employment Agreements

 

The Company has no employment agreement with any of its officers.  However, the company is contemplating entering employment agreement with all of its officers in April 2020 as follows:

 

Patience C Ogbozor, President and Chief Executive Officer:  Under the contemplated employment agreement to be entered between the company and Ms. Ogbozor, she would be entitled to receive (i) $10,000 monthly for her service from the month of April to June 2020, (ii) $15,000 monthly for her services after June 2020.  Additionally, Ms. Ogbozor would receive stock options entitling her to purchase 100,000 shares of Company Common Stock, as well as a “put option” to sell up to 25,000 shares of her Common Stock in the Company (received through the exercise of her stock options) at a purchase price of $10.00 per Common Stock share upon the Company successfully raising $5,000,000 in proceeds from this Offering.

 

Azuka L Uzoh, Esq., General Counsel, Vice Chairman: Under the contemplated employment agreement to be entered between the company and Mr. Uzoh, he would receive stock options entitling him to purchase 100,000 shares of Company Common Stock, as well as a “put option” to sell up to 25,000 shares of his Common Stock in the Company (received through the exercise of his stock options) at a purchase price of $10.00 per Common Stock share upon the Company successfully raising $5,000,000 in proceeds from this Offering.

 

Dr. Solomon Mbagwu, MD, Executive Chairman:  Under the contemplated employment agreement to be entered between the company and Dr. Mbagwu, he would receive stock options entitling him to purchase 100,000 shares of Company Common Stock, as well as a “put option” to sell up to 25,000 shares of his Common Stock in the Company (received through the exercise of his stock options) at a purchase price of $10.00 per Common Stock share upon the Company successfully raising $5,000,000 in proceeds from this Offering.

 

Frank I Igwealor, CPA, CMA, JD, MBA, MSRM, Vice President and Chief Financial Officer:  Under the contemplated employment agreement to be entered between the company and Mr. Igwealor, he would be entitled to receive (i) $8,000 monthly for his service from the month of April to June 2019, (ii) $13,000 monthly for his services after June 2020.  Additionally, Mr. Igwealor would receive stock options entitling him to purchase 100,000 shares of Company Common Stock, as well as a “put option” to sell up to 25,000 shares of his Common Stock in the Company (received through the exercise of his stock options) at a purchase price of $10.00 per Common Stock share upon the Company successfully raising $5,000,000 in proceeds from this Offering.

 

The Company and Messrs. Uzoh, Mbagwu, , Igwealor and Ms. Ogbozor are in the process of negotiating the terms of formal employment agreements with the Company for the period beginning in January 2019 and expiring no earlier than December 31, 2020. The final terms of any such employment agreements, including any stock options or stock award proposed to be offered to Messrs. Uzoh, Mbagwu, , Igwealor and Ms. Ogbozor are subject to the approval of the disinterested members of the Board of Directors. There can be no assurance that such employment agreements will be entered into with any of Uzoh, Mbagwu, , Igwealor and Ms. Ogbozor, or that any such persons will continue to serve as executive officers of the Company or as members of the Board of Directors of the Company. In the event that any of such executive officers no longer provide full-time services to the Company, our business and future prospects could be materially and adversely affected. See, “Risk Factors.”

 

 

Transfer Agent

 

We intend to enlist the services of FundAmerica as both our transfer agent and escrow agent.

 

 

ITEM 12.   SECURITY OWNERSHIP OF MANAGEMENT & CERTAIN SECURITYHOLDERS

 


 

The following table shows the beneficial ownership of our Common Stock as of the date of this Offering Circular held by (i) each person known to us to be the beneficial owner of more than five percent (5%) of any class of our shares; (ii) each director; (iii) each executive officer; and (iv) all directors and executive officers as a group. As of December 31, 2018, there were 16,700,000 shares of our Common Stock issued and outstanding, and as at the date of this Offering Circular a total of 19,700,000 shares of our Common Stock will be outstanding after giving effect to the sales of 3,000,000 shares of our Common Stock on January 10, 2019.

 

Beneficial ownership is determined in accordance with the rules of the Commission, and generally includes voting power and/or investment power with respect to the securities held. Shares of Common Stock subject to options and warrants currently exercisable or which may become exercisable within sixty (60) days of the date of this Offering Circular, are deemed outstanding and beneficially owned by the person holding such options or warrants for purposes of computing the number of shares and percentage beneficially owned by such person, but are not deemed outstanding for purposes of computing the percentage beneficially owned by any other person. Except as indicated in the footnotes to this table, the persons or entities named have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them.

 

The percentages below are based on fully diluted shares of our Common Stock as of December 31, 2019.

 

   

Number of

         
   

shares of

         
   

Common Stock

         
   

Beneficially

     

Beneficially Owned(4)

 
   

Owned as of

 

Percentage

   
   

30-Nov-18

 

Before Offering

 

After Maximum Offering

 
   

 

 

 

 

 

 

Directors and Officers:(1)

 

 

 

 

 

 

 

 

 

 

Patience C Ogbozor(2)

 

 

11,000,000

 

 

55.84%

%

 

16.30%

%

Dr. Solomon Mbagwu, MD(3)

 

 

 5,200,000

 

 

26.4%

 

7.70%

Azuka L Uzoh, Esq.(1)

 

 

    700,000

 

 

3.6%

 

1.04%

 

 

 

 

 

 

 

 

 

 

 

All directors and named executive officers as a group (3 persons)

 

 

16,900,000

 

 

85.8%

%

 

25.04%

%

 

 

 

 

 

 

 

 

 

 

 

 Greater than 5% Beneficial Owners:

 

 

 

 

 

 

 

 

 

 

Goldstein Franklin, Inc.(2)

 

 

10,000,000 

 

 

50.8% 

 

 

14.81%

%

Dr. Solomon Mbagwu, MD(3)

 

 

5,200,000

 

 

26.4%

%

 

7.70%

%

Poverty Solutions, Inc.(5)

 

 

1,000,000

 

 

5.1%

%

 

1.48%

%

 

 

(1) Unless otherwise indicated, the principal address of the named directors and officers of the Company is c/o Cannabinoid Biosciences, Inc., 370 Amapola Ave., Suite 200A, Torrance, CA 90501.

 

(2) Common Stock beneficially owned by Ms. Patience C Ogbozor are held of record by Goldstein Franklin, Inc., which is an entity that is wholly-owned and controlled by Ms. Patience C Ogbozor, the Company’s President and Chief Executive Officer and Director. Its address is 370 Amapola Ave., Suite 200A, Torrance, CA 90501.

  

(3) Address is 370 Amapola Ave., Suite 200A, Torrance, CA 90501.


 

 

(4) Assumes that upon the sale of the Maximum Offering the Company will have 50,000,000 shares of Common Stock issued and outstanding.

 

(5) Mr. Igwealor is a member of Poverty Solutions’ governing board and represents its interest on Cannabiniod Biosciences’ board

 

 

 

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

Transactions with Related Persons

 

Goldstein Franklin, Inc.

 

From May 6, 2014 (inception) to December 31, 2017, the Company for $50 per month was renting a tiny space from Goldstein Franklin Inc., a business controlled by our officers.  The company also uses the accounting and reporting services of Goldstein Franklin Inc., its registered services of process agent, as well as controlling shareholder.  Goldstein Franklin is also responsible for paying the telephone bills and other operating expenses on behalf of the Company. 

 

Poverty Solutions, Inc.

 

In January 2018, the Company entered into lease agreement with Poverty Solutions Inc., to lease office space at $550 per month.  Poverty Solutions, Inc. owns one million shares of our common stock.  Poverty Solutions Inc. had also being helping the company to pay certain invoices and vendors throughout the years 2019 and 2018. To this end, as at December 31, 2019, the Company owes to Poverty Solutions, Inc., a total of $41,558.93

 

To the best of our knowledge, since the period from inception (May 6, 2014) to December 31, 2019, other than as set forth above, there were no material transactions, or series of similar transactions, or any currently proposed transactions, or series of similar transactions, to which we were or are to be a party, in which any director or executive officer, or any security holder who is known by us to own of record or beneficially own more than five percent (5%) of any class of our Common Stock, or any member of the immediate family of any of the foregoing persons, has an interest (other than compensation to our officers and directors in the ordinary course of business).

 

ITEM 14. DESCRIPTION OF SECURITIES

 

The following is a summary of the rights of our capital stock as provided in our certificate of incorporation, bylaws and certificate of designation. For more detailed information, please see our certificate of incorporation, bylaws and certificate of designation which have been filed as exhibits to the Offering Statement of which this Offering Circular is a part.

 

General - Current Offering

 

We are offering 50,000,000 shares of our Common Stock, par value $0.0001 (“Common Stock”), at an offering price of $1.00 per share (the “Offered Shares”) by the Company. 

 

Common Stock

 

The Company is authorized to issue one classes of stock. The total number of shares of stock which the Company is authorized to issue is One Billion (1,000,000,000) shares of Common Stock, $0.0001 par value. 

 

As of the date of this Offering Circular, the Company had 19,722,927 shares of Common Stock issued and outstanding.

 


 

Voting

 

The holders of the Common Stock are entitled to one vote for each share held at all meetings of shareholders (and written actions in lieu of meeting). There shall be no cumulative voting. The holders of shares of Common Stock are entitled to dividends when and as declared by the Board from funds legally available therefor, and upon liquidation are entitled to share pro rata in any distribution to holders of Common Stock. There are no preemptive, conversion or redemption privileges, nor sinking fund provisions with respect to the Common Stock.

 

Changes in Authorized Number

 

The number of authorized shares of Common Stock may be increased or decreased subject to the Company’s legal commitments at any time and from time to time to issue them, by the affirmative vote of the holders of a majority of the stock of the Company entitled to vote.

 

Preferred Stock

 

The Company has no Preferred Stock. 

 

Indebtedness.

 

As of the date of this Offering Circular, with the exception of approximately $42,358.93 in payables and debt obligations owed by the Company, we have no indebtedness or liabilities believed to be material to our business.

 

Transfer Agent

 

Our transfer agent is KoreConX Inc., 285 Fulton St, One World Trade Centre, New York, New York 10007.  Our transfer agent is registered under the Exchange Act and operates under the regulatory authority of the Commission.

 

 

POSSIBLE 2019 Equity Incentive Plan

 

At the close of this offering, the Company intends to adopt an Equity Incentive Plan (the “Plan”) to reward and provide incentives to our officers, directors, employees, consultants and other eligible participants. We intend to set aside options to purchase up to Ten Million (10,000,000) shares of Common Stock for issuance under the Plan, which may be granted in the form of either incentive stock options or non-qualified stock options. Our Board of Directors would administers the Plan, and would have the authority: (i) to select the Plan recipients, the time or times at which awards may be granted, the number of shares to be subject to each option awarded, the vesting schedule of the options and (ii) to amend the stock option Plan to reward and provide incentives to its officers, directors, employees, consultants and other eligible participants. As of the date of this Offering Circular, the Plan is still being prepared and negotiated.  Subsequent to the completion of the Offering, the Company expects to issue options as an inducement for managerial and qualified personnel to remain with and to join the Company.

 

Once adopted, we intend to register the Plan.  However, there is no guarantee that we could be able to register the shares subject to issuance thereunder, pursuant to the Securities Act. Absent registration, such shares, when issued upon exercise of options, would be “restricted securities” as that term is defined in Rule 144 under the Securities Act. Administration of the Plan would be by our Board of Directors (the “Board”) or a committee appointed by the Board of Directors which would consist of one (1) or more members (the “Committee”). To date, no such Committee has been appointed, and the Board has elected to administer the Plan itself.

 

Penny Stock Regulation

 

The SEC has adopted regulations which generally define “penny stock” to be any equity security that has a market price of less than Five Dollars ($5.00) per share or an exercise price of less than Five Dollars ($5.00) per share. Such securities are subject to rules that impose additional sales practice requirements on broker-dealers who sell them. For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchaser of such securities and have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a disclosure schedule prepared by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, among other requirements, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. As our Common Stock immediately following this Offering may be subject to such penny stock rules, purchasers in this Offering will in all likelihood find it more difficult to sell their Common Stock shares in the secondary market.


 

 

DIVIDEND POLICY

 

We plan to retain any earnings for the foreseeable future for our operations. We have never paid any dividends on our Common Stock and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our Board and will depend on our financial condition, operating results, capital requirements and such other factors as our Board deems relevant.

 

 

ADDITIONAL INFORMATION ABOUT THE OFFERING

 

Investment Limitations

 

Generally, no sale may be made to you in this Offering if the aggregate purchase price you pay is more than ten percent (10%) of the greater of your annual income or net worth (please see below on how to calculate your net worth). Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

 

Because this is a Tier 2, Regulation A offering, most investors must comply with the ten percent (10%) limitation on investment in the Offering. The only investor in this Offering exempt from this limitation is an “accredited investor” as defined under Rule 501 of Regulation D under the Securities Act (an “Accredited Investor”). If you meet one of the following tests you should qualify as an Accredited Investor:

 

(i)

You are a natural person who has had individual income in excess of $200,000 in each of the two (2) most recent years, or joint income with your spouse in excess of $300,000 in each of these years, and have a reasonable expectation of reaching the same income level in the current year;

   

(ii)

You are a natural person and your individual net worth, or joint net worth with your spouse, exceeds $1,000,000 at the time you purchase Shares (please see below on how to calculate your net worth);

   

(iii)

You are an executive officer or general partner of the issuer or a manager or executive officer of the general partner of the issuer;

   

(iv)

You are an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or the Code, a corporation, a Massachusetts or similar business trust or a partnership, not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5,000,000;

   

(v)

You are a bank or a savings and loan association or other institution as defined in the Securities Act, a broker or dealer registered pursuant to Section 15 of the Exchange Act, an insurance company as defined by the Securities Act, an investment company registered under the Investment Company Act of 1940 (the "Investment Company Act"), or a business development company as defined in that act, any Small Business Investment Company licensed by the Small Business Investment Act of 1958 or a private business development company as defined in the Investment Advisers Act of 1940;

   

(vi)

You are an entity (including an Individual Retirement Account trust) in which each equity owner is an accredited investor;

   

(vii)

You are a trust with total assets in excess of $5,000,000, your purchase of Shares is directed by a person who either alone or with his purchaser representative(s) (as defined in Regulation D promulgated under the Securities Act) has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment, and you were not formed for the specific purpose of investing in the Shares; or

   

(viii)

You are a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has assets in excess of $5,000,000.


 

 

 

Offering Period and Expiration Date

 

This Offering will start on or immediately prior to the date on which the SEC initially qualifies this Offering Statement (the “Qualification Date”) and will terminate on the Termination Date (the “Offering Period”).

 

Procedures for Subscribing

 

If you decide to subscribe for our Common Stock shares in this Offering, you should:

 

 

1.

Electronically receive, review, execute and deliver to us a subscription agreement; and

 

 

2.

Deliver funds directly by wire or electronic funds transfer via ACH to the Company’s bank account designated in the Company’s subscription agreement.

 

Any potential investor will have ample time to review the subscription agreement, along with their counsel, prior to making any final investment decision. We shall only deliver such subscription agreement upon request after a potential investor has had ample opportunity to review this Offering Circular.

 

 

Right to Reject Subscriptions

 

After we receive your complete, executed subscription agreement and the funds required under the subscription agreement have been transferred to our designated account, we have the right to review and accept or reject your subscription in whole or in part, for any reason or for no reason. We will return all monies from rejected subscriptions immediately to you, without interest or deduction.

 

Acceptance of Subscriptions

 

Upon our acceptance of a subscription agreement, we will countersign the subscription agreement and issue the shares subscribed at closing. Once you submit the subscription agreement and it is accepted, you may not revoke or change your subscription or request your subscription funds. All accepted subscription agreements are irrevocable.

 


 

Under Rule 251 of Regulation A, non-accredited, non-natural investors are subject to the investment limitation and may only invest funds which do not exceed ten percent (10%) of the greater of the purchaser's revenue or net assets (as of the purchaser's most recent fiscal year end). A non-accredited, natural person may only invest funds which do not exceed ten percent (10%) of the greater of the purchaser's annual income or net worth (please see below on how to calculate your net worth).

 

NOTE: For the purposes of calculating your net worth, it is defined as the difference between total assets and total liabilities. This calculation must exclude the value of your primary residence and may exclude any indebtedness secured by your primary residence (up to an amount equal to the value of your primary residence). In the case of fiduciary accounts, net worth and/or income suitability requirements may be satisfied by the beneficiary of the account or by the fiduciary, if the fiduciary directly or indirectly provides funds for the purchase of the Shares.

 

In order to purchase our Common Stock shares and prior to the acceptance of any funds from an investor, an investor will be required to represent, to the Company’s satisfaction, that he is either an accredited investor or is in compliance with the ten percent (10%) of net worth or annual income limitation on investment in this Offering.

 

 

SHARES ELIGIBLE FOR FUTURE SALE

 

 

Prior to this offering, there has been a limited market for our Common Stock. Future sales of substantial amounts of our Common Stock, or securities or instruments convertible into our Common Stock, in the public market, or the perception that such sales may occur, could adversely affect the market price of our Common Stock prevailing from time to time. Furthermore, because there will be limits on the number of shares available for resale shortly after this offering due to contractual and legal restrictions described below, there may be resales of substantial amounts of our Common Stock in the public market after those restrictions lapse. This could adversely affect the market price of our Common Stock prevailing at that time.

 

 

Rule 144

 

In general, a person who has beneficially owned restricted shares of our Class A Common Stock for at least twelve months, in the event we are a reporting company under Regulation A, or at least six months, in the event we have been a reporting company under the Exchange Act for at least 90 days before the sale, would be entitled to sell such securities, provided that such person is not deemed to be an affiliate of ours at the time of sale or to have been an affiliate of ours at any time during the 90 days preceding the sale. A person who is an affiliate of ours at such time would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of shares that does not exceed the greater of the following:

 

 

·

1% of the number of shares of our Class A Common Stock then outstanding; or

     
 

·

the average weekly trading volume of our Class A Common Stock during the four calendar weeks preceding the filing by such person of a notice on Form 144 with respect to the sale; provided that, in each case, we are subject to the periodic reporting requirements of the Exchange Act for at least 90 days before the sale. Rule 144 trades must also comply with the manner of sale, notice and other provisions of Rule 144, to the extent applicable.

 

 

 

LEGAL MATTERS

 

Certain legal matters with respect to the shares of Common Stock offered hereby will be passed upon by the Law Office Of Mary Shea, Vancouver, WA 98663

 

EXPERTS


 

 

The financial statements of the Company appearing elsewhere in this Offering Circular have been included herein in reliance upon the report of DylanFloyd Accounting & Consulting, an independent certified public accounting firm, appearing elsewhere herein, and upon the authority of that firm as experts in accounting and auditing.

 

WHERE YOU CAN FIND MORE INFORMATION

 

We have filed with the SEC a Regulation A Offering Statement on Form 1-A under the Securities Act of 1993, as amended, with respect to the shares of Common Stock offered hereby. This Offering Circular, which constitutes a part of the Offering Statement, does not contain all of the information set forth in the Offering Statement or the exhibits and schedules filed therewith. For further information about us and the Common Stock offered hereby, we refer you to the Offering Statement and the exhibits and schedules filed therewith. Statements contained in this Offering Circular regarding the contents of any contract or other document that is filed as an exhibit to the Offering Statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the Offering Statement. Upon the completion of this Offering, we will be required to file periodic reports, proxy statements, and other information with the SEC pursuant to the Securities Exchange Act of 1934. You may read and copy this information at the SEC's Public Reference Room, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, including us, that file electronically with the SEC. The address of this site is www.sec.gov.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on behalf by the undersigned, thereunto duly authorized, in Los Angeles, State of California, on May 20,  2020.

 

 

Cannabinoid Biosciences, Inc.

 

By:

/s/ Patience C Ogbozor

 

Name: Patience C Ogbozor

 

Title:  President and Chief Executive Officer

 

 

 


 

This offering statement has been signed by the following persons in the capacities and on the date indicated.

 

Signature

 

Title

 

Date

         

 /s/ Patience C Ogbozor

 

President, CEO & Director

 

30-Apr-2020

Patience C Ogbozor

       

 

 

       

/s/ Frank I Igwealor

 

Chief Financial Officer, Treasurer, Secretary & Director

 

30-Apr-2020

Frank I Igwealor

       

 


 

Part III – EXHIBITS

 

 

 

Exhibit No.

 

Description

     

EX1A-2A

 

Certificate of Incorporation of Cannabinoid Biosciences, Inc. *

     

EX1A-2C

 

Bylaws of Cannabinoid Biosciences, Inc.*

     

EX1A-4A

 

Form of Subscription Agreement

 

 

 

EX1A-11

 

CONSENT of CPA

     

EX1A-12

 

OPN CNSL

 

  *filed previously

 

 


 

 

 

CANNABINOID BIOSCIENCES, INC.

(a California Corporation)

Audited Consolidated Financial Statements

December 31, 2019 and 2018

 

 

 

 

 

  

 

 

TABLE OF CONTENTS

 

Independent Auditor’s Report

F-2

 

 

Consolidated Balance Sheets as of December 31, 2019 and 2018

F-3

 

 

Consolidated Statements of Operations for the years ended December 31, 2019 and 2018

F-4

 

 

Consolidated Statements of Changes in Members’ Capital for years ended December 31, 2019 and 2018

F-5

 

 

Consolidated Statements of Cash Flows for the years ended December 31, 2019 and 2018

F-6

 

 

Notes to the Consolidated Financial Statements

F-7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-1

D y l a n F l o y d A c c o u n t i n g & C o n s u l t i n g

 

 

Independent Auditor's Report

 

To the Shareholders and the Board of Directors

Cannabinoid Biosciences Inc.

 

We have audited the accompanying balance sheet of Cannabinoid Biosciences Inc. as of December 31, 2019 and 2018, and the related statements of income, stockholder’s equity (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. 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.

 

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above, present fairly, in all material respects, the financial position of Cannabinoid Biosciences Inc. as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The company had an accumulated deficit of $ 162,390 from May 6, 2014 (Inception) through December 31, 2019 and incurred a significant operating loss of $143,944. These conditions raise a substantial doubt about its ability to continue as a going concern. These factors as discussed in Note 4 of the financial statements raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 4. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

Albert Garcia, CPA

DylanFloyd Accounting & Consulting

April 28, 2020

 

Newhall CANewhall CA

F-2

 

CANNABINOID BIOSCIENCES, INC.

   

(A Development Stage Company)

   
   

Balance Sheet

   
       

For the Year Ended

       
           

December 31,

           

2019

 

2018

                 

 

 

ASSETS

 

 

 

 

 

 

                 

Cash and cash equivalents

 

 

 

 $            10,878

 

 $               1,393

Other current assets

         

                 8,620

 

                        -  

          Total Current Assets

 

 

 

 $            19,498

 

 $               1,393

                 

Fixed Assets

 

 

 

 $            17,550

 

 $                     -  

Other assets

         

               41,579

   

 

Total assets

 

 

 

 $          78,628

 

 $              1,393

                 

      LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

                 

Liabilites:

 

 

 

 

 

 

 

 

                 

    Current liabilities

 

 

 

 $                 800

 

 $               1,600

                 

    Long-term liabilities

 

 

 

 $            41,559

 

 $               4,101

           

 

 

 

           Total liabilities

 

 

 

 

               42,359

 

                11,438

                 

 

 

 

 

 

 

 

 

 

Stockholders' deficit:

           

 

 

 

 

 

 

 

 

 

Common stock ($0.0001 par value)

                 1,973

 

                  1,670

1,000,000,000 shares authorized, no par

 

 

 

19,722,927 issued and outstanding on 12/31/2019, and

     

   16,700,000 issued and outstanding on 12/31/2018 respectively.

 

 

 

    Accumulated other comprehensive income

     

               (5,738)

   

    Additional Paid-in Capital

 

 

 

             196,686

 

                  6,730

    Accumulated Deficits

     

           (156,652)

 

               (12,708)

 

 

 

 

 

 

 

 

 

              Total stockholders' equity

     

               36,269

 

                 (4,308)

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 $          78,628

 

 $              1,393

                 
 

The accompanying notes are an integral part of these financial statements