UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

Amendment No. 1

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2015

or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to __________

Commission File Number: 001-28911

CANNABIS SCIENCE, INC.

 (Exact name of registrant as specified in its charter)

Nevada	91-1869677
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
6946 N Academy Blvd, Suite B #254 Colorado Springs, CO	80918
(Address of principal executive offices)	(Zip Code)
888-889-0888
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [  ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  [X] Yes [  ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a not-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer   [  ] Accelerated filer   [  ]

Non-accelerated filer     [  ] Smaller reporting company   [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  [  ] Yes [X] No

Number of common shares outstanding at November 20, 2015: 1,416,655,296

Number of common shares outstanding at September 30, 2015: 1,287,155,296

Number of Class A common shares outstanding at September 30, 2015: 0

EXPLANATORY NOTE

The sole purpose of this Amendment to the Registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 2015 (the “10-Q”), is to furnish the Interactive Data File exhibits required by Item 601(b)(101) of Regulation S-K. No other changes have been made to the 10-Q, and this Amendment has not been updated to reflect events occurring subsequent to the filing of the 10-Q.

CANNABIS SCIENCE, INC.

FORM 10-Q

For the Period Ended September 30, 2015

TABLE OF CONTENTS

	Page
PART I   FINANCIAL INFORMATION
Item 1.  Consolidated Financial Statements	3
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations	5
Item 3.  Quantitative and Qualitative Disclosures about Market Risk	8
Item 4.  Controls and Procedures	8
PART II  OTHER INFORMATION
Item 1.   Legal Proceedings	9
Item 1A.  Risk Factors	9
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds	9
Item 3.   Defaults Upon Senior Securities	10
Item 4.   Mine Safety Disclosures.	10
Item 5.   Other Information	10
Item 6.   Exhibits and Certifications	11

2

PART I   FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

Index

Consolidated Balance Sheets

F-1

Consolidated Statements of Operations and Other Comprehensive Loss

F-2

Consolidated Statements of Cash Flows

F-3

Notes to the Consolidated Financial Statements

F-4

3

CANNABIS SCIENCE, INC.
CONSOLIDATED BALANCE SHEEETS
September 30, 2015 and December 31, 2014
		September 30,2015		December 31,
		(unaudited)		2014
		$		$
ASSETS
Current Assets
Cash		4,791		10,061
Inventory		18,476		-
Other receivables		3,072		8,670
Prepaid expenses and deposits		88,588		97,626
Loans receivable, related party		22,936		50,000
Total current assets		137,863		166,357
Deposits (Note 8)		971,500		971,500
Goodwill		280,141		-
Equity method investee (Note 9)		156,181		243,969
TOTAL ASSETS		1,545,685		1,381,826
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable		127,440		153,094
Accrued expenses, primary management fees (Note 5)		2,029,807		1,716,807
Dividends payable		473,527		-
Advances from related parties (Note 5)		756,993		203,892
Management bonuses		300,000		300,000
Notes payable to stockholders (Note 6)		1,466,513		1,581,486
Total current liabilities and total liabilities		5,154,280		3,955,279
Commitments (Note 10)
Stockholders' Deficit
Series A Preferred Stock, $0.001 par value, 1,000,000 shares
authorized, 1,000,000 shares issued and outstanding at September 30,2015 and December 31, 2014		1,000		1,000
Common stock, $.001 par value, 3,000,000,000 and 1,500,000,000 shares authorized as of September 30, 2015 and December 31, 2014; 1,287,155,296 issued and outstanding as of September 30,2015 and 1,032,123,906 at December 31, 2014		1,287,155		1,032,124
Common stock, Class A, $.001 par value, 100,000,000  shares
authorized, none issued and outstanding as of September 30, 2015 and December 31, 2014		-		-
Prepaid consulting		(5,476,985)		(4,448,696)
Additional paid-in-capital, including 104,000,000 shares pending to be issued		125,519,240		110,256,424
Common stock receivable		(615,000)		-
Accumulated deficit		(123,991,168)		(109,393,306)
Cumulative exchange translation		(100,248)		(20,999)
Equity attributable to common shareholders		(3,376,006)		(2,573,453)
Non-controlling interest		(232,589)		-
Total stockholders' deficit		(3,608,595)		(2,573,453)
TOTAL LIABILTIES AND STOCKHOLDERS' DEFICIT		1,545,685		1,381,826

The accompanying notes are an integral part of these consolidated financial statements.

F-1

CANNABIS SCIENCE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 and 2014
(UNAUDITED)
		For the three months				For the nine months
		ended September 30,				ended September 30,
		2015		2014		2015		2014
		$		$		$		$
Revenue		4,150		-		4,150		1,031
Cost of Goods Sold		2,088		-		2,088		-
Operating Expenses
Investor relations		(10,500)		-		-		-
Professional Fees		22,424		29,277		626,132		71,622
Net loss on settlement of liabilites		770,000		-		4,488,076		2,116,500
Depreciation and Amortization		-		16,122		-		54,373
Research and Development		68,552		11,847		381,772		11,847
General and administrative		2,967,024		597,077		8,710,982		4,845,803
Total operating expenses		3,817,500		654,323		14,206,962		7,100,145
Net Operating Loss		(3,815,438)		(654,323)		(14,204,900)		(7,099,114)
Other income (expense)
Interest expense, net		(603)		-		(603)		(65)
Impairment of goodwill		-		-		(64,421)		-
Debt refinance costs		-		-		-		(833,000)
Warrant expense		-		-		-		(97,894)
Unrealized gain (loss) on marketable common stock		(79,500)		(21,000)		(87,000)		(36,000)
Total other income (expense)		(80,103)		(21,000)		(152,024)		(966,959)
Net Loss		(3,895,541)		(675,323)		(14,356,924)		(8,066,073)
Less: Net loss attributable to non-controlling interest		177,621		-		232,589		-
Net loss attributable to common shareholders		(3,717,920)		(675,323)		(14,124,335)		(8,066,073)
Other Comprehensive Income
Foreign exchange translation adjustment		(49,708)		(16,690)		(79,249)		(17,641)
Total other comprehensive income (loss)		(49,708)		(16,690)		(79,249)		(17,641)
Comprehensive loss attributable to Cannabis Science, Inc.		(3,767,628)		(692,013)		(14,203,584)		(8,083,714)
Net loss per common share:
Basic and diluted		$            (0.00)		$        (0.00)		$            (0.01)		$       (0.01)
Weighted average number of common shares outstanding		1,285,416,166		836,783,906		1,213,795,570		778,287,313

The accompanying notes are an integral part of these consolidated financial statements.
 

F-2

CANNABIS SCIENCE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 and 2014
(UNAUDITED)
		September 30, 2015		September 30, 2014
		$		$
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		(14,356,924)		(8,066,073)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		-		54,373
Stock issued for services		8,585,654		4,366,539
Stock issued for the extension of debt		-		833,000
Warrant expense		-		97,894
Foreign exchange adjustment		(79,249)		(17,641)
Loss on settlement of liabilities		4,488,076		2,116,500
Loss on marketable securities		-		36,000
Equity investee, Endocan Corporation		87,788		-
Changes in operating assets and liabilities:
Accounts receivable		5,883		(8,351)
Inventory		1,937		-
Prepaid expenses and deposits		9,038		(23,684)
Accounts payable		570,893		(18,513)
Accrued expenses, including management fees		313,000		362,734
CASH FLOWS USED IN OPERATING ACTIVITES		(373,904)		(267,222)
CASH FLOWS FROM INVESTING ACTIVITIES
Advance receivable, related parties		33,615		-
Repayment of advances receivable, related parties		(7,351)		-
Cash acquired with EquiPharm		6,493		-
Loans receivable, related parties		-		(40,596)
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES		32,757		(40,596)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from advances from officer		-		447
Proceeds from notes payable-stockholders		85,877		-
Repayments of notes payable-stockholders		-		(250,000)
Proceeds from sale of common stock		250,000		1,000,000
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES		335,877		750,447
NET INCREASE (DECREASE) IN CASH		(5,270)		442,629
CASH, BEGINNING  OF PERIOD		10,061		943
CASH, END OF PERIOD		4,791		443,572
SUPPLEMENTAL CASH FLOW INFORMATION:
Common stock issued for service		10,228,944		3,572,760
Common stock issued for settlement of debt		4,733,904		2,146,000
Common stock issued for extension of debt		-		833,000
Common stock issued for acquisition of EquiPharm		305,000		-
Debt converted into common stock		245,828		29,500
Accounts payable and expenses paid through note payable, stockholder		130,854		13,500
Accounts payable and expenses paid through advances from related parties		466,106		-
Stock dividends payable		473,527		-

The accompanying notes are an integral part of these consolidated financial statements.
 

F-3

CANNABIS SCIENCE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Organization and General Description of Business

Cannabis Science, Inc.  (“We” or “the Company”), was incorporated under the laws of the State of Colorado, on February 29, 1996, as Patriot Holdings, Inc.  On August 26, 1999, the Company changed its name to National Healthcare Technology, Inc. On June 6, 2007, the Company changed its name from National Healthcare Technology, Inc., to Brighton Oil & Gas, Inc., and converted to a Nevada corporation.  On March 25, 2008 the Company changed its name to Gulf Onshore, Inc.  On April 7, 2009, the Company changed its name to Cannabis Science, Inc., and obtained a new CUSIP number.  On May 7, 2009 the Company common shares commenced trading under the new stock symbol OTCBB: CBIS.

Cannabis Science, Inc. is at the forefront of medical marijuana research and development.  The Company works with world authorities on phytocannabinoid science targeting critical illnesses, and adheres to scientific methodologies to develop, produce, and commercialize phytocannabinoid-based pharmaceutical products.  In sum, we are dedicated to the creation of cannabis-based medicines, both with and without psychoactive properties, to treat disease and the symptoms of disease, as well as for general health maintenance.  

On February 20, 2015, the Company closed on the acquisition of additional 30.1% interest in Michigan Green Technologies LLC (“MGT”), bringing the Company’s ownership position to 50.1% controlling interest.  MGT is working on various Michigan initiatives with state government to legalize and commercialize medical cannabis business, as was done in Colorado, Washington State, and other U.S. states.  The Company recognized $51,367 in goodwill related to the MGT acquisition.

On May 27, 2015, the Company entered into a collaborative drug development deal with IGX Bio and its GenePro®, a DNA-based immunotherapeutic that recently received FDA IND approval to enter into human trials. The companies intend to develop a joint protocol to demonstrate potential synergistic effects of their respective drug candidates in HIV, as well as potential new drug candidates.  The collaboration between IGX Bio and the Company and will provide a scientific evaluation of GenePro® and CS-TATI-1 to demonstrate the enhanced potential of therapeutic vaccination and the anti-inflammatory effects of cannabinoids to deter disease progression in AIDS patients unable to control HIV replication.

On May 7, 2015 the Company announced the acquisition of Equi-Pharm LLC, a USA manufacturer and distributor of specialty horse and pet grooming and topical applications. The acquisition incorporates an extensive expansion plan for Equi-Pharm including "Large Animal" such as horses, cattle, sheep and the like and "Small Animal" or "Pets" include cats, dogs, pet snakes and the like for medical and cosmetic products.

B.  Basis of Presentation

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in U.S. dollars.  The Company’s fiscal year end is December 31.

Interim Financial Reporting

While the information presented in the accompanying interim consolidated financial statements is unaudited, it includes all adjustments, which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in accordance with generally accepted accounting principles in the United States of America ("GAAP").  These interim financial statements follow the same accounting policies and methods of application as used in the December 31, 2014 audited financial statements of the Company.  All adjustments are of a normal, recurring nature. Interim financial statements and the notes thereto do not contain all of the disclosures normally found in year-end audited financial statements and these Notes to Financial Statements are abbreviated and contain only certain disclosures related to the nine month periods ended September 30, 2015 and 2014.  It is suggested that these interim financial statements be read in conjunction with the Company’s audited financial statements and related notes for the year ended December 31, 2014 included in our Form 10-K, filed with the Securities Exchange Commission on April 21, 2015. Operating results for the nine months ended September 30, 2015 are not necessarily indicative of the results that can be expected for the year ending December 31, 2015.

For other accounting policies please refer to the Company’s Form 10-K with the SEC on file no. 000-28911 April 21, 2015.

The Company qualifies as an “emerging growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we do not have more than $1,000,000,000 in annual gross revenue and did not have such amount as of December 31, 2014, our last fiscal year. We are electing to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.
 

F-4

Earnings (Loss) Per Share (EPS)

Basic earnings per common share are calculated by dividing net income or loss by the weighted average number of shares outstanding during the period. Diluted earnings per common share are calculated by adjusting outstanding shares, assuming conversion of all potentially dilutive stock options and warrants. The computation of diluted EPS does not assume conversion, exercise, or contingent issuance of shares that would have an anti-dilutive effect on earnings per common share. Anti-dilution results from an increase in earnings per share or reduction in loss per share from the inclusion of potentially dilutive shares in EPS calculations. Currently there are 1,700,000 stock options, which have been excluded from EPS that could potentially have a dilutive effect on EPS in the future. The table below sets forth the reconciliation for net loss and weighted average shares used for calculating basic and diluted earnings per share.

		Three Months Ended September 30,				Nine Months Ended September 30,
		2015		2014		2015		2014
Earnings (numerator)
Net loss		$    (3,767,628)		$      (692,013)		$  (14,203,584)		$   (8,083,714)
Stock dividends		(473,527)		-		(473,527)		-
Net loss available to common shareholders		$    (4,241,155)		$      (692,013)		$  (14,677,111)		$   (8,083,714)
Shares (denominator)
Weighted average common shares outstanding		1,285,416,166		836,783,906		1,213,795,570		778,287,313
Earnings (loss) per share
Basic and diluted		$             (0.00)		$            (0.00)		$             (0.01)		$            (0.01)

2.  GOING CONCERN

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate the continuation of the Company as a going concern.  The Company reported an accumulated deficit of $123,991,168 and had a stockholders’ deficit of $3,608,595 at September 30, 2015.

In view of the matters described, there is substantial doubt as to the Company's ability to continue as a going concern without a significant infusion of capital.  At September 30, 2015, the Company had insufficient operating revenues and cash flow to meet its financial obligations.  There can be no assurance that management will be successful in implementing its plans.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company raised $250,000 through a private sale of common stock in the nine months ended September 30, 2015.  Notwithstanding, we anticipate that we will have to raise additional capital to fund research and development and operations over the next 12 months.  To the extent that we are required to raise additional funds to acquire research and growing facilities, and to cover costs of operations, we intend to do so through additional public or private offerings of debt or equity securities.  There are no commitments or arrangements for  other  offerings  in  place,  no  guaranties  that  any  such financings would be forthcoming,  or as to the terms of any such financings.  Any future financing may involve substantial dilution to existing investors.  We had been relying on our common stock to pay third parties for services that has resulted substantial dilution to existing investors.

3.  FAIR VALUE MEASUREMENTS AND DISCLOSURES

ASC Topic 820, Fair Value Measurement, establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

Effective January 1, 2015, the equity method investments in Endocan Corporation are measured using the more observable fair value.  The decision to elect the fair value option, which is irrevocable once elected, is determined on an investment by investment basis and applied to an entire instrument. The net gains or losses on the equity investment in Endocan Corporation were recognized in unrealized gain (loss) on marketable common stock.  

F-5

4.  BUSINESS ACQUISITIONS

The Company completed the acquisition of Equi-Pharm, LLC (“Equi-Pharm”) on May 7, 2015 by acquiring all of the issued and outstanding stock of Equi-Pharm for the sum of $305,000. The acquisition was done through stock issuance.

The transaction has been accounted for using the acquisition method of accounting which requires that, among other things, assets acquired and liabilities assumed be recorded at their fair values as of the acquisition date. The Company has not finalized the determination of the fair values of the assets acquired and liabilities assumed and, therefore, the provisional amounts set forth are subject to adjustment when the valuations are completed. Under U.S. Generally Accepted Accounting Principles, companies have up to one year following an acquisition to finalize acquisition accounting.

The following details the preliminary fair value of the consideration transferred to effect the acquisition of Equi-Pharm:

Common stock of Cannabis Science, Inc.		$ 305,000
Total fair value consideration		$ 305,000

The following is a preliminary valuation of the net assets acquired by the Company in the acquisition, reconciled to the total fair value of the consideration transferred:

Cash		$    6,493
Accounts receivable		285
Inventory		20,413
Accounts payable		(413)
Related party payable		(1,919)
Book value of net assets acquired as of May 7, 2015		24,859
Fair value adjustment to:
Goodwill		280,141
Fair value of consideration transferred		$305,000

5.  RELATED PARTY TRANSACTIONS

At September 30, 2015, a total of $191,344 (December 31, 2014: $191,344) in loans payable was due to Bogat Family Trust, Raymond Dabney as trustee, and $0 to Raymond Dabney (December 31, 2013: $6,166).  The loan amounts due are non-interest bearing, unsecured and have no specified terms of repayment.  Raymond Dabney was appointed President/CEO signed a new management agreement on November 5, 2014.

At September 30, 2015, the Company owes $72,968 (2014: $0) to MJR B.V. which is owned and controlled by Mario Lap director and director and officer of EU subsidiaries.  The loan is unsecured, non-interest bearing, and due upon demand.

On March 27, 2015, the Company’s CFO, Robert Kane, loaned Michigan Green Technologies LLC (“MGT”) $52,500 secured by a non-interest bearing promissory note due within 30 days of MGT liquidating shares in Cannabis Science, Inc. to repay the debt.  The loan is unsecured, non-interest bearing, and due upon demand.  As of February 20, 2015, the Company closed on its acquisition and now owns a majority 50.1% interest in MGT.   

At September 30, 2015, the Company held 7,500,000 common shares with a fair market value of $70,500 in Endocan Corporation (“EC”) representing approximately 8.6% of the issued and outstanding shares of EC.  The value of the shares at September 30, 2015 was determined to be $0.01 per share or $70,500 with the Company recording an unrealized loss of $87,000 for the nine months ended September 30, 2015 and an unrealized loss of $36,000 for the nine months ended September 30, 2014.  Robert Kane, CFO and director is also the CFO and a director of EC and Chad S. Johnson, Esq., COO, general counsel and a director is also a director and general counsel for EC.  Raymond C. Dabney is a controlling shareholder of both the Company and Endocan Corporation.

For the nine months ended September 30, 2015, the following related party management fees and stock-based compensation was recorded:

Related Party	Position	Amount
Raymond Dabney1	CEO and Director	$         586,201
Dr. Richard Ogden	CSO	59,342
Robert Kane	CFO and Director	642,511
Chad S. Johnson, Esq.	COO, General Counsel, and Director	529,812
Mario Lap	Director	88,659
		$      1,906,525

¹Including compensation to entities beneficially owned/control by the related parties

See Note 7-Equity Transactions for details of stock issuances to director and officers for services rendered.

Raymond Dabney, CEO is a controlling shareholder and Chad S. Johnson, COO/General Legal Counsel of ImmunoClin Corporation (OTC: IMCL), respectively.  ImmunoClin performs laboratory services and pharmaceutical development for the Company through its wholly-owned subsidiary ImmunoClin Limited that operates a laboratory at the London Biosciences Centre.

Mario Lap, a director of the Company and director and officer its European subsidiaries, is conducting various business activities of the Company in Spain under his personal name and/or his personal holding company MLS Lap BV until such time as the Company is able to establish a Spanish subsidiary to conduct its own business operations and activities, including but not limited to: operating lease for farms, asset purchases, office and equipment, personnel employment and other business and operating activities as may be required from time-to-time.  The Company anticipates having the Spanish subsidiary setup in fiscal 2015 at which time Mario Lap under fiduciary duty will transfer all business operating activities, agreements, and assets to the Company.

The Company has signed a research and distribution agreement with Cannabis Science Research Foundation (CSRF) in which three of the board of directors is the executives of the Company

F-6

6.  NOTES PAYABLE

As at September 30, 2015, a total of $1,466,513 (December 31, 2014: $1,581,486) of notes payable are due to stockholders that are non-interest bearing and are due 12 months from the date of issue and loan origination beginning on May 30, 2012 through February 7, 2015. All promissory notes are unsecured.

$150,000 in promissory notes were due to Richard Cowan, former director and CFO of the Company.  On January 15, 2015, the Company entered into a debt settlement agreement and issued 15,000,000 shares of common stock on April 7, 2015 to settle the debt owed to Cowan.  All promissory notes are unsecured.

$130,855 in promissory notes is due to Stacey R. Lewis, stockholder of the Company. On August 20, 2015, the Company entered into a partial debt settlement agreement to retire $25,000 of the amount and issued 25,000,000 shares of common stock to partially settle the debt owed to Lewis.  All promissory notes are unsecured.

On February 20, 2015, the Company issued 30,828,080 shares of common stock pursuant to a debt settlement agreement with Intrinsic Capital Corp. to settle $30,828 in debt owing under December 31, 2013 note payable.

On April 29, 2015, the Company issued 40,000,000 shares of common stock pursuant to a debt settlement agreement with Intrinsic Capital Corp. to settle $40,000 in debt owing under December 31, 2013 note payable.

As of September 30, 2015, the Company is default on $1,340,156 in promissory notes due and is negotiating with the debtors to extend the due dates and/or settle the debt.

7.  EQUITY TRANSACTIONS

The Company was authorized to issue 1,500,000,000 shares of common stock with a par value of $0.001 per share.  These shares have full voting rights.  There were 1,287,155,296 shares issued and outstanding as of September 30, 2015 with 40,000,000 shares pending to be issued as of September 30, 2015. On September 2, 2015, the Company increased the number of authorized shares of common stock from 1,500,000,000 to 3,000,000,000.

The Company is also authorized to issue 100,000,000 shares of common stock, Class A with a par value of $0.001 per share.  These shares have 10 votes per share.  There were no shares issued and outstanding as of September 30, 2015.

The Company is also authorized to issue 1,000,000 shares of Series A preferred stock, with a par value of $0.001 per share.  These shares have full voting rights of 1,000 votes per share.  There were 1,000,000 shares issued and outstanding as of September 30, 2015.

During the nine months ended September 30, 2015, the Company issued 154,203,310 shares of common stock for service under various executive and consulting agreements.

On January 15, 2015, the Company issued 15,000,000 shares of Rule 144 restricted common stock with a fair market value of $997,500 for settlement of $150,000 in liabilities for loss on settlement of $847,500.

On January 15, 2015, the Company sold 10,000,000 shares of Rule 144 restricted common stock with a fair market value of $250,000.

On February 20, 2015, the Company issued 30,828,080 common shares for settlement of $30,828 of stockholder debt with Intrinsic Capital Corp., for a loss on settlement of $1,510,576, from the stockholder notes payable originating on July 23, 2013 ($18,328), August 15, 2013 ($1,250), August 30, 2013 ($1,250), and September 9, 2013 ($10,000).

On March 27, 2015, the Company’s CFO, Robert Kane, loaned Michigan Green Technologies LLC $52,500 secured by a non-interest bearing promissory note due within 30 days of MGT liquidating shares in Cannabis Science, Inc. to repay the debt.  As of February 20, 2015, the Company closed on its acquisition and now owns a majority 50.1% interest in MGT.

On April 29, 2015, the Company issued 40,000,000 common shares for settlement of $40,000 of stockholder debt with Intrinsic Capital Corp., for a loss on settlement of $1,360,000, from the stockholder notes payable originating on December 31, 2013.

On May 21, 2015, the Company issued 5,000,000 shares of Rule 144 restricted common stock to IGX Bio, Inc. pursuant to the joint development agreement with the Company.

On July 16, 2015, the Company issued 10,000,000 shares of Rule 144 restricted common stock for the acquisition of EquiPharm.

On September 2, 2015, the Company approved dividend paid in the form of common stocks and warrants. The fair value of the dividends paid were $473,527.

The company approved issuance of 17,500,000 shares of common stocks as consulting fee to be issued at a later date.

The company approved issuance of 25,000,000 shares of common stocks as settlement of $25,000 of debt for a loss on settlement of $770,000 to be issued at a later date.

The company approved issuance of 61,500,000 shares of common stocks as stock option exercise to be issued at a later date.

F-7

Stock Options:

A summary of the status of the Company’s option grants as of September 30, 2015 and the changes during the period then ended is presented below:

				Weighted-Average
		Shares		Exercise Price
Outstanding December 31, 2014		1,700,000		$                  0.41
Granted		61,500,000		0.01
Exercised		(61,500,000)		(0.01)
Expired		-
Outstanding September 30, 2015		1,700,000		$                  0.41
Options exercisable at September 30, 2015		1,700,000		$                  0.41

These options expire on the date of termination of the management agreement and services there under with the consultants. The weighted average fair value at date of grant for options during nine months ended September 30, 2015 was estimated using the Black-Scholes option valuation model with the following:

Average expected life in years		0
Average risk-free interest rate		2%
Average volatility		106%
Dividend yield		0%

The option holders exercised its options in September 2015 through cashless exercise. These exercise resulted in a receivable from the option holders of $615,000

8.  DEPOSITS

On February 9, 2012, the Company signed a license agreement with Apothecary to produce several Cannabis Science Brand Formulations for the California medical cannabis market. As well, Apothecary will provide research and development facilities with full circle operations including a California laboratory facility for internal research and development, along with 16 unique genetic strains specifically generated and maintained by a cancer survivor who recognizes the importance of proper growth and breeding in addition to investing $250,000 in research and development in the first 24 months.  

F-8

Apothecary failed to meet several contract provisions including investing $250,000 in R&D, setting up a laboratory facility, and reporting and remitting license fees owing to the Company.  On November 20, 2014, the Company signed an amendment to the license agreement.  Pursuant to the amendment, the Company is acquiring all property, building, and equipment of Apothecary in exchange for 14,500,000 Rule 144 restricted stock with a fair market value of $971,500.  The Company recorded an equivalent deposit for the year ended December 31, 2014 until the acquisition of assets closes, which is anticipated during fiscal 2015 once all assets are identified with supported fair market values and the transfer of land title is completed.

9.  EQUITY METHOD INVESTEE

On November 5, 2014, the Company accounted for its investment and loans in Endocan Corporation using the fair value method pursuant to ASC 323 – Investments – Equity Method and Joint Ventures and ASC 825 – Financial Instruments – Fair Value Option.  In accordance with ASC 323, when the Company does not have a controlling financial interest in an entity but exerts significant influence over the entity’s operating and financial policies, the Company accounts for its investment in accordance with the equity method of accounting. This generally applies to cases in which the Company owns a voting or economic interest of between 20 and 50 percent.

The accounting using the equity method is in conjunction with appointment of Raymond Dabney as CEO and director of the Company on November 5, 2014, in addition to Mr. Dabney being a controlling shareholder of the Company since September 2009 and a controlling shareholder of Endocan Corporation since June 2013.  Therefore, the Company was deemed to have significant influence and control of Endocan Corporation.

On November 5, 2014, the Company recorded $247,500 in marketable securities and $85,681 in loans to Endocan Corporation to its equity method investee account in accordance with ASC 323.  

Using the fair value method pursuant to ASC 825, a loss on investment of $87,000 on the equity method investee account was recognized for the nine months ended September 30, 2015 due to the decline in the value of Endocan marketable securities.

10.  COMMITMENTS

The Company has lease commitments for its European operations under private companies MLS Lap B.V. and MJR B.V. owned and controlled by Mario Lap, director and director and officer of EU subsidiaries.  Negotiations are ongoing in regards to preparing finalized agreements.

11.  SUBSEQUENT EVENTS

Common shares reconciliation table: 

Issued and outstanding as of September 30, 2015		1,287,155,296
Pending to be issued		91,500,000
Subsequent shares issued for services		8,000,000
Subsequent shares issued for debt settlement		30,000,000
Unissued and outstanding as of November 20, 2015		1,416,655,296

F-9

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Interim Report on Form 10-Q contains forward-looking statements that have been made pursuant to the provisions of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995 and concern matters that involve risks and uncertainties that could cause actual results to differ materially from historical results or from those projected in the forward-looking statements.  Discussions containing forward-looking statements may be found in the material set forth under “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in other sections of this Form 10-Q. Words such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or similar words are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Although we believe that our opinions and expectations reflected in the forward-looking statements are reasonable as of the date of this Report, we cannot guarantee future results, levels of activity, performance or achievements, and our actual results may differ substantially from the views and expectations set forth in this Interim Report on Form 10-Q.  We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations.

Readers should carefully review and consider the various disclosures made by us in this Report, set forth in detail in Part I, under the heading “Risk Factors,” as well as those additional risks described in other documents we file from time to time with the Securities and Exchange Commission, which attempt to advise interested parties of the risks, uncertainties, and other factors that affect our business.  We undertake no obligation to publicly release the results of any revisions to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements.

4

Not applicable.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS