United Cannabis Corp (Form: S-1, Received: 02/20/2018 16:01:32)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

Registration Statement Under

THE SECURITIES ACT OF 1933

UNITED CANNABIS CORPORATION

(Exact name of registrant as specified in charter)


Colorado	8742	46-5221947
(State or other jurisdiction	(Primary Standard Classi-	(IRS Employer
of incorporation)	fication Code Number)	I.D. Number)

United Cannabis Corporation

301 Commercial Rd., Unit D

Golden, CO. 80401

(303) 386-7104

(Address and telephone number of principal executive offices)

301 Commercial Rd., Unit D

Golden, CO. 80401

(Address of principal place of business or intended principal place of business)

Earnest Blackmon

301 Commercial Rd., Unit D

Golden, CO. 80401

(303) 386-7104

(Name, address and telephone number of agent for service)

Copies of all communications, including all communications sent

to the agent for service, should be sent to:

William T. Hart, Esq.

Hart & Hart, LLC

1624 Washington Street

Denver, Colorado 80203

303-839-0061

As soon as practicable after the effective date of this Registration Statement

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: þ

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “ large accelerated filer, ” “ accelerated filer, ” “ smaller reporting company, ” and “ emerging growth company ” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company þ
(Do not check if a smaller reporting company)	Emerging growth company ¨

If an emerging growth company, indicate by checkmark if the registrant has not elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ¨

CALCULATION OF REGISTRATION FEE


Title of each		Proposed	Proposed
Class of		Maximum	Maximum
Securities	Securities	Offering	Aggregate	Amount of
to be	to be	Price Per	Offering	Registration
Registered	Registered	Share (1)	Price	Fee

Common stock (2)
Total			$10,000,000	$1,245.00

(1) Offering price computed in accordance with Rule 457(o).

(2) Represents shares issuable to Tangiers Global, LLC under an Investment Agreement.

Pursuant to Rule 416, this Registration Statement includes such indeterminate number of additional securities as may be required for issuance upon the exercise of the warrants as a result of any adjustment in the number of securities issuable by reason of stock splits or similar capital reorganizations.

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of l933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

PROSPECTUS

UNITED CANNABIS CORPORATION

Common Stock

This prospectus may be used only in connection with sales of shares of our common stock by Tangiers Global, LLC. Tangiers will sell shares of common stock purchased from us under an Investment Agreement. In connection with the sale of these shares, Tangiers will be an “underwriter” as that term is defined in the Securities Act of 1933.

The number of shares to be sold by Tangiers in this offering will vary from time-to-time and will depend upon the number of shares purchased from us pursuant to the terms of the Investment Agreement. See the section of this prospectus captioned “Investment Agreement” for more information.

Our common stock is quoted on the over-the-counter market under the symbol "CNAB". On February 15, 2018 the closing price for one share of our common stock was $1.14.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

These securities are speculative and involve a high degree of risk. For a description of certain important factors that should be considered by prospective investors, see "Risk Factors" beginning on page 5 of this prospectus.

The date of this prospectus is February __, 2018

PROSPECTUS SUMMARY

THIS SUMMARY IS QUALIFIED BY THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS.

Our primary goal is to advance the use of phytocannabinoids therapeutics in medicine through research, product development and education. We are dedicated to improving the lives of patients. We provide the intellectual property, patent-pending technology, trusted brands, clinical data, technical training, sales tools and methodologies necessary to assist our clients businesses for success. Our ACT Now Program utilizes our patent-pending Prana Bio Nutrient Medicinals with a HIPPAA compliant electronic health record (“EHR”) software that enables physicians to create comprehensive sequencing charts specific to their patients’ medical aliments. The ACT Now EHR software allows for global monitoring, patient management, and effective cannabinoid therapy protocols.

Our Prana Bio Nutrient Medicinal products are designed to help supplement deficiencies related to the endocannabinoid system including pain, neuropathy, arthritis, MS, IBS, autism, seizures, eczema, sleep, anxiety, head trauma, opioid dependency and clinical endocannabinoid deficiencies. The endocannabinoid system is a signaling system within the human body that utilizes hundreds of receptors to help maintain homeostasis between the central nervous system and the immune system.

Our executive offices are located at 301 Commercial Road, Unit D, Golden, CO 80401, and our telephone number is (303) 386-7104.

Securities Offered:

In order to provide a possible source of funding for our operations, we have entered into an Investment Agreement with Tangiers Global, LLC

Under the Investment Agreement, Tangiers has agreed to provide us with up to $10,000,000 of funding during the period ending on the date which is three years after the date of this prospectus. During this period, we may sell shares of our common stock to Tangiers, and Tangiers will be obligated to purchase the shares. These shares may be offered for sale from time to time by means of this prospectus by or for the account of Tangiers.

The minimum amount we can raise at any one time is $5,000, and the maximum amount we can raise at any one time is $1,000,000. We are under no obligation to sell any shares under the Investment Agreement.

As of January 31, 2018, we had 62,971,967 outstanding shares of common stock. The number of outstanding shares does not give effect to shares which may be issued pursuant to the Investment Agreement or upon the exercise of options or warrants

We will not receive any proceeds from the sale of the shares by Tangiers. However, we will receive proceeds from any sale of common stock to Tangiers under the Investment Agreement. We expect to use substantially all the net proceeds for our operations.

Risk Factors:

The purchase of the securities offered by this prospectus involves a high degree of risk. Risk factors include our history of losses and need for additional capital. See the "Risk Factors" section of this prospectus for additional Risk Factors.

Trading Symbol: CNAB

Forward-Looking Statements

This prospectus contains or incorporates by reference "forward-looking statements," as that term is used in federal securities laws, concerning our financial condition, results of operations and business. These statements include, among others:

statements concerning the benefits that we expect will result from our business activities; and

statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts.

You can find many of these statements by looking for words such as "believes," "expects," "anticipates," "estimates" or similar expressions used in this prospectus.

These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied in those statements. Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied. We caution you not to put undue reliance on these statements, which speak only as of the date of this prospectus. Further, the information contained in this prospectus, or incorporated herein by reference, is a statement of our present intention and is based on present facts and assumptions, and may change at any time.

RISK FACTORS

Investors should be aware that this offering involves certain risks, including those described below, which could adversely affect the value of our common stock. We do not make, nor have we authorized any other person to make, any representation about the future market value of our common stock. In addition to the other information contained in this prospectus, the following factors should be considered carefully in evaluating an investment in our securities.

We have a limited operating history, and may never be profitable . Since we have only limited operations and have an unproven business plan, it is difficult for potential investors to evaluate our business. There can be no assurance that we will be profitable or that the securities which may be sold in this offering will have any value.

We need additional capital . We need additional capital to fund our operations. We do not know what the terms of any future capital raising may be but any future sale of our equity securities will dilute the ownership of existing stockholders and could be at prices substantially below the market price of our common stock. Our failure to obtain the capital which we require may result in the slower implementation of our business plan.

Our proposed business is dependent on laws pertaining to the marijuana industry . Continued development of the marijuana industry is dependent upon continued legislative authorization of marijuana at the state level. Any number of factors could slow or halt progress in this area. Further, progress for the industry, while encouraging, is not assured. While there may be ample public support for legislative action, numerous factors impact the legislative process. Any one of these factors could slow or halt use of marijuana, which would negatively impact our proposed business.

As of January 31, 2018, 29 states and the District of Columbia allow its citizens to use medical marijuana. Voters in the states of Colorado, Washington, Alaska, Oregon and the District of Columbia have approved ballot measures to legalize cannabis for adult use. The state laws are in conflict with the federal Controlled Substances Act, which makes marijuana use and possession illegal on a national level. The Obama administration has effectively stated that it is not an efficient use of resources to direct law federal law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical marijuana. However, there is no guarantee that the administration will not change its stated policy regarding the low-priority enforcement of federal laws. Additionally, any new administration that follows could change this policy and decide to enforce the federal laws strongly. Any such change in the federal government’s enforcement of current federal laws could cause significant financial damage to us and our shareholders.

Further, and while we do not intend to harvest, distribute or sell cannabis, if we lease buildings to growers of marijuana we could be deemed to be participating in marijuana cultivation, which remains illegal under federal law, and exposes us to potential criminal liability, with the additional risk that our properties could be subject to civil forfeiture proceedings.

The marijuana industry faces strong opposition. It is believed by many that large well-funded businesses may have a strong economic opposition to the marijuana industry. We believe that the pharmaceutical industry clearly does not want to cede control of any product that could generate significant revenue. For example, medical marijuana will likely adversely impact the existing market for the current “marijuana pill” sold by mainstream pharmaceutical companies. Further, the medical marijuana industry could face a material threat from the pharmaceutical industry, should marijuana displace other drugs or encroach upon the pharmaceutical industry’s products. The pharmaceutical industry is well funded with a strong and experienced lobby that eclipses the funding of the medical marijuana movement. Any inroads the pharmaceutical industry could make in halting or impeding the marijuana industry could have a detrimental impact on our proposed business.

Marijuana remains illegal under Federal law. Marijuana is a schedule-I controlled substance and is illegal under federal law. Even in those states in which the use of marijuana has been legalized, its use remains a violation of federal law. Since federal law criminalizing the use of marijuana preempts state laws that legalize its use, strict enforcement of federal law regarding marijuana would likely result in our inability to proceed with our business plan.

The previous administration under President Obama had effectively stated that it was not an efficient use of resources to direct federal law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical cannabis. In this regard, the prior DOJ Deputy Attorney General of the Obama administration issued a memorandum (the “Cole Memo”) to all United States Attorneys providing updated guidance to federal prosecutors concerning cannabis enforcement under the Controlled Substances Act. The Cole Memo noted that the Department of Justice is committed to using its investigative and prosecutorial resources to address the most significant threats in the most effective, consistent, and rational way.

On January 4, 2018, the U.S. Attorney General Jeff Sessions issued the Sessions Memo stating that the Cole Memo was rescinded effectively immediately. In particular, Mr. Sessions stated that “prosecutors should follow the well-established principles that govern all federal prosecutions,” which require “federal prosecutors deciding which cases to prosecute to weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.” Mr. Sessions went on to state in the memorandum that “previous nationwide guidance specific to marijuana is unnecessary and is rescinded, effective immediately.”

It is unclear at this time whether the Sessions Memo indicates that the Trump administration will strongly enforce the federal laws applicable to cannabis or what types of activities will be targeted for enforcement. While we do not currently harvest, distribute or sell cannabis, we may be irreparably harmed by a change in enforcement policies of the federal government depending on the nature of such change.

See the “Business – Government Regulation” section of this prospectus for more information.

Laws and regulations affecting the medical marijuana industry are constantly changing, which could detrimentally affect our proposed operations. Local, state and federal medical marijuana laws and regulations are broad in scope and subject to evolving interpretations, which could require us to incur substantial costs associated with compliance or alter our business plan. In addition, violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our operations. In addition, it is possible that regulations may be enacted in the future that will be directly applicable to our proposed business. We cannot predict the nature of any future laws, regulations, interpretations or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business.

Potential competitors could duplicate our business model. There is no aspect of our business which is protected by patents, copyrights, trademarks, or trade names. As a result, potential competitors could duplicate our business model with little effort.

We are dependent on our management team and the loss of any of these individuals would harm our business. Our future success depends largely upon the management experience, skill, and contacts of our officers and directors. The loss of the services of either of these officers, whether as a result of death, disability or otherwise, may have a material adverse effect upon our business.

The applicability of "penny stock rules" to broker-dealer sales of our common stock may have a negative effect on the liquidity and market price of our common stock. Trading in our shares is subject to the "penny stock rules" adopted pursuant to Rule 15g-9 of the Exchange Act, which apply to companies that are not listed on an exchange and whose common stock trades at less than $5.00 per share or which have a tangible net worth of less than $5,000,000, or $2,000,000 if they have been operating for three or more years. The penny stock rules impose additional sales practice requirements on broker-dealers which sell such securities to persons other than established customers and institutional accredited investors. For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser's written consent to the transaction prior to sale. Consequently, the penny stock rules may affect the ability of broker-dealers to sell shares of common stock and may affect the ability of shareholders to sell their shares in the secondary market, as compliance with such rules may delay and/or preclude certain trading transactions. The rules could also have an adverse effect on the market price of our common stock.

These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for our common stock. Many brokers may be unwilling to engage in transactions in our common stock because of the added disclosure requirements, thereby making it more difficult for shareholders to dispose of their shares. You may also find it difficult to obtain accurate information about, and/or quotations as to the price of our common stock.

We may issue shares of preferred stock that would have a liquidation preference to our common stock . Our articles of incorporation currently authorize the issuance of 10,000,000 shares of our preferred stock. The board has the power to issue shares without shareholder approval, and such shares can be issued with such rights, preferences, and limitations as may be determined by our board of directors. The rights of the holders of common stock will be subject to, and may be adversely affected by, the rights of any holders of preferred stock that may be issued in the future. We presently have no commitments or contracts to issue any shares of preferred stock. Authorized and unissued preferred stock could delay, discourage, hinder or preclude an unsolicited acquisition of our company, could make it less likely that shareholders receive a premium for their shares as a result of any such attempt, and could adversely affect the market prices of, and the voting and other rights, of the holders of outstanding shares of our common stock.

The market price of our common stock may decline due to the Investment Agreement . An unknown number of shares of common stock, which may be sold by means of this prospectus, are issuable under an Investment Agreement to Tangiers Global, LLC. As we sell shares of our common stock to Tangiers under the Investment Agreement, and Tangiers sells the common stock to third parties, the price of our common stock may decrease due to the additional shares in the market. The more shares that are issued under the Investment Agreement, the more our then outstanding shares will be diluted and the more our stock price may decrease. Any decline in the price of our common stock may encourage short sales, which could place further downward pressure on the price of our common stock. Short selling is a practice of selling shares which are not owned by a seller with the expectation that the market price of the shares will decline in value after the sale. See “Investment Agreement” for more information concerning the Investment Agreement.

MARKET FOR OUR COMMON STOCK

Market Information

Our common stock is quoted on the OTC Markets Group, Inc.’s OTCBB tier under the symbol “CNAB.” The following is a summary of the high and low sales prices of our common stock for the periods indicated, as reported by the OTC Markets Group, Inc. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.


	High	Low
Year ended December 31, 2016
First Quarter	$0.79	$0.17
Second Quarter	$0.48	$0.15
Third Quarter	$0.42	$0.16
Fourth Quarter	$3.35	$0.43

Year ended December 31, 2017
First Quarter	$2.40	$1.33
Second Quarter	$1.59	$0.56
Third Quarter	$1.15	$0.73
Fourth Quarter	$2.02	$0.56

On February 15, 2018, the closing price of our common stock was $1.14.

Stockholders

As of February 15, 2018, we had 57 shareholders of record and 62,971,967 outstanding shares of common stock.

Dividends

We have not declared or paid any cash dividends on our capital stock in our history as a public company. We currently intend to retain all future earnings to finance our business and do not anticipate paying cash or other dividends on our common stock in the foreseeable future.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Certain statements set forth below under this caption constitute forward-looking statements. See “Forward-Looking Statements” in the Prospectus Summary.

You should read the following discussion and analysis of financial condition and results of operations in conjunction with the consolidated financial statements and related notes appearing elsewhere in this Prospectus.

Overview

We were originally formed as a California corporation under the name MySkin, Inc. on November 15, 2007. MySkin was engaged in the business of providing management services to a medical spa in Los Angeles, California which provided various advanced skin care services until March 31, 2014, when this business was sold to the prior President of the Company.

Following this sale, we changed our focus to providing products, services and intellectual property to the cannabis industry.

Results of Operations

Year Ended December 31, 2016

Revenues and Cost of Revenues

Revenues and cost of revenues were $715,095 and $562,673, and $343,071 and $150,236, respectively, for the years ended December 31, 2016 and 2015. This increase in revenues in 2016 over 2015 was due to an increase in product support from a major customer, and certain changes in the mix of products and services provided during the twelve months ended December 31, 2016 as compared to the twelve months ended December 31, 2015. The increase in cost of revenues in 2016 over 2015 was due to the costs associated with the greater amount of product support from a major customer during 2016.

Sales and Marketing Expenses

Sales and marketing expenses were $68,007 and $86,797 for the years ended December 31, 2016 and 2015, respectively. The decrease in sales and marking expenses was due to our focus on serving existing customers during the year ended December 31, 2016 as compared to our sales and marketing efforts applicable to new products and services throughout the year ended December 31, 2015.

Research and Development Expenses

Research and development expenses (“R&D”) were $23,124 and $329 for the years ended December 31, 2016 and 2015, respectively. The increase in R&D was due to our focus on developing new products from extracting processes during the year ended December 31, 2016, as compared to our R&D efforts applicable to new products and services during the twelve months ended December 31, 2015.

Operating Expenses

Operating expenses were $1,139,046 and $1,833,981the years ended December 31, 2016 and 2015, respectively. The decrease in operating expenses was due to a decrease in general and administrative expenses in the amount of $650,966. This decrease in general and administrative expenses was due to a reduction of $612,512 in share-based compensation paid to our officers and directors during the year ended December 31, 2015.

Other Non-operating Expense, net

Our other non-operating expense was $3,086,982 and $1,461,566, for the years ended December 31, 2016 and 2015, respectively. The increase is due for the most part to the (i) $1,870,665 loss on derivative liabilities, (ii) $310,689 increase in interest expense and (iii) an increase in the amortization of debt discount in the amount of $184,500, reduced by an increase of $184,875 of other income.

Three Months ended September 30, 2017

Material changes in line items in our Statement of Operations for the three months ended September 30, 2017, as compared to the same period last year, are discussed below:


	Increase (I) or
Item	Decrease (D)	Reason

Revenues	D	Decline caused for the most part by a changeover in the production process utilized by our affiliated licensee, which resulted in a shortage of finished product during the latter part of the second quarter, which had a continuing impact on production volumes in the third quarter. The affiliated licensee has implemented an automated system to help meet potential future demand.
Gross profit, as a % of revenue	D	Experienced lower profit margins on license fees, as a result of increased production costs incurred during the implementation by our affiliated licensee of an expanded automated production system.
Operating expenses	I	Greater amounts were spent on (i) marketing, advertising and new business development, (ii) research and development and (iii) legal, accounting, consulting and public reporting and general and administrative expenses.

Nine Months Ended September 30, 2017

Material changes in line items in our Statement of Operations for the nine months ended September 30, 2017, as compared to the same period last year, are discussed below:


	Increase (I) or
Item	Decrease (D)	Reason

Revenues	D	Decline caused for the most part by a changeover in the production process utilized by our affiliated licensee, which resulted in a shortage of finished product during the latter part of the second quarter which had a continuing impact on production volumes in the third quarter. The affiliated licensee has implemented an automated system to help meet potential future demand.
Gross profit, as a % of revenue	D	Experienced lower profit margins on license fees, as a result of increased production costs incurred during implementation by our affiliated licensee of an expanded automated production system.
Operating expenses	I	Greater amounts were spent on (i) marketing, advertising and new business development, (ii) research and development and (iii) legal, accounting, consulting and public reporting. Additionally, share-based compensation of $2,117,302 was incurred during the nine months ended September 30, 2017, which included options granted to officers and directors that were fair valued at $1,812,456, while share-based compensation for the same period last year was $118,160.

The factors that will most significantly affect future operating results will be:


	·	State by state regulatory changes with respect to marijuana in the United States; and
	·	Rescheduling of marijuana by the federal government.

Other than the foregoing we do not know of any trends, events or uncertainties that have had, or are reasonably expected to have, a material impact on our revenues or expenses.

Capital Resources and Liquidity

During the year ended December 31, 2016, we incurred losses of $3,854,004 and used cash in operating activities of $274,670, respectively, compared to $2,883,362 of losses and $525,148 of cash used in our operating activities for the year ended December 31, 2015. At December 31, 2016 and 2015, we had a working capital deficit of $393,182 and $2,410,679, respectively, and an accumulated deficit of $9,362,333 at December 31, 2016. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and, or, obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. There is no assurance that these events will be satisfactorily completed.

Net cash used in operating activities for the years ended December 31, 2016 and 2015, was $274,670 and $525,148, respectively. This $250,478 decrease was primarily due to the positive impacts on our operating cash flows resulting from a decrease in general and administrative expenses during the twelve months ended December 31, 2016 as compared to the same period in 2015.

Net cash used in investing activities for the years ended December 31, 2016 and 2015 was $0.0 and $17,685, respectively. This decrease was due for the most part to $14,385 of payments applicable to our trademarks and provisional patents during the twelve months ended December 31, 2015.

Net cash provided by financing activities for the years ended December 31, 2016 and 2015 was $268,871 and $339,900, respectively. The decrease was primarily due to the fact that net proceeds from the issuance of convertible debt and warrants during the year ended December 31, 2015, in the amount of $339,000, was greater than the total amount of net proceeds from the issuance of convertible debt and warrants in the amount of $316,478, the sale of our common shares and deposit on warrant exercises in the amount of $145,000, and the proceeds from notes payable to certain officers and directors in the amount of $50,000, reduced by the repayment of convertible debt and notes payable in the amount of $242,607, during the year ended December 31, 2016.

Our material sources and (uses) of cash during the nine months ended September 30, 2017 and 2016 were:


	2017			2016

Cash used in operations	$	(1,037,264	)	$	(258,607	)
Improvements to cultivation facility and purchase of equipment		(261,560	)		—
Purchase of intangible assets – patent applications and research		(125,858	)		—


	2017			2016

Cash acquired upon acquisition of subsidiary		347,307			—
Proceeds from sale of common stock - equity line of credit		1,380,204			—
Proceeds from issuance of convertible notes		—			316,478
Advances from officers and directors		254,943			52,500
Sale of common stock		64,804			—
Other		(87,500	)		—

We may also incur significant sales, marketing, research and development expenses during the next twelve months, and we expect to spend approximately (i) $2,000,000 on expanding our production capacity in Jamaica through advances to our 50% owned subsidiary, Cannabinoid Research & Development, Limited, (ii) $500,000 on pursing licensing and patent applications for products developed and licensed to our recently acquired 95% owned subsidiary, Prana Therapeutics, Inc., and (iii) $500,000 on solidifying agreements with potential licensees who might be utilizing or want to utilize our patented formulations and processes.

We must obtain additional financing to continue our operations. We may not be able to obtain additional funding on terms that are favorable to us or at all. We may not be able to obtain sufficient funding to continue our operations, or if we do receive funding, to generate adequate revenues in the future or to operate profitably in the future. These conditions raise substantial doubt about our ability to continue as a going concern.

Other than payment of equipment for our cultivation and extraction facilities in the amount of approximately $450,000, and payment for research laboratory equipment and usage at the University of Florida School of Medicine in the amount of approximately $303,000, we presently have no material capital commitments for the twelve months ending January 31, 2019.

Other than as disclosed above, we do not know of any:

trends, demands, commitments, events or uncertainties that will result in, or that are reasonable likely to result in, our liquidity increasing or decreasing in any material way; or

any significant changes in our expected sources and uses of cash.

Off-Balance Sheet Arrangements

None.

Significant Accounting Policies

See Note 2 to the financial statements included as part of this prospectus for a description of our significant accounting policies.

Recent Accounting Pronouncements

From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASCs are communicated through issuance of an Accounting Standards Update (“ASU”). Unless otherwise discussed, we believe that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on our consolidated financial statements upon adoption.

To understand the impact of recently issued guidance, whether adopted or to be adopted, please review the information provided in Note 2 to the financial statements included as part of this prospectus.

BUSINESS

Background

United Cannabis Corporation (‘we” “our”, “us”, “UCANN”, or “the Company”) a Colorado corporation, was originally formed as a California corporation under the name MySkin, Inc. on November 15, 2007. MySkin was engaged in the business of providing management services to a medical spa in Los Angeles, California which provided various advanced skin care services until March 31, 2014, when this business was sold to the prior President of the Company.

In early 2014 we decided to exit the medical spa management business and change our focus to providing products, services and intellectual property to the cannabis industry.

On March 26, 2014, we entered into a License Agreement with Earnest Blackmon, Tony Verzura and Chad Ruby pursuant to which Messrs. Blackmon, Verzura and Ruby licensed certain intellectual property to us in exchange for 38,690,000 shares of our common stock.

The intellectual property we licensed includes know-how relating to the design and buildout of cultivation facilities, growing/cultivation systems, seed-to-sale protocols and procedures, products, access to a genetic catalogue including over 150 different strains, an advanced (non-psychoactive) cannabinoid sequencing therapy program utilizing patent-pending Prana Bio Nutrient Medicinals called the A.C.T. Now Program (“ACT Now” or “ACT Now Program”), security, regulatory compliance, and other methods and processes which relate to the cannabis industry.

In May, 2014 we changed our corporate domicile from California to Colorado and changed our name to United Cannabis Corporation.

We own intellectual property relating to the legalized growth, production, manufacture, marketing, management, utilization and distribution of medical and recreational marijuana and marijuana infused products. We are focused on creating unique therapeutics for a wide range of diseases that can be utilized by patients globally. Our products are subject to all existing marijuana laws in the United States and foreign countries.

Our primary goal is to advance the use of phytocannabinoids therapeutics in medicine through research, product development and education. We are dedicated to improving the lives of patients. We provide the intellectual property, patented technology, trusted brands, clinical data, technical training, sales tools and methodologies necessary to assist our clients’ businesses for success. Our ACT Now Program utilizes our patented Prana Bio Nutrient Medicinals with a HIPPAA compliant electronic health record (“EHR”) software that enables physicians to create comprehensive sequencing charts specific to their patients’ medical aliments. The ACT Now EHR software allows for global monitoring, patient management, and effective cannabinoid therapy protocols.

Our Prana Aromatherapy Transdermal Roll-on line uses a proprietary blend of essential oils infused with cannabinoids designed to provide targeted and large surface relief with combinations of aromatherapy. The transdermal is a part of the complete patented Prana Bio Nutrient Medicinals line, which is offered in 5 categories (P1, P2, P3, P4, P5), with three delivery methods (sublingual, capsules, topical). Dosages range from 1mg to 50mg, are available in both raw and activated formulations, and paired with specific cannabis derived terpene profiles.

Our short term plan involves licensing the technology associated with our products to companies which are licensed to grow and sell medical marijuana in states where medical marijuana is legal.

Our long term plan is to perform clinical trials on the most promising products in our product line that are currently being manufactured in California. We intend to perform our phase I clinical trials at the West Indies University in Jamaica. We will fund the initial clinical trials by licensing our Prana product line to manufacturers in all legal territories in the United States and with revenue received for providing technical, financial and licensing consulting services. After our phase 1 clinical trials are complete, we plan on partnering with companies that have expertise in global pharmaceutical distribution and research for phase II and III clinical trials in the United States.

Prana Therapeutics

In furtherance of our long-term plan, on July 14, 2017, we acquired 95% of the voting interests of Prana Therapeutics, Inc. (“Prana”), in consideration for the issuance of 5,730,000 shares of our shares of common stock. The acquisition of Prana broadens our foundation in plant-based drug development. Prana is a biotech company focused on developing targeted therapeutics for prevention of the negative side effects of chemotherapy, management of rheumatoid arthritis and treatment of brain cancer.

Similar to the use of the compounds found in the cannabis plant to create our Prana Bio Medicinal products, Prana identifies novel combinations of botanical compounds to address unmet medical needs. Prana’s principal drug, Epidiferphane™, is a leading example of how combinatorial targeting can be used to address complex and difficult-to-treat diseases.

Prana was founded by Drs. Brent Reynolds, a professor in the Department of Neurosurgery at the University of Florida, College of Medicine and Dennis Steindler, a professor of Medical Research in the Department of Neurosurgery at the University of Florida, College of Medicine, as well as, Dr. Loic Deleyrolle, a research assistant at McKnight Brain Institute at the University Florida; and, Prana’s business model is based on technology developed there. Drs. Reynolds and Steindler have filed on behalf of the University of Florida Research Foundation, Inc. (“University of Florida”) patents related to the composition of matter and use claims on this technology in the United States and internationally. Prana owns the exclusive, world-wide license to the technology through a licensing agreement with the University of Florida. Both Drs. Reynolds and Deleyrolle will continue as part time employees of Prana, while also serving as professors and performing research at the University of Florida. Dr. Steindler will not have any future affiliation with Prana, and Prana will be operated as a stand-alone, majority owned subsidiary of the Company.

We purchased Prana based upon our belief in the potential of Epidiferphane™ to help with the negative side effects of chemotherapy, inflammation and brain tumors;

The Negative Side Effects Of Chemotherapy

An estimated 650,000 patients undergo chemotherapy each year, in the US alone, at a cost of approximately $12 billion. There are several protocols to minimize the side effects associated with chemotherapy, there is currently no protocol that prevents these symptoms. Preclinical data have shown Epidiferphane to be effective in preventing Anemia (low red blood cells), Neutropenia (low white blood cells), attenuating Chemotherapy Induced Peripheral Neuropathy, and protecting the endogenous neural stem cell population that is associated with Chemofog (memory problems). At least one of these conditions are experienced by 90% of patients going through chemotherapy.

Inflammatory Disease

Approximately 150 million patients suffer from inflammation and pain associated with arthritis and back-centric conditions, spending in excess of $30 billion on treatments, many of which have significant side effects. Epidiferphane™ in combination with nutritional ketosis reduces levels of cytokines that contribute to inflammatory diseases and in a small cohort of patients has been reported to reduce pain, morning stiffness and improve sleep.

Brain Tumors

There are approximately 80,000 new brain cancer diagnoses in the US each year; Glioblastoma, the most common type, has a survival diagnosis of approximately 12 months. In pre-clinical rodent testing, Epidiferphane™, in conjunction with a nutritional ketosis, has been shown to double the mean life expectancy, increase the effectiveness of chemotherapy, and sensitize chemotherapy resistant tumors to standard of care drugs.

Industrial Hemp Plant

In December 2017 we leased an industrial building in Colorado where we will construct a state-of-the-art industrial hemp processing plant where we provide contract manufacturing for farmers working under the 2014 Federal Farm Bill and Colorado’s Department of Agriculture's Industrial Hemp Program. The multi-function facility will include extraction, purification, testing and processing equipment, as well as packaging, fulfillment, and secure storage capabilities.

Our manufacturing services will enable farmers to convert harvested industrial hemp plants into a range of products, including simple extracts, capsules and sublingual drops, and have them packaged for resale. The processing plant will also have the capability to process raw hemp seed through cold press extraction. Valuable fibrous bi-products generated through processing will also be collected for sale to a wide range of consumer product industries.

Colorado-grown hemp accounts for more than half of U.S. domestic hemp production, according to the Colorado Department of Agriculture. The Denver Post reported farms around in Colorado are expected to harvest up to 9,000 acres of hemp in 2017, compared with just 200 acres in 2014.

We lease the industrial building for $7,500 per month. The plant is expected to be fully operational by February 15, 2018.

Harborside Health Association

On January 24, 2018 we entered into a non-exclusive licensing agreement with an affiliate of Harborside Health Association LLC.

The license provided Harborside with the rights to our technology which will enable Harborside to manufacture and distribute its proprietary line of products. In consideration for the license, Harborside will pay us the greater of:

5% of the gross price paid by Harborside for the manufacture of the products; or

2.5% of the wholesale price received by Harborside from the sale of the products.

For purposes of the agreement, the “ wholesale price ” for any product means the gross price obtained by a distributor licensed by Harborside from the sale of any products in an arm’s length transaction with another distributor or retailer, excluding cannabis tax payments for remittance to taxing authorities; and, for non-arm’s length sales, the average price which could have been obtained in an arm’s length transaction.

The technology licensed to Harborside covers our patented methods of extracting, preparing and using cannabis. The agreement has a term of three years.

Cannibinoid Research & Development Company Limited (“CRD”)

In August 2014, we acquired 50% of the capital stock of CRD. In August 2014, we agreed to fund the operations of CRD on terms mutually agreed upon by us and CRD. As of the date of this prospectus, CRD had ten employees and had applied to the Jamaican government for a license to conduct research on the benefits of cannabis which will be grown by CRD in Jamaica.

Lasco Manufacturing Limited

On December 12, 2017 we entered into an agreement with Lasco Manufacturing Limited whereby we gave Lasco the right to manufacture and sell some of our products. The agreement is for a five year terms and covers Jamaica and most English speaking countries in the Carribean. The licensed products and the fees to be paid to us are:

Products

Fees

Prana Medicinal Hemp Capsules

$550 per gallon of concentrate

Prana Medicinal Hemp Sublinguals

$737 per gallon of concentrate

Prana Roll-On Hemp

(1)

CBD Water

(1)

Prana Bolt Balm

(1)

15% of the gross sales price of these products.

Advesa

We have licensed our Prana products to Advesa, Inc. (“Advesa”), which is wholly owned by Tony Verzura, an officer, director and principal shareholder. Advesa has an exclusive right for five years to sell our Prana products in certain cities in California. In consideration for the exclusive license, Advesa is obligated to pay us a royalty on all Prana products sold by Advesa equal to the sale price of the Prana products, minus the cost of goods sold (computed without regard to depreciation, amortization, other non-cash items or allocation of overhead, general and administrative expenses or similar items). In addition, Advesa pays us a management fee of five percent of all Advesa gross revenue, minus the Prana royalty payable to us with respect to the sales of our Prana products.

ACT Now Program

One of our primary goals is to advance the use of cannabinoids in medicine through research, product development and education. Our intellectual property includes our ACT Now Program which is a comprehensive full spectrum cannabinoid therapy guide that utilizes the entire cannabis plant by controlling specific cannabinoid ratios, accurate dosing and multiple non-invasive delivery methods. Our ACT Now Program offers a wide range of affordable patient driven programs with limitless combinations of cannabinoid-based products and nutritional recommendations to assist patients suffering from chronic pain, opiate dependency, inflammation, glaucoma, PTSD, neuropathy, multiple sclerosis, fibromyalgia, Crohn’s, IBS, seizures, epilepsy, paralysis, autoimmune, autism, tumors, HIV/AIDS and many types of cancer.

We own certain proprietary formulations, processes and other intellectual property which can be used to produce our Prana Bio Nutrient Medicinals in connection with our ACT Now Program. These products, which are made with unique combinations of pharmaceutically active cannabinoids, provide a comprehensive solution designed to enable physicians and patients to design, implement and monitor effective therapy protocols.

Competition

Currently, we are primarily engaged in the business of providing consulting and advisory services and licensing our intellectual property to businesses or persons who are already in the marijuana business or who desire to enter the business. There are a large number of other public and private companies which compete with us in this area. These competitors include MedBox, Inc., Advanced Cannabis Solutions, Inc., Growlife, Inc., Terra Tech Corp., American Cannabis Company, Americann, Inc. and Monarch America, Inc. (formerly Cannabis Kinetics, Inc.). We believe that our principal competitive advantages are the reputations and experience of our principals in the industry.

The recent growth in the industry, has attracted many businesses trying to enter the market. Some of our competitors have greater capital resources and facilities which may enable them to compete more effectively in this market. Due to this competition, there is no assurance that we will not encounter difficulties in generating revenues. If we are unable to successfully compete with existing companies and new entrants to the market, this will have a negative impact on our business and financial condition.

Government Regulation

Marijuana is a Schedule-I controlled substance and is illegal under federal law. Even in those states in which the use of marijuana has been legalized, its use remains a violation of federal law.

A Schedule I controlled substance is defined as a substance that has no currently accepted medical use in the United States, a lack of safety for use under medical supervision and a high potential for abuse. The Department of Justice defines Schedule 1 controlled substances as “the most dangerous drugs of all the drug schedules with potentially severe psychological or physical dependence.” If the federal government decides to enforce the Controlled Substances Act in Colorado with respect to marijuana, persons that are charged with distributing, possessing with intent to distribute, or growing marijuana could be subject to fines and terms of imprisonment, the maximum being life imprisonment and a $50 million fine.

As of January 31, 2018, 29 states and the District of Columbia allowed their citizens to use Medical Marijuana. Additionally, voters in the states of Colorado, Washington, Alaska, Oregon and the District of Columbia approved ballot measures to legalize cannabis for recreational use by adults. The state laws are in conflict with the federal Controlled Substances Act, which makes marijuana use and possession illegal on a national level.

The Cole Memo noted that the Department of Justice is committed to using its investigative and prosecutorial resources to address the most significant threats in the most effective, consistent, and rational way. In furtherance of those objectives, the Cole Memo provided guidance to Department of Justice attorneys and law enforcement to focus their enforcement resources on persons or organizations whose conduct interferes with any one or more of the following in preventing:

the distribution of cannabis to minors;

revenue from the sale of cannabis from going to criminal enterprises, gangs and cartels;

the diversion of cannabis from states where it is legal under state law in some for to other states;

state-authorized cannabis activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;

violence and the use of firearms in the cultivation and distribution of cannabis;

drugged driving and the exacerbation of other adverse public health consequences associated with cannabis use;

the growing of cannabis on public lands and the attendant public safety and environmental dangers posed by cannabis production on public lands; and

cannabis possession or use on federal property.

Compliance with federal, state, and local laws and regulations has not had, and is not expected to have, an adverse effect on our capital expenditures, competitive position, financial condition, or results of operations.

Intellectual Property

Our intellectual property includes our management’s knowledge and know-how relating to the legalized growth, production, manufacture, marketing, management, utilization and distribution of medical and recreational marijuana and marijuana infused products. It also includes a genetic catalogue including over 150 different strains of marijuana, and an advanced cannabinoid therapy program called “A.C.T. Now.”

On August 15, 2017, the United States Patent and Trademark Office issued to us US Patent #9730911 granting exclusive rights to our proprietary formulations based on compounds extracted from cannabis plant materials; more specifically the composition of matter pertaining to the use of phytocannabinoids, cannabinoids, and specific terpene profiles in liquid form. This composition of matter Patent provides protection for our proprietary formulations. The Patent protects the use of suspending both phytocannabinoids and cannabinoids with specific combinations of cannabis derived terpenes in liquid forms with an array of delivery methods including capsule, sublingual, topical, oral, suppository, and vaporization. Cannabinoids referenced in the application include ratios of tetrahydrocannabinolic acid (THCa), cannabidiolic acid (CBDa), tetrahydrocannabinol (THC), cannabinol (CBN), cannabidiol (CBD), cannabichromenic acid (CBCa), and cannabichromene (CBC).

Employees

As of January 31, 2018, we had nine employees. There is no union representation of our employees, and we have never experienced an involuntary work stoppage. We believe that our continued success depends, in part, on our ability to attract and retain qualified personnel. We consider our relations with our employees to be good.

Effect of Environmental Laws

We are subject to federal, state, and local environmental laws and regulations, as well as the environmental laws and regulations of the foreign federal and local jurisdictions in which we have operations. We believe we are in material compliance with all such laws and regulations.

Website Access

Our website address is www.unitedcannabis.us. We make available, free of charge on our website, our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to these reports as soon as reasonably practicable after filing such reports with, or furnishing them to, the Securities and Exchange Commission (“SEC”). Such reports are also available at www.sec.gov. Information contained on our website is not incorporated by reference in, or otherwise part of, this prospectus or any of our other filings with the SEC.

MANAGEMENT

Our executive officers and directors are listed below. Directors are generally elected at our annual shareholders’ meeting and hold office until the next annual shareholders’ meeting, or until their successors are elected and qualified. Our executive officers are elected by our directors and serve at the board’s discretion.


Name	Age	Positions

Earnest Blackmon	45	CEO, President, principal financial and accounting officer and director
Chad Ruby	42	Chief Operating Officer, Secretary, Treasurer and director
Tony Verzura	39	Vice President, Chief Technical Officer and director
John Walsh	72	Treasurer and Principal Financial Officer
Dr. Brent Reynolds	55	Chief Research Officer

The following is a brief summary of the background of each officer and director including their principal occupation during the five preceding years. Neither of these persons is a financial expert as that term is defined by the SEC. All directors will serve until their successors are elected and qualified or until they are removed.

Earnest Blackmon has been a director since April 2014. He was elected President in March 2014 and was elected CEO and principal financial officer in June 2014. Mr. Blackmon has been the President and owner of Blue River Inc., which is engaged in creating and retailing aroma therapy products since February 2015. He has served as the master grower and Chief Technical Officer/Member of RiverRock LLC, which is engaged in growing and selling medical and recreational marijuana from November of 2009 to July 2015. He served as the Chief Operating Officer/Owner of Sweet Lawn and Landscaping in Tampa, Florida from January of 2004 to June of 2008 and from July 2008 until October 2009 he consulted with several collectives in California on their cultivation methods. Mr. Blackmon attended John’s Hopkins University from 1991 to 1992. We believe that his twenty years of experience in the commercial horticulture industry and more specifically in growing marijuana and his six years in the cannabis industry enable him to make valuable contributions to our board of directors.

Chad Ruby has been a director since April 2014. He was elected Chief Operating Officer in March 2014 and was elected Secretary and Treasurer in August 2014. He has been a portfolio manager, real estate broker and appraiser for the last 15 years. He started with Hudson Appraisals, Inc. in 2002 and became a partner and Chief Operating Officer in February of 2005, and he resigned as Chief Operating Officer in June of 2008. Mr. Ruby was employed by NRT REO Experts, LLC, Orlando, Florida, as a portfolio manager from June of 2008 until April 2014. During 2013 and 2014 he was a part-time consultant for RiverRock LLC, which is engaged in growing and selling medical and recreational marijuana. Mr. Ruby graduated from the University of Central Florida in 2010 with a B.S. in Finance. We believe that Mr. Ruby’s thirteen years of real estate and business experience combined with his college degree in finance and his consulting experience with RiverRock LLC qualify him to serve as a member of our board of directors.

Tony Verzura has been a director since April 2014. He was elected Vice President and Chief Technical Officer in March 2014. Mr. Verzura has been the Vice President and owner of Blue River Inc., which is engaged in creating and retailing aroma therapy products since February 2015. He has served as the patient care facilitator and Chief Operating Officer for RiverRock LLC, which is engaged in growing and selling medical and recreational marijuana in Denver, Colorado, from November of 2009 to July 2015. Mr. Verzura attended Florida International University from 1999 to 2003. We believe that Mr. Verzura’s six years of experience as Chief Operating Officer of RiverRock LLC enables him to make valuable contributions to our board of directors.

John Walsh has been our Treasurer and Principal Financial Officer since August 2017. Mr. Walsh is a former partner of the international accounting firm of Touche Ross & CO. (now Deloitte Touche Tohmatsu Limited), and has over 40 years of experience in the accounting and financial services industry, including reporting requirements and GAAP oversight for publicly registered companies. Subsequent to his professional association with Deloitte, he has provided independent consulting services to such companies as AT&T Broadband (now Comcast), the Casualty Insurance Division of CNA Financial, the Construction Division of Lafarge North America, and Crown Media (the Hallmark cable and movie channel). At Crown Media, Mr. Walsh served as its interim Chief Financial Officer for a three-year period. Prior to joining us as a consultant in February 2016, he served as a GAAP consultant (January 2014 to November 2016) to a public company that provided cultivation facility leasing and fulfilment services to licensed holders of retail and medical marijuana outlets in the state of Colorado.

Brent A. Reynolds, Ph.D ., has been our Chief Research Officer since July 2017. Dr. Reynolds attended the University of Calgary, where he received his M.Sc. and Ph.D. in 1989 and 1994, respectively. While working on his Ph.D. thesis Reynolds co-discovered the existence of stem cells in the adult mammalian brain, a finding that overcame a century old dogma that the mature brain did not have the capacity to repair itself. After graduating, Reynolds co-founded the first neural stem cell company, NeuroSpheres, Ltd., where he was a director and vice president of research. Here he developed a strong patent portfolio in the neural stem cell field, developing and protecting protocols related to the application of stem cell technology in brain repair. Today, these patents and technology have been licensed to numerous biotechnology companies that are testing the efficacy in over half a dozen clinical trials for diseases such as spinal cord injury, stroke, ALS and pediatric disorders. After a brief hiatus, where Reynolds studied and practiced Traditional Chinese Medicine, he returned to industry working with StemCell Technologies in Vancouver, Canada. In 2004, Reynolds returned to academic science as a professor at the Queensland Brain Institute at the University of Queensland in Australia where he continued refining the application of neural stem cells for repairing the damaged brain. In 2008, Reynolds was recruited to the department of Neurosurgery at the University of Florida and has focused his efforts on studying aggressive pediatric and adult brain cancer and developing novel translational approaches to combat this lethal disease. Working with a multidisciplinary group of scientists, the team is taking the unique approach that cancer can be managed as a chronic disease by applying the principles that have been used in ecology to manage wildlife and pest populations. Based on the lessons learned over the past 80 years by ecologists, the team is focused on using multimodal low toxicity therapeutics to enforce a stable tumor population that exists below a threshold that has any harmful effects. Dr. Reynolds has more than 60 publications, including papers in Science, Cell and Nature, with several manuscripts receiving over 1,000 citations. In addition, he is an inventor on 18 granted US patents. Dr. Reynolds is currently a professor in the department of neurosurgery at UF; adjunct professor at the University of New South Wales, Sydney, Australia; an honorary professor at the Queensland Brain Institute, Australia; and program director for StepAhead, Australia. NIH, NHMRC and numerous foundations have funded his lab. Since January 22, 2012 Dr. Reynolds has been the Chief Executive Officer of Prana Therapeutics, Inc., a company we acquired in July 2017.

None of the directors are independent directors as that term is defined in Section 803 of the NYSE MKT Company Guide.

Employment Agreements

We currently do not have any employment agreements with any of our directors or executive officers.

Audit Committee and Audit Committee Financial Expert

We do not currently have an audit committee or a committee performing similar functions. Our board as a whole participates in the review of financial statements and disclosure. We also do not have an audit committee financial expert.

Code of Ethics

We have adopted a code of ethics that applies to our principal executive officers, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of our code of ethics may be obtained free of charge by contacting us.

Executive Compensation

The following Summary Compensation Table sets forth for fiscal 2017 and 2016, the compensation awarded to, paid to, or earned by our executive officers.

Name and Principal Position

Year

Salary

($)

Option Awards

($)

All other

Compensation

($)

Total

($)


Ernie Blackmon	2017	250,000	274,750	--	520,750
CEO, President	2016	--	208,811	--	280,811


Chad Ruby	2017	250,000	1,618,750	--	1,868,750
Chief Operating Officer, Secretary, Treasurer	2016	70,798	194,890	--	265,686



Tony Verzura	2017	250,000	274,570	--	348,750
Vice President, Chief Technical Officer	2016	52,000	280,890	--	260,811


John Walsh	2017	74,000	274,500	--	348,750
Principal Financial and Accounting Officer	2016	--	--	--	--

Brent Reynolds	2017	60,000	12,000	--	72,000
Chief Research Officer	2016	--	--	--	--

On January 3, 2016, Messrs. Blackmon and Verzura each agreed to forego $70,000 of 2015 salary in lieu of 350,000 stock options each under the Equity Incentive Plan and Mr. Ruby agreed to forego $56,000 of 2015 salary in lieu of 280,000 stock options under the Equity Incentive Plan. The options were granted on January 15, 2016, were fully vested at the time of grant and gave the option holder the right to purchase shares of our common stock at $0.20 per share during the ten year term.

Stock Incentive Plans

We have three Stock Incentive Plans. The terms and conditions of any stock issued and the terms and conditions of any options granted, including the price of the shares of common stock issuable on the exercise of options, are governed by the provisions of the Plans and any agreements with the Plan participants.

The following lists, as of January 31, 2018 the options and shares granted pursuant to the Plans. Each option represents the right to purchase one share of our common stock.


Name of Plan	Total Shares Reserved Under Plan	Shares Reserved for Outstanding Options	Shares Options Exercised	Remaining Issued as Stock Bonus	Options/Shares Under Plan

2014 Stock Incentive Plan	4,000,000	2,680,000	1,000,000	--	320,000
2017 Stock Incentive Plan	6,000,000	3,957,500	--	--	2,042,500
2018 Stock Incentive Plan	12,000,000	--	--	--	12,000,000

Pursuant to the Plans, awards may be in the form of Incentive Stock Options, Non-Qualified Stock Options, or Stock Bonuses.

Incentive Stock Options

All of our employees of the Company are eligible to be granted Incentive Stock Options pursuant to the Plans as may be determined by our Board of Directors which administers the Plans.

Options granted pursuant to the Plans terminate at such time as may be specified when the option is granted.

The total fair market value of the shares of common stock (determined at the time of the grant of the option) for which any employee may be granted options which are first exercisable in any calendar year may not exceed $100,000.

In the discretion of the Board of Directors, options granted pursuant to the Plans may include installment exercise terms for any option such that the option becomes fully exercisable in a series of cumulating portions. The Board of Directors may also accelerate the date upon which any option (or any part of any option) is first exercisable. However, no option, or any portion thereof may be exercisable until one year following the date of grant. In no event shall an option granted to an employee then owning more than l0% of our common stock be exercisable by its terms after the expiration of five years from the date of grant, nor shall any other option granted pursuant to the Plans be exercisable by its terms after the expiration of ten years from the date of grant.

Non-Qualified Stock Options

Our employees, directors and officers, and consultants or advisors are eligible to be granted Non-Qualified Stock Options pursuant to the Plans as may be determined by our Board of Directors which administers the Plans, provided however that bona fide services must be rendered by such consultants or advisors and such services must not be in connection with a capital-raising transaction or promoting our common stock.

Options granted pursuant to the Plans terminate at such time as may be specified when the option is granted.

In the discretion of the Board of Directors options granted pursuant to the Plans may include installment exercise terms for any option such that the option becomes fully exercisable in a series of cumulating portions. The Board of Directors may also accelerate the date upon which any option (or any part of any option) is first exercisable. In no event shall an option be exercisable by its terms after the expiration of ten years from the date of grant.

Stock Bonuses

Our employees, directors and officers, and consultants or advisors are eligible to receive a grant of our shares, provided however that bona fide services must be rendered by such consultants or advisors and such services must not be in connection with a capital-raising transaction or promoting our common stock. The grant of the shares rests entirely with our Board of Directors which administer the Plans. It is also left to the Board of Directors to decide the type of vesting and transfer restrictions which will be placed on the shares.

The following shows the amounts we expect to pay to our officers during the twelve months ending December 31, 2018, and the amount of time these persons expect to devote to our business.


	Projected	% of time to be
Name	Compensation	devoted to our business

Ernie Blackmon	$250,000	100%
Chad Ruby	$250,000	100%
Tony Verzura	$250,000	100%
John Walsh	$250,000	100%
Brent Reynolds	$120,000	40%

Outstanding Equity Awards

Outstanding equity awards as of January 31, 2018 are as follows:


Name	Number of securities underlying unexercised options		Option exercise price ($)	Option expiration date

Ernie Blackmon		200,000	$0.70	1/06/2025
Ernie Blackmon		50,000	$0.20	1/09/2026
Ernie Blackmon		100,000	$0.56	5/30/2027
Ernie Blackmon		250,000	$0.875	12/08/2027
		600,000

Chad Ruby		200,000	$0.70	1/06/2025
Chad Ruby		980,000	$0.20	1/09/2026
Chad Ruby		2,600,000	$0.56	5/30/2027
Chad Ruby		250,000	$0.875	12/08/2027
		4,030,000

Tony Verzura		200,000	$0.70	1/06/2025
Tony Verzura		1,050,000	$0.20	1/09/2026
Tony Verzura		100,000	$0.56	5/30/2027
Tony Verzura		250,000	$0.875	12/08/2027
		1,600,000

John Walsh		100,000	$0.56	5/30/2027
John Walsh		250,000	$0.875	12/08/2027
		350,000

John Walsh also holds warrants to purchase 641,000 shares of our common stock. The warrants are exercisable at prices between $0.19 and $1.25 and expire at various dates prior to April 30, 2022.

Securities Authorized for Issuance under Stock Incentive Plans

The following table shows information with respect to each Stock Incentive Plan under which our common stock is authorized for issuance as of December 31, 2017:


Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options	Weighted-Average Exercise Price of Outstanding Options, Warrants, and Rights	Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans

Equity Incentive Plan	3,680,000	$0.31	320,000
2017 Stock Incentive Plan	3,957,500	$0.65	2,042,500

Employee Pension, Profit Sharing or other Retirement Plans

We do not have a defined benefit, pension plan, profit sharing or other retirement plan, although we may adopt one or more of such plans in the future.

Compensation of Directors

During the fiscal year ended December 31, 2017 we did not compensate our directors for acting as such.

Transactions with Related Parties

PRINCIPAL SHAREHOLDERS

The following table shows the ownership of our common stock as of the date of this prospectus, by (i) each person whom we know beneficially owns more than 5% of the outstanding shares of our common stock; (ii) each of our executive officers; (iii) each of our directors; and (iv) all of our executive officers and directors as a group. Unless otherwise indicated, to our knowledge each of the stockholders listed below has sole voting and investment power over the shares beneficially owned. Unless otherwise specified, the address of each of the persons set forth below is in care of UCANN at 301 Commercial Road, Unit D, Golden, CO 80401.


	Number of Shares		Percentage
Name	Owned		of Class

Ernie Blackmon	22,437,610	⁽¹⁾	35.3%
Chad Ruby	4,613,772	⁽²⁾	6.9%
Tony Verzura	15,133,055	⁽³⁾	23.4%
John Walsh	1,066,000	⁽⁴⁾	1.7%
Brent Reynolds	2,350,000		3.7%

All executive officers and directors as a group (five persons)	45,600,437		71%

(1)

Includes 600,000 shares underlying currently exercisable stock options held by Mr. Blackmon.

(2)

Includes 4,030,000 shares underlying currently exercisable stock options held by Mr. Ruby.

(3)

Includes 1,600,000 shares underlying currently exercisable stock options held by Mr. Verzura.

(4)

Includes 991,000 shares underlying currently exercisable stock options and warrants held by Mr. Walsh.

INVESTMENT AGREEMENT

On January 19, 2018, we entered into an Investment Agreement with Tangiers in order to establish a possible source of funding for our operations.

Under the Investment Agreement Tangiers has agreed to provide us with up to $10,000,000 of funding during the period ending three years from the date of this prospectus.

From time to time during the period ending three years after the date of this prospectus, we may, in our sole discretion, deliver a Put Notice to Tangiers. The Put Notice will specify the number of shares of common stock which we intend to sell to Tangiers on a closing date.

The closing of the purchase by Tangiers of the shares specified in the Put Notice will occur on the date which is no earlier than five and no later than seven Trading Days following the date Tangiers receives the Put Notice. On the closing date we will sell to Tangiers the shares specified in the Put Notice, and Tangiers will pay us an amount equal to the Purchase Price multiplied by the number of shares specified in the Put Notice.

The maximum amount that we will be entitled to sell to Tangiers with respect to any applicable Put Notice will be equal to 100% of the average of the daily trading volume of our common stock for the ten consecutive Trading Days immediately prior to the delivery of the Put Notice, so long as the dollar value of the shares we sell is at least $5,000 and does not exceed $1,000,000 as calculated by multiplying the number of shares specified in the Put Notice by the VWAP. We may not submit a Put Notice until after the closing of the sale of the shares specified in any previous Put Notice or earlier than the eighth Trading Day immediately following the delivery of any Put Notice.

For purposes of the foregoing:

Purchase Price means 85% of the average of the two lowest daily volume weighted average prices of the Company’s common stock during the five consecutive Trading Days including and immediately following the delivery of a Put Notice provided, however, an additional 10% will be added to the discount of each Put if (i) we are not DWAC eligible and (ii) an additional 15% will be added to the discount of each Put if we are under a Depository Trust Company “chill” status on the date Tangiers receives the Put Notice.

Trading Day means any day on which the Principal Market for our common stock is open for trading.

Principal Market means the NYSE MKT, the Nasdaq Capital Market, the OTC Bulletin Board or the OTC Markets Group, whichever is the principal market on which our common stock is traded.

VWAP means a price determined by the daily volume weighted average price of our common stock on the Principal Market as reported by (i) Bloomberg Financial L.P. or (ii) Stock Charts/Quote Media for the ten consecutive Trading Days immediately prior to the date of the delivery of a Put Notice.

Using the formula contained in the Investment Agreement, if we had delivered a Put Notice on January 25, 2018 specifying that we wanted to sell 200,000 shares of our common stock, we would have received $183,000 from the sale of these shares.

The number of shares to be sold by Tangiers in this offering will vary from time-to-time and will depend upon the number of shares purchased from us pursuant to the terms of the Investment Agreement.

We are under no obligation to sell any shares under the equity line of credit and we may terminate the Investment Agreement upon 15 days’ notice to Tangiers.

We will not receive any proceeds from the sale of the shares by Tangiers. Tangiers may resell the shares it acquires by means of this prospectus from time to time in the public market. We are paying the costs of registering the shares offered by Tangiers. Tangiers will pay all other costs of the sale of the shares which it may purchase from us. During the past three years neither Tangiers nor its controlling persons had any relationship with us, or our officers or directors.

The shares of common stock owned, or which may be acquired by Tangiers, may be offered and sold by means of this prospectus from time to time as market conditions permit in the over-the-counter market, or otherwise, at prices and terms then prevailing or at prices related to the then-current market price, or in negotiated transactions. These shares may be sold by one or more of the following methods, without limitation:

a block trade in which a broker or dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

purchases by a broker or dealer as principal and resale by such broker or dealer for its account pursuant to this prospectus;

ordinary brokerage transactions and transactions in which the broker solicits purchasers; and

face-to-face transactions between sellers and purchasers without a broker/dealer.

In competing sales, brokers or dealers engaged by Tangiers may arrange for other brokers or dealers to participate. These brokers or dealers may receive commissions or discounts from Tangiers in amounts to be negotiated.

Tangiers is an “underwriter” and any broker/dealers who act in connection with the sale of the shares by means of this prospectus may be deemed to be “underwriters” within the meaning of the Securities Acts of 1933, and any commissions received by them and profit on any resale of the shares as principal might be deemed to be underwriting discounts and commissions under the Securities Act. We haves agreed to indemnify Tangiers against certain liabilities, including liabilities under the Securities Act as underwriters or otherwise.

We have advised Tangiers that it and any securities broker/dealers or others who may be deemed to be statutory underwriters will be subject to the prospectus delivery requirements under the Securities Act of 1933. We have also advised Tangiers that, in the event of a “distribution” of its shares, Tangiers, any “affiliated purchasers”, and any broker/dealer or other person who participates in such distribution, may be subject to Rule 102 of Regulation M under the Securities Exchange Act of 1934 until their participation in that distribution is completed. Rule 102 makes it unlawful for any person who is participating in a distribution to bid for or purchase stock of the same class as is the subject of the distribution. A “distribution” is defined in Regulation M as an offering of securities “that is distinguished from ordinary trading transactions by the magnitude of the offering and the presence of special selling efforts and selling methods”. We have also advised Tangiers that Regulation M prohibits any “stabilizing bid” or “stabilizing purchase” for the purpose of pegging, fixing or stabilizing the price of the common stock in connection with this offering.

We granted registration rights to Tangiers to enable it to sell the common stock it may acquire under the Investment Agreement. Notwithstanding these registration rights, we have no obligation:

to assist or cooperate with Tangiers in the offering or disposition of their shares; or

to obtain a commitment from an underwriter relative to the sale of any the shares.

Tangiers is entitled to customary indemnification from us for any losses or liabilities it suffers based upon material misstatements or omissions from the registration statement or this prospectus, except as they relate to information Tangiers supplied to us for inclusion in the registration statement and prospectus.

We will prepare and file amendments and supplements to this prospectus as may be necessary in order to keep this prospectus effective as long as Tangiers holds shares of our common stock or until these shares can be sold under an appropriate exemption from registration. We have agreed to bear the expenses of registering the shares, but not the expenses associated with selling the shares, such as broker discounts and commissions.

As the date of this prospectus Tangiers did not own any shares of our common stock. During the course of this offering Tangiers may acquire up to 7,000,000 shares of our common stock. Upon the completion of this offering it is not expected that Tangiers will own any shares of our common stock. Tangiers is controlled by Justin Ederle and Michael Sobeck.

Tangiers’ obligations under the equity line are not transferable.

In December 2016 we entered into a separate equity line credit agreement with Tangiers. The agreement, which provides us with funding of up to $10,000,000, operates essentially the same as the equity line agreement described above. As of January 31, 2018, we have received $4,143,964 under the terms of the equity line of credit agreement from the sale of 4,469,604 shares of our common stock.

DESCRIPTION OF SECURITIES

Common Stock

We are authorized to issue 100,000,000 shares of common stock. Holders of our common stock are each entitled to cast one vote for each share held of record on all matters presented to the shareholders. Cumulative voting is not allowed; hence, the holders of a majority of our outstanding common shares can elect all directors.

Holders of our common stock are entitled to receive such dividends as may be declared by our Board of Directors out of funds legally available and, in the event of liquidation, to share pro rata in any distribution of our assets after payment of liabilities. Our Board of Directors is not obligated to declare a dividend. It is not anticipated that dividends will be paid in the foreseeable future.

Holders of our common stock do not have preemptive rights to subscribe to additional shares if issued. There are no conversion, redemption, sinking fund or similar provisions regarding the common stock. All outstanding shares of common stock are fully paid and non-assessable.

Preferred Stock

We are authorized to issue 10,000,000 shares of preferred stock. Shares of preferred stock may be issued from time to time in one or more series as may be determined by our Board of Directors. The voting powers and preferences, the relative rights of each such series and the qualifications, limitations and restrictions of each series will be established by the Board of Directors. Our directors may issue preferred stock with multiple votes per share and dividend rights which would have priority over any dividends paid with respect to the holders of our common stock. The issuance of preferred stock with these rights may make the removal of management difficult even if the removal would be considered beneficial to shareholders generally, and will have the effect of limiting shareholder participation in transactions such as mergers or tender offers if these transactions are not favored by our management. As of the date of this prospectus, we had not issued any shares of preferred stock.

Warrants and Options

Information concerning our outstanding warrants and options is shown below:


	Shares Issuable
	Upon Exercise
	of Warrant	Exercise
Holder	or Option	Price	Expiration Date

Officers and Directors	(1)	(1)	(1)
Slainte Ventures	783,112	$0.18	11/30/21

(1)

See “Management – Outstanding Equity Awards” for information concerning options held by our officers and directors.

Transfer Agent

Direct Transfer, LLC

500 Perimeter Park Dr., Suite D

Morrisville, NC 27560

(919) 744-2722

LEGAL PROCEEDINGS

We are not involved in any legal proceedings and we do not know of any legal proceedings which are threatened or contemplated.

INDEMNIFICATION

Our Bylaws authorize indemnification of a director, officer, employee or agent against expenses incurred by him in connection with any action, suit, or proceeding to which he is named a party by reason of his having acted or served in such capacity, except for liabilities arising from his own misconduct or negligence in performance of his duty. In addition, even a director, officer, employee, or agent found liable for misconduct or negligence in the performance of his duty may obtain such indemnification if, in view of all the circumstances in the case, a court of competent jurisdiction determines such person is fairly and reasonably entitled to indemnification. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers, or controlling persons pursuant to these provisions, we have been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is therefore unenforceable.

AVAILABLE INFORMATION

We have filed with the Securities and Exchange Commission a Registration Statement on Form S-1 (together with all amendments and exhibits) under the Securities Act of 1933, as amended, with respect to the securities offered by this prospectus. This prospectus does not contain all of the information in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Securities and Exchange Commission. For further information, reference is made to the Registration Statement which may be read and copied at the Commission’s Public Reference Room.

We are subject to the requirements of the Securities Exchange Act of l934 and are required to file reports and other information with the Securities and Exchange Commission. Copies of any such reports and other information (which includes our financial statements) filed by us can be read and copied at the Commission's Public Reference Room.

The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Public Reference Room is located at 100 F. Street, N.E., Washington, D.C. 20549.

Our Registration Statement and all reports and other information we file with the Securities and Exchange Commission are available at www.sec.gov, the website of the Securities and Exchange Commission.

UNITED CANNABIS CORPORATION

TABLE OF CONTENTS

Audited Financial Statements

Years Ended December 31, 2016 and 2015


		Page

Report of Independent Registered Public Accounting Firm		F-2

Consolidated Balance Sheets		F-3

Consolidated Statements of Operations		F-4

Consolidated Statements of Stockholders' (Deficit) Equity		F-5

Consolidated Statements of Cash Flows		F-6 – F-7

Notes to Consolidated Financial Statements		F-8

Unaudited Financial Statements

September 30, 2017


		Page

Consolidated Balance Sheets		F-29

Consolidated Statements of Operations		F-30

Consolidated Statements of Cash Flows		F-31 – F-32

Notes to Consolidated Financial Statements		F-33

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of United Cannabis Corporation:

We have audited the accompanying consolidated balance sheets of United Cannabis Corporation (“the Company”) as of December 31, 2016 and 2015 and the related statement of operations, stockholders’ 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 standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 statement referred to above present fairly, in all material respects, the financial position of United Cannabis Corporation, as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles in the United States of America.

The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the Company's internal control over financial reporting. Accordingly, we express no such opinion.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors 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 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ B F Borgers CPA PC

B F Borgers CPA PC

Lakewood, CO

February 24, 2017

F-2

UNITED CANNABIS CORPORATION

CONSOLIDATED BALANCE SHEETS


	December 31,
	2016			2015
ASSETS
Current assets:
Cash and cash equivalents	$	112,621		$	118,420
Accounts receivable		24,484			53,435
Due from related parties		26,775			8,284
Prepaid expenses		—			56,341
Deferred financing costs, net		—			32,400
Total current assets		163,880			268,880

Intangible assets		32,273			32,273
Investments in non-marketable equity securities		—			205,275
Equity method investments		88,000			88,000
Total assets	$	284,153		$	594,428

LIABILITIES & STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	25,048		$	104,238
Accrued expenses		55,264			928,533
Derivative liabilities		—			383,581
Current portion of deferred revenue		180,000			380,000
Notes payable		—			775,000
Notes payable to and advances from officers and directors		171,203			—
Convertible notes payable, net of $34,543 and $272,793 debt discount, respectively		125,547			108,207
Total current liabilities		557,062			2,679,59

Long term liabilities:
Deferred revenue, net of current portion		203,750			383,750
Total liabilities		760,812			3,063,309

Stockholders' deficit:
Preferred stock, no par value; 10,000,000 shares authorized; none issued and outstanding		—			—
Common stock, no par value; 100,000,000 shares authorized; 50,650,994 and 44,988,500 shares issued and outstanding, respectively		8,885,674			3,039,448
Accumulated deficit		(9,362,333	)		(5,508,329	)
Total stockholders' deficit		(476,659	)		(2,468,881	)
Total liabilities and stockholders' deficit	$	284,153		$	594,428

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

F-3

UNITED CANNABIS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS


	Year Ended December 31,
	2016			2015
Revenues:
Revenues, non-affiliates	$	695,095		$	558,248
Revenues, affiliate		20,000			4,425
Total revenues		715,095			562,673
Cost of revenues:
Cost of revenues, non-affiliate		335,571			75,672
Cost of revenues, affiliate		7,500			74,564
Total cost of revenues		343,071			150,236
Gross profit		372,024			412,437

Operating expenses:
Marketing, advertising and new business development		68,007			86,797
Research and development		23,124			329
Legal, accounting, consulting and public reporting		643,913			645,503
General and administrative		404,002			1,101,604
Total operating expenses		1,139,046			1,834,233

Loss from operations		(767,022	)		(1,421,796	)

Other income (expense):
Other income and expenses		184,875			—
Loss on derivative liabilities		(1,894,258	)		(23,593	)
Interest expense		(418,437	)		(107,496	)
Amortization of debt discount		(267,258	)		(82,500	)
Equity in net loss of unconsolidated affiliate		—			(90,900	)
Loss on extinguishment of debt and repurchase of warrants		(691,904	)		(768,602	)
Loss on investment in non-marketable equity securities		—			(388,475	)
Total other income (expense), net		(3,086,982	)		(1,461,566	)

Net Loss	$	(3,854,004	)	$	(2,883,362	)

Basic and diluted net loss per share:	$	(0.08	)	$	(0.06	)

Basic and diluted weighted-average common shares outstanding:		46,722,407			44,793,510

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

F-4

UNITED CANNABIS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY


	Shares		Amount			Accumulated Deficit			Total
Balance at December 31, 2014		44,060,001	$	1,626,968		$	(2,624,967	)	$	(997,999	)

Shares issued for repurchase of warrant		621,000		987,390			—			987,390
Cancellation of warrant		—		(218,788	)		—			(218,788	)
Shares issued for services		307,500		226,215			—			226,215
Stock options issued for compensation		—		417,663			—			417,663
Net loss		—		—			(2,883,362	)		(2,883,362	)

Balance at December 31, 2015		44,988,501		3,039,448			(5,508,329	)		(2,468,881	)

Options issued to officers and directors for accrued wages		—		612,512			—			612,512
Warrants issued for services		—		319,419			—			319,419
Shares issued for compensation		565,576		271,097			—			271,097
Shares issued for payables and accrued expenses		509,549		223,484			—			223,484
Conversion of note to Tangiers Investment Group		2,843,698		473,966			—			473,966
Conversion of notes to Slainte Ventures		1,638,731		3,845,748			—			3,845,748
Share buy-back with exercise of put option		104,939		100,000			—			100,000
Net Loss		—		—			(3,854,004	)		(3,854,004	)

Balance at December 31, 2016		50,650,994	$	8,885,674		$	(9,362,333	)	$	(476,659	)

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

F-5

UNITED CANNABIS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year Ended December 31,
	2016			2015
Operating activities:
Net loss	$	(3,854,004	)	$	(2,883,362	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Increase (decrease) in provision for losses on accounts receivable		(4,619	)		24,185
Amortization of debt discount		267,258			82,500
Amortization of deferred financing costs		32,400			8,700
Non-cash interest expense		199,206			4,694
Loan origination discount		15,500			—
Share-based compensation, net		622,450			1,030,681
Deferred revenue in the form of non-marketable equity securities recognized as revenue		(180,000	)		(180,000	)
Loss on revaluation of derivative liabilities		1,894,258			23,593
Loss on extinguishment of debt and repurchase of warrants		691,904			768,602
Loss on non-marketable equity securities		15,125			388,475
Equity in net loss of unconsolidated affiliate		—			90,900
Abandonment of FoxBarry consulting project and resultant recognition of deferred revenue		(200,000	)		—
Changes in operating assets and liabilities:
Accounts receivable		33,570			(68,263	)
Due from related party		(18,491	)		(8,284	)
Prepaid expenses		56,341			(3,394	)
Accounts payable and accrued expenses		40,729			195,825
Accrued wages payable to officers and directors		42,695			—
Advances from officers and directors		71,008			—
Net cash used in operating activities		(274,670	)		(525,148	)

Investing activities:
Purchase of intangible assets		—			(17,685	)
Purchase of equity method investments		—			—
Net cash provided by (used in) investing activities		—			(17,685	)

Financing activities:
Proceeds from notes payable to officers and directors		50,000			—
Net proceeds from issuance of convertible debt and warrants		316,478			339,900
Repayment of convertible debt and notes payable		(242,607	)		—
Proceeds from issuance of common shares and deposit on warrant exercise		145,000			—
Net cash provided by (used in) financing activities		268,871			339,900

Net increase (decrease) in cash		(5,799	)		(202,933	)

Cash, beginning of period		118,420			321,353

Cash, end of period	$	112,621		$	118,420

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

F-6

UNITED CANNABIS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
	2016			2015
Supplemental schedule of cash flow information:
Cash paid for interest	$	8,165		$	—
Cash paid for income taxes	$	—		$	—

Supplemental disclosure of non-cash investing and financing activities:
Issuance of stock options in exchange for accrued wages payable to officers and directors	$	612,512		$	—
Reduction of convertible notes payable due to the conversion by Tangiers Investment Group	$	220,000		$	—
Issuance of common stock upon conversion of Tangiers Investment Group convertible note	$	473,965
Reduction of three convertible notes payable due to the conversion by Slainte Ventures	$	206,978		$	—
Issuance of common stock upon conversion of Slainte Ventures note payable	$	218,038
Reduction of note payable due to the conversion by Slainte Ventures	$	600,000		$	—
Issuance of common stock upon conversion of Slainte Ventures note payable	$	3,845,748		$	—
Reduction of notes payable in exchange for 1,100,000 shares of common stock of WeedMD	$	175,000		$	—
Intangible asset costs included in accounts payable	$	—		$	12,279
Issuance of common stock for services	$	—		$	47,880
Issuance of common stock for prepaid professional fees	$	—		$	187,335
Issuance of common stock for repurchase of warrant	$	—		$	987,390
Warrants cancelled	$	(3,000,000	)	$	(218,788	)
Issuance of options for compensation, accrued expenses and accounts payable	$	—		$	417,664
Issuance of convertible note payable for debt issuance costs	$	—		$	41,000
Debt conversion feature issued for debt discount	$	—		$	(355,293	)

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

F-7

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 –BUSINESS ORGANIZATION AND NATURE OF OPERATIONS

On March 19, 2014, we effected a four-for-one stock split of our outstanding shares of common stock. All references to shares of our common stock in our consolidated financial statements refer to the number of shares of common stock after giving effect to the stock split (unless otherwise indicated).

Background and Current Operations

United Cannabis Corporation ("we", "our", "us", or "UCANN") a Colorado corporation, was originally formed as a California corporation under the name MySkin, Inc. (“MySkin”) on November 15, 2007. MySkin was engaged in the business of providing management services to a medical spa in Los Angeles, California which provided various advanced skin care services until March 31, 2014, when this business was sold.

In early 2014, we decided to exit the medical spa management business and change our focus to providing products, services and intellectual property licenses to the cannabis industry.

In connection with this transaction:


·	Messrs. Blackmon, Verzura and Ruby licensed to us all of their knowledge and know-how relating to the design and buildout of cultivation facilities, growing/cultivation systems, seed-to-sale protocols and procedures, products, a genetic catalogue including over 150 different strains, an advanced cannabinoid therapy program called "A.C.T. Now", security, regulatory compliance, and other methods and processes which relate to the cannabis industry.

·	The territory for this license is the entire world and the license runs in perpetuity. There are no royalty payments under the License Agreement.

·	Messrs. Blackmon, Verzura and Ruby were appointed to our board of directors effective April 7, 2014.

·	Mr. Blackmon was elected as our President, Mr. Ruby was elected as Chief Operating Officer and Mr. Verzura was elected as Vice President.

·	A total of 41,690,000 previously outstanding shares of common stock were cancelled resulting in a total of 43,620,000 shares of common stock outstanding on March 26, 2014.

UCANN was formed as a Colorado corporation on March 25, 2014, and on May 2, 2014, MySkin merged into UCANN, a wholly-owned subsidiary of MySkin, for the purpose of changing domicile from California to Colorado and changing the corporation's name to United Cannabis Corporation.

On March 31, 2014, we sold all right, title and interest in the tangible and intangible assets, trademarks, customer lists, intellectual property and rights, which we owned and were related to our advanced skin care business since we have entered into a new business and we no longer have any use for these assets. The assets were sold to MySkin Services, Inc. (“MTA”), a business partly owned by Marichelle Stoppenhagen, our former officer and director, in exchange for the $15,000 payable which we owed to Ms. Stoppenhagen and/or MTA. In addition, MTA assumed all costs associated with these assets starting on March 31, 2014.

Government Regulation - Marijuana is a Schedule-I controlled substance and is illegal under federal law. Even in those states in which the use of marijuana has been legalized, its use remains a violation of federal laws.

F-8

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2016, 28 states and the District of Columbia allow their citizens to use medical marijuana, and four states and the District of Columbia have legalized marijuana for recreational use. The state laws are in conflict with the federal Controlled Substances Act, which makes marijuana use and possession illegal on a national level. The Obama administration has effectively stated that it is not an efficient use of resources to direct federal law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical and recreational marijuana. However, there is no guarantee that the current administration will not change its stated policy regarding the low-priority enforcement of federal laws, or that any future administration would not change this policy and decide to enforce the federal laws vigorously. Any such change in the federal government’s enforcement of current federal laws could cause significant financial damage to us.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation – Our consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries UC Nevada L.L.C., UC Colorado Corporation and UCANN California Corporation. All intercompany accounts and transactions have been eliminated. Our consolidated financial statements are stated in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).

Use of Estimates - The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of our consolidated financial statements and the reported amounts of revenues and expenses during the periods presented.

We make our estimate of the ultimate outcome for these items based on historical trends and other information available when our consolidated financial statements are prepared. We recognize changes in estimates in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available. We believe that our significant estimates, assumptions and judgments are reasonable, based upon information available at the time they were made. Our actual results could differ from these estimates, making it possible that a change in these estimates could occur in the near term.

Fair Value of Financial Instruments - Our financial instruments consist principally of cash and cash equivalents, accounts receivable, non-marketable equity securities, accounts payable, notes payable and other current assets and liabilities. We value our financial assets and liabilities using fair value measurements. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows:

Level 1 : Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

Level 2 : Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.

Level 3 : Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.

There have been no changes in Level 1, Level 2, and Level 3 categorizations and no changes in valuation techniques for these assets or liabilities for the years ended December 31, 2016 and 2015.

F-9

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash and Cash Equivalents - We consider investments with original maturities of 90 days or less to be cash equivalents. Because of current banking regulations, marijuana centric entities are not afforded normal banking privileges, and thus, we have not able to consistently have access to the federal banking system. Thus, at the beginning of 2016, the Company entered into an agreement with our Chief Executive Officer to hold cash funds in his personal bank account, on an as-need basis, in trust for the Company. Under the terms of our trust agreement with our Chief Executive Officer, he agreed to hold our cash in his personal bank account, and to make payments of our funds only for our business purposes, and to allow daily access to the bank account for ongoing oversight of his fiduciary responsibility to the Company. Additionally, the trust agreement requires that the Chief Executive Officer make copies available to our accounting staff of all transactions applicable to our operations, on a weekly, or as requested basis. At December 31, 2016 and 2015 there is cash deposits in the personal bank accounts of the Chief Executive Officer held in trust for us in the amount of $4,158 and $0, respectively.

Accounts Receivable – Our accounts receivable consists primarily of trade accounts arising in the normal course of business. No interest is charged on past due accounts. Accounts for which no payments have been received after 30 days are considered delinquent and customary collection efforts are initiated. Accounts receivable are carried at original invoice amount less a reserve made for doubtful accounts based on a review of all outstanding amounts on a monthly basis. We determine our allowance for doubtful accounts by regularly evaluating individual customer receivables and considering the customer’s financial condition and credit history, and current economic conditions.

Our allowance for doubtful accounts was $30,000 and $4,340 as of December 31, 2016 and 2015, respectively. We recorded bad debt expense, included in general and administrative expenses, of $82,831 and $24,185 during the years ended December 31, 2016 and 2015, respectively.

Prepaid Expenses - Prepaid expenses are primarily comprised of advance payments made to third parties for independent contractors’ services or other general expenses. Prepaid services and general expenses are amortized over the applicable periods which approximate the life of the contract or service period.

Property and Equipment – Our property and equipment are recorded at cost. Maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line method over estimated useful lives of three to five years. Assets acquired under capital leases are depreciated over the lesser of the useful life of the asset or the lease term. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from our accounts and any resulting gain or loss is reflected in our consolidated statements of operations.

Intangible Assets – Our intangible assets, consisting of applications for trademarks, design mark and provisional patents are recorded at cost, and once approved, will be amortized using the straight-line method over an estimated useful life of 10 to 20 years.

Investments in Non-Marketable Equity Securities – Our investments in non-marketable equity securities are carried at cost, less write-down-for-impairments, if any. Impairments are based on methodologies, including the valuation achieved in the most recent private placement by the investee, an assessment of the impact of industry and general private equity market conditions, and discounted projected future cash flows. Investments in non-marketable equity securities that expire in less than 12 months, for example stock options or warrants, are classified as current assets; otherwise, we classify investments in non-marketable equity securities as other noncurrent assets.

Long-Lived Assets – Our intangible assets and other long-lived assets are subject to an impairment test if there is an indicator of impairment. The carrying value and ultimate realization of these assets is dependent upon our estimates of future earnings and benefits that we expect to generate from their use. If our expectations of future results and cash flows are significantly diminished, intangible assets and other long-lived assets may be impaired and the resulting charge to operations may be material. When we determine that the carrying value of intangibles or other long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, we use the projected undiscounted cash flow method to determine whether an impairment exists, and then measure the impairment using discounted cash flows.

We have not recorded any impairment charges related to long-lived assets as of December 31, 2016 or December 31, 2015.

F-10

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred Revenue - We defer revenue for which product or service has not yet been delivered or is subject to refund until such time that we and our customer jointly determine that the product or service has been delivered or no refund will be required.

Revenue Recognition - We recognize revenue in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, Revenue Recognition , which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on our management's judgments regarding the fixed nature of the selling prices of the products and services delivered and the collectability of those amounts.

Revenue for services with a payment in the form of stock, warrants or other financial assets is recognized when the services are performed. The value of revenue paid for with warrants is measured using the Black-Scholes-Merton pricing model. Revenue from product sales, including delivery fees, is recognized when an order has been obtained, the price is fixed and determinable, the product is shipped, title has transferred and collectability is reasonably assured.

Reimbursable expenses, including those relating to travel, other out-of-pocket expenses and any third-party costs, are included as a component of revenues. Typically, an equivalent amount of reimbursable expenses are included in cost of revenues. Reimbursable expenses related to time and materials and fixed-fee engagements are recognized as revenue in the period in which the expense is incurred and collectability is reasonably assured. Taxes collected from customers and remitted to governmental authorities are presented in our consolidated statement of operations on a net basis.

Cost of Revenues – Our policy is to recognize cost of revenues in the same manner as, and in conjunction with, revenue recognition. Our cost of revenues includes the costs directly attributable to revenue recognized and includes expenses related to the production, packaging and labeling of our Prana medicinals products and personnel-related costs, fees for third-party services, travel and other consulting costs related to our advisory services.

Research and Development Expenses - Research and development (“R&D”) costs are charged to expense as incurred. Our R&D expenses include, but are not limited to, consulting service fees and materials and supplies used in the development of our proprietary products and services.

Sales and Marketing Expenses – Sales and marketing expenses consist primarily of fees for professional and consulting services, promotional events and advertising costs.

General and Administrative Expenses - General and administrative expenses consist primarily of personnel-related costs, fees for professional and consulting services, travel costs, rent, bad debt expense, general corporate costs, and other costs of administration such as human resources, finance and administrative roles.

Share-Based Compensation - We periodically issue shares of our common stock to non-employees in non-capital raising transactions for fees and services. We account for stock issued to non-employees in accordance with ASC 505, Equity , whereas the value of the stock compensation is based upon the measurement date as determined at either (a) the date at which a performance commitment is reached, or (b) at the date at which the necessary performance to earn the equity instruments is complete.

We account for stock option grants issued and vesting to employees based on ASC 718, Compensation – Stock Compensation , whereas the award is measured at its fair value at the date of grant and is amortized ratably over the vesting period. Accounting for share-based compensation to employees requires the measurement and recognition of compensation expense for all share-based payment awards made to employees based on estimated fair values. We estimate the fair value of all stock option awards on the date of grant using the Black-Scholes-Merton pricing model, which is affected by our stock price, as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, actual and projected employee option exercise behaviors, risk free interest rates and expected dividends. We also estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from our estimates

F-11

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income Taxes - Income taxes are recorded using the asset and liability method. Under the asset and liability method, tax assets and liabilities are recognized for the tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using the enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that enactment occurs. To the extent that we do not consider it more likely than not that a future tax asset will be recovered, we will provide a valuation allowance against the excess.

We follow the provisions of ASC 740, Income Taxes . As a result of the ASC 740, we make a comprehensive review of our portfolio of tax positions in accordance with recognition standards established by ASC 740. As a result of the implementation of ASC 740, we recognized no material adjustments to liabilities or stockholders’ deficit.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in our consolidated financial statements in the period during which, based on all available evidence, we believe it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Interest and penalties associated with unrecognized tax benefits, if any, are classified as interest expense and penalties and are included in selling, general and administrative expenses in our consolidated statements of operations.

Commitments and Contingencies - Certain conditions may exist as of the date our consolidated financial statements are issued, which may result in a loss but which will only be resolved when one or more future events occur or fail to occur. We assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, we evaluate the perceived merits of the 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 that 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 our consolidated financial statements. If the assessment indicates that 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 nature of the guarantee would be disclosed.

Net Loss Per Share - We compute net loss per share in accordance with ASC 260, Earnings per Share . Under the provisions of ASC 260, basic net loss per share includes no dilution and is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share takes into consideration shares of common stock outstanding (computed under basic net loss per share) and potentially dilutive securities that are not anti-dilutive.

F-12

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Potentially dilutive securities outlined in the table below have been excluded from the computation of diluted net loss per share, because the effect of their inclusion would have been anti-dilutive.


	Years Ended December 31,
	2016		2015
Warrants to purchase common stock		666,667		3,000,000
Cashless warrants not converted to common stock		783,112		—
Stock options		3,680,000		600,000
Total potentially dilutive securities		5,129,779		3,600,000

Other Comprehensive Income (Loss) – We report as other comprehensive income (loss) those revenues, gains and losses not included in the determination of net income. During the years ended December 31, 2016 and 2015, we did not have any gains and losses resulting from activities or transactions that resulted in other comprehensive income or loss.

Segment Reporting – UCANN operates as one segment.

Concentration of Credit Risk - Financial instruments that potentially subject us to credit risk consist of cash. We maintain our cash with high credit quality financial institutions; at times, such balances with any one financial institution may not be insured by the FDIC.

The following tables show significant concentrations in our revenues and accounts receivable for the periods indicated:

Percentage of Revenue:


	Years Ended December 31,
	2016			2015
Customer A		95	%		36	%
Customer B		3	%		32	%
Customer C		2	%		18	%

Percentage of Accounts Receivable:


	Years Ended December 31,
	2016			2015
Customer D		75	%		56	%
Customer E		25	%		41	%
Customer F			%		1	%

Recently Issued Accounting Pronouncements - From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASCs are communicated through issuance of an Accounting Standards Update ("ASU"). Unless otherwise discussed, we believe that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on our consolidated financial statements upon adoption.

In May 2014, the FASB issued guidance on revenue from contracts with customers, which implements a five step process of how an entity should recognize revenue in order to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective for us at the beginning of fiscal year 2018, and early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the impact that the adoption will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing reporting.

F-13

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In August 2014, the FASB issued guidance on disclosure of uncertainties about an entity's ability to continue as a going concern. This guidance requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity's ability to continue as a going concern. The guidance is effective for us at the beginning of fiscal year 2017, with early adoption permitted. We do not expect that the adoption of this standard will have a material effect on our consolidated financial statements.

In November 2015, the FASB issued guidance requiring entities to present deferred tax assets and liabilities as noncurrent in a classified balance sheet instead of separating into current and noncurrent amounts. This guidance is effective for us at the beginning of fiscal year 2017, on a prospective or retrospective basis, and thus, we will implement such guidance beginning in 2017.

In February 2016, the FASB issued guidance on leases which requires entities to recognize right-of-use assets and lease liabilities on the balance sheet for the rights and obligations created by all leases, including operating leases, with terms of more than 12 months. The new guidance also requires additional disclosures on the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative information. The new guidance will be effective for us at the beginning of fiscal year 2019. Early adoption is permitted. We are in the process of evaluating the impact the adoption of this guidance will have on our consolidated financial statements and related disclosures.

NOTE 3 – GOING CONCERN

Our consolidated financial statements have been prepared on a going concern basis which assumes we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future. During the year ended December 31, 2016, we incurred losses of $3,854,004 and used cash of $274,670 in our operating activities. As at December 31, 2016, we had a working capital deficit of $393,182 and an accumulated deficit of $9,362,333. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and, or, obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. There is no assurance that these events will be satisfactorily completed.

NOTE 4 – INVESTMENTS IN NON-MARKETABLE EQUITY SECURITIES

On June 9, 2014, we received 1,187,500 common shares and 3,000,000 warrants to purchase common shares of WeedMD RX Inc. (“WMD”), a private Canadian company in the cannabis industry, in exchange for future consulting services and use of our intellectual property. The shares represented a 4.29% equity investment in WMD at the time of the investment and we did not have significant influence over the investee. We recorded our investment in these non-marketable equity securities at estimated cost, based on our estimate of the fair value of the securities on the date of the transaction. The 3,000,000 WMD warrants expired unexercised in December 2014.

The WMD common shares were recorded at $0.50 per share, or $593,750 in total, taking into consideration WMD’s most recent sale of their common shares prior to the date of the transaction (CAD $0.50). In December 2015, we determined that WMD’s lack of operating activities during 2015 resulted in a significant adverse effect on our carrying value of these securities (an impairment indicator) and accordingly, we recorded an other-than-temporary impairment charge of $388,475 and included this amount in loss on investments in non-marketable securities in our consolidated statements of operations. The remaining balance, $205,275, or $0.17 per share, was determined based on the consideration we received in our subsequent sale of 1,100,000 WMD shares in March 2016, and this amount is classified as investment in non-marketable equity securities on our consolidated balance sheets.

On March 24, 2016, an unrelated third party agreed to assume all of our obligations, including accrued and unpaid interest, pursuant to the terms of a $175,000 note payable we owed to WeedMD, in consideration for the transfer by us of 1,100,000 shares of the common stock of WMD to the unrelated third party. WMD consented to the assumption of the loan by the unrelated third party, and released us from any further liability with respect to the loan. After the exchange of the 1,100,000 shares of common stock of WMD to the unrelated third party, we own 87,500 shares of common stock of WMD, and reduced our investment in none-marketable equity securities to $15, 125. Because of the difficulty in validating a fair market value for our investment in WMD, we elected to write-off such carrying value as a charge to other income and expenses in our consolidated statements of operations in the amount of $15,125, in the year ended December 31, 2016.

F-14

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 – PREPAID EPENSES

Our prepaid expenses consist of:


	December 31,
	2016		2015
Prepaid investor relations services	$	—	$	1,667
Prepaid licensing fees		—		35,000
Other prepaid services and fees		—		19,674
	$	—	$	56,341

NOTE 6 – INTANGIBLES

Our intangible assets are comprised of provisional patent applications and applications for a design mark and trademarks. Our intangible assets will be amortized on a straight-line basis over estimated useful lives of 20 years for patents and 10 years for design marks and trademarks once the applications are approved. Costs associated with applications that are not approved will be expensed in the period that the application is rejected or abandoned.

NOTE 7 – EQUITY METHOD INVESTMENTS

On August 15, 2014, we acquired a 50% interest in Cannabinoid Research & Development Company Limited (“CRD”), a Jamaican company, in exchange for 40,000 shares of our common stock valued at $88,000 based on the previous day’s closing price of our stock. We also committed to provide expertise on design-build, genetics, cultivation, production, processing, productizing, labeling, packaging, marketing, branding and distribution of products, as well as use of our intellectual property in the operations of CRD. During the year ended December 31, 2016, CRD had minimal operating activities. However, in November 2016, the Jamaican government accepted applications from CRD for a Tier 1 Cultivar license and a Research and Development license. Predicated upon the potential approval of the license applications from the Jamaican government, CRD entered to an agreement with the Caribbean Institute of Medical Research in January 2017, for collaboration in the use of medical cannabis therapies through biomedical research and development for the nutraceutical industry. We accounted for this $88,000 as an equity method investment on our consolidated balance sheets.

On January 19, 2017, the Company and CRD signed a letter of intent (the “LOI”) with the Caribbean Institute of Medical Research (“CARIMER”) to collaborate on advancing clinical research on medical cannabis. CARIMER is the Jamaican-based division of MPR Development Group, a full service global Clinical Research and Development Organization (“CRO”). CARIMER also serves as the research arm of several medical facilities and hospitals in the Caribbean and collaborates with health institutions to support health care research projects around the world. According to the terms of the LOI, during the next two months the parties will work to finalize the clinical trial and financial terms.

NOTE 8 – ACCRUED EXPENSES

Our accrued expenses consist of:


	December 31,
	2016		2015
Accrued consulting fees	$	45,000	$	110,000
Accrued wages and related expenses		—		629,780
Accrued interest expense		10,264		101,185
Accrued other expenses		—		87,568
Total accrued expenses	$	55,264	$	928,533

F-15

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On May 6, 2014, we entered into a consultancy agreement with two third party consultants that had a nine month term, which could be renewed and/or extended by mutual agreement. The agreement provided for a $50,000 payment at signing, which has been paid, and for three more $50,000 payments (a total of $200,000) and the issuance of 100,000 shares of our common stock upon the achievement of certain goals, as set forth in appendix II of the agreement. During the year ended December 31, 2014 we recognized $160,000 of expense applicable to this agreement. At December 31, 2015, the project was approximately 80% complete and $110,000 is included in accrued expenses on our consolidated balance sheet at that date. On December 7, 2016, upon mutual agreement, the consultancy agreement was deemed to be abandoned, because the project was not completed. In turn, one of the consultants, Dr. Brent Reynolds, has been performing other services for the Company during the year ended December 31, 2016, and has agreed to join our Board of Advisors. Dr Reynolds is currently a professor in the Department of Neurosurgery at the University of Florida, College of Medicine, where his lab focuses on the application of natural products for treating diseases and dysfunction of the nervous system. In recognition of his services to the Company during the year ended December 31, 2016, and as an inducement to join our Board of Advisors, he was issued 100,000 shares of our common stock for such services, and the fair market value of these shares in the amount of $163,783 was charged to common stock on the consolidated balance sheet at December 31, 2016, and the residual amount of $53,783 was recognized as a loss on the extinguishment of a debt in our consolidated statement of operations.

NOTE 9– FAIR VALUE MEASUREMENTS AND DERIVATIVE LIABILITIES

The following table provides the liabilities carried at fair value measured on a recurring basis as of December 31, 2015:


	Level 1		Level 2		Level 3		Total

Derivative liabilities	$	—	$	—	$	383,581	$	383,581

We did not have any liabilities carried at fair value measured on a recurring basis as of December 31, 2016.

Derivative Liabilities

We valued our derivative liabilities related to warrants and embedded conversion features applicable to our borrowings under our convertible notes payable (see Notes 10 and 11 below) and accrued interest payable thereon in accordance with fair value measurement guidelines. For the years ended December 31, 2016 and 2015, the following table reconciles the beginning and ending balances for our financial instruments that are carried at fair value measured on a recurring basis:


Derivative liabilities as of December 31, 2014	$	—
Additions to derivative liabilities for convertible debt conversion features and interest		359,988
Loss on revaluation of derivative liabilities during the year		23,593
Derivative liabilities as of December 31, 2015		383,581
Additions to derivative liabilities for convertible debt conversion features		557,000
Additions for modifications of note payable to Sláinte Ventures		686,612
Reductions due to conversions or repayments of convertible debt		(3,317,986	)
Loss on revaluation of derivative liabilities during the year		1,690,793
Derivative liabilities as of December 31, 2016	$	—

The estimated fair value of the derivative liabilities related to our convertible notes payable was measured as the aggregate estimated fair value of each component of the compound embedded derivative liabilities (see Note 11 and 12 below), based on Level 2 and Level 3 inputs, using a binomial lattice pricing model. Changes in the fair value of the compound embedded derivative liability at each reporting date are included in gain/ (loss) on derivative liabilities in our consolidated statement of operations.

F-16

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – DEFERRED REVENUE

Our deferred revenue consists of:


	December 31,
	2016			2015
Deferred revenue – WeedMD	$	383,750		$	563,750
Deferred revenue - FoxBarry		—			200,000
		383,750			763,750
Less – current portion		(180,000	)		(380,000	)
Deferred revenue, net of current portion	$	203,750		$	383,750

As described in Note 4 above, on June 9, 2014, we received 1,187,500 common shares and 3,000,000 warrants to purchase common shares of WMD in exchange for future consulting services and use of our intellectual property. We recorded the $893,750 fair value of these securities as deferred revenue and we recognized $150,000 of this amount as revenue during the period July 1, 2014 through December 31, 2014, based upon our initial three year estimate of the service period involved. Based on recent discussions with WMD, we now expect to deliver the remaining consulting services and use of our intellectual property to WMD on a relatively consistent monthly basis during the four year period January 1, 2015 through December 31, 2018. Accordingly, we are now recognizing $15,000 of deferred revenue per month. We recognized $180,000 of revenue applicable to this arrangement, in each of the years ended December 31, 2016 and 2015. At December 31, 2016, we expect to recognize $180,000 of the remaining $383,750 WMD deferred revenue during the next twelve months and accordingly, we have classified the $180,000 as a current liability on our consolidated balance sheets.

On December 28, 2014, we entered into a royalty and consulting services agreement with FoxBarry Farms, LLC (“FoxBarry”) whereby we received a $200,000 prepaid royalty payment from FoxBarry. At the time, we planned to recognize deferred royalty revenue based on actual applicable sales as defined in the agreement. During the years ended December 31, 2015 and 2014, we did not recognize any deferred revenue related to this agreement. In August 2015, we discontinued providing consulting services to FoxBarry, as our initial project with FoxBarry was abandoned due to operational issues. However, FoxBarry appears to no longer be in existence, and since all of our conditions pursuant to the agreement have been satisfied, we elected to recognize the $200,000 of deferred income during the year ended December 31, 2016, as other income.

NOTE 11 – NOTES PAYABLE

Our notes payable consist of:


	December 31,
	2016		2015
Note payable - WeedMD	$	—	$	175,000
Note payable – Slainte		—		600,000
Total notes payable	$	—	$	775,000

On July 7, 2014, we issued a $175,000, unsecured, demand promissory note bearing interest at 5% to WeedMD for cash used in our business development activities. On March 24, 2016, an unrelated third party agreed to assume all of our obligations, including accrued and unpaid interest, pursuant to the terms of a $175,000 note payable we owed to WeedMD, in consideration for the transfer by us of 1,100,000 shares of the common stock of WMD to the unrelated third party. WMD consented to the assumption of the loan by the unrelated third party, and released us from any further liability with respect to the loan.

On December 18, 2014, we issued a $600,000 unsecured promissory note (the “Slainte Note”) bearing interest at 12% to Slainte Ventures, LLC (“Slainte”). The principal and accrued interest were due on the earlier of December 17, 2015, or upon the closing of certain capital raising transactions as described in the note. The default rate of interest under the note is 18%. Debt issuance costs of $13,500 were immediately recognized as interest expense as, at the time, we expected to close on a capital raising transaction in early 2015.

F-17

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On October 6, 2015, we borrowed funds from a third party and did not apply the borrowed funds to the Slainte Note resulting in a default under the terms of the note, and thus, we received a default waiver from Slainte.

On March 18, 2016, we entered into an agreement with Slainte whereby Slainte waived default, amended the terms and extended the maturity date of the Slainte Note until December 17, 2016, and agreed to accept a warrant in lieu of interest due on the loan. The warrant allows Slainte to purchase 416,667 shares of our common stock; plus that number of shares of our common stock equal in number to (i) the product of the then-applicable interest rate under the Slainte Note and the amount of principal outstanding on the Note, calculated on a daily basis and paid for actual days elapsed, during the period beginning on December 18, 2015, and ending on the date on which the Note is paid in full, divided by (ii) $0.18; plus that number of shares of our common stock equal in number to (i) the product of 0.02 and the sum of the amount of principal and interest outstanding on the Note on the first day of each calendar month, beginning with February 1, 2016, divided by (ii) $0.18. The warrant is exercisable at a price of $0.18 per share, subject to adjustment in the event of stock splits, the sale of our shares of common stock at a price below $0.18 per share or the sale of equity securities with a conversion price of less than $0.18 per share.

On November 14, 2016, the Slainte Note was again amended to extend the maturity date to December 30, 2017 and to allow the note to be converted into shares of the Company's common stock. The number of shares to be issued upon conversion of the note will be determined by dividing the dollar amount of the principal to be converted by 70% of the average closing price of the Company's common stock for the ten business days immediately preceding the date of the conversion. The warrant can be exercised at any time during the five year period following the full repayment of the loan; the exercise price can be paid in cash or through a cashless exercise feature; and the warrant grants certain registration rights to Slainte applicable to all shares of our common stock owned or controlled by Slainte, including shares issued upon exercise of the warrant. In addition, Slainte granted us a put option, exercisable upon repayment of the loan prior to December 17, 2016, that requires Slainte to purchase from us, for $100,000, that number of shares of our common stock equal in number to (i) $100,000 divided by (ii) the product of 80% and the average price of our common stock for the 30 trading days immediately prior to the date the put option is exercised.

Due to the fair value of the warrants issued and conversion feature added in connection with the amended note agreements, the modifications were considered substantial (i.e. greater than 10% of the carrying value of the debt). As a result, an extinguishment of debt was deemed to have occurred, resulting in the recognition of extinguishment losses totaling $674,666.

Following the amendment in November 2016, Slainte converted the entire principal amount of the note into 594,540 shares of the Company's common stock. Slainte also exercised the warrants through the cashless exercise feature resulting in the issuance of 1,330,007 shares of the Company's common stock. He also purchased 104,939 shares of the Company's common stock for $100,000 in connection with the Company's exercise of the put option.

Prior to their exercise in November 2016, these warrants and conversion feature were accounted for as a liability under ASC 815. The Company assessed the fair value of the warrants and conversion feature upon issuance and conversion and at each reporting period based on the Black-Scholes pricing model. See below for the range of variables used in assessing the fair value during the year ended December 31, 2016.


	Warrants December 31, 2016	Conversion Feature December 31, 2016
Expected life (years)	4.29 - 5.0	1.09 - 1.13
Risk-free interest rate	1.01% - 1.90%	0.78% - 0.79%
Expected volatility	214% - 227%	200% - 203%

In connection with these warrants, the Company recognized a loss on the change in fair value of warrant liability of $1,616,215 during the year ended December 31, 2016. In connection with the conversion feature, the Company recognized a loss on the change in fair value of derivative liability of $13,947.

Expected volatility is based primarily on historical volatility. Historical volatility was computed using weekly pricing observations for recent periods that correspond to the expected life of the warrants or conversion feature. The Company believes this method produces an estimate that is representative of our expectations of future volatility over the expected term of these warrants or conversion feature. The expected life is based on the remaining term of the warrants or conversion feature. The risk-free interest rate is based on U.S. Treasury securities rates.

F-18

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 – CONVERTIBLE NOTES PAYABLE

From time to time during the year ended December 31, 2016 and 2015, we issued convertible promissory notes to unaffiliated third parties. The net proceeds from these transactions are used for general working capital purposes. The debt discounts and deferred financing costs on the convertible promissory notes are amortized on a straight-line basis, which approximates the effective interest rate method, over the term of the note, and this amortization is included in interest expense in our consolidated statements of operations.

The following table summarizes our convertible promissory notes outstanding as of December 31, 2016 and 2015:


			Maturity	Interest			Base	December 31,
Issue Date	Holder	Security	Date	Rate			Conversion Rate	2016			2015
12/28/2016	Tangiers Investment Group	Unsecured	7/8/2017		10	%	$1.00 through maturity; 55% of lowest closing price thereafter	$	35,000		$	—
8/10/2016	JSJ Investments	Unsecured	5/10/2017		12	%	$0.20 during first 180 days; 45% of lowest closing price thereafter		125,000			—
10/6/2015	Vis Vires Group	Unsecured	6/30/2016		8	%	58% of three lowest closing bids		—			59,000
10/12/2015	JSJ Investments	Unsecured	7/8/2016		12	%	55% of five lowest trades		—			102,000
12/9/2015	Tangiers Investment Group	Secured	12/8/2016		10	%	55% of three lowest closing bids		—			220,000
									160,000			381,000
							Less unamortized discount		(34,453	)		(272,793	)
								$	125,547		$	108,207

The convertible notes, including accrued interest payable, may be converted into shares of our common stock at the Conversion Price, in whole, or in part, at various times, after the date of issuance, at the option of the holder (the “Conversion Feature”), as defined by the terms of the convertible note.

The Conversion Price is equal to the Base Conversion Rate specified in the table above multiplied by the Variable Conversion Rate (“VCR”) which is equal to the average of the number of lowest trading prices or closing bid prices of our common stock (specified in the table above) during the ten trading day period prior to the date of conversion divided by the closing price of our common stock on the day of conversion.

F-19

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

If these conversion rates results in a beneficial conversion feature (“BCF”), the BCF is recorded as an unamortized convertible debt discount, which is required to be valued and amortized to interest expense over the term of the Note. We amortize our convertible debt discount on a straight-line basis, which approximates the effective interest rate method, and this amortization is included in amortization of debt discount in our consolidated statements of operations. If a convertible note is repaid, any remaining unamortized deferred financing costs and unamortized debt discount are expensed on the date of repayment.

If a convertible notes is convertible into an unlimited number of unregistered, restricted common shares, it is classified as having an unlimited shares feature (“Unlimited Shares Feature”). The difference between the closing price of our common stock and the VCR is referred to as the Variable Conversion Rate Differential (“VCRD”). If, both the Unlimited Shares Feature and the VCRD meet the definition of an embedded derivative, then together they create a compound embedded derivative liability or, hereafter, simply a “derivative liability.”

In accordance with U.S. GAAP, our derivative liabilities are recorded at fair value on the date of issuance and subsequently remeasured to fair value each reporting period with any change in fair value being recognized as gain (loss) on derivative liabilities in our consolidated statement of operations. See Note 9.

Similarly, accrued interest payable applicable to the convertible notes is convertible into shares of our common stock, without limit, at the same Conversion Price. The fair value of the derivative liabilities applicable to accrued interest payable is measured and recognized at each reporting date as derivative liabilities with a corresponding charge to interest expense. As noted above, all derivative liabilities are re-measured in subsequent reporting periods with any change in fair value being included in gain (loss) on derivative liabilities.

During the years ended December 31, 2016 and 2015, we recorded deferred financing fees of $0 and $41,100, respectively, in connection with the issuance of our convertible notes and we recognized $32,400 and $8,700 of amortization of deferred financing costs during the year ended December 31, 2016 and 2015, respectively. This amount is included in interest expense in our consolidated statements of operations.

The aggregate fair value of the derivative liabilities applicable to our convertible notes on the dates of issuance was $557,000 and $355,293 for convertible notes issued during the years ended December 31, 2016 and 2015, respectively, and was recorded as derivative liabilities on our consolidated balance sheets. The related BCF debt discount was recorded as a reduction to our convertible notes payable on our consolidated balance sheets. During the years ended December 31, 2016 and 2015, we recognized $267,258 and $82,500, respectively, of amortization related to the convertible notes and recorded this amount as amortization of debt discount in our consolidated statements of operations.

We recognized $35,719 and $5,121 of interest expense applicable to our convertible notes during the years ended December 31, 2016 and 2015, respectively. As of December 31, 2016 and 2015, $5,876 and $5,121, respectively, of this interest is accrued within accrued expenses on our consolidated balance sheets.

2015 Convertible Notes

At various times during the year ended December 31, 2015, the Company issued convertible promissory notes (the "2015 Notes") in the aggregate principal balance of $381,000. The 2015 Notes, including accrued interest payable, may be converted into shares of our common stock at the Conversion Price, as defined below, in whole, or in part, at any time beginning 180 days after the date of issuance, at the option of the holder. The 2015 Notes also contain prepayment options whereby we may, during the first 180 days that each note is outstanding, prepay the note by paying prepayment premiums ranging from 10% to 40% of the principal then outstanding depending on the date of prepayment.

In general, per the terms of our 2015 Notes, the note holders may not make any conversions that would result in the note holder holding more than 9.99% of our issued and outstanding common stock at any one time.

Should we default on a conversion or repayment of a convertible note, the note, accrued interest and default penalties and fees are immediately due and payable. The minimum default penalty amount ranges from 25% to 50% (or more, under certain circumstances) times the then outstanding principal and unpaid interest.

F-20

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the year ended December 31, 2016, two of these notes in the aggregate principal balance of $161,000 were repaid. The $220,000 note dated December 9, 2015 from Tangiers Investment Group, LLC was converted in full into a total of 2,843,698 shares of the Company's common stock at various dates during the year ended December 31, 2016.

Slainte Convertible Notes

On March 30, 2016, we borrowed $81,978, from Slainte Ventures and used the proceeds to repay principal and accrued interest applicable to our $59,000 convertible promissory note dated October 6, 2015, to Vis Vires Group, Inc. On April 6, 2016, we borrowed an additional $75,000 from Slainte Ventures and used the proceeds, along with $52,500 of advances to the Company by officers and directors of the Company, to repay principal and accrued interest applicable to our $102,000 convertible promissory note, dated October 12, 2015, to JSJ Investments, Inc. On July 5, 2016, we borrowed $50,000 from Slainte Ventures and used the proceeds for working capital purposes. These loans, together with interest at 12% per year, are payable on December 30, 2016. We can prepay the loans at any time. If the loans are repaid on or before September 30, 2016, the principal amount which is being repaid will increase by 10%. If the loans are repaid after September 30, 2016, the principal amount which is being repaid will increase by 15%. The amount of the principal increase may be paid with shares of our common stock. The number of shares to be issued for such purpose will be determined by dividing the average closing price of our common stock (which in no case can be greater than $0.45) for the ten trading days preceding the prepayment date. The original principal of the loan was not convertible prior to maturity. If the loans were not paid when due, then at any time between the maturity date and January 10, 2017, Slainte may convert the outstanding principal and interest on the loan into shares of our common stock. The number of shares to be issued on conversion was to be determined by dividing the average closing price of our common stock (which in no case can be greater than $0.45) for the ten trading days preceding the conversion date by the outstanding principal and interest on the loan on the conversion date.

The notes were not paid prior to the maturity date of December 30, 2016. As a result, the notes became convertible effective December 31, 2016. Derivative liabilities in the aggregate amount of $557,000 were recorded upon these notes becoming convertible. The notes along with their accrued interest were converted into 497,296 shares of the Company's common stock on December 31, 2016, and the value of the derivative liabilities were extinguished to common stock.

JSJ Convertible Note

On August 10, 2016, we borrowed $125,000 from JSJ Investments and used the proceeds for working capital purposes. The loan, together with interest at 12% per year, is payable on May 10, 2017. We can prepay the loan at any time. If the loan is repaid on or before October 16, the principal amount which is being repaid will increase by 25%. If the loan is repaid on or before October 16, 2016 through February 12, 2016, the principal amount which is being repaid will increase by 30%. Thereafter, the note may be repaid only upon written consent from JSJ, and the principal amount that is being repaid will increase by 30%. At any time after the date of the note, JSJ is entitled to convert all of the outstanding and unpaid principal in to shares of our common stock. Until February 12, 2017, the conversion price is $0.20 per share, and thereafter, the conversion price will be at a 45% discount to the lowest closing price of our common stock for the ten trading days preceding the conversion date. JSJ may not make any conversions that would result in the note holder holding more than 4.99% of our issued and outstanding common stock at any one time. If the notes are held through February 12, 2017, derivative accounting will apply upon the change to a variable conversion price. This convertible note was paid in full on February 9, 2017, as more fully described in Note 19 – Subsequent Events.

Tangiers Convertible Note

In connection with an equity line agreement discussed in Note 20, the Company issued a promissory note to Tangiers for the principal sum of $35,000 as a commitment fee for the equity line. The note bears interest at 10% per year, is unsecured, and is due and payable on July 8, 2017. At the option of Tangiers, all or any part of the unpaid principal amount of the note may be converted into shares of the Company's common stock. The number of shares to be issued on any conversion will be determined by dividing the principal amount of the note to be converted by $1.00. If the note is not repaid or converted prior to maturity, the conversion price will change to 55% of the lowest closing bid price during the 20 days preceding the conversion date. If the note is held past maturity, derivative accounting will apply upon the change to a variable conversion price.

F-21

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 – NOTES PAYABLE TO AND ADVANCES FROM OFFICERS AND DIRECTORS

Notes payable to and advance from officers and directors consisted of the following, at December 31, 2016 and 2015:


	December 31,
	2016		2015
Note payable to Earnie Blackmon, an officer and director	$	28,750	$	—
Note payable to Tony Verzura, an officer and director		28,750		—
Advances from officers and directors		71,008		—
Accrued wages payable to officers and directors		42,695		612,512
	$	171,203	$	612,512

On April 6, 2016, we borrowed $25,000 from Ernest Blackmon and $25,000 from Tony Verzura and used the proceeds to repay principal and interest applicable on our $102,000 convertible promissory note dated October 12, 2015, to JSJ Investments Inc. The loans, together with interest at 12% per year, are payable on December 30, 2016. We may prepay the loans at any time. If the loans are repaid on or before September 30, 2016, the principal amount, which is being repaid, will increase by 10%. If the loans are repaid after September 30, 2016, the principal amount, which is being repaid will increase by 15%. As of December 31, 2016, the loans were not repaid, when they were due, per the terms of the notes, and thus, the principal balance of the notes was increased to $57,500 in the aggregate, with the addition to the principal balance charged to interest expense.

During the year ended December 31, 2016, Messrs. Blackmon, Verzura and Ruby, who are officers and directors of the Company, paid obligations and expenses on behalf of the Company, from their own individual, personal funds. Such payments have been recorded in the consolidated balance sheets as a component of Notes payable to and advances from officers and directors.

NOTE 14 – STOCKHOLDERS’ DEFICIT

2014 Stock Split

On March 21, 2014, we effected a four-for-one stock split of our common stock in the form of a stock dividend of three shares of common stock for each share of common stock outstanding to stockholders of record on March 19, 2014.

2014 Equity Offering

On March 26, 2014, we sold 600,000 Units for a total amount of $900,000 to 45 accredited investors. Each Unit consisted of one share of our common stock, two A Warrants and three B Warrants. Each A Warrant entitles the holder to purchase one share of our common stock at a price of $7.50 per share during the two year period commencing April 1, 2014. The A Warrants are callable once our common stock has traded at a price of at least $15.00 for 20 consecutive trading days. Each B Warrant entitles the holder to purchase one share of our common stock at a price of $15.00 per share during the three year period commencing April 1, 2014. The B Warrants are callable once our common stock has traded at a price of at least $22.00 for 20 consecutive trading days.

2014 Change in Authorized Share Capital

Effective May 2, 2014, we increased the authorized number of our preferred shares from five million to ten million and the authorized number of our common shares from 50 million to 100 million. At the same time we also changed the par value of both our preferred and common stock from $0.001 per share to no par value per share.

Common Stock Issued For Warrant Outstanding

On February 10, 2015, we issued 621,000 shares of our common stock, valued at $987,390 based on the previous day’s closing price, to Typenex in exchange for the return of Typenex Warrant #1 that we issued to Typenex on August 13, 2014, as part of a financing arrangement with Typenex.

F-22

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On February 10, 2015, we calculated the fair value of Typenex Warrant #1 to be $218,788, or approximately $1.29 per underlying share, utilizing the Black Scholes option pricing model and the following assumptions on the date of valuation:


Stock price	$	1.59
Exercise price	$	3.00
Risk free interest rate		1.05	%
Expected term (years)		2.6
Expected volatility		183	%
Expected dividends		0	%

Typenex Warrant #1 gave Typenex the right to purchase 170,044 shares of our common stock on the issuance date and provided for adjustments to the number of shares underlying the warrant upon occurrence of certain events including subsequent sales of our common stock. Our repurchase of Typenex Warrant #1 resulted in Typenex forgoing its potential right to receive shares in excess of the original 170,044 shares underlying the warrant on the issuance date. On February 10, 2015, we recorded the $987,390 fair value of the common shares issued as an increase to common stock and the $218,788 fair value of Typenex Warrant #1 reacquired and cancelled as a decrease to common stock and the difference, $768,602, as a loss on extinguishment of debt and repurchase of warrants in our consolidated statements of operations.

Warrants:

The following table summarizes our share warrants outstanding as of December 31, 2016 and 2015:


	Year Ended December 31,
	2016					2015
	Number of Shares			Weighted Average Exercise Price		Number of Shares		Weighted Average Exercise Price
Warrants outstanding, beginning of period		3,000,000		$	12.00	3,170,044		$	11.52
Warrants issued to consultant		666,667			0.18	—			—
Cashless issued upon conversion of Slainte note		1,746,674			—
Warrants exercised		(963,562	)		—	—			—
Repurchased and cancelled		—				(170,044	)		3.00
Expired		(3,000,000	)		—	—			—
Warrants outstanding, end of period		1,449,779		$	0.180	3,000,000		$	12.00
Warrants exercisable, end of period		1,449,779		$	0.180	3,000,000		$	12.00

The weighted-average remaining contractual life for warrants outstanding and exercisable at December 31, 2016, is 4.5 years, and the aggregate intrinsic value of warrants outstanding and exercisable at December 31, 2016 is $0.

The warrants issued during the year ended December 31, 2016 were valued utilizing the Black Scholes option pricing model and the following range of assumptions on the date of valuation:


Stock price				$0.16 - $2.18
Exercise price				$0.18
Risk free interest rate				1.01% - 1.37%
Expected term (years)				5
Expected volatility				322% - 504%
Expected dividends				0%

F-23

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2014 Equity Incentive Plan

On November 20, 2014, our board of directors approved our 2014 Stock Incentive Plan (the “Plan”) and the Plan became effective on November 19, 2015. The Plan provides officers, directors, selected employees and outside consultants an opportunity to acquire or increase a direct ownership interest in our operations and future success. Our board of directors currently administers the Plan and makes all decisions concerning which officers, directors, employees and other persons are granted awards, how many to grant to each recipient, when awards are granted, the terms and conditions applicable to awards, how the Plan should be interpreted, whether to amend or terminate the Plan and whether to delegate administration of the Plan to a committee. A maximum of 4,000,000 common shares are subject to the Plan. The Plan provides for the grant of stock options, stock awards, restricted stock units and stock appreciation rights. Stock options may be non-qualified stock options or incentive stock options except that stock options granted to outside directors, consultants or advisers providing services to us shall in all cases be non-qualified stock options. The Plan will terminate on November 20, 2024, unless the administrator terminates the Plan earlier. As of December 31, 2015, 3,400,000 common shares were available for issue under the Plan.

Stock Options

On January 9, 2015, we awarded 200,000 stock options to each of Messrs. Blackmon, Verzura and Ruby under our 2014 Stock Incentive Plan. The options were fully vested at the time of grant and give the option holder the right to purchase shares of our common stock at $0.70 per share during the ten year term of the option.

We calculated the fair value of each option to be approximately $0.70 per option utilizing the Black Scholes option pricing model and the following assumptions on the date of valuation:


Stock price	$	0.70
Exercise price	$	0.70
Risk free interest rate		1.98	%
Expected term (years)		10.0
Expected volatility		173	%
Expected dividends		0	%

At December 31, 2014, the fair value of these 600,000 options totaling $417,664 was included in accrued expenses on our consolidated balance sheets. On January 9, 2015, the option grant date, we increased common stock and decreased accrued expenses by this amount to account for the issuance of the 600,000 options on that date.

On January 12, 2016, we awarded 1,050,000 stock options to each of Messrs. Blackmon, Verzura and 980,000 stock options to Mr. Ruby under our 2014 Stock Incentive Plan. The options were fully vested at the time of grant and give the option holder the right to purchase shares of our common stock at $0.20 per share during the ten year term of the option.

We calculated the fair value of each option to be approximately $0.20 per option utilizing the Black Scholes option pricing model and the following assumptions on the date of valuation:



Stock price	$	0.20
Exercise price	$	0.20
Risk free interest rate		1.98	%
Expected term (years)		10.0
Expected volatility		173	%
Expected dividends		0	%

At December 31, 2015 the fair value of these 3,080,000 options totaling $612,512, which was included in accrued expenses on our consolidated balance sheets, and on January 15, 2016, the option grant date, we increased common stock and decreased accrued expenses by this amount to account for the issuance of these options on that date.

F-24

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes our stock options outstanding as of both December 31, 2016 and 2015, respectively:


	Number of Shares	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price
Stock options outstanding at December 31, 2014	—		—
Issued	600,000	9.8	$0.70
Exercised	—	—	—
Expired	—	—	—
Stock options outstanding at December 31, 2015	600,000	9.8	$0.70
Stock options exercisable at December 31, 2015	600,000		$0.70

Stock options outstanding at December 31, 2015	600,000	9.8
Issued	3,080,000	10.0	$0.20
Exercised	—	—	—
Expired	—	—	—
Stock options outstanding at December 31, 2016	3,680,000	8.9	$0.28
Stock options exercisable at December 31, 2016	3,680,000	8.9	$0.28

The weighted-average remaining contractual life for stock options outstanding and exercisable at December 31, 2016, is 8.9 years, and the aggregate intrinsic value of options outstanding and exercisable at December 31, 2016 is $0.

NOTE 15 – SHARE-BASED COMPENSATION

Share-based Compensation

We recognize share-based compensation expense in cost of revenues, sales and marketing expenses, R&D expenses and general and administrative expenses based on the fair value of common shares issued for services. In addition, we accrue share-based compensation expense for estimated share-based awards earned during the years ended December 31, 2016 and 2015, under our 2014 Equity Incentive Plan. Share-based compensation expense for the years ended December 31, 2016 and 2015 is, as follows:


	December 31,
	2016		2015
Warrants issued for consulting services	$	319,419	$	47,880
Warrants issued for accrual of share-based awards to officers and directors		—		612,512
Common stock issued for accounts payable and accrued expenses		223,484		—
Common stock issued for services		271,097		67,500
Amortization of common stock issued for prepaid services		—		302,789
	$	814,000	$	1,030,681

Of the $814,000 of share-based compensation, $191,550 was reported as a reduction of accounts payable and accrued expenses pertaining to amounts owed as of the beginning of the year ended December 31, 2016, and $31,934 was recognized as a loss on the extinguishment of debt during the year ended December 31, 2016.

NOTE 16 – INCOME TAXES

The Internal Revenue Code (“IRC”) allows net operating losses (“NOL's”) to be carried forward and applied against future profits for a period of twenty years. The change of ownership following our merger with MySkin may limit our ability to utilize these NOLs under the terms of IRC Section 381.

F-25

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We did not provide any current or deferred federal income tax provision or benefit for any of the periods presented in our consolidated financial statements because we have experienced losses since our inception. When it is more likely than not, that a tax asset cannot be realized through future income, we must record an allowance against any potential future tax benefit. We provided a full valuation allowance against our net deferred tax assets, consisting of net operating loss carry forwards, because we determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carry forward periods.

We have not taken a tax position that, if challenged, would have a material effect on our consolidated financial statements for the years ended December 31, 2016 and 2015, as defined under ASC 740. We did not recognize any adjustment to our liability for uncertain tax positions and therefore did not record any adjustment to the beginning balance of our accumulated deficit on our consolidated balance sheets.

Our provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences for the periods presented are as follows:


	Years Ended December 31,
	2016			2015
Statutory U.S. federal tax rate		39	%		39	%
Effect of increase in valuation allowance		(39	%)		(39	%)
		—	%		—	%

Changes in our cumulative net deferred tax assets consist of the following:


	December 31,
	2016			2015
Net loss carry forward	$	3,648,316		$	2,148,248
Valuation allowance		(3,648,316	)		(2,148,248	)
	$	—		$	—

A reconciliation of our income taxes computed at the statutory rate is as follows:


	Years Ended December 31,
	2016			2015
Tax benefit at statutory rate	$	1,500,068		$	1,124,511
Valuation allowance		(1,500,068	)		(1,124,511	)
	$	—		$	—

NOTE 17 – RELATED PARTY TRANSACTIONS

Affiliate Customer

During 2010, Messrs. Blackmon and Verzura, who are officers and directors of our Company, made loans to, or equity investments in, one of our customers. Effective June 30, 2015, Messrs. Blackmon and Verzura completely divested themselves of those interests. As Messrs. Blackmon and Verzura may have had significant influence on management or operating polices of the customer until June 30, 2015, we classified professional fees in the amount of $4,425 to this customer as revenues - affiliate, in our consolidated statements of operations and accounts receivable from this customer, as due from related parties on our consolidated balance sheets.

Lone Mountain

During the year ended December 31, 2014, we made certain payments on behalf of Lone Mountain during the organizational phase of this venture and we classified these payments as due from related parties on our consolidated balance sheets. As further described in Note 6 above, during the first half of 2015, we expensed our $40,900 advance to Lone Mountain and included this amount in equity in net loss of unconsolidated affiliate in our consolidated statements of operations.

F-26

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CRD

On April 20, 2015, we advanced CRD $5,000 and included this amount in due from related parties.

Blue River Inc.

In February 2015, Messrs. Blackmon and Verzura, who are officers and directors of our Company, formed Blue River Inc. (“Blue River”), a Colorado corporation in the cannabis industry that plans to manufacture and wholesale medicinal and recreational cannabis including our Prana medicinals products. On January 1, 2016, our wholly owned subsidiary, UCANN California Corporation (“UCANN CA”), entered into a five year consulting and intellectual property licensing arrangement with Blue River whereby UCANN CA will provide consulting services to Blue River at hourly rates and a non-exclusive license to our intellectual property for $5,000 per month. The arrangement can be terminated by either party by written agreement. During the year ended December 31, 2015, we advanced Blue River $3,284 and included this amount in due from related parties. For the year ended December 31, 2016 and 2015, we recognized consulting fee revenue in the amounts of $71,680 and $4,425, respectively, which amounts are included as Revenue, affiliate in our consolidated statements of operations. At December 31, 2016 and 2015, we owed Blue River $4,293 and $0, respectively, in trade payables and included this amount in accounts payable.

Advesa Corporation

Advesa Corporation (“Advesa”), a California corporation, was formed in September 2016, and is 100% owned by Mr. Verzura. The Company entered into a memo of understanding in November 2016, under which we provide consulting services to Advesa, and Advesa assists our largest customer, who is located in California, produce our Prana biomedical line of products under a licensing agreement with that California customer. During the year ended December 31, 2016 we advanced Advesa approximately $20,499 and included this amount in Due from related parties in our consolidated balance sheet.

Amounts due from related parties consist of:


	December 31,
	2016		2015
Blue River	$	—	$	3,284
Advesa		21,755		—
CRD		5,000		5,000
Total due from related parties	$	26,755	$	8,284

NOTE 18 – COMMITMENTS AND CONTINGENCIES

Contractual Obligations and Commercial Commitments

Consulting Agreement for GAAP Reporting Services

On February 20, 2016, we entered into a consulting agreement with a third party that has a twelve month term, and which can be extended by mutual agreement. The agreement provides for the issuance of a five (5) year warrant to the consultant, upon the execution of the agreement, to purchase 250,000 shares of our common stock at a price of $0.18 per share, plus the payment of $7,500 on the first day of each month, beginning March 1, 2016, coupled with the monthly issuance of five (5) year warrants to purchase our common stock in an amount of shares determined by dividing $7,500 by $0.18 per share. These warrants are exercisable at a price of $0.18 per share. During the year ended 31, 2016, we recognized in our consolidated statements of operations expenses in the total amount of $394,215 related to this contract, as follows:


	Year Ended December 31, 2016
Cash paid to consultant	$	15,000
Shares of common stock issued to consultant		62,781
Fair value of warrants issued to consultant		319,419
	$	397,200

F-27

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financing Commitment

On December 28, 2016, we entered into an equity line of credit agreement with Tangiers Global, LLC (“Tangiers”). Under the equity line agreement, Tangiers has agreed to provide the Company with up to $10,000,000 of funding through the purchase of shares of the Company’s common stock. During the term of the agreement, the Company may deliver a put notice to Tangiers, which will specify the number of shares which the Company will sell to Tangiers. The minimum amount the Company can draw down at any one time is $5,000, and the maximum amount the Company can draw down at any one time is $350,000 as determined by the formula contained in the equity line agreement.

A closing will occur on the date which is no earlier than five trading days following, and no later than seven trading days following, the applicable put notice. On each closing date, the Company will sell, and Tangiers will purchase, the shares of the Company’s common stock specified in the put notice. The amount to be paid by Tangiers on a particular closing date will be determined by multiplying the purchase price by the number of shares specified in the put notice. The purchase price is 85% of the average of the two lowest trading prices of the Company’s common stock during the pricing period applicable to the put notice. The pricing period, with respect to a particular put notice, is five consecutive trading days including, and immediately following, the delivery of a put notice to Tangiers. The Company may submit a put notice once every ten trading days provided the closing of the previous transaction has taken place. The Company is under no obligation to submit any put notices.

The equity line agreement has a term of 36 months, which will begin on the effective date of the registration statement, which the Company has agreed to file with the Securities and Exchange Commission so that the shares of common stock to be sold to Tangiers may be sold in the public market. The Company issued a promissory note to Tangiers for the principal sum of $35,000 as a commitment fee for the equity line. The note bears interest at 10% per year, is unsecured, and is due and payable on July 8, 2017. The note is recorded on our consolidated balance sheet at December 31, 2016 in the amount of $35,000, net of a discount of $34,453. At the option of Tangiers, all or any part of the unpaid principal amount of the note may be converted into shares of the Company’s common stock. The number of shares to be issued on any conversion will be determined by dividing the principal amount of the note to be converted by $1.00.

Legal Proceedings

There have been no material developments in legal proceedings in which we are involved during the year ended December 31, 2016.

NOTE 19 – SUBSEQUENT EVENTS

JSJ Convertible Note

On August 10, 2016, we borrowed $125,000 from JSJ Investments and used the proceeds for working capital purposes. The note, together with interest at 12% per year, was due and payable on May 10, 2017. We could prepay the loan at any time, and if we were to repay the note on or before October 16, 2016 through February 12, 2016, the principal amount which was being repaid would increase by 30%. On February 13, 2017, the note was repaid in the form of the issuance of 379,100 shares of our common stock to JSJ Investments.

In accordance with ASC 855-10 we have analyzed its operations subsequent to December 31, 2016, to the date these consolidated financial statements were issued, and has determined that, other that as disclosed above, we do not have any material subsequent events to disclose in these consolidated financial statements.

F-28

UNITED CANNABIS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS


	September 30, 2017			December 31, 2016
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	647,697		$	112,621
Account receivable, net		25,700			24,484
Due from related parties		37,283			26,775
Inventory		36,098			—
Total current assets		746,778			163,880
Outdoor cultivation facility and laboratory equipment, net of accumulated depreciation of $26,299 and $0.0 at September 30, 2017 and December 31, 2016, respectively		321,283			—
Patents, net		141,417			—
Intangible assets		73,043			32,273
Equity method investments		—			88,000
Goodwill		4,912,201			—
Total assets	$	6,194,722		$	284,153

LIABILITIES AND STOCKHOLERS’ EQUITY (DEFICIT)
LIABILITIES
Current liabilities:
Accounts payable	$	86,477		$	25,048
Accrued expenses		38,244			50,875
Current portion of deferred revenue		180,000			180,000
Advances from and accrued wages of officers and directors		587,943			175,592
Convertible notes payable		—			125,547
Total current liabilities		892,664			557,062
Scientific Research Grant		75,000			—
Deferred revenue, net of current portion		68,750			203,750
Total liabilities		1,036,414			760,812

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock, 10,000,000 shares authorized; 2,000 Series A shares and none outstanding at September 30, 2017 and December 31, 2016, respectively		2,200			—
Common stock, 100,000,000 shares authorized; 60,210,502 and 50,650,994 outstanding at September 30, 2017 and December 31, 2016, respectively		18,002,191			8,885,674
Accumulated deficit		(12,849,876	)		(9,362,333	)
Total equity (deficit) attributable to stockholders of the Company		5,154,515			(476,659	)
Non-controlling interests (deficits) in less than fifty percent owned subsidiaries		3,793			—
Total stockholders’ equity (deficit)		5,158,308			(476,659	)
Total liabilities and stockholders’ equity (deficit)	$	6,194,722		$	284,153

See accompanying notes to the unaudited condensed consolidated financial statements.

F-29

UNITED CANNABIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues
Revenues, non-affiliated	$	57,627		$	264,964			277,685		$	707,660
Revenues, affiliate		45,033			—			178,785			—
Total revenues		102,660			264,964			456,470			707,660
Cost of revenues		(26,226	)		(68,813	)		(238,227	)		(252,550	)
Gross Profit		76,434			196,151			218,243			455,110
Operating expenses
Marketing, advertising and new business development		39,728			7,516			132,493			56,208
Research and development		40,611			4,371			90,006			17,732
Legal, accounting, consulting and public reporting		181,052			111,847			637,252			246,584
General and administrative		461,990			(6,923	)		2,644,041			225,748
		723,381			116,811			3,503,792			546,272
Income (loss) from operations		(646.947	)		79,340			(3,285,549	)		(91,162	)
Other income and costs and expenses
Gain (loss) on derivative liabilities		—			(331,618	)		—			(332,456	)
Loss on extinguishment of debt		—			—			(267,567	)		(130,423	)
Interest expense		(6,759	)		(40,044	)		(54,432	)		(153,438	)
Amortization of debt discount		—			—			—			(266,711	)
Gain on conversion of a portion of convertible notes		—			(4,253	)		—			11,237
Loss on settlement of dispute		—			—			(122,139	)		—
Loss before provision for taxes on income		(653,706	)		(296,575	)		(3,729,687	)		(962,953	)
Provision for taxes on income		—			—			—			—
Net Income (Loss)		(653,706	)	$	(296,575	)		(3,729.687	)		(962,953	)
Loss attributable to non-controlling interests		80,914			—			242,146			—
Net (Loss) attributable to common shareholders	$	(572,792	)	$	(296,575	)	$	(3,487,541	)	$	(962,953	)


Basic loss per common share	$	(0.01	)	$	(0.01	)	$	(0.07	)	$	(0.02	)
Basic and fully diluted weighted average number of shares outstanding		56,503,689			44,925,837			54,170,003			45,519,746

See accompanying notes to the unaudited condensed consolidated financial statements.

F-30

UNITED CANNABIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
	2017			2016
Cash flows from operating activities :
Net loss	$	(3,729,687	)	$	(962,953	)
Increase in collection reserve		—			25,660
Amortization of debt discount to interest expense		34,453			266,711
Decrease in deferred financing costs		—			32,400
Depreciation and amortization		26,299			—
Share-based compensation		2,117,302			118,160
Loss on revaluation of derivative liability		—			365,576
Loss on extinguishment of debt		248,892			—
Loss on settlement of dispute		122,139			—
Loss on warrants to cure debt default		—			92,004
Loss on modification of note payable		—			133,077
Gain on payoff of convertible notes		—			(156,531	)
Gain on conversion of convertible note		—			(11,237	)
Discount on and fees on convertible note payable		—			15,500
Changes in operating assets and liabilities
Accounts receivable		(1,216	)		(279	)
Amounts due from related parties		(10,508	)		—
Inventory		(36,098	)		—
Prepaid expenses		—			56,341
Accounts payable and accrued expenses		23,271			72,634
Deferred revenue		(135,000	)		(335,000	)
Accrued wages payable to officers and directors		302,889			29,330
Net cash used in operating activities		(1,037,264	)		(258,607	)

Investing activities :
Cash acquired upon acquisition of subsidiary		347,307			—
Improvements to cultivation facility and purchase of equipment		(261,560	)		—
Purchase of intangible assets		(125,858	)		—
Return of deposit		(32,500	)		—
Cash portion of settlement of dispute		(20,000	)		—
Net cash used in investing activities		(92,611	)		—

Cash flow from financing activities :
Proceeds from issuance of common stock – equity financing line		1,380,204			—
Proceeds from convertible notes		—			316,478
Advances from officers and directors		254,943			52,500
Repayment of convertible debt and notes payable		(35,000	)		(213,978	)
Proceeds from sale of common stock and exercise of warrants		64,804			—
Net cash provided by financing activities		1,664,951			155,000

Net increase (decrease) in cash		535,076			(103,607	)
Cash and equivalents, beginning of period		112,621			118,420
Cash and equivalents, end of period	$	647,697		$	14,813

See accompanying notes to the unaudited condensed consolidated financial statements.

F-31

UNITED CANNABIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
	2017		2016
Supplemental cash flow disclosures
Cash paid for interest	$	—	$	—
Cash paid for income taxes	$	—	$	—

Supplemental disclosure of non-cash investing and financing activities
Issuance of stock options in exchange for accrued wages payable to officers and directors	$	—	$	612,512
Issuance of common stock upon conversion of convertible note payable to Tangiers Investment Group	$	—	$	473,965
Reduction of convertible notes payable due to the conversion by Tangiers Investment Group	$	—	$	220,000
Common shares issued in the acquisition of Prana Therapeutics, Inc.	$	4,870,500	$	—
Exercise of stock option for 1,000,000 of common stock in exchange for notes payable to an officer and director	$	200,000	$	—
Decrease in non-marketable securities due to the exchange of 1,100,000 shares of common stock of WeedMD	$	—	$	(190,150	)
Reduction of notes payable due to assumption of note payable to WeedMD by unrelated third party in exchange for the exchange of 1,100,000 shares of common stock of WeedMD	$	—	$	175000
Acquisition from and leaseback to of equipment to related party	$	99,200	$	—
Accounts payable exchanged for note payable to third party	$	—	$	30,000

See accompanying notes to the unaudited condensed consolidated financial statements.

F-32

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

NOTE 1 –BUSINESS ORGANIZATION AND NATURE OF OPERATIONS

Background and Current Operations

United Cannabis Corporation ("we", "our", "us", "UCANN", or “the Company”) a Colorado corporation, was originally formed as a California corporation under the name MySkin, Inc. on November 15, 2007. MySkin was engaged in the business of providing management services to a medical spa in Los Angeles, California which provided various advanced skin care services until March 31, 2014, when this business was sold to the prior President of the Company.

In early 2014 we decided to exit the medical spa management business and change our focus to providing products, services and intellectual property to the cannabis industry.

In connection with this transaction:


·	Messrs. Blackmon, Verzura and Ruby licensed to us all of their knowledge and know-how relating to the design and buildout of cultivation facilities, growing/cultivation systems, seed-to-sale protocols and procedures, products, a genetic catalogue including over 150 different strains, an advanced (non-psychoactive) cannabinoid therapy program called "A.C.T. Now", security, regulatory compliance, and other methods and processes which relate to the cannabis industry.

·	The territory for this license is the entire world and the license runs in perpetuity. There are no royalty payments under the License Agreement.

·	Messrs. Blackmon, Verzura and Ruby were appointed to our board of directors effective April 7, 2014.

·	Mr. Blackmon was elected as our President, Mr. Ruby was elected as Chief Operating Officer and Mr. Verzura was elected as Vice President.

·	A total of 41,690,000 previously outstanding shares of common stock were cancelled resulting in a total of 43,620,000 shares of common stock outstanding on March 26, 2014.

UCANN was formed as a Colorado corporation on March 25, 2014, and on May 2, 2014, MySkin, Inc. merged into UCANN, a wholly-owned subsidiary of MySkin, Inc., for the purpose of changing domicile from California to Colorado and changing the corporation's name to United Cannabis Corporation.

On March 31, 2014, we sold all right, title and interest in the tangible and intangible assets, trademarks, customer lists, intellectual property and rights, which we owned and were related to our advanced skin care business since we entered into a new business and no longer had any use for these assets. The assets were sold to MySkin Services, Inc. (“MTA”), a business partly owned by Marichelle Stoppenhagen, our former officer and director, in exchange for the $15,000 payable which we owed to Ms. Stoppenhagen and/or MTA. In addition, MTA assumed all costs associated with these assets starting on March 31, 2014.

On July 14, 2017, we completed the acquisition of Prana Therapeutics, Inc. (“Prana”) in a one-for-one exchange of 5,730,000 shares of common stock of the Company for 5,730,000 of common stock of Prana. The purchase price had a fair market value of $5,070,500, based upon the closing price of $0.85 per share on the OTC QB exchange on July 14, 2017, including the cost to purchase 400,000 shares of Prana common stock for $200,000. Prana is a polymolecular botanical drug development company focused on developing targeted therapeutics for prevention of the negative side effects of chemotherapy, management of rheumatoid arthritis and treatment of brain cancer. Management elected to purchase Prana, because of the successful indication of the effectiveness of their Epidiferphane™ chemical formulation in the treatment of (i) the negative side effects of chemotherapy, (ii) inflammation and pain associated with arthritis and back-centric pain, (iii) sleep disorder, and (iv) the potential shrinkage of brain tumors.

F-33

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

As of September 30, 2017, 28 states and the District of Columbia allow their citizens to use medical marijuana, and voters in the states of California, Colorado, Washington, Nevada, Oregon, Alaska and the District of Columbia approved ballot measures to legalize cannabis for adult recreational use. The state laws are in conflict with the federal Controlled Substances Act, which makes marijuana use and possession illegal on a national level. The former Obama administration has effectively stated that it is not an efficient use of resources to direct federal law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical and recreational marijuana. However, there is no guarantee that the current administration will not change its stated policy regarding the low-priority enforcement of federal laws, or that any future administration would not change this policy and decide to enforce the federal laws vigorously. Any such change in the federal government’s enforcement of current federal laws could cause significant financial damage to us.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation – We prepared these condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three months and nine months ended September 30, 2017 and 2016 are not necessarily indicative of the results for the full year. While we believe that the disclosures presented herein are adequate and not misleading, these interim financial statements should be read in conjunction with the audited financial statements and the footnotes thereto contained in our annual report on Form 10-K for the year ended December 31, 2016.

Principles of Consolidation – Our consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries UCANN California Corporation, UC Colorado Corporation and UC Oregon Corporation, the ninety-five percent (95%) owned subsidiary Prana Therapeutics, Inc. (“Prana”), and the fifty percent (50%) owned subsidiary Cannabinoid Research & Development Company Limited (“CRD”). All intercompany accounts and transactions have been eliminated. Our consolidated financial statements are stated in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). At March 31, 2017, we concluded that we had established a variable interest entity relationship with CRD, because we are the primary beneficiary, in accordance with GAAP. As a result, we elected to consolidate the assets and liabilities of CRD in our consolidated balance sheet at March 31, 2017. Prana was purchased on July 14, 2017, and their assets and liabilities are included in the consolidated balance sheets at September 30, 2017, and their results of operations are included in the consolidated financial statements for the period of June 30, 2017, which is the nearest quarter end to the purchase date, through September 30, 2017.

Use of Estimates – The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of our condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented.

We make our estimates of the ultimate outcome for these items based on historical trends and other information available when our condensed consolidated financial statements are prepared. We recognize changes in estimates in accordance with the accounting rules for the estimates, which are typically in the period when new information becomes available. We believe that our significant estimates, assumptions and judgments are reasonable, based upon information available at the time they were made. Our actual results could differ from these estimates, making it possible that a change in these estimates could occur in the near term.

Fair Value of Financial Instruments – Our financial instruments consist principally of cash and cash equivalents, accounts receivable, non-marketable equity securities, accounts payable, notes payable and other current assets and liabilities. We value our financial assets and liabilities using fair value measurements. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows:

Level 1 : Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

F-34

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

Level 3 : Unobservable inputs that are supported by little or no market activity, and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.

The carrying amount of our cash and cash equivalents, accounts receivable, accounts payable, and other current assets and liabilities in our consolidated financial statements approximates fair value because of the short-term nature of the instruments. Investments in non-marketable equity securities are carried at cost less other-than-temporary impairments. The carrying amount of our notes payable and convertible debt at September 30, 2017, approximates their fair values based on our incremental borrowing rates. There have been no changes in Level 1, Level 2, and Level 3 categorizations and no changes in valuation techniques for these assets or liabilities for the nine months ended September 30, 2017 and the year ended December 31, 2016.

Cash and Cash Equivalents – We consider investments with original maturities of 90 days or less to be cash equivalents. Because of current banking regulations, marijuana centric entities are not afforded normal banking privileges, and thus, we have not been able to consistently have access to the federal banking system. Thus, at the beginning of 2016, the Company entered into an agreement with our Chief Executive Officer to hold cash funds in his personal bank account, on an as-needed basis, in trust for the Company. Under the terms of our trust agreement with our Chief Executive Officer, he agreed to hold our cash in his personal bank account, and to make payments of our funds only for our business purposes, and to allow daily access to the bank account for ongoing oversight of his fiduciary responsibility to the Company. Additionally, the trust agreement requires that the Chief Executive Officer make copies available to our accounting staff of all transactions applicable to our operations, on a weekly, or as requested basis. There is cash deposits in the personal bank accounts of the Chief Executive Officer held in trust for us in the amount of $4,158 at September 30, 2017 and at December 31, 2016.

Prepaid Expenses – Prepaid expenses are primarily comprised of advance payments made to third parties for independent contractors’ services or other general expenses. Prepaid services and general expenses are amortized over the applicable periods which approximate the life of the contract or service period.

Patents – Our patent was granted by the United States Patent and Trademark Office on August 15, 2017. The patent covers the extraction of pharmaceutically active components from cannabis plant materials, for incorporation into medicines. The cost of the patents is being amortized over a 15 year period.

Intangible Assets – Our intangible assets, consisting of trademarks, design marks and provisional patent applications are recorded at cost, and once approved, will be amortized using the straight-line method over an estimated useful life of 10 to 15 years. We test for impairment of our intangible assets on an annual basis.

F-35

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

Long-Lived Assets Impairment Assessment – In accordance with the FASB Accounting Standards Codification (“ASC”) 350, we regularly review the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. The carrying value and ultimate realization of these assets is dependent upon our estimates of future earnings and benefits that we expect to generate from their use. If our expectations of future results and cash flows are significantly diminished, intangible assets and other long-lived assets may be impaired and the resulting charge to operations may be material. When we determine that the carrying value of intangibles or other long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, we use the projected undiscounted cash flow method to determine whether an impairment exists, and then measure the impairment using discounted cash flows.

Equity Method Investments – Our investments in entities representing ownership of at least 20% but not more than 50%, where we exercise significant influence, are accounted for under the equity method of accounting, and are included in our financial statements as a component of the consolidated financials. All intercompany accounts are eliminated upon consolidation, and we recognize the minority interests’ share in the income and losses of the less than 100% percent owned subsidiary in the period incurred.

Goodwill – Our goodwill, which consists of our interest in a ninety-five percent owned subsidiary, Prana Therapeutics, Inc. (“Prana”) and a fifty percent owned subsidiary, Cannabinoid Research & Development Company Limited (“CRD”), is not amortized, but is evaluated for impairment annually, or when indicators of a potential impairment are present. The annual evaluation for impairment of goodwill is based on valuation models that incorporate assumptions and internal projections of expected future cash ﬂ ows and operating plans. We believe such assumptions are also comparable to those that would be used by other marketplace participants. Our total goodwill of $4,912,201 consists of $4,805,328 for Prana and $106,873 for CRD at September 30, 2017.

Purchase Price Allocation – The acquisition method of accounting is based on ASC Subtopic 805-10, “ Business Combinations ,” and uses the fair value concepts defined in ASC Subtopic 820-10, “ Fair Value Measurements and Disclosures ”. The price for the purchase of Prana Therapeutics, Inc., was allocated to the net tangible and intangible assets based upon their fair values as of the acquisition date, July 14, 2017. The allocation of the purchase price of $5,070,500 was based upon a valuation and the estimates and assumptions are subject to change within the measurement period. The excess of the purchase price over the fair values of the net tangible assets and intangible assets was recorded as goodwill in the amount of $4,733,410, and is generally driven by our expectations of our ability to commercialize the several drugs invented by Prana.

Deferred Revenue – We defer revenue for which product or service has not yet been delivered or is subject to refund until such time that we and our customer jointly determine that the product or service has been delivered or no refund will be required.

Revenue Recognition – We recognize revenue in accordance with ASC 605, Revenue Recognition , which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on our management's judgments regarding the fixed nature of the selling prices of the products and services delivered and the collectability of those amounts.

Revenue for services with a payment in the form of stock, warrants or other financial assets is recognized when the services are performed. The value of revenue paid with warrants is measured using the Black-Scholes-Merton pricing model. Revenue from product sales, including delivery fees, is recognized when an order has been obtained, the price is fixed and determinable, the product is shipped, title has transferred, and collectability is reasonably assured.

Revenue Recognition – Affiliate – We have licensed our Prana products to Advesa, Inc. (“Advesa”), which is 100% owned by one of our major shareholders. Advesa has an exclusive right for five (5) consecutive one (1) year periods to sell our Prana products in certain cities in the state of California. In consideration for the exclusive license granted to Advesa under the agreement, Advesa is obligated to pay us a royalty on all Prana products sold by Advesa equal to the sale price of the Prana products, minus the cost of goods sold (computed without regard to depreciation, amortization, other non-cash items or allocation of overhead, general and administrative expenses or similar items) (the “ Prana Royalty”). In addition, Advesa pays us a management fee of five percent (5%) of all Advesa gross revenue minus the Prana Royalty. We recognize revenue on all Prana sales consistent with the criteria described above for all sales in accordance with ASC 605, Revenue Recognition.

F-36

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

Research and Development Expenses – Research and development (“R&D”) costs are charged to expense as incurred. Our R&D costs include, but are not limited to, consulting service fees and materials and supplies used in the development of our proprietary products and services.

General and Administrative Expenses – General and administrative expenses consist primarily of personnel-related costs, rent, corporate costs, fees for professional and consulting services, advertising costs, and other costs of administration such as marketing, human resources, finance and administrative roles.

Stock-Based Compensation – We periodically issue shares of our common stock to non-employees in non-capital raising transactions for fees and services. We account for stock issued to non-employees in accordance with ASC 505, Equity , whereas the value of the stock compensation is based upon the measurement date as determined at either (a) the date at which a performance commitment is reached, or (b) at the date at which the necessary performance to earn the equity instruments is complete.

We account for stock option grants issued and vesting to employees based on ASC 718, Compensation – Stock Compensation , whereas the award is measured at its fair value at the date of grant and is amortized ratably over the vesting period. Accounting for stock-based compensation to employees requires the measurement and recognition of compensation expense for all share-based payment awards made to employees based on estimated fair values. We estimate the fair value of all stock option awards on the date of grant using the Black-Scholes-Merton pricing model, which is affected by our stock price, as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, actual and projected employee option exercise behaviors, risk free interest rates and expected dividends. We also estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from our estimates.

Income Taxes – Income taxes are recorded using the asset and liability method. Under the asset and liability method, tax assets and liabilities are recognized for the tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using the enacted tax rates expected to apply when the asset is realized, or the liability settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that enactment occurs. To the extent that we do not consider it more likely than not that a future tax asset will be recovered, we will provide a valuation allowance against the excess.

We follow the provisions of ASC 740, Income Taxes . As a result of ASC 740, we make a comprehensive review of our portfolio of tax positions in accordance with recognition standards established by ASC 740. As a result of the implementation of ASC 740, we recognized no material adjustments to liabilities or stockholders’ deficit.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken, or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in our consolidated financial statements in the period during which, based on all available evidence, we believe it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured, as described above, is reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets, along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

F-37

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

Commitments and Contingencies – Certain conditions may exist as of the date our condensed consolidated financial statements are issued which may result in a loss but which will only be resolved when one or more future events occur or fail to occur. We assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, we evaluate the perceived merits of the 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 that 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 our condensed consolidated financial statements. If the assessment indicates that 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 nature of the guarantee would be disclosed.

Net Loss Per Share – We compute net loss per share in accordance with ASC 260, Earnings per Share . Under the provisions of ASC 260, basic net loss per share includes no dilution and is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share takes into consideration shares of common stock outstanding (computed under basic net loss per share) and potentially dilutive securities that are not anti-dilutive. Potentially dilutive securities outlined in the table below have been excluded from the computation of diluted net loss per share, because the effect of their inclusion would have been anti-dilutive:


	Nine Months Ended September 30,				Three Months Ended September 30,
	2017		2016		2017		2016
Warrants to purchase common stock		641,000		666,667		641,000		666,667
Cashless warrants not converted to common stock		783,112		1,228,455		783,112		1,228,455
Stock options		6,580,000		3,680,000		6,580,000		3,680,000
		8,004,112		5,575,122		8,004,112		5,575,122

Other Comprehensive Income (Loss) – We report as other comprehensive income (loss) those revenues, gains and losses not included in the determination of net income. During the three and the nine months ended September 30, 2017 and 2016, we did not have any gains and losses resulting from activities or transactions that resulted in comprehensive income or loss.

Segment Reporting – We operate as one segment.

Concentration of Credit Risk – Financial instruments that potentially subject us to credit risk consist of cash. Because of our perceived association with the marijuana industry, we are not always able to maintain our cash with high credit quality financial institutions; and at times, cash is held by our employees, under the terms of trust agreements, and, as a result, these balances are not insured by the FDIC.

The following tables show significant concentrations in our revenues and accounts receivable for the periods indicated:

Percentage of Revenue:


	Nine Months Ended						Three Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Customer A		82	%		88	%		98	%		80	%
Customer B		17	%		12	%		2	%		20	%
Customer C		1	%		0	%		0	%		0	%

F-38

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

Percentage of Accounts Receivable:


	Nine Months Ended September 30,
	2017			2016
Customer A		0	%		68	%
Customer B		0	%		30	%
Customer C		0	%		21	%

Recently Issued Accounting Pronouncements – From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASCs are communicated through issuance of an Accounting Standards Update ("ASU"). Unless otherwise discussed, we believe that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on our condensed consolidated financial statements upon adoption.

In May 2014 the FASB issued guidance on revenue from contracts with customers, which implements a five-step process of how an entity should recognize revenue in order to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective at the beginning of fiscal year 2018, and early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the impact that the adoption will have on our condensed consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing reporting.

NOTE 3 – GOING CONCERN

Our condensed consolidated financial statements have been prepared on a going concern basis which assumes we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future. During the nine months ended September 30, 2017, we incurred losses of $3,729,687 and used cash of $1,037,264 in our operating activities. At September 30, 2017, we had a working capital deficit of $145,886 and an accumulated deficit of $12,849,876. We have an equity line of credit funding agreement for providing equity capital for up to $10,000,000 of funding through the purchase of shares of our common stock. During the term of the agreement, the Company may deliver a put notice to the financier, which will specify the number of shares which we will sell to the financier. As of September 30, 2017, we have received $1,380,204, under the terms of the equity line of credit agreement. However, our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and, or, to able to draw funds from our equity line of credit agreement. There is no assurance that these events will be satisfactorily completed.

NOTE 4 – RECEIVABLE FROM AND EQUIPMENT NOTE PAYABLE TO RELATED PARTY

On April 20, 2015, we advanced Cannabinoid Research & Development, Limited (“CRD”) $5,000 and included this amount in due from related parties. At March 31, 2017, we concluded that we had established a variable interest entity relationship with CRD, because we are the primary beneficiary, in accordance with GAAP. As a result, we elected to consolidate the assets and liabilities of CRD in our consolidated balance sheet at March 31, 2017. Thus, at September 30, 2017, the $5,000 advance to CRD is eliminated upon the consolidation of the assets and liabilities of CRD for financial statement reporting purposes.

In the normal course of business, we make non-interest bearing advances to Advesa, Inc. (“Advesa’), which is 100% owned by one of our officers and directors. Such advances are used by Advesa to purchase equipment and to cover the cost of their operations.

F-39

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

Amounts due from related parties consist of:


	September 30,		December 31,
	2017		2016
Advesa, Inc.	$	35,083	$	21,775
Employees		2,200		—
Cannabinoid Research & Development, Limited		—		5,000
	$	37,283	$	26,775

We purchased certain laboratory equipment from Advesa at an amount equal to their cost of the equipment, and subsequently leased the laboratory equipment back to Advesa for a 36 month period. The equipment note is payable over 36 months at an interest rate of $7.5%. The equipment note was paid in full on August 1, 2017.

NOTE 5 – PURCHASE OF PRANA THERAPUETICS, INC.

On June 8, 2017, we entered into an agreement to purchase 400,000 shares of Prana Therapeutics, Inc. (“Prana”), in a private offering of their common shares, for a total consideration of $200,000 (“Subscription Agreement’). In accordance with the terms of the Subscription Agreement, we paid Prana $50,000, upon execution of the Subscription Agreement, and committed to remit $50,000 to Prana on September 30, 2017, December 31, 2017 and March 31, 2018, respectively. Subsequently, on July 14, 2017, we completed the acquisition of Prana in a one-for-one exchange of 5,730,000 shares of our common stock for 5,730,000 shares of common stock of Prana. The purchase price had a fair market value of $5,070,500, based upon the closing price of $0.85 per share of our common stock on the OTC QB exchange on July 14, 2017, including the cost to purchase 400,000 shares of Prana for $200,000.

The purchase price for Prana was allocated to the net tangible and intangible assets based upon their fair values as of the acquisition date. The excess of the purchase price over the fair values of the net tangible assets and intangible assets was recorded as goodwill and is generally driven by management’s expectations and ability to realize synergies and achieve strategic growth.

As of July 14, 2017, the allocation of the purchase price for the 95% fair value of Prana was comprised of:


Patents	$	52,596
Net assets		450,888
Goodwill		4,567,016
Total	$	5,070,500

NOTE 6 -PATENTS

On August 15, 2017, the United States Patent and Trademark Office issued to the Company US Patent #9730911 (the “Patent”) granting exclusive rights to its proprietary formulations based on compounds extracted from cannabis plant materials; more specifically the composition of matter pertaining to the use of phytocannabinoids, cannabinoids, and specific terpene profiles in liquid form. This composition of matter Patent provides protection for our proprietary formulations. The Patent protects the use of suspending both phytocannabinoids and cannabinoids with specific combinations of cannabis derived terpenes in liquid forms with an array of delivery methods including capsule, sublingual, topical, oral, suppository, and vaporization. Cannabinoids referenced in the application include ratios of tetrahydrocannabinolic acid (THCa), cannabidiolic acid (CBDa), tetrahydrocannabinol (THC), cannabinol (CBN), cannabidiol (CBD), cannabichromenic acid (CBCa), and cannabichromene (CBC). At August 15, 2017, we classified the costs associated with research, legal fees, application costs incurred in the process of being granted the Patent on our consolidated balance sheet in the amount of $142,317, and we began amortizing such cost of the Patent on a straight-line basis over a 15 year period. Amortization expense of the Patent is $900 and $0.00 for the nine months ended September 30, 2017 and 2016, respective, and accumulated amortization is $900 and $0.00 at September 30, 2017 and 2016, respectively.

F-40

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

NOTE 7 – INTANGIBLES

Our intangible assets are comprised of the costs incurred in pursuing provisional patent applications and applications for design mark and trademarks, which have presently not been approved or issued. The costs associated with our intangible assets are amortized on a straight-line basis over estimated useful lives of 15 years for patents and 10 years for design marks and trademarks, once the applications are approved. Costs associated with applications that are not approved will be expensed in the period that the application is rejected or abandoned.

NOTE 8 – EQUITY METHOD INVESTMENTS

On August 15, 2014, we acquired a 50% interest in Cannabinoid Research & Development Company Limited (“CRD”), a Jamaican company, in exchange 40,000 shares of our common stock valued at $88,000 based on the previous day’s closing price of our stock. We also committed to provide expertise on design-build, genetics, cultivation, production, processing, productizing, labeling, packaging, marketing, branding and distribution of products, as well as use of our intellectual property in the operations of CRD. We accounted for this $88,000 as an equity method investment on our condensed consolidated balance sheets at December 31, 2016.

At March 31, 2017, it was concluded that we had established a variable interest entity relationship with CRD, because we are the primary beneficiary, in accordance with GAAP. As a result, we elected to consolidate the assets and liabilities of CRD in our consolidated balance sheet at March 31, 2017.

NOTE 9 – ACCRUED EXPENSES

Our accrued expenses consist of:


	September 30, 2017		December 31, 2016
Accrued consulting fees	$	—	$	45,000
Accrued interest expense		—		5,875
Accrued payroll taxes		38,244		—
	$	38,244	$	50,875

On May 6, 2014, we entered into a consultancy agreement with two third party consultants that had a nine month term, which could be renewed and/or extended by mutual agreement. The agreement provided for a $50,000 payment at signing, which has been paid, and for three more $50,000 payments (a total of $200,000) and the issuance of 100,000 shares of our common stock upon the achievement of certain goals, as set forth in appendix II of the agreement. During the year ended December 31, 2014 we recognized $160,000 of expense applicable to this agreement. At December 31, 2015, the project was approximately 80% complete and $110,000 was included in accrued expenses on our consolidated balance sheet at that date. On December 7, 2016, upon mutual agreement, the consultancy agreement was deemed to be abandoned, because the project was not completed. In turn, one of the consultants, Dr. Brent Reynolds, has been performing other services for us during the year ended December 31, 2016, and has agreed to join our Board of Advisors. Dr Reynolds is currently a professor in the Department of Neurosurgery at the University of Florida, College of Medicine, where his lab focuses on the application of natural products for treating diseases and dysfunction of the nervous system. In recognition of his services to us during the year ended December 31, 2016, and as an inducement to join our Board of Advisors, he was issued 100,000 shares of our common stock for such services, and the fair market value of these shares in the amount of $163,783 was credited to stockholders’ equity (deficit) on the consolidated balance sheet at December 31, 2016, and the residual amount of $53,783 was recognized as a loss on the extinguishment of a debt in our consolidated statement of operations.

NOTE 10 – FAIR VALUE MEASUREMENTS AND DERIVATIVE LIABILITIES

We did not have any liabilities carried at fair value measured on a recurring basis as of September 30, 2017 or at December 31, 2016.

F-41

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

NOTE 11 – RESEARCH GRANT PAYABLE

In August of 2013, we were received a grant from Accelerate Brain Cancer Cure, Inc. (“ABC”) in the amount of $75,000 to be used by us for the development and testing of brain cancer therapies (the “Grant”). Under the terms of the Grant, within 15 years after the effective date of the Grant, if one or more products resulting from the Grant is brought to market, then the Company will owe ABC the repayment of the Grant in the following amounts, based upon the following cumulative net profit benchmarks:


Net Profit Benchmarks		Grant Repayment Amount
$	5,000,000	$	75,000
	15,000,000		75,000
	30,000,000		75,000
	50,000,000		75,000
		$	300,000

NOTE 12 – DEFERRED REVENUE

Our deferred revenue consists of:


	September 30, 2017			December 31, 2016
Deferred revenue - WeedMD	$	248,750		$	383,750
Less - current portion		(180,000	)		(180,000	)
Deferred revenue, net of current portion	$	68,750		$	203,750

As described in Note 4 above, on June 9, 2014, we received 1,187,500 common shares and 3,000,000 warrants to purchase common shares of WMD in exchange for future consulting services and use of our intellectual property. We recorded the $893,750 fair value of these securities as deferred revenue, and we recognized $150,000 of this amount as revenue during the period July 1, 2014 through December 31, 2014, based upon our initial three year estimate of the service period involved. Based on consultations with WMD, we expect to deliver the remaining consulting services and use of our intellectual property to WMD on a relatively consistent monthly basis during the four year period January 1, 2016 through December 31, 2018. Accordingly, we are now recognizing $15,000 of deferred revenue per month, and thus, during the three and nine month periods ending September 30, 2017 and 2016, we recognized a total of $45,000 and $90,000, respectively, of revenue applicable to this arrangement. At September 30, 2017, we expect to recognize $180,000 of the remaining $248,750 WMD deferred revenue during the next twelve months and accordingly, we have classified the $180,000 as a current liability on our condensed consolidated balance sheets.

NOTE 13 – NOTES PAYABLE

We do not owe any notes payable at September 30, 2017 or December 31, 2016.

F-42

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

NOTE 14 – STOCKHOLDERS’ EQUITY (DEFICIT)

Stock Options

On January 9, 2016, we awarded 200,000 stock options to each of Messrs. Blackmon, Verzura and Ruby under our 2014 Stock Incentive Plan. The options were fully vested at the time of grant and give the option holder the right to purchase shares of our common stock at $0.70 per share during the ten year term of the option.

We calculated the fair value of each option to be approximately $0.70 per option utilizing the Black Scholes option pricing model and the following assumptions on the date of valuation:


Stock price	$	0.70
Exercise price	$	0.70
Risk free interest rate		1.98	%
Expected term (years)		10.0
Expected volatility		173	%
Expected dividends		0	%

At December 31, 2016, the fair value of these 600,000 options totaling $417,664 was included in accrued expenses on our condensed consolidated balance sheets and on January 9, 2016, the option grant date, we increased common stock and decreased accrued expenses by this amount to account for the issuance of these options on that date.

On January 12, 2016, we awarded 1,050,000 stock options to each of Messrs. Blackmon, Verzura and 980,000 stock potions to Mr. Ruby under our 2014 Stock Incentive Plan. The options were fully vested at the time of grant and give the option holder the right to purchase shares of our common stock at $0.20 per share during the ten year term of the option. We calculated the fair value of each option to be approximately $0.20 per option utilizing the Black Scholes option pricing model and the following assumptions on the date of valuation:


Stock price	$	0.20
Exercise price	$	.20
Risk free interest rate		1.98	%
Expected term (years)		10.0
Expected volatility		173	%
Expected dividends		0	%

On May 31, 2017, we awarded 100,000 stock options to each of Messrs. Blackmon, Verzura, 100,000 stock options to a non-officer consultant, and 2,600,000 stock options to Mr. Ruby under our 2017 Stock Incentive Plan. The options were fully vested at the time of grant, and give the option holder the right to purchase shares of our common stock at $0.56 per share during the ten year term of the option.

We calculated the fair value of each option to be approximately $0.56 per option, based upon the day’s closing price of our common stock on the date of grant.

At December 31, 2016, the fair value of 3,080,000 options totaling $612,512, was included in accrued expenses on our condensed consolidated balance sheets, and on January 15, 2017, the option grant date, we increased common stock and decreased accrued expenses by this amount to account for the issuance of these options on that date.

The following table summarizes our stock options outstanding, as of September 30, 2017:


	Nine Months Ended September 30, 2017
	Number of Shares		Weighted Average Remaining Life (years)		Weighted Average Exercise Price
Stock options outstanding, beginning of period		3,680,000		8.9	$	$0.28
Issued		2,900,000		9.6		$0.56
Exercised		—
Expired		—
Stock options outstanding, end of period		6,580,000		8.8	$	$0.40
Stock options exercisable, September 30, 2017		6,580,000		8.8	$	$0.40

F-43

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

We issued to certain of our employees 57,500 stock options, at an option price of $0.92 per share that will become vested and exercisable on July 26, 2018.

Common Stock Issued In Exchange For Warrant Outstanding

On February 10, 2016, we issued 621,000 shares of our common stock valued at $987,390 based on the previous day’s closing price, to Typenex Co-Investment, LLC ("Typenex") in exchange for the return of Warrant #1 to Purchase Shares of Common Stock (the “Warrant”) that we issued to Typenex on August 13, 2014, as part of a financing arrangement. We calculated the fair value of the Warrant to be $218,788, or approximately $1.29 per underlying share, utilizing the Black Scholes option pricing model and the following assumptions on the date of valuation:


Stock price	$	1.59
Exercise price	$	3.00
Risk free interest rate		1.05	%
Expected term (years)		2.6
Expected volatility		183	%
Expected dividends		0	%

The Warrant gave Typenex the right to purchase 170,044 shares of our common stock on the issuance date and provided for adjustments to the number of shares underlying the Warrant upon occurrence of certain events including subsequent sales of our common stock. Our repurchase of the Warrant resulted in Typenex forgoing its potential right to receive shares in excess of the original 170,044 shares underlying the Warrant on the original issuance date. On February 10, 2016, we recorded the $768,602 fair value of the common shares issued in excess of the $218,788 fair value of the Warrant reacquired as a loss on settlement of disputed terms of warrant in our condensed consolidated statements of operations and as an increase in common stock on our condensed consolidated balance sheets. On February 10, 2016, we cancelled the Warrant and recorded the $218,788 fair value as an increase to common stock.

Warrants:

The following table summarizes our share warrants outstanding as of September 30, 2017 and December 31, 2016:


	September 30, 2017					December 31, 2016
	Number of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Warrants outstanding, beginning of period		1,449,779		$	0.18		3,000,000		$	12.00
Warrants issued to consultant		83,333			0.18		666,667			0.18
Warrants issued to consultant		16,000			1.25		—			—
Cashless issued upon conversion of Slainte note					—		1,746,674			—
Warrants exercised		(125,000	)		0.18		(963,562	)		—
Expired		—			—		(3,000,000	)		—
Warrants outstanding, end of period		1,424,112		$	0.19		1,449,779		$	0.18
Warrants exercisable, end of period		1,424,112		$	0.19		1,449,779		$	0.18

Preferred Stock

On July 18, 2017, the Board of Directors adopted a resolution creating a series of Preferred Shares, no par value per share, designated as the Series A Preferred Shares. We subsequently issued 2,000 shares of our Series A preferred stock for $2,200 to of our officers and directors.

F-44

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

NOTE 15 – SHARE-BASED COMPENSATION

Share-based Compensation

We recognize share-based compensation expense in cost of revenues and general and administrative expense based on the fair value of common shares issued for services. Share-based compensation expense for the three and nine months ended September 30, 2017 and 2016 is, as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Options granted to officers and directors for compensation	$	—	$	33,780	$	1,812,456	$	118,160
Warrants and options issued for consulting services		—		—		16,379		—
Common stock issued for services		68,984		—		170,958		—
Common stock accrued as payment for services, shares not yet issued		22,949		—		117,509		—
	$	91,933	$	33,780	$	2,117,302	$	118,160

NOTE 16 – COMMITMENTS AND CONTINGENCIES

Contractual Obligations and Commercial Commitments

On February 20, 2017, we entered into a consulting agreement with a third party that has a twelve month term, and which can be extended by mutual agreement. The agreement provides for the issuance of a five (5) year warrant to the consultant, upon the execution of the agreement, to purchase 250,000 shares of our common stock at a price of $0.18 per share, plus the payment of $7,500 on the first day of each month, beginning March 1, 2016, coupled with the monthly issuance of five (5) year warrants to purchase our common stock in a number of shares determined by dividing $7,500 by $0.18 per share. These warrants are exercisable at a price of $0.18 per share. During the nine months ended September 30, 2017, we recognized $84,380 of expense applicable to this consulting agreement.

On May 6, 2014, we entered into a consulting agreement with two third party consultants that has a nine month term, which can be renewed and/or extended by mutual agreement. Currently, the renewal of the agreement is under negotiation. The agreement provides for a $50,000 payment to the consultants at signing, which has been paid, and for three more $50,000 payments (a total of $200,000) and the issuance of 100,000 shares of our common stock upon the achievement of certain goals as set forth in appendix II of the agreement. During the three and nine months ended September 30, 2017 and 2016, we recognized no expenses applicable to this agreement At September 30, 2017 and December 31, 2016 the project was approximately 80% complete and $110,000 is included in accrued expenses on our consolidated balance sheets. The value of the 100,000 shares will be recognized upon achievement of the goals. The project has been suspended and it is unknown when it will resume.

Financing Agreement – Equity Line of Credit

On December 28, 2016, the Company entered into an equity line of credit agreement with Tangiers Global, LLC (“Tangiers”). Under the equity line agreement, Tangiers has agreed to provide the Company with up to $10,000,000 of funding through the purchase of shares of the Company’s common stock. During the term of the agreement, the Company may deliver a put notice to Tangiers, which will specify the number of shares which the Company will sell to Tangiers. The minimum amount the Company can draw down at any one time is $5,000, and the maximum amount the Company can draw down at any one time is $350,000 as determined by the formula contained in the equity line agreement.

F-45

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

The Company has delivered seven (7) put notices to Tangiers as of September 30, 2017, and has received $1,380,204, under the terms of the equity line of credit agreement from the sale of 1,897,215 shares of our common stock to Tangiers. Subsequent to September 30, 2017, the Company delivered an additional put notice to Tangiers, and received $162,506, under the terms of the equity line of credit agreement from the sale of 267,703 shares of our common stock to Tangiers.

Legal Proceedings

We were not subject to any legal proceedings during the nine months ended September 30, 2017, and, to the best of our knowledge, no legal proceedings are pending or threatened.

NOTE 17 – SUBSEQUENT EVENTS

Research Agreement

Under the terms of a research agreement entered into in October 2017 with the University of Florida Trustees (“UFT”), our subsidiary, Prana Therapeutics, Inc. committed to pay UFT $100,000, upon the execution of the research agreement, and $50,000 in each of the months of February 2018 and June 2018, for a total commitment of $200,000.

Subsequent Analysis of Operations

In accordance with ASC 855-10, we have analyzed our operations subsequent to September 30, 2017, to the date these condensed consolidated financial statements were issued, and have determined that, other than as disclosed above, we do not have any material subsequent events to disclose in these condensed financial statements.

F-46

TABLE OF CONTENTS


	Page
PROSPECTUS SUMMARY	1
RISK FACTORS	3
MARKET FOR OUR COMMON STOCK	6
MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION	7
BUSINESS	11
MANAGEMENT	17
PRINCIPAL SHAREHOLDERS	23
INVESTMENT AGREEMENT	24
DESCRIPTION OF SECURITIES	26
LEGAL PROCEEDINGS	27
INDEMNIFICATION	27
AVAILABLE INFORMATION	27
FINANCIAL STATEMENTS	F-1

No dealer, salesperson or other person has been authorized to give any information or to make any representation not contained in this prospectus, and if given or made, such information or representations must not be relied upon as having been authorized by United Cannabis Corporation. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any of the securities offered in any jurisdiction to any person to whom it is unlawful to make an offer by means of this prospectus.

PART II

Information Not Required in Prospectus

Item 13. Other Expenses of Issuance and Distribution .

The following table shows the costs and expenses payable by the Company in connection with this registration statement.


SEC Filing Fee	$	1,245
Blue Sky Fees and Expenses		1,000
Legal Fes and Expenses		30,000
Accounting Fees and Expenses		5,000
Miscellaneous Expenses		2,755
TOTAL	$	40,000

All expenses other than the SEC filing fee are estimated.

Item 14. Indemnification of Officers and Directors

The Colorado Business Corporation Act provides that the Company may indemnify any and all of its officers, directors, employees or agents or former officers, directors, employees or agents, against expenses actually and necessarily incurred by them, in connection with the defense of any legal proceeding or threatened legal proceeding, except as to matters in which such persons shall be determined to not have acted in good faith and in the Company’s best interest.

Item 15. Recent Sales of Unregistered Securities.

On September 25, 2017 we sold 34,560 shares of common stock for $25,000 to a private investor.

On November 11, 2017 we sold 84,034 shares of common stock for $50,000 to a private investor.

On December 11, 2017 we sold 105,042 shares of common stock for $50,000 to a private investor.

Common Stock Issued For Services

During the past three years we issued 307,500 shares of our common stock to five persons for services, valued at approximately $226,215, provided to us.

Item 16. Exhibits and Financial Statement Schedules

The following exhibits are filed with this Registration Statement:


Exhibit		Description
2		Plan of Merger dated April 10, 2014 (1)
3.1		Articles of Incorporation (2)
3.2		Bylaws (3)
4.1		Warrant issued to Sláinte Ventures, LLC (9)
4.2		2017 Stock Incentive Plan (10)
4.3		2018 Stock Incentive Plan (11)
5		Opinion of Counsel
10.1		License Agreement with Earnest Blackmon, Tony Verzura and Chad Ruby dated March 26, 2014 (4)
10.2		Asset Assignment and Purchase Agreement dated March 31, 2014 (5)
10.3		(Reserved)
10.5		Promissory Note, dated April 6, 2016, payable to Earnest Blackmon (6)
10.6		Promissory Note, dated April 6, 2016, payable to Tony Verzura (7)
10.7		Agreement with Cannibinoid Research and Development Company Limited (12)
10.12		2016 Investment Agreements with Tangiers Global, LLC (13)
10.13		Licensing Agreement - Advesa
10.14		2018 Investment Agreement with Tangiers Global, LLC
10.15		License Agreement (Harborside)

II-1


10.16		Licensing Agreement (Lasco)
21		Subsidiaries (8)
23.1		Consent of Attorneys
23.2		Consent of Accountants
101.INS		XBRL Taxonomy Extension Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

———————

(1)

Incorporated by reference to Appendix A of the Registrant’s Definitive Schedule 14C dated April 11, 2014, filed on April 11, 2014.

(2)

Incorporated by reference to Exhibit 3.4 to the Registrant’s 10-K report filed on April 15, 2015.

(3)

Incorporated by reference to Exhibit 3.5 to the Registrant’s Form 10-K filed on April 15, 2015.

(4)

Incorporated by reference to Exhibit 10 to the Registrant’s Form 8-K filed on March 28, 2014.

(5)

Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on April 3, 2014.

(6)

Incorporated by reference to Exhibit 10.6 to the Registrant’s Form 8-K filed on April 13, 2016.

(7)

Incorporated by reference to Exhibit 10.7 to the Registrant’s Form 8-K filed on April 13, 2016.

(8)

Incorporated by reference to Exhibit 21.1 filed with the Registrant’s 10-K report for the year ended December 31, 2014.

(9)

Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed on March 24, 2016.

(10)

Incorporated by reference to Exhibit 4(c) filed with the Registrant’s S-8 Registration Statement (file number 333-219134).

(11)

Incorporated by reference to Exhibit 4(b) filed with the Registrant’s S-8 Registration Statement (file number 333-222997).

(12)

Incorporated by reference to Exhibit 10.7 filed with the Registrant’s S-1 Registration Statement (file 333-216222).

(13)

Incorporated by reference to Exhibit 10.12 filed with the Registrant’s S-1 Registration Statement (file 333-216222).

Item 17.

Undertakings

The undersigned registrant hereby undertakes:

(1)

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)

To include any prospectus required by Section l0 (a)(3) of the Securities Act:

(ii)

To reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii)

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2)

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)

To remove from registration by means of a post-effective amendment any of the securities that remain unsold at the termination of the offering.

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Insofar as indemnification for liabilities arising under the Securities Act of l933 (the “Act”) may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant 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 Act and will be governed by the final adjudication of such issue.

(4)

That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

(i)

If the registrant is relying on Rule 430B:

(A)

Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

(B)

Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

(ii)

If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(6)

That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)

Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii)

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii)

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv)

Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

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SIGNATURES

Pursuant to the requirements of the Securities Act of l933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Denver, Colorado on the 15 ^th day of February, 2018.


	UNITED CANNABIS CORPORATION

	By:	/s/ Earnest Blackmon
		Earnest Blackmon, Principal Executive,
		Financial and Accounting Officer

In accordance with the requirements of the Securities Act of l933, this registration statement has been signed by the following persons in the capacities and on the dates indicated:


/s/ Earnest Blackmon
Earnest Blackmon	Principal Executive, Financial and Accounting Officer and Director	February 15, 2018

/s/ Chadwick Ruby
Chadwick Ruby	Director	February 15, 2018

/s/ Tony Verzura
Tony Verzura	Director	February 15, 2018

/s/ John Walsh
John Walsh	Principal Financial and Accounting Officer	February 15, 2018

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EXHIBIT 5

HART & HART, LLC

ATTORNEYS AT LAW

1624 Washington Street

Denver, CO 80203


William T. Hart, P.C.	________	Email : harttrinen@aol.com
Will Hart		Facsimile: (303) 839-5414
	(303) 839-0061

February 16, 2018

United Cannabis Corporation

301 Commercial Rd.

Unit D

Golden, CO. 80401

This letter will constitute an opinion upon the legality of the sale by United Cannabis Corporation, a Colorado corporation (the “Company”), of up to 7,000,000 shares of the Company’s common stock.

We have examined the Articles of Incorporation, the Bylaws, and the minutes of the Board of Directors of the Company, and the applicable laws of the State of Colorado and a copy of the Registration Statement. In our opinion, the Company is authorized to issue the shares of stock mentioned above and such shares, when issued, will represent fully paid and non-assessable shares of the Company’s common stock.


	Very truly yours,

	HART & HART, LLC

	/s/ William T. Hart

	William T. Hart

EXHIBIT 10.13

INTELLECTUAL PROPERTY LICENSE AGREEMENT

This Intellectual Property License Agreement (this “Agreement”) dated as of January 1 ^st , 2018, (the “Effective Date”), by and between United Cannabis Corporation, a Colorado corporation (“UCAN”) and Advesa Wellness Inc. a California Not For Profit Mutual Benefit Corporation, (the “ADVESA”). ADVESA and UCAN are sometimes referred to individually herein as a “Party” and collectively as the “Parties”.

RECITALS

WHEREAS, ADVESA is engaged in the business of processing, extracting and providing of legal medical cannabis and cannabis products pursuant to the laws and regulations of the State of California and the rules and regulations of relevant local jurisdictions; and

WHEREAS, UCAN owns and holds certain intellectual property related to its proprietary Prana formulation, cannabis manufacturing, delivery methods and software and provides consulting services to cannabis related businesses and access to its professional network (the “Intellectual Property” and “Consulting Services”); and

WHEREAS, ADVESA wishes to utilize the Intellectual Property and receive Consulting Services, and UCAN desires make the same available to ADVESA on and subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual promises and conditions hereinafter set forth, and for other valuable consideration, the materiality, receipt and legal sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

AGREEMENT

License of Intellectual Property .

Subject to the terms and conditions of this Agreement, UCAN hereby grants to ADVESA an exclusive, non-transferable, non-sublicenseable license in one or more cities in California (the “Territory”) to manufacture and distribute UCAN’s Prana formulation products set forth on Exhibit B (“Licensed Products”). The Licensed Products shall expressly include: (a) all patents obtained, or patent applications and/or provisional patent applications submitted, by UCAN relating to the Licensed Products (the “Licensed Patents”); and (b) all know-how relating to the Intellectual Property and the Licensed Products, including the use, manufacture or formulation thereof, that is owned or controlled by UCAN as of the Effective Date or thereafter acquired, discovered, developed, identified, made, conceived or reduced to practice by or on behalf of UCAN, whether or not patented or patentable and whether or not maintained as trade secret(the “Licensed Know-How”). In the event that UCAN subsequently releases other products based on the Intellectual Property, UCAN will promptly notify ADVESA and provide ADVESA with the right of first refusal to include such other products as Licensed Products hereunder from UCAN and ADVESA, which right of first refusal shall expire thirty (30) calendar days following ADVESA’s receipt of UCAN’s written notice if not exercised by ADVESA. Said other products will be made available to ADVESA for only the additional cost expended by UCAN and are directly attributable to the improvements made. The Company’s Intellectual Property may not be used by ADVESA for any purpose other than the manufacture and distribution of Licensed Products within the Territory without the prior written consent of UCAN. The license granted by this Section 1, (a) may not be transferred or sublicensed by ADVESA without UCAN’s consent

Page 2

(which consent shall not be unreasonably withheld, delayed or conditioned), and (b) does not create any rights of ownership on the part of ADVESA (all rights of ownership being retained by UCAN). ADVESA must obtain UCAN’s consent before making any improvements to the Intellectual Property. In the event that ADVESA creates an improvement to the Intellectual Property (the “Improvement”), ADVESA shall be deemed to have immediately assigned such Improvement to UCAN and such Improvement shall become part of the Intellectual Property licensed by UCAN under this Agreement. ADVESA shall execute and deliver any reasonably requested assignment of the Improvement to document UCAN’s ownership of the Improvement provided UCAN reimburses ADVESA all of its costs directly attributable to these improvements.

License of Trademarks . Subject to the terms and conditions of this Agreement, UCAN hereby grants to ADVESA the exclusive, non-transferable, non-sublicenseable right and license to use the trademarks, service marks, trade names, trade dress, symbols and logos set forth on Exhibit C, and all applications and registrations thereof, including the goodwill associated therewith (as such may be updated from time to time by written notice by UCAN to ADVESA, each individually a “Licensed Mark,” and collectively, the “Licensed Marks”) solely in connection with the manufacturing, sale and distribution of the Licensed Products in the Territory during the Term. In the event that ADVESA wishes to use the Licensed Marks in connection with the sale of other products produced by ADVESA and UCAN approves such use in its reasonable discretion, such approved products shall be added as “Licensed Products” under this Agreement and ADVESA shall be obligated to pay license fees in accordance with Section 6 hereof with respect to its sales of such additional Licensed Products. The license granted by this Section 2 does not create any rights of ownership on the part of ADVESA (all rights of ownership being retained by UCAN). Any use of the Licensed Marks by ADVESA shall inure to the benefit of UCAN.

Rights and Obligations Related to Intellectual Property and Licensed Marks.

Retained Rights . All rights not expressly granted by a Party under this Agreement are reserved by such Party. Subject to the exclusive rights granted by UCAN to ADVESA in the Territory, nothing in this Agreement or in the conduct of the Parties shall be interpreted as preventing UCAN from granting to any other person a license for use of the Intellectual Property or Licensed Marks or from using the Intellectual Property or Licensed Marks in any other geographic location. Except as expressly provided in this Section 3 or elsewhere in this Agreement, neither Party will be deemed to have been granted any license or other rights to the other Party's products, information or other intellectual property rights, either expressly or by implication, estoppel or otherwise.

Further Actions . To the extent any rights in and to the Intellectual Property (or any Improvement or other improvement thereto) or the Licensed Marks are deemed to accrue to ADVESA pursuant to this Agreement or otherwise, ADVESA hereby assigns any and all such rights, at such time as they may deem to accrue, to UCAN. ADVESA shall cooperate in the execution of any documents that is reasonably necessary to create, record or perfect UCAN’s sole and exclusive ownership of the Intellectual Property and the Licensed Marks, or to obtain, defend or protect registrations or applications for registration of such Intellectual Property and/or the Licensed Marks, which is licensed to ADVESA hereunder, so long as such execution and action is at no cost to ADVESA.

No Challenge . ADVESA expressly acknowledges and agrees that all rights in and to the Intellectual Property and the Licensed Marks (including the goodwill related thereto) shall remain vested in UCAN both during the Term and thereafter, and that all use of the

________ ________

ADVESA UCAN

Page 3

Licensed Marks by ADVESA and all goodwill derived therefrom shall inure solely to the benefit of and be on behalf of UCAN. ADVESA shall not: (a) assert rights in the Intellectual Property or the Licensed Marks, or challenge the distinctiveness of the Licensed Marks, the validity of UCAN’s rights in and to the Intellectual Property or the Licensed Marks or any application for registration thereof in any jurisdiction; (b) use the Licensed Marks in a manner which could, in the reasonable opinion of UCAN, dilute UCAN’s rights in the Licensed Marks, or which could otherwise prejudice or invalidate a registration or application for registration of any of the Licensed Marks; (c) take any action that will, in any way, diminish, alter or adversely affect UCAN’s rights in the Intellectual Property or the Licensed Marks or the reputation of UCAN, or otherwise damage the goodwill attached to the Licensed Marks; (d) apply to register or register any Licensed Mark or any trade name, trademark, service mark, domain name or logo that is confusingly similar to any Licensed Mark, without UCAN’s prior written consent; or (e) use or adopt any trade name, trademark, service mark, domain name or logo that is confusingly similar to the Licensed Marks, without UCAN’s prior written consent.

Notice Requirements . To the extent allowed by applicable rules or regulations, including those of the State of California related to packaging, ADVESA agrees that it will include such trademark notices and other proprietary notices on all Licensed Products or related materials that bear any Licensed Mark or contain any Intellectual Property as may be reasonably required by UCAN in order to give appropriate notice of all intellectual property rights therein or pertaining thereto. Such notices shall include the appropriate notice symbol in the form of a superscript “TM” (™), or “C” (©), or “R” ® on the Licensed Product, displays, advertising and all other public uses.

Quality Control .

ADVESA agrees to maintain and use the Licensed Marks in good faith in a manner consistent with the uses approved in this Agreement.

ii.

ADVESA shall comply in all material respects with all applicable laws, including without limitation, the rules and regulations promulgated by the State of California and the relevant local jurisdiction, as the same may be amended from time to time, that are applicable to the promotion, manufacture and distribution of the Licensed Product, and with any other reasonable quality standards requested in writing by UCAN from time to time.

iii.

UCAN shall have the right to verify compliance with the terms of this Agreement through the use of reasonable and appropriate inspection and verification processes and programs, including compliance with all applicable laws, including without limitation, the rules and regulations promulgated by the State of California and the relevant local jurisdiction, as applicable. If UCAN in good faith determines that a Licensed Mark is used in violation of this Agreement, UCAN shall so notify ADVESA in writing and ADVESA shall have thirty (30) calendar days within which to: (a) reassure UCAN as to the propriety of the use of the Licensed Mark, or (b) modify the proposed use of the Licensed Mark and submit such modified use for review by UCAN. If, at the end of such thirty (30) day period, UCAN is not satisfied with the proposed use of the Licensed Mark, UCAN shall notify ADVESA in writing how the Licensed Mark is to be used. If ADVESA fails to change its use of the Licensed Mark to conform to UCAN’s written notice within thirty (30)

________ ________

ADVESA UCAN

Page 4

calendar days of ADVESA’s receipt of such written notice, UCAN may terminate this Agreement upon providing an additional fifteen (15) calendar days’ written notice to ADVESA.

iv.

ADVESA shall not use the Licensed Marks in any manner without the prior written approval of UCAN in accordance with the provisions of this paragraph. Within a reasonable period prior to the use of any Licensed Mark by ADVESA hereunder, ADVESA shall provide to UCAN samples of the Licensed Product, packaging, advertising and promotional materials intended for use by ADVESA that will incorporate such Licensed Mark, as well as photographs or other appropriate evidence of the manner and format in which such Licensed Mark is intended for use with the Licensed Product. UCAN shall notify ADVESA in writing of its approval or disapproval (in UCAN’s sole discretion) of ADVESA’s proposed use of such Licensed Mark within ten (10) calendar days of UCAN’s receipt of such samples, photographs and other evidence (“Review Period”). If UCAN objects to ADVESA’s proposed use of a Licensed Mark prior to the expiration of the Review Period, then the Parties shall cooperate in good faith to agree upon a mutually acceptable manner of use. If UCAN fails to object to ADVESA’s proposed use prior to the expiration of the Review Period, such proposed use shall be deemed approved by UCAN.

Prosecution and Maintenance . UCAN shall be solely responsible for, and have control of, preparing, filing, prosecuting, obtaining and maintaining the Intellectual Property (including the Licensed Patents) and Licensed Marks. UCAN may take such actions as it shall deem appropriate in its good faith business judgment in connection therewith, and shall pay all costs and expenses incurred by it in connection with the foregoing activities.

Infringement . If ADVESA has actual knowledge of any activity by a third party that might constitute an infringement of UCAN’s rights in any of the Intellectual Property or Licensed Marks, without any obligation to obtain such actual knowledge, or if any third party informs ADVESA that ADVESA’s use of the Intellectual Property or the Licensed Marks constitutes unauthorized use or infringement of the third party’s or other party’s legal rights, ADVESA shall promptly notify UCAN.

Enforcement . UCAN represents and warrants to ADVESA that UCAN is the legal and beneficial owner of the Intellectual Property and Licensed Marks. In the event UCAN becomes aware of potential third-party infringement of its Intellectual Property and Licensed Marks licensed to ADVESA under this Agreement UCAN shall, in good faith, evaluate and with due diligence and expediency have the option, but not the obligation to enforce its rights against any third party infringement and defend ADVESA’s right to use the Intellectual Property and the Licensed Marks. If UCAN prosecutes any alleged infringement of the Intellectual Property or the Licensed Marks, or defends ADVESA’s right to use the Intellectual Property or the Licensed Marks, UCAN shall control such litigation and shall bear the expense of such actions. ADVESA shall reasonably assist UCAN, including joining such action as a party plaintiff, if legally required, or providing such evidence and assistance as needed. Such assistance shall be at no cost to ADVESA, except that ADVESA assumes responsibility for reasonable attorneys’ fees and associated costs in connection with the review of documents by ADVESA and its counsel. UCAN shall retain the award of any damages paid by a third party in any such infringement action.

________ ________

ADVESA UCAN

Page 5

Non-Disparagement . During the Term of this Agreement, ADVESA shall not use the Licensed Marks in a manner that disparages or reflects adversely upon UCAN, the Intellectual Property or the Licensed Products, or casts UCAN, its reputation, the Intellectual Property, or the Licensed Products and associated goodwill in a negative light as may be reasonably determined by UCAN.

Exclusivity . Subject to the terms and conditions set forth in this Agreement, the licenses and rights granted to ADVESA by UCAN in this Agreement may be exercised exclusively by ADVESA in the Territory. UCAN is prohibited from (i) promoting, manufacturing, distributing or selling the licensed products noted in Schedule B, (ii) entering into licensing or similar arrangements with any other party with respect to the Licensed Products within the Territory,. UCAN shall retain the unrestricted right to develop, manufacture and distribute its products, not covered in this contract, alone or in conjunction with third parties in any manner outside the Territory and provided UCAN and/or the third party does not market and/or sell their product in the Territory.

Term and Termination.

Term . This Agreement and the licenses granted hereunder shall have an initial term of one (1) year from the Effective Date hereof, unless extended or earlier terminated pursuant to Section 5.b. (“Term”). Upon expiration of the Term, this Agreement shall continue for additional one year periods unless and until either Party gives Thirty (30) days’ notice prior to the commencement of any additional one-year extension of its desire to terminate this Agreement. Any extension of the Term shall be on the same terms and conditions provided herein.

Termination . This Agreement and the licenses granted hereunder may be terminated prior to the expiration of the initial term or any renewal term of this Agreement as follows:

This Agreement may be terminated by UCAN by written notice to ADVESA upon the occurrence of any of the following: (a) failure of ADVESA to pay any amounts owed hereunder when due after the expiration of all grace and cure periods; (b) ADVESA’s material breach of or non-compliance with any other term of this Agreement, which other breach or non-compliance is not cured within thirty (30) calendar days after receipt of written notice of such breach or noncompliance from UCAN; (c) failure of ADVESA to maintain all required licenses and governmental authorizations required for the conduct of its business or to comply in all material respects with applicable state and local laws; (d) any other action or inaction by ADVESA that damages UCAN’s Licensed Products, Licensed Marks, Licensed Patents and/or Intellectual Property, in UCAN’s reasonable discretion; or (e) ADVESA ceases operations, makes a general assignment for the benefit of creditors or is the subject of a voluntary or involuntary bankruptcy, insolvency or similar proceeding that is not terminated within sixty (30) days of filing.

ii.

This Agreement may be terminated by ADVESA by written notice to UCAN (a) in the event of material breach by UCAN of its obligations under this Agreement, which breach is not cured within thirty (30) calendar days after receipt of written notice of such breach from ADVESA, or (b) UCAN ceases operations, makes a general assignment for the benefit of creditors or is the

________ ________

ADVESA UCAN

Page 6

subject of a voluntary or involuntary bankruptcy, insolvency or similar proceeding that is not terminated within sixty (60) days of filing.

iii.

Upon termination of this Agreement, ADVESA shall immediately cease all further manufacture and sale of the Licensed Products; however, all manufactured inventory already tracked for distribution may be sold after termination of the agreement.

Compensation and Payment .

6.1

Advesa will pay UCAN a fee of twenty percent (20%) of gross sales of products covered under Exhibit B until 4/1/2018. Thereafter the fee will increase to twenty five percent (25%) until the end of the contract term.

6.2

Payments made monthly.

Obligations .

Obligations of ADVESA.

ADVESA shall be solely responsible for all costs of producing the Licensed Products, including raw materials, labor and purchase of equipment specified in UCAN's standard operating procedures incorporated into the Intellectual Property. ADVESA acknowledges and agrees that it is solely responsible for (i) procurement of cannabis extraction machinery, cannabis, cannabis oils and other raw materials; (ii) compliance with all state and local laws relating to production and sale of cannabis products; and (iii) procurement and maintenance of all required licensing and permits and/or operating authorities, including proper zoning of production and distribution facilities; and

ii.

As a condition to the grant of the licenses provided by this Agreement, ADVESA agrees to manufacture and distribute the Licensed Products strictly in accordance with written processes and procedures prescribed by UCAN, including the standard operating procedures set forth in Exhibit A by UCAN as part of the Intellectual Property. UCAN shall have the right to implement reasonable quality standards for the Licensed Products from time to time upon written notice to ADVESA, including those set forth in Section 3.e. above, and ADVESA agrees to conform to such standards; and

iii.

ADVESA shall remit to UCAN, within the first ten (10) days of each month during the Term, reports for the preceding month which include, without limitation, reports of the following data of ADVESA in form(s) provided by, or reasonably acceptable to, UCAN:

Monthly gross and net sales, balance sheets, batch record sheets, and other reporting requirements relating to the Licensed Products.

Obligations of UCAN.

Upon execution of this Agreement, UCAN shall provide to ADVESA the

________ ________

ADVESA UCAN

Page 7

Intellectual Property and all documents and materials, including the procedures manual described in Exhibit A , necessary to effectuate the license of the Intellectual Property to ADVESA provided in this Agreement; and

ii.

UCAN shall provide ADVESA written standard operating procedures, in connection with ADVESA's use of the Intellectual Property. Such support shall also include: (i) provision of point of sale materials, website, and brand use guidelines, the cost of which is included in the Management Fee; and (ii) print materials, to be provided to ADVESA at cost for which such expenses shall be paid to UCAN with ADVESA’s next installment of the Management Fee; and

iii.

UCAN shall provide training to ADVESA’s personnel in the proper use of the Intellectual Property including, without limitation, the use of equipment, testing and packaging. Such training shall be provided at ADVESA’s facility in California. The Parties shall, in good faith, mutually agree upon the timing and frequency of such training of ADVESA's personnel. All reasonable costs (reimbursement of only the travel and other direct incidentals of these individuals providing the training and does not include their wages or salaries or other forms of compensation as the same is to be borne by UCAN) of such training shall be at ADVESA’s expense; and

iv.

UCAN shall provide its personnel at ADVESA’s facilities to oversee initial start-up and implementation of the Intellectual Property at ADVESA’s facilities. All reasonable costs of such travel and start-up oversight costs shall require fourteen (14) days' notice to and prior written approval of ADVESA, which shall not be unreasonably withheld, and shall be at ADVESA’s expense. Definition of the term reasonable costs and expenses is set forth in iii above.

Representations and Warranties .

Representations and Warranties of ADVESA . ADVESA represents and warrants to UCAN as follows:

ADVESA is corporation duly organized and in good standing under the laws of the State of California and Anthony Verzura is the sole officer, director and shareholder of ADVESA;

ii.

the execution, delivery and performance of this Agreement by ADVESA has been duly authorized by all necessary action of ADVESA’s Board of Directors and does not violate, conflict with, or require the consent or approval of any third party pursuant to any contract or legally binding obligation to which ADVESA is subject;

iii.

this Agreement constitutes the valid and binding obligation of ADVESA enforceable against ADVESA in accordance with its terms;

iv.

ADVESA possesses all required licenses, permits and approvals necessary for its operations and the manufacture and sale of the Licensed Products and has received no written notice from applicable governmental authority and, to its current actual knowledge, does not otherwise believe that it is not in

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compliance with all applicable state and local laws and regulations relating to the manufacture and sale of the Licensed Products;

ADVESA has no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or agreements of any kind for the purchase or acquisition from ADVESA of any of its securities

ADVESA shall not issue, grant or enter into any contract whereby Common Stock, Preferred Stock or options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or agreements of any kind for the purchase or acquisition from ADVESA of any of its securities without the prior written consent of UCAN in its sole and absolute discretion.

vi.

ADVESA will not sell or transfer any equipment or supplies, which will fall within the definition of an “accountable expense” pursuant to Section 9.

vii.

ADVESA has provided or otherwise disclosed to UCAN all material contracts and agreements of any kind. Any breach of this representation and warranty shall be a material breach of this Agreement.

Representations and Warranties of UCAN . UCAN represents and warrants to ADVESA as follows: (i) UCAN is corporation duly organized and in good standing under the laws of the State of Colorado, (ii) the execution, delivery and performance of this Agreement by UCAN has been duly authorized by all necessary action on the part of UCAN’s directors, officers, members and managers and does not violate, conflict with, or require the consent or approval of any third party pursuant to any state or local law or regulation applicable to UCAN or any contract or legally binding obligation to which UCAN is subject; (iii) this Agreement constitutes the valid and binding obligation of UCAN enforceable against UCAN in accordance with its terms; (iv) UCAN holds and maintains the legal right to convey the exclusive licenses granted hereunder to ADVESA in the Territory and UCAN has not granted the same or similar license to any other party in the Territory; and (v) UCAN has not received any written communication alleging and to its current actual knowledge does not otherwise believe that UCAN has infringed upon the intellectual property rights of any third party relating to the exclusive licenses granted to ADVESA under this Agreement.

Option to Acquire ADVESA . Tony Verzura as the sole officer, director and shareholder of ADVESA hereby grants UCAN an option to acquire all of the outstanding capital stock of ADVESA in consideration of payment for a fair market value of the company with considerations to include all accountable expenses for the development of its facilities, equipment, licenses, relationships, banking, legal, governance, tracking systems, supplies, operational manuals, staffing, distribution, after the date of this Agreement, upon to and including the date of transfer. Exercise of the Option shall be mutually agreed upon by both Tony Verzura and ADVESA and UCAN on or before ten years from the date of this Agreement and will be effective by written notice thereof with closing to be held within thirty (30) days of said notice. UCAN Agrees that if it were to exercise of this option to acquire all of the outstanding common stock of ADVESA, UCAN shall allow Tony Verzura and ADVESA an option to carve out all other products that are being manufactured by ADVESA and do not utilize the Intellectual Property leased by UCAN,

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but may be included in the acquisition of ADVESA by UCAN as part of the acquisition evaluation. All equipment that has been utilized and that Tony Verzura deems is necessary for the production of these products (that do not incorporate the Intellectual Property of UCAN) shall be considered as an option in the acquisition process.

10.

Confidentiality; Non-Compete; Non-Disparagement Restrictions .

Confidentiality . At all times during the term of this Agreement (including any renewal term) and thereafter, the receiving Party will not use or disclose and will otherwise keep confidential any trade secrets or proprietary information, including, but not limited to, the Intellectual Property and other intellectual property of disclosing Party (collectively, the “Confidential Information”) communicated or provided to receiving Party, except to the extent required to perform the receiving Party's obligations under this Agreement. Without limitation of the foregoing, the receiving Party will hold the Confidential Information in confidence and will:

exercise the same degree of care, but no less than a reasonable degree of care to prevent its disclosure as the receiving Party would take to safeguard its own confidential or proprietary information;

ii.

limit disclosure of Confidential Information, including any notes, extracts, analyses or materials that would disclose Confidential Information, solely to those of its employees who need to know the information for purposes of performing the receiving Party's obligations under this Agreement and who agree to keep such information confidential. Upon termination of this Agreement, the receiving Party shall promptly return all Confidential Information to the disclosing Party and the disclosing Party shall have the right, at its cost, to conduct an on-site audit of the receiving Party within three (3) business days of termination to ensure compliance with the requirements of this Section 10.a.; provided , however, as to UCAN’s on-site audit of ADVESA, UCAN’s audit shall be subject to and only as permitted by the Act and the rules and regulations promulgated by the State of California pursuant thereto, as the same may be amended.

iii.

Limitations. This Section 10.a. does not apply to any information that:

is already lawfully in the receiving Party's possession (unless received pursuant to a nondisclosure agreement);

is or becomes generally available to the public through no fault of the receiving Party;

is disclosed to the receiving Party by a third party who may transfer or disclose such information without restriction;

is required to be disclosed by the receiving Party as a matter of law (provided that the receiving Party will use commercially reasonable efforts to provide the disclosing Party with ten (10) days' prior written notice of such proposed disclosure so that the disclosing party may seek a protective order therefor);

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is disclosed by the receiving Party with the disclosing Party's written approval; and

is independently developed by the receiving Party without any use of Confidential Information.

Non-Compete Restrictions . At all times during the Term of this Agreement (including any renewal term), and for a period of one year thereafter, ADVESA agrees that it will not, directly or indirectly through any related party, engage in the promotion, distribution, manufacture, use or sale in the Territory of the Licensed Products or any products that are similar to the Licensed Products other than pursuant to this Agreement. At all times during the Term of this Agreement (including any renewal term), UCAN shall not, directly or indirectly, distribute its Licensed Products, designate another licensee or work with any other party in the promotion, distribution, manufacture, use or sale of the Intellectual Property, Licensed Marks or Licensed Products in the Territory.

Non-Disparagement Restrictions . During the Term and all times thereafter, each Party agrees to take no action, including without limitation, statements, comments or communications, which is intended, or would reasonably be expected, to harm, disparage, or be derogatory or negative towards the other Party or its reputation or which would be reasonably expected to lead to unwanted or unfavorable publicity to the other Party.

Saving Provision . The Parties agree that the agreements and covenants not to compete contained in Section 10.b. are fair and reasonable in light of all of the facts and circumstances of their relationship; however, the Parties are aware that in certain circumstances courts have refused to enforce such agreements. Therefore, in furtherance of and not in derogation of the provisions of Section 10.b. , the Parties agree that in the event a court should decline to enforce the provisions of Section 10.b. , in whole or in part, Section 9.b. shall be deemed to be modified to restrict non-enforcing Party’s rights under this Agreement to the maximum extent, in time, extent and geography, which the court shall find enforceable.

11.

Injunctive Relief . The Parties agree that any breach of Section 10 by either Party shall cause the other Party immeasurable and irreparable harm and the injured Party shall be entitled to a temporary restraining order, preliminary injunction or permanent injunction, without bond or other security, or a showing that it has an adequate remedy at law, from any court of competent jurisdiction, in addition to any other remedies that such injured Party may have at law or in equity.

12.

Indemnification . ADVESA agrees to indemnify UCAN and hold UCAN harmless from and against any and all liabilities, losses and expenses arising from:

ADVESA’s use of the Intellectual Property or the Licensed Marks in violation of this Agreement;

ADVESA’s failure to comply with applicable laws or to maintain all required licenses and governmental authorizations for the operation of its business;

any breach of ADVESA’s representations and warranties in Section 8.a. ; and

any liability to third parties as a result of ADVESA’s sale of Licensed Products if the

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Licensed Products are cultivated, extracted and manufactured in violation of UCAN’s Procedures Manuals described in Exhibit A , as the same may be amended. Subject to Section 3 , UCAN alone shall have the right to take such actions which it determines, in its sole discretion, are reasonably necessary or desirable in connection with any infringement or alleged infringement by a third party of any portion of the Intellectual Property or Licensed Know-How, and ADVESA shall not undertake any action in response to any infringement or alleged infringement without UCAN’s prior written consent. ADVESA agrees to cooperate reasonably with UCAN in such infringement action. All such action shall be at no cost to ADVESA, except that ADVESA assumes responsibility for reasonable attorneys’ fees and associated costs in connection with the review of documents by ADVESA and its counsel; provided, that, such fees and costs incurred by ADVESA shall not exceed $2,500.00 per occurrence or $5,000.00 in the aggregate during the Term of this Agreement. ADVESA shall not have any rights against UCAN for damages or other remedy by reason of UCAN’s failure to prosecute any alleged infringements, except as provided in Section 3 . UCAN shall indemnify, defend and hold harmless ADVESA from and against any and all claims, losses, liabilities, actions and expenses, including attorneys’ fees, incurred by or asserted against ADVESA, arising out of (a) UCAN’s failure to comply with all applicable laws, codes, ordinances, rules and regulations, and (b) any breach of UCAN’s representations and warranties in this Agreement.

13.

Limitation of Liability . EXCEPT FOR A PARTY’S BREACH OF SECTION 10 , OR AMOUNTS PAYABLE WITH RESPECT TO INDEMNIFICATION CLAIMS UNDER SECTION 12 , IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR LOST PROFITS OR FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.

14.

Insurance . For the period of time required to cover its obligations hereunder, each Party will maintain third party provided insurance in types and amounts customary for the type of business it conducts, including product liability insurance, and in any event reasonably adequate to cover any liabilities arising out of its obligations hereunder. Upon a Party’s written request, the other Party will provide to the requesting Party a certificate of insurance showing that such insurance has been procured and is being maintained, together with evidence of the payment of the premium thereon, which certificate shall demonstrate the amounts, exclusions and deductibles of such insurance coverage. Each Party shall notify the other Party in writing no less than thirty (30) calendar days prior to the cancellation, termination or modification of the insurance coverage(s) described in the notifying Party’s insurance certificate(s). Each Party shall be named as an additional insured on such certificates of insurance of the other Party. Nothing in this Section 14 shall in any way be construed to limit the liability of a Party under this Agreement.

15.

Compliance with Laws . In connection with this Agreement, ADVESA agrees to comply with all applicable laws, statutes and ordinances of any applicable governmental or regulatory authority, that may be applicable to ADVESA, its activities under this Agreement or the Licensed Products. UCAN shall comply with all applicable laws, statutes and ordinances of any applicable governmental or regulatory authority that may be applicable to UCAN relating to its Intellectual Property, Licensed Products, Licensed Patents, Licensed Know-How and Licensed Marks.

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16.

Conformance with Regulations . The Parties acknowledge and agree that this Agreement, and the licensing of the Intellectual Property, is neither intended to convey any ownership interest in ADVESA to UCAN nor grant UCAN any control over ADVESA. In the event that any governmental or regulatory authority indicates otherwise with regards to this Agreement or any portion thereof, then the Parties shall promptly negotiate in good faith for a period of forty-five (45) calendar days to modify this Agreement in order to conform with any guidance proffered by such governmental or regulatory authority. In the event the Parties cannot reach an agreement within forty-five (45) calendar days’ notice by such governmental or regulatory authority that this Agreement must be reformed, either Party may give notice to the other Party that this Agreement has been terminated, and the Parties shall thereafter have no further obligation to each other hereunder.

17.

Employees; Agents; Representatives . Employees, agents and/or representatives, if any, of either Party, who perform services for either Party pursuant to this Agreement shall also be bound by the provisions of this Agreement.

18.

Relationship of Parties . The legal relationship of the Parties is exclusively that of licensor and licensee and no employer-employee, principal-agent, partnership, franchise, agency, joint venture or other legal relationship is created by this Agreement. Neither Party shall have the authority to enter into any contracts or incur any debts on behalf of the other Party.

19.

Successors; Assignment; Binding Agreement . ADVESA may not assign or transfer ADVESA’s rights or delegate its obligations under this Agreement without UCAN's prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned; provided that ADVESA may assign this Agreement to a parent ADVESA, subsidiary or affiliate without UCAN’s consent, so long as such assignee or successor assumes and can perform and discharge all of the duties and obligations of ADVESA hereunder. UCAN may assign this Agreement or any rights under this Agreement, or delegate any duties under this Agreement to a parent ADVESA, subsidiary or affiliate or ADVESA resulting from the sale or merger of UCAN without ADVESA’s consent, so long as such assignee or successor assumes and can perform and discharge all of the duties and obligations of UCAN hereunder. Subject to the foregoing, this Agreement inures to the benefit of, and shall be binding upon, the successors and assigns of the Parties to this Agreement, and this Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the Parties and their respective successors and assigns, and no other person or entity shall be or be deemed to be a third party beneficiary of this Agreement.

20.

Modifications and Waivers . This Agreement may be amended only by a written agreement signed by both Parties. With regard to any power, remedy or right provided in this Agreement or otherwise available to either Party, no waiver or extension of time shall be effective unless expressly contained in a writing signed by the waiving Party. No alteration, modification or impairment shall be implied by reason of any previous waiver, extension of time, delay or omission in exercise or other indulgence, and waiver by any Party of the time for performance of any act or condition hereunder does not constitute a waiver of the act or condition itself.

21.

Notice . Except as otherwise provided in this Agreement, notices required to be given pursuant to this Agreement shall be effective when received, and shall be sufficient if given in writing, (a) hand-delivered, (b) sent by facsimile or electronic mail with confirmation of receipt, (c) sent by registered or certified mail, return receipt requested, postage prepaid, or (d) sent by overnight courier service and addressed as set forth below, or at such other address as either Party shall provide to the other pursuant to this Section 21 , from time to time:

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If to ADVESA:

If to UCAN:

301 Commercial Road

Suite D

Golden CO 80401

No objection may be made to the manner of delivery of any notice or other communication in writing actually received by a Party.

22.

Entire Agreement . This Agreement, including the attached Exhibits, constitutes the entire agreement of the Parties hereto relating to the subject matter hereof and supersedes all prior and contemporaneous discussions, memos, correspondence, faxes, text messages, e-mails, proposals and agreements. There are no written or oral terms, conditions, representations or warranties made by either Party other than those contained in this Agreement.

23.

Publicity . Without the prior written consent of the other Party, neither Party shall disclose this Agreement or any of the terms and conditions of this Agreement to any third party, except disclosure may be made as is reasonably necessary to the disclosing Party's bankers, attorneys, accountants, financial advisors, consultants or third parties retained by either Party in connection with the performance of this Agreement, or except as may be required by law.

24.

Expenses . Each Party to this Agreement shall bear all of its own expenses in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the transactions contemplated hereby, including without limitation all fees and expenses of its attorneys, accountants, advisors, agents and representatives.

25.

Governing Law/Arbitration . The validity, interpretation, construction, performance and enforcement of this Agreement shall be governed by the laws of the State of Colorado, without giving effect to the choice or conflict of law provisions of the State of Colorado. Any dispute between the Parties shall be submitted to binding arbitration conducted under the most current Commercial Arbitration Rules of the American Arbitration Association in Denver, Colorado. Ruling of the arbitrator shall be binding on the parties.

26.

Waiver of Trial by Jury . EACH PARTY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING IN CONNECTION WITH ANY MATTER RELATING TO THIS AGREEMENT.

27.

Attorney’s Fees . In the event of any dispute between the Parties arising out of this Agreement, the prevailing Party shall be entitled, in addition to any other rights and remedies it may have, to recover its reasonable attorney's fees and costs.

28.

Force Majeure . Neither Party shall be liable for any delay or failure to perform its obligations in this Agreement if such delay or failure to perform is due to any cause or condition beyond that Party’s reasonable control, including, but not limited to, acts of God, war, government intervention, riot, embargoes, acts of civil or military authorities, earthquakes, hurricanes, tsunamis, fire, flood, accident, strikes, weather, or inability to secure transportation, facilities, fuel, energy, labor or materials.

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29.

Survival . In addition to ADVESA’s obligation to pay UCAN all amounts due hereunder, ADVESA’s obligations under Sections 10 and 12, and all other provisions which by their nature are intended to survive this Agreement, shall expressly survive expiration or termination of the Agreement.

30.

Severability . If any terms or provisions of this Agreement shall be found to be illegal or unenforceable, notwithstanding, this Agreement shall remain in full force and effect and such terms or provisions shall be deemed stricken.

31.

Further Assurances . Upon a Party’s reasonable request, the other Party shall, at its sole cost and expense, execute and deliver all further documents and instruments, and take all further acts, as are reasonably necessary to give full effect to this Agreement.

32.

Counterparts . The Parties may execute this Agreement in multiple counterparts, each of which will constitute an original and all of which, when taken together, will constitute one and the same Agreement. Further, this Agreement may be executed via facsimile or electronic mail and shall be effective for all purposes when so signed.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Parties have executed this Agreement, intending to be legally bound, as of the date set forth above.


“UCAN”		ADVESA INC.



By:	/s/ Earnest Blackmon	By:	/s/ Tony Verzura
	Earnest Blackmon, CEO/President		Tony Verzura
			Sole Officer, Director and Shareholder

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EXHIBIT A

INTELLECTUAL PROPERTY

The Intellectual Property consists of the following, along with all related Licensed Know-How:

Standard Operating Procedures

●

Testing

●

Packaging

●

Employee Operating Procedures

Equipment Selection

Training

●

On-site training at ADVESA ’ s facility

●

On-site training at UCAN ’ s facility

EXHIBIT B

LICENSED PRODUCTS

Prana “ Bio Nutrient Medicinals ” Capsule in the following varieties:

Prana P1;

Prana P2;

Prana P3; and

Prana P4;

Prana P5;

All white label products in this category

Prana “Bio Nutrient Medicinals” Sublingual in the following varieties:

Prana P1;

Prana P2;

Prana P3; and

Prana P4.

Prana P5;

All white label products in this category

Prana “Bio Nutrient Medicinals” Topicals in the following varieties:

Prana P1;

Prana P2;

Prana P3; and

Prana P4.

Prana P5

All white label products in this category

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EXHIBIT C

LICENSED MARKS

UCAN Federal Trademark Applications Pending for United Cannabis Corp.

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ADVESA UCAN

EXHIBIT 10.14

INVESTMENT AGREEMENT

This INVESTMENT AGREEMENT (the “ Agreement ”), dated as of January 19, 2018 (the “ Execution Date ”), is entered into by and between United Cannabis Corp. (the “ Company ”), a Colorado corporation, with its principal executive offices at 1600 Broadway, Suite 1600, Denver, CO 80202, and Tangiers Global, LLC (the “ Investor ”), a Wyoming limited liability company, with its principal executive offices at Caribe Plaza Office Building 6th Floor, Palmeras St. #53, San Juan, PR 00901.

RECITALS:

WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Investor shall invest up to Ten Million Dollars ($10,000,000) (the “Commitment Amount”) to purchase the Company’s common stock, no par value per share (the “ Common Stock ”);

WHEREAS, such investments will be made in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “ 1933 Act ”), Rule 506 of Regulation D promulgated by the SEC under the 1933 Act, and/or upon such other exemption from the registration requirements of the 1933 Act as may be available with respect to any or all of the investments in Common Stock to be made hereunder; and

WHEREAS, contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement substantially in the form attached hereto as Exhibit A (the “ Registration Rights Agreement ”) pursuant to which the Company has agreed to provide certain registration rights under the 1933 Act, and the rules and regulations promulgated thereunder, and applicable state securities laws.

NOW THEREFORE, in consideration of the foregoing recitals, which shall be considered an integral part of this Agreement, the covenants and agreements set forth hereafter, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Investor hereby agree as follows:

SECTION I.

DEFINITIONS

For all purposes of and under this Agreement, the following terms shall have the respective meanings below, and such meanings shall be equally applicable to the singular and plural forms of such defined terms.

“ 1933 Act ” shall have the meaning set forth in the recitals.

“ 1934 Act ” shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same will then be in effect.

“ Affiliate ” shall mean any individual or entity that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with another individual or entity as such terms are used in and construed under Rule 405 under the 1933 Act.

“ Agreement ” shall have the meaning set forth in the preamble.

“ Articles of Incorporation ” shall have the meaning set forth in Section 4.3 .

“ By-laws ” shall have the meaning set forth in Section 4.3 .

“ Certificate ” shall have the meaning set forth in Section 2.5 .

“ Closing ” shall have the meaning set forth in Section 2.5 .

“ Closing Date ” shall have the meaning set forth in Section 2.5 .

“ Commitment Amount ” shall have the meaning set forth in the recitals.

“ Common Stock ” shall have the meaning set forth in the recitals.

“ Company ” shall have the meaning set forth in the preamble.

“ DTC ” shall have the meaning set forth in Section 2.5 .

“DWAC” shall mean Deposit and Withdrawal at Custodian service provided by the Depository Trust Company.

“ Effective Date ” shall mean the date the SEC declares effective under the 1933 Act the Registration Statement covering the Securities.

“ Environmental Laws ” shall have the meaning set forth in Section 4.13 .

“ Execution Date ” shall have the meaning set forth in the preamble.

“ FAST ” shall have the meaning set forth in Section 2.5 .

“ Investor ” shall have the meaning set forth in the preamble.

“ Material Adverse Effect ” shall have the meaning set forth in Section 4.1 .

“ Maximum Common Stock Issuance ” shall have the meaning set forth in Section 2.6 .

“ Open Period ” shall mean the period beginning on and including the Trading Day immediately following the Effective Date and ending on the earlier to occur of (i) the date which is thirty-six (36) months from the Effective Date; or (ii) termination of the Agreement in accordance with Section 8 .

“ PCAOB ” shall have the meaning set forth in Section 4.6 .

“ Pricing Period ” shall mean, with respect to a particular Put Notice, the five (5) consecutive Trading Days including and immediately following the applicable Put Notice Date.

“ Principal Market ” shall mean the New York Stock Exchange, the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the OTC Bulletin Board or the OTC Markets Group, whichever is the principal market on which the Common Stock is traded.

“ Purchase Amount ” shall mean the total amount being paid by the Investor on a particular Closing Date to purchase the Securities, calculated by multiplying the Purchase Price by the Put Amount.

“ Purchase Price ” shall mean the 85% of the average of the 2 lowest daily VWAP during the Pricing Period applicable to the Put Notice, provided, however, an additional 10% will be added to the discount of each Put if (i) the Company is not DWAC eligible and (ii) an additional 15% will be added to the discount of each Put if the Company is under DTC “chill” status on the applicable Put Notice Date.

“ Put ” shall have the meaning set forth in Section 2.2 .

“ Put Amount ” shall have the meaning set forth in Section 2.3 .

“ Put Notice ” shall mean a written notice sent to the Investor by the Company stating the number of shares that the Company intends to sell to the Investor pursuant to the terms of the Agreement and stating the current number of Shares issued and outstanding on such date.

“ Put Notice Date ” shall mean the Trading Day on which the Investor receives a Put Notice, determined as follows: a Put Notice shall be deemed delivered on (a) the Trading Day it is received by electronic mail or otherwise by the Investor if such notice is received prior to 9:30 a.m. (Pacific time), or (b) the immediately succeeding Trading Day if it is received by electronic mail or otherwise after 9:30 a.m. (Pacific time) on a Trading Day. No Put Notice may be deemed delivered on a day that is not a Trading Day.

“Put Settlement Sheet” shall mean a written letter to the Company by the Investor, evidencing acceptance of the Put and providing instructions for delivery of the Securities to the Investor.

“Put Shares Due” shall mean the Shares to be sold to the Investor pursuant to the Put.

“ Registered Offering Transaction Documents ” shall mean this Agreement and the Registration Rights Agreement between the Company and the Investor as of the date herewith.

“ Registration Rights Agreement ” shall have the meaning set forth in the recitals.

“ Registration Statement ” means the registration statement of the Company filed under the 1933 Act covering the resale of the Securities issuable hereunder by the Investor, in the manner described in such Registration Statement.

“ Resolutions ” shall have the meaning set forth in Section 7.4 .

“ SEC ” shall mean the U.S. Securities and Exchange Commission.

“ SEC Documents ” shall have the meaning set forth in Section 4.6 .

“ Securities ” shall mean the shares of Common Stock issued pursuant to the terms of the Agreement.

“ Shares ” shall mean the shares of the Company’s Common Stock.

“ Subsidiaries ” shall have the meaning set forth in Section 4.1 .

“ Trading Day ” shall mean any day on which the Principal Market for the Common Stock is open for trading, from the hours of 9:30 am until 4:00 pm.

“VWAP” shall mean, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by (i) Bloomberg Financial L.P. or (ii) Stock Charts/Quote Media if the Investor does not promptly provide the Company the Bloomberg quote/pricing charts for the days involved upon the Company’s request (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)) and (b) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Investor and to the Company.

“ Waiting Period ” shall have the meaning set forth in Section 2.3 .

SECTION II

PURCHASE AND SALE OF COMMON STOCK

2.1

PURCHASE AND SALE OF COMMON STOCK . Subject to the terms and conditions set forth herein, the Company shall issue and sell to the Investor, and the Investor shall purchase from the Company, up to that number of Shares having an aggregate Purchase Price of Ten Million Dollars ($10,000,000).

2.2

DELIVERY OF PUT NOTICES . Subject to the terms and conditions of the Registered Offering Transaction Documents, and from time to time during the Open Period, the Company may, in its sole discretion, deliver a Put Notice to the Investor which states the share amount (designated in whole shares of the Company’s Common Stock), which the Company intends to sell to the Investor on a Closing Date (the “ Put ”). The Put Notice shall be in the form attached hereto as Exhibit B and incorporated herein by reference. On the Closing Date the Investor shall deliver to the Company a Put Settlement Sheet on the Put Notice Date. The Put Settlement Sheet shall be in the form attached hereto as Exhibit C and incorporated herein by reference.

2.3

PUT FORMULA . The maximum amount that the Company shall be entitled to Put to the Investor per any applicable Put Notice is that number of shares of Common Stock up to or equal to 400% of the average of the daily trading volume (U.S. market only) of the Common Stock for the eight consecutive Trading Days immediately prior to the applicable Put Notice Date (the “ Put Amount ”) so long as the Put Amount dollar value is at least $5,000 and does not exceed $1,000,000, as calculated by multiplying the Put Amount by the average daily VWAP for the ten (10) consecutive Trading Days immediately prior to the applicable Put Notice Date. During the Open Period, the Company shall not be entitled to submit a Put Notice until after the previous Closing has been completed. Notwithstanding the foregoing, the Company may not deliver a Put Notice on or earlier of the eighth Trading Day immediately following the preceding Put Notice Date (the “ Waiting Period ”).

2.4

CONDITIONS TO DELIVERY OF PUT NOTICE. Notwithstanding anything to the contrary in this Agreement, the Company shall not be entitled to deliver a Put Notice and may not sell any shares applicable to the Put Notice unless each of the following conditions are satisfied:

a Registration Statement shall have been declared effective and shall remain effective and available for the resale of all the Put Shares Due at all times until the Closing with respect to the applicable Put Notice;

ii.

at all times during the period beginning on the related Put Notice Date and ending on and including the related Closing Date, the Common Stock shall have been listed or quoted for trading on the Principal Market and shall not have been suspended from trading thereon during the Pricing Period (excluding suspensions of not more than one (1) Trading Day resulting from business announcements by the Company, provided that such suspensions occur prior to the Company’s delivery of a Put Notice);

iii.

the Company has complied with its obligations and is otherwise not in material breach of or in material default under, this Agreement, the Registration Rights Agreement or any other agreement executed in connection herewith which has not been cured prior to delivery to the Investor of the applicable Put Notice;

iv.

no injunction shall have been issued and remain in force, or action commenced by a governmental authority which has not been stayed or abandoned, prohibiting the purchase or the issuance of the Securities; and

the issuance of the Securities will not violate any shareholder approval requirements of the Principal Market.

2.5

MECHANICS OF PURCHASE OF SHARES BY INVESTOR. Subject to the satisfaction of the conditions set forth in Sections 2.6 and 7 of this Agreement, the closing of the purchase by the Investor of Securities (a “ Closing ”) shall occur on the date which is no earlier than five (5) Trading Days following and no later than seven (7) Trading Days following the applicable Put Notice Date (each a “ Closing Date ”). On each such Closing Date, if the Company’s transfer agent is participating in The Depository Trust Company (“ DTC ”) Fast Automated Securities Transfer (“ FAST ”) program and that the Securities are eligible for inclusion in the FAST program, the Company shall use all commercially reasonable efforts to cause its transfer agent to electronically transmit the Securities to be issued to the Investor on such date by crediting the account of the Investor’s prime broker (as specified by the Investor in a Put Settlement Sheet) with DTC through its DWAC service. If the Company is not DWAC eligible or the Company is under DTC “chill” on such Closing Date, the Company shall deliver to the Investor pursuant to this Agreement, certificates representing the Securities to be issued to the Investor on such date and registered in the name of the Investor (the “ Certificate ”). On such Closing Date, after receipt of confirmation of delivery of such Securities to the Investor, the Investor shall disburse the funds constituting the Purchase Amount to the Company’s designated account by wire transfer of (i) immediately available funds if the Investor receives the Securities by 9:30 a.m. (Pacific time) or (ii) next day available funds if the Investor receives the Securities thereafter.

2.6

OVERALL LIMIT ON COMMON STOCK ISSUABLE . Notwithstanding anything contained herein to the contrary, if during the Open Period the Company becomes listed on an exchange that limits the number of shares of Common Stock that may be issued without shareholder approval, then the number of Shares issuable by the Company and purchasable by the Investor, shall not exceed that number of the shares of Common Stock that may be issuable without shareholder approval (the “ Maximum Common Stock Issuance ”). If such issuance of shares of Common Stock could cause a delisting on the Principal Market, then the Maximum Common Stock Issuance shall first be approved by the Company’s shareholders in accordance with applicable law and the By-laws and the Articles of Incorporation of the Company, if such issuance of shares of Common Stock could cause a delisting on the Principal Market. The parties understand and agree that the Company’s failure to seek or obtain such shareholder approval shall in no way adversely affect the validity and due authorization of the issuance and sale of Securities or the Investor’s obligation in accordance with the terms and conditions hereof to

purchase a number of Shares in the aggregate up to the Maximum Common Stock Issuance limitation, and that such approval pertains only to the applicability of the Maximum Common Stock Issuance limitation provided in this Section 2.6 .

2.7

LIMITATION ON AMOUNT OF OWNERSHIP. Notwithstanding anything to the contrary in this Agreement, in no event shall the Investor be entitled to purchase that number of Shares, which when added to the sum of the number of shares of Common Stock beneficially owned (as such term is defined under Section 13(d) and Rule 13d-3 of the 1934 Act), by the Investor, would exceed 9.99% of the number of shares of Common Stock outstanding on the Closing Date, as determined in accordance with Rule 13d-1(j) of the 1934 Act.

SECTION III

INVESTOR’S REPRESENTATIONS, WARRANTIES AND COVENANTS

The Investor represents and warrants to the Company, and covenants, that:

3.1

SOPHISTICATED INVESTOR . The Investor has, by reason of its business and financial experience, such knowledge, sophistication and experience in financial and business matters and in making investment decisions of this type that it is capable of (i) evaluating the merits and risks of an investment in the Securities and making an informed investment decision; (ii) protecting its own interest; and (iii) bearing the economic risk of such investment for an indefinite period of time.

3.2

AUTHORIZATION; ENFORCEMENT . This Agreement has been duly and validly authorized, executed and delivered on behalf of the Investor and is a valid and binding agreement of the Investor enforceable against the Investor in accordance with its terms, subject as to enforceability to general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

3.3

COMPLIANCE WITH THE 1934 ACT . During the term of this Agreement, the Investor will comply with the provisions of the 1934 Act, and the rules promulgated thereunder, with respect to transactions involving the Common Stock. The Investor agrees not to short sell the Company’s stock, either directly or indirectly through its affiliates, principals or advisors, during the term of this Agreement. The Investor will only sell Company stock that it has in its possession.

3.4

ACCREDITED INVESTOR . The Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D of the 1933 Act.

3.5

NO CONFLICTS . The execution, delivery and performance of the Registered Offering Transaction Documents by the Investor and the consummation by the Investor of the transactions contemplated hereby and thereby will not result in a violation of limited liability company agreement or other organizational documents of the Investor.

3.6

OPPORTUNITY TO DISCUSS . The Investor has received all materials relating to the Company’s business, finance and operations which it has requested. The Investor has had an opportunity to discuss the business, management and financial affairs of the Company with the Company’s management.

3.7

INVESTMENT PURPOSES . The Investor is purchasing the Securities for its own account for investment purposes and not with a view towards distribution and agrees to resell or otherwise dispose of the Securities solely in accordance with the registration provisions of the 1933 Act (or pursuant to an exemption from such registration provisions).

3.8

NO REGISTRATION AS A DEALER . The Investor is not and will not be required to be registered as a “dealer” under the 1934 Act, either as a result of its execution and performance of its obligations under this Agreement or otherwise.

3.9

GOOD STANDING . The Investor is a limited liability company, duly organized, validly existing and in good standing in the State of Colorado.

3.10

TAX LIABILITIES . The Investor understands that it is liable for its own tax liabilities.

3.11

REGULATION M . The Investor will comply with Regulation M under the 1934 Act, if applicable.

3.12

GENERAL SOLICITATION . The Investor is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

3.13

TRANSFER RESTRICTIONS . The Securities may only be disposed of in compliance with federal and state securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement, to the Company or to an affiliate of the Investor, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the 1933 Act; provided, however, that in connection with any transfer of Securities pursuant to Rule 144, the Company may require the transferor to provide a customary Rule 144 sellers representation letter. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of the Investor under this Agreement and the Registration Rights Agreement, as to issued Securities only.

SECTION IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the Schedules attached hereto, or as disclosed on the Company’s SEC Documents, the Company represents and warrants to the Investor that:

4.1

ORGANIZATION AND QUALIFICATION . The Company is a corporation duly organized and validly existing in good standing under the laws of the State of Colorado, and has the requisite corporate power and authorization to own its properties and to carry on its business as now being conducted. Both the Company and the companies it owns or controls (“ Subsidiaries ”) are duly qualified to do business and are in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement, “ Material Adverse Effect ” means a change, event, circumstance, effect or state of facts that has had or is reasonably likely to have, a material adverse effect on the business, properties, assets, operations, results of operations, financial condition or prospects of the Company and its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements and instruments to be entered into in connection herewith, or on the authority or ability of the Company to perform its obligations under the Registered Offering Transaction Documents.

4.2

AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER NSTRUMENTS .

The Company has the requisite corporate power and authority to enter into and perform the Registered Offering Transaction Documents, and to issue the Securities in accordance with the terms hereof and thereof.

ii.

The execution and delivery of the Registered Offering Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby, including without limitation the issuance of the Securities pursuant to this Agreement, have been duly and validly authorized by the Company’s board of directors and no further consent or authorization is required by the Company, its board of directors, or its shareholders.

iii.

The Registered Offering Transaction Documents have been duly and validly executed and delivered by the Company.

iv.

The Registered Offering Transaction Documents constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies.

4.3

CAPITALIZATION . As of the date hereof, the authorized capital stock of the Company consists of 100,000,000 shares of Common Stock, no par value, of which 62,971,967 shares are issued and outstanding and 10,000,000 shares of preferred stock, no par value, of which 2,000 Series A shares are issued and outstanding. All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and non-assessable.

Except as disclosed in the Company’s publicly available filings with the SEC or as otherwise set forth on Schedule 4.3:

no shares of the Company’s capital stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company;

ii.

there are no outstanding debt securities;

iii.

there are no outstanding shares of capital stock, options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries;

iv.

there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except the Registration Rights Agreement);

there are no outstanding securities of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries;

vi.

there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities as described in this Agreement;

vii.

the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and

viii.

there is no dispute as to the classification of any shares of the Company’s capital stock.

The Company has furnished to the Investor, or the Investor has had access through EDGAR to, true and correct copies of the Company’s Articles of Incorporation, as in effect on the date hereof (the “ Articles of Incorporation ”), and the Company’s By-laws, as in effect on the date hereof (the “ By-laws ”), and the terms of all securities convertible into or exercisable for Common Stock and the material rights of the holders thereof in respect thereto.

4.4

ISSUANCE OF SHARES . As of the Effective Date, the Company will have reserved the amount of Shares included in the Registration Statement for issuance pursuant to the Registered Offering Transaction Documents, which will have been duly authorized and reserved (subject to adjustment pursuant to the Company’s covenant set forth in Section 5.5 below) pursuant to this Agreement. Upon issuance in accordance with this Agreement, the Securities will be validly issued, fully paid for and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof. In the event the Company cannot reserve a sufficient number of Shares for issuance pursuant to this Agreement, the Company will use its best efforts to authorize and reserve for issuance the number of Shares required for the Company to perform its obligations hereunder as soon as reasonably practicable.

4.5

NO CONFLICTS . The execution, delivery and performance of the Registered Offering Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Articles of Incorporation or the By-laws; or (ii) conflict with, or constitute a material default (or an event which with notice or lapse of time or both would become a material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, contract, indenture mortgage, indebtedness or instrument to which the Company or any of its Subsidiaries is a party, or to the Company’s knowledge result in a violation of any law, rule, regulation, order, judgment or decree (including United States federal and state securities laws and regulations and the rules and regulations of the Principal Market or principal securities exchange or trading market on which the Common Stock is traded or listed) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected. Neither the Company nor its Subsidiaries is in violation of any term of, or in default under, the Articles of Incorporation or the By-laws or their organizational charter or by-laws, respectively, or any contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company or its Subsidiaries, except for possible conflicts, defaults, terminations, amendments, accelerations, cancellations and violations that would not individually or in the aggregate have or constitute a Material Adverse Effect. The business of the Company and its Subsidiaries is not being conducted, and shall not be conducted, in violation of any law, statute, ordinance, rule, order or regulation of any governmental authority or agency, regulatory or self-regulatory agency, or court, except for possible violations the sanctions for which either individually or in the aggregate would not have a Material Adverse Effect. Except as specifically contemplated by this Agreement and as required under the 1933 Act or any securities laws of any states, to the Company’s knowledge, the Company is not required to obtain any consent, authorization, permit or order of, or make any filing or registration (except the filing of a registration statement as outlined in the Registration Rights Agreement between the parties) with, any court, governmental authority or agency, regulatory or self-regulatory agency or other third party in order for it to execute, deliver or perform any of its obligations under, or

contemplated by, the Registered Offering Transaction Documents in accordance with the terms hereof or thereof. All consents, authorizations, permits, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof and are in full force and effect as of the date hereof. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. The Company is not, and will not be, in violation of the listing requirements of the Principal Market as in effect on the date hereof and on each of the Closing Dates and is not aware of any facts which would reasonably lead to delisting of the Common Stock by the Principal Market in the foreseeable future.

4.6

SEC DOCUMENTS; FINANCIAL STATEMENTS . As of the date hereof, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein, and amendments thereto, being hereinafter referred to as the “ SEC Documents ”). The Company has delivered to the Investor or its representatives, or they have had access through EDGAR to, true and complete copies of the SEC Documents. As of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC or the time they were amended, if amended, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, by a firm that is a member of the Public Companies Accounting Oversight Board (“ PCAOB ”) consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other written information provided by or on behalf of the Company to the Investor which is not included in the SEC Documents, including, without limitation, information referred to in Section 4.3 of this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstance under which they are or were made, not misleading. The Company’s knowledge, neither the Company nor any of its Subsidiaries or any of their officers, directors, employees or agents have provided the Investor with any material, nonpublic information which was not publicly disclosed prior to the date hereof and any material, nonpublic information provided to the Investor by the Company or its Subsidiaries or any of their officers, directors, employees or agents prior to any Closing Date shall be publicly disclosed by the Company prior to such Closing Date.

4.7

ABSENCE OF CERTAIN CHANGES . Except as otherwise set forth in the SEC Documents, the Company does not intend to change the business operations of the Company in any material way. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy law nor does the Company or its Subsidiaries have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings.

4.8

ABSENCE OF LITIGATION AND/OR REGULATORY PROCEEDINGS . Except as set forth in the SEC Documents, or disclosed on Schedule 4.8, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of Company or any of its Subsidiaries, threatened against or affecting the Company, the Common Stock or any of the Company’s Subsidiaries or any of the Company’s or the Company’s Subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a Material Adverse Effect.

4.9

ACKNOWLEDGMENT REGARDING INVESTOR’S PURCHASE OF SHARES . The Company acknowledges and agrees that the Investor is acting solely in the capacity of an arm’s length purchaser with respect to the Registered Offering Transaction Documents and the transactions contemplated hereby and thereby. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Registered Offering Transaction Documents and the transactions contemplated hereby and thereby and any advice given by the Investor or any of its respective representatives or agents in connection with the Registered Offering Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Investor’s purchase of the Securities, and is not being relied on by the Company. The Company further represents to the Investor that the Company’s decision to enter into the Registered Offering Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.

4.10

NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES . Except as set forth in the SEC Documents or required with respect to the Registered Offering Transaction Documents, as of the date hereof, no event, liability, development or circumstance has occurred or exists, or to the Company’s knowledge is contemplated to occur, with respect to the Company or its Subsidiaries or their respective business, properties, assets, prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws on a registration statement filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced.

4.11

EMPLOYEE RELATIONS . Neither the Company nor any of its Subsidiaries is involved in any union labor dispute nor, to the knowledge of the Company or any of its Subsidiaries, is any such dispute threatened. Neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that relations with their employees are good. No executive officer (as defined in Rule 501(f) of the

1933 Act) has notified the Company that such officer intends to leave the Company’s employ or otherwise terminate such officer’s employment with the Company.

4.12

INTELLECTUAL PROPERTY RIGHTS . The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted. Except as set forth in the SEC Documents, none of the Company’s trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations, trade secrets or other intellectual property rights necessary to conduct its business as now or as proposed to be conducted have expired or terminated, or are expected to expire or terminate within two (2) years from the date of this Agreement. The Company and its Subsidiaries do not have any knowledge of any infringement by the Company or its Subsidiaries of trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret or other similar rights of others, or of any such development of similar or identical trade secrets or technical information by others and, except as set forth in the SEC Documents, there is no claim, action or proceeding being made or brought against, or to the Company’s knowledge, being threatened against, the Company or its Subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other infringement; and the Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and its Subsidiaries have taken commercially reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties.

4.13

ENVIRONMENTAL LAWS . The Company and its Subsidiaries (i) are, to the knowledge of the management and directors of the Company and its Subsidiaries, in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“ Environmental Laws ”); (ii) have, to the knowledge of the management and directors of the Company, received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses as currently conducted; and (iii) are in compliance, to the knowledge of the management and directors of the Company, with all terms and conditions of any such permit, license or approval where, in each of the three (3) foregoing cases, the failure to so comply would have, individually or in the aggregate, a Material Adverse Effect.

4.14

TITLE . The Company and its Subsidiaries have good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as are described in the SEC Documents or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company or any of its Subsidiaries. Any real property and facilities held under lease by the Company or any of its Subsidiaries are held by them under valid, subsisting and enforceable

leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries.

4.15

INSURANCE . Each of the Company’s Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company reasonably believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any of its Subsidiaries has been refused any insurance coverage sought or applied for and neither the Company nor its Subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.

4.16

REGULATORY PERMITS . The Company and its Subsidiaries have in full force and effect all certificates, approvals, authorizations and permits from the appropriate federal, state, local or foreign regulatory authorities and comparable foreign regulatory agencies, necessary to own, lease or operate their respective properties and assets and conduct their respective businesses in the manner currently being conducted, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, approval, authorization or permit, except for such certificates, approvals, authorizations or permits which if not obtained, or such revocations or modifications which, would not have a Material Adverse Effect.

4.17

INTERNAL ACCOUNTING CONTROLS . Except as otherwise set forth in the SEC Documents, the Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles by a firm with membership to the PCAOB and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company’s management has determined that the Company’s internal accounting controls were not effective as of the date of this Agreement as further described in the SEC Documents.

4.18

NO MATERIALLY ADVERSE CONTRACTS, ETC . Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contract or agreement which in the judgment of the Company’s officers has or is expected to have a Material Adverse Effect.

4.19

TAX STATUS . The Company and each of its Subsidiaries has made or filed all United States federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and

each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.

4.20

CERTAIN TRANSACTIONS . Except as set forth in the SEC Documents and except for transactions pursuant to which the Company makes payments in the ordinary course of business upon terms no less favorable than the Company could obtain from disinterested third parties and other than the grant of stock options disclosed in the SEC Documents, none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees, consultants, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, such that disclosure would be required in the SEC Documents.

4.21

DILUTIVE EFFECT . The Company understands and acknowledges that the number of shares of Common Stock issuable upon purchases pursuant to this Agreement will increase in certain circumstances including, but not necessarily limited to, the circumstance wherein the trading price of the Common Stock declines during the period between the Effective Date and the end of the Open Period. The Company’s executive officers and directors have studied and fully understand the nature of the transactions contemplated by this Agreement and recognize that they have a potential dilutive effect on the shareholders of the Company. The board of directors of the Company has concluded, in its good faith business judgment, and with full understanding of the implications, that such issuance is in the best interests of the Company. The Company specifically acknowledges that, subject to such limitations as are expressly set forth in the Registered Offering Transaction Documents, its obligation to issue shares of Common Stock upon purchases pursuant to this Agreement is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.

4.22

LOCK-UP . The Company shall cause its officers, insiders, directors, and affiliates or other related parties under control of the Company, to refrain from selling Common Stock during each Pricing Period.

4.23

NO GENERAL SOLICITATION . Neither the Company, nor any of its affiliates, nor any person acting on its behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Common Stock to be offered as set forth in this Agreement.

4.24

NO BROKERS, FINDERS OR FINANCIAL ADVISORY FEES OR COMMISSIONS . No broker’s, finder’s or financial advisory fees or commissions will be payable by the Company, its agents or Subsidiaries, with respect to the transactions contemplated by this Agreement.

SECTION V

COVENANTS OF THE COMPANY

5.1

BEST EFFORTS . The Company shall use all commercially reasonable efforts to timely satisfy each of the conditions set forth in Section 7 of this Agreement.

5.2

REPORTING STATUS . During the Open Period and until one of the following occurs, the Company shall file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status, or take an action or fail to take any action, which would terminate its status as a reporting company under the 1934 Act: (i) this Agreement terminates pursuant to Section 8 and the Investor has the right to sell all of the Securities without volume restrictions pursuant to Rule 144 promulgated under the 1933 Act, or such other exemption, or (ii) the date on which the Investor has sold all the Securities and this Agreement has been terminated pursuant to Section 8 .

5.3

USE OF PROCEEDS . The Company will use the proceeds from the sale of the Securities (excluding amounts paid or to be paid by the Company for fees as set forth in the Registered Offering Transaction Documents, if any) for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for other purposes that the board of directors of the Company, in its good faith deem to be in the best interest of the Company.

5.4

FINANCIAL INFORMATION . During the Open Period, the Company agrees to make available to the Investor via EDGAR or other electronic means the following documents and information on the forms set forth: (i) within five (5) Trading Days after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and any Registration Statements or amendments filed pursuant to the 1933 Act; (ii) copies of any notices and other information made available or given to the shareholders of the Company generally, contemporaneously with the making available or giving thereof to the shareholders; and (iii) within two (2) calendar days of filing or delivery thereof, copies of all documents filed with, and all correspondence sent to, the Principal Market, any securities exchange or market, or the Financial Industry Regulatory Association, unless such information is material nonpublic information.

5.5

RESERVATION OF SHARES . The Company shall take all action necessary to at all times have authorized, and reserved the amount of Shares included in the Registration Statement for issuance pursuant to the Registered Offering Transaction Documents. In the event that the Company determines that it does not have a sufficient number of authorized shares of Common Stock to reserve and keep available for issuance as described in this Section 5.5 , the Company shall use all commercially reasonable efforts to increase the number of authorized shares of Common Stock by seeking shareholder approval for the authorization of such additional shares.

5.6

LISTING . The Company shall use all commercially reasonable efforts to promptly secure and maintain the listing of all of the Registrable Securities (as defined in the Registration Rights Agreement) on the Principal Market and each other national securities exchange and automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain, such listing of all Registrable Securities from time to time issuable under the terms of the Registered Offering Transaction Documents. Neither the Company nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market (excluding suspensions of not more than one (1) Trading Day resulting from business announcements by the Company). The Company shall promptly provide to the Investor copies of any notices it receives from the Principal Market regarding the continued eligibility of the Common Stock for listing on such automated quotation system or securities exchange. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 5.6 .

5.7

FILING OF FORM 8-K . On or before the date which is four (4) Trading Days after the Execution Date, the Company shall file a Current Report on Form 8-K with the SEC describing the terms of the transaction contemplated by the Registered Offering Transaction Documents in the form required by the 1934 Act, if such filing is required.

5.8

CORPORATE EXISTENCE . The Company shall use all commercially reasonable efforts to preserve and continue the corporate existence of the Company.

5.9

NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF RIGHT TO MAKE A PUT . The Company shall promptly notify the Investor upon the occurrence of any of the following events in respect of a Registration Statement or related prospectus in respect of an offering of the Securities: (i) receipt of any request for additional information by the SEC or any other federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the Registration Statement or related prospectus; (ii) the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Securities for sale in any jurisdiction or the initiation or notice of any proceeding for such purpose; (iv) the happening of any event that makes any statement made in such Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, related prospectus or documents so that, in the case of a Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the related prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (v) the Company’s reasonable determination that a post-effective amendment or supplement to the Registration Statement would be appropriate, and the Company shall promptly

make available to Investor any such supplement or amendment to the related prospectus. The Company shall not deliver to Investor any Put Notice during the continuation of any of the foregoing events in this Section 5.9 .

5.10

TRANSFER AGENT . Upon effectiveness of the Registration Statement, and for so long as the Registration Statement is effective, following delivery of a Put Notice, the Company shall deliver instructions to its transfer agent to issue Shares to the Investor that are covered for resale by the Registration Statement free of restrictive legends.

5.11

ACKNOWLEDGEMENT OF TERMS . The Company hereby represents and warrants to the Investor that: (i) it is voluntarily entering into this Agreement of its own freewill, (ii) it is not entering this Agreement under economic duress, (iii) the terms of this Agreement are reasonable and fair to the Company, and (iv) the Company has had independent legal counsel of its own choosing review this Agreement, advise the Company with respect to this Agreement, and represent the Company in connection with this Agreement.

SECTION VI

CONDITIONS OF THE COMPANY’S ELECTION TO SELL

There is no obligation hereunder of the Company to issue and sell the Securities to the Investor. However, an election by the Company to issue and sell the Securities hereunder, from time to time as permitted hereunder, is further subject to the satisfaction, at or before each Closing Date, of each of the following conditions set forth below. These conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion.

6.1

The Investor shall have executed this Agreement and the Registration Rights Agreement and delivered the same to the Company.

6.2

The Investor shall have delivered to the Company a Put Settlement Sheet in the form attached here to as Exhibit C on the Put Notice Date.

6.3

No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

SECTION VII

FURTHER CONDITIONS OF THE INVESTOR’S OBLIGATION TO PURCHASE

The obligation of the Investor hereunder to purchase Securities is subject to the satisfaction, on or before each Closing Date, of each of the following conditions set forth below.

7.1

The Company shall have executed the Registered Offering Transaction Documents and delivered the same to the Investor.

7.2

The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the applicable Closing Date as though made at that time and the Company shall have materially performed, satisfied and complied with the covenants, agreements and conditions required by the Registered Offering Transaction Documents to be performed, satisfied or complied with by the Company on or before such Closing Date. The Investor may request an update as of such Closing Date regarding the representation contained in Section 4.3 .

7.3

The Company shall have executed and delivered to the Investor the certificates representing, or have executed electronic book-entry transfer of, the Securities (in such denominations as the Investor shall request) being purchased by the Investor at such Closing.

7.4

The board of directors of the Company shall have adopted resolutions consistent with Section 4.2(ii) (the “ Resolutions ”) and such Resolutions shall not have been materially amended or rescinded prior to such Closing Date.

7.5

7.6

The Registration Statement shall be effective on each Closing Date and no stop order suspending the effectiveness of the Registration statement shall be in effect or to the Company’s knowledge shall be pending or threatened. Furthermore, on each Closing Date (i) neither the Company nor the Investor shall have received notice that the SEC has issued or intends to issue a stop order with respect to such Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of such Registration Statement, either temporarily or permanently, or intends or has threatened to do so (unless the SEC’s concerns have been addressed), and (ii) no other suspension of the use or withdrawal of the effectiveness of such Registration Statement or related prospectus shall exist.

7.7

At the time of each Closing, the Registration Statement (including information or documents incorporated by reference therein) and any amendments or supplements thereto shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading or which would require public disclosure or an update supplement to the prospectus.

7.8

If applicable, the shareholders of the Company shall have approved the issuance of any Shares in excess of the Maximum Common Stock Issuance in accordance with Section 2.6 or the Company shall have obtained appropriate approval pursuant to the requirements of Nevada law and the Company’s Articles of Incorporation and By-laws.

7.9

The conditions to such Closing set forth in Section 2.4 shall have been satisfied on or before such Closing Date.

7.10

The Company shall have certified to the Investor the number of Shares of Common Stock outstanding when a Put Notice is given to the Investor. The Company’s delivery of a Put Notice to the Investor constitutes the Company’s certification of the existence of the necessary number of shares of Common Stock reserved for issuance.

SECTION VIII

TERMINATION

This Agreement shall terminate upon any of the following events:

when the Investor has purchased an aggregate of Ten Million Dollars ($10,000,000) in the Common Stock of the Company pursuant to this Agreement;

ii.

on the date which is thirty-six (36) months after the Effective Date; or

iii.

at such time that the Registration Statement is no longer in effect; or

iv.

at any time at the election of the Company upon 15 days written notice.

Any and all shares, or penalties, if any, due under this Agreement shall be immediately payable and due upon termination of this Agreement.

SECTION IX

SUSPENSION

This Agreement shall be suspended upon any of the following events, and shall remain suspended until such event is rectified:

The trading of the Common Stock is suspended by the SEC, the Principal Market or FINRA for a period of two (2) consecutive Trading Days during the Open Period; or,

ii.

During the Open Period the Common Stock ceases to be registered under the 1934 Act or listed or traded on the Principal Market or the Registration Statement is no longer effective (except as permitted hereunder).

Immediately upon the occurrence of one of the above-described events, the Company shall send written notice of such event to the Investor.

SECTION X

MISCELLANEOUS

10.1

proceeding arising out of the transactions contemplated by this Agreement or the rights and obligations of each of the parties shall be brought only in a competent court in New York or in the federal courts of the United States of America located in New York. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The parties executing this Agreement and other agreements referred to herein or delivered in connection herewith agree to submit to the in personam jurisdiction of such courts. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Documents by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

10.2

LEGAL FEES; AND MISCELLANEOUS FEES. EXCEPT AS OTHERWISE SET FORTH IN THE Registered Offering Transaction Documents (including but not limited to Section 5 of the Registration Rights Agreement), each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. Any attorneys’ fees and expenses incurred by either the Company or the Investor in connection with the preparation, negotiation, execution and delivery of any amendments to this Agreement or relating to the enforcement of the rights of any party, after the occurrence of any breach of the terms of this Agreement by another party or any default by another party in respect of the transactions contemplated hereunder, shall be paid on demand by the party which breached the Agreement and/or defaulted, as the case may be. The Company shall pay all stamp and other taxes and duties levied in connection with the issuance of any Securities.

10.3

COUNTERPARTS . This Agreement may be executed in any number of counterparts and by the different signatories hereto on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. This Agreement may be executed by facsimile transmission, PDF, electronic signature or other similar electronic means with the same force and effect as if such signature page were an original thereof.

10.4

HEADINGS; SINGULAR/PLURAL . The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Whenever required by the context of this Agreement, the singular shall include the plural and masculine shall include the feminine.

10.5

SEVERABILITY . If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

10.6

ENTIRE AGREEMENT; AMENDMENTS . This Agreement is the FINAL AGREEMENT between the Company and the Investor with respect to the terms and conditions set forth herein, and, the terms of this Agreement may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the Parties.

10.7

NOTICES . Any notices or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic mail (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and email addresses for such communications shall be:

If to the Company:

United Cannabis Corp.

1600 Broadway, Suite 1600

Denver, CO 80202

Attn: Ernie Blackmon

Email: eb@unitedcannabis.us

If to the Investor:

Tangiers Global, LLC

Caribe Plaza Office Building 6th Floor, Palmeras St. #53

San Juan, PR 00901

Email: rachel@tangierscapital.com

Each party shall provide five (5) business days prior written notice to the other party of any change in address or email address.

10.8

NO ASSIGNMENT . This Agreement may not be assigned.

10.9

NO THIRD PARTY BENEFICIARIES . This Agreement is intended for the benefit of the parties hereto and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

10.10

SURVIVAL . The representations and warranties of the Company and the Investor contained in Sections 3 and 4 , the agreements and covenants set forth in Section 5 and this Section 11 , shall survive each of the Closings and the termination of this Agreement.

10.11

PUBLICITY . The Company and the Investor shall consult with each other in issuing any press releases or otherwise making public statements with respect to the transactions contemplated hereby and no party shall issue any such press release or otherwise make any such

public statement without the prior consent of the other party, which consent shall not be unreasonably withheld or delayed, except that no prior consent shall be required if such disclosure is required by law, as determined solely by the Company in consultation with its counsel. The Investor acknowledges that this Agreement and all or part of the Registered Offering Transaction Documents may be deemed to be “material contracts” as that term is defined by Item 601(b)(10) of Regulation S-K, and that the Company may therefore be required to file such documents as exhibits to reports or registration statements filed under the 1933 Act or the 1934 Act. The Investor further agrees that the status of such documents and materials as material contracts shall be determined solely by the Company, in consultation with its counsel.

10.12

EXCLUSIVITY . The Company shall not pursue an equity line transaction similar to the transactions contemplated in this Agreement with any other person or entity until the earlier of (i) the Effective Date and (ii) termination of this Agreement in accordance with Section 8 .

10.13

FURTHER ASSURANCES . Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

10.14

NO STRICT CONSTRUCTION . The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party, as the parties mutually agree that each has had a full and fair opportunity to review this Agreement and seek the advice of counsel on it.

10.15

REMEDIES . The Investor shall have all rights and remedies set forth in this Agreement and the Registration Rights Agreement and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which the Investor has by law. Any person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any default or breach of any provision of this Agreement, including the recovery of reasonable attorney’s fees and costs, and to exercise all other rights granted by law.

10.16

PAYMENT SET ASIDE . To the extent that the Company makes a payment or payments to the Investor hereunder or under the Registration Rights Agreement or the Investor enforces or exercises its rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

SECTION XI

NON-DISCLOSURE OF NON-PUBLIC INFORMATION

The Company shall not disclose non-public information to the Investor, its advisors, or its representatives.

Nothing in the Registered Offering Transaction Documents shall require or be deemed to require the Company to disclose non-public information to the Investor or its advisors or representatives, and the Company represents that it does not disseminate non-public information to any investors who purchase stock in the Company in a public offering, to money managers or to securities analysts, provided, however, that notwithstanding anything herein to the contrary, the Company will, as hereinabove provided, immediately notify the advisors and representatives of the Investor and, if any, underwriters, of any event or the existence of any circumstance (without any obligation to disclose the specific event or circumstance) of which it becomes aware, constituting non-public information (whether or not requested of the Company specifically or generally during the course of due diligence by such persons or entities), which, if not disclosed in the prospectus included in the Registration Statement would cause such prospectus to include a material misstatement or to omit a material fact required to be stated therein in order to make the statements, therein, in light of the circumstances in which they were made, not misleading. Nothing contained in this Section 12 shall be construed to mean that such persons or entities other than the Investor (without the written consent of the Investor prior to disclosure of such information) may not obtain non-public information in the course of conducting due diligence in accordance with the terms of this Agreement and nothing herein shall prevent any such persons or entities from notifying the Company of their opinion that based on such due diligence by such persons or entities, that the Registration Statement contains an untrue statement of material fact or omits a material fact required to be stated in the Registration Statement or necessary to make the statements contained therein, in light of the circumstances in which they were made, not misleading.

SECTION XII

ACKNOWLEDGEMENTS OF THE PARTIES

Notwithstanding anything in this Agreement to the contrary, the parties hereto hereby acknowledge and agree to the following: (i) the Investor makes no representations or covenants that it will not engage in trading in the securities of the Company, other than the Investor will not short or pre-sell, either directly or indirectly through its affiliates, principals or advisors, the Common Stock at any time during the Open Period; (ii) the Company shall comply with its obligations under Section 5.8 in a timely manner; (iii) the Company has not and shall not provide material non-public information to the Investor unless prior thereto the Investor shall have executed a written agreement regarding the confidentiality and use of such information; and (iv) the Company understands and confirms that the Investor will be relying on the acknowledgements set forth in clauses (i) through (iii) above if the Investor effects any transactions in the securities of the Company.

[Signature Page to Follow.]

Your signature on this Signature Page evidences your agreement to be bound by the terms and conditions of the Investment Agreement as of the date first written above. The undersigned signatory hereby certifies that he has read and understands the Investment Agreement, and the representations made by the undersigned in this Investment Agreement are true and accurate, and agrees to be bound by its terms.


	TANGIERS GLOBAL, LLC


	By:	/s/ Justin Ederle
	Name:	Justin Ederle
	Title:	Managing Member


	UNITED CANNABIS CORP.


	By:	/s/ John Walsh
	Name:	John Walsh
	Title:	Chief Financial Officer

[SIGNATURE PAGE OF INVESTMENT AGREEMENT]

LIST OF EXHIBITS

EXHIBIT A

Registration Rights Agreement

EXHIBIT B

Put Notice

EXHIBIT C

Put Settlement Sheet

EXHIBIT A

REGISTRATION RIGHTS AGREEMENT

See attached.

EXHIBIT B

FORM OF PUT NOTICE

Date:

RE: Put Notice Number __

Dear Mr.__________,

This is to inform you that as of today, United Cannabis Corp., a Colorado corporation (the “Company”), hereby elects to exercise its right pursuant to the Investment Agreement to require Tangiers Global, LLC to purchase shares of its common stock. The Company hereby certifies that:

Put Amount in Shares __________.

The Pricing Period runs from _______________ until _______________.

The current number of shares of common stock issued and outstanding is: _________________.

The number of shares currently available for resale on the S-1 is: ________________________.

Regards,

United Cannabis Corp.

By: __________________________________

Name:

Title:

EXHIBIT C

PUT SETTLEMENT SHEET

Date: ________________

Dear ________,

Pursuant to the Put given by United Cannabis Corporation to Tangiers Global, LLC. (“TG”) on _________________ 201_, we are now submitting the purchase price for the shares of common stock.

Purchase Price per Share _________________.

Shares Being Purchased___________________.

Total Purchase Price _____________________.

Please have a certificate bearing no restrictive legend issued to TG immediately and sent via DWAC to the following account:

[INSERT]

If not DWAC eligible, please send FedEx Priority Overnight to:

[INSERT ADDRESS]

Once these shares are received by us, we will have the funds wired to the Company.

Regards,

TANGIERS GLOBAL, LLC

By: _________________________________

Name:

Title: Managing Member

SCHEDULE 4.3

None.

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (the “ Agreement ”), dated as of January 19, 2018 , (the “ Execution Date ”), is entered into by and between United Cannabis Corp. (the “ Company ”), a Colorado corporation, with its principal executive offices at 301 Commercial Rd, Unit D Golden, CO 80401, and Tangiers Global, LLC (the “ Investor ”), a Wyoming limited liability company, with its principal executive offices at Caribe Plaza Office Building 6th Floor, Palmeras St. #53, San Juan, PR 00901.

RECITALS:

WHEREAS , pursuant to the Investment Agreement entered into by and between the Company and the Investor of this even date (the “ Investment Agreement ”), the Company has agreed to issue and sell to the Investor an indeterminate number of shares of the Company’s common stock, par value of $.001 per share (the “ Common Stock ”), up to an aggregate purchase price of Ten Million Dollars ($10,000,000);

WHEREAS , as an inducement to the Investor to execute and deliver the Investment Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “ 1933 Act ”), and applicable state securities laws, with respect to the shares of Common Stock issuable pursuant to the Investment Agreement.

NOW THEREFORE , in consideration of the foregoing promises and the mutual covenants contained hereinafter and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows:

SECTION I
DEFINITIONS

As used in this Agreement, the following terms shall have the following meanings:

“ 1933 Act ” shall have the meaning set forth in the recitals.

“ 1934 Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, or any similar successor statute.

“ Agreement ” shall have the meaning set forth in the preamble.

“ Claims ” shall have the meaning set forth in Section 6.1 .

“ Common Stock ” shall have the meaning set forth in the recitals.

“ Company ” shall have the meaning set forth in the preamble.

“ Execution Date ” shall have the meaning set forth in the preamble.

“ Indemnified Damages ” shall have the meaning set forth in Section 6.1 .

“ Indemnified Party ” shall have the meaning set forth in Section 6.1 .

“ Indemnified Person ” shall have the meaning set forth in Section 6.1 .

“ Investment Agreement ” shall have the meaning set forth in the recitals.

“ Investor ” shall have the meaning set forth in the preamble.

“ Investor’s Delay ” shall have the meaning set forth in Section 3.5 .

“ New Registration Statement ” shall have the meaning set forth in Section 2.3 .

“ Person ” means a corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency.

“ Register ,” “ Registered ,” and “ Registration ” refer to the Registration effected by preparing and filing one (1) or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous basis, and the declaration or ordering of effectiveness of such Registration Statement(s) by the SEC.

“ Registration Period ” shall have the meaning set forth in Section 3.1 .

“ Registrable Securities ” means (i) the shares of Common Stock issuable pursuant to the Investment Agreement, and (ii) any shares of capital stock issuable with respect to such shares of Common Stock, if any, as a result of any stock splits, stock dividends, or similar transactions, which have not been (x) included in the Registration Statement that has been declared effective by the SEC, or (y) sold under circumstances meeting all of the applicable conditions of Rule 144 (or any similar provision then in force) under the 1933 Act.

“ Registration Default ” shall have the meaning set forth in Section 3.3 .

“ Registration Statement ” means the registration statement of the Company filed under the 1933 Act covering the Registrable Securities.

“ Rule 144 ” means Rule 144 promulgated under the 1933 Act or any successor rule of the SEC.

“ SEC ” shall mean the U.S. Securities and Exchange Commission.

“ Staff ” shall have the meaning set forth in Section 2.3 .

“ Violations ” shall have the meaning set forth in Section 6.1 .

All capitalized terms used in this Agreement and not otherwise defined herein shall have the same meaning ascribed to them as in the Investment Agreement.

SECTION II
REGISTRATION

2.1

The Company shall use its best efforts to, within forty five (45) days of the Execution Date, file with the SEC a Registration Statement or Registration Statements (as is necessary) on Form S-1 (or, if such form is unavailable for such a registration, on such other form as is available for such registration), covering the resale of 7,000,000 shares of the Registrable Securities, which Registration Statement(s) shall state that, in accordance with Rule 416 promulgated under the 1933 Act, such Registration Statement also covers such indeterminate number of additional shares of Common Stock as may become issuable upon stock splits, stock dividends or similar transactions. The Company shall initially register for resale 7,000,000 shares of Registrable Securities except to the extent that the SEC requires the share amount to be reduced as a condition of effectiveness.

2.2

The Company shall use commercially reasonable efforts to have the Registration Statement(s) declared effective by the SEC within seventy five (75) days but no more than one hundred twenty (120) days after the Company has filed the Registration Statement(s).

2.3

Notwithstanding the registration obligations set forth in Section 2.1. , if the staff of the SEC (the “ Staff ”) or the SEC informs the Company that all of the unregistered Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single Registration Statement, the Company agrees to promptly (i) inform the Investor and use its commercially reasonable efforts to file amendments to the Registration Statement as required by the SEC and/or (ii) withdraw the Registration Statement and file a new registration statement (the “ New Registration Statement ”), in either case covering the maximum number of Registrable Securities permitted to be registered by the SEC, on Form S-1 to register for resale the Registrable Securities as a secondary offering. If the Company amends the Registration Statement or files a New Registration Statement, as the case may be, under clauses (i) or (ii) above, the Company shall use its commercially reasonable efforts to file with the SEC, as promptly as allowed by the Staff or SEC, one or more registration statements on Form S-1 to register for resale those Registrable Securities that were not registered for resale on the Registration Statement, as amended, or the New Registration Statement. Additionally, the Company shall have the ability to file one or more New Registration Statements to cover the Registrable Securities once the Shares under the initial Registration Statement referenced in Section 2.1 have been sold.

SECTION III
RELATED OBLIGATIONS

At such time as the Company is obligated to prepare and file the Registration Statement with the SEC pursuant to Section 2 , the Company shall effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, with respect thereto, the Company shall have the following obligations:

3.1

Upon the effectiveness of such Registration Statement relating to the Registrable Securities, the Company shall keep such Registration Statement effective until the earlier to occur of the date on which (A) the Investor shall have sold all the Registrable Securities actually issued or that the Company has an obligation to issue under the Investment Agreement; or (B)

the Investor has no right to acquire any additional shares of Common Stock under the Investment Agreement; or (C) the Investor may sell the Registrable Securities without volume limitations under Rule 144 (the “ Registration Period ”). The Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. The Investor agrees to provide all information which it is required by law to provide to the Company, including the intended method of disposition of the Registrable Securities, and the Company’s obligations set forth in this Agreement shall be conditioned on the receipt of such information.

3.2

The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the Investor thereof as set forth in such Registration Statement. In the event the number of shares of Common Stock covered by the Registration Statement filed pursuant to this Agreement is at any time insufficient to cover all of the Registrable Securities, the Company shall amend such Registration Statement, or file a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover all of the Registrable Securities, in each case, as soon as practicable, but in any event within thirty (30) calendar days after the necessity therefor arises (based on the then Purchase Price of the Common Stock and other relevant factors on which the Company reasonably elects to rely), assuming the Company has sufficient authorized shares at that time, and if it does not, within thirty (30) calendar days after such shares are authorized. The Company shall use commercially reasonable efforts to cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof.

3.3

As promptly as practicable after becoming aware of such event, the Company shall notify Investor in writing of the happening of any event as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (“ Registration Default ”) and use all diligent efforts to promptly prepare a supplement or amendment to such Registration Statement and take any other necessary steps to cure the Registration Default (which, if such Registration Statement is on Form S-3, may consist of a document to be filed by the Company with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act and to be incorporated by reference in the prospectus) to correct such untrue statement or omission, and make available copies of such supplement or amendment to the Investor. The Company shall also promptly notify the Investor (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when the Registration Statement or any post-effective amendment has become effective; (ii) of any request by the SEC for amendments or supplements to the Registration Statement or related prospectus or related information, (iii) of the Company’s reasonable determination that a post-effective amendment to the Registration Statement would be appropriate, (iv) in the event the Registration Statement is

no longer effective, or (v) if the Registration Statement is stale as a result of the Company’s failure to timely file its financials or otherwise

3.4

The Company shall use all commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of the Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Investor holding Registrable Securities being sold of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding concerning the effectiveness of the Registration Statement.

3.5

The Company shall permit the Investor and one (1) legal counsel, designated by the Investor, to review and comment upon the Registration Statement and all amendments and supplements thereto at least one (1) calendar day prior to their filing with the SEC. However, any postponement of a filing of a Registration Statement or any postponement of a request for acceleration or any postponement of the effective date or effectiveness of a Registration Statement by written request of the Investor (collectively, the " Investor's Delay ") shall not act to trigger any penalty of any kind, or any cash amount due or any in-kind amount due the Investor from the Company under any and all agreements of any nature or kind between the Company and the Investor. The event(s) of an Investor's Delay shall act to suspend all obligations of any kind or nature of the Company under any and all agreements of any nature or kind between the Company and the Investor.

3.6

The Company shall hold in confidence and not make any disclosure of information concerning the Investor unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning the Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to the Investor and allow the Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order covering such information.

3.7

The Company shall use all commercially reasonable efforts to maintain designation and quotation of all the Registrable Securities covered by any Registration Statement on the Principal Market. If, despite the Company’s commercially reasonable efforts, the Company is unsuccessful in satisfying the preceding sentence, it shall use commercially reasonable efforts to cause all the Registrable Securities covered by any Registration Statement to be listed on each other national securities exchange and automated quotation system, if any, on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange or system. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3.7 .

3.8

If requested by the Investor, the Company shall (i) as soon as reasonably practical incorporate in a prospectus supplement or post-effective amendment such information as the Investor reasonably determines should be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings of such prospectus supplement or post-effective amendment as soon as reasonably possible after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement if reasonably requested by the Investor.

3.9

The Company shall use all commercially reasonable efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to facilitate the disposition of such Registrable Securities.

3.10

The Company shall otherwise use all commercially reasonable efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.

3.11

The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investor of Registrable Securities pursuant to the Registration Statement.

SECTION IV
OBLIGATIONS OF THE INVESTOR

4.1

At least five (5) calendar days prior to the first anticipated filing date of the Registration Statement, the Company shall notify the Investor in writing of the information the Company requires from the Investor for the Registration Statement. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities and the Investor agrees to furnish to the Company that information regarding itself, the Registrable Securities and the intended method of disposition of the Registrable Securities as shall reasonably be required to effect the registration of such Registrable Securities and the Investor shall execute such documents in connection with such registration as the Company may reasonably request. The Investor covenants and agrees that, in connection with any sale of Registrable Securities by it pursuant to the Registration Statement, it shall comply with the “Plan of Distribution” section of the then current prospectus relating to such Registration Statement.

4.2

The Investor, by its acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless the Investor has notified the Company in writing of an election to exclude all of the Investor’s Registrable Securities from such Registration Statement.

4.3

The Investor agrees that, upon receipt of written notice from the Company of the happening of any event of the kind described in Section 3.4 or the first sentence of Section 3.3 , the Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until the Investor’s receipt of the

copies of the supplemented or amended prospectus contemplated by Section 3.4 or the first sentence of Section 3.3 .

SECTION V
EXPENSES OF REGISTRATION

All legal expenses of the Company incurred in connection with registrations shall be paid by the Company.

SECTION VI
INDEMNIFICATION

In the event any Registrable Securities are included in the Registration Statement under this Agreement:

6.1

To the fullest extent permitted by law, the Company, under this Agreement, will, and hereby does, indemnify, hold harmless and defend the Investor who holds Registrable Securities, the directors, officers, partners, employees, counsel, agents, representatives of, and each Person, if any, who controls, any Investor within the meaning of the 1933 Act or the 1934 Act (each, an “ Indemnified Person ”), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, attorneys’ fees, amounts paid in settlement or expenses, joint or several (collectively, “ Claims ”), incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“ Indemnified Damages ”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in the Registration Statement or any post-effective amendment thereto, or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which the statements therein were made, not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to the Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, “ Violations ”). Subject to the restrictions set forth in Section 6.3 the Company shall reimburse the Investor and each such controlling person, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6.1 : (i) shall not apply to a Claim arising out of or based upon a Violation which is due to the inclusion in the Registration Statement of the information furnished to the Company by any Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; (ii) shall not be available to the extent such Claim is based on (a) a failure of the Investor to

deliver or to cause to be delivered the prospectus made available by the Company or (b) the Indemnified Person’s use of an incorrect prospectus despite being promptly advised in advance by the Company in writing not to use such incorrect prospectus; (iii) any claims based on the manner of sale of the Registrable Securities by the Investor or of the Investor’s failure to register as a dealer under applicable securities laws; (iv) any omission of the Investor to notify the Company of any material fact that should be stated in the Registration Statement or prospectus relating to the Investor or the manner of sale; and (v) any amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the resale of the Registrable Securities by the Investor pursuant to the Registration Statement.

6.2

In connection with any Registration Statement in which Investor is participating, the Investor agrees to indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6.1 , the Company, each of its directors, each of its officers who signs the Registration Statement, each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act and the Company’s agents (collectively and together with an Indemnified Person, an “ Indemnified Party ”), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation is due to the inclusion in the Registration Statement of the written information furnished to the Company by the Investor expressly for use in connection with such Registration Statement; and, subject to Section 6.3 , the Investor shall reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however , that the indemnity agreement contained in this Section 6.2 and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Investor, which consent shall not be unreasonably withheld; provided, further, however, that the Investor shall only be liable under this Section 6.2 for that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the resale of the Registrable Securities by the Investor pursuant to the Registration Statement. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6.2 with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the preliminary prospectus were corrected on a timely basis in the prospectus, as then amended or supplemented.

6.3

Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6 , deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an

Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the Indemnified Person or Indemnified Party, the representation by counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The indemnifying party shall pay for only one (1) separate legal counsel for the Indemnified Persons or the Indemnified Parties, as applicable, and such counsel shall be selected by the Investor, if the Investor is entitled to indemnification hereunder, or the Company, if the Company is entitled to indemnification hereunder, as applicable. The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or Claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding affected without its written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such Claim. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6 , except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

6.4

The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

SECTION VII

CONTRIBUTION

7.1

To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6 ; (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities, or, if Registrable Securities are unsold, the value of such Registrable Securities.

SECTION VIII

REPORTS UNDER THE 1934 ACT

8.1

After the Execution Date of the Registration Statement and with a view to making available to the Investor the benefits of Rule 144 that may at any time permit the Investor to sell securities of the Company to the public without registration, provided that the Investor holds any Registrable Securities that are eligible for resale under Rule 144, the Company agrees to:

make and keep public information available, as those terms are understood and defined in Rule 144;

file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

furnish to the Investor, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, as applicable, and (ii) such other information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration.

SECTION IX

MISCELLANEOUS

9.1

NOTICES. Any notices or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic mail (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and email addresses for such communications shall be:


If to the Company:		United Cannabis Corp. 301 Commercial Rd. Unit D Golden, CO 80401 Attn: Ernie Blackmon Email: eb@unitedcannabis.us

If to the Investor:		Tangiers Global, LLC Caribe Plaza Office Building 6th Floor, Palmeras St. #53, PR 00901 Email: admin@tangierscapital.com

Each party shall provide five (5) business days prior written notice to the other party of any change in address or email address.

9.2

NO WAIVERS . Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

9.3

NO ASSIGNMENTS . The rights and obligations under this Agreement shall not be assignable.

9.4

ENTIRE AGREEMENT/AMENDMENT . This Agreement and the Registered Offering Transaction Documents constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement and the Registered Offering Transaction Documents supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof. The provisions of this Agreement may be amended only with the written consent of the Company and Investor.

9.5

HEADINGS . The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Whenever required by the context of this Agreement, the singular shall include the plural and masculine shall include the feminine. This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if all the parties had prepared the same.

9.6

9.7

9.8

SEVERABILITY . In case any provision of this Agreement is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Agreement will not in any way be affected or impaired thereby.

9.9

LAW GOVERNING THIS AGREEMENT . This Agreement shall be governed by, and construed and interpreted in accordance with, the substantive laws of the State of New York without giving effect to any conflict of laws rule or principle that might require the application of the laws of another jurisdiction. Any dispute, claim, suit, action or other legal proceeding arising out of the transactions contemplated by this Agreement or the rights and obligations of each of the parties shall be brought only in a competent court in New York or in the federal courts of the United States of America located in the state of New York. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or

based upon forum non conveniens . The parties executing this Agreement and other agreements referred to herein or delivered in connection herewith agree to submit to the in personam jurisdiction of such courts. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Documents by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

9.10

NO THIRD PARTY BENEFICIARIES . This Agreement is intended for the benefit of the parties hereto and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

[Signature Page to Follow.]

Your signature on this Signature Page evidences your agreement to be bound by the terms and conditions of the Registration Rights Agreement as of the date first written above. The undersigned signatory hereby certifies that he has read and understands the Registration Rights Agreement, and the representations made by the undersigned in this Registration Rights Agreement are true and accurate, and agrees to be bound by its terms.


	TANGIERS GLOBAL, LLC


	By:	/s/ Justin Ederle
	Name:	Justin Ederle
	Title:	Managing Member


	UNITED CANNABIS CORP.


	By:	/s/ John Walsh
	Name:	John Walsh
	Title:	Chief Financial Officer

[SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT]

EXHIBIT 10.15

LICENSING AGREEMENT

This Licensing Agreement ( “Agreeme nt”) is made effective as of January 19, 2018 (the “Effective Date”) by and between United Cannabis Corporation, (“UCANN”) and FLRish IP, LLC (“Licensee”). UCANN and Licensee may be referred to herein collectively as the “Parties.”

WHEREAS, UCANN has been granted US Patent 9,730,911 B2, dated August 15, 2017, for methods of extracting, preparing and using cannabis “Patent”; and

WHEREAS, Licensee is manufacturing certain products as listed in Exhibit A hereto (Products) that utilize methods of extracting, preparing and using cannabis that are covered by the Patent, and

WHEREAS, Licensee desires to license from UCANN the rights to use the Patent, and UCANN is authorized to grant the rights as permitted in this Agreement; and,

NOW, THEREFORE, in consideration of the promises and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

DEFINITIONS. The following terms shall have the following definitions for the purposes of this Licensing Agreement.

1.1

Products . The term "Product" or "Products" shall mean any of the products described on Schedule A, attached hereto and incorporated herein by reference, as such Schedule A may be amended from time to time by addition of products manufactured at the direction of Licensee covered by the Patent. Licensee shall not license or manufacture any products that at the time of such license or manufacture are the same as products that are manufactured by Advesa Wellness and sold under the “Prana” brand name.

1.2

Patent. The term patent shall mean US Patent 9,730,911 B2, dated August 15, 2017, a copy of which is attached hereto and incorporated herein by reference, as Schedule B.

LICENSE GRANT

2.1

License . Subject to the terms and conditions of this Agreement, UCANN hereby grants Licensee, for the Term (as defined below) and in the Territory (as defined below) the following limited non-exclusive, non-transferrable, non-assignable right and license to use the Patent, only as approved by UCANN pursuant to the terms of this Agreement.

2.2

Reserved Rights .

(a)

All rights not expressly licensed to the Licensee hereunder are expressly reserved by UCANN.

(b)

Nothing in this Agreement shall be construed or interpreted so as to preclude UCANN from granting any other right or license to any third party, whether or not such party is a competitor of licensee, for the use of any of the Patents.

2.3

Restrictions on Licensee .

(a)

Licensee shall not enter into a licensing agreement or any similar arrangement where the Licensee or any of Licensee’s owners, employees, or affiliates are permitted to profit from, market, or sell any products related to or similar to the Products, or any other intellectual property or product of UCANN, except for as expressly authorized by this Agreement or by UCANN in writing. If Licensee enters into a licensing agreement or any agreement similar to this Agreement with a permitted entity pursuant to this Section 2.3(a), the terms of any such agreement shall be no more favorable to such permitted entity than the terms of any agreement between UCANN and Licensee.

(b)

The license granted under this Agreement is specifically set forth herein, and no licenses are granted by UCANN to Licensee by implication or estoppel. This Agreement shall not be construed to give Licensee any vested right, title, or interest to the Patent, or except as authorized under this Agreement.

2.4

Third Party Manufacturers . The Products will be manufactured by a company or companies, which are mutually acceptable to UCANN and Licensee. While so designated such third party manufacturers shall not be required to execute a separate License Agreement for the Patent and Trade Secrets relating thereto, but are required to execute an Agreement identifying UCANN as a third party beneficiary with respect to the terms relating to Improvements, below, and to execute a confidentiality agreement with terms substantially similar to those contained herein. UCANN shall not unreasonably withhold approval of a third party manufacturer. The initial manufacturer of the Products shall be Advesa Wellness, a California mutual benefit corporation.

Upon request by UCANN and contingent upon a reduction in the cost of manufacturing by Advesa Wellness equivalent to the Royalties, the Licensee shall pay the Fees directly to UCANN. For any Products not manufactured by Advesa Wellness the Fees shall be payable directly to UCANN, unless otherwise agreed by the Parties.

INTELLECTUAL PROPERTY. The Parties agree to cooperate in the diligent protection of the Patent. Licensee hereby agrees to the following:

3.1

Licensee acknowledges the legal validity and commercial value of UCANN’s Patent and trade secrets related thereto. Licensee shall not, at any time, file any application for intellectual property protection with the United States Patent and Trademark Office, or with any other governmental entity for the Patent or any trade secret of UCANN where such trade secret is expressed in writing or identified in writing as being a trade secret of UCANN (“Trade Secrets”). Licensee shall not use any trademarks identified on Schedule C, a copy of which is attached hereto and incorporated herein by reference and which may be amended from time to time by inclusion of applied for or granted marks obtained by UCANN which are not confusingly similar

to any marks applied for or obtained by Licensee (“Licensor Marks”), or any confusingly similar mark as, as part of, a trademark, service mark, trade name, fictitious name, company or corporate name anywhere other than on the Products as authorized under this Agreement, unless expressly authorized by UCANN in writing. Any such Licensor Marks, or any confusingly similar mark, shall be immediately transferred to UCANN free of charge; and Licensee shall forfeit any and all receipts and/ or accounts receivable generated from the improper use of Licensor Marks to UCANN that arise after sixty days of inclusion of a mark as a Licensors Marks.

3.2

Licensee shall not oppose or seek to cancel or challenge, in any forum, including, but not limited to, the United States Patent and Trademark Office, the Patent or Licensors Marks. Licensee shall not object to, or file any action or lawsuit because of any use by UCANN of its official label or trademark for any goods or services, whether such use is by UCANN directly or through licensees or other authorized users.

3.3

Licensee recognizes the great legal and commercial value of the goodwill associated with the Patent, and that such goodwill has inherent and/or acquired value. Licensee shall not, during the term of this Agreement or thereafter, dispute or contest the intellectual property rights of UCANN. The Licensee further acknowledges and agrees that the Patent (including all rights therein and goodwill associated therewith) shall be and remain the exclusive sole and complete property of UCANN and its designees. The Licensee acknowledges and agrees that its use of the Patent shall not create in the Licensee, and in any parties or entities deriving rights from Licensee, any favor, right, title or interest in the Patent and that all uses of and sale of the Products by the Licensee shall inure to the benefit of the UCANN.

3.4

Licensee acknowledges that the Patent and UCANN’s intellectual property are valuable properties of UCANN, some of which qualify as trade secrets within applicable laws and regulations. Any improvements to UCANN’s Patent or Trade Secrets relating to the Patent, or subsequent inventions derived from the Patent conceived or made by Licensee or a manufacturer designated by Licensee or other party licensed by Licensee (collectively “Improvements”) shall be owned by UCANN and Licensee shall take all necessary actions to inform UCANN of such Improvements and shall take all necessary steps to assign such Improvements to UCANN.

3.5

UCANN may seek, obtain and, maintain in its own name appropriate intellectual property protection for the Patent. Licensee agrees to assist UCANN in the protection of UCANN’s rights in and to the Patent and shall provide evidence, documents, and testimony concerning the use by Licensee of the Patent, which UCANN may request for use in obtaining, defending, or enforcing rights licensed in this Agreement, or related application or registration. Licensee will promptly notify UCANN of any known or suspected use of any Patent or Product by others not duly authorized hereunder. Nothing in this Agreement requires UCANN to bring suit for the infringement of any Product or Patent. Licensee has no right to initiate an action of its own against any alleged infringer without first obtaining the prior express written approval of UCANN. Licensee will fully cooperate with UCANN in the prosecution of any infringement action, including, without limitation, by the provision of evidence and testimony in any such action. Any sums recovered as a result of any judgment or settlement of any claim pertaining to infringement of the Patent or Products shall belong exclusively to UCANN.

3.6

Licensee acknowledges that its breach or threatened breach of this Agreement will result in immediate, irremediable, and irreparable damage to UCANN for which money damages alone would be inadequate to compensate UCANN. Therefore, in the event of a breach or threatened breach of this Licensing Agreement by Licensee, UCANN may, in addition to other remedies, immediately obtain and enforce injunctive relief prohibiting the breach, continued breach or threatened breach or compelling specific performance of this Agreement. In the event of any breach or threatened breach of this Agreement by Licensee or infringement of any rights of UCANN, Licensee shall reimburse UCANN for its reasonable attorney’s fees and other related expenses.

3.7

The parties agree to execute any documents reasonably requested by the other party to effect any of the above provisions.

LICENSEE’S REPRESENTATIONS AND WARRANTIES. Licensee hereby represents and warrants that:

4.1

This Agreement has been properly executed and delivered by an authorized representative of Licensee and constitutes the legal, valid and binding obligation of Licensee which is fully enforceable against Licensee in accordance with its terms. Licensee has the requisite authority to enter into this Licensing Agreement and to carry out the transactions contemplated by this Licensing Agreement.

4.2

The execution, delivery and performance by such Licensee does not violate or breach the terms of any other agreement with any third party.

4.3

Licensee currently possesses and will maintain all state and local licenses, permits and approvals of all kinds necessary to undertake the activities contemplated herein; and

4.4

Licensee will clearly and unambiguously comply with all applicable laws, rules and regulations relating to the operation of Licensee’s business, without exception.

UCANN’S REPRESENTATIONS AND WARRANTIES. UCANN hereby represents and warrants that: (i) this Agreement has been properly executed and delivered by an authorized representative of UCANN and constitutes the legal, valid and binding obligation of UCANN which is fully enforceable against UCANN in accordance with its terms; and (ii) UCANN has the requisite authority to enter into this Agreement and to carry out the transactions contemplated by this Agreement, and the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by UCANN.

CONFIDENTIAL INFORMATION.

6.1

Confidentiality . All nonpublic technical or business information disclosed or otherwise made available by UCANN to Licensee, the Patent, services, tools, information related to a UCANN’s business plans developed for Licensee, or other information given to Licensee and designated “Confidential” by UCANN, shall be deemed “Confidential Information.” Confidential

Information does not include any information that it is already known by Licensee as of the date such disclosure is made; is available to the Licensee from printed publications as of the date such disclosure is made or becomes publicly available through no fault of Licensee, or it is disclosed to License by an independent third party through no fault of Licensee.

6.2

Non- Disclosure. Licensee agrees that it will not disclose such Confidential Information without the prior written consent of UCANN. Licensee shall restrict disclosure of Confidential Information solely to its attorneys, principals, and employees with an actual and present need to know in order for the disclosing party to fulfill its obligations under this Agreement or if such disclosure is required by law. Licensee shall use a reasonable degree of care to prevent the unauthorized use or disclosure of Confidential Information. This provision shall survive the termination of this Agreement. Nothing contained in this Licensing Agreement shall be construed to grant Licensee any right, title or interest in or to any of Confidential Information of UCANN. All rights and title to all forms of the Confidential Information and all copies thereof shall be and remain with UCANN. Licensee shall not copy or otherwise reproduce, in whole or in part, any of UCANN’s Confidential Information without the prior written authorization of UCANN, except as may be reasonably necessary to fulfill the purposes of this Agreement.

6.3

Enforcement . Licensee agrees that its breach of this Section 5 would leave UCANN without an adequate remedy at law, and that UCANN will be entitled to seek an injunction against such breach, in addition to all other remedies available to such party. Notwithstanding anything to the contrary, it shall not be a breach of this Section for a party to disclose the existence or terms of this Licensing Agreement in order to enforce the terms hereof.

6.4

Return/Destroy Obligation . Upon the termination or expiration of this Licensing Agreement, Licensee will promptly return to UCANN all tangible copies of UCANN’s Confidential Information in Licensee’s possession or control.

FEES AND PAYMENT.

7.1

Fees . In consideration for the rights and licenses granted in this Agreement, the Licensee shall pay UCANN the greater of:

7.2

a) 5% of the gross price of the Products paid by Licensee to the manufacturer of such Products; or,

7.3

b) 2.5% of the wholesale price of the Products; or,

For purposes of this section the “wholesale price” for any Product means the gross price obtained by a distributor licensed by Licensee from the sale of any Products in an arm’s length transaction with another distributor or retailer, excluding cannabis tax payments made to such distributor for remittance to taxing authorities; and, for non-arm’s length sales the average price obtained in the same quarter in arm’s length transactions multiplied by the number of units transferred or sold.

7.4

Delivery of Payment . Payments shall be delivered by Licensee to UCANN in negotiable United States currency, check or wire transfer through UCANN’s affiliated entity,

Advesa, Inc.at the following address:

Attn: Tony Verzura

6114 La Salle Avenue #223

Oakland, CA 94611

or at such other location as UCANN may, from time to time, designate in writing and with advanced notice to Licensee.

7.5

Payments. Except with respect to the fees payable through Advesa Wellness, the fee owed UCANN shall be calculated on a quarterly calendar basis (and shall be payable no later than thirty (30) days after the termination of the preceding full calendar quarter, i.e., commencing on the first (1st) day of January, April, July and October with the exception of the first and last calendar quarters which may be "short" depending upon the effective date of this Agreement. The fee obligation shall accrue upon the sale of the Licensed Products regardless of the time of collection by Licensee. For purposes of this Agreement, a Licensed Product shall be considered "sold" on the date that any affiliate, manufacture, or licensee of Licensee bills, invoices, ships, or receives payment for the Licensed Product, whichever event occurs first.

7.6

Fee Statement. Accompanying each payment of fees, Licensee shall provide Licensor with a written fee statement (“Statement”) in a form acceptable to UCANN. Such royalty statement shall be certified as accurate by a duly authorized officer of Licensee, reciting at minimum: (i) items, (ii) units sold, (iii) gross sales, (iv) discounts and allowances actually shown on the invoice, (v) state, county and city sales taxes billed to and payable by Licensee, and (vi) bona fide returns that are supported by credit memoranda issued to the customer. Such statements shall be furnished to Licensor whether or not any Licensed Products were sold during the reporting period, and whether or not any accrued royalty payments are due and/or payable for any quarter.

7.7

Inspection . UCANN shall have the right, at its expense, upon a minimum of five (5) days written notice to have a Certified Public Accountant inspect Licensee's books and records and all other documents and material in the possession of or under the control of Licensee with respect to the subject matter of this Agreement for the purpose of verifying the accuracy of Statement accountings due to UCANN. Such inspection shall take place at a reasonably convenient time, during normal business hours at the place or places where such records are normally retained by Licensee. UCANN shall have free and full access thereto for such purposes and shall be permitted to make copies thereof and extracts therefrom.

TERMINATION . This Agreement and the License granted hereunder may be terminated prior to the expiration of the term of this Agreement as follows:

ii.

This Agreement may be terminated by LICENSEE by written notice to UCANN in the event of material breach by UCANN of its obligations under this Agreement, which breach is not cured within ten calendar days after receipt of written notice of such breach from LICENSEE.

EFFECT OF TERMINATION . After expiration or termination of this Licensing Agreement for any reason, Licensee shall immediately discontinue the production all Products.

10.

RELATIONSHIP OF THE PARTIES. UCANN and Licensee acknowledge that in fulfilling the obligations under this Agreement, UCANN and Licensee are purely contracting parties and neither is the principal or agent, parent or subsidiary, master or servant, or employer or employee of the other. Neither UCANN nor Licensee has the authority to bind the other to any third person or otherwise to act in any way as the representative of the other unless expressly authorized by this Agreement otherwise expressly agreed to in writing signed by both Parties. Nothing contained in the Agreement is intended to give rise to a partnership, joint venture, or employment relationship between the Parties or to impose upon the Parties any of the duties or responsibilities of partners, joint venturers, or employer-employee. Except as otherwise authorized in writing, Licensee agrees to indicate to any third-party vendor or customer who is or may be doing business with UCANN, as appropriate, that Licensee has no authority to bind UCANN. Employees, agents or other persons furnished by UCANN shall be solely the employees or agents of UCANN and shall be under the sole and exclusive direction and control of UCANN. The Parties understand and agree, for purposes of any federal, state, or local law, that neither UCANN nor any of its agents or employees will be treated as agents or employees of Licensee with respect to the Licensing Agreement and that UCANN has sole responsibility for all decisions with respect to its personnel, including but not limited to hiring, firing, disciplining, directing, training, setting and paying compensation, and providing benefits, if any.

11.

COMPLIANCE WITH REGULATORY AUTHORITES . Notwithstanding anything contained herein to the contrary, the Parties acknowledge and agree that all provisions of this Agreement may be subject to regulatory oversight and approval. In the event that any provision is determined to be non-compliant by any applicable regulatory authority, this Agreement shall be amended by the Parties in good faith within the timeframe given by the applicable regulatory authority or 30 (Thirty) days, whichever occurs earlier. If the Parties are unable to negotiate appropriate amendments within the required timeframe, this Agreement shall terminate and be subject to the provisions of Section 7 above.

12.

ASSIGNABILITY. This Licensing Agreement is personal to Licensee. Neither this Licensing Agreement nor any of Licensee’s rights hereunder shall be sold, transferred or assigned by Licensee without UCANN’s prior written approval. No rights shall be vested by operation of law or otherwise in any assignee, receiver, liquidator, trustee or other party. Other than as permitted by UCANN, any attempted assignment by Licensee without Licensor's prior written approval is a material breach of this Agreement and such purported assignment by Licensee will be null and void and will not pass any rights or interests to any purported assignee. Subject to the foregoing, this Agreement shall be binding on and inure to the benefit of the parties and their respective successors and assigns.

13.

ENTIRE AGREEMENT.

13.1

This Licensing Agreement, and all Schedules and Exhibits attached hereto, constitutes the entire agreement and understanding between the Parties and replaces all previous agreements written or oral on the subject matter of this agreement. There are no representations, promises, agreements, warranties, covenants or understandings other than those contained herein. None of the provisions of this Licensing Agreement may be waived or modified, except expressly in writing signed by both parties. However, failure of either party to require the performance of any term in this Licensing Agreement or the waiver by either party of any breach shall not prevent subsequent enforcement of such term nor be deemed a waiver of any subsequent breach.

13.2

Notwithstanding anything contained herein to the contrary, if any relevant laws or regulations change in any way which impacts this Agreement, the parties shall address any such changes in good faith to negotiate adjustments to comply with applicable law.

14.

PRESS RELEASE, ETC. Except for the initial filing of a Form 8-K with the Securities and Exchange Commission, and an accompanying press release, neither UCANN or Licensee may publicize the Patent without mutual written consent.

15.

TERM AND RENEWAL. This Agreement and the license granted hereunder shall continue in full force and effect for years from the Effective Date unless otherwise terminated by operation of law or in accordance with the terms of this Licensing Agreement.

16.

TERRITORY. The license granted by UCANN to Licensee under this Licensing Agreement shall be restricted to Licensee’s operations located in California.

17.

COUNSEL/INTERPRETATION. Each party acknowledges that it has obtained legal advice in connection with this Agreement and agrees that this Agreement will be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing an instrument to be drafted.

18.

FORCE MAJEURE. Neither Licensee or UCANN shall not be liable for any failure to perform its obligations hereunder where such failure results from any cause beyond the party’s reasonable control, including, without limitation, change of regulatory structure, weather or climate related challenges, change in federal, state, or local law that makes the party’s activities reasonably impracticable, regulatory action by any government or government agency, law enforcement interference, natural disaster, or act of God.

19.

GOVERNING LAW; ATTORNEY FEES. This Licensing Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Colorado. Any action arising out of or relating to this Licensing Agreement shall be brought only in the state courts of Denver County, Colorado, and the Parties expressly consent to such court’s jurisdiction and irrevocably waive any objection with respect to the same, including any objection based on forum non conveniens . The parties agree that in the event that one party commences an action against the other party, then the prevailing party in any such action shall be awarded its reasonable attorneys’ fees and costs, in addition to any other relief to which it may be entitled.

20.

SEVERABILITY. The determination that any provision of this Licensing Agreement is invalid or unenforceable shall not invalidate the entire Licensing Agreement, and the remainder of this Licensing Agreement shall be valid and enforceable to the fullest extent permitted by law.

21.

NOTICES. Notices under this agreement shall be sent to:

For FLRish IP, LLC

FLRish IP, LLC

c/o Legal Department

2100 Embarcadero, Suite 201,

Oakland CA 94606

For UCANN:

United Cannabis Corporation Chad Ruby

301 Commercial Road Unit D

Golden, CO 80401

22.

COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

23.

HEADINGS . All headings used in this Agreement are for clarification and reference purposes only.

IN WITNESS WHEREOF, the Parties hereto have caused this Licensing Agreement to be executed by their duly authorized officers or representatives with the intent that it be effective as of the Effective Date.


UCANN		LICENSEE

By:	/s/ Earnest Blackmon	By:	/s/ Steve DeAngelo
Name:	Earnest Blackmon	Name:	Steve DeAngelo
Title:	CEO	Title:	CEO

Date:	1/24/2018	Date:	1/22/2018

For:	United Cannabis Corporation	For:	Harborside Health Association, LLC

SCHEDULE A PRODUCTS

The following capsule products manufactured by Advesa Corporation:


Product Type	SKU	Initial Price	Lead Time (from order, in days)
Awake 10 pack (5 mg)	P-AW-10- 05	$7.50	30
Awake 10 pack (10 mg)	P-AW-10- 10	$10.00	30
Sleep (PM Pain) 10 pack (5 mg)	P-SL-10- 05	$7.50	30
Sleep (PM Pain) 10 pack (10 mg)	P-SL-10- 10	$10.00	30
Revive/Recovery 10 pack (5 mg)	P-RE-10- 05	$7.50	30
Revive/Recovery 10 pack (10 mg)	P-RE-10- 10	$10.00	30

EXHIBIT 10.16

PRANA “BIO NUTRIENT MEDICINALS”

SUPPLY, DISTRIBUTION, AND LICENSING AGREEMENT

This Supply, Distribution, and Licensing Agreement (“ Agreemen t”) is made effective as of December 12, 2017 (the “ Effective Date ”) by and between United Cannabis Corporation, (“ UCANN ”) and Lasco Manufacturing Limited a company incorporated under the Companies Act and having its registered office at 27 ½ Red Hills Road, in the parish of Saint Andrew, Jamaica (“ Licensee ”). UCANN and Licensee may be referred to herein collectively as the “Parties.”

WHEREAS, UCANN is engaged in the manufacture and development of a bio-nutrient based concentrate, (“ Concentrate ”) the invention, formulas and other intellectual property of which is an industrial secret of UCANN; and

WHEREAS, UCANN is authorized to grant the rights as permitted in this Agreement relating to the Concentrate, Products (as defined herein) and its associated trademarks, logos, and other approved intellectual property, which are set forth in Schedule A attached hereto and incorporated herein by reference, as such Schedule A may be amended from time to time (“ Prana IP ”); and

WHEREAS, the Licensee desires to use the Concentrate, Prana IP and Packaging (which may include, but not be limited to, containers, labels, hangtags, displays, and/or signage) (the " Packaging ") in connection with the manufacture, production, sale, distribution, and marketing of cannabis-based products approved by UCANN (“ Products ”), solely as approved by UCANN pursuant to the terms of this Agreement; and.

DEFINITIONS. The following terms shall have the following definitions for the purposes of this Licensing Agreement.

1.1

Prana IP. The term Prana IP shall refer to all intangible property rights owned by UCANN relating in any way to the Prana “Bio Nutrient Medicinals” brand and products, including but not limited to the Concentrate, Products, Trademarks (as defined herein) or UCANN’s processes, know-how, formulas, trade secrets, technical operations, cultivation or processing techniques, business processes and methods, Internet websites, or other technologies which relate to UCANN’s technical, scientific, research, process, technique, methods or technologies relating to, or used in conjunction with the Products, or Concentrate, patented and patentable designs and inventions, all design, plant and patents, service marks, trade names, brand names, logos, copyrights, trade dress and other proprietary source-identifying indicia of goods and services whether or not patentable, or subject to copyright, trade secret, or other intellectual property protection.

1.2

Prana “Bio Nutrient Medicinals” capsule. The term Prana “Bio Nutrient Medicinals” capsule shall refer to UCANN’s Prana “Bio Nutrient Medicinals” branded Concentrate product in a capsular form and any Prana IP relating to, or used in conjunction with the production, development, and sale of UCANN’s Prana “Bio Nutrient Medicinals” capsule.

1.3

Prana “Bio Nutrient Medicinals” sublingual. The term Prana “Bio Nutrient Medicinals” sublingual shall refer to UCANN’s Prana “Bio Nutrient Medicinals” branded Concentrate produced in a form to be administered sublingually, and any Prana IP relating to, or used in conjunction with the production, development, and sale of UCANN’s Prana “Bio Nutrient Medicinals” sublingual.

1.4

Products. The term "Product" or "Products" shall mean only those described on Schedule B, attached hereto and incorporated herein by reference, and shall include the Packaging. All Products will be manufactured and packaged in compliance with the rules and regulations of Jamaican Ministry of Health and the Bureau of Standards Jamaica.

1.5

Specifications. The term "Specifications" refers to all processes and other specifications, criteria, standards, methods, instructions, plans or other directions prescribed by UCANN for the manufacture, production preparation, packaging and labeling of the Products, all as set forth in Schedule C attached hereto and incorporated herein by reference, as such Schedule C may be amended from time to time.

1.6

Trademarks. The term "Trademarks" shall mean those trademarks and tradenames, distinctive packaging, promotional and advertising materials, and all other communications in whatever form created by UCANN and provided to Licensee to be used in connection with the production, marketing, sale or distribution of the Products, including, without limitation, the trademark, designs and trade names set forth in Schedule A and brand names set forth in Schedule D, attached hereto and incorporated herein by reference, as such Schedule D may be amended from time to time. (“Authorized Brands”).

LICENSE GRANT

2.1

License. Subject to the terms and conditions of this Agreement, UCANN hereby grants Licensee, for the Term (as defined below) and in the Territory (as defined below) the following limited, exclusive, non-transferrable, non-assignable right and license, only as approved by UCANN pursuant to the terms of this Agreement, to:

Produce, manufacture, and package the Products in accordance with the Specifications and as permitted in this Agreement, provided the use of the Concentrate, Prana IP or Packaging by Licensee is not for the use or benefit of any third party.

Use the Packaging in connection with the production, manufacture, distribution, sale, advertising, promotion and marketing of the Products, provided that the Packaging shall be used only for the Products.

To manufacture and package the Product in accordance with the Specifications provided the by UCANN. In the event the Specifications do not constitute UCANN as a “Franchisor” or this Agreement as a “Franchise”, Licensee shall notify UCANN and UCANN shall provide Licensee with amended Specifications. All Specifications must be in compliance with the rules and regulations of the Jamaican Ministry of Health and the Bureau of Standards Jamaica.

To sell and distribute the Products only in the Territory provided that all such facilities are operating pursuant to all applicable laws and regulations. Licensee shall sell, market, advertise, and promote the Products solely in the Packaging approved by UCANN.

To use the Prana IP in conjunction with the sale, promotion and distribution of the Products in the Territory, including the display of the Trademarks on any of Licensee’s products, packaging marketing materials, or other material distributed by Licensee.

To sell Products manufactured in accordance with clause 2.1(c) above using its own labels, trademarks or get up whether as now exists or may be created and adjusted from time to time by the Licensee and without limiting the generality of the foregoing to use its existing ‘ICool’ brand or a variation of it to market and sell the Product.

2.2

Reserved Rights.

(a)

All rights not expressly licensed to the Licensee hereunder are expressly reserved by UCANN. The License granted herein expressly excludes the use of the Concentrate, Packaging, and Prana IP in connection with any products or services of any type whatsoever other than the Products.

(b)

Nothing in this Agreement shall be construed or interpreted so as to preclude UCANN from granting any other right or license to any third party outside of the Territory, whether or not such party is a competitor of licensee, for the use of any of the Concentrate, Products, Packaging, or Prana IP for or with respect to any other products or services or otherwise.

(c)

This license does not cover any Prana IP which is the subject, or the intended subject, of any clinical trials which will be undertaken by UCANN or any affiliate of UCANN.

(d)

Licensee shall exercise such rights granted under this Agreement in accordance with all UCANN’s guidelines, policies, and requirements provided to Licensee, which shall be deemed part of this Agreement.

2.3

Restrictions on Licensee.

(a)

Licensee shall not enter into a licensing agreement or any similar arrangement where the Licensee or any of Licensee’s owners, employees, or affiliates are permitted to profit from, market, or sell any products related to or similar to the Products, Prana IP or any other intellectual property or product of UCANN, except as expressly authorized by UCANN in writing. If Licensee enters into a licensing agreement or any agreement similar to this Agreement with a permitted entity pursuant to this Section 2.3(a), the terms of any such agreement shall be no more favorable to such permitted entity than the terms of any agreement between UCANN and Licensee.

(b)

The license granted under this Agreement is specifically set forth herein, and no licenses are granted by UCANN to Licensee by implication or estoppel. This Agreement shall not be construed to give Licensee any vested right, title, or interest to the Concentrate, Prana IP, or Packaging except as authorized under this Agreement.

(c)

Licensee shall not use the Concentrate, Prana IP, or Packaging for any purpose other than as authorized by this Agreement. Any proposed additions or modifications to the Products, Concentrate, Packaging or Prana IP or proposed new developments based on the Prana IP shall be submitted in writing to UCANN. Upon written notice to Licensee by UCANN that there has been unauthorized use of the Prana IP, Licensee shall, in accordance with all applicable laws and regulations, at its own expense and at the sole option of UCANN, immediately recall any unauthorized Products from the marketplace, and destroy them, surrender, or transfer the same in accordance with UCANN’s instructions.

(d)

Licensee shall not use any Trademarks or brand names in connection with the manufacture, advertising, distribution and sale of the Products other than Prana “Bio Nutrient Medicinals” or any other Trademark or brand name otherwise authorized by UCANN as set forth in Schedule A, except as authorized in writing by UCANN.

2.4

Third Party Manufacturers. UCANN, in its sole discretion, may, upon advanced written application by Licensee and formal written approval by UCANN, permit third parties (“Manufacturer(s)”) to produce or participate in the production of the Products, or any component thereof, on behalf of Licensee. To make such application, Licensee must submit to UCANN the name, address, licensing information, telephone number and principal contact of the proposed Manufacturer. UCANN must approve any Manufacturer in writing, and the Manufacturer must enter into a separate agreement with UCANN to be prepared by UCANN, prior to use of the Concentrate, Packaging, Prana IP, or Confidential Information, as such term is defined in Section 8. Licensee shall ensure that all Manufacturer(s) comply with all applicable labor laws. Licensee is responsible for complying with all changes in labor code requirements and that any such Manufacturer(s) strictly and fully comply with this Licensing Agreement.

INTELLECTUAL PROPERTY. The Parties agree to cooperate in the diligent protection of the Prana IP. Licensee hereby agrees to the following:

3.1

Licensee acknowledges the legal validity and commercial value of UCANN’s intellectual property, including all state and federal registrations that UCANN owns, obtains or acquires. Licensee shall not, at any time, file any application for intellectual property protection with the United States Patent and Trademark Office, or with any other governmental entity for the Prana IP, or any other intellectual property owned by UCANN regardless of whether such intellectual property is listed in this Agreement or any schedule hereto. This shall extend to any related or substantially similar intellectual property or any purported or proposed new intellectual property that has been developed using the Prana IP licensed hereunder. Licensee shall not use any Trademarks, or any similar mark as, as part of, a trademark, service mark, trade name, fictitious name, company or corporate name anywhere other than on the Products as authorized under this Agreement, unless expressly authorized by UCANN in writing. Any such trademark or service mark registration obtained or applied for, or any similar mark, shall be immediately transferred to UCANN free of charge; and Licensee shall forfeit any and all receipts and/ or accounts receivable generated from the improper use of intellectual property to UCANN.

3.2

Licensee shall not oppose or seek to cancel or challenge, in any forum, including, but not limited to, the United States Patent and Trademark Office, any application or registration of UCANN’s brands, products, official label, or any other existing or future UCANN trademark. Licensee shall not object to or file any action or lawsuit because of any use by UCANN of its official label or trademark for any goods or services, whether such use is by UCANN directly or through licensees or other authorized users.

3.3

Licensee recognizes the great legal and commercial value of the goodwill associated with UCANN and its products, including without limitation the Concentrate, Products, Intellectual Property, and Trademarks, and acknowledges that such goodwill belongs to UCANN, and that such goodwill has inherent and/or acquired value. Licensee shall not, during the term of this Agreement or thereafter, dispute or contest the intellectual property rights of UCANN. The Licensee further acknowledges and agrees that the Prana IP (including all rights therein and goodwill associated therewith) shall be and remain the exclusive sole and complete property of UCANN and its designees. The Licensee acknowledges and agrees that its use of the Prana IP shall not create in the Licensee, and in any parties or entities deriving rights from Licensee, any favor, right, title or interest in the Prana IP and that all uses of and sale of the Products by the Licensee shall inure to the benefit of the UCANN. All goodwill and associated benefits associated with the Products, Concentrate, Prana IP, and Packaging shall inure to Licensor.

3.4

Licensee acknowledges that the Prana IP is a valuable property of UCANN some of which qualifies as a trade secret within applicable laws and regulations.

3.5

UCANN may seek, obtain and, maintain in its own name appropriate intellectual property protection for the Prana IP. Licensee agrees to assist UCANN in the protection of the UCANN’s rights in and to the Prana IP and shall provide evidence, documents, and testimony concerning the use by Licensee of the Prana IP, which UCANN may request for use in obtaining, defending, or enforcing rights licensed in this Agreement, or related application or registration. Licensee will promptly notify UCANN of any known or suspected use of any Prana IP or Product by

others not duly authorized hereunder. Nothing in this Agreement requires UCANN to bring suit for the infringement of any Product or Prana IP. Licensee has no right to initiate an action of its own against any alleged infringer without first obtaining the prior express written approval of UCANN. Licensee will fully cooperate with UCANN in the prosecution of any infringement action, including, without limitation, by the provision of evidence and testimony in any such action. Any sums recovered as a result of any judgment or settlement of any claim pertaining to infringement of the Prana IP or Products shall belong exclusively to UCANN.

3.6

Any and all work product resulting in a new invention, from this Agreement, and all proprietary or intellectual property rights therein, shall be the sole and exclusive property of the Licensee. In the event any such inventions are of a patentable nature, Licensee agrees to apply for a patent on the invention and assign any patent rights relating to the invention to the Licensee. Licensee will bear the costs of any patent applications pursued by the Licensee.

3.7

Licensee understands that the Licensee’s duties may involve writing or drafting various documents, brochures, publications or software codes for UCANN. Licensee hereby assigns any and all rights to such documents, brochures, publications or software codes to UCANN, together with the right to secure copyright therefor and all extensions and renewals of copyright throughout the entire world. UCANN shall have the right to make any and all revisions, omissions, additions, changes, specifications and adaptions, in whole or in part, with respect to such documents, brochures, publications or software codes.

3.8

3.9

The parties agree to execute any documents reasonably requested by the other party to effect any of the above provisions.

AUTHORIZATION, QUALITY STANDARDS, MARKETING. Licensee understands and agrees that it is an essential term of this Agreement for Licensee to protect the standards, goodwill and good reputation of UCANN, and agrees as follows:

4.1

Obligations of Licensor. At UCANN’s expense, UCANN shall provide, no later than fourteen (14) days following the execution of this Agreement, to Licensee all creative design, concepts, packaging designs, and digital assets to Licensee for use on the Packaging and in connection with the Products. All such items provided by UCANN shall constitute "Prana IP" and remain the sole and exclusive property of UCANN.

4.2

Obligations of Licensee.

(a)

The Packaging, Products and all advertising, and promotional materials created in connection with the Packaging and Products: (1) will be of a high standard in style, appearance and quality; (2) will conform with approved samples approved by the UCANN pursuant to Section 4.3 below; (3) will be safe for use by consumers and will comply with and pass all applicable state and local governmental rules, guidelines, safety codes and regulations; (4) will be manufactured, advertised, distributed and sold in accordance with the rules and regulations of the Jamaican Ministry Health and the Bureau of Standards Jamaica; and, (5) in a manner that will not reflect adversely on UCANN or any others with whom UCANN has contractual arrangements with respect to the Prana IP.

(b)

Licensee will use best efforts and dedicate its resources and expertise, to develop the formula, packaging, marketing strategy, and manufacturing and distribution plan for each of the Products, and to arrange for the marketing, promotion, and distribution of each of the Products in order to exploit same, as well as to enhance the reputation and goodwill associated with each Product throughout the Territory, and shall pay all costs associated with the foregoing.

(c)

As between UCANN and Licensee, Licensee is and will be solely and fully responsible for and will pay all costs and expenses in connection with the production, manufacture, distribution, marketing, promotion, advertisement and sale of the Products.

(d)

Licensee will obtain all permits, licenses and approvals necessary for the productions, manufacture, sale, advertisement and distribution of the Products and all advertising and promotion thereof. Licensee will conduct its respective activities under this Agreement in strict compliance with all applicable state and local laws, rules and regulations, including without limitation, minimum wage, benefits and overtime regulations and other laws pertaining to employees and workers.

(e)

Licensee will ensure that all Packaging and Products and all advertising and promotion thereof, are non-infringing, free from defects and suitable for the purpose for which it is intended.

(f)

Licensee will use its best efforts to promote and maximize sales and sales revenue relating to each of the Products in the Territory.

(g)

Licensee will not at any time do or suffer to be done any act or thing or fail to perform any act that might impair or affect the Prana IP and/or UCANN’s rights and interests in the Prana IP and/or the reputation of UCANN.

(h)

Licensee shall provide UCANN with any and all test results (whether required by rule or regulation or done internally) and any other material information related to the Products by Licensee and the items that are proposed to be sold by Licensee.

4.3

Licensor's Approvals.

(a)

UCANN shall have the right to approve the selection of any Product and Packaging including, but not limited to, formulas, taste, appearance, name, design, "look and feel", and branding for each of the Products, including, without limitation, all advertising, promotional and marketing materials in connection therewith (individually and collectively, "Approval Items"). Accordingly, Licensee shall submit to UCANN for its approval, at no cost or expense whatsoever to UCANN, full and complete materials for the Approval Items and at least one sample of each Approval Item as the same would be manufactured, used, distributed, marketed or sold. Unless permitted otherwise by law or statute, samples of Products containing medical marijuana or retail marijuana will be provided for viewing in the Licensee’s licensed facility located in the Territory.

(b)

UCANN has the sole right to place conditions on the Approval Items for any reason whatsoever, and to require Licensee to resubmit samples as often as necessary, in UCANN’s sole discretion, for the preservation of UCANN’s quality standards. Licensee will incorporate all changes requested by UCANN related to the Approval Items promptly.

(c)

Unless and until the Licensee shall receive UCANN’s written approval of such Approval Items, Licensee shall not produce or manufacture (other than for pre-production purposes), distribute or sell, exhibit or otherwise exploit any of the Approval Items. If UCANN approves in writing the Approval Item, the same shall be accepted to serve as an example of quality for such item, and the same may be manufactured by Licensee in strict conformity with the approved sample and Specifications. All approvals provided herein are effective only for the Term or renewal period in which Licensee has submitted and UCANN has approved, unless Licensee is otherwise notified in writing by UCANN.

(d)

Licensee shall not depart from the approved quality standards in any material respect without the prior written approval of UCANN. Approval Items not meeting those standards shall not be distributed, sold, or otherwise transferred under any circumstances without UCANN’s prior written authorization.

(e)

All Approval Items shall bear the Trademarks in the form specified by UCANN.

(f)

At UCANN’s request, the Licensee shall arrange for UCANN’s representative to enter the Licensee’s or its manufacturer’s premises for the purpose of inspecting the Products or the Licensee’s premises, in the event that UCANN shall determine that any of the Products at any time falls below the aforesaid standard of quality and content, the same shall be destroyed at the Licensee’s sole cost in the presence of UCANN’s representative.

4.4

Marketing.

(a)

UCANN shall have the right to approve in writing any proposed press releases, publications, and print, radio or television commercials or other media formats concerning any of the Products prior to the use of such advertising, and Licensee will incorporate any changes into any of the foregoing requested by UCANN.

(b)

Licensee will not produce, manufacture, advertise, distribute or sell the Products in any manner at any time or in any place out of the Territory or not specifically licensed hereunder.

(c)

Any change in price of the Products shall be agreed to in writing by UCANN prior to sale.

(d)

Licensee will not make any of the Products or items sold using the Products available as premiums, commercial tie-ins and/or special offers, connected to the purchase of any item, nor package any Product with any other product without the prior written consent of UCANN.

(e)

UCANN will use reasonable efforts to promote the Products, provided that such promotion is in compliance with the rules and regulations of the Jamaican Ministry of Health and the Bureau of Standards Jamaica

(f)

The Parties shall meet on a quarterly basis to review the performance and quality of the Products, develop and discuss marketing initiatives related to the Products, and make improvements and adjustments to the foregoing where mutually agreed.

4.5

Defect. If UCANN notifies Licensee of any defect in any Product, Packaging, or of any deviation from the approved use of any of the Prana IP, Licensee shall have fifteen (15) days from the date of notification by UCANN to cure such defect. Defective Products, Packaging, labels, marketing materials and/or designs in Licensee’s inventory shall not be used, distributed, sold, or otherwise transferred to any third party and shall, upon request by UCANN, be immediately recalled pursuant to Section 2.3(c) herein. However, if it is procedurally and financially practicable to correct such defects without compromising quality and without interfering or adversely affecting UCANN’s good will, said items may be distributed, marketed, or sold after all defects are corrected to the satisfaction of UCANN, which shall be indicated in writing. UCANN and/or its authorized representatives shall have the right at reasonable times, without notice, to inspect Licensee’s facilities, dispensaries, plants, warehouses, storage facilities.

4.6

Compliance Standards. Licensee shall comply with all applicable laws, regulations, standards and procedures relating or pertaining to the manufacture, use, advertising, distribution or sale of the Products. Licensee shall permit UCANN and/or its authorized representatives to inspect its records, procedures and facilities and to test or sample Products for compliance with this Section 4. Products which are found by UCANN at any time to be non-compliant with any the rules and regulations of the Jamaican Ministry of Health and the Bureau Of Standards Jamaica shall be deemed disapproved, even if previously approved by UCANN, and shall not be distributed or sold, and shall be subject to recall unless and until Licensee can demonstrate to UCANN’s satisfaction that such Products have been brought into full compliance.

LICENSEE’S REPRESENTATIONS AND WARRANTIES. Licensee hereby represents and warrants that:

5.1

This Agreement has been properly executed and delivered by an authorized representative of Licensee and constitutes the legal, valid and binding obligation of Licensee

which is fully enforceable against Licensee in accordance with its terms. Licensee has the requisite authority to enter into this Licensing Agreement and to carry out the transactions contemplated by this Licensing Agreement.

5.2

The execution, delivery and performance by such Licensee does not violate or breach the terms of any other agreement with any third party.

5.3

Licensee currently possesses and will maintain all state and local licenses, permits and approvals of all kinds necessary to undertake the activities contemplated herein; and

5.4

Licensee will clearly and unambiguously comply with the rules and regulations of the Jamaican Ministry of Health and the Bureau of Standards Jamaica relating to the operation of Licensee’s business, without exception.

UCANN’S REPRESENTATIONS AND WARRANTIES. UCANN hereby represents and warrants that: (i) this Agreement has been properly executed and delivered by an authorized representative of UCANN and constitutes the legal, valid and binding obligation of UCANN which is fully enforceable against UCANN in accordance with its terms; and (ii) UCANN has the requisite authority to enter into this Agreement and to carry out the transactions contemplated by this Agreement, and the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by UCANN.

INDEMNIFICATION. Licensee will protect, defend, indemnify and hold UCANN and UCANN’s officers, directors, members employees, successors and assigns harmless (including, without limitation, from all damages, liabilities, settlements, and costs payable to a third party) from and against any and all liability, loss claim, action, demand and/or expense (including reasonable attorneys’ fees) made or threatened by third parties, including, without limitation, claims for product liability, arising out of or in any manner connected with: (i) this Agreement or the development, manufacture, production, distribution, sale, advertisement, marketing, or promotion of the Packaging, Product(s), or Concentrate; (ii) any use of the Prana IP by Licensee; (iii) Licensee’s operations including but not limited to, manufacturing, sales, distribution, marketing or general business activities; (iv) the preparation, manufacture, packaging, storage, warehousing, distribution or sale of the Products or any other products manufactured or sold by Licensee; and (v) any negligent act, misfeasance or nonfeasance by Licensee or any of its agents, contractors, servants or employees. Licensee shall provide: (i) prompt notification of any potential suit or claim; and (ii) reasonable assistance, at Licensee’s expense, in the defense and settlement of any suit or claim(s), coming to its attention. If a conflict of interest exists vis-à-vis the interests of UCANN and Licensee, or if Licensee fails to diligently defend UCANN, UCANN shall be entitled to defend the suit or claim with counsel of its own choosing at the expense of Licensee, for the account of, and at the risk of, Licensee. In addition, UCANN can participate in the defense or settlement of any suit or claim(s) at UCANN’s sole cost and expense for reasonable out-of-pocket expenses.

CONFIDENTIAL INFORMATION.

8.1

Confidentiality. All nonpublic technical or business information disclosed or otherwise made available by UCANN to Licensee, the Prana IP, services, tools, information related to a UCANN’s business plans developed for Licensee, or other information given to Licensee and designated “Confidential” by UCANN, shall be deemed “Confidential Information.” Confidential Information does not include any information that it is already known by Licensee as of the date such disclosure is made; is available to the Licensee from printed publications as of the date such disclosure is made or becomes publicly available through no fault of Licensee, or it is disclosed to License by an independent third party through no fault of Licensee.

8.2

Licensee agrees that it will not disclose such Confidential Information without the prior written consent of UCANN. Licensee shall restrict disclosure of Confidential Information solely to its attorneys, principals, and employees with an actual and present need to know in order for the disclosing party to fulfill its obligations under this Agreement or if such disclosure is required by law. Licensee shall use a reasonable degree of care to prevent the unauthorized use or disclosure of Confidential Information. This provision shall survive the termination of this Agreement. Nothing contained in this Licensing Agreement shall be construed to grant Licensee any right, title or interest in or to any of Confidential Information of UCANN. All rights and title to all forms of the Confidential Information and all copies thereof shall be and remain with UCANN. Licensee shall not copy or otherwise reproduce, in whole or in part, any of UCANN’s Confidential Information without the prior written authorization of UCANN, except as may be reasonably necessary to fulfill the purposes of this Agreement.

8.3

Enforcement. Licensee agrees that its breach of this Section 8 would leave UCANN without an adequate remedy at law, and that UCANN will be entitled to seek an injunction against such breach, in addition to all other remedies available to such party. Notwithstanding anything to the contrary, it shall not be a breach of this Section for a party to disclose the existence or terms of this Licensing Agreement in order to enforce the terms hereof.

8.4

Return/Destroy Obligation. Upon the termination or expiration of this Licensing Agreement, Licensee will promptly return to UCANN all tangible copies of UCANN’s Confidential Information in Licensee’s possession or control.

INSURANCE OBLIGATIONS.

9.1

Licensee shall provide and maintain at its sole cost and expense during the term of this Licensing Agreement, and as provided in Section 9.2 below, the insurance coverage described in this Section 9 covering its operations. Evidence of such coverage reasonably satisfactory to UCANN shall be delivered to UCANN upon request therefor. Such insurance shall (i) be issued by reputable and financially sound insurance companies reasonably acceptable to UCANN holding an “A” rating in Best’s Key Rating Guide; (ii) specifically identify this Licensing Agreement; (iii) contain the express condition that UCANN is to be given written notice at least 30 days in advance of any modification, termination or non-renewal of any such insurance; and (iv) includes an endorsement identifying UCANN as an additional insured.

9.2

Such insurance shall be primary and without right of contribution from any insurance maintained by UCANN, shall, except for the insurance described in Section 9.2(b) below, name UCANN as an additional insured and shall include, but not be limited to:

(a)

Commercial General Liability insurance endorsed for $1,000,000 per occurrence with not less than a $2,000,000 aggregate per year and written on an occurrence form coverage basis;

(b)

Statutory Workers’ Compensation insurance in the Territory and employer’s liability insurance with limits of not less than $100,000: (i) for each accident; and (ii) for each employee for occupational disease; and (iii) for policy limit for disease;

(c)

Umbrella/Excess Liability insurance with minimum limits such that (i) when added to the per occurrence coverage of Section 9.2(a) and Section 9.2(b) above, the per occurrence coverages of not less than $1,000,000 and written on an occurrence form coverage basis, and (ii) general aggregate coverages of not less than $1,000,000;

9.3

Coverage is to be effective as of the Effective Date of this Licensing Agreement and is to continue in force for a period of at least one (1) year after the expiration or termination for any reason of this Licensing Agreement. Coverage shall be renewed continuously and shall be in full force and effect, without lapse, for the duration of this Licensing Agreement. Licensee agrees that the obligations under this Section are continuing and shall survive the termination or expiration of this Licensing Agreement for one (1) year following such termination or expiration.

10.

FEES AND PAYMENT. In consideration for the rights and licenses granted in this Agreement, the Licensee shall make payments to UCANN as follows.

10.1

Prana “Bio Nutrient Medicinals” capsule Supply Fee. Licensee shall pay UCANN a Supply Fee for the Concentrate provided by UCANN to Licensee for the Prana “Bio Nutrient Medicinals” capsules at the rate of $550 per one gallon of Concentrate. Payment shall be due at the time the order for Concentrate is placed.

10.2

Prana “Bio Nutrient Medicinals” sublingual Supply Fee. Licensee shall pay UCANN a Supply Fee for the Concentrate provided by UCANN to Licensee for the Prana “Bio Nutrient Medicinals” sublingual at the rate of $737.50 per one gallon of Concentrate. Payment shall be due at the time the order is placed.

10.3

For all other Products other than those designated as 1 and 2 on Schedule B, 15% on the gross sales of such Products.

10.4

Packaging Fee. Licensee shall pay UCANN an agreed upon Packaging Fee per unit of Packaging provided by UCANN to Licensee. Payment shall be due at time the order is placed.

10.5

Delivery of Payment. Payments shall be delivered by Licensee to UCANN in negotiable United States currency, check or wire transfer at UCANN’s business address at:

United Cannabis Corp.

301 Commercial Rd.

Suite D

Golden, CO. 80401

or at such other location as UCANN may, from time to time, designate in writing and with advanced notice to Licensee.

10.6

No Reductions or Set-Offs. All payments pursuant to this Section 10 shall be made to Licensor in US Dollars. Payments shall be payable without reduction or setoff for any costs or expenses, including, but not limited to, sales, use or any other tax, whether incurred by Licensee or any other party. If any withholding is required by law the Licensee shall immediately notify UCANN of the specific withholding requirement and (i) make such withholding; and (ii) account for the amount withheld to the relevant authority; and (iii) provide to UCANN the relevant tax deduction certificate in UCANN’s name; or (v) pay to UCANN such amount, as will after deduction of any withholding, be equal to the amount that would have been received if no deduction had been made.

11.

TERMINATION. This Agreement and the License granted hereunder may be terminated prior to the expiration of the term of this Agreement as follows:

This Agreement may be terminated by UCANN by written notice to LICENSEE upon the occurrence of any of the following: (a) failure of LICENSEE to pay any amounts owed hereunder when due; (b) LICENSEE’s material breach of or non-compliance with any other term of this Agreement, which other breach or non-compliance is not cured within ten calendar days after receipt of written notice of such breach or noncompliance from UCANN; (c) failure of LICENSEE to maintain all required licenses and governmental authorizations required for the conduct of its business or to comply in all material respects with applicable laws; (d) any action or inaction by LICENSEE that damages UCANN’s products, marks, patents and/or intellectual property, in UCANN’s reasonable discretion; or (e) LICENSEE ceases operations, begins steps to wind up its affairs and dissolve, makes a general assignment for the benefit of creditors or is the subject of a voluntary or involuntary bankruptcy, insolvency or similar proceeding that is not terminated within forty days of filing.

ii.

This Agreement may be terminated by LICENSEE by written notice to UCANN (a) in the event of material breach by UCANN of its obligations under this Agreement, which breach is not cured within ten calendar days after receipt of written notice of such breach from LICENSEE, or (b) UCANN ceases operations, begins steps to wind up

its affairs and dissolve, makes a general assignment for the benefit of creditors or is the subject of a voluntary or involuntary bankruptcy, insolvency or similar proceeding that is not terminated within forty days of filing.

12.

EFFECT OF TERMINATION.

12.1

Effect of Expiration or Termination. After expiration or termination of this Licensing Agreement for any reason:

(a)

All rights granted to the Licensee shall forthwith revert to UCANN and all of the Products, Packaging, Concentrate or Prana IP shall remain the sole property of UCANN. Licensee shall provide UCANN with contact information for and authorization to UCANN to work with any vendors used by Licensee in any way related to the Products, Packaging, Concentrate, or Prana IP;

(b)

Licensee shall immediately discontinue the production, manufacture, advertising, use, distribution and sale of all Products, Packaging and marketing materials, Trademarks, and all similar marks, subject to any right of Sell-Off Period pursuant to paragraph 12.2 below, or if otherwise authorized in writing by UCANN;

(c)

Payments shall be payable in accordance with Section 10 above and shall immediately become due and payable to UCANN;

(d)

Licensee shall deliver to UCANN within 30 business days a statement indicating the number and description of the Products in stock or in the process of manufacture as at such expiration of the Term or earlier termination of this Agreement. UCANN may, upon reasonable prior notice, require the Licensee to conduct a physical inventory in the presence of the UCANN’s duly authorized representative in order to ascertain or verify such statement;

(e)

Licensee shall deliver to UCANN all creations, designs, materials and intellectual property created or licensed by Licensee pursuant to paragraph 2.1 above or provided to it by UCANN;

(f)

All warranties and indemnification obligations of the parties and all provisions which expressly or by implication are intended to apply after expiration or termination of this agreement shall survive and continue to apply;

(g)

Any termination hereunder will be without prejudice to any of UCANN’s rights or remedies.

12.2

Sell Off Period. After expiration or termination of this Agreement for any reason, and only upon the written authorization of UCANN, Licensee may continue to sell and distribute its remaining inventory of Products in existence at the time of expiration or termination for a period of 30 days after the date of termination or expiration (the “Sell Off Period”). Notwithstanding the foregoing, Licensee shall not produce, manufacture, advertise, use, distribute or sell any Products, packaging or advertising materials after the expiration or termination of this

Agreement in the event that the termination is due to: (i) departure of Licensee from the quality and style approved by UCANN pursuant to Section 4 of this Agreement; (ii) failure of Licensee to obtain product or design approval; (iii) violation of any of the rules and regulations of the Jamaican Ministry of Health and the Jamaican Ministry of Standards and Measurements ; or (iv) any other reason that in the sole discretion of UCANN, would make the disposal of the remaining inventory impracticable or damaging to the reputation or name of UCANN. Licensee shall not in any event have the right to manufacture any of the Products either in anticipation of the expiration of the Term or during the Sell Off Period. Within 30 days following the expiration of the Term or termination of this Agreement, Licensee shall furnish to UCANN a detailed written statement as to the inventory of the Products as of the expiration of the Term or date of termination of this Agreement. Notwithstanding the foregoing, UCANN shall have the right to terminate the Sell-Off Period with respect to any or all of the Products (as UCANN may elect) by so notifying Licensee. Licensee shall render statements and pay payments to UCANN in accordance with the terms and conditions of this Agreement for all sales of the Products during the Sell Off Period.

12.3

Inventory. Within 30 business days following the expiration of the Term or earlier termination of this Agreement or the end of the Sell Off Period (as applicable), Licensee shall furnish UCANN with a further detailed written statement as to the inventory of each of the Products as of the expiration of the Term or earlier termination of this agreement or the end of the Sell Off Period (as applicable) and UCANN shall at its election either:

(a)

Purchase all or part of such inventory, at the Licensees actual out of pocket cost of manufacture (Licensee shall then promptly ship all such items at Licensees expense to UCANN or its designee or shall make them available at UCANN’s place of business for UCANN or its designee to take possession thereof); or

(b)

Require Licensee to destroy such remaining inventory in a manner satisfactory to UCANN and in the presence of UCANN’s representative and/or provide UCANN with an affidavit of such destruction sworn to by one of Licensee principal officers.

12.4

Licensee shall not during the two-month period preceding the date on which the Term is due to expire manufacture excess Products.

13.

RELATIONSHIP OF THE PARTIES. UCANN and Licensee acknowledge that in fulfilling the obligations under this Agreement, UCANN and Licensee are purely contracting parties and neither is the principal or agent, parent or subsidiary, master or servant, or employer or employee of the other. Neither UCANN nor Licensee has the authority to bind the other to any third person or otherwise to act in any way as the representative of the other unless expressly authorized by this Agreement otherwise expressly agreed to in writing signed by both Parties. Nothing contained in the Agreement is intended to give rise to a partnership, joint venture, or employment relationship between the Parties or to impose upon the Parties any of the duties or responsibilities of partners, joint venturers, or employer-employee. Except as otherwise authorized in writing, Licensee agrees to indicate to any third-party vendor or customer who is or may be doing business with UCANN, as appropriate, that Licensee has no authority to bind UCANN. Employees, agents or other persons furnished by UCANN shall be solely the employees or agents of UCANN and shall be under the sole and exclusive direction and control

of UCANN. The Parties understand and agree, for purposes of any federal, state, or local law, that neither UCANN nor any of its agents or employees will be treated as agents or employees of Licensee with respect to the Licensing Agreement and that UCANN has sole responsibility for all decisions with respect to its personnel, including but not limited to hiring, firing, disciplining, directing, training, setting and paying compensation, and providing benefits, if any.

14.

COMPLIANCE WITH REGULATORY AUTHORITES. Notwithstanding anything contained herein to the contrary, the Parties acknowledge and agree that all provisions of this Agreement may be subject to regulatory oversight and approval. In the event that any provision is determined to be non-compliant with any the rules and regulations of the Jamaican Ministry of Health and the Bureau Of Standards Jamaica this Agreement shall be amended by the Parties in good faith within the timeframe given by the applicable regulatory authority or ____30_____ days, whichever occurs earlier. If the Parties are unable to negotiate appropriate amendments within the required timeframe, this Agreement shall terminate and be subject to the provisions of Section 12 above.

15.

ASSIGNABILITY. This Licensing Agreement is personal to Licensee. Neither this Licensing Agreement nor any of Licensee’s rights hereunder shall be sold, transferred or assigned by Licensee without UCANN’s prior written approval. No rights shall be vested by operation of law or otherwise in any assignee, receiver, liquidator, trustee or other party. Other than as permitted by UCANN, any attempted assignment by Licensee without Licensor's prior written approval is a material breach of this Agreement and such purported assignment by Licensee will be null and void and will not pass any rights or interests to any purported assignee. Subject to the foregoing, this Agreement shall be binding on and inure to the benefit of the parties and their respective successors and assigns.

16.

ENTIRE AGREEMENT.

16.1

16.2

Notwithstanding anything contained herein to the contrary, if any rules and regulations of the Jamaican Ministry of Health and the Bureau of Standards Jamaica change in any way which impacts this Agreement, the parties shall address any such changes in good faith to negotiate adjustments to comply with applicable law.

17.

PRESS RELEASE, ETC. Except as otherwise expressly provided by this Licensing Agreement or otherwise authorized by UCANN in writing, Licensee may not publicize UCANN’s Products or Prana IP, including but not limited to name, logos, and/or Trademarks or Licensee’s selection of UCANN’s services or the existence and nature of this Licensing Agreement.

18.

TERM AND RENEWAL. This Agreement and the license granted hereunder shall continue in full force and effect for 5 years from the Effective Date unless otherwise terminated by operation of law or in accordance with the terms of this Licensing Agreement. This Licensing Agreement shall renew automatically at the end of the Term at the sole discretion of UCANN.

19.

TERRITORY. The license granted by UCANN to Licensee under this Agreement shall be restricted to the countries listed on Schedule E.

20.

COUNSEL/INTERPRETATION. Each party acknowledges that it has obtained legal advice in connection with this Agreement and agrees that this Agreement will be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing an instrument to be drafted.

21.

FORCE MAJEURE. Neither Licensee nor UCANN shall be liable for any failure to perform its obligations hereunder where such failure results from any cause beyond the party’s reasonable control, including, without limitation, change of regulatory structure, weather or climate related challenges, change in the rules and regulations of the Jamaican Ministry of Health and the Jamaican Ministry of Standards and Measurements that makes the party’s activities reasonably impracticable, regulatory action by any government or government agency, law enforcement interference, natural disaster, or act of God.

22.

GOVERNING LAW; ATTORNEY FEES. This Licensing Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Colorado. Any action arising out of or relating to this Licensing Agreement shall be brought only in the state courts of Denver County, Colorado, and the Parties expressly consent to such court’s jurisdiction and irrevocably waive any objection with respect to the same, including any objection based on forum non conveniens . The parties agree that in the event that one party commences an action against the other party, then the prevailing party in any such action shall be awarded its reasonable attorneys’ fees and costs, in addition to any other relief to which it may be entitled.

23.

SEVERABILITY. The determination that any provision of this Licensing Agreement is invalid or unenforceable shall not invalidate the entire Licensing Agreement, and the remainder of this Licensing Agreement shall be valid and enforceable to the fullest extent permitted by law.

24.

NOTICES. Notices under this agreement shall be sent to:

For Licensee: Mr. James Rawle,

Managing Director,

Lasco Manufacturing Limited,

27 Red Hills Road,

Kingston 10,

Jamaica.

With copy to:

Mr. Vincent A. Chen,

Attorney-at-law and Company Secretary,

6 Haining Road,

Kingston 5,

Jamaica

Email address: lbfarms@hotmail.com

For UCANN:

United Cannabis Corporation

John Walsh

CFO United Cannabis Corporation

301 Commercial Rd.

Suite D

Golden, CO. 80401

25.

COUNTERPARTS.

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

26.

HEADINGS. All headings used in this Agreement are for clarification and reference purposes only.

UCANN

LICENSEE

By: /s/ Earnest Blackmon

By: /s/ James E.D. Rawle

Name: Earnest Blackmon

Name: James E.D. Rawle

Title: CEO

Title: Managing Director

Date: 12/11/2017

For: United Cannabis Corporation

For: Lasco Manufacturing Limited

SCHEDULE A

INTELLECTUAL PROPERTY

Prana “Bio Nutrient Medicinals” Capsule in the following variety:

Prana P5/ Prana Hemp;

which includes all solutions, oversight and management, research and development, technology, scientific information, ingredient list, ingredient mix and other associated intangible and tangible information relating to the products.

Prana “Bio Nutrient Medicinals” Sublingual in the following variety:

Prana P5/ Prana Hemp;

Trademarks

Patents- US Patent # 9730911

SCHEDULE B

PRODUCTS

[ List Products]

Prana “Bio Nutrient Medicinals” Capsule in the following variety:

Prana P5/ Prana Hemp

Prana “Bio Nutrient Medicinals” Sublingual in the following variety:

Prana P5/ Prana Hemp

Prana Roll on in the following variety

Prana P5/ Prana Hemp

CBD water

Prana/ Bolt Balm

SCHEDULE C

SPECIFICATIONS

[List Specifications]

Prana P5/ Prana Hemp

MCT oil, Cannabis Terpenes and isolated CBD or similar combinations

Prana P5/ Prana Hemp

MCT oil, Cannabis Terpenes, CBD isolate and stevia or similar combinations.

CBD Water

Water mixed with water soluble CBD

Prana/ Bolt Balm

Topical application with a variety of essential oils mixed with hemp derived CBD and terpenes.

Prana Roll on

(a)

Arnica, lavender, chamomile, Cannabis derived CBD, Cannabis Terpenes, Almond Oil, Juniper and Eucalyptus.

SCHEDULE D

AUTHORIZED BRANDS

Prana “Bio Nutrient Medicinals”:

Prana P5/ Prana Hemp;

Prana CBD water

Prana/ Bolt Balm

SCHEDULE E

THE TERRITORY

Jamaica and the English speaking Caribbean including but not limited to

Trinidad and Tobago

Barbados

Antigua and Barbuda

Central America including but not limited to

Guyana

Honduras

But excluding Mexico

EXHIBIT 23.1

CONSENT OF ATTORNEYS

Reference is made to the Registration Statement of United Cannabis Corporation on Form S-1 whereby certain selling shareholders propose to sell up to 7,000,000 shares of the Company’s common stock. Reference is also made to Exhibit 5 included in the Registration Statement relating to the validity of the securities proposed to be issued and sold.

We hereby consent to the use of our opinion concerning the validity of the securities proposed to be issued and sold.


	Very truly yours,

	HART & HART, LLC



	/s/ William T. Hart
	William T. Hart

Denver, Colorado

February 16, 2018

EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors of
United Cannabis Corporation

We consent to the use in this Registration Statement on Form S-1 of our report of independent registered public accounting firm dated February 24, 2017 on the balance sheet of United Cannabis Corporation as of December 31, 2016 and 2015, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the two years ended December 31, 2016.

/s/ BF Borgers, CPA PC

BF Borgers, CPA PC

February 16, 2018

Lakewood, Colorado