UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
100 F Street NE
WASHINGTON, DC 20002
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended September 30, 2011.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from __________ to ___________
Commission File Number: 001-28911
CANNABIS SCIENCE, INC.
(Exact name of registrant as specified in its charter)
| |
Nevada | 91-1869677 |
(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.) |
organization) |
|
6946 N Academy Blvd, Suite B #254
Colorado Springs CO 80918
(Address of principal executive offices,
including zip code)
888-889-0888
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ( 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes (X) No ( )
Indicate by check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (X)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a not-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer ( ) Accelerated filer ( )
Non-accelerated filer ( ) Smaller reporting company (X)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ( ) No (X)
At November 4, 2011, the Company had outstanding of 241,920,574 shares of Common Stock, $0.001 par value per share.
CANNABIS SCIENCE, INC.
FORM 10-Q
For the Quarter Ended September 30, 2011
TABLE OF CONTENTS
| Page |
PART I FINANCIAL INFORMATION |
|
Item 1. Financial Statements | 3 |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 4 |
Item 3. Quantitative and Qualitative Disclosures about Market Risk | 5 |
Item 4. Controls and Procedures | 6 |
PART II OTHER INFORMATION |
|
Item 1. Legal Proceedings | 7 |
Item 1A. Risk Factors | 7 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 7 |
Item 3. Defaults Upon Senior Securities | 8 |
Item 4. Submission of Matters to a Vote of Security Holders | 8 |
Item 5. Other Information | 8 |
Item 6. Exhibits and Certifications | 8 |
2
PART 1 FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS
CANNABIS SCIENCE, INC.
| Page No. |
Balance Sheets as of September 30, 2011 and December 31, 2010 | F-1 |
Statements of Operations for the three and nine months ended September 30, 2011 and 2010 and for the period January 27, 2005 (Inception) to September 30, 2011 | F-2 |
Statements of Shareholders Equity/(Deficit) for the Period from January 27, 2005 (inception) to September 30, 2011 | F-3 |
Statements of Cash Flows for the nine months ended September 30, 2011 and 2010 and for the period January 27, 2005 (Inception) to September 30, 2011 | F-5 |
Notes to Financial Statements | F-6 |
3
CANNABIS SCIENCE, INC. (A Development Stage Company) Balance Sheets September 30, 2011 and December 31, 2010 | ||||
|
| September 30, |
| |
|
| 2011 | December 31, | |
|
| (unaudited) $ | 2010 $ | |
ASSETS |
|
|
| |
Current Assets |
|
|
| |
Cash |
| 6,190 | 1,190 | |
Prepaid expenses | | 3,128 | 18,009 | |
Total current assets |
| 9,318 | 19,199 | |
|
| |
| |
Deposits | | 6,666 | 6,666 | |
Computer and Equipment, net of accumulated |
| | | |
depreciation of $3,425 and $2,389 |
| 1,145 | 2,181 | |
|
| |
| |
Intangibles, net of accumulated amortization |
| |
| |
of $73,125 and $57,264 |
| 52,875 | 68,736 | |
TOTAL ASSETS |
| 70,004 | 96,782 | |
|
| |
| |
LIABILITIES AND STOCKHOLDERS' DEFICIT |
| |
| |
Current Liabilities |
| |
| |
Accounts payable |
| 495,844 | 393,753 | |
Accrued expenses |
| 1,267,761 | 675,000 | |
Advances from related parties |
| 156,818 | 107,835 | |
Advances from officers |
| - | 1,807 | |
Notes payable to stockholders | | 188,055 | 171,509 | |
Deferred license revenue |
| - | 73,334 | |
Total current liabilities and total liabilities |
| 2,108,478 | 1,423,238 | |
|
|
|
| |
Stockholders Deficit |
|
|
| |
Preferred stock, $0.001 par value |
|
|
| |
Authorized 1,000,000 shares |
|
|
| |
Issued and outstanding, 999,999 shares |
|
|
| |
respectively |
| 1,000 | 1,000 | |
Common stock, $0.001 par value |
| |
| |
Authorized 250,000,000 shares |
| |
| |
Issued and outstanding, 184,120,574 shares and |
| |
| |
101,170,574, respectively |
| 184,121 | 101,171 | |
Prepaid consulting | | (283,462) | (1,322,630) | |
Additional paid-in capital |
| 66,199,303 | 62,091,628 | |
Accumulated deficit |
| (68,139,436) | (62,197,625) | |
Total stockholders' deficit |
| (2,038,474) | (1,326,456) | |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
| 70,004 | 96,782 | |
|
|
The accompanying notes are an integral part of these financial statements.
F-1
CANNABIS SCIENCE, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010 AND THE CUMULATIVE PERIOD FROM JANUARY 27, 2005 (INCEPTION) TO SEPTEMBER 30, 2011 (UNAUDITED) | |||||||||||||||
| | | | | | | |||||||||
| | For the three months ended September 30, | | For the nine months ended September 30, | Period from January 27, 2005 (inception) to September 30, 2011 | ||||||||||
|
| ||||||||||||||
|
| 2011 |
| 2010 | | 2011 | 2010 | ||||||||
$ | $ | $ | $ | $ | |||||||||||
Revenue | | 368 | | - | | 73,702 | - | 90,107 | |||||||
|
|
| |||||||||||||
Operating Expenses |
|
|
| ||||||||||||
Investor relations | 17,660 | 3,205 | 33,052 | 49,000 | 1,153,844 | ||||||||||
Professional fees | 25,115 | 38,100 | 70,144 | 39,975 | 32,721,324 | ||||||||||
Technology license royalties | - |
| - | - | - | 160,417 | |||||||||
Impairment of oil and gas well lease | - | - | - | - | 5,089,811 | ||||||||||
Net loss (gain) on settlement of liabilities | 873,700 | 945,500 | 3,245,400 | 2,422,500 | 2,985,937 | ||||||||||
Depreciation and Amortization | 5,633 | 5,555 | 16,897 | 21,734 | 76,116 | ||||||||||
General and administrative |
| 463,324 | 1,414,889 | 2,649,683 | 2,088,615 | 22,429,544 | |||||||||
Total operating expenses | 1,385,431 | 2,407,249 | 6,015,176 | 4,621,824 | 64,616,993 | ||||||||||
Net Operating Loss | (1,385,063) | (2,407,249) |
| (5,941,474) | (4,621,824) | (64,526,886) | |||||||||
|
|
|
| ||||||||||||
Other income (expense) |
| - | - | (337) | - | 66,021 | |||||||||
Interest expense, net | - | - | - | - | (153,711) | ||||||||||
Beneficial conversion feature |
| - |
| - | - | - | (1,098,992) | ||||||||
Net Income (Loss) Before Income Taxes |
| (1,385,063) | (2,407,249) |
| (5,941,812) | (4,621,824) | (65,713,569) | ||||||||
Income tax provision |
| - | - | - | - | (2,035,065) | |||||||||
Income tax benefit |
| - | - |
| - | - | 1,210,270 | ||||||||
Net tax |
| - | - | - | - | (824,795) | |||||||||
|
|
| |||||||||||||
Net Loss From Continuing |
|
| |||||||||||||
Operations |
| (1,385,063) | (2,407,249) |
| (5,941,812) | (4,621,824) | (65,538,364) | ||||||||
Discontinued operations | - | - | - | - | (2,425,868) | ||||||||||
Income tax benefit | - | - | - | - | 824,795 | ||||||||||
Net Loss | (1,385,063) | (2,407,249) |
| (5,941,812) | (4,621,824) | (68,139,437) | |||||||||
|
| ||||||||||||||
Net loss per common share | $ (0.01) | $ (0.04) |
| $ (0.04) | $ (0.10) |
| |||||||||
- Basic and diluted |
| ||||||||||||||
|
|
|
| ||||||||||||
Weighted average number of |
|
|
|
|
| ||||||||||
common shares outstanding |
| 152,354,688 | 68,610,163 | 141,346,215 | 47,087,870 |
| |||||||||
|
|
|
|
The accompanying notes are an integral part of these financial statements.
F-2
CANNABIS SCIENCE, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF SHAREHOLDERS EQUITY/(DEFICIT) FOR THE PERIOD FROM JANUARY 27, 2005 (inception) to SEPTEMBER 30, 2011 (Unaudited) | ||||||||||||||
|
|
|
|
| Additional |
|
|
| ||||||
Preferred | Common | Paid-in | Prepaid | Accum. |
| |||||||||
Shares | Par | Shares | Par | Capital | Consulting | Deficit | Total | |||||||
$ |
| $ | $ | $ | $ | $ | ||||||||
Bal, Jan 27, 2005 | - | - | - | - | - | - | - | - | ||||||
Founder's stock issued |
|
| 83,800 | 84 | (84) | - | - | - | ||||||
Stock issued for debt |
|
| 8,000 | 8 | 399,992 | - | - | 400,000 | ||||||
Shares issued for |
|
|
|
|
|
|
|
| ||||||
license agreement |
|
| 86,188 | 86 | (86) | - | - | - | ||||||
Effect of reverse merger |
|
| 13,840 | 14 | (200,014) | - | - | (200,000) | ||||||
Divestiture of subsidiary |
|
|
|
|
|
|
| |||||||
to related party |
| - | - | 544,340 | - | - | 544,340 | |||||||
Net loss for the period |
|
|
|
|
| (807,600) | (807,600) | |||||||
Bal, Dec 31, 2005 | - | - | 191,828 | 192 | 744,148 | - | (807,600) | (63,260) | ||||||
Shares issued for |
|
|
|
|
|
|
|
| ||||||
employment |
|
| 45,500 | 45 | 8,487,455 | - | - | 8,487,500 | ||||||
Shares issued for |
|
|
|
|
|
|
|
| ||||||
service |
|
| 171,080 | 171 | 28,798,329 | (7,633,750) | - | 21,164,750 | ||||||
Shares issued for |
|
|
|
|
|
|
|
| ||||||
lease agreement |
|
| 6,770 | 7 | 406,193 | - | (350,200) | 56,000 | ||||||
Net loss for the year |
|
|
|
|
|
| (36,906,584) | (36,906,584) | ||||||
Bal, Dec 31, 2006 | - | - | 415,178 | 415 | 38,436,125 | (7,633,750) | (38,064,384) | (7,261,594) | ||||||
Shares issued for |
|
|
|
|
|
|
|
| ||||||
service |
|
| 63,020 | 63 | 528,285 | (387,500) |
| 140,848 | ||||||
Shares issued for |
|
|
|
|
|
|
|
| ||||||
debt |
|
| 350,000 | 350 | 349,650 |
|
| 350,000 | ||||||
Amortization of |
|
|
|
|
|
|
|
| ||||||
beneficial conversion |
|
|
|
|
|
|
| |||||||
feature |
|
|
|
| 1,066,657 |
|
| 1,066,657 | ||||||
Amortization of shares |
|
|
|
|
|
|
| |||||||
issued for services |
|
|
|
|
| 8,021,250 |
| 8,021,250 | ||||||
Shares issued for |
|
|
|
|
|
|
|
| ||||||
properties |
|
| 500,000 | 500 | 4,999,500 |
|
| 5,000,000 | ||||||
Net loss for the year |
|
|
|
|
| (15,007,117) | ( 15,007,117) | |||||||
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
|
| ||||||||||||||||||
| Preferred | Common | Paid-in | Prepaid | Accum. |
|
|
| ||||||||||||||||||||
| Shares | Par | Shares | Par | Capital | Consulting | Deficit | Total |
|
| ||||||||||||||||||
|
| $ |
| $ | $ | $ | $ | $ |
|
| ||||||||||||||||||
Bal, Dec 31, 2007 | - | - | 1,328,198 | 1,328 | 45,380,217 | - | (53,071,501) | (7,689,956) |
|
| ||||||||||||||||||
Amortization of |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
beneficial conversion |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
feature |
|
|
|
| 32,335 |
|
| 32,335 |
|
| ||||||||||||||||||
Cancellation and |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
amortization of shares |
|
| (919) | (1) | 1 |
|
| - |
|
| ||||||||||||||||||
Shares issued for cash |
|
| 10,000 | 10 | 19,990 |
|
| 20,000 |
|
| ||||||||||||||||||
Shares issued for debt |
|
| 990,000 | 990 | 98,010 |
|
| 99,000 |
|
| ||||||||||||||||||
Shares issued for |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
acquisition |
|
| 10,000,000 | 10,000 | 2,490,000 |
|
| 2,500,000 |
|
| ||||||||||||||||||
Shares issued for |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
service |
|
| 270,000 | 270 | 128,230 |
|
| 128,500 |
|
| ||||||||||||||||||
Net profit for the year |
|
|
|
|
|
| 3,559,617 | 3,559,617 |
|
| ||||||||||||||||||
Bal, Dec 31, 2008 | - | - | 12,597,279 | 12,597 | 48,148,783 | - | (49,511,884) | (1,350,504) |
|
| ||||||||||||||||||
Shares issued for cash |
|
| 2,522,495 | 2,523 | 197,552 |
|
| 200,075 |
|
| ||||||||||||||||||
Shares issued for |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
service |
|
| 8,855,000 | 8,855 | 2,507,195 |
|
| 2,516,050 |
|
| ||||||||||||||||||
Cancellation of shares |
|
| (10,000) | (10) | 10 |
|
| - |
|
| ||||||||||||||||||
Shares issued for debt |
|
| 3,680,000 | 3,680 | 2,020,320 |
|
| 2,024,000 |
|
| ||||||||||||||||||
Shares issued for |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
service | 999,999 | 1,000 |
|
|
|
|
| 1,000 |
|
| ||||||||||||||||||
Shares issued for |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
assets |
|
| 2,100,000 | 2,100 | 123,900 |
|
| 126,000 |
|
| ||||||||||||||||||
Net loss for the year |
|
|
|
|
|
| (4,532,061) | (4,532,061) |
|
| ||||||||||||||||||
Bal, Dec 31, 2009 | 999,999 | 1,000 | 29,744,774 | 29,745 | 52,997,760 | - | (54,043,945) | (1,015,440) |
|
| ||||||||||||||||||
Common stock issued for cash | - | - | 1,245,800 | 1,246 | 137,540 |
| - | 138,786 |
|
| ||||||||||||||||||
Common stock issued for services | - | - | 26,680,000 | 26,680 | 3,670,978 | ( 3,530,808) | - | 166,850 |
|
| ||||||||||||||||||
Common stock issued for acquisition write-off | - | - | 350,000 | 350 | 36,150 | - | - | 36,500 |
|
| ||||||||||||||||||
Common stock issued for debt | - | - | 42,750,000 | 42,750 | 5,249,600 | - | - | 5,292,350 |
|
| ||||||||||||||||||
Amortization of shares issued for services | - | - | - | - | - | 2,208,178 | - |
2,208,178 |
|
| ||||||||||||||||||
Common shares pending cancelation | - | - | 400,000 | 400 | (400) |
| - | - |
|
| ||||||||||||||||||
Net loss for the period | - | - | - | - | - | - | (8,153,680) | (8,153,680) |
|
| ||||||||||||||||||
Bal, Dec 31, 2010 | 999,999 | 1,000 | 101,170,574 | 101,171 | 62,091,628 | (1,322,630) | (62,197,625) | (1,326,456) |
|
| ||||||||||||||||||
Common stock issued for services | - | - | 20,750,000 | 20,750 | 861,875 | (851,400) | - | 31,225 |
|
| ||||||||||||||||||
Common stock issued for debt | - | - | 62,600,000 | 62,600 | 3,245,400 | - | - | 3,308,000 |
|
| ||||||||||||||||||
Common shares cancelled | - | - |
|
| (400,000) | (400) | 400 | - | - | - | ||||||||||||||||||
Amortization of shares issued for services | - | - | - | - | - | 1,890,568 | - |
1,890,568 |
|
| ||||||||||||||||||
Net loss for the period | - | - | - | - | - | - | (5,941,811) | (5,941,812) |
|
| ||||||||||||||||||
Bal, September 30, 2011 | 999,999 | 1,000 | 184,120,574 | 184,521 | 66,199,303 | (283,462) | (68,139,436) | (2,038,474) |
|
|
The accompanying notes are an integral part of these financial statements.
F-3
CANNABIS SCIENCE, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||||||
|
|
|
|
|
| Period from | ||||||
|
|
|
|
|
| January 27, | ||||||
|
|
|
|
|
| 2005 | ||||||
|
| For the nine months |
| (inception) to |
| |||||||
|
| ended September 30, |
| September 30, |
| |||||||
|
| 2011 |
| 2010 |
| 2011 |
| |||||
$ | $ | | $ |
| ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
| |||||
Net loss |
| (5,941,811) |
| (4,621,824) |
| (68,139,436) |
| |||||
Plus: |
|
|
|
|
|
|
| |||||
Income from discontinued operations | - |
| - | 1,601,073 |
| |||||||
Total net loss | (5,941,811) |
| (4,621,824) | ) | (66,538,363) |
| ||||||
Adjustments to reconcile net loss to net |
| |||||||||||
cash used in operating activities: |
| |||||||||||
Depreciation | 1,036 | 539 | 16,568 |
| ||||||||
Amortization | | 15,861 | | 21,194 | | 9,543,568 |
| |||||
Impairment on oil lease investments | - | - | 5,076,667 |
| ||||||||
Stock issued for services | 1,921,793 | 1,450,798 | 36,719,479 |
| ||||||||
Loss (gain) on settlement of debt | 3,245,400 | 2,422,500 | 9,486,588 |
| ||||||||
Loss (gain) on acquisition write-off | - | - | 36,500 |
| ||||||||
Changes in operating assets and liabilities: |
| |||||||||||
Accounts receivable | - | - | (2,087) |
| ||||||||
Prepaid expenses and deposits | 14,881 | (12,000) |
| (9,794) |
| |||||||
Inventory | - | - | (29,102) |
| ||||||||
Accounts payable | 102,090 | (10,068) |
| 1,631,627 |
| |||||||
Deferred license revenue | (73,334) | - | - |
| ||||||||
Accrued expenses | | 592,761 | | 539,377 | | 213,706 |
| |||||
Due to related parties | - | (52,400) |
| 66,500 |
| |||||||
Accrued interest payable to affiliate | - | - | | 214,892 |
| |||||||
CASH FLOWS USED IN OPERATING ACTIVITIES |
| |||||||||||
FROM CONTINUING OPERATIONS | | (121,323) | (148,084) | ) | (3,573,250) |
| ||||||
CASH FLOWS PROVIDED BY OPERATING |
| |||||||||||
ACTIVITIES FROM DISCONTINUED OPERATIONS | | - | | - | | 898,927 |
| |||||
NET CASH USED IN OPERATING ACTIVITIES |
| (121,323) | (148,084) | (2,674,323) |
| |||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
| |||||||||||
Purchase of oil & gas leases | - | - | (30,000) |
| ||||||||
Purchase of property, plant & equipment | - | - | (43,522) |
| ||||||||
CASH FLOWS USED IN INVESTING ACTIVITIES | - | - | (73,522) |
| ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
| |||||||||||
Proceeds from convertible note-related party | - | - | 951,342 |
| ||||||||
Proceeds from advances from officer | - | - | 94,307 |
| ||||||||
Repayments on advances from officer | (1,807) |
| - | (73,807) |
| |||||||
Proceeds from notes payable to stockholders |
| 79,146 | - | 220,846 |
| |||||||
Repayments on notes payable to stockholders |
| - | - | (691) |
| |||||||
Advances from related parties | 48,983 | 9,807 | 1,203,176 |
| ||||||||
Proceeds from sale of common stock | - | 138,786 | 358,861 |
| ||||||||
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 126,323 | 148,593 | 2,754,035 |
| ||||||||
NET INCREASE (DECREASE) IN CASH | 5,000 | 509 |
| 6,190 |
| |||||||
CASH, BEGINNING OF PERIOD | 1,190 | 243 | - |
| ||||||||
CASH, END OF PERIOD | 6,190 | 752 | 6,190 |
| ||||||||
| ||||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION: |
| |||||||||||
| ||||||||||||
Related party note payable | - | - | 250,000 |
| ||||||||
Net liabilities assumed with recapitalization | - | - | 200,000 | |||||||||
Divestiture of subsidiary to related party | - | - | 544,340 | |||||||||
Common stock issued for debt | 62,600 | 2,927,000 | 1,211,600 | |||||||||
Common stock issued for acquiring |
| |||||||||||
oil and gas leases | - | - | 7,906,200 |
| ||||||||
Issuance of common stock for assets | - | 9,000 | 135,000 |
| ||||||||
Issuance of preferred stock for services | - | - | 1,000 |
| ||||||||
| |
The accompanying notes are an integral part of these financial statements.
F-4
CANNABIS SCIENCE, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
1. SUMMARY OF SIGNIFICICANT ACCOUNTING POLICIES
A. Organization and General Description of Business
Cannabis Science, Inc. (We or the Company), was incorporated under the laws of the State of Colorado, on February 29, 1996, as Patriot Holdings, Inc. On August 26, 1999, the Company changed its name to National Healthcare Technology, Inc. On June 6, 2007, the Company changed its name from National Healthcare Technology, Inc., to Brighton Oil & Gas, Inc., and converted to a Nevada corporation. On March 25, 2008 the Company changed its name to Gulf Onshore, Inc.
On March 30, 2009, the Company acquired certain assets used to conduct a cannabis research and development business from Steven W. Kubby and Cannex Therapeutics, LLC, (Cannex). The asset purchase agreement included all of Cannex and Kubbys intellectual property rights, formulas, patents, trademarks, client base, hardware and software, including the website www.phytiva.com.
On April 7, 2009, the Company changed its name to Cannabis Science, Inc., reflecting its new business mission.
The Company is in the business of developing pharmaceutical grade medical cannabis (marijuana) products. We are working with scientific experts on phytocannabinoid science targeting critical illnesses; adhering to scientific methodologies to develop, produce, and commercialize phytocannabinoid-based pharmaceutical products. In sum, the Company is dedicated to the creation of cannabis-based medicines, both with and without psychoactive properties, to treat disease and the symptoms of disease, as well as for general health maintenance.
Cannabis Science Inc. website is www.cannabisscience.com.
On May 7, 2009, the Company common shares commenced trading under the new stock symbol OTCBB: CBIS.
F-5
On May 8, 2010, the Company entered into a share purchase agreement to acquire Rockbrook, Inc., a Colorado dispensary in exchange for 400,000 restricted common shares in the Company.
On July 27, 2010, the Company signed a mutual termination agreement (MTA) to cancel the Share Purchase Agreement to acquire Rockbrook Inc. (Rockbrook). Due to regulatory changes in the state of Colorado it was no longer permissible for the Company to own Rockbrook, a Colorado dispensary, and therefore the May 8, 2010 acquisition was retroactively cancelled along with the 400,000 restricted common shares issued on May 14, 2010 to the sole shareholder of Rockbrook. The Company had not yet taken possession of Rockbrook shares or assets at the time of signing the MTA.
On June 8, 2011, a new and non-exclusive license agreement was signed with Rockbrook. Under the terms of the new agreement, the Company will share revenues on a 50/50 basis with Rockbrook for any Company products sold through the Rockbrook dispensary. In addition, the Company is released from prior agreements and the world-wide exclusivity clause in the original license agreement, which will permit the Company to pursue other product license and sales agreements.
On August 10, 2011, the Company entered into a Memorandum of Understanding with Presciption Vending Machines, Inc. (PVM) to jointly promote and market the PVM products and services in Asia, Africa, North America, South America, Antarctica, Europe, and Australia/Oceania under a 50% / 50% gross profit sharing arrangement.
B. Basis of Presentation
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Companys fiscal year end is December 31.
C. Interim Financial Statement
These statements reflect all normal recurring adjustments, which, in the opinion of management, are necessary for the fair presentation of financial position, results of operations and cash flows for the periods presented. The accompanying financial statements should be read in conjunction with Cannabis Science Incs financial statements for the years ended December 31, 2010 and 2009 filed in the Companys Form 10-K dated April 15, 2011, which includes all disclosures required by accounting principles generally accepted in the United States of America, or GAAP. The results of operations for the periods ended September 30, 2011 and 2010 are not necessarily indicative of expected operating results for the full year.
D. Use of Estimates
The preparation of these financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company regularly evaluates estimates and assumptions related to stock-based compensation and deferred income tax valuations. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Companys estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
E. Basic and Diluted Net Income (Loss) Per Share
Under ASC 260, "Earnings Per Share" ("EPS"), the Company provides for the calculation of basic and diluted earnings per share. Basic EPS includes no dilution and is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of securities that could share in the earnings or losses of the entity. For the periods July 1, 2011 to September 30, 2011, January 1, 2011 to September 30, 2011, and from inception through September 30, 2011, basic and diluted loss per share are the same since the calculation of diluted per share amounts would result in an anti-dilutive calculation.
F. Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
G. Fair Value Measurements
ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the customers creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time.
H. Income Taxes
Under ASC 740, Income Tax, the Company is required to account for its income taxes through the establishment of a deferred tax asset or liability for the recognition of future deductible or taxable amounts and operating loss and tax credit carry forwards. Deferred tax expense or benefit is recognized as a result of timing differences between the recognition of assets and liabilities for book and tax purposes during the year.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are recognized for deductible temporary differences and operating loss, and tax credit carry forwards. A valuation allowance is established to reduce that deferred tax asset if it is "more likely than not" that the related tax benefits will not be realized.
I. Stock-Based Compensation
Effective January 1, 2006, the Company adopted ASC 718-10, Compensation - Stock Compensation ("ASC 718-10"), using the modified-prospective method. Under ASC 718-10, share-based compensation cost is estimated at the grant date based on the fair value of the award and is recognized as expense, net of estimated pre-vesting forfeitures, ratably over the applicable period of the award.
J. Development Stage Enterprise
The Company is currently in the development stage as defined under the provisions of Accounting Codification Standard ("ASC") 915-10. In October 2008, the Company divested itself of its operating company, Curado Energy Resources, Inc. Beginning with the fiscal fourth quarter of 2008 the Company again became a development stage company. The Company is working on developing its medical cannabis business, which will be comprised of cannabinoid medicines approved through the FDA along with non-psychotropic medicines for the naturopathy market.
F-6
K. Recent Accounting Pronouncements
During the year ended December 31, 2010 and through November 4, 2011, there were several new accounting pronouncements issued by the FASB the most recent of which was Accounting Standards Update 2011-09. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Companys financial statements.
L. Reclassifications
For comparative purposes, certain prior period financial statements have been reclassified to conform with report classifications of the current year.
2. GOING CONCERN
The accompanying financial statements have been prepared in conformity with U.S. generally accepted accounting principles, which contemplate the continuation of the Company as a going concern. The Company reported an accumulated deficit of $68,139,436 and had a stockholders deficit of $2,038,474 at September 30, 2011.
In view of the matters described, there is substantial doubt as to the Company's ability to continue as a going concern without a significant infusion of capital. At September 30, 2011, the Company had minimal operations. There can be no assurance that management will be successful in implementing its plans. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
We anticipate that we will have to raise additional capital to fund operations over the next 12 months. To the extent that we are required to raise additional funds to acquire research and growing facilities, and to cover costs of operations, we intend to do so through additional public or private offerings of debt or equity securities. There are no commitments or arrangements for other offerings in place, no guaranties that any such financings would be forthcoming, or as to the terms of any such financings. Any future financing may involve substantial dilution to existing investors. We had been relying on our common stock to pay third parties for services which has resulted in substantial dilution to existing investors.
3. RELATED PARTY TRANSACTIONS
As of September 30, 2011, a total of $156,818 (December 31, 2010: $107,835) was due to a related party. The amounts due are non-interest bearing, unsecured and have no specified terms of repayment. This
related party also performs management services to the Company under a management consulting agreement signed on July 1, 2010.
4. NOTES PAYABLE
As of September 30, 2011, a total of $188,055 (December 31, 2010: $171,509) of notes payable are due to stockholders. A total of $9 is due to a stockholder under a convertible note that is non-interest bearing and has no specified terms of repayment. $188,046 is due to stockholders under promissory notes that are non-interested bearing and are due 12 months from the date of issue and loan origination beginning on July 30, 2011 through June 29, 2012. One of the stockholders, to whom $184,200 in promissory notes are payable, also performs business and accounting services for the Company on a month-to-month basis.
5. COMMON STOCK
During the three-months ended September 30, 2011, the Company issued the following common stock:
On July 26, 2011, the Company issued 1,400,000 common shares, with a fair market value of $0.04 per share, for settlement of $1,400 of shareholder debt assigned from the shareholder note payable originating on December 16, 2010 and owing at December 31, 2010.
On July 27, 2011, the Company issued 6,000,000 common shares, with a fair market value of $0.04 per share, for settlement of $6,000 of shareholder debt assigned from the shareholder note payable originating on July 9, 2010 and July 15, 2010 and owing at December 31, 2010.
On July 28, 2011, the Company issued 3,000,000 common shares, with a fair market value of $0.05 per share, for settlement of $3,000 of shareholder debt assigned from the shareholder note payable originating on July 9, 2010 and owing at December 31, 2010.
On August 8, 2011, the Company issued 3,400,000 common shares, with a fair market value of $0.04 per share, for settlement of $3,400 of shareholder debt assigned from the shareholder note payable originating on December 16, 2010 and owing at December 31, 2010.
On August 16, 2011, the Company issued 3,000,000 common shares, with a fair market value of $0.04 per share, for settlement of $3,000 of shareholder debt assigned from the shareholder note payable originating on August 16, 2010 and owing at December 31, 2010.
On September 6, 2011, the Company issued 3,500,000 common shares, with a fair market value of $0.03 per share, for settlement of $3,500 of shareholder debt assigned from the shareholder note payable originating on July 15, 2010 and owing at December 31, 2010.
On September 14, 2011, the Company issued 3,000,000 common shares, with a fair market value of $0.03 per share, for settlement of $3,000 of shareholder debt assigned from the shareholder note payable originating on July 30, 2010 and owing at December 31, 2010.
On September 22, 2011, the Company issued 3,500,000 common shares with a fair market value of $105,000 to a consultant for services rendered to the Company; pursuant to a consulting agreement entered into on August 10, 2011 with services to be provided through August 31, 2013.
F-7
6. EQUIPMENT
Equipment
$ 1,117
Computer
28
$ 1,145
Computer and equipment are stated at cost. Maintenance and repairs are charged to expense as incurred and the cost of renewals and betterments are capitalized. Depreciation is computed using the straight-line method over the estimated lives of the related assets, 2 years for computer and 5 years for equipment.
7. INTANGIBLE ASSETS
Intellectual assets, primarily intellectual property $ 126,000
Less accumulated amortization
73,125
$ 52,875
Intangible assets are stated at fair value on the date of purchase less accumulated amortization. Amortization is computed using the straight-line method over the estimated lives of the related assets (5 years for intellectual assets).
8. COMMITMENTS
| Payments due by period | ||||
| Total | < 1 Year | 1-3 Years | 3-5Years | > 5 Years |
Operating Lease | $237,711 | $47,841 | $101,651 | $88,219 | $0 |
On August 10, 2011, the Company signed a Consulting Agreement with a Consultant. Under the Agreement, the Company shall issue up to $250,000 of common shares, based on the current market price of the Companys stock, to the Consultant for services rendered from August 10, 2011 to August 31, 2013. On September 22, 2011 the Company issued 3,500,000 common shares as an initial payment under the Agreement.
9. SUBSEQUENT EVENTS
On October 4, 2011, the Company issued 6,500,000 common shares with a fair market value of $156,000 to two consultants for services rendered to the Company. 3,500,000 were issued to the same consultant that previously received shares on September 22, 2011 and 3,000,000 shares were issued to a consulting for services rendered to the Company for the period October 1, 2011 to September 30, 2012.
On October 12, 2011, the Company issued 8,000,000 common shares, with a fair market value of $0.022 per share, for settlement of $8,000 of shareholder debt assigned from the shareholder notes payable originating on July 9, 2010, July 15, 2010, and July 30, 2010 and owing at December 31, 2010.
On October 13, 2011, the Company issued 3,000,000 common shares, with a fair market value of $0.0224 per share, for settlement of $3,000 of shareholder debt assigned from the shareholder note payable originating on March 2, 2011.
On October 13, 2011, the Company issued 4,500,000 common shares with a fair market value of $100,800 to a consultant for services rendered to the Company for the period October 15, 2011 to October 14, 2012.
On October 25, 2011, the Company issued 300,000 common shares with a fair market value of $0.02 per share for the settlement of $300 of shareholder debt assigned from the shareholder note payable originating on July 15, 2010 and owing at December 31, 2010.
On October 25, 2011, the Company issued 5,500,000 common shares with a fair market value of $0.03 per share for the settlement of $5,500 of shareholder debt assigned from the shareholder note payable originating on July 30, 2010 and August 5, 2010 and owing at December 31, 2010.
On November 4, 2011, the Company issued 30,000,000 common shares with a fair market value of $0.03 per share for the settlement of $5,500 of shareholder debt assigned from the shareholder note payable originating on September 2, 2010, September 17, 2010, and October 7, 2010 and owing at December 31, 2010.
Authorized Share Increase
On November 4, 2011, the Company filed a Certificate of Amendment to increase the authorized number of shares to 951 million comprised of: 100 million Class A Common Stock, 850 million Class B Common Stock, and 1 million Series A Preferred Stock.
F-8
PART I
This Interim Report on Form 10-Q contains forward-looking statements that have been made pursuant to the provisions of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995 and concern matters that involve risks and uncertainties that could cause actual results to differ materially from historical results or from those projected in the forward-looking statements. Discussions containing forward-looking statements may be found in the material set forth under Business, Managements Discussion and Analysis of Financial Condition and Results of Operations and in other sections of this Form 10-Q. Words such as may, will, should, could, expect, plan, anticipate, believe, estimate, predict, potential, continue or similar words are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Although we believe that our opinions and expectations reflected in the forward-looking statements are reasonable as of the date of this Report, we cannot guarantee future results, levels of activity, performance or achievements, and our actual results may differ substantially from the views and expectations set forth in this Interim Report on Form 10-Q. We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations.
Readers should carefully review and consider the various disclosures made by us in this Report, set forth in detail in Part I, under the heading Risk Factors, as well as those additional risks described in other documents we file from time to time with the Securities and Exchange Commission, which attempt to advise interested parties of the risks, uncertainties, and other factors that affect our business. We undertake no obligation to publicly release the results of any revisions to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section of this report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking states are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
Overview of the Companys Business
Cannabis Science, Inc. (formerly Gulf Onshore, Inc.) (We or the Company), was incorporated under the laws of the State of Colorado, on February 29, 1996, as Patriot Holdings, Inc. On August 26, 1999, the Company changed its name to National Healthcare Technology, Inc., and commenced a business plan to develop Magkelate, a patented intravenous drug developed to re-establish normal electrolyte balance in ischemic tissue and certain other patents for medical instruments and medical instrument technology. On January 14, 2000, the Company filed its Form 10SB12G. In 2002, the Company ceased its medical technology business following the death of Magkelates inventor. The Company conducted no substantial business until 2005.
On June 6, 2007, the Company changed its name from National Healthcare Technology, Inc., to Brighton Oil & Gas, Inc., and converted to a Nevada corporation. On March 25, 2008 the Company changed its name to Gulf Onshore, Inc. and began acquired oil and gas leases for production.
On March 30, 2009, the Company acquired certain assets used to conduct a cannabis research and development business from Steven W. Kubby and Cannex Therapeutics, LLC, (Cannex). The asset purchase agreement included all of Cannex and Kubbys intellectual property rights, formulas, patents, trademarks, client base, hardware and software, including the website www.phytiva.com.
On April 7, 2009, the Company changed its name to Cannabis Science, Inc., reflecting its new business mission.
The Company is in the business of developing pharmaceutical grade medical cannabis (marijuana) products. We are working with scientific experts on phytocannabinoid science targeting critical illnesses; adhering to scientific methodologies to develop, produce, and commercialize phytocannabinoid-based pharmaceutical products. In sum, the Company is dedicated to the creation of cannabis-based medicines, both with and without psychoactive properties, to treat disease and the symptoms of disease, as well as for general health maintenance.
On May 8, 2010, the Company entered into a share purchase agreement to acquire Rockbrook, Inc., a Colorado dispensary in exchange for 400,000 restricted common shares in the Company.
On July 27, 2010, the Company signed a mutual termination agreement (MTA) to cancel the Share Purchase Agreement to acquire Rockbrook Inc. (Rockbrook). Due to regulatory changes in the state of Colorado it was no longer permissible for the Company to own Rockbrook, a Colorado dispensary, and therefore the May 8, 2010 acquisition was retroactively cancelled along with the 400,000 restricted common shares issued on May 14, 2010 to the sole shareholder of Rockbrook. The Company had not yet taken possession of Rockbrook shares or assets at the time of signing the MTA.
On June 8, 2011, a new and non-exclusive license agreement was signed with Rockbrook. Under the terms of the new agreement, the Company will share revenues on a 50/50 basis with Rockbrook for any Company products sold through the Rockbrook dispensary. In addition, the Company is released from prior agreements and the world-wide exclusivity clause in the original license agreement, which will permit the Company to pursue other product license and sales agreements.
On August 10, 2011, the Company entered into a Memorandum of Understanding with Presciption Vending Machines, Inc. (PVM) to jointly promote and market the PVM products and services in Asia, Africa, North America, South America, Antarctica, Europe, and Australia/Oceania under a 50% / 50% gross profit sharing arrangement.
4
Liquidity
The Company has a working capital deficit of $2,099,160 as of September 30, 2011 compared to a working capital deficit of $1,404,039 for the year ended December 31, 2010. There are insufficient liquid assets to meet current liabilities or sustain operations through 2011 and beyond and the Company must raise additional capital to cover the working capital deficit. Management is working on plans to raise additional capital through private placements and lending facilities.
The Company has promissory note payment commitments of $188,055 due to stockholders over the next 12 months through September 30, 2012.
Contractual Obligations
| Payments due by period | ||||
| Total | < 1 Year | 1-4 Years | 3-5Years | > 5 Years |
Operating Lease | $237,711 | $47,841 | $101,651 | $88,219 | $0 |
On October 14, 2011, the Company contact the landlord to negotiate a termination of its laboratory lease. The Company anticipates lease termination costs of approximately $43,000 to be paid over a four month period. The Company is currently seeking a more suitable location to conduct its laboratory and research and development operations.
On June 8, 2011, the Company signed a Consulting Agreement with a Consultant. Under the Agreement, the Company shall issue 1,500,000 144-restricted common shares to the Consultant upon successfully raising $1,000,000 at $0.10 per common share for the Company.
On August 10, 2011, the Company signed a Consulting Agreement with a Consultant. Under the Agreement, the Company shall issue up to $250,000 of common shares to the Consultant, based on the current market price of the Companys stock. As of September 30, 2011 the Company had issued 3,500,000 to the Consultant. Subsequent to the quarter ended September 30, 2011 the Company issued another 3,500,000 to Consultant. The Company estimates that it must issue approximately another 2,500,000 common shares to fulfill the $250,000 commitment under the Agreement.
Capital Resources
The Company has capital resource requirements for laboratory and scientific equipment of approximately $350,000 over the next 12 months. These capital disbursements are dependent on managements successful raising of capital through private placements and lending facilities.
5
Results of Operations
The Company had license revenues of $0 and $73,334 for the three and nine month periods ended September 30, 2011, respectively, compared to $0 for both comparative prior year periods. These increases resulted from the Companys license agreement with Rockbrook signed on August 18, 2010 and the associated recognition of license fees paid by Rockbrook to the Company for the distribution of its products.
Net loss on settlement of liabilities decreased by $71,800 to $873,700 for the three months ended September 30, 2011 compared to $945,500 for the three months ended September 30, 2010. This decrease was due to the Company issuing more shares for the settlement of less debt and the lower corresponding fair market value of shares issued for settlement. For the nine months ended September 30, 2011 the net loss on settlement of liabilities increased by $822,900 to $3,245,400 compared to $2,422,500 for the comparable prior year period. This increase was due to the Company issuing more shares for the settlement of less debt despite the lower corresponding fair market value of shares issued for settlement.
General and administrative expenses decreased by $951,564 to $463,324 for the three months ended September 30, 2011 compared to $1,414,888 for the three months ended September 30, 2010. General and administrative expenses increased by $561,068 to $2,649,683 for the nine months ended September 30, 2011 compared to $2,088,615 for the nine months ended September 30, 2010. The decrease for the
three months ended September 30, 2011 as compared to the prior year period is due to one-time bonuses for new management consulting agreements signed on July 1, 2010 and increased management and consulting expense from stock issued to consultants for services rendered. The increase for the nine months ended September 30, 2011 as compared to the prior year period is due to increased management and consulting expenses, office, and laboratory rental expenses.
The Company is in the development stage as defined in ASC 915.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
6
ITEM 4. CONTROLS AND PROCEDURES
Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report, have concluded that, based on the evaluation of these controls and procedures, that our disclosure controls and procedures were not effective.
There were no changes in our internal controls or in other factors during the period covered by this report that have materially affected, or are likely to materially affect the Companys internal controls over financial reporting.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three months ended September 30, 2011, we have issued securities using exemptions available under the Securities Act of 1933:
As set out below, we have issued securities in exchange for services, properties and for debt:
On July 26, 2011, the Company issued 1,400,000 common shares, with a fair market value of $0.04 per share, for settlement of $1,400 of shareholder debt assigned from the shareholder note payable originating on December 16, 2010 and owing at December 31, 2010.
On July 27, 2011, the Company issued 6,000,000 common shares, with a fair market value of $0.04 per share, for settlement of $6,000 of shareholder debt assigned from the shareholder note payable originating on July 9, 2010 and July 15, 2010 and owing at December 31, 2010.
On July 28, 2011, the Company issued 3,000,000 common shares, with a fair market value of $0.05 per share, for settlement of $3,000 of shareholder debt assigned from the shareholder note payable originating on July 9, 2010 and owing at December 31, 2010.
On August 8, 2011, the Company issued 3,400,000 common shares, with a fair market value of $0.04 per share, for settlement of $3,400 of shareholder debt assigned from the shareholder note payable originating on December 16, 2010 and owing at December 31, 2010.
On August 16, 2011, the Company issued 3,000,000 common shares, with a fair market value of $0.04 per share, for settlement of $3,000 of shareholder debt assigned from the shareholder note payable originating on August 16, 2010 and owing at December 31, 2010.
On September 6, 2011, the Company issued 3,500,000 common shares, with a fair market value of $0.03 per share, for settlement of $3,500 of shareholder debt assigned from the shareholder note payable originating on July 15, 2010 and owing at December 31, 2010.
On September 14, 2011, the Company issued 3,000,000 common shares, with a fair market value of $0.03 per share, for settlement of $3,000 of shareholder debt assigned from the shareholder note payable originating on July 30, 2010 and owing at December 31, 2010.
7
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith. |
31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith. |
32.1 Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith. |
32.2 Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith. |
EX-101.INS XBRL INSTANCE DOCUMENT |
EX-101.SCH XBRL TAXONOMY EXTENSION SCHEMA |
EX-101.CAL XBRL TAXONOMY EXTENSION CALCULATION LINKBASE |
EX-101.LAB XBRL TAXONOMY EXTENSION LABEL LINKBASE |
EX-101.PRE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE |
EX-101.DEF XBRL TAXONOMY EXTENSION DEFINITION LINKBASE |
8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CANNABIS SCIENCE, INC. /s/ Dr. Robert Melamede /s/ Richard Cowan
Date: November 21, 2011
Dr. Robert Melamede
President and Chief Executive Officer Date November 21, 2011:
Dr. Richard Cowan
Chief Financial Officer
9