S-1

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)

1600 Broadway, Suite 1600
Denver, CO 80202

(303) 386-7104

(Address and telephone number of principal executive offices)

1600 Broadway, Suite 1600

Denver, CO 80202

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

Earnest Blackmon

1600 Broadway, Suite 1600
Denver, CO 80202

(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” and “smaller reporting company” in Rule 12b2 of the Exchange Act.

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

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	5,000,000	$2.00	$10,000,000	$1,160

(1)

Offering price computed in accordance with Rule 457(c).

(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 17, 2017 the closing price for one share of our common stock was $2.00.

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 3 of this prospectus.

The date of this prospectus is _________, 2017

PROSPECTUS SUMMARY

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

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 have entered into what we believe are significant agreements with partners outside of Colorado where we have agreed to provide intellectual property and consulting services. We also have formalized strategic relationships with four other businesses in the marijuana industry.

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 1600 Broadway, Suite 1600, Denver, CO  80202, 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 $350,000.  We are under no obligation to sell any shares under the Investment Agreement.

As of January 31, 2017, we had 50,546,055 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 and/or conversion of options, warrants or convertible notes.  See “Comparative Share Data”.

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 loss and need for additional capital.  See the "Risk Factors" section of this prospectus for additional Risk Factors.

Trading Symbol:                

CNAB

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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.

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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, 2017, 28 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.

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.  

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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.

4

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, 2015
First Quarter	$2.00	$0.56
Second Quarter	$1.09	$0.41
Third Quarter	$0.55	$0.27
Fourth Quarter	$0.43	$0.12
Year ended December 31, 2016
First Quarter	$0.79	$0.17
Second Quarter	$0.48	$0.18
Third Quarter	$0.20	$0.16
Fourth Quarter	$3.35	$0.43

On January 31, 2017, the closing price of our common stock was $1.47.

Stockholders

As of January 31, 2017, we had 45 shareholders of record and 50,546,055 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.

5

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

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 our previous President.

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, 2015

Revenues and Cost of Revenues

Revenue increased by approximately $376,000 during the year ended December 31, 2015. This increase in revenue was due to an increase in the recognition of deferred revenue for consulting services of approximately $30,000, the sale of oil extractions in the amount of approximately $190,000, and an increase in licensing fees of approximately $156,000. Gross profit, as a percentage of total revenue, was 73% for the year ended December 31, 2015 as compared to 96% for the year ended December 31, 2014.

Sales and Marketing Expenses

Sales and marketing expenses were 17,100 and $101,962 the years ended December 31, 2015 and 2014, respectively. The decrease in sales and marking expenses was due to our focus on serving existing customers during the year ended December 31, 2015 as compared to our sales and marketing efforts applicable to new products and services throughout the year ended December 31.  

Research and Development Expenses

Research and development expenses (“R&D”) were $329 and $182,601 for the years ended December 31, 2015 and 2014, respectively. The decrease in R&D was due to our focus on sales of existing products and services throughout the year ended December 31, 2015 as compared to our R&D efforts applicable to new products and services during the twelve months ended December 31. 2014.

General and Administrative Expenses

General and administrative expenses (“G&A”) were $1,816,804 and $1,709,040 for the years ended December 31, 2015 and 2014, respectively. The increase in general and administrative expenses was due for the most part to an increase in personnel costs for the year ended December 31, 2015 as compared to the same period for 2014.

Other Non-Operating Expense, net

Our other nonoperating expense of was $1,461,566 and $595,390, net, for the years ended December 31, 2015 and 2014, respectively. The increase is due for the most part to the (i) $734,967 increase in the loss on the extinguishment of debt and repurchase of warrants incurred in connection with the issue and of 612,000 warrants to Typenex in connection with a warrant settlement agreement, (ii) $90,900 increase in the recognition of the net loss in our equity investment in the unconsolidated affiliate, CRD, and (ii) an increase in the loss on investment in non-marketable equity securities of $88,475.

6

Discontinued Operations

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. The assets were sold to MySkin Services, Inc. (“MTA”), a business partly owned by Ms. Stoppenhagen in exchange for a $15,000 payable we owed to Ms. Stoppenhagen and/or MTA.  In addition, MTA assumed all costs associated with these assets starting on March 31, 2014.

The following details our income (loss) from discontinued operations:

	Years Ended December 31,
	2015		2014
Revenues	$	—	$	20,684
Operating expenses:
Selling, general and administrative		—		63,878
Depreciation		—		—
Loss on disposal of assets		—		15,704
Total operating expenses		—		79,576
Income (loss) from discontinued operations, before income taxes		—		(58,892	)
Provision for income taxes		—		—
Income (loss) from discontinued operations, net of income taxes	$	—	$	(58,892	)

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

·

Regulatory changes to different territories in the United States;

·

Political party influence and what party(s) will gain control of the United States; and

·

 Rescheduling of Cannabis by the DEA or congress.

Period Ended September 30, 2016

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.

Material changes in line items in our Statement of Operations for the three months ended September 30, 2016 as compared to the same period last year, are discussed below:

	Increase (I) or
Item	Decrease (D)	Reason
Revenues	I	An increase resulting from the recognition of $200,000 of deferred revenue associated with the FoxBarry transaction, described in Note 10 to the unaudited condensed consolidated financial statements, coupled with a decrease from the three months ended September 30, 2015 of approximately $68,000 in consulting revenues and licensing fees.
Gross profit, as a % of revenue	I	There was no cost of goods sold associated with the recognition of gross profit associated with the FoxBarry transaction.
General and Administrative expenses	D	Lower amounts spent on sales and marketing, research and development, and salaries and wages.

7

Material changes in line items in our Statement of Operations for the nine months ended September 30, 2016 as compared to the same period last year, are discussed below:

	Increase (I) or
Item	Decrease (D)	Reason
Revenues	I	License fee income increased approximately $343,000 largely due to a major dispensary in California aggressively selling our licensed products, plus the recognition of $200,000 of deferred consulting fee revenue associated with the FoxBarry transaction, described in Note 10 to the unaudited condensed consolidated financial statements.  The increase in license fee income and deferred consulting fee revenue was mitigated by a one-time gain on the sale of certain non-cannabis related raw materials for $200,000 in the prior period, and a decrease from the Nine months ended September 30, 2015 of approximately $171,000 in consulting revenues.
Gross profit, as a % of revenue	D	Slight decrease due to greater licensing fees than consulting fees compared to the prior period. Our licensing fees have a higher cost to deliver than our consulting fees, which resulted in a lower profit margin due to our product mix for the period.
General and Administrative expenses	D	Lower amounts spent on sales and marketing, research and development, and salaries and wages.

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

·

state by state regulatory changes in the United States;

·

the aftermath of the recent elections; and

·

rescheduling of marijuana by the federal government.

Capital Resources and Liquidity

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, 2015 we incurred losses of $2,883,362 and used cash in operating activities of $525,148, respectively, compared to $2,468,364 of losses and $1,189,057 of cash used in our operating activities for the year ended December 31, 2014. At December 31, 2015 and 2014, we had a working capital deficit of $2,410,679 and $1,304,209, respectively, and an accumulated deficit of $5,508,329 at December 31, 2015.  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, 2015 and 2014, was $525,148 and $1,189,057 respectively. This $663,909 decrease was primarily due to positive impacts to our operating cash flows resulting from an increase in sales and the resultant impact on gross profits and decreases in marketing and R&D expenses during the twelve months ended December 31, 2015 as compared to the same period in 2014.

Net cash used in investing activities for the years ended December 31, 2015 and 2014 was $17,685 and $52,309, respectively. This decrease was due to $14,385 of payments applicable to our trademarks and provisional patents during the twelve months ended December 31, 2015 compared to our $50,000 cash equity investment in Lone Mountain during the year ended December 31, 2014.

Net cash provided by financing activities for the years ended December 31, 2015 and 2014 was $339,900 and $1,530,305 respectively. The decrease was primarily due to $900,000 from the sale of our common stock in 2014 compared to $0.0 during 2015, net of $339,900 of net proceeds from the issuance of convertible debt and warrants during the year ended December 31, 2015.

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On December 18, 2014, we borrowed $600,000 from Slainte Ventures, LLC, an unrelated third party.  The loan was evidenced by an unsecured promissory note bearing interest at 12%.  In October 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.  On March 16, 2016, we entered into an agreement with Slainte whereby Slainte waived default, and extended the maturity date of note until December 17, 2016. Slainte also agreed to accept a warrant in lieu of interest due on the loan.  See Note 11 to the financial statements included as part of this prospectus for information concerning the terms of the warrant.

On February 9, 2017, JSJ Investments, Inc. converted a note in the principal amount of $125,000, plus accrued interest, into 379,000 shares of our common stock.

Our material sources and (uses) of cash during the nine months ended September 30, 2016 and 2015 were:

	2016			2015
Cash used in operations	$	(258,607	)	$	(304,297	)
Loan Proceeds		368,978			—
Loan Payments		(213,978	)		—
Acquisition of intangible assets		—			(14,385	)

General

Other than the repayment of our notes and convertible notes, we presently have no material capital commitments for the twelve months ending January 31, 2018.

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.

We do not have any commitments or arrangements from any person to provide us with any equity capital.

During the next twelve months, we anticipate that we will incur approximately $832,000 of general and administrative expenses in order to execute our current business plan. We also expect to incur significant sales, marketing, research and development expenses during the next twelve months. 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. These conditions raise substantial doubt about our ability to continue as a going concern.

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.

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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.

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, 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.

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

· 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.

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

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

Business Overview

We own distinct intellectual property relating to the legalized growth, production, manufacture, marketing, management, utilization and distribution of medical and recreational marijuana and marijuana infused products.  In our first year of operating in the marijuana industry we have entered into three significant agreements with partners outside of Colorado where we have agreed to provide intellectual property and consulting services and in which we have received an equity interest.  These businesses are located in Nevada, Jamaica, and Canada and the three agreements are described below.  We also have formalized strategic relationships with four other businesses in the marijuana industry and a description of these relationships is set forth below.

Our primary goal is to advance the use of phytocannabinoid 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 Products

We are focused on creating unique therapeutics for a wide range of diseases that can be utilized by patients globally.

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Our Prana Bio Nutrient Medicinal products are designed to help supplement deficiencies related in 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 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 patent-pending 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 or activated formulations, and paired with specific cannabis derived terpene profiles.

Our products are subject to all existing marijuana laws in the United States.

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.  As of January 31, 2017 we had signed license agreements with two companies.

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.

We work closely with many individuals and businesses in the medical marijuana industry.  Following is a summary of some of the key relationships which have been formalized with an agreement, letter of intent or memorandum of understanding.

WeedMD (Canada)

On May 28, 2014, we signed a binding letter agreement with WeedMD RX Inc. (“WeedMD”), a private Canadian corporation, regarding the establishment of a strategic partnership with respect to growing, producing and selling medical marijuana in Canada.  WeedMD is a medical marijuana company which has secured pre-license approval from Health Canada to produce and distribute 2,500 kg of medical marijuana from its 25,000 square foot facility in Aylmer, Ontario.  In the letter agreement, we granted to WeedMD a royalty free license to use all of our intellectual property including our knowledge and know-how relating to the design and buildout of cultivation facilities, our catalogue of different strains of marijuana, our ACT Now Program, our growing expertise and other methods and processes which relate to the medical cannabis industry.  WeedMD plans to use our intellectual property and our consulting services in connection with their project in Aylmer and any other projects in Canada. WeedMD has received the security approval from Health Canada for the Aylmer project and it is moving toward obtaining a cultivation license.

In consideration for the license to use our intellectual property and our consulting services, WeedMD issued us 1,187,500 shares of its common stock which represents approximately 3.6% of their shares outstanding and WeedMD issued to us warrants to purchase 3 million shares of common stock at an exercise price of CAD $.50 per share, however, these warrants expired on December 9, 2014.

On July 7, 2014, we borrowed $175,000 from WeedMD.  The loan was due and payable on demand.  On March 31, 2016, an unrelated third party agreed to assume all of our obligations pursuant to the loan in consideration for the transfer by us of 1,100,000 shares of the common stock of WeedMD to the unrelated third party.  WeedMD consented to the assumption of the loan and released us from any further liability with respect to the loan.

Harborside Health Center

Founded in 2006 by Steve DeAngelo, Harborside Health Center one of the largest medical cannabis dispensaries in the United States. Harborside has over 200,000 registered patients and was first in the nation to support education for seniors, veterans and families with severely ill children; first in the country to offer CBD-rich medicine; and the first to treat children with Dravet syndrome. Harborside continues to set an example of diversity and compliance, and is one of the prime advocates of diversity, sustainability and economic justice in the industry.

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Harborside has the license use our intellectual property and products in California.  In consideration for this license, Harborside pays us 25% of the wholesale price of all products sold using our Prana Bio Nutrient Medicinal line.

Blue River Extracts

Blue River Extracts, headquartered in Colorado, provides a full spectrum of aromatherapy and essential oil profiles which are derived naturally from specific plant based cultivars utilizing a proprietary chemical-free process.  Terpenes are produced by countless plant species, prevalent in fruits, vegetables, herbs, spices, and other botanicals. Terpenes are also common ingredients in the human diet and have generally been recognized as safe to consume by the US Food and Drug Administration

On January 1, 2016, we granted a license to Blue River for the right to use our pending global utility patent for the use of terpenes as a diluent in aromatherapy, vaporization, essential oils, edibles, aerosols, and for product branding purposes.  We are paid $5,000 each month for the license, plus $500 for each hour of consulting service we provide Blue River.  The license expires on December 31, 2020.

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 December 31, 2015, CRD did not have any operations or operating activities.  As of the date of this prospectus, CRD had five 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.

Cherubim Interests, Inc.

In October, 2016, we signed an agreement with Cherubim Interests, Inc.  Pursuant to the agreement, Cherubim will design and sell mobile extraction laboratories for sale to the marijuana industry.  We have the exclusive right to solicit orders for the mobile laboratories throughout the world.  All orders we obtain will be subject to acceptance by Cherubim.  For any mobile laboratory sold, we will receive a commission equal to the sales price of the mobile laboratory less:

·

Shipping costs,

·

custom duties or similar charges, and

·

$47,000.

Cherubim’s fully-functioning mobile laboratory fits in a trailer and can be used to process cannabis.  As of the date of this prospectus, we had not sold any mobile laboratories.

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.

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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, particularly in Colorado, 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, 2017, 28 states and the District of Columbia allow 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 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 marijuana.   However, there is no guarantee that the administration will not change its stated policy regarding the low-priority enforcement of such 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.  While we do not intend to harvest, distribute or sell cannabis, we may be irreparably harmed by a change in enforcement by the federal or state governments or the enactment of new and more restrictive 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.

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.”

We have also filed for utility patents related to the unique combinations of pharmaceutically active cannabinoids used to alleviate disorders of the nervous system, immune system and cancer with the U.S. Patent and Trademark office.

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Employees

As of January 31, 2017, we had four 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.

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.

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.

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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	44	CEO, President, principal financial and accounting officer and director
Chad Ruby	41	Chief Operating Officer, Secretary, Treasurer and director
Tony Verzura	38	Vice President, Chief Technical Officer and director

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.

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.

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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 2016 and 2015, the compensation awarded to, paid to, or earned by our executive officers.

Name and Principal Position	Year	Salary ($)	Option Awards ($) (4)	All other Compensation ($)	Total ($)
Ernie Blackmon	2016	—	—	—	—
CEO, President, principal financial	2015	173,854	139,207	—	313,140
officer and director (1)
Chad Ruby	2016	70,798	—	—	70,798
Chief Operating Officer, Secretary,	2015	173,933	139,207	—	313,140
Treasurer and director (2)
Tony Verzura	2016	52,000	—	—	52,000
Vice President, Chief Technical Officer and	2015	173,854	139,207	—	313,140
director (3)

———————

(1)

Mr. Blackmon’s salary for the year ended December 31, 2015, was $173,854 (of which $69,604 was paid with 350,000 stock options) and during fiscal 2015 he earned stock option awards with a grant date fair value of $139,207 as more fully described in footnote (4).

(2)

Mr. Ruby’s salary for the year ended December 31, 2015, was $173,933 (of which $55,683 was paid with 280,000 stock options) and during fiscal 2015 he earned stock option awards with a grant date fair value of $139,207 as more fully described in footnote (4).

(3)

Mr. Verzura’s salary for the year ended December 31, 2015, was $173,854 (of which $69,604 was paid with 350,000 stock options) and during fiscal 2015 he earned stock option awards with a grant date fair value of $139,207 as more fully described in footnote (4).

(4)

During fiscal 2015, Messrs. Blackmon, Verzura and Ruby each earned 700,000 stock options under our 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.  We recognized the grant date fair value of approximately $0.20 per share as share-based compensation expense in fiscal 2015.

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 Plan and Mr. Ruby agreed to forego $56,000 of 2015 salary in lieu of 280,000 stock options under the 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.  We recognized the grant date fair value of approximately $0.20 per share as share-based compensation expense in fiscal 2015.

During fiscal 2014, Messrs. Blackmon, Verzura and Ruby each earned 200,000 stock options under the Plan. The options were granted on January 9, 2015, were fully vested at the time of grant and gave 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 recognized the grant date fair value of approximately $0.70 per share as share-based compensation expense in fiscal 2014.

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Stock Option and Bonus Plans

We have an Equity Incentive Plan, a Non-Qualified Stock Option Plan and a Stock Bonus Plan.  A summary description of these Plans follows.  In some cases these Plans are collectively referred to as the “Plans”.

Equity Incentive Plan. Our Equity Incentive Plan (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.

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.

Non-Qualified Stock Option Plan. The Non-Qualified Stock Option Plans authorize the issuance of shares of our common stock to persons that exercise options granted pursuant to the Plans. Our employees, directors, officers, consultants and advisors are eligible to be granted options pursuant to 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 sale a capital-raising transaction or promoting our common stock. The option exercise price is determined by our Board of Directors.

Stock Bonus Plan. Under the Stock Bonus Plans shares of our common stock may be issued to our employees, directors, officers, consultants and advisors, provided however that bona fide services must be rendered by consultants or advisors and such services must not be in connection with a capital-raising transaction or promoting our common stock.

Other Information Regarding the Plans.  Our Board of Directors administers the Plans 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 Plans should be interpreted, and whether to delegate administration of the Plans to a committee.  Our Directors may, at any time, and from time to time, amend, terminate, or suspend one or more of the Plans in any manner they deem appropriate, provided that such amendment, termination or suspension will not adversely affect rights or obligations with respect to shares or options previously granted.  Our Directors serve for a one-year tenure and until their successors are elected.  

Any option granted pursuant to the Plans may include installment exercise terms such that the option becomes fully exercisable in a series of cumulating portions.

Any shares or options will be forfeited if the “vesting” schedule established at the time of the grant is not met. For this purpose, vesting means the period during which the employee must remain our employee, or the period of time a non-employee must provide services to us.  At the time an employee ceases working for us (or at the time a non-employee ceases to perform services for us), any shares or options not fully vested will be forfeited and cancelled. At the discretion of our Board of Directors, payment for the shares of common stock underlying options may be paid through the delivery of shares of our common stock having an aggregate fair market value equal to the option price, provided such shares have been owned by the option holder for at least one year prior to such exercise. A combination of cash and shares of common stock may also be permitted at the discretion of the Board of Directors.

Options are generally non-transferable except upon death of the option holder. Shares issued as a stock bonus will generally not be transferable until the person receiving the shares satisfies the vesting requirements imposed when the shares were issued.

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Summary. The following shows certain information as of January 31, 2017 concerning the Plans.  Each option represents the right to purchase one share of our common stock.  The Equity Incentive Plan has been approved by our shareholders.  The other Plans have not been approved by our shareholders.

Name of Plan	Total Shares Reserved Under Plans	Shares Reserved for Outstanding Options	Shares Issued	Remaining Options/Shares Under Plans
Equity Incentive Plan	4,000,000	3,680,000	N/A	320,000
Non-Qualified Stock Option Plan	200,000	—	N/A	200,000
Stock Bonus Plan	500,000		368,000	132,000

The following shows the amounts we expect to pay to our officers during the twelve months ending December 31, 2017, 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	50%
Chad Ruby	$250,000	50%
Tony Verzura	$125,000	25%

Outstanding Equity Awards

Outstanding equity awards as of December 31, 2016 are as follows: 

Name	Number of securities underlying unexercised options (#) exercisable	Number of securities underlying unexercised options (#) unexercisable	Number of securities underlying unexercised unearned options (#)	Option exercise price ($)	Option expiration date
Ernie Blackmon	200,000	200,000	200,000	0.70	1/08/2024
Chad Ruby	200,000	200,000	200,000	0.70	1/08/2024
Tony Verzura	200,000	200,000	200,000	0.70	1/08/2024
Ernie Blackmon	700,000	700,000	700,000	0.20	1/15/2026
Chad Ruby	700,000	700,000	700,000	0.20	1/15/2026
Tony Verzura	700,000	700,000	700,000	0.20	1/15/2026
Ernie Blackmon	350,000	350,000	350,000	0.20	1/15/2026
Chad Ruby	280,000	280,000	280,000	0.20	1/15/2026
Tony Verzura	350,000	350,000	350,000	0.20	1/15/2026

Securities Authorized for Issuance under Equity Compensation Plans

The following table shows information with respect to each equity compensation plan under which our common stock is authorized for issuance as of December 31, 2016:

Equity Compensation Plan Information

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 compensation plans approved by security holders	3,680,000	$0.28	320,000

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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, 2016 we did not compensate our directors for acting as such.

Transactions with Related Parties

Messrs. Blackmon and Verzura have made loans to or equity investments in RiverRock LLC, a Colorado company which is licensed by the Colorado Department of Revenue to operate a dispensary, to manufacture marijuana infused products and to operate a cultivation facility.  We had sales of non-marijuana products to this entity in the amounts of $4,425 and $14,600 during 2015 and 2014, respectively.  During 2015, Messrs. Blackmon and Verzura divested those interests.  As Messrs. Blackmon and Verzura may have significant influence on management or operating polices of the customer, we have classified sales 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.

In February 2015, Messrs. Blackmon, Verzura and Ruby formed Blue River Inc. (“Blue River”), a Colorado corporation in the cannabis industry that plans to manufacture and wholesale medicinal and recreational cannabis products including our Prana Bio Nutrient Medicinals products. On December 2, 2015, Mr. Ruby relinquished his ownership in Blue River, effective November 2, 2015. During the year ended December 31, 2015, we advanced Blue River $3,284 and included this amount in due from related parties. 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.

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%.

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PRINCIPAL SHAREHOLDERS

The following table shows the beneficial ownership of our common stock as of January 31, 2017, 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 1600 Broadway, Suite 1600, Denver, Colorado 80202.

	Number of Shares		Percentage
Name	Beneficially Owned		of Class
Ernie Blackmon	23,678,000	(1)	51.2%
Chad Ruby	2,490,000	(2)	5.4%
Tony Verzura	16,202,000	(3)	35.0%
All executive officers and directors as a group (three persons)	42,370,000	(1)(2)(3)	87.1%

———————

(1)

Includes 1,250,000 shares underlying currently exercisable stock options held by Mr. Blackmon.

(2)

Includes 1,180,000 shares underlying currently exercisable stock options held by Mr. Ruby. 

(3)

Includes 1,250,000 shares underlying currently exercisable stock options held by Mr. Verzura.

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INVESTMENT AGREEMENT

On December 28, 2016, 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 $350,000 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 tenth 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 trading 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 31, 2017 specifying that we wanted to sell 200,000 shares of our common stock, we would have received $238,850 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.

21

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.

We also issued a fixed price convertible promissory note to Tangiers in the principal amount of $35,000 as a commitment fee.  The note bears interest at 10% per year and is due and payable on July 8, 2017.

22

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	Exercise
Holder	of Warrant or Option	Price	Expiration Date
Officers and Directors	(1)	(1)	(1)
Slainte Ventures	783,112	$0.18	11/30/21
Consultant	666,667	$0.18	4/30/21 through
			12/31/21

———————

(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

23

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.  

24

UNITED CANNABIS CORPORATION

TABLE OF CONTENTS

	Page
Audited Financial Statements
Reports of Independent Registered Public Accounting Firms	F-2
Consolidated Balance Sheets	F-4
Consolidated Statements of Operations	F-5
Consolidated Statements of Stockholders' (Deficit) Equity	F-6
Consolidated Statements of Cash Flows	F-7
Notes to Consolidated Financial Statements	F-9

Unaudited Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets	F-32
Condensed Consolidated Statements of Operations	F-33
Condensed Consolidated Statements of Cash Flows	F-34
Notes to Unaudited Condensed Consolidated Financial Statements	F-36

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

United Cannabis Corporation

Denver, Colorado

We have audited the accompanying consolidated balance sheet of United Cannabis Corporation (formerly MySkin, Inc.) and subsidiary company (collectively the “Company”) as of December 31, 2014, and the related consolidated statement of operations, changes in stockholders’ (deficit)/ equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance the 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 consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. 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 effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of United Cannabis Corporation (formerly MySkin, Inc.) and subsidiary company as of December 31, 2014, and the related statement of operations and cash flows for the for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements the Company has suffered losses from operations and currently does not have sufficient available funding to fully implement its business plan. These factors raise substantial doubt about its 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.

Wheat Ridge, Colorado

April 15, 2015

9605 West 49^thAve, Suite 200 Wheat Ridge, Colorado 80033 ~ Phone 303-968-3281 ~ Fax 303-456-7488 ~ www.cutlercpas.com

F-2

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, 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, 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

April 26, 2016

F-3

UNITED CANNABIS CORPORATION

CONSOLIDATED BALANCE SHEETS

	December 31,
	2015			2014
ASSETS
Current assets:
Cash and cash equivalents	$	118,420		$	321,353
Accounts receivable, net		53,435			6,245
Due from related parties		8,284			44,012
Prepaid expenses		56,341			177,400
Deferred financing costs, net		32,400			—
Total current assets		268,880			549,010
Intangible assets		32,273			18,210
Investments in non-marketable equity securities		205,275			593,750
Equity method investments		88,000			138,000
Total assets	$	594,428		$	1,298,970
LIABILITIES & STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	104,238		$	27,424
Accrued expenses		928,533			550,795
Derivative liabilities		383,581			—
Current portion of deferred revenue		380,000			500,000
Notes payable		775,000			775,000
Convertible notes payable, net of $272,793 and $0 debt discount, respectively		108,207			—
Total current liabilities		2,679,559			1,853,219
Long term liabilities:
Deferred revenue, net of current portion		383,750			443,750
Total liabilities		3,063,309			2,296,969
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; 44,988,500 and 44,060,000 shares issued and outstanding, respectively		3,039,448			1,626,968
Accumulated deficit		(5,508,329	)		(2,624,967	)
Total stockholders' deficit		(2,468,881	)		(997,999	)
Total liabilities and stockholders' deficit	$	594,428		$	1,298,970

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

F-4

UNITED CANNABIS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years Ended December 31,
	2015			2014
Revenues:
Revenues, non-affiliates	$	558,248		$	171,957
Revenues, affiliate		4,425			14,600
Total revenues		562,673			186,557
Cost of revenues:
Cost of revenues, non-affiliate		75,672			7,031
Cost of revenues, affiliate		74,564			—
Total cost of revenues		150,236			7,031
Gross profit		412,437			179,526
Operating expenses:
Sales and marketing		17,100			101,962
Research and development		329			182,606
General and administrative		1,816,804			1,709,040
Total operating expenses		1,834,233			1,993,608
Loss from operations		(1,421,796	)		(1,814,082	)
Other income (expense):
Interest income		252			37,837
(Loss) gain on derivative liabilities		(23,593	)		6,099
Loss on origination of derivative liability		—			(12,810	)
Interest expense		(107,748	)		(131,479	)
Amortization of debt discount		(82,500	)		(161,402	)
Equity in net loss of unconsolidated affiliate		(90,900	)		—
Loss on extinguishment of debt and repurchase of warrants		(768,602	)		(33,635	)
Loss on investment in non-marketable equity securities		(388,475	)		(300,000	)
Total other income (expense), net		(1,461,566	)		(595,390	)
Loss from continuing operations		(2,883,362	)		(2,409,472	)
Net loss from discontinued operations		—			(58,892	)
Net loss	$	(2,883,362	)	$	(2,468,364	)
Basic and diluted net loss per share:
Continuing operations	$	(0.06	)	$	(0.06	)
Discontinued operations		na			(0.00	)
Net loss per share	$	(0.06	)	$	(0.06	)
Basic and diluted weighted-average common shares outstanding:		44,793,510			38,256,438

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

F-5

UNITED CANNABIS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

	Common Stock					Accumulated
	Shares		Amount			Deficit			Total
Balance, December 31, 2013	6,020,000		$	165,495		$	(156,603	)	$	8,892
Shares issued for conversion of debt	40,000,000			50,000			—			50,000
Shares cancelled	(41,690,000	)		—			—			—
Shares issued for license agreement	38,690,000			—			—			—
Shares and warrants issued for cash	600,000			900,000			—			900,000
Warrants issued with convertible debt	—			694,525			—			694,525
Shares issued for services	400,000			305,100			—			305,100
Purchase and cancellation of warrants	—			(576,152	)		—			(576,152	)
Shares issued for equity method investments	40,000			88,000			—			88,000
Net loss	—			—			(2,468,364	)		(2,468,364	)
Balance, December 31, 2014	44,060,000			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 December 31, 2015	44,988,500		$	3,039,448		$	(5,508,329	)	$	(2,468,881	)

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,
	2015			2014
Operating activities:
Net loss	$	(2,883,362	)	$	(2,468,364	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Loss on sale of assets of discontinued operations		—			15,704
Provision for losses on accounts receivable		24,185			—
Amortization of debt discount		82,500			161,402
Amortization of deferred financing costs		8,700			—
Non-cash interest expense		4,694			15,320
Notes payable issued for debt issuance costs		—			46,000
Loss on origination of derivative liability		—			12,810
Share-based compensation		1,030,681			551,685
Value of non-marketable equity securities recognized as revenue		(180,000	)		(150,000	)
Loss (gain) on revaluation of derivative liabilities		23,593			(6,099	)
Loss on non-marketable equity securities		388,475			300,000
Equity in net loss of unconsolidated affiliate		90,900			—
Loss on extinguishment of debt and repurchase of warrants		768,602			33,635
Changes in operating assets and liabilities:
Accounts receivable		(68,263	)		(6,245	)
Due from related party		(8,284	)		(33,238	)
Prepaid expenses		(3,394	)		(6,321	)
Accounts payable and accrued expenses		195,825			144,654
Deferred revenue		—			200,000
Net cash provided by (used in) operating activities		(525,148	)		(1,189,057	)
Investing activities:
Purchase of intangible assets		(17,685	)		(2,309	)
Purchase of equity method investments		—			(50,000	)
Net cash provided by (used in) investing activities		(17,685	)		(52,309	)
Financing activities:
Net proceeds from issuance of notes payable		—			761,500
Net proceeds from issuance of convertible debt and warrants		339,900			225,000
Repayment of convertible debt and repurchase of warrants		—			(356,195	)
Proceeds from issuance of common shares and warrants		—			900,000
Net cash provided by (used in) financing activities		339,900			1,530,305
Net increase (decrease) in cash		(202,933	)		288,939
Cash, beginning of period		321,353			32,414
Cash, end of period	$	118,420		$	321,353

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

F-7

UNITED CANNABIS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2015			2014
Supplemental schedule of cash flow information:
Cash paid for interest	$	—		$	—
Cash paid for income taxes	$	—		$	—
Supplemental disclosure of non-cash investing and financing activities:
Intangible asset costs included in accounts payable	$	12,279		$	15,901
Non-marketable equity securities received as consideration for future services	$	—		$	893,750
Issuance of common stock for equity method investment	$	—		$	88,000
Issuance of common stock for services	$	47,880		$	83,600
Issuance of common stock for prepaid professional fees	$	187,335		$	221,500
Issuance of common stock for repurchase of warrant	$	987,390		$	—
Warrants cancelled	$	(218,788	)	$	(576,152	)
Warrants issued for debt discount	$	—		$	694,525
Issuance of stock options for compensation	$	417,664		$	—
Issuance of note payable for debt issuance costs	$	—		$	13,500
Issuance of convertible note payable for debt issuance costs	$	41,000		$	32,500
Debt conversion feature issued for debt discount	$	(355,293	)	$	(151,937	)
Conversion of note payable, related party, into common stock	$	—		$	50,000

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

F-8

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.

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 a total of 38,690,000 shares of our common stock.

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-9

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2015, 23 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.

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 December 31, 2015, 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 years ended December 31, 2015 and 2014.

F-10

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. We do not have any cash equivalents as of December 31, 2015 or December 31, 2014.

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 $4,340 and $0 as of December 31, 2015 and 2014, respectively. We recorded bad debt expense, included in general and administrative expenses, of $24,185 and $0 during the years ended December 31, 2015 and 2014, 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, 2015 or December 31, 2014.

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.

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.

F-11

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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. Generally, our suppliers drop-ship orders to our clients with origin terms. For any shipments with destination terms, we defer revenue until delivery is made to the customer. During the years ended December 31, 2015 and 2014, sales returns were not significant and as such, no sales return allowance had been recorded as of December 31, 2015 or December 31, 2014.

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.

Shipping and Handling Costs - For product sales, shipping and handling costs are included as a component of cost of revenues. During the years ended December 31, 2015 and 2014, we incurred shipping and handling costs of $1,013 and $0, respectively.

Advertising Costs - All advertising costs are expensed as incurred. During the years ended December 31, 2015 and 2014, we incurred $16,500 and $304 of advertising costs, respectively, and included these costs in sales and marketing expense in our consolidated statements of operations.

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.

F-12

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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-13

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,
	2015		2014
Warrants to purchase common stock		3,000,000		3,997,692
Stock options		600,000		—
Total potentially dilutive securities		3,600,000		3,997,692

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, 2015 and 2014, 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,
	2015			2014
Customer A		36	%		—	%
Customer B		32	%		80	%
Customer C		18	%		4	%

Percentage of Accounts Receivable:

	Years Ended December 31,
	2015			2014
Customer D		56	%		—	%
Customer E		41	%		—	%
Customer F		—	%		46	%
Customer G		—	%		33	%
Customer H		1	%		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 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-14

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 April 2015, the FASB issued guidance requiring us to present debt issuance costs in the balance sheet as a reduction from the related debt liability rather than as an asset. Amortization of these costs will continue to be reported as interest expense. This guidance is effective for us at the beginning of fiscal year 2016, and early adoption is allowed. Retrospective application is required. Upon adoption, the deferred financing costs associated with our notes payable will be reclassified from “Deferred financing costs” to “Notes payable, net.”

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. Early adoption is permitted for all companies in any interim or annual period. We have not determined in what period it will adopt or what adoption method we will use and we are currently assessing the impact that this guidance may have on our consolidated financial statements.

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, 2015, we incurred losses of $2,883,362 and used cash of $525,148 in our operating activities. As at December 31, 2015, we had a working capital deficit of $2,410,679 and an accumulated deficit of $5,508,329.  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.

Currently we are not in compliance with the covenants under our debt agreements. As a result, we are proactively working with our lenders and evaluating options for maintaining compliance, which include requesting covenant amendments, waivers or forbearances, and could include a possible reduction of our debt level, including the payment of prepayment penalties. Our failure to comply with these covenants would be an event of default that, if not waived, could result in the acceleration of most our outstanding indebtedness, including the acceleration of our convertible notes and certain notes payable. If the lenders were to make such a demand for repayment, we would be unable to pay the obligations as we do not have existing facilities or sufficient cash on hand to satisfy these obligations. Due to this material uncertainty, there is substantial doubt about our ability to continue as a going concern. While we will continue to work with our existing lenders, there can be no assurance that we will be successful.

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 do 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.

F-15

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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. See also Note 20, Subsequent Events.

The warrants we received entitled us to purchase WMD shares for CAD $0.50 (USD $0.46 on the date of the related agreement) each for a period of six months from the date the warrant was issued.

F-16

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The WMD warrants were recorded at $0.10 per warrant utilizing the Black Scholes option pricing model and the following assumptions on the date of valuation:

Risk free interest rate	0.60	%
Expected term (years)	0.5
Expected volatility	70	%
Expected dividends	0	%

On December 9, 2014, the 3,000,000 WMD warrants expired unexercised and we recorded a $300,000 loss on investment in non-marketable equity securities in our consolidated statements of operations.

NOTE 5 – PREPAID EXPENSES

Our prepaid expenses consist of:

	December 31,
	2015		2014
Prepaid investor relations services	$	1,667	$	121,500
Prepaid licensing fees		35,000		39,000
Other prepaid services and fees		19,674		16,900
	$	56,341	$	177,400

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

Our equity method investments consist of:

	December 31,
	2015		2014
Lone Mountain Partners, LLC – 25% interest	$	—	$	50,000
Cannabinoid Research & Development Company Limited – 50% interest		88,000		88,000
Total equity method investments	$	88,000	$	138,000

Lone Mountain

On August 14, 2014, we acquired a 25% membership interest in Lone Mountain Partners, LLC, (“Lone Mountain”) for $50,000 and a commitment to provide future services, including, but not limited to, assisting with the application to obtain licenses to operate a medical marijuana entity in Nevada and to provide  standard operating procedures, security protocols, extract processing and equipment design, cultivation and processing center management, staffing and assistance with ongoing management of Lone Mountain. During the second half of 2014, we advanced Lone Mountain $40,900 for license application fees. As of December 31, 2014, Lone Mountain did not have any operations or operating activities. We accounted for our $50,000 cash contribution as an equity method investment and the $40,900 advance as amounts due from related parties on our consolidated balance sheets.

During the first half of 2015, Lone Mountain incurred operating losses in excess of $400,000. We recognized our 25% share of these losses up to the carrying amount of our equity method investment and advances to Lone Mountain and included this total $90,900 expense in equity in net loss of unconsolidated affiliate in our consolidated statements of operations.

We entered into a settlement agreement effective July 16, 2015, as amended on September 9, 2015, whereby we transferred our 25% equity interest in LMP to one of the LMP members in exchange for a mutual release from all claims against us, LMP and the other LMP members. This transaction did not impact our consolidated financial statements as we had previously written off our investment in and advances to LMP.

F-17

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CRD

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. As of December 31, 2015, CRD did not have any operations or operating activities. We accounted for this $88,000 as an Equity method investment on our consolidated balance sheets.

NOTE 8 – ACCRUED EXPENSES

Our accrued expenses consist of:

	December 31,
	2015		2014
Accrued consulting fees	$	110,000	$	110,000
Accrued wages and related		629,780		433,963
Accrued interest expense		101,185		6,832
Accrued other expenses		87,568		—
Total accrued expenses	$	928,533	$	550,795

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, 2014.

2015 Derivative Liabilities

We valued our derivative liabilities related to embedded conversion features applicable to our borrowings of $381,000 under our 2015 convertible notes payable (see Note 12 below) and accrued interest payable of $5,121 thereon in accordance with fair value measurement guidelines. For the year ended December 31, 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 recorded as debt discount		355,293
Additions to derivative liabilities for interest payable conversion features recorded as interest expense		4,695
Loss on revaluation of derivative liabilities during the year		23,593
Derivative liabilities as of December 31, 2015	$	383,581

The estimated fair value of the derivative liabilities related to our 2015 convertible notes payable was measured as the aggregate estimated fair value of each component of the compound embedded derivative liabilities (see Note 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-18

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2014 Derivative Liability

We valued our derivative liability related to embedded conversion features applicable to our initial borrowing of $282,500 under the Typenex convertible note payable (see Note 12 below) and accrued interest payable of $28,473 thereon in accordance with the Level 3 guidelines. For the year ended December 31, 2014, 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 liability as of December 31, 2013	$	—
Additions to derivative liability for convertible debt conversion feature recorded as debt discount		151,937
Additions to derivative liability for interest payable conversion feature recorded as interest expense		15,320
Gain on revaluation of derivative liability during the year		(6,099	)
Settlement of derivative liability on December 29, 2014		(161,158	)
Derivative liability as of December 31, 2014	$	—

The fair values of embedded conversion features issued with our Typenex convertible note and accrued interest payable were estimated using the Black-Scholes option pricing model. The key inputs to this valuation model during the year ended December 31, 2014, were as follows:

Risk-free interest rate	0.43% – 0.72%
Dividend yield	—
Volatility	146% – 172%
Expected life in years	1.72 – 2.09
Exercise price	$3.00

NOTE 10 – DEFERRED REVENUE

Our deferred revenue consists of:

	December 31,
	2015			2014
Deferred revenue – WeedMD	$	563,750			$	743,750
Deferred revenue - FoxBarry		200,000				200,000
		763,750				943,750
Less – current portion		(380,000	)			(500,000
Deferred revenue, net of current portion	$	383,750			$	443,750

As described in Note 4 above, on September 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. During the years ended December 31, 2015 and 2014, we recognized $180,000 and $150,000, respectively, of revenue applicable to this arrangement. At December 31, 2015, we expect to recognize $180,000 of the remaining $563,750 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. At the same time we entered into discussions with FoxBarry to earn the $200,000 prepaid royalty through new projects or as a potential termination fee associated with our original agreement. We have classified the $200,000 as a current liability on our consolidated balance sheets as we expect to recognize this amount during the next twelve months.

F-19

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 – NOTES PAYABLE 

Our notes payable consist of:

	December 31,
	2015		2014
Note payable - WeedMD	$	175,000	$	175,000
Note payable – Slainte		600,000		600,000
Total notes payable	$	775,000	$	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. Interest expense during the years ended December 31, 2015 and 2014, applicable to this note was $8,750 and $4,267, respectively. Accrued interest payable at December 31, 2015 and 2014 was $13,017 and $4,267, respectively, and these amounts are included in accrued expenses on our consolidated balance sheets.

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.  Additional interest expense during the years ended December 31, 2015 and 2014, applicable to this note was $80,482 and $2,565, respectively. Accrued interest payable at December 31, 2015 and 2014, was $83,047 and $2,565, respectively.

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. On March 18, 2016, we received a default waiver from Slainte as further described in Note 20, Subsequent Events.

NOTE 12 – CONVERTIBLE NOTES PAYABLE

2015 Convertible Notes

From time to time during 2015, we issued convertible promissory notes (the “2015 Notes”) to unaffiliated third parties. The net proceeds from these transactions are used for general working capital purposes. The difference between the face amount of the 2015 Notes and the net proceeds is recorded as deferred financing costs on our consolidated balance sheets if such difference is the result of payments related to debt issuance costs. Deferred financing costs are amortized on a straight-line basis, which approximates the effective interest rate method, during the first 180 days that the 2015 Notes are outstanding and this amortization is included in interest expense in our consolidated statements of operations.

The following table summarizes our convertible promissory notes issued during the year ended December 31, 2015:

Issue Date	Issued to		Maturity Date	Interest Rate	Default Interest Rate	Base Conversion Rate	VCR Look back Period	VCR Calculated Using	Principal
10/6/2015	Vis Viers Group, Inc.	Unsecured	6/30/2016	8%	22%	58%	10 days	3 lowest closing bids	$	59,000.00
10/12/15	JSJ Investments Inc.	Unsecured	7/8/2016	12%	18%	55%	10 days	5 lowest trades		102,000.00
12/9/15	Tangiers Investment Group, LLC	Secured by Certain Assets	12/8/2016	10%	20%	55%	10 days	3 lowest closing bids		220,000.00
Total principal outstanding at December 31, 2015									$	381,000.00

F-20

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 “Conversion Feature”).

The Conversion Price is equal 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.

Both of these conversion rates results in a beneficial conversion features (“BCF”) recorded as 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, during the first 180 days that each 2015 Note is outstanding and this amortization is included in amortization of debt discount in our consolidated statements of operations. If a 2015 Note is repaid during the first 180 days, the remaining unamortized deferred financing costs and unamortized debt discount are expensed on the date of repayment.

The 2015 Notes are convertible into an unlimited number of unregistered, restricted common shares (“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”). Both the Unlimited Shares Feature and the VCRD meet the definition of an embedded derivative and together are referred to as 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.

Similarly, accrued interest payable applicable to the 2015 Notes is convertible into shares of our 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.

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.

At December 31, 2015, we have reserved 10.2 million shares of our authorized but unissued common stock for potential conversion of the 2015 Notes.

Should we default on a conversion or repayment of a 2015 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.

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

The aggregate fair value of the derivative liabilities applicable to our 2015 Notes on the dates of issuance was $355,293 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 year ended December 31, 2015, we recognized $82,500 of amortization related to the 2015 Notes and recorded this amount as amortization of debt discount in our consolidated statements of operations.  

F-21

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We recognized $5,121 of interest expense applicable to our 2015 Notes during the year ended December 31, 2015, and included this amount of accrued interest payable as accrued expenses on our consolidated balance sheets. During the same period, we recorded an additional $4,694 of interest expense and an increase to our derivative liabilities related to the recognition of the BCF applicable to the $5,121 of interest payable.

During the year ended December 31, 2015, we recognized $82,500 of BCF debt discount amortization and recorded this as an increase to our convertible notes payable, net of debt discount on our consolidated balance sheets.

2014 Typenex Note

On August 13, 2014, we entered into a Securities Purchase Agreement with Typenex Co-Investment, LLC ("Typenex"), for the sale of a 10% convertible promissory note (the “Typenex Note”) in the principal amount of $1,657,500 (the “Closing Amount”) convertible into shares of our common stock. The Typenex Note had an original issue discount (“OID”) of $150,000. Typenex retained $7,500 of the Closing Amount for due diligence and legal bills related to the transaction and paid $25,000 on our behalf to a third party for brokerage fees (together, the “Fees”). The financing closed on August 13, 2014 (the “Closing Date”). The Typenex Note was secured by all of our assets.

On August 13, 2014, in conjunction with the $1,657,500 Typenex Note, we received five, unsecured, $250,000 Investor Notes bearing interest at 8% per annum, totaling $1,250,000 that were scheduled to mature with respect to principal and interest on September 13, 2016. On December 29, 2014, we settled the amounts owing under the Typenex Note and the amounts owed to us under the Investor Notes as more fully described in below.

During the year ended December 31, 2014, we recognized $37,807 of interest income applicable to these Investor Notes.

The Typenex Note’s interest rate was 10% per annum. All interest and principal was required to be paid twenty-five months after the date of the first borrowing under the Typenex Note (the “Maturity Date”). The outstanding balance on the Typenex Note was convertible into our common stock, at Typenex’s option, at $3.00 per share (the “Optional Conversion”).

The Typenex Note also contained repayment requirements beginning six months after the first borrowing under the Typenex Note. The repayment requirements gave us the option of making periodic repayments in cash or with shares of our common stock at a price discounted to market in accordance with the terms of the Typenex Note.

In addition, we issued to Typenex warrants (the “Typenex Warrants”) to purchase 997,692 shares of our common stock, subject to adjustment in the event of a cashless exercise, as defined in the Typenex Warrants. Warrant #1 to Purchase Shares of Common Stock (“Typenex Warrant #1”) for 170,044 shares was immediately exercisable with the remainder (Typenex Warrants #2 - #6”) only becoming exercisable, in five tranches, if and when the Investor Notes were paid. The Typenex Warrants were exercisable at $3.00 per share (the “Exercise Price”) until August 31, 2017, on a cash or cashless basis. Under the terms of the Typenex Warrants, if we, at any time while the Typenex Warrants were outstanding, sell or issue our common stock or securities convertible into or exercisable for shares of our common stock, including common stock issued under the Typenex Note, at an effective price per share less than the Exercise Price, then, subject to a few exceptions set forth in the Typenex Warrants, the Exercise Price will be reduced to such lower price provided that the number of shares of common stock issuable under the Typenex Warrants could not exceed a number of shares equal to three times the number of shares of common stock issuable under the Typenex Warrants as of the Closing Date.

On August 15, 2014, we received net cash proceeds from our initial borrowing under the Typenex Note of $225,000 as follows: total initial borrowing of $282,500 less the $32,500 of Fees and less $25,000 of OID applicable to the initial borrowing. We expensed the Fees immediately as interest expense as the initial borrowing and all subsequent tranches were immediately convertible into our common stock by the lender.

With regards to our $282,500 initial borrowing, on August 15, 2014, we recorded the $25,000 of OID plus the $118,373 fair value of the Typenex Warrant #1, plus $139,127 of the $151,937 fair value of the initial borrowing BCF, or, in total, $282,500, as debt discount and recorded the excess, $12,810, as loss on origination of derivative liability in our consolidated statements of operations. We were amortizing the $282,500 debt discount associated with the initial borrowing on a straight line basis, which approximates the effective interest method, over the nine month repayment term of the initial borrowing.

F-22

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

With regards to the remaining $1,375,000 liability owed under the Typenex Note, we recorded the remaining $125,000 of OID as debt discount. We were amortizing the $125,000 debt discount on a straight line basis, which approximates the effective interest method, over the twenty-five month term of the Typenex Note. We also recorded the $576,152 fair value of the Typenex Warrants #2 - #6 as debt discount. Debt discount amortization relating to these warrants would be recognized on a straight line basis over the term of each future borrowing under the Typenex Note.

On December 29, 2014, we paid off the Typenex Note and accrued interest thereon and we repurchased and cancelled the Typenex Warrants #2 - #6 for the purchase of 827,648 of our shares of common stock held by Typenex. Principal and interest owed to us under the Investor Notes were offset against the principal and interest we owed to Typenex under the Typenex Note and, in addition, we paid Typenex $381,714 in cash. We removed the assets and liabilities, including the derivative liability related to the Typenex Note and interest payable conversion features, from our consolidated balance sheets and reduced our common stock balance by the amount previously assigned to the Typenex Warrants #2 - #6 and recorded a loss on extinguishment of debt and repurchase of warrants as follows:

Convertible note payable	$	1,657,500
Less: unamortized discount		(822,250	)
Accrued interest payable		63,326
Derivative liability		161,158
Typenex Warrants #2 - #6 repurchased		576,152
Less: investor notes receivable		(1,250,000	)
Less: accrued interest receivable		(37,807	)
Less: cash paid		(381,714	)
Loss on extinguishment of debt	$	33,635

During the year ended December 31, 2014, we recognized $161,402 of debt discount amortization and interest expense totaling $63,326 applicable to the Typenex Note.

During the year ended December 31, 2014, the fair value of the BCF applicable to Typenex Note accrued interest was $15,320 and this amount was recorded as interest expense and an increase to our derivative liability in our consolidated financial statements.

NOTE 13 – NOTES PAYABLE, RELATED PARTIES

On September 30, 2013, we issued a Convertible Note (the "Convertible Note") for $50,000 to NYX Capital Advisors, Inc. (“NYX”), an entity owned by the husband of our former President and director, in connection with $50,000 cash paid by NYX.  The Convertible Note bears no interest and was convertible at any time, at the option of the holder, into 10,000,000 shares of our common stock at $0.005 per share.  The Convertible Note was converted into our common shares on February 24, 2014.

NOTE 14 – STOCKHOLDERS’ DEFICIT

2014 Change of Control

On February 27, 2014, NYX and Mr. Paul Enright, our former President, entered into a Stock Purchase Agreement, pursuant to which NYX sold to Mr. Enright an aggregate of 40,000,000 shares of our common stock, representing approximately 87% of our issued and outstanding shares as of that date.

On March 26, 2014, we cancelled 41,690,000 previously outstanding shares of our common stock and issued 38,690,000 shares to Messrs. Blackmon, Ruby and Verzura, representing approximately 89% of our issued and outstanding shares as of that date.

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.

F-23

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 described in Note 12 above.

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.

Common Stock Issued For Equity Method Investment

On August 25, 2014, we issued 40,000 shares of common stock valued at $88,000, based on the previous trading day’s closing price, as consideration for a 50% ownership interest in CRD. The $88,000 is included in equity method investments on our consolidated balance sheets.

Common Stock Issued For Services

On August 14, 2014, we issued 10,000 shares of common stock valued at $9,200, based on the previous trading day’s closing price, as consideration for marketing services. The $9,200 was recorded as share-based compensation expense and is included in sales and marketing expense in our consolidated statements of operations.

On August 15, 2014, we issued 20,000 shares of common stock valued at $24,800, based on the previous trading day’s closing price, as consideration for consulting services. The $24,800 was recorded as share-based compensation expense and is included in included in general and administrative expenses in our consolidated statements of operations.

F-24

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On September 17, 2014, we issued 150,000 shares of common stock valued at $162,000, based on the previous trading day’s closing price, as consideration for prepaid investor relations services. The $162,000 was amortized on a straight-line basis over the 12 month term of the investor relations service agreement. During the year ended December 31, 2015 and 2014, we recorded $121,500 and $40,500, respectively, of amortization as share-based compensation expense and included this in general and administrative expenses in our consolidated statements of operations.

On October 17, 2014, we issued 100,000 shares of common stock valued at $40,000, based on the previous trading day’s closing price, as consideration for prepaid product distribution fees. The $40,000 is being amortized on a straight-line basis over the ten year term of the licensing and distribution agreement. During the year ended December 31, 2015 and 2014, we recorded $4,000 and $1,000, respectively, of amortization as share-based compensation expense and included this in cost of revenues in our consolidated statements of operations. The remaining $35,000 as at December 31, 2015, is included in prepaid expenses on our consolidated balance sheets.

On October 22, 2014, we issued 50,000 shares of common stock valued at $24,000, based on the previous trading day’s closing price, as consideration for consulting services. The $24,000 was recorded as share-based compensation expense and is included in included in general and administrative expenses in our consolidated statements of operations.

On October 24, 2014, we issued 20,000 shares of common stock valued at $11,800, based on the previous trading day’s closing price, as consideration for consulting services. The $11,800 was recorded as share-based compensation expense and is included in included in general and administrative expenses in our consolidated statements of operations.

On December 1, 2014, we issued 30,000 shares of common stock valued at $19,500, based on the previous trading day’s closing price, as consideration for prepaid consulting services. The $19,500 was recognized as share-based compensation expense as services were rendered. During the year ended December 31, 2015 and 2014, we recorded $10,579 and $8,921, respectively, of share-based compensation expense and these amounts are included in general and administrative expenses in our consolidated statements of operations.

On December 30, 2014, we issued 20,000 shares of common stock valued at $13,800, based on the previous trading day’s closing price, as consideration for consulting services. The $13,800 was recorded as share-based compensation expense and is included in included in general and administrative expenses in our consolidated statements of operations.

On March 2, 2015, we issued 30,000 shares of common stock valued at $42,600, based on the previous trading day’s closing price, as consideration for consulting services from an independent contractor. The $42,600 of share-based compensation expense is included in included in general and administrative expenses in our consolidated statements of operations.

On April 23, 2015 we issued 60,000 shares of common stock valued at $47,400, based on the previous trading day’s closing price, as consideration for prepaid consulting fees. The $47,400 was recognized as share-based compensation expense as services were rendered. During the year ended December 31, 2015, we recorded $47,400 of share-based compensation expense and included this amount in general and administrative expenses in our consolidated statements of operations.

On April 23, 2015, we issued 126,500 shares of common stock valued at $99,935, based on the previous trading day’s closing price, as consideration for prepaid corporate finance fees. The $99,935 was recognized as share-based compensation expense as services were rendered. During the year ended December 31, 2015, we recorded $99,935 of share-based compensation expense and included this amount in general and administrative expenses in our consolidated statements of operations.

On August 17, 2015 we issued 50,000 shares of common stock valued at $19,000, based on the previous trading day’s closing price, as consideration for prepaid consulting fees. The $19,000 was recognized as share-based compensation expense as services were rendered. During the year ended December 31, 2015, we recognized $19,000 of share-based compensation expense and included this amount in general and administrative expenses in our consolidated statements of operations.

On August 24, 2015, we issued a total of 11,000 shares of common stock valued at $5,280, based on the previous trading day’s closing price, as consideration for consulting services from two independent contractors. The $5,280 of share-based compensation expense is included in included in general and administrative expense in our consolidated statements of operations.

F-25

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On October 19, 2015, we issued 30,000 shares of common stock valued at $12,000, based on the previous trading day’s closing price, as consideration for prepaid product distribution fees. The $12,000 is being amortized on a straight-line basis over the remaining nine year term of the related licensing and distribution agreement. During the year ended December 31, 2015, we recorded $375 of share-based compensation expense and included this in cost of revenues in our consolidated statements of operations. The remaining $11,625 as at December 31, 2015, is included in prepaid expenses on our consolidated balance sheets.

Warrants:

The following table summarizes our share warrants outstanding as of December 31, 2015 and 2014:

	Year Ended December 31,
	2015					2014
	Number of Shares			Weighted Average Exercise Price		Number of Shares		Weighted Average Exercise Price
Warrants outstanding, beginning of period		3,170,044		$	11.52	—		$	—
Issued		—			—	3,997,692			9.75
Exercised		—			—	—			—
Repurchased and cancelled		(170,044	)		3.00	(827,648	)		3.00
Expired		—			—	—			—
Warrants outstanding, end of period		3,000,000		$	12.00	3,170,044		$	11.52
Warrants exercisable, end of period		3,000,000		$	12.00	3,170,044		$	11.52

The weighted-average remaining contractual life for warrants outstanding and exercisable at December 31, 2015, is 0.25 years. The aggregate intrinsic value of warrants outstanding and exercisable at December 31, 2015 is $0.

As described in Note 12 above, on August 13, 2014, we issued Typenex warrants to purchase 997,692 of our common shares and recorded the $694,525 fair value of these warrants as an increase to common stock on our consolidated balance sheets. On December 29, 2014, we repurchased 827,648 of these warrants, cancelled them and recorded a $576,152 decrease in common stock.  

The warrants were recorded at approximately $0.70 per warrant utilizing the Black Scholes option pricing model and the following assumptions on the date of valuation:

Stock price	$	1.03
Exercise price	$	3.00
Risk free interest rate		0.88	%
Expected term (years)		3.05
Expected volatility		146	%
Expected dividends		0	%

2004 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.

F-26

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

The following table summarizes our stock options outstanding as of December 31, 2015:

	Year Ended December 31, 2015
	Number of Shares		Weighted Average Exercise Price
Stock options outstanding, beginning of period		—	$	—
Issued		600,000		0.70
Exercised		—		—
Expired		—		—
Stock options outstanding, end of period		600,000	$	0.70
Stock options exercisable, end of period		600,000	$	0.70

The weighted-average remaining contractual life for stock options outstanding and exercisable at December 31, 2015, is 9.0 years. The aggregate intrinsic value of options outstanding and exercisable at December 31, 2015 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, 2015 and 2014, under our 2014 Equity Incentive Plan. Share-based compensation expense for the years ended December 31, 2015 and 2014 is as follows:

	Year Ended December 31,
	2015		2014
Share-based compensation expense – shares issued for services	$	47,880	$	83,600
Share-based compensation expense – amortization of shares issued for prepaid services		302,789		50,421
Share-based compensation expense – accrual of shares to be issued for services		67,500		—
Share-based compensation expense – accrual of estimated share-based awards to officers		612,512		417,664
	$	1,030,681	$	551,685

F-27

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 –COMMITMENTS AND CONTINGENCIES

Contractual Obligations and Commercial Commitments

On May 6, 2014, we entered into a consultancy 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 negotiations. The agreement provides 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 years ended December 31, 2015 and 2014, we recognized $0 and $160,000 of expense applicable to this agreement and this amount is included in R&D expenses in our consolidated statements of operations. At December 31, 2015 and 2014, 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.

Legal Proceedings

We are involved in disputes and legal actions arising in the normal course of our business. There have been no material developments in legal proceedings in which we are involved during the year ended December 31, 2015.

NOTE 17 – 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.

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, 2015 and 2014, 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,
	2015		2014
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,
	2015			2014
Net loss carry forward	$	1,124,511		$	962,662
Valuation allowance		(1,124,511	)		(962,662	)
	$	—		$	—

F-28

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	Years Ended December 31,
	2015			2014
Tax benefit at statutory rate	$	1,124,511		$	962,662
Valuation allowance		(1,124,511	)		(962,662	)
	$	—		$	—

NOTE 18 –RELATED PARTY TRANSACTIONS

Affiliate Customer

During 2010, Messrs. Blackmon and Verzura have made loans to, or equity investments in, one of our customers and, effective June 30, 2015, Messrs. Blackmon and Verzura had 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 have classified sales 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.

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, Verzura and Ruby formed Blue River Inc. (“Blue River”), a Colorado corporation in the cannabis industry that plans to manufacture and wholesale medicinal and recreational cannabis products including our Prana medicinals products. During the year ended December 31, 2015, we advanced Blue River $3,284 and included this amount in due from related parties.

Amounts due from related parties consist of:

	December 31,
	2015		2014
Affiliated customer	$	—	$	3,112
Lone Mountain		—		40,900
Blue River		3,284		—
CRD		5,000		—
Total due from related parties	$	8,284	$	44,012

NOTE 19 –DISCONTINUED OPERATIONS

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 the advanced skin care business. The assets were sold to MySkin Services, Inc. (“MTA”), a business partly owned by Ms. Stoppenhagen, our former President and director, in exchange for a $15,000 payable we owed to Ms. Stoppenhagen and/or MTA. In addition, MTA assumed all costs associated with these assets starting on March 31, 2014. See Note 1 for further detail on our change in operations.

F-29

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following details our loss from discontinued operations:

	Years Ended December 31,
	2015		2014
Revenues	$	—	$	20,684
Operating expenses:
Selling, general and administrative		—		63,872
Depreciation		—		—
Loss on disposal of assets		—		15,704
Total operating expenses		—		79,576
Loss from discontinued operations, before income taxes		—		(58,892
Provision for income taxes		—		—
Loss from discontinued operations, net of income taxes	$	—	$	(58,892	)

NOTE 20 – SUBSEQUENT EVENTS

On January 15, 2016, we awarded 1,050,000 stock options to each of Messrs. Blackmon and 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 gave 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		2.03	%
Expected term (years)		10.0
Expected volatility		173	%
Expected dividends		0	%

On March 18, 2016, we entered into an agreement with Slainte whereby we released Slainte from any and all claims relating to the Slainte Note and 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.

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.

F-30

UNITED CANNABIS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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) $100,000.00 divided by (ii) the product of 0.80% and the average price of our common stock for the 30 trading days immediately prior to the date the put option is exercised.

On March 24, 2016, an unrelated third party agreed to assume all of our obligations pursuant to the $175,000 note payable to WeedMD dated July 7, 2014, in consideration for the transfer by us of 1,100,000 shares of the common stock of WeedMD to the unrelated third party. WeedMD consented to the assumption of the loan and released us from any further liability with respect to the loan.

On March 30, 2016, we borrowed $81,978, from Slainte 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.

The loan, together with interest at 12% per year, is payable on December 30, 2016. We can prepay the loan at any time. If the loan is repaid on or before September 30, 2016, the principal amount which is being repaid will increase by 10%. If the loan is 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.

If the loan is not paid when due, then at any time on or before 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 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 conversion date by the outstanding principal and interest on the loan on the conversion date.

On April 6, 2016, we borrowed $75,000, from Slainte and used the proceeds to repay principal and accrued interest applicable to our $102,000 convertible promissory note dated October 12, 2015, to JSJ Investments Inc.

The loan, together with interest at 12% per year, is payable on December 30, 2016. We may prepay the loan at any time. If the loan is repaid on or before September 30, 2016 the principal amount which is being repaid will increase by 10%. If the loan is 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.

If the loan is not paid when due, then at any time on or before 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 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 conversion date by the outstanding principal and interest on the loan on the conversion date.

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 used to 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%.

In accordance with ASC 855-10 we have analyzed its operations subsequent to December 31, 2015, 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-31

UNITED CANNABIS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2016			December 31, 2015
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	14,813		$	118,420
Account receivable, net of collection reserve of $30,000 at September 30, 2016 and $4,340 December 31, 2015, respectively		28,054			53,435
Due from related parties		8,284			8,284
Prepaid expenses		—			56,341
Deferred financing costs, net		—			32,400
Total current assets		51,151			268,880
Intangible assets		32,273			32,273
Investments in non-marketable securities		15,125			205,275
Equity method investments		88,000			88,000
Total assets	$	186,549		$	594,428
LIABILITIES AND STOCKHOLERS’ (DEFICIT)
LIABILITIES
Current liabilities:
Accounts payable	$	61,542		$	104,238
Accrued expenses		362,446			928,533
Advances from and accrued amounts owed to officers and directors		81,830			—
Derivative liabilities		547,200			383,581
Current portion of deferred revenue		180,000			380,000
Notes payable		600,000			775,000
Convertible notes payable, net of a $0.0 and $272,793 debt discount, at September 30, 2016 and December 31, 2015, respectively		331,978			108,207
Total current liabilities		2,164,996			2,679,559
Deferred revenue, net of current portion		248,750			383,750
Total liabilities		2,413,746			3,063,309
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ DEFICIT
Preferred stock, no par value: 10,000,000 authorized; none issued and outstanding		—			—
Common stock, no par value, 100,000,000 shares authorized; 47,832,198 and 44,988,500 issued and outstanding at September 30, 2016 and  December 31, 2015, respectively		4,244,085			3,039,448
Accumulated deficit		(6,471,282	)		(5,508,329	)
Total stockholders’ deficit		(2,227,197	)		(2,468,881	)
Total liabilities and stockholders’ deficit	$	186,549		$	594,428

See accompanying notes to the unaudited condensed consolidated financial statements.

F-32

UNITED CANNABIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Revenues
Revenues, non-affiliated	$	264,964		$	133,553		$	707,660		$	531,318
Revenues, affiliate		—			—			—			4,425
Total revenues		264,964			133,553			707,660			535,743
Cost of revenues:
Cost of revenues-non-affiliated		(68,813	)		(22,652	)		(252,550	)		(129,670	)
Cost of revenues- affiliated		—			(46,409	)		—			(46,409
Total cost of revenues		(68,813	)		(69,061	)		(252,550	)		(176,079	)
Gross profit		196,151			64,492			455,110			359,664
Operating expenses
General and administrative		116,811			362,194			546,272			1,414,672
Income (loss) from operations		79,340			(297,702	)		(91,162	)		(1,055,008	)
Other income and costs and expenses
Gain (loss) on derivative liabilities		(331,618	)		—			(332,456	)		—
Loss on early extinguishment of debt					—			(130,423	)		—
Interest expense		(40,044	)		(20,353	)		(153,438	)		(60,396	)
Amortization of debt discount		—			—			(266,711	)		—
Gain (loss) on conversion of convertible notes		(4,253	)		—			11,237			—
Loss on settlement of disputed terms of warrant		—			—			—			(768,602	)
Equity in net loss of unconsolidated Affiliate		—			—			—			(90,900	)
Loss before provision for taxes		(296,575	)		(318,055	)		(962,953	)		(1,974,906	)
Provision for taxes		—			—			—			—
Net Income (Loss)	$	(296,575	)	$	(318,055	)	$	(962,953	)	$	(1,974,906	)
Basic loss per common share	$	(0.006	)	$	(0.007	)	$	(0.021	)	$	(0.037	)
Basic and fully diluted weighted average number of shares outstanding		47,056,060			44,925,837			45,519,746			44,729,886

See accompanying notes to the unaudited condensed consolidated financial statements.

F-33

UNITED CANNABIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2016			2015
Cash flows from operating activities:
Net loss	$	(962,953	)	$	(1,974,906	)
Increase in accounts receivable		(279	)		(27,715	)
Increase in collection reserve		25,660			19,845
(Increase) decrease in prepaid expenses		56,341			(7,718	)
Decrease in deferred financing costs		32,400			—
Increase in accounts payable and accrued expenses		72,634			310,148
Decrease in deferred revenue		(335,000	)		—
Amortization of debt discount		266,711			—
Stock based compensation		118,160			642,109
Loss on revaluation of derivative liabilities		365,576			—
Loss on issue of warrants to cure default on note payable to Slainte Ventures		92,004			—
Loss on modification of note payable to Slainte Ventures		133,077			—
Gain on payoff of convertible note payable to JSJ Investments		(107,592	)		—
Gain on payoff of convertible note payable to Vis Vires Group		(48,939	)		—
Gain on conversion of convertible notes payable		(11,237	)		—
Discount and fees on convertible note		15,500			—
Value of non-marketable securities recognized as revenue		—			(135,000	)
Increase in advances from and accrued amounts owed to officers and directors		29,330			16,981
Increase in due from related parties		—			(7,543	)
Loss on settlement of disputed warrants		—			768,602
Equity in net loss of unconsolidated subsidiary		—			90,900
Cash used in operations		(258,607	)		(304,297	)
Cash flow from investing activities:
Purchase of intangible assets		—			(14,385	)
		—			(14,385	)
Cash flow from financing activities:
Proceeds from convertible notes		316,478			—
Advances from officers and directors		52,500			—
Payoff convertible notes		(183,978	)		—
Payments on notes payable		(30,000	)		—
		155,000			—
Net Cash flows		(103,607	)		(318,682	)
Cash and cash equivalents, beginning of period		118,420			321,353
Cash and cash equivalents, end of period	$	14,813		$	2,671

See accompanying notes to the unaudited condensed consolidated financial statements

F-34

UNITED CANNABIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(Unaudited)

	Nine Months Ended September 30,
	2016			2015
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 Tangiers Investment Group convertible note	$	473,965		$	—
Reduction of convertible notes payable due to the conversion by Tangiers Investment Group	$	220,000		$	—
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	$	175,000		$	—
Reduction of discount on notes due to revaluation of derivatives	$	—		$	—
Accounts payable exchanged for note payable to a third party	$	30,000		$	—
Cancellation of warrant	$	—		$	(218 788	)
Issuance of common stock in settlement of disputed terms of warrant	$	—		$	987,390
Issuance of common stock for services	$	—		$	214,215
Issuance of stock options	$	—		$	417 664

See accompanying notes to the unaudited condensed consolidated financial statements

F-35

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

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.

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 a total of 38,690,000 shares of our common stock.

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.

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-36

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

As of September 30, 2016, 23 states and the District of Columbia allow their citizens to use medical marijuana, and voters in the states of Colorado, Washington, 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 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 month and nine month periods ended September 31, 2016 and 2015 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, 2015.

Principles of Consolidation – Our condensed consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries UC Nevada L.L.C. and UC Colorado Corporation. All intercompany accounts and transactions have been eliminated.

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 estimate 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 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.

Financial Instruments – We have adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 825, Financial Instruments, which requires disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate that value. For purposes of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.

The carrying amounts of our short-term financial instruments, including accounts receivable, , accounts payable, accrued expenses and deferred revenue approximates fair value due to the relatively short period to maturity for these instruments. Investments in non-marketable equity securities are carried at cost. The carrying amount of our notes payable at September 30, 2016 and December 31, 2015, approximates their fair values based on our incremental borrowing rates.

Cash and Cash Equivalents - We consider investments with original maturities of 90 days or less to be cash equivalents. We did not have cash equivalents as of September 30, 2016 and December 31, 2015.

F-37

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

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 September 30, 2016 and December 31, 2015, respectively.

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 20 years. We test for impairment of our intangible assets on an annual basis.

Investments in Non-Marketable Equity Securities – Our investments in non-marketable equity securities are carried at cost, less write-down-for-impairments, and are adjusted for impairment based on methodologies, and assessment of the impact of 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 noncurrent assets.

Long-Lived Assets –In accordance with 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 less than 50%, where we exercise significant influence, are accounted for under the equity method.

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) is 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 form of stock, warrants or other financial assets is recognized when the services are performed. The value of revenue is measured using the Black-Scholes model for warrants.

Cost of Revenues - Our cost of revenues consists primarily of costs associated with the production and delivery of our products and services. These include expenses related to the production, packaging and labeling of our Prana medicinals products and consulting expense related to our advisory services.

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.

F-38

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

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 - We follow the provisions of ASC 740, Income Taxes. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

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 Income 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,
	2016		2015		2016		2015
Warrants to purchase common stock		1,895,122		3,000,000		1,895,122		3,000,000
Stock options		3,680,000		600,000		3,680,000		600,000
Total potentially dilutive securities		5,575,122		3,600,000		5,575,122		3,600,000

F-39

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

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 nine months ended September 30, 2016 and 2015, we did not have any gains and losses resulting from activities or transactions that resulted in 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. 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 Revenues:

	Nine Months Ended September 30,						Three Months Ended September 30,
	2016			2015			2016			2015
Customer A		88	%		9	%		80	%		35	%
Customer B		12	%		25	%		20	%		34	%
Customer C		—			19	%		—			31	%
Customer D		—			37	%		—			0	%

Percentage of Accounts Receivable:

	September 30, 2016			December 31, 2015
Customer A		57	%		56	%
Customer B		43	%		41	%
Customer C		—			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 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 2017, 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, 2016, we incurred losses of $962,953 and used cash of $258,607 in operating activities. At September 30, 2016, we had a working capital deficit of $2,132,349 and an accumulated deficit of $6,471,282.  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.

F-40

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

NOTE 4 – INVESTMENTS IN NON-MARKETABLE EQUITY SECURITIES

On June 9, 2014, we received 1,187,500 common shares; and 3,000,000 warrants, which expired unexercised, to purchase shares of common stock 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 $593,750 cost assigned to the WMD shares was classified as investment in non-marketable equity securities and as a component of deferred revenue in the amount of $593,750 on our condensed 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 transfer 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.

NOTE 5 – PREPAID EXPENSES AND OTHER ASSETS

Prepaid expenses and other assets consist of:

	September 30, 2016		December 31, 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. As of September 30, 2016, CRD did not have any operations or operating activities. We accounted for this $88,000 as an equity method investment on our condensed consolidated balance sheets.

NOTE 8 – ACCRUED EXPENSES

Our accrued expenses consist of:

	September 30, 2016		December 31, 2015
Accrued consulting fees	$	152,500	$	110,000
Accrued wages and related expenses		—	$	629,780
Accrued interest expense		142,446	$	101,185
Accrued other expenses		67,500	$	87,568
	$	362,446	$	928,533

F-41

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

Included in accrued consulting fees at September 30, 2016 and December 31, 2015 is $110,000 that represent fees owed to consultants working on a research and development project that is approximately 80% complete.

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 September 30, 2016.

	Level 1		Level 2		Level 3		Total
Derivative liabilities - convertible notes	$	—	$	—	$	—	$	—
Derivative liabilities - warrants		—		547,200		—		547,200
Total	$	—	$	547,200	$	—	$	547,200

Convertible Notes Payable

We valued our derivative liabilities related to embedded conversion features applicable to our borrowings of $322,000 under our convertible notes payable with embedded derivative features (see Note 12 below) and accrued interest payable of $28,724 thereon in accordance with fair value measurement guidelines. For the nine months ended September 30, 2016, 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. 2015	$	383,581
Loss on revaluation of derivative liabilities during the period		370,805
Loss on modification and cure of default of note payable to Slainte Ventures		237,027
Effect of payoff of JSJ and Vis Vires convertible notes		(178,484	)
Conversion of note payable to Tangiers Investment Group		(265,729	)
Derivative liabilities as of September 30, 2016	$	547,200

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 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.

NOTE 10 – DEFERRED REVENUE

Our deferred revenue consists of:

	September 30, 2016			December 31, 2015
Deferred revenue - WeedMD	$	428,750		$	563,750
Deferred revenue - FoxBarry		—			200,000
		428,750			763,750
Less - current portion		(180,000	)		(380,000	)
Deferred revenue, net of current portion	$	248,750		$	383,750

F-42

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

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, 2015 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 September 30 2016 and 2015, we recognized a total of $45,000 and $135,000 of revenue applicable to this arrangement, respectively. At September 30, 2016, we expect to recognize $180,000 of the remaining $428,751 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.

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, which we classified on our balance sheet as deferred revenue. Over the past twelve months, in spite of repeated efforts by our management, we have not been able to communicate with, or locate the principals of FoxBarry; and further, our research indicates that FoxBarry has ceased doing business, and is no longer an operating entity. When we entered into the transaction with FoxBarry, it was our policy to recognize the related deferred royalty revenue, based on actual applicable sales as defined in the agreement.  However, since FoxBarry appears to no longer be in existence, and all of our conditions pursuant to the agreement have been satisfied, we elected to recognize $200,000 of deferred during the three and nine months ended September 30, 2016. For the three and nine months ended September 2015, we did not recognize any deferred revenue related to this agreement.

NOTE 11 – NOTES PAYABLE 

Our notes payable consisted of the following:

	September 30, 2016		December 31, 2015
Note payable - WeedMD	$	—	$	175,000
Note payable - Slainte Ventures, LLC		600,000		600,000
Total notes payable	$	600,000	$	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. As discussed in Note 4 above, on March 24, 2016, an unrelated third party agreed to assume all of our obligations pursuant to the $175,000 note payable to WeedMD, in consideration for the transfer by us of 1,100,000 shares of the common stock of WeedMD to the unrelated third party. WeedMD consented to the assumption of the loan and released us from any further liability with respect to the loan.

On December 18, 2014, we issued a $600,000 unsecured promissory note bearing interest at 12% to an unrelated third party, Slainte Ventures, LLC. The principal and accrued interest are 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%.

F-43

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

On March 16, 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. 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.

These warrants are accounted for as a liability under ASC 815. The Company assesses the fair value of the warrants quarterly based on the Black-Scholes pricing model. See below for variables used in assessing the fair value.

	September 30, 2016			December 31, 2015
Expected life (years)		5.0			4.96
Risk-free interest rate		1.41	%		1.21	%
Expected volatility		226	%		227	%

In connection with these warrants, the Company recognized a loss on the change in fair value of warrant liability of $310,173 during the nine months ended September 30, 2016.

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. The Company believes this method produces an estimate that is representative of our expectations of future volatility over the expected term of these warrants. The Company currently has no reason to believe future volatility over the expected remaining life of these warrants is likely to differ materially from historical volatility. The expected life is based on the remaining term of the warrants. The risk-free interest rate is based on U.S. Treasury securities rates.

Due to the fair value of the warrants issued in connection with the amended note agreement, the modification was 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 an extinguishment loss of $133,077.

F-44

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

NOTE 12 – CONVERTIBLE NOTES PAYABLE

During the year ended 2015, we issued three convertible promissory notes to unaffiliated third parties. The net proceeds from these transactions were used for general working capital purposes. During the nine months ended September 30, 2016 we issued four convertible promissory notes, the net proceeds from which were used to pay the principal and accrued interest of two of the convertible notes issued during the year ended December 31, 2015. The difference between the face amount of the convertible notes and the net proceeds was recorded as deferred financing costs on our consolidated balance sheets, if such difference was the result of payments related to debt issuance costs. Any deferred financing costs are amortized on a straight-line basis, which approximates the effective interest rate method, during the first 180 days that the convertible notes are outstanding, and this amortization is included in interest expense in our consolidated statements of operations.

The following table summarizes our convertible promissory notes as of September 30, 2016:

Issue Date	Issued To	Security	Maturity Date	Interest Rate			Base Conversion Rate	Principal Balance
3/30/2016	Slainte Ventures	Unsecured	12/30/16		12	%	N/A	$	81,978
4/06/16	Slainte Ventures	Unsecured	12/30/16		12	%	N/A		75,000
7/5/2016	Slainte Ventures	Unsecured	12/30/16		12	%	N/A		50,000
8/10/16	JSJ Investments	Unsecured	5/10/17		12	%	$0.20 per share during first 180 days; 45% discount thereafter		125,000
								$	331,978

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 the Base Conversion Rate specified in the table above multiplied by the Variable Conversion Rate (“VCR”), which is equal to the lowest trading price or closing bid price of our common stock 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.

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 and 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.

F-45

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

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.

At September 30, 2016, we have reserved 10.2 million shares of our authorized but unissued common stock for potential conversion of the convertible notes.

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. The loan, together with interest at 12% per year, is payable on December 30, 2016. We can prepay the loan at any time. If the loan is repaid on or before September 30, 2016, the principal amount which is being repaid will increase by 10%. If the loan is 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. If the loan is not paid when due, then at any time on or before 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 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 conversion date by the outstanding principal and interest on the loan on the conversion date.

On April 6, 2016, we borrowed $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. The loan, together with interest at 12% per year, is payable on December 30, 2016. We can prepay the loan at any time. If the loan is repaid on or before September 30, 2016, the principal amount which is being repaid will increase by 10%. If the loan is 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. If the loan is not paid when due, then at any time on or before 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 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 conversion date by the outstanding principal and interest on the loan on the conversion date.

On July 5, 2016, we borrowed $50,000 from Slainte Ventures and used the proceeds for working capital purposes. The loan, together with interest at 12% per year, is payable on December 30, 2016. We can prepay the loan at any time. If the loan is repaid on or before September 30, 2016, the principal amount which is being repaid will increase by 10%. If the loan is 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. If the loan is not paid when due, then at any time on or before 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 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 conversion date by the outstanding principal and interest on the loan on the conversion date.

F-46

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

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.

NOTE 13 – STOCKHOLDERS’ DEFICIT

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, 2015, 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, 2015, 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	$	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 3,080,000 options totaling $612,512, was included in accrued expenses on our condensed 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-47

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

The following table summarizes our stock options outstanding, as of September 30, 2016:

	Nine Months Ended September 30, 2016
	Number of Shares		Weighted Average Remaining Life (years)		Weighted Average Exercise Price
Stock options outstanding, beginning of period		3,680,000		9.1	$	0.26
Issued		—		—		—
Exercised		—		—		—
Expired		—		—		—
Stock options outstanding, end of period		3,680,000		9.1	$	0.26
Stock options exercisable, September 30, 2016		3,680,000		9.1	$	0.26

Common Stock Issued In Exchange For Outstanding Warrant

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 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, 2015, 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.

Warrants:

The following table summarizes our share warrants outstanding as of September 30, 2016 and December 31, 2015:

	Nine Months Ended September 30, 2016
	Number of Shares			Weighted Average Remaining Life (years)		Weighted Average Exercise Price
Warrants outstanding, December 31, 2015		3,000,000			1.00	$	12.00
Issued		956,836			4.53		0.18
Shares issuable at the election of the noteholder in lieu of the payment of interest under the terms of the amended Slainte note		938,287
Exercised		—			—		—
Expired		(3,000,000	)		—		—
Warrants outstanding, end of period		1,895,122			4.53	$	0.18
Warrants exercisable, September 30, 2016		1,895,122			4.53	$	0.18

F-48

UNITED CANNABIS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

NOTE 14 – 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 nine months ended September 30, 2016 and 2015 is, as follows:

	Nine Months Ended September 30,
	2016		2015
Share-based compensation expense – consulting services	$	118,160	$	47,880
Share-based compensation expense – amortization of shares issued for prepaid services		—		279,229
Share-based compensation expense – accrual of estimated share-based awards		—		315,000
	$	118,160	$	642,109

NOTE 15 –COMMITMENTS AND CONTINGENCIES

Contractual Obligations and Commercial Commitments

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 nine months ended September 30, 2016, we recognized $118,160 of stock based compensation 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, 2016 and 2015, we recognized no expenses applicable to this agreement At September 30, 2016 and December 31, 2015 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.

Legal Proceedings

We were not subject to any legal proceedings during the nine months ended September 30, 2016, and, to the best of our knowledge, no legal proceedings are pending or threatened.

NOTE 16 – SUBSEQUENT EVENTS

In accordance with ASC 855-10 we have analyzed our operations subsequent to September 30, 2016, to the date these condensed consolidated financial statements were issued, and have determined that we do not have any material subsequent events to disclose in these condensed financial statements.

F-49

TABLE OF CONTENTS

	Page
PROSPECTUS SUMMARY	1
RISK FACTORS	3
MARKET FOR OUR COMMON STOCK	5
MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION	6
BUSINESS	10
MANAGEMENT	15
PRINCIPAL SHAREHOLDERS	20
INVESTMENT AGREEMENT	21
DESCRIPTION OF SECURITIES	23
LEGAL PROCEEDINGS	24
INDEMNIFICATION	24
AVAILABLE INFORMATION	24
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	$	1,160
Blue Sky Fees and Expenses		1,000
Legal Fes and Expenses		25,000
Accounting Fees and Expenses		5,000
Miscellaneous Expenses		2,840
TOTAL	$	35,000

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 February 27, 2014 we sold Paul Enright, our former President, 40,000,000 shares of our common stock for $50,000.

On March 21, 2014 we declared a stock dividend of three shares of common stock for each share of common stock outstanding as of March 19, 2014.

On March 26, 2014 we cancelled 41,690,000 previously outstanding shares of our common stock and collectively issued 38,690,000 shares of common stock to Earnest Blackmon, Chad Ruby and Tony Verzura in consideration for a license to use intellectual property.

On August 25, 2014 we issued 40,000 shares of common stock, valued at $88,000, as consideration for a 50% ownership interest in Cannibinoid Research and Development Company Limited.

Common Stock Sold for Cash

On March 26, 2014, we sold 600,000 Units for $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 entitled 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.  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.

Common Stock Issued For Warrant Outstanding

On February 10, 2015 we issued 621,000 shares of our common stock, valued at $987,390, to Typenex Co-Investment, LLC in exchange for the return of a warrant we issued to Typenex on August 13, 2014.

Common Stock Issued For Services

During the past three years we issued 1,454,549 shares of our common stock to sixteen persons for services, valued at approximately $816,000, provided to us.

II-1

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	Warrant issued to Sláinte Ventures, LLC (12)
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)
10.4	Assignment of Debt Agreement, dated March 24, 2016, by and between Buckingham Group Limited, WeedMD Rx Inc. and United Cannabis Corporation (6)
10.5	Promissory Note, dated April 6, 2016, payable to Earnest Blackmon (7)
10.6	Promissory Note, dated April 6, 2016, payable to Tony Verzura (8)
10.7	Agreement with Cannibinoid Research and Development Company Limited
10.8	Agreement with WeedMD RX, Inc.
10.9	Agreement with Harborside Health Center
10.10	Agreements with Blue River, Inc.
10.11	Agreement with Cherubim Interests, Inc.
10.12	Investment Agreements with Tangiers Global, LLC
16.1	Letter from Cutler & Co. LLC addressed to SEC, dated November 13, 2015 (9)
16.2	Letter from Pritchett, Siler & Hardy, P.C. addressed to SEC, dated April 25, 2016 (10)
21	Subsidiaries (11)
23.1	Consent of Attorneys
23.2	Consent of Accountants

———————

(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 10.3 to the Registrant’s Form 8-K/A filed on April 5, 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 10.8 to the Registrant’s Form 8-K filed on April 13, 2016.

(9)

Incorporated by reference to Exhibit 16.1 to the Registrant’s Form 8-K filed on November 16, 2015.

(10)

Incorporated by reference to Exhibit 16 to the Registrant’s Form 8-K filed on April 25, 2016.

(11)

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

(12)

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

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

II-2

(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.

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.

(5)

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.

II-3

(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.

II-4

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 21st day of February, 2017.

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 21, 2017
/s/ Chadwick Ruby
Chadwick Ruby	Director	February 21, 2017
/s/ Tony Verzura
Tony Verzura	Director	February 21, 2017

II-5

EX-5

EXHIBIT 5

HART & HART, LLC

ATTORNEYS AT LAW

1624 Washington Street

Denver, CO  80203

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

February 20, 2017

United Cannabis Corporation

1600 Broadway, Suite 1600

Denver, CO 80202

This letter will constitute an opinion upon the legality of the sale by United Cannabis Corporation, a Colorado corporation (the “Company”), of up to 5,000,000 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

EX-10.7

EXHIBIT 10.7

This Shareholder’s Agreement (“Agreement”) is made and entered into this 25th day of August 2014 by and between Cannibinoid Research & Development Company Limited (“CRD”)  a company incorporated in Jamaica and having its registered office at 14 Fulmer Way , Spanish Town , in the Parish of St Catherine, ___________________________, the remaining 50% Shareholders of CRD (“Shareholders”) and United Cannibis Corporation (“UCC”) a United States Corporation created in the state of Colorado and having its registered office at 303 east 17 Ave., Suite 800, Denver, Colorado 80129. CRD, UCC and Shareholders are sometimes referred to collectively as the “parties.”

WHEREAS, UCC holds 50% of the outstanding stock of CRD;

WHEREAS, in consideration for the shares held in CRD, UCC agrees to issue 40,000 shares of its common stock to the remaining 50% Shareholders of CRD;

WHEREAS, UCC agrees to fund the operations of CRD as requested and approved by UCC on a monthly or quarterly basis

WHEREAS, the Shareholders agree to certain restriction on the transfer of UCC stock as provided herein;

WHEREAS, the parties are entering into this agreement for their mutual benefit for the funding and financing of the business operations of CRD.

NOW THEREFORE, for good and valuable consideration, the sufficiency of which is hereby acknowledged the parties agree as follows:

1.

 In exchange for the transfer or issuance of 50%  shareholder interest in CRD, UCC agrees to issue 40,000 shares of Common Stock of UCC to the Shareholders as follows:

(1)

Vivia Brown

(4)

John Beefelo

_________________

_________________

_________________

_________________

6,667 shares

6,667 shares

(2)

John Sayers

(5)

Marcys Richardson

________________

_________________

________________

_________________

6,667 shares

6,666 shares

(3)

Ashley Davidson

(6)

Huntley Golding

__________________

_________________

__________________

_________________

6,667 shares

6,666 shares

The address of any Shareholder may be changed by notice to UCC and the other Shareholders.

In the event any Shareholder shall desire to transfer in any manner any or all of his or her Common Stock to any other person, such Shareholder shall give notice to UCC not less than 60 days prior to such proposed transfer.

In the event of the death of a Shareholder, UCC shall not unreasonably object or withhold its consent to any transfer by reason of death of the Shareholder, provided that such transfer will not result in or be likely to result in the termination, and will not jeopardize the retention of, any t ax status that might have been elected by UCC under the tax laws of the United States of America or the State of Colorado

2.

UCC will fund and finance the Jamaican operations of CRD. The funding will be requested by CRD, from time to time, but not more than monthly. Decisions to fund and finance will be made by UCC in its discretion and in good faith to meet the reasonable expenses of the business operations of CRD. Funding requests will be submitted with such documentation as required from time to time by UCC, including, but not limited to, CRD operational reports, budgets, projections, contracts pending, accounts receivable, balance sheets, financial statements, labor costs, expense reports and accounts payable. Requests for funding or financing shall be on such terms as the parties mutually agree, including such terms as the date of funding, costs of financing, and repayment terms.

3.

 CRD will provide all books of accounts and maintain all records for its operations. All books and records shall be open for inspection by any party at any time.

4.

UCC will provide the expertise for the production, packaging and distribution of the CRD products, as well as its intellectual property in the operations of CRD.

5.

UCC will indemnify and hold harmless each Shareholder, Officer and Director from a loss, liability or damage actually and reasonably incurred or suffered by any such Shareholder, Officer and Director by reason of any act performed or omitted to be performed, or alleged to have been performed or omitted, by such Shareholder, Officer and Director in connection with the business of UCC; provided that, no Shareholder, Officer and Director whose action or omission to act caused the loss, liability or damage incurred or suffered may receive indemnification or avoid liability with respect to any claim, issue or matter as to which there is a final determination that such Shareholder, Officer and Director acted in bad faith, gross negligence or willful misconduct.  A final determination means an order of any court or arbitration panel that is not appealed.  This right of indemnification includes any judgment, award, settlement, cost, expenses and reasonable attorney's fees incurred in connection with the defense of any actual or threatened claim or action based on any such act or omission

A Shareholder will not be liable to UCC for any loss, liability or damage suffered or incurred by UCC, directly or indirectly, because of any act or omission made by such Shareholder in good faith and in the absence of gross negligence and willful misconduct.

6.

The Shareholders agree that irreparable damage would occur if any Shareholder should bring an action in court to dissolve the Company.  Accordingly, each Shareholder waives and renounces (to the fullest extent permitted by law) such Shareholder's right to seek a court decree of dissolution or to seek the appointment by a court of a liquidator for the Company.

7.

Neither this Agreement or any interest herein may be assigned, pledged, transferred or hypothecated, without the prior written approval of the parties hereto.

8.

No provision of this Agreement may be amended or modified, or performance of any obligation waived, or any consent required hereunder given, except by a written instrument signed by all the parties hereto. This provision is not subject to oral modification.

9.

This Agreement shall be governed by and construed and interpreted in accordance with the laws of Jamaica, and without regard to principles of conflicts of law. The parties agree that this Agreement shall not be subject to any inference or rule of construction for or against the party who drafted this Agreement. Notwithstanding the foregoing, issues or disputes related in any way to the corporate governance of UCC shall be governed by Colorado Law, the place of UCC’s incorporation.

10.

In the event of any dispute between the parties hereto, the parties agree to try and resolve the dispute through non-binding mediation before any court proceeding is commenced. The Mediator shall be determined by the parties and, in the absence of agreement, by the President of the Jamaican Bar Association.

11.

This Agreement constitutes the entire Agreement between the parties hereto  with respect to the subject matter hereof and supersedes each course of conduct previously pursued or acquiesced in, and each oral agreement and representation previously made, by any party with respect thereto, whether or not relied or acted upon. All prior agreements, negotiations, representations, oral or written are merged herein.

12.

If any part of any provision of this Agreement shall be held to be invalid or unenforceable under applicable law, such part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining parts of such provision or the remaining provisions of this Agreement.

13.

Neither the waiver by any party hereto of a breach of or a default under any of the provisions of this Agreement, nor the failure of any party, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall thereafter be construed as a waiver of any subsequent breach or default, or as a waiver of any such rights, privileges or provisions thereunder.

14.

This Agreement may be executed in counterparts, and a facsimile or photocopy of a signature shall be deemed to be the original by the parties.

15.

A party shall not be liable for any failure of or delay in the performance of this Agreement for the period that such failure or delay is due to causes beyond its reasonable control, including but not limited to acts of God, war, strikes, police actions, labor disputes, embargoes, government orders, restrictions or seizures or any other force majeure event.

16.

Notice to CRD hereunder shall be provided by (Method) and addressed to: 48 Duke Street. Notice to UCC hereunder shall be provided by (Method) and addressed to: 9249 S. Broadway, Suite 200-883, Highlands Ranch, Colorado 80129. Notice shall net be effective until actually received.

Cannibinoid Research &Development Company Limited By: /s/ Vivia Brown       __Director_______, its________	United Cannabis Corporation By: /s/ Tony Verzura       ______________________, its__CTO___
/s/ Ashley Davidson, Shareholder Director	_____________________, Shareholder
______________, Shareholder	_________________ ____, Shareholder

EX-10.8

EXHIBIT 10.8

WeedMD

151 Bloor Street West

Suite 703

Toronto, Ontario

Canada M5S 1S4

May 28, 2014

United Cannabis Corporation

9249 S. Broadway

Suite 200-883

Highlands Ranch, Colorado

USA 80129

Attention: Ernie Blackmon

RE:

LETTER AGREEMENT

This letter will serve as a binding letter agreement (the "Agreement") to set out the relationship between United Cannabis Corporation ("UCC") and WeedMD RX Inc. ("WeedMD"). The terms and conditions, governing the relationship between UCC and WeedMD will be those set out in this Agreement.

The following sets out the principal terms of the relationship between UCC and WeedMD.

1.

STRATEGIC PARTNERSHIP

UCC, on the one hand and WeedMD, on the other hand, hereby agree to establish an exclusive strategic partnership (the "Partnership") in respect of the cultivation, growing, production and distribution of marijuana in Canada. The Partnership shall have a perpetual term.

A)   UCC'S SERVICES

UCC shall provide the following services, in connection with the Partnership (collectively, the "UCC Services"):

(i)

providing a royalty free license to use UCC's intellectual property (including, without limitation, "Act Now") as well as providing know-how, research & development and product strains for the Weed MD project located in Aylmer, Ontario (the "Aylmer Project", and any other WeedMD projects in Canada (the "Projects");

(ii)

providing  experience  and  expertise  related  to  all  aspects of  start-up  and  ongoing execution and operations to be undertaken by the Projects;

(iii)

providing authorization and a  royalty free license to use "Powered by United Cannabis Corporation" in connection with the Projects and their respective products;

(iv)

providing WeedMD with access to its grower(s) and invitation to site visits in the United States of America on a regular basis and opportunity to attend and participate in offsite sessions with UCC's contract growers;

(v)

sharing growing expertise and best practices including technology and applications with WeedMD;

(vi)

management from UCC to travel for regular visits with WeedMD in Toronto and other cities in Canada, as required, for corporate development and business development purposes and also to visit the WeedMD facility in Aylmer for operational  insight, input, feedback, recommendations and support;

(vii)

providing   marketing   support   and   awareness   of   partnership   and   collaborative relationship in Canada with WeedMD through all available UCC marketing channels for the Projects; and

(viii)

providing access and use of all UCC content, editorial, publications, videos, articles, photos, pictures and findings to communicate with potential customers and existing customers and with medical practitioners in Canada through online and print materials developed by UCC along with Canadian web traffic (if any) for  WeedMD (and/or to a company assigned by WeedMD to develop an online portal and associated websites for Canada which will depend on Health Canada marketing restrictions) and ensure proper credit to UCC for all copyrighted materials.

B)  CONSIDERATION FOR UCC'S SERVICES

In consideration for the UCC Services, WeedMD shall issue from treasury to UCC, 1,187,500 common shares in the capital of WeedMD within 10 business days following the execution of this Agreement.

C)  FINDER'S FEE

As a finder's fee in connection with the strategic partnership, WeedMD shall issue from treasury to Harold Algers and Edward Smolin or their nominee, 125,000 common shares in the capital of WeedMD within 10 business days following the execution of this Agreement.

2.

WEEDMD SHARE PURCHASE WARRANTS

Within 10 business days following the execution of the Agreement, WeedMD shall issue to UCC, 3,000,000 warrants to purchase shares in the capital of WeedMD (collectively, the "Warrants" and each a "Warrant"). Each Warrant shall entitle UCC to purchase one common share in the capital of WeedMD for a price of $0.50 for a period of six (6) months from the Warrant's date of issuance. Certain investors in UCC have outstanding Series A Warrants for UCC common stock priced at $7.50. In the event that a minimum of 800,000 US$7.50 Series A Warrants of UCC are exercised before or after 20 consecutive trading days at US$15.00 per share for UCC common stock , UCC shall be required to exercise the Warrants to purchase 3,000,000 shares of WeedMD common stock within 10 business days.

2

Upon the exercise of the 3,000,000 Warrants by UCC, WeedMD will issue a side letter to UCC providing UCC with the option to subscribe for common shares in the capital of WeedMD at the same price per share and on the same terms and conditions as any additional shares offered by WeedMD in any such offering(s), to the extent required for UCC to avoid dilution of its current proportionate holding of shares in the capital ofWeedMD.,

3.

EXCLUSIVITY

Weed MD and UCC agree that WeedMD shall be its and its Affiliates' (as defined below) exclusive partner in Canada, with the exception of the First Nations project, for marijuana production and all related products and services along with distribution for medical marijuana and potential future recreational marijuana in Canada and that it and its Affiliates will not be involved in, directly or indirectly, in any business competitive with the Projects without the involvement or prior written consent of WeedMD and UCC respectively. For the purposes of this Section 4, "Affiliate"  means, as applied to a person, (a) any other person controlling, controlled by or under common control with that person, (b) any other person that owns or controls fifty (50%) percent or more of any class of equity securities (including any equity securities issuable upon the exercise of any option or convertible security) of that person or any of its affiliates, or (c) any director, partner, principal, officer, agent, employee or relative of such person, where "control" (including with correlative meanings, the terms "controlling", "controlled by", and "under common control with") as applied to any person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that person, whether through ownership of voting securities, by contract or otherwise.

4.

RIGHT TO CO-INVEST IN SELECT PROJECTS

Within 30 days of execution of this Agreement, the parties will enter into a side letter agreement whereby UCC shall provide WeedMD or its nominee(s) with the right to invest, on a 50/50 basis, in select projects in UCC's sole discretion which UCC will be investing in the United States of America and internationally.

5.

PRESS RELEASES

The parties hereto agree not to issue press releases in connection with this letter, the relationship Between the parties hereto, or the transactions contemplated in this letter without the prior written approval of both parties.

6.

MISCELLANEOUS

This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of the Canada applicable therein. Neither party hereto can assign all or any part of this letter without the prior written consent of the other party hereto. This Agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and permitted assigns This letter may be signed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall

3

together constitute one and the same instrument. Delivery of such counterparts may be made by fax or PDF via email, either of which will be deemed to have the legal effect of an original.

The effective date of this Agreement will be the date that it has been executed by both parties hereto.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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Yours very truly,

Acknowledged and agreed this 30th day of May 2014.

WEEDMD RX INC.

/s/ Michael P. Kraft

Per: Michael P. Kraft

Title: Chairman

I have authority to bind the company.

UNITED CANNABIS CORPORATION

/s/ Earnest Blackmon

Per:  Earnest Blackmon

Title: President

I have authority to bind the company.

5

EX-10.9

EXHIBIT 10.9

TERM SHEET FOR

Prana “Bio Nutrient Medicinals”

Distribution and Licensing Agreement

This Term Sheet is to definitively agree to a Distribution and Licensing Agreement by and between UCANN California Corporation, (“UCANN” or “Licensor”) a California corporation whose address is 1600 Broadway, Suite 1600, Denver, Colorado 80202 and Patients Mutual Assistance Collective Corporation, a California corporation dba Harborside Health Center (“Harborside” or “Licensee”) located at 1840 Embarcadero, Oakland, California 94606. UCANN and Licensee may be referred to herein collectively as the “Parties” on the following terms:

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

UCANN is authorized to grant the rights relating to the Concentrate, Products (as defined herein) and its associated trademarks, logos, and other approved intellectual property, which shall be set forth in Schedule A attached hereto (“Prana IP”); and

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 marketing, sale or distribution of cannabis-based products approved by UCANN (“Products”).

DEFINITIONS.  The following terms shall have the following definitions for the purposes of this Agreement.

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 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.

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.

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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.

Products. The term "Product" or "Products" shall mean any of the marijuana infused products which are manufactured and packaged using the Concentrate and Prana IP in accordance with the Specifications including, without limitation, Prana “Bio Nutrient Medicinals” sublingual, Prana “Bio Nutrient Medicinals” capsule and any other authorized products described on Schedule B, attached hereto and incorporated herein by reference, as such Schedule B may be amended from time to time, and shall include the Packaging.

Effective Date:

August 10, 2015

Term:

Four months

License:

To sell and distribute the Products in California in its licensed Medical Marijuana Business owned and operated by Licensee, provided that all such facilities are licensed at the state and local level in good standing, and lawfully operating pursuant to the California Marijuana Code. Licensee shall advertise, promote, market, sell or distribute the Products solely in the Packaging approved by UCANN.

Exclusivity:

This arrangement is nonexclusive.

Obligations of Licensor:

At UCANN’s expense, UCANN shall provide:

·

detail descriptions of the Products,

·

educational literature,

·

patient education,

·

patient on boarding into the ACT Now software program,

·

support for Licensee staff and

·

at least two Licensor staff members at the booth while Licensee’s store is open.

Obligations of Licensee:

At Harborside’s expense, Harborside shall provide:

·

safe, insured and properly licensed facilities for the sale of Products,

·

point of sale (“POS”) systems to facilitate the sale of Products,

·

support staff for POS systems and sale of Products,

·

sales reporting, including weekly sales reports and license fee calculations.

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Fees and Payments:

Licensee shall pay to UCANN a Licensing Fee in the an amount equal to 25% above the wholesale price , computed on a weekly basis (Saturday through Friday) and payable to Licensor on the Monday immediately following the previous week’s retail sales.

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:

Attention: UC California Corporation

1600 Broadway

Suite 1600

Denver, CO 80202

or at such other location as UCANN may, from time to time, designate in writing and with advanced notice to Licensee.

Termination:

At any time for any reason upon 24 hours written notice

Governing Law:

Colorado

Notices:

For Patients Mutual Assistance Collective Corporation:

1840 Embarcadero

Oakland, California 94606

For UCANN:

UC California Corporation

1600 Broadway, Suite 1600

Denver, Colorado 80202

AGREED: __________________________

Date:    8/11/15

UCANN California Corporation

Name: /s/ Earnest Blackmon, CEO

AGREED: __________________________

Date:    8/11/15

Harborside Health Center

Name: /s/ Mark McMillian, CFO

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SCHEDULE A

INTELLECTUAL PROPERTY

1.

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

a.

Prana P1;

b.

Prana P2;

c.

Prana P3; and

d.

Prana P4;

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.

2.

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

a.

Prana P1;

b.

Prana P2;

c.

Prana P3; and

d.

Prana P4;

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.

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SCHEDULE B

PRODUCTS

1.

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

a.

Prana P1;

b.

Prana P2;

c.

Prana P3; and

d.

Prana P4.

2.

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

a.

Prana P1;

b.

Prana P2;

c.

Prana P3; and

d.

Prana P4.

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SCHEDULE C

AUTHORIZED BRANDS

Prana “Bio Nutrient Medicinals”:

a.

Prana P1;

b.

Prana P2;

c.

Prana P3; and

d.

Prana P4.

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EX-10.10

EXHIBIT 10.10

BINDING TERM SHEET

The Parties to this agreement are:

Blue River Inc.a Colorado Corporation (“Blue River”)

and

UCANN California Corporation (“UCANN CA”), a California Corporation

Blue River Designated Location:

1840 Embarcadero

Oakland, CA 94606

Effective date:

January 1, 2016

Term:

5 year

Termination:

Termination upon mutual written agreement (only)

Recitals:

UCANN CA is a consulting services provider, supplier of non-cannabis products and licensor of intellectual property (IP) to businesses in the cannabis industry.

UCANN CA IP includes rights to use and license United Cannabis Corporation’s (“UCANN”) formulations, processes and patent applications pertaining to UCANN’s proprietary Prana Bio Nutrient Medicinals (Prana) brand, terpene extraction, non-cannabis terpene products and UCANN business partner branded products

Blue River works with various collectives in Colorado, California and Oregon whose business includes the manufacture, production and distribution of cannabis and cannabis infused products.

Blue River desires to manufacture and produce UCANN’s non-cannabis terpene products for sale and distribution to its customers.

Blue River desires to use UCANN CA’s IP to manufacture and produce UCANN’s non-cannabis terpene products.

UCANN CA desires to provide an IP license(s) to Blue River for the purpose of producing UCANN non-cannabis terpene products.

Equipment:

Blue Rive will purchase, install, operate and own the equipment necessary to fulfill its obligations under this contract.

IP License:

UCANN CA will provide Blue River with a five year, non-exclusive license to use UCANN’s IP during the term of this arrangement.

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Services:

UCANN CA will provide management consulting services (“Consulting Services”), including the day-to-day supervision of the production, and consulting services related to the wholesale sale and distribution of UCANN’s non-cannabis terpene products.

Consideration:

Blue River will pay UCANN CA $5,000 per month as consideration for a five year IP license (“License Fee”). The monthly License Fee can be revised, and may be reduced or increased, every 90 days as agreed upon in writing by UCANN CA and Blue River.

Blue River will pay UCANN CA a fee of $500.00 per hour for any management consulting services provided by any UCANN CA personnel to be billed on a calendar month basis.

Payment:

UCANN CA will invoice Blue River monthly, in advance for License Fees and in arrears for Consulting Services, and Blue River will pay UCANN CA net 30 days from the invoice date.

Other:

This agreement is non-exclusive to either party.

The parties agree to the intellectual property, confidential information, mutual non-disclosure, mutual non-compete, mutual non-circumvent, indemnification, dispute resolution, warranties and limitation of liability, assignment and other conditions contained in the standard UCANN CA consulting and supply agreement(s) a draft copy of which is provided to Blue River.

Notices:

For UCANN CA:

UCANN California Corporation

1600 Broadway, Suite 1600

Denver, CO 80202

Attn: Earnie Blackmon

For Blue River Inc.:

Tony Verzura

Blue River Inc.

1001 16th Street, B-180 #143

Denver, CO 80265

Blue River, Inc.
By: /s/ Earnest Blackmon Name: Earnest Blackmon Title:  President UCANN California Corporation
By: /s/ Chadwick Ruby Name: Title:  Chief Operating Officer

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BINDING TERM SHEET

The Parties to this agreement are:

Blue River Inc. a Colorado Corporation“(“Blue River”)

and

UC Colorado Corporation (“UC CO”), a Colorado Corporation

Blue River Address:

1600 W. 113^th Avenue

Westminster, CO  80234

Effective date:

January 1st, 2016

Term:

5 year

Termination:

Termination upon mutual agreement.

Recitals:

UC CO is a consulting services provider, supplier of non‐cannabis products and licensor of intellectual property (IP) to businesses in the cannabis industry.

UC CO IP includes rights to use and license United Cannabis Corporation’s (“UCANN”) formulations, processes and patent applications pertaining to UCANN’s proprietary Prana Bio Nutrient Medicinals (Prana) brand, terpene extraction, non‐cannabis terpene products and UCANN business partner branded products.

Blue River works with various collectives in Colorado, California and Oregon whose business includes the manufacture, production and distribution of cannabis and cannabis infused products.

Blue River desires to manufacture and produce UCANN’s non-cannabis terpene products for sale and distribution to its customers.

Blue River desires to use UC CO’s IP to manufacture and produce UCANN’s non-cannabis terpene products.

UC CO desires to provide an IP license(s) to Blue River for the purpose of producing UCANN non-cannabis terpene products.

Equipment:

Blue Rive will purchase, install, operate and own the equipment necessary to fulfill its obligations under this contract.

IP License:

UC CO will provide Blue River with a temporary, non‐exclusive license to useUCANN’s IP during the term of this arrangement.

.

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Services:

UC CO will provide management consulting services, including the day‐to‐day supervision of the production, and consulting services related to the wholesale sale and distribution of UCANN’s non‐cannabis terpene products.

Consideration:

Blue River will pay UC CO $5,000 per month as consideration for a temporary IP license (“License Fee”). The monthly License Fee can be revised, and may be reduced or increased, every 90 days as agreed upon in writing by UC CO and Blue River.

Blue River will pay UC CO a fee of $500.00 per hour for any management consulting services provided by any UC CO personnel to be billed on a calendar month basis.

Payment:

UC CO will invoice Blue River monthly and Blue River will pay UC CO net 30 days from the invoice date.

Other:

This agreement is non‐exclusive to either party.

The parties agree to the intellectual property, confidential information, mutual non‐disclosure, mutual non‐compete, mutual non‐circumvent, indemnification, dispute resolution, warranties and limitation of liability, assignment and other conditions contained in the standard UC CO consulting and supply agreement(s) a draft copy of which is provided to Blue River.

Notices:

For UCCO:

UC Colorado Corporation

1600 Broadway, Suite 1600

Denver, CO 80202

Attn: Earnie Blackmon

For Blue River Inc.:

Tony Verzura

^{Blue River Inc.}

1001 16th Street, B‐180 #143

Denver, CO 80265

Blue River, Inc.

UCANN California Corporation

By: /s/ Earnest Blackmon

By: /s/ Chadwick Ruby

Name: Earnest Blackmon

Name:Chadwick Ruby

Title:  President

Title:  Chief Operating Officer

4

EX-10.11

EXHIBIT 10.11

SALES REPRESENTATIVE AGREEMENT

This Sales Representative Agreement (hereinafter called “Agreement”), to be effective as of this 29^th day of June, 2016 (hereinafter the “Effective Date”), is by and between Cherubim Interests, LLC., dba BCS USA, a wholly owned subsidiary of Cherubim Interests, Inc.  (“BCS”), a Nevada corporation having its principal place of business at 1304 Norwood Dr., Bedford, TX 76022 and United Cannabis Corporation, a Colorado corporation having its principal place of business at 1600 Broadway, Suite 1600, Denver, Colorado 80202 (“UCC”).  Throughout this agreement, BCS and UCC may each be referred to as “Party” and collectively the “Parties.”

In consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

1.

EXCLUSIVE MARKET AND TERRITORY

1.1

BCS grants UCC the exclusive and non-assignable right to solicit orders for the Product throughout the world (the “Territory”).  UCC has authority to solicit orders only and has no authority to accept orders.  All orders solicited by UCC shall be subject to acceptance by BCS.

1.2

The term “Product” shall mean any portable testing and/or extraction laboratory(s)/facility(s) offered by BCS for sale.  A description of the initial Product is attached here as Exhibit A.

1.3

From time to time, UCC shall generate sales call reports, sales forecasts, and such other information pertinent to UCC’s performance hereunder and shall keep BCS informed as to competitive and economic conditions which may affect the marketing or sales of the Products.

2.

PURCHASE ORDERS AND SHIPMENTS

2.1

UCC shall order the Product by written notice to BCS.  Each purchase order shall specify the number of units to be shipped, the desired method of shipment, the desired shipment date, and the delivery site.  BCS shall indicate its acceptance of such purchase order by returning a signed copy to UCC.  BCS agrees to ship units as close as possible to the delivery schedule set forth in each order as accepted by BCS, unless BCS otherwise indicates in writing.  Shipping dates are approximate and are based, to a great extent, on prompt receipt by BCS of all necessary ordering information from UCC.  BCS shall not be required to honor any purchase order which: (a) specifies a shipping date earlier than BCS’s then current delivery schedule for the date such purchase order is received by BCS and/or (b) specifies a quantity to be delivered in any one month within the current delivery schedule which is greater than 25% of the total quantity in the preceding sixty (60) day period.

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2.2

All shipments of the Product shall be made FOB BCS’s plant and liability for loss or damage in transit, or thereafter, shall pass to the customer upon BCS’s delivery of the Product to a common carrier for shipment.  The customer shall bear all costs of transportation, insurance and import/export duties.  BCS shall provide written notice to the customer and UCC when orders are ready for shipment.  BCS shall not be in default by reason of any failure in its performance under this Agreement if such failure results from, whether directly or indirectly, fire, explosion, strike, freight embargo, Act of God or of the public enemy, war, civil disturbance, act of any government, de jure or de facto, or agency or official thereof, material or labor shortage, transportation contingencies, unusually severe weather, default of any other manufacturer or a supplier or subcontractor, quarantine, restriction, epidemic, or catastrophe, lack of timely instructions or essential information from UCC, or otherwise arisen out of causes beyond the control of BCS.  BCS will not at any time be liable for any incidental, special or consequential damages.

3.

PAYMENTS AND COMMISSIONS

3.1

All payments required under this Agreement shall be made by the customer as follows:

·

A deposit equal to 50% of the total amount of the order upon submittal of the Purchase Order.

·

The remaining balance is due in full upon the completion of 60% of the construction of all Products specified in the applicable Purchase Order.  A Product is considered 60% complete upon completion of three walls.  BCS shall provide written notice to the customer and UCC when the 60% completion point is reached.

3.2

All payments due hereunder shall be paid by credit card, check or bank wire payable in U.S. dollars to BCS, or to the account of BCS at such bank as BCS may from time to time designate by notice to customer.  Except as authorized by BCS, UCC shall have no authority to make collections from customers, but shall assist BCS in collections upon request.

3.3

BCS agrees to pay UCC a commission on all Products sold.  The commission will be equal to the sales price of the Product as shown on the purchase order submitted to BCS, less shipping, custom duties or similar charges, less $47,000.  The commission will be paid to UCC within ten (10) days of BCS receiving the final payment as provided in Section 3.1 of this Agreement.

4.

TRADEMARKS/TRADENAMES

4.1

UCC will have the right to use BCS’ names, trademarks and tradenames for purposes of marketing the Product.  All advertising and other promotional material will  be submitted to BCS at least two (2) weeks in advance and will only be used if BCS consents thereto, which consent shall  not be unreasonably withheld.   BCS reserves the right to, at its sole discretion, periodically review   and monitor UCC’s use of its

2

marks for proper trademark usage as may be required to preserve BCS’ rights, good will, and value in its trademarks and tradenames.  UCC will, on termination of this Agreement, discontinue the use of BCS’s name, trademarks or tradenames on any stationery, invoices, promotion material or otherwise and thereafter will not use the same, either directly or indirectly in connection with its business, or expressions so nearly resembling the same as would likely lead to confusion or uncertainty, or to deceive the public.

5.

NON-COMPETE

5.1

Unless authorized by BCS in writing, neither UCC nor any other entity in which UCC or any of its principals has any ownership or other financial interest, at any time during the term of this Agreement, or within one hundred eighty (180) days after the termination of this Agreement, shall either sell, or act as a sales representative for any products or product lines which are in any way similar in design, function or intended use as to the Product, or which otherwise are competitive with the Product.  UCC will use its best efforts to notify BCS of any potential or current competitive product or product line.

5.2

Unless authorized by UCC in writing, neither BCS nor any other entity in which BCS or any of its principals has any ownership or other financial interest, at any time during the term of this Agreement, or within one hundred eighty (180) days after the termination of this Agreement, shall either sell, or act as a sales representative for any products or product lines which are in any way similar in design, function or intended use as to the Product, or which otherwise are competitive with the Product.  

6.

WARRANTY

6.1

All Products and components thereof are subject to their respective manufacturer’s warranties.  The warranties, WHICH RUN TO THE CUSTOMER, will be represented to the customer in documents provided by the respective manufacturers. Products, parts or components that are replaced or repaired shall be subject to the same limitations and exclusions as the warranty for a new Product.

6.2

UCC may not extend the warranty or modify it in any respect. No modification or extension of any warranty is effective unless it is in a writing signed by an authorized officer of BCS. UCC shall notify BCS of any claimed defect in any product within thirty (30) days of the date UCC becomes aware of the defect, by giving a written report setting forth all pertinent details including a description of the defect and the time and place of occurrence.

6.3

UCC shall make certain that all customers are aware of the terms of the Product and component warranties prior to the sale of the Product and will deliver a copy of manufacturer’s warranty documents with the sale of each Product. UCC shall prepare or cause a customer to prepare and forward to BCS any warranty registration materials or the like which BCS may require.

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7.

PROPRIETARY INFORMATION

7.1

 “Proprietary Information” as used herein shall mean all or any portion   of only the: (a) written, recorded, graphical or other information in tangible form disclosed during the term of this Agreement, by one party to the other party which is labeled “Proprietary”, “Confidential”, or with a similar legend denoting the proprietary interest therein of the disclosing party; (b) oral information which is disclosed by one party to the other party to the extent it is identified as “Proprietary” or “Confidential” at the time of oral disclosure, is reduced to written or other tangible form within thirty (30) days of oral disclosure, and such written or tangible form is labeled “Proprietary”, “Confidential”, or  with a similar legend denoting the proprietary interest therein of the disclosing party; and (c) models and other devices delivered or disclosed, during the Term of this Agreement, by one party to the other party which have been identified in writing at the time of disclosure as being proprietary to the disclosing party; and provided further, however, Proprietary Information shall not include any data, information or device that is: (i) in the possession of the receiving party prior to its disclosure by the disclosing party and not subject to other restriction on disclosure; (ii) independently developed by the receiving party; (iii) publicly disclosed by the disclosing party; (iv) rightfully received by the receiving party from a third party without restrictions on disclosure; (v) approved for unrestricted release or unrestricted disclosure by the disclosing party; or (vi) produced or disclosed pursuant to applicable laws, regulations or court order, provided the receiving party has given the disclosing party prompt notice of such request so that the disclosing party has an opportunity to defend, limit or protect such production or disclosure.

7.2

The Parties agree, (a) not to disclose Proprietary Information of the other Party (b) to limit dissemination of the other Party’s Proprietary Information to only those of the receiving Party’s officers, directors and employees who require access thereto to perform their functions regarding the purposes of his Agreement; and (c) not to use Proprietary Information of the other Party except for the purposes of this Agreement, which purposes shall include disclosure to subcontractors and second sources, both in accordance with nondisclosure agreements. The standard of care to be exercised by the receiving Party to meet these obligations shall be the standard exercised by the receiving Party with respect to its own proprietary information of a similar nature, but in no event less than due care.

7.3

Each Party retains all rights and title to all Proprietary Information, in any form, disclosed to the other Party pursuant to this Agreement. Each Party acknowledges that such information is of substantial value and that any disclosure or misuse of such information is harmful to the originating Party.

7.4

The Parties shall only disclose Proprietary Information to those employees and independent contractors who require access to the Proprietary Information to permit a Party to exercise its rights and perform its obligations under this Agreement. A Party shall not disclose any Proprietary Information to any employee or independent contractor unless the employee or independent contractor has signed a nondisclosure agreement incorporating provisions obligating the employee or independent contractor to maintain the confidentiality of the other Party’s Proprietary Information.  

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The Parties agree to keep the terms and conditions of this Agreement confidential and proprietary among the Parties and/or their affiliates.

8.

TERMINATION

8.1

Except as provided below, this Agreement will terminate on a mutually agreed date, to be agreed upon by both Parties.

8.2

In the event of default or failure by either Party to perform any of the terms, covenants or provisions of this Agreement, the defaulting Party shall have thirty (30) days after the giving of written notice of such default by the non-defaulting Party to correct such default.  If such default is not corrected within the said thirty (30) day period, the non-defaulting Party shall have the right, at its option, to cancel and terminate this Agreement.  The failure of the non-defaulting Party to exercise such right of termination or otherwise shall not be deemed to be a waiver of any right the non-defaulting Party might have, nor shall such failure preclude the non-defaulting Party from exercising or enforcing said right upon any subsequent failure by the defaulting Party.

8.3

Either Party shall have the right, at its option, to cancel and terminate this Agreement in  the event that the other Party shall (i) become involved in insolvency, dissolution, bankruptcy or receivership proceedings affecting the operation of its business (ii) make an assignment of all or substantially all of its assets for the benefit of creditors, or (iii) in the event that a receiver or trustee is appointed for the other Party and the other Party shall, after the expiration of thirty (30) days following any of the events enumerated above, have been unable to secure a dismissal, stay or other suspension of such  proceedings.

8.5

No termination of this Agreement shall constitute a termination or a waiver of any rights of either Party against the other Party accruing at or prior to the time of such termination.

8.6

The obligations of Sections 5, 6 and 7 shall survive the termination of this Agreement.

9.

NOTICES

9.1

Except as otherwise provided in this Agreement any notice, payment or other communication pursuant to this Agreement shall be sufficiently made or given on the date of mailing if sent to such Party by first class mail, postage prepaid, addressed to it at its address below or as it shall designate by written notice given to the other  Party:

5

In the case of BCS to:

Patrick Johnson

Cherubim Interests DBA BudCube Cultivation Systems

1304 Norwood Dr.

Bedford, TX 76022

In the case of UCC to:

Ernest Blackmon

United Cannabis Corporation

1600 Broadway Ste. 1600

Denver, CO  80202

10.

ADDITIONAL PROVISIONS

10.1

Arbitration. The parties agree to binding arbitration pursuant to the provisions of the Commercial Rules of the American Arbitration Association, provided however, that this arbitration provision shall not preclude either Party from seeking injunctive relief from any court having jurisdiction with respect to any disputes or claims relating to or arising out of the misuse or misappropriation of either Party’s trade secrets or confidential and proprietary information. The arbitrator shall award costs and fees, including reasonable attorneys’ fees, to the prevailing party, or he/she shall be free to apportion costs and fees as he/she deems reasonable under the circumstances.  This Agreement and the terms hereof shall be governed by the laws of the state of Texas.  The arbitration proceedings will be held in Tarrant County, TX.

10.2

Disclaimers. UCC does not assume any responsibility for defective products where the defective products are not manufactured according to specifications agreed to by both parties.

10.3

Independent Contractors. The Parties herby acknowledge and agree that each is an independent contractor and that neither Party shall be considered to be the agent, representative, master or servant of the other Party for any purpose whatsoever, and that neither Party has any authority to enter into a contract, to assume any obligation or to give warranties or representations on behalf of the other Party. Nothing in this relationship shall be construed to create a relationship of joint venture partnership, fiduciary, or other similar    relationship between the Parties.

10.4

Non­Waiver.  The Parties covenant and agree that if a Party fails or neglects for any    reason to take advantage of any of the terms providing for the termination of this Agreement or if a Party, having the right to declare this Agreement terminated, shall fail to do so, any such failure or neglect by such Party shall not be a waiver or be deemed or be construed to be a waiver of any cause for the termination of this Agreement subsequently arising, or as a waiver of any of the  terms, covenants or conditions of this Agreement or of the performance thereof.  None of the terms,

6

covenants and conditions of this Agreement may be waived by a Party except by its written consent.

10.5

Reformation. All Parties hereby agree that neither Party intends to violate any public policy, statutory or common law, rule, regulation, treaty or decision of any government agency or executive body thereof of any country or community or association of countries; that if any word, sentence, paragraph or clause or combination thereof of this Agreement is found, by a court or executive body with judicial powers having jurisdiction over this Agreement or any of its Parties hereto, in a final unappealed order to be in violation of any such provision in any country or community or association of countries, such words, sentences, paragraphs or    clauses of combination shall be inoperative in such country or community or association of countries, and the remainder of the Agreement shall remain binding upon the Parties  hereto.

10.6

Force Majeure.  No liability hereunder shall result to a Party by reason of   delay in performance caused by force majeure that are circumstances beyond the reasonable control of the Party, including, without limitation, acts of God, fire, flood, war, civil unrest, labor unrest, or shortage of or inability to obtain material or equipment.

10.7

Assignment.  This Agreement and the rights granted hereunder shall not be assigned by either Party without the prior written consent of the other Party.

10.8

Government Compliance.  BCS shall at all times during the term of this Agreement comply and cause its Affiliates to comply with all laws that may control the import, export, manufacture, use, sale, marketing, distribution and other commercial exploitation of the Product or any other activity undertaken pursuant to   this Agreement.  Each Party shall comply with all applicable laws and regulations in performing its responsibilities hereunder.

10.9

Entire Agreement.  The terms and conditions herein constitute the entire Agreement between the Parties and shall supersede all previous agreements, either oral or written, between the Parties hereto with respect to the subject matter hereof.  No agreement or understanding bearing on this Agreement shall be binding upon either Party hereto unless it shall be in writing and signed by the duly authorized officer or representative of each of the Parties and shall expressly refer to this Agreement.

7

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement in multiple originals by their duly authorized officers and representatives on the respective dates shown below.

CHERUBIM INTERESTS, LLC,

UNITED CANNABIS CORPORATION

dba BCS USA

By:

/s/ Patrick Johnson

By: /s/ Earnest Blackmon

      Patrick Johnson, CEO/Pres

       Earnest Blackmon, President

June 29, 2016

June 29, 2016

Date

Date

8

EXHIBIT A

Product List

BCS-USA & NTX Porta-Lab 1.0

Figure  - Conceptual Schematic

Description:

20” ISO, Certified Used, Shipping Container retro-fitted with the following;

1.

Containment Area

a.

Containment wall with Metal Insulated Entry Door w/Deadbolt locks, keyed locksets and a wide angled peep-hole.

b.

Electrical Panel and main connector

c.

LED Light Fixture and Switch

d.

Containment Barrier and Clean Room Mat

2.

Plumbing

a.

20 Gallon Electric Water Heater including over-flow drain pan

b.

Wall clean-out cover

c.

Drain Vent Line - ABS pipe with fitting(s) and hanger(s)

d.

20-gallon service sink basin

9

e.

Sink faucet w/sprayer

f.

P-trap assembly

g.

Bubbleman Washer – drain into service sink

h.

Distribution manifold for PEX tubing

i.

Water Supply line(s) – PEX with fitting(s) and Hanger(s)

j.

Angle Stop Valve(s)

k.

RV water connection – filler and box

l.

Ice Machine with Condensate Pan and Connection Line(s) w/Valve(s)

m.

Clean Out

3.

Electrical

a.

200 Amp Breaker Panel

b.

Standard Grade LED Light Fixtures

c.

110 Volt Boxes, wiring, outlets and switches

d.

110 Volt GFI Outlets as applicable

e.

220 Volt, wiring, box, outlet and switch

f.

Disconnect Box

g.

Combination CO / Smoke Detector

4.

Heat, Ventilation and Air Conditioning

a.

Refrigerant line-set

b.

Duct-free split system – 1 Zone – High Efficiency

c.

Low Volume Ventilation Fan

d.

Vent-Rain Cap and Storm Collar as applicable

5.

Interior Wall System

a.

3 ½” Insulated Metal Panel and Track System w/ trim components

b.

Closure strips for panels

c.

Commercial Grade Vinyl Floor Covering

6.

Exterior

a.

Metal Housing – HVAC System

b.

Access-fab openings & connections to conform to ISO Shipping Regulations

c.

Undercoating & Rust inhibitor as applicable

d.

Paint

e.

Make ready for Shipping as applicable

10

EX-10.12

EXHIBIT 10.12

INVESTMENT AGREEMENT

This INVESTMENT AGREEMENT (the “Agreement”), dated as of December 28, 2016 (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.

1

“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 Fee Note” shall have the meaning set forth in Section 10.17

“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

2

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 trading prices of the Common Stock 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 7.5.

“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.

3

“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 one hundred percent (100%) of the average of the daily trading volume (U.S. market only) of the Common Stock for the ten (10) 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 $350,000, 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 tenth (10th) Trading Day immediately following the preceding Put Notice Date (the “Waiting Period”).  

2.4

CONDITIONS TO INVESTOR’S OBLIGATION TO PURCHASE SHARES. Notwithstanding anything to the contrary in this Agreement, the Company shall not be entitled to deliver a Put Notice and the Investor shall not be obligated to purchase any Shares at a Closing unless each of the following conditions are satisfied:

4

i.

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;

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

v.

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

If any of the events described in clauses (i) through (v) above occurs during a Pricing Period, then the Investor shall have no obligation to purchase the Put Amount of Common Stock set forth in the applicable Put Notice.

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

5

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

6

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

7

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 INSTRUMENTS.

i.

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 49,508,733 are issued and outstanding and 10,000,000 shares of preferred stock, no par value, of which no 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:

i.

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

8

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);

v.

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

9

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

10

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

11

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

12

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.

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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.  Meyers & Associates will receive a finder’s fee equal to 2% of the amount raised from the sale of the shares to the Investor.  Except with respect to the finder’s fee to be paid to Meyers & Associates, 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,

14

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

15

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.

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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 Common Stock shall be authorized for quotation on the Principal Market and trading in the Common Stock shall not have been suspended by the Principal Market or the SEC, at any time beginning on the date hereof and through and including the respective Closing Date (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 the Put Notice related to such Closing).

7.3

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.

7.4

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.

7.5

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.

7.6

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.

7.7

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.

7.8

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.

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7.9

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.

7.10

The conditions to such Closing set forth in Section 2.4 shall have been satisfied on or before such Closing Date.

7.11

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:

i.

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:

i.

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

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

18

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 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.

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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.

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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.

10.17

COMMITMENT FEE. Upon the Execution Date of this Agreement, the Company shall be required to issue to the Purchaser a 10% $35,000 promissory note as a commitment fee (the “Commitment Fee Note”). The Commitment Fee Note will have a 7-month maturity.  If the S-1 is declared effective within 90 days following document execution, $15,000 will be automatically deducted from the balance of the Commitment Fee Note. If the S-1 is declared effective within 135 days (but more than 90 days) following document execution, $7,500 will be automatically deducted from the balance of the Commitment Fee Note.  The Company agrees that the issuance of the Commitment Fee Note is a material obligation and that the Commitment Fee Note is considered fully earned as of the Execution Date of this Agreement, regardless of whether or not the Company files the S-1 or is successful in having it deemed effective by the SEC.

SECTION XI

NON-DISCLOSURE OF NON-PUBLIC INFORMATION

The Company shall not disclose non-public information to the Investor, its advisors, or its representatives.

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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.]

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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/ Michael Sobeck

Name: Michael Sobeck

Title:  Managing Member

UNITED CANNABIS CORP.

By: /s/ Earnest Blackmon

Name: Earnest Blackmon

Title: CEO

[SIGNATURE PAGE OF INVESTMENT AGREEMENT]

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LIST OF EXHIBITS

EXHIBIT A

Registration Rights Agreement

EXHIBIT B

Put Notice

EXHIBIT C

Put Settlement Sheet

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EXHIBIT A

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (the “Agreement”), dated as of December 28, 2016 (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, 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, no par value 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.

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“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

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registration), covering the resale of 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 of the maximum number of shares of Registrable Securities allowed by the rules and regulations of the SEC.

2.2

The Company shall use commercially reasonable efforts to have the Registration Statement(s) declared effective by the SEC within 90 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 Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale 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. 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

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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 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

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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 the 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

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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

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(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

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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.

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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:

a.

make and keep public information available, as those terms are understood and defined in Rule 144;

b.

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

c.

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 X

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. 1600 Broadway, Suite 1600 Denver, CO 80202 Attn:   Earnest Blackmon Email: eb@unitecannabis.us
If to the Investor:	Tangiers Global, LLC Caribe Plaza Office Building 6th Floor, Palmeras St. #53, 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.

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.

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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

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.

9.7

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.

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 the state courts of 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

10

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.]

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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/ Michael Sobeck

Name: Michael Sobeck

Title:  Managing Member

UNITED CANNABIS CORP.

By: /s/ Earnest Blackmon

Name: Earnest Blackmon

Title:  Chief Executive officer

[SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT]

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NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

THIS NOTE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE NOTE IN THE EVENT OF A PARTIAL REDEMPTION OR CONVERSION.  AS A RESULT, FOLLOWING ANY REDEMPTION OR CONVERSION OF ANY PORTION OF THIS NOTE, THE OUTSTANDING PRINCIPAL SUM REPRESENTED BY THIS NOTE MAY BE LESS THAN THE PRINCIPAL SUM AND ACCRUED INTEREST SET FORTH BELOW.

10% FIXED CONVERTIBLE PROMISSORY NOTE

OF

UNITED CANNABIS CORP.

Issuance Date:  December 28, 2016

Total Face Value of Note: $35,000

THIS NOTE is a duly authorized Fixed Convertible Promissory Note of United Cannabis Corp. a corporation duly organized and existing under the laws of the State of Colorado (the “Company”), designated as the Company's 10% Fixed Convertible Promissory Note due July 8, 2017 (“Maturity Date”) in the principal amount of $35,000 (the “Note”).

FOR VALUE RECEIVED, the Company hereby promises to pay to the order of Tangiers Global, LLC or its registered assigns or successors-in-interest (“Holder”) the Principal Sum of $35,000 (the “Principal Sum”) and to pay “guaranteed” interest on the principal balance hereof at an amount equivalent to 10% of the Principal Sum, to the extent such Principal Sum and “guaranteed” interest and any other interest, fees, liquidated damages and/or items due to Holder herein have been repaid or converted into the Company's Common Stock (the “Common Stock”), in accordance with the terms hereof.

In addition to the “guaranteed” interest referenced above, and in the Event of Default pursuant to Section 2.00(a), additional interest will accrue from the date of the Event of Default at the rate equal to the lower of 15% per annum or the highest rate permitted by law (the “Default Rate”).  

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This Note will become effective only upon the execution by both parties, including the execution of Exhibits B, C, the Irrevocable Transfer Agent Instructions and the December 28, 2016 Investment Agreement (the “Date of Execution”) between the Company and Holder (the “Effective Date”).

This Note may not be prepaid by the Company, in whole or in part, at any time without approval by the Holder.

For purposes hereof the following terms shall have the meanings ascribed to them below:

“Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the City of New York are authorized or required by law or executive order to remain closed.

“Conversion Price” shall be fixed at $1.00.

 “Principal Amount” shall refer to the sum of (i) the original principal amount of this Note (including the original issue discount, prorated if the Note has not been funded in full), (ii) all guaranteed and other accrued but unpaid interest hereunder, (iii) any fees due hereunder, (iv) liquidated damages, and (v) any default payments owing under the Note, in each case previously paid or added to the Principal Amount.

“Principal Market” shall refer to the primary exchange on which the Company’s common stock is traded or quoted.

“Trading Day” shall mean a day on which there is trading or quoting for any security on the Principal Market.

“Underlying Shares” means the shares of common stock into which the Note is convertible (including interest, fees, liquidated damages and/or principal payments in common stock as set forth herein) in accordance with the terms hereof.

The following terms and conditions shall apply to this Note:

Section 1.00

Conversion.

(a)

Conversion Right.  Subject to the terms hereof and restrictions and limitations contained herein, the Holder shall have the right, at the Holder's sole option, at any time and from time to time to convert in whole or in part the outstanding and unpaid Principal Amount under this Note into shares of Common Stock as per the Conversion Formula.  The date of any conversion notice (“Conversion Notice”) hereunder shall be referred to herein as the “Conversion Date”.  

(b)

Stock Certificates or DWAC.  The Company will deliver to the Holder, or Holder’s authorized designee, no later than 2 Trading Days after the Conversion Date, a certificate or certificates (which certificate(s) shall be free of restrictive legends and trading

2

restrictions if the shares of Common Stock underlying the portion of the Note being converted are eligible under a resale exemption pursuant to Rule 144(b)(1)(ii) and Rule 144(d)(1)(ii) of the Securities Act of 1933, as amended) representing the number of shares of Common Stock being acquired upon the conversion of this Note.  In lieu of delivering physical certificates representing the shares of Common Stock issuable upon conversion of this Note, provided the Company's transfer agent is participating in DTC’s FAST program, the Company shall instead use commercially reasonable efforts to cause its transfer agent to electronically transmit such shares issuable upon conversion to the Holder (or its designee), by crediting the account of the Holder’s (or such designee’s) broker with DTC through its DWAC program (provided that the same time periods herein as for stock certificates shall apply).  

(c)

Charges and Expenses.  Issuance of Common Stock to Holder, or any of its assignees, upon the conversion of this Note shall be made without charge to the Holder for any issuance fee, transfer tax, legal opinion and related charges, postage/mailing charge or any other expense with respect to the issuance of such Common Stock.  Company shall pay all Transfer Agent fees incurred from the issuance of the Common Stock to Holder, as well as any and all other fees and charges required by the Transfer Agent as a condition to effectuate such issuance.  Any such fees or charges, as noted in this Section that are paid by the Holder (whether from the Company’s delays, outright refusal to pay, or otherwise), will be automatically added to the Principal Sum of the Note and tack back to the Effective Date for purposes of Rule 144.    

(d)

Delivery Timeline.  If the Company fails to deliver to the Holder such certificate or certificates (or shares through the DWAC program) pursuant to this Section (free of any restrictions on transfer or legends, if eligible) prior to 3 Trading Days after the Conversion Date, the Company shall pay to the Holder as liquidated damages an amount equal to $2,000 per day, until such certificate or certificates are delivered.  The Company acknowledges that it would be extremely difficult or impracticable to determine the Holder’s actual damages and costs resulting from a failure to deliver the Common Stock and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs.  Such liquidated damages will be automatically added to the Principal Sum of the Note and tack back to the Effective Date for purposes of Rule 144.   

(e)

Reservation of Underlying Securities.  The Company covenants that it will at all times reserve and keep available for Holder, out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, five times the number of shares of Common Stock as shall be issuable (taking into account the adjustments under this Section 1.00, but without regard to any ownership limitations contained herein) upon the conversion of this Note (consisting of the Principal Amount), under the formula in Section 2.00(c), to Common Stock (the “Required Reserve”).  The Company covenants that all shares of Common Stock that shall be issuable will, upon issue, be duly authorized, validly issued, fully-paid, non-assessable and freely-tradable (if eligible).  If the amount of shares on reserve in Holder’s name at the Company’s transfer agent for this Note shall drop below the Required Reserve, the Company will, within 2 Trading Days of notification from Holder, instruct the transfer agent to increase the number of shares so that the Required Reserve is met. In the event that the Company does not instruct the transfer agent to increase the number of shares so that the Required Reserve is met, the Holder will be allowed, if applicable, to provide this instruction as

3

per the terms of the Irrevocable Transfer Agent Instructions attached to this Note. The Company agrees that the maintenance of the Required Reserve is a material term of this Note and any breach of this Section 1.00(e) will result in a default of the Note.

The Company agrees that this is a material term of this Note and any breach of this Section 1.00(e) will result in a default of the Note.

(f)

Conversion Limitation.  The Holder will not submit a conversion to the Company that would result in the Holder beneficially owning more than 9.99% of the then total outstanding shares of the Company (“Restricted Ownership Percentage”).

(g)

Conversion Delays.  If the Company fails to deliver shares in accordance with the timeframe stated in Section 1.00(b), the Holder, at any time prior to selling all of those shares, may rescind any portion, in whole or in part, of that particular conversion attributable to the unsold shares.  The rescinded conversion amount will be returned to the Principal Sum with the rescinded conversion shares returned to the Company under the expectation that any returned conversion amounts will tack back to the Effective Date.

(h)

Shorting and Hedging.  Holder may not engage in any “shorting” or “hedging” transaction(s) in the Common Stock prior to conversion.

(i)

Conversion Right Unconditional.  If the Holder shall provide a Conversion Notice as provided herein, the Company's obligations to deliver Common Stock shall be absolute and unconditional, irrespective of any claim of setoff, counterclaim, recoupment, or alleged breach by the Holder of any obligation to the Company.

Section 2.00

Defaults and Remedies.

(a)

Events of Default.  An “Event of Default” is:  (i) a default in payment of any amount due hereunder which default continues for more than 5 Trading Days after the due date; (ii) a default in the timely issuance of underlying shares upon and in accordance with terms of Section 1.00, which default continues for 2 Trading Days after the Company has failed to issue shares or deliver stock certificates within the 3rd Trading Day following the Conversion Date; (iii) if the Company does not issue the press release or file the Current Report on Form 8-K, in each case in accordance with the provisions and the deadlines referenced Section 4.00(h); (iv) failure by the Company for 3 days after notice has been received by the Company to comply with any material provision of this Note; (v) failure of the Company to remain compliant with DTC, thus incurring a “chilled” status with DTC; (vi) any default of any mortgage, indenture or instrument which may be issued, or by which there may be secured or evidenced any indebtedness, for money borrowed by the Company or for money borrowed the repayment of which is guaranteed by the Company, whether such indebtedness or guarantee now exists or shall be created hereafter; (vii) if the Company is subject to any Bankruptcy Event; (viii) any failure of the Company to satisfy its “filing” obligations under Securities Exchange Act of 1934, as amended (the “1934 Act”) and the rules and guidelines issued by OTC Markets News Service, OTCMarkets.com and their affiliates; (ix) failure of the Company to remain in good standing under the laws of the State of Colorado; (x) any failure of the Company to provide the Holder with information related to its corporate structure including, but not limited to, the number of

4

authorized and outstanding shares, public float, etc. within 1 Trading Day of request by Holder; (xi) failure by the Company to maintain the Required Reserve in accordance with the terms of Section 1.00(e); (xii) failure of Company’s Common Stock to maintain a closing bid price in its Principal Market for more than 3 consecutive Trading Days; (xiii) any delisting from a Principal Market for any reason; (xiv) failure by Company to pay any of its Transfer Agent fees in excess of $2,000 or to maintain a Transfer Agent of record; (xv) failure by Company to notify Holder of a change in Transfer Agent within 24 hours of such change; (xvi) any trading suspension imposed by the United States Securities and Exchange Commission (the “SEC”) under Sections 12(j) or 12(k) of the 1934 Act; or (xvii) failure by the Company to meet all requirements necessary to satisfy the availability of Rule 144 to the Holder or its assigns, including but not limited to the timely fulfillment of its filing requirements as a fully-reporting issuer registered with the SEC, requirements for XBRL filings, and requirements for disclosure of financial statements on its website.

(b)

Remedies.  If an Event of Default occurs, the outstanding Principal Amount of this Note owing in respect thereof through the date of acceleration, shall become, at the Holder's election, immediately due and payable in cash at the “Mandatory Default Amount”.  The Mandatory Default Amount means 150% of the outstanding Principal Amount of this Note, will be automatically added to the Principal Sum of the Note and tack back to the Effective Date for purposes of Rule 144.  Commencing 5 days after the occurrence of any Event of Default that results in the eventual acceleration of this Note, this Note shall accrue additional interest, in addition to the Note’s “guaranteed” interest, at a rate equal to the lesser of 20% per annum or the maximum rate permitted under applicable law.  In connection with such acceleration described herein, the Holder need not provide, and the Issuer hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law.  No such rescission or annulment shall affect any subsequent event of default or impair any right consequent thereon.  Nothing herein shall limit the Holder's right to pursue any other remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Issuer's failure to timely deliver certificates representing shares of Common Stock upon conversion of the Note as required pursuant to the terms hereof.

(c)

Conversion Right. At any time and from time to time after a default occurs solely due to the fact the Note is not retired on or before the Maturity Date (“Maturity Default”), subject to the terms hereof and restrictions and limitations contained herein, the Holder shall have the right, at the Holder's sole option, to convert in whole or in part the outstanding and unpaid Principal Amount under this Note into shares of Common Stock at the Maturity Default Conversion Price.  The “Maturity Default Conversion Price” shall be equal to the lower of: (a) the Conversion Price or (b) 55% of the lowest closing bid price of the Company’s common stock during the 20 consecutive Trading Days prior to the date on which the Holder elects to convert all or part of the Note.  If the Company is placed on “chilled” status with the DTC, the discount shall be increased by 10%, i.e., from 50% to 60%, until such chill is remedied.  If the Company is not DWAC eligible through their Transfer Agent and DTC’s FAST system, the discount will be increased by 5%, i.e., from 50% to 55%.  In the case of both, the discount shall be a cumulative increase of 15%, i.e., from 50% to 65%.  

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Section 3.00 Representations and Warranties of Holder.

Holder hereby represents and warrants to the Company that:

(a)

Holder is an “accredited investor,” as such term is defined in Regulation D of the Securities Act of 1933, as amended (the “1933 Act”), and will acquire this Note and the Underlying Shares (collectively, the “Securities”) for its own account and not with a view to a sale or distribution thereof as that term is used in Section 2(a)(11) of the 1933 Act, in a manner which would require registration under the 1933 Act or any state securities laws. Holder has such knowledge and experience in financial and business matters that such Holder is capable of evaluating the merits and risks of the Securities. Holder can bear the economic risk of the Securities, has knowledge and experience in financial business matters and is capable of bearing and managing the risk of investment in the Securities. Holder recognizes that the Securities have not been registered under the 1933 Act, nor under the securities laws of any state and, therefore, cannot be resold unless the resale of the Securities is registered under the 1933 Act or unless an exemption from registration is available. Holder has carefully considered and has, to the extent Holder believes such discussion necessary, discussed with its professional, legal, tax and financial advisors, the suitability of an investment in the Securities for its particular tax and financial situation and its advisers, if such advisors were deemed necessary, and has determined that the Securities are a suitable investment for it. Holder has not been offered the Securities by any form of general solicitation or advertising, including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine, or other similar media or television or radio broadcast or any seminar or meeting where, to Holders’ knowledge, those individuals that have attended have been invited by any such or similar means of general solicitation or advertising. Holder has had an opportunity to ask questions of and receive satisfactory answers from the Company, or any person or persons acting on behalf of the Company, concerning the terms and conditions of the Securities and the Company, and all such questions have been answered to the full satisfaction of Holder. The Company has not supplied Holder any information regarding the Securities or an investment in the Securities other than as contained in this Agreement, and Holder is relying on its own investigation and evaluation of the Company and the Securities and not on any other information.

(b)

The Holder is a limited liability company duly organized, validly existing and in good standing under the laws of the state of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted. The Holder is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties.

(c)

All corporate action has been taken on the part of the Holder, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Note. The Holder has taken all corporate action required to make all of the obligations of the Holder reflected in the provisions of this Note, valid and enforceable obligations.

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(d)

Each certificate or instrument representing Securities will be endorsed with the following legend (or a substantially similar legend), unless or until registered under the 1933 Act:

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES WHICH IS REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.

Section 4.00

General.

(a)

Payment of Expenses.  The Company agrees to pay all reasonable charges and expenses, including attorneys' fees and expenses, which may be incurred by the Holder in successfully enforcing this Note and/or collecting any amount due under this Note.

(b)

Assignment, Etc.  The Holder may assign or transfer this Note to any transferee at its sole discretion.  This Note shall be binding upon the Company and its successors and shall inure to the benefit of the Holder and its successors and permitted assigns.

(c)

Piggyback Registration Rights.  Purposely withheld

(d)

Terms of Future Financings.  So long as this Note is outstanding, upon any issuance by the Company or any of its subsidiaries of any convertible debt security (whether such debt begins with a convertible feature or such feature is added at a later date) with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the Holder in this Note, then the Company shall notify the Holder of such additional or more favorable term and such term, at the Holder's option, shall become a part of this Note and its supporting documentation.. The types of terms contained in the other security that may be more favorable to the holder of such security include, but are not limited to, terms addressing conversion discounts, conversion look back periods, interest rates, original issue discount percentages and warrant coverage.

(e)

Governing Law; Jurisdiction.

(i)

Governing Law.  This Note 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.

(ii)

Jurisdiction and Venue.  Any dispute, claim, suit, action or other legal proceeding arising out of or relating to this Note or the rights and obligations of each of the

7

parties shall be brought only in a competent court in New York City, New York or in the federal courts of the United States of America located in New York City, New York.

(iii)

No Jury Trial.  The Company hereto knowingly and voluntarily waives any and all rights it may have to a trial by jury with respect to any litigation based on, or arising out of, under, or in connection with, this Note.

(iv)

Delivery of Process by the Holder to the Company.  In the event of an action or proceeding by the Holder against the Company, and only by the Holder against the Company, service of copies of summons and/or complaint and/or any other process that may be served in any such action or proceeding has to be made by hand delivery of such process to its last known attorney as set forth in its most recent SEC filing.

(v)

Notices.  Any notice required or permitted hereunder (including Conversion Notices) must be in writing and either personally served, sent by facsimile or email transmission, or sent by overnight courier.  Notices will be deemed effectively delivered at the time of transmission if by facsimile or email, and if by overnight courier the business day after such notice is deposited with the courier service for delivery.

(f)

No Bad Actor.  No officer or director of the Company would be disqualified under Rule 506(d) of the Securities Act of 1933, as amended, on the basis of being a “bad actor” as that term is established in the September 13, 2013 Small Entity Compliance Guide published by the SEC.

(g)

Usury.  If it shall be found that any interest or other amount deemed interest due hereunder violates any applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.  The Company covenants (to the extent that it may lawfully do so) that it will not seek to claim or take advantage of any law that would prohibit or forgive the Company from paying all or a portion of the principal, fees, liquidated damages or interest on this Note.

(h)

Securities Laws Disclosure; Publicity.  The Company shall (a) by 9:30 a.m. Eastern Time on the Trading Day immediately following the Date of Execution, issue a press release disclosing the material terms of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K, including a copy of this Note as an exhibit thereto, with the SEC within the time required by the 1934 Act.  From and after the filing of such press release, the Company represents to the Holder that it shall have publicly disclosed all material, non-public information delivered to the Holder by the Company, or any of its officers, directors, employees, or agents in connection with the transactions contemplated by this Note.  The Company and the Holder shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor the Holder shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of the Holder, or without the prior consent of the Holder, with respect to any press release of the Company, none of which consents shall be unreasonably withheld, delayed, denied, or conditioned except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of

8

such public statement or communication.  Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Holder, or include the name of the Holder in any filing with the SEC or any regulatory agency or Principal Market, without the prior written consent of the Holder, except to the extent such disclosure is required by law or Principal Market regulations, in which case the Company shall provide the Holder with prior notice of such disclosure permitted hereunder.  The Company agrees that this is a material term of this Note and any breach of this Section 4.00(h) will result in a default of the Note.

[Signature Page to Follow.]

9

IN WITNESS WHEREOF, the Company has caused this Fixed Convertible Promissory Note to be duly executed on the day and in the year first above written.

UNITED CANNABIS CORP.

By: /s/ Earnest Blackmon

Name: Earnest Blackmon

Title:  CEO

Email:

Address:

This Fixed Convertible Promissory Note of December 28, 2016 is accepted by:

TANGIERS GLOBAL, LLC

By:

/s/ Michael Sobeck

Name: Michael Sobeck

Title: Managing Member

10

EX-23.1

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 5,000,000 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 20, 2017

EX-23.2

EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors of
United Cannabis Corporation

We hereby consent to the use in the Registration Statement of United Cannabis Corporation on Form S-1 of our report of Independent Registered Public Accounting Firm, dated April 15, 2015, on the consolidated balance sheets of United Cannabis Corporation and its subsidiary company as of December 31, 2014, and the related statement of operations, changes in shareholders’ equity (deficit) and cash flows for the year then ended which appear in such Registration Statement.

Sincerely,

/s/ Cutler & Co. LLC

Cutler & Co., LLC

Wheat Ridge, Colorado

February 17, 2017

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 April 26, 2016 on the balance sheet of United Cannabis Corporation as of December 31, 2015, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the year ended December 31, 2015.

/s/ B.F. Borgers, CPA PC

B.F. Borgers, CPA PC

February 17, 2017

Lakewood, Colorado

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2016
Document And Entity Information
Entity Registrant Name	United Cannabis Corp
Entity Central Index Key	0001436161
Document Type	S-1
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 14,813	$ 118,420	$ 321,353
Account receivable, net of collection reserve of $30,000 at September 30, 2016 and $4,340 December 31, 2015, respectively	28,054	53,435	6,245
Due from related parties	8,284	8,284	44,012
Prepaid expenses		56,341	177,400
Deferred financing costs, net		32,400
Total current assets	51,151	268,880	549,010
Intangible assets	32,273	32,273	18,210
Investments in non-marketable securities	15,125	205,275	593,750
Equity method investments	88,000	88,000	138,000
Total assets	186,549	594,428	1,298,970
Current liabilities:
Accounts payable	61,542	104,238	27,424
Accrued expenses	362,446	928,533	550,795
Advances from and accrued amounts owed to officers and directors	81,830
Derivative liabilities	547,200	383,581
Current portion of deferred revenue	180,000	380,000	500,000
Notes payable	600,000	775,000	775,000
Convertible notes payable, net of a $0.0 and $272,793 debt discount, at September 30, 2016 and December 31, 2015, respectively	331,978	108,207
Total current liabilities	2,164,996	2,679,559	1,853,219
Long term liabilities:
Deferred revenue, net of current portion	248,750	383,750	443,750
Total liabilities	2,413,746	3,063,309	2,296,969
STOCKHOLDERS' DEFICIT
Preferred stock, no par value: 10,000,000 authorized; none issued and outstanding
Common stock, no par value, 100,000,000 shares authorized; 47,832,198 and 44,988,500 issued and outstanding at September 30, 2016 and December 31, 2015, respectively	4,244,085	3,039,448	1,626,968
Accumulated deficit	(6,471,282)	(5,508,329)	(2,624,967)
Total stockholders' deficit	(2,227,197)	(2,468,881)	(997,999)
Total liabilities and stockholders' deficit	$ 186,549	$ 594,428	$ 1,298,970

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Account receivable, collection reserve	$ 30,000	$ 4,340
Convertible notes payable, debt discount	$ 0	$ 272,793
Preferred stock, no par value
Preferred stock, shares authorized	10,000,000	10,000,000	10,000,000
Preferred stock, shares issued	0
Preferred stock, shares outstanding	0
Common stock, no par value	$ 0
Common stock, shares authorized	100,000,000	100,000,000	100,000,000
Common stock, shares issued	47,832,198	44,988,500	44,060,000
Common stock, shares outstanding	47,832,198	44,988,500	44,060,000
Convertible notes payable, debt discount		$ 272,793

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Revenues:
Revenues, non-affiliated	$ 264,964	$ 133,553	$ 707,660	$ 531,318	$ 558,248	$ 171,957
Revenues, affiliate				4,425	4,425	14,600
Total revenues	264,964	133,553	707,660	535,743	562,673	186,557
Cost of revenues:
Cost of revenues-non-affiliated	(68,813)	(22,652)	(252,550)	(129,670)	(75,672)	(7,031)
Cost of revenues-affiliated		(46,409)		(46,409)	(74,564)
Total cost of revenues	(68,813)	(69,061)	(252,550)	(176,079)	(150,236)	(7,031)
Gross profit	196,151	64,492	455,110	359,664	412,437	179,526
Operating expenses
General and administrative	116,811	362,194	546,272	1,414,672	1,816,804	1,709,040
Sales and marketing					17,100	101,962
Research and development					329	182,606
Total operating expenses	116,811	362,194	546,272	1,414,672	1,834,233	1,993,608
Loss from operations	79,340	(297,702)	(91,162)	(1,055,008)	(1,421,796)	(1,814,082)
Other income (expense):
Interest income					252	37,837
Gain (loss) on derivative liabilities	(331,618)		(332,456)		(23,593)	6,099
Loss on early extinguishment of debt			(130,423)
Loss on origination of derivative liability						(12,810)
Interest expense	(40,044)	(20,353)	(153,438)	(60,396)	(107,748)	(131,479)
Amortization of debt discount			(266,711)		(82,500)	(161,402)
Gain (loss) on conversion of convertible notes	(4,253)		11,237
Loss on settlement of disputed terms of warrant				(768,602)	(768,602)	(33,635)
Equity in net loss of unconsolidated affiliate				(90,900)	(90,900)
Loss on investment in non-marketable equity securities					(388,475)	(300,000)
Total other income (expense), net	(375,915)	(20,353)	(871,791)	(919,898)	(1,461,566)	(595,390)
Loss from continuing operations before provision for taxes	(296,575)	(318,055)	(962,953)	(1,974,906)	(2,883,362)	(2,409,472)
Provision for taxes
Net loss from discontinued operations						(58,892)
Net Income (Loss)	$ (296,575)	$ (318,055)	$ (962,953)	$ (1,974,906)	$ (2,883,362)	$ (2,468,364)
Basic and diluted net loss per share:
Continuing operations					$ (0.06)	$ (0.06)
Discontinued operations						0.00
Basic loss per common share	$ (0.006)	$ (0.007)	$ (0.021)	$ (0.037)	$ (0.06)	$ (0.06)
Basic and diluted weighted-average common shares outstanding:	47,056,060	44,925,837	45,519,746	44,729,886	44,793,510	38,256,438

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY - USD ($)	Common Stock [Member]	Accumulated Deficit [Member]	Total
Beginning balance at Dec. 31, 2013	$ 165,495	$ (156,603)	$ 8,892
Beginning balance, shares at Dec. 31, 2013	6,020,000
Shares issued for conversion of debt	$ 50,000		50,000
Shares issued for conversion of debt, shares	40,000,000
Shares cancelled, shares	41,690,000
Shares issued for license agreement, shares	38,690,000
Shares and warrants issued for cash	$ 900,000		900,000
Shares and warrants issued for cash, shares	600,000
Warrants issued with convertible debt	$ 694,525		694,525
Shares issued for services	$ 305,100		305,100
Shares issued for services, shares	400,000
Purchase and cancellation of warrants	$ (576,152)		(576,152)
Shares issued for equity method investments	$ 88,000		88,000
Shares issued for equity method investments, shares	40,000
Net loss		(2,468,364)	(2,468,364)
Ending balance at Dec. 31, 2014	$ 1,626,968	(2,624,967)	(997,999)
Ending balance, shares at Dec. 31, 2014	44,060,000
Shares issued for repurchase of warrant	$ 987,390		987,390
Shares issued for repurchase of warrant, shares	621,000
Cancellation of warrant	$ (218,788)		(218,788)
Cancellation of warrant, shares
Shares issued for services	$ 226,215		226,215
Shares issued for services, shares	307,500
Stock options issued for compensation	$ 417,663		417,663
Stock options issued for compensation, shares
Net loss		(2,883,362)	(2,883,362)
Ending balance at Dec. 31, 2015	$ 3,039,448	$ (5,508,329)	(2,468,881)
Ending balance, shares at Dec. 31, 2015	44,988,500
Net loss			(962,953)
Ending balance at Sep. 30, 2016			$ (2,227,197)

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Operating activities:
Net loss	$ (962,953)	$ (1,974,906)	$ (2,883,362)	$ (2,468,364)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Loss on sale of assets of discontinued operations				15,704
Provision for losses on accounts receivable			24,185
Amortization of debt discount	266,711		82,500	161,402
Amortization of deferred financing costs			8,700
Non-cash interest expense			4,694	15,320
Notes payable issued for debt issuance costs				46,000
Loss on origination of derivative liability				12,810
Share-based compensation	118,160	642,109	1,030,681	551,685
Loss on revaluation of derivative liabilities	365,576
Loss on issue of warrants to cure default on note payable to Slainte Ventures	92,004
Loss on modification of note payable to Slainte Ventures	133,077
Gain on payoff of convertible note payable to JSJ Investments	(107,592)
Gain on payoff of convertible note payable to Vis Vires Group	(48,939)
Gain on conversion of convertible notes payable	(11,237)
Discount and fees on convertible note	15,500
Increase in advances from and accrued amounts owed to officers and directors	29,330	16,981
Value of non-marketable equity securities recognized as revenue		(135,000)	(180,000)	(150,000)
Gain on revaluation of derivative liabilities				(6,099)
Loss on revaluation of derivative liabilities			23,593
Loss on non-marketable equity securities			388,475	300,000
Equity in net loss of unconsolidated affiliate		90,900	90,900
Loss on extinguishment of debt and repurchase of warrants		768,602	768,602	33,635
Changes in operating assets and liabilities:
Accounts receivable	(279)	(27,715)	(68,263)	(6,245)
Increase in collection reserve	25,660	19,845
Decrease in deferred financing costs	32,400
Due from related party		(7,543)	(8,284)	(33,238)
Prepaid expenses	56,341	(7,718)	(3,394)	(6,321)
Accounts payable and accrued expenses	72,634	310,148	195,825	144,654
Deferred revenue	(335,000)			200,000
Net cash provided by (used in) operating activities	(258,607)	(304,297)	(525,148)	(1,189,057)
Investing activities:
Purchase of intangible assets		(14,385)	(17,685)	(2,309)
Purchase of equity method investments				(50,000)
Net cash provided by (used in) investing activities		(14,385)	(17,685)	(52,309)
Financing activities:
Net proceeds from issuance of notes payable				761,500
Net proceeds from issuance of convertible debt and warrants			339,900	225,000
Repayment of convertible debt and repurchase of warrants				(356,195)
Proceeds from issuance of common shares and warrants				900,000
Proceeds from convertible note payable, related party	316,478
Advances from officers and directors	52,500
Payoff convertible notes	(183,978)
Payments on notes payable	(30,000)
Net cash provided by (used in) financing activities	155,000		339,900	1,530,305
Net increase (decrease) in cash	(103,607)	(318,682)	(202,933)	288,939
Cash, beginning of period	118,420	321,353	321,353	32,414
Cash, end of period	14,813	2,671	118,420	321,353
Supplemental schedule of cash flow information:
Cash paid for interest
Cash paid for income taxes
Supplemental disclosure of non-cash investing and financing activities:
Intangible asset costs included in accounts payable			12,279	15,901
Non-marketable equity securities received as consideration for future services				893,750
Issuance of common stock for equity method investment				88,000
Issuance of common stock for services		214,215	47,880	83,600
Issuance of common stock for prepaid professional fees			187,335	221,500
Issuance of common stock for repurchase of warrant			987,390
Warrants cancelled			(218,788)	(576,152)
Warrants issued for debt discount		(218,788)		694,525
Issuance of stock options for compensation		417,664	417,664
Issuance of note payable for debt issuance costs				13,500
Issuance of convertible note payable for debt issuance costs			41,000	32,500
Debt conversion feature issued for debt discount			(355,293)	(151,937)
Conversion of note payable, related party, into common stock	473,965			50,000
Issuance of stock options in exchange for accrued wages payable to officers and directors	612,512
Issuance of common stock upon conversion of Tangiers Investment Group convertible note	473,965			50,000
Reduction of convertible notes payable due to the conversion by Tangiers Investment Group	220,000
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	175,000
Reduction of discount on notes due to revaluation of derivatives
Accounts payable exchanged for note payable to a third party	30,000
Issuance of common stock in settlement of disputed terms of warrant		$ 987,390

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - WeedMD RX Inc. (''WMD'') [Member]	9 Months Ended
	Sep. 30, 2016 shares
Decrease in non-marketable securities	1,100,000
Reduction of notes payable	1,100,000

XML

BUSINESS ORGANIZATION AND NATURE OF OPERATIONS

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BUSINESS ORGANIZATION AND NATURE OF OPERATIONS

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.

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 a total of 38,690,000 shares of our common stock.

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.

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.

As of September 30, 2016, 23 states and the District of Columbia allow their citizens to use medical marijuana, and voters in the states of Colorado, Washington, 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 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 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.

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 a total of 38,690,000 shares of our common stock.

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.

As of December 31, 2015, 23 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.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 month and nine month periods ended September 31, 2016 and 2015 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, 2015.

Principles of Consolidation – Our condensed consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries UC Nevada L.L.C. and UC Colorado Corporation. All intercompany accounts and transactions have been eliminated.

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 estimate 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 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.

Financial Instruments – We have adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 825, Financial Instruments, which requires disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate that value. For purposes of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.

The carrying amounts of our short-term financial instruments, including accounts receivable, , accounts payable, accrued expenses and deferred revenue approximates fair value due to the relatively short period to maturity for these instruments. Investments in non-marketable equity securities are carried at cost. The carrying amount of our notes payable at September 30, 2016 and December 31, 2015, approximates their fair values based on our incremental borrowing rates.

Cash and Cash Equivalents - We consider investments with original maturities of 90 days or less to be cash equivalents. We did not have cash equivalents as of September 30, 2016 and December 31, 2015.

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 September 30, 2016 and December 31, 2015, respectively.

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 20 years. We test for impairment of our intangible assets on an annual basis.

Investments in Non-Marketable Equity Securities – Our investments in non-marketable equity securities are carried at cost, less write-down-for-impairments, and are adjusted for impairment based on methodologies, and assessment of the impact of 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 noncurrent assets.

Long-Lived Assets –In accordance with 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 less than 50%, where we exercise significant influence, are accounted for under the equity method.

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) is 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 form of stock, warrants or other financial assets is recognized when the services are performed. The value of revenue is measured using the Black-Scholes model for warrants.

Cost of Revenues - Our cost of revenues consists primarily of costs associated with the production and delivery of our products and services. These include expenses related to the production, packaging and labeling of our Prana medicinals products and consulting expense related to our advisory services.

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 - We follow the provisions of ASC 740, Income Taxes. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

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 Income 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,
	2016		2015		2016		2015
Warrants to purchase common stock		1,895,122		3,000,000		1,895,122		3,000,000
Stock options		3,680,000		600,000		3,680,000		600,000
Total potentially dilutive securities		5,575,122		3,600,000		5,575,122		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 three and nine months ended September 30, 2016 and 2015, we did not have any gains and losses resulting from activities or transactions that resulted in 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. 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 Revenues:

	Nine Months Ended September 30,						Three Months Ended September 30,
	2016			2015			2016			2015
Customer A		88	%		9	%		80	%		35	%
Customer B		12	%		25	%		20	%		34	%
Customer C		—			19	%		—			31	%
Customer D		—			37	%		—			0	%

Percentage of Accounts Receivable:

	September 30, 2016			December 31, 2015
Customer A		57	%		56	%
Customer B		43	%		41	%
Customer C		—			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 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 2017, 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 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.

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 December 31, 2015, 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 years ended December 31, 2015 and 2014.

Cash and Cash Equivalents - We consider investments with original maturities of 90 days or less to be cash equivalents. We do not have any cash equivalents as of December 31, 2015 or December 31, 2014.

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 $4,340 and $0 as of December 31, 2015 and 2014, respectively. We recorded bad debt expense, included in general and administrative expenses, of $24,185 and $0 during the years ended December 31, 2015 and 2014, 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, 2015 or December 31, 2014.

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.

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. Generally, our suppliers drop-ship orders to our clients with origin terms. For any shipments with destination terms, we defer revenue until delivery is made to the customer. During the years ended December 31, 2015 and 2014, sales returns were not significant and as such, no sales return allowance had been recorded as of December 31, 2015 or December 31, 2014.

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.

Shipping and Handling Costs - For product sales, shipping and handling costs are included as a component of cost of revenues. During the years ended December 31, 2015 and 2014, we incurred shipping and handling costs of $1,013 and $0, respectively.

Advertising Costs - All advertising costs are expensed as incurred. During the years ended December 31, 2015 and 2014, we incurred $16,500 and $304 of advertising costs, respectively, and included these costs in sales and marketing expense in our consolidated statements of operations.

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

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.

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,
	2015		2014
Warrants to purchase common stock		3,000,000		3,997,692
Stock options		600,000		—
Total potentially dilutive securities		3,600,000		3,997,692

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, 2015 and 2014, 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,
	2015			2014
Customer A		36	%		—	%
Customer B		32	%		80	%
Customer C		18	%		4	%

Percentage of Accounts Receivable:

	Years Ended December 31,
	2015			2014
Customer D		56	%		—	%
Customer E		41	%		—	%
Customer F		—	%		46	%
Customer G		—	%		33	%
Customer H		1	%		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 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.

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 April 2015, the FASB issued guidance requiring us to present debt issuance costs in the balance sheet as a reduction from the related debt liability rather than as an asset. Amortization of these costs will continue to be reported as interest expense. This guidance is effective for us at the beginning of fiscal year 2016, and early adoption is allowed. Retrospective application is required. Upon adoption, the deferred financing costs associated with our notes payable will be reclassified from “Deferred financing costs” to “Notes payable, net.”

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. Early adoption is permitted for all companies in any interim or annual period. We have not determined in what period it will adopt or what adoption method we will use and we are currently assessing the impact that this guidance may have on our consolidated financial statements.

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.

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GOING CONCERN

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

GOING CONCERN [Abstract]

GOING CONCERN

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, 2016, we incurred losses of $962,953 and used cash of $258,607 in operating activities. At September 30, 2016, we had a working capital deficit of $2,132,349 and an accumulated deficit of $6,471,282.  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 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, 2015, we incurred losses of $2,883,362 and used cash of $525,148 in our operating activities. As at December 31, 2015, we had a working capital deficit of $2,410,679 and an accumulated deficit of $5,508,329.  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.

Currently we are not in compliance with the covenants under our debt agreements. As a result, we are proactively working with our lenders and evaluating options for maintaining compliance, which include requesting covenant amendments, waivers or forbearances, and could include a possible reduction of our debt level, including the payment of prepayment penalties. Our failure to comply with these covenants would be an event of default that, if not waived, could result in the acceleration of most our outstanding indebtedness, including the acceleration of our convertible notes and certain notes payable. If the lenders were to make such a demand for repayment, we would be unable to pay the obligations as we do not have existing facilities or sufficient cash on hand to satisfy these obligations. Due to this material uncertainty, there is substantial doubt about our ability to continue as a going concern. While we will continue to work with our existing lenders, there can be no assurance that we will be successful.

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INVESTMENTS IN NON-MARKETABLE EQUITY SECURITIES

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Investments, All Other Investments [Abstract]

INVESTMENTS IN NON-MARKETABLE EQUITY SECURITIES

NOTE 4 – INVESTMENTS IN NON-MARKETABLE EQUITY SECURITIES

On June 9, 2014, we received 1,187,500 common shares; and 3,000,000 warrants, which expired unexercised, to purchase shares of common stock 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 $593,750 cost assigned to the WMD shares was classified as investment in non-marketable equity securities and as a component of deferred revenue in the amount of $593,750 on our condensed 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 transfer 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.

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 do 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 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. See also Note 20, Subsequent Events.

The warrants we received entitled us to purchase WMD shares for CAD $0.50 (USD $0.46 on the date of the related agreement) each for a period of six months from the date the warrant was issued.

The WMD warrants were recorded at $0.10 per warrant utilizing the Black Scholes option pricing model and the following assumptions on the date of valuation:

Risk free interest rate	0.60	%
Expected term (years)	0.5
Expected volatility	70	%
Expected dividends	0	%

On December 9, 2014, the 3,000,000 WMD warrants expired unexercised and we recorded a $300,000 loss on investment in non-marketable equity securities in our consolidated statements of operations.

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PREPAID EXPENSES

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

PREPAID EXPENSES

NOTE 5 – PREPAID EXPENSES AND OTHER ASSETS

Prepaid expenses and other assets consist of:

	September 30, 2016		December 31, 2015
Prepaid investor relations services	$	—	$	1,667
Prepaid licensing fees		—		35,000
Other prepaid services and fees		—		19,674
	$	—	$	56,341

NOTE 5 – PREPAID EXPENSES

Our prepaid expenses consist of:

	December 31,
	2015		2014
Prepaid investor relations services	$	1,667	$	121,500
Prepaid licensing fees		35,000		39,000
Other prepaid services and fees		19,674		16,900
	$	56,341	$	177,400

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INTANGIBLES

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLES

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 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.

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EQUITY METHOD INVESTMENTS

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Equity Method Investments and Joint Ventures [Abstract]

EQUITY METHOD INVESTMENTS

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. As of September 30, 2016, CRD did not have any operations or operating activities. We accounted for this $88,000 as an equity method investment on our condensed consolidated balance sheets.

NOTE 7 – EQUITY METHOD INVESTMENTS

Our equity method investments consist of:

	December 31,
	2015		2014
Lone Mountain Partners, LLC – 25% interest	$	—	$	50,000
Cannabinoid Research & Development Company Limited – 50% interest		88,000		88,000
Total equity method investments	$	88,000	$	138,000

Lone Mountain

On August 14, 2014, we acquired a 25% membership interest in Lone Mountain Partners, LLC, (“Lone Mountain”) for $50,000 and a commitment to provide future services, including, but not limited to, assisting with the application to obtain licenses to operate a medical marijuana entity in Nevada and to provide  standard operating procedures, security protocols, extract processing and equipment design, cultivation and processing center management, staffing and assistance with ongoing management of Lone Mountain. During the second half of 2014, we advanced Lone Mountain $40,900 for license application fees. As of December 31, 2014, Lone Mountain did not have any operations or operating activities. We accounted for our $50,000 cash contribution as an equity method investment and the $40,900 advance as amounts due from related parties on our consolidated balance sheets.

During the first half of 2015, Lone Mountain incurred operating losses in excess of $400,000. We recognized our 25% share of these losses up to the carrying amount of our equity method investment and advances to Lone Mountain and included this total $90,900 expense in equity in net loss of unconsolidated affiliate in our consolidated statements of operations.

We entered into a settlement agreement effective July 16, 2015, as amended on September 9, 2015, whereby we transferred our 25% equity interest in LMP to one of the LMP members in exchange for a mutual release from all claims against us, LMP and the other LMP members. This transaction did not impact our consolidated financial statements as we had previously written off our investment in and advances to LMP.

CRD

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. As of December 31, 2015, CRD did not have any operations or operating activities. We accounted for this $88,000 as an Equity method investment on our consolidated balance sheets.

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ACCRUED EXPENSES

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Accrued Liabilities, Current [Abstract]

ACCRUED EXPENSES

NOTE 8 – ACCRUED EXPENSES

Our accrued expenses consist of:

	September 30, 2016		December 31, 2015
Accrued consulting fees	$	152,500	$	110,000
Accrued wages and related expenses		—	$	629,780
Accrued interest expense		142,446	$	101,185
Accrued other expenses		67,500	$	87,568
	$	362,446	$	928,533

Included in accrued consulting fees at September 30, 2016 and December 31, 2015 is $110,000 that represent fees owed to consultants working on a research and development project that is approximately 80% complete.

NOTE 8 – ACCRUED EXPENSES

Our accrued expenses consist of:

	December 31,
	2015		2014
Accrued consulting fees	$	110,000	$	110,000
Accrued wages and related		629,780		433,963
Accrued interest expense		101,185		6,832
Accrued other expenses		87,568		—
Total accrued expenses	$	928,533	$	550,795

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FAIR VALUE MEASUREMENTS AND DERIVATIVE LIABILITIES

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS AND DERIVATIVE LIABILITIES

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 September 30, 2016.

	Level 1		Level 2		Level 3		Total
Derivative liabilities - convertible notes	$	—	$	—	$	—	$	—
Derivative liabilities - warrants		—		547,200		—		547,200
Total	$	—	$	547,200	$	—	$	547,200

Convertible Notes Payable

We valued our derivative liabilities related to embedded conversion features applicable to our borrowings of $322,000 under our convertible notes payable with embedded derivative features (see Note 12 below) and accrued interest payable of $28,724 thereon in accordance with fair value measurement guidelines. For the nine months ended September 30, 2016, 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. 2015	$	383,581
Loss on revaluation of derivative liabilities during the period		370,805
Loss on modification and cure of default of note payable to Slainte Ventures		237,027
Effect of payoff of JSJ and Vis Vires convertible notes		(178,484	)
Conversion of note payable to Tangiers Investment Group		(265,729	)
Derivative liabilities as of September 30, 2016	$	547,200

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 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.

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, 2014.

2015 Derivative Liabilities

We valued our derivative liabilities related to embedded conversion features applicable to our borrowings of $381,000 under our 2015 convertible notes payable (see Note 12 below) and accrued interest payable of $5,121 thereon in accordance with fair value measurement guidelines. For the year ended December 31, 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 recorded as debt discount		355,293
Additions to derivative liabilities for interest payable conversion features recorded as interest expense		4,695
Loss on revaluation of derivative liabilities during the year		23,593
Derivative liabilities as of December 31, 2015	$	383,581

The estimated fair value of the derivative liabilities related to our 2015 convertible notes payable was measured as the aggregate estimated fair value of each component of the compound embedded derivative liabilities (see Note 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.

2014 Derivative Liability

We valued our derivative liability related to embedded conversion features applicable to our initial borrowing of $282,500 under the Typenex convertible note payable (see Note 12 below) and accrued interest payable of $28,473 thereon in accordance with the Level 3 guidelines. For the year ended December 31, 2014, 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 liability as of December 31, 2013	$	—
Additions to derivative liability for convertible debt conversion feature recorded as debt discount		151,937
Additions to derivative liability for interest payable conversion feature recorded as interest expense		15,320
Gain on revaluation of derivative liability during the year		(6,099	)
Settlement of derivative liability on December 29, 2014		(161,158	)
Derivative liability as of December 31, 2014	$	—

The fair values of embedded conversion features issued with our Typenex convertible note and accrued interest payable were estimated using the Black-Scholes option pricing model. The key inputs to this valuation model during the year ended December 31, 2014, were as follows:

Risk-free interest rate	0.43% – 0.72%
Dividend yield	—
Volatility	146% – 172%
Expected life in years	1.72 – 2.09
Exercise price	$3.00

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DEFERRED REVENUE

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Deferred Revenue Disclosure [Abstract]

DEFERRED REVENUE.

NOTE 10 – DEFERRED REVENUE

Our deferred revenue consists of:

	September 30, 2016			December 31, 2015
Deferred revenue - WeedMD	$	428,750		$	563,750
Deferred revenue - FoxBarry		—			200,000
		428,750			763,750
Less - current portion		(180,000	)		(380,000	)
Deferred revenue, net of current portion	$	248,750		$	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 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, 2015 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 September 30 2016 and 2015, we recognized a total of $45,000 and $135,000 of revenue applicable to this arrangement, respectively. At September 30, 2016, we expect to recognize $180,000 of the remaining $428,751 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.

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, which we classified on our balance sheet as deferred revenue. Over the past twelve months, in spite of repeated efforts by our management, we have not been able to communicate with, or locate the principals of FoxBarry; and further, our research indicates that FoxBarry has ceased doing business, and is no longer an operating entity. When we entered into the transaction with FoxBarry, it was our policy to recognize the related deferred royalty revenue, based on actual applicable sales as defined in the agreement.  However, since FoxBarry appears to no longer be in existence, and all of our conditions pursuant to the agreement have been satisfied, we elected to recognize $200,000 of deferred during the three and nine months ended September 30, 2016. For the three and nine months ended September 2015, we did not recognize any deferred revenue related to this agreement.

NOTE 10 – DEFERRED REVENUE

Our deferred revenue consists of:

	December 31,
	2015			2014
Deferred revenue – WeedMD	$	563,750			$	743,750
Deferred revenue - FoxBarry		200,000				200,000
		763,750				943,750
Less – current portion		(380,000	)			(500,000
Deferred revenue, net of current portion	$	383,750			$	443,750

As described in Note 4 above, on September 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. During the years ended December 31, 2015 and 2014, we recognized $180,000 and $150,000, respectively, of revenue applicable to this arrangement. At December 31, 2015, we expect to recognize $180,000 of the remaining $563,750 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. At the same time we entered into discussions with FoxBarry to earn the $200,000 prepaid royalty through new projects or as a potential termination fee associated with our original agreement. We have classified the $200,000 as a current liability on our consolidated balance sheets as we expect to recognize this amount during the next twelve months.

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NOTES PAYABLE

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Notes Payable [Abstract]

NOTES PAYABLE

NOTE 11 – NOTES PAYABLE 

Our notes payable consisted of the following:

	September 30, 2016		December 31, 2015
Note payable - WeedMD	$	—	$	175,000
Note payable - Slainte Ventures, LLC		600,000		600,000
Total notes payable	$	600,000	$	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. As discussed in Note 4 above, on March 24, 2016, an unrelated third party agreed to assume all of our obligations pursuant to the $175,000 note payable to WeedMD, in consideration for the transfer by us of 1,100,000 shares of the common stock of WeedMD to the unrelated third party. WeedMD consented to the assumption of the loan and released us from any further liability with respect to the loan.

On December 18, 2014, we issued a $600,000 unsecured promissory note bearing interest at 12% to an unrelated third party, Slainte Ventures, LLC. The principal and accrued interest are 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%.

On March 16, 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. 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.

These warrants are accounted for as a liability under ASC 815. The Company assesses the fair value of the warrants quarterly based on the Black-Scholes pricing model. See below for variables used in assessing the fair value.

	September 30, 2016			December 31, 2015
Expected life (years)		5.0			4.96
Risk-free interest rate		1.41	%		1.21	%
Expected volatility		226	%		227	%

In connection with these warrants, the Company recognized a loss on the change in fair value of warrant liability of $310,173 during the nine months ended September 30, 2016.

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. The Company believes this method produces an estimate that is representative of our expectations of future volatility over the expected term of these warrants. The Company currently has no reason to believe future volatility over the expected remaining life of these warrants is likely to differ materially from historical volatility. The expected life is based on the remaining term of the warrants. The risk-free interest rate is based on U.S. Treasury securities rates.

Due to the fair value of the warrants issued in connection with the amended note agreement, the modification was 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 an extinguishment loss of $133,077.

NOTE 11 – NOTES PAYABLE 

Our notes payable consist of:

	December 31,
	2015		2014
Note payable - WeedMD	$	175,000	$	175,000
Note payable – Slainte		600,000		600,000
Total notes payable	$	775,000	$	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. Interest expense during the years ended December 31, 2015 and 2014, applicable to this note was $8,750 and $4,267, respectively. Accrued interest payable at December 31, 2015 and 2014 was $13,017 and $4,267, respectively, and these amounts are included in accrued expenses on our consolidated balance sheets.

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.  Additional interest expense during the years ended December 31, 2015 and 2014, applicable to this note was $80,482 and $2,565, respectively. Accrued interest payable at December 31, 2015 and 2014, was $83,047 and $2,565, respectively.

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. On March 18, 2016, we received a default waiver from Slainte as further described in Note 20, Subsequent Events.

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CONVERTIBLE NOTE PAYABLE

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

CONVERTIBLE NOTE PAYABLE [Abstract]

CONVERTIBLE NOTE PAYABLE

NOTE 12 – CONVERTIBLE NOTES PAYABLE

During the year ended 2015, we issued three convertible promissory notes to unaffiliated third parties. The net proceeds from these transactions were used for general working capital purposes. During the nine months ended September 30, 2016 we issued four convertible promissory notes, the net proceeds from which were used to pay the principal and accrued interest of two of the convertible notes issued during the year ended December 31, 2015. The difference between the face amount of the convertible notes and the net proceeds was recorded as deferred financing costs on our consolidated balance sheets, if such difference was the result of payments related to debt issuance costs. Any deferred financing costs are amortized on a straight-line basis, which approximates the effective interest rate method, during the first 180 days that the convertible notes are outstanding, and this amortization is included in interest expense in our consolidated statements of operations.

The following table summarizes our convertible promissory notes as of September 30, 2016:

Issue Date	Issued To	Security	Maturity Date	Interest Rate			Base Conversion Rate	Principal Balance
3/30/2016	Slainte Ventures	Unsecured	12/30/16		12	%	N/A	$	81,978
4/06/16	Slainte Ventures	Unsecured	12/30/16		12	%	N/A		75,000
7/5/2016	Slainte Ventures	Unsecured	12/30/16		12	%	N/A		50,000
8/10/16	JSJ Investments	Unsecured	5/10/17		12	%	$0.20 per share during first 180 days; 45% discount thereafter		125,000
								$	331,978

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 the Base Conversion Rate specified in the table above multiplied by the Variable Conversion Rate (“VCR”), which is equal to the lowest trading price or closing bid price of our common stock 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.

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 and 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.

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.

At September 30, 2016, we have reserved 10.2 million shares of our authorized but unissued common stock for potential conversion of the convertible notes.

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. The loan, together with interest at 12% per year, is payable on December 30, 2016. We can prepay the loan at any time. If the loan is repaid on or before September 30, 2016, the principal amount which is being repaid will increase by 10%. If the loan is 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. If the loan is not paid when due, then at any time on or before 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 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 conversion date by the outstanding principal and interest on the loan on the conversion date.

On April 6, 2016, we borrowed $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. The loan, together with interest at 12% per year, is payable on December 30, 2016. We can prepay the loan at any time. If the loan is repaid on or before September 30, 2016, the principal amount which is being repaid will increase by 10%. If the loan is 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. If the loan is not paid when due, then at any time on or before 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 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 conversion date by the outstanding principal and interest on the loan on the conversion date.

On July 5, 2016, we borrowed $50,000 from Slainte Ventures and used the proceeds for working capital purposes. The loan, together with interest at 12% per year, is payable on December 30, 2016. We can prepay the loan at any time. If the loan is repaid on or before September 30, 2016, the principal amount which is being repaid will increase by 10%. If the loan is 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. If the loan is not paid when due, then at any time on or before 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 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 conversion date by the outstanding principal and interest on the loan on the conversion date.

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.

NOTE 12 – CONVERTIBLE NOTES PAYABLE

2015 Convertible Notes

From time to time during 2015, we issued convertible promissory notes (the “2015 Notes”) to unaffiliated third parties. The net proceeds from these transactions are used for general working capital purposes. The difference between the face amount of the 2015 Notes and the net proceeds is recorded as deferred financing costs on our consolidated balance sheets if such difference is the result of payments related to debt issuance costs. Deferred financing costs are amortized on a straight-line basis, which approximates the effective interest rate method, during the first 180 days that the 2015 Notes are outstanding and this amortization is included in interest expense in our consolidated statements of operations.

The following table summarizes our convertible promissory notes issued during the year ended December 31, 2015:

Issue Date	Issued to		Maturity  Date	Interest  Rate	Default  Interest  Rate	Base  Conversion  Rate	VCR Look  back  Period	VCR Calculated  Using	Principal
10/6/2015	Vis Viers Group, Inc.	Unsecured	6/30/2016	8%	22%	58%	10 days	3 lowest closing bids	$	59,000.00
10/12/15	JSJ Investments Inc.	Unsecured	7/8/2016	12%	18%	55%	10 days	5 lowest trades		102,000.00
12/9/15	Tangiers Investment Group, LLC	Secured by Certain Assets	12/8/2016	10%	20%	55%	10 days	3 lowest closing bids		220,000.00
Total principal outstanding at December 31, 2015									$	381,000.00

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 “Conversion Feature”).

The Conversion Price is equal 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.

Both of these conversion rates results in a beneficial conversion features (“BCF”) recorded as 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, during the first 180 days that each 2015 Note is outstanding and this amortization is included in amortization of debt discount in our consolidated statements of operations. If a 2015 Note is repaid during the first 180 days, the remaining unamortized deferred financing costs and unamortized debt discount are expensed on the date of repayment.

The 2015 Notes are convertible into an unlimited number of unregistered, restricted common shares (“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”). Both the Unlimited Shares Feature and the VCRD meet the definition of an embedded derivative and together are referred to as 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.

Similarly, accrued interest payable applicable to the 2015 Notes is convertible into shares of our 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.

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.

At December 31, 2015, we have reserved 10.2 million shares of our authorized but unissued common stock for potential conversion of the 2015 Notes.

Should we default on a conversion or repayment of a 2015 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.

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

The aggregate fair value of the derivative liabilities applicable to our 2015 Notes on the dates of issuance was $355,293 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 year ended December 31, 2015, we recognized $82,500 of amortization related to the 2015 Notes and recorded this amount as amortization of debt discount in our consolidated statements of operations.  

We recognized $5,121 of interest expense applicable to our 2015 Notes during the year ended December 31, 2015, and included this amount of accrued interest payable as accrued expenses on our consolidated balance sheets. During the same period, we recorded an additional $4,694 of interest expense and an increase to our derivative liabilities related to the recognition of the BCF applicable to the $5,121 of interest payable.

During the year ended December 31, 2015, we recognized $82,500 of BCF debt discount amortization and recorded this as an increase to our convertible notes payable, net of debt discount on our consolidated balance sheets.

2014 Typenex Note

On August 13, 2014, we entered into a Securities Purchase Agreement with Typenex Co-Investment, LLC ("Typenex"), for the sale of a 10% convertible promissory note (the “Typenex Note”) in the principal amount of $1,657,500 (the “Closing Amount”) convertible into shares of our common stock. The Typenex Note had an original issue discount (“OID”) of $150,000. Typenex retained $7,500 of the Closing Amount for due diligence and legal bills related to the transaction and paid $25,000 on our behalf to a third party for brokerage fees (together, the “Fees”). The financing closed on August 13, 2014 (the “Closing Date”). The Typenex Note was secured by all of our assets.

On August 13, 2014, in conjunction with the $1,657,500 Typenex Note, we received five, unsecured, $250,000 Investor Notes bearing interest at 8% per annum, totaling $1,250,000 that were scheduled to mature with respect to principal and interest on September 13, 2016. On December 29, 2014, we settled the amounts owing under the Typenex Note and the amounts owed to us under the Investor Notes as more fully described in below.

During the year ended December 31, 2014, we recognized $37,807 of interest income applicable to these Investor Notes.

The Typenex Note’s interest rate was 10% per annum. All interest and principal was required to be paid twenty-five months after the date of the first borrowing under the Typenex Note (the “Maturity Date”). The outstanding balance on the Typenex Note was convertible into our common stock, at Typenex’s option, at $3.00 per share (the “Optional Conversion”).

The Typenex Note also contained repayment requirements beginning six months after the first borrowing under the Typenex Note. The repayment requirements gave us the option of making periodic repayments in cash or with shares of our common stock at a price discounted to market in accordance with the terms of the Typenex Note.

In addition, we issued to Typenex warrants (the “Typenex Warrants”) to purchase 997,692 shares of our common stock, subject to adjustment in the event of a cashless exercise, as defined in the Typenex Warrants. Warrant #1 to Purchase Shares of Common Stock (“Typenex Warrant #1”) for 170,044 shares was immediately exercisable with the remainder (Typenex Warrants #2 - #6”) only becoming exercisable, in five tranches, if and when the Investor Notes were paid. The Typenex Warrants were exercisable at $3.00 per share (the “Exercise Price”) until August 31, 2017, on a cash or cashless basis. Under the terms of the Typenex Warrants, if we, at any time while the Typenex Warrants were outstanding, sell or issue our common stock or securities convertible into or exercisable for shares of our common stock, including common stock issued under the Typenex Note, at an effective price per share less than the Exercise Price, then, subject to a few exceptions set forth in the Typenex Warrants, the Exercise Price will be reduced to such lower price provided that the number of shares of common stock issuable under the Typenex Warrants could not exceed a number of shares equal to three times the number of shares of common stock issuable under the Typenex Warrants as of the Closing Date.

On August 15, 2014, we received net cash proceeds from our initial borrowing under the Typenex Note of $225,000 as follows: total initial borrowing of $282,500 less the $32,500 of Fees and less $25,000 of OID applicable to the initial borrowing. We expensed the Fees immediately as interest expense as the initial borrowing and all subsequent tranches were immediately convertible into our common stock by the lender.

With regards to our $282,500 initial borrowing, on August 15, 2014, we recorded the $25,000 of OID plus the $118,373 fair value of the Typenex Warrant #1, plus $139,127 of the $151,937 fair value of the initial borrowing BCF, or, in total, $282,500, as debt discount and recorded the excess, $12,810, as loss on origination of derivative liability in our consolidated statements of operations. We were amortizing the $282,500 debt discount associated with the initial borrowing on a straight line basis, which approximates the effective interest method, over the nine month repayment term of the initial borrowing.

With regards to the remaining $1,375,000 liability owed under the Typenex Note, we recorded the remaining $125,000 of OID as debt discount. We were amortizing the $125,000 debt discount on a straight line basis, which approximates the effective interest method, over the twenty-five month term of the Typenex Note. We also recorded the $576,152 fair value of the Typenex Warrants #2 - #6 as debt discount. Debt discount amortization relating to these warrants would be recognized on a straight line basis over the term of each future borrowing under the Typenex Note.

On December 29, 2014, we paid off the Typenex Note and accrued interest thereon and we repurchased and cancelled the Typenex Warrants #2 - #6 for the purchase of 827,648 of our shares of common stock held by Typenex. Principal and interest owed to us under the Investor Notes were offset against the principal and interest we owed to Typenex under the Typenex Note and, in addition, we paid Typenex $381,714 in cash. We removed the assets and liabilities, including the derivative liability related to the Typenex Note and interest payable conversion features, from our consolidated balance sheets and reduced our common stock balance by the amount previously assigned to the Typenex Warrants #2 - #6 and recorded a loss on extinguishment of debt and repurchase of warrants as follows:

Convertible note payable	$	1,657,500
Less: unamortized discount		(822,250	)
Accrued interest payable		63,326
Derivative liability		161,158
Typenex Warrants #2 - #6 repurchased		576,152
Less: investor notes receivable		(1,250,000	)
Less: accrued interest receivable		(37,807	)
Less: cash paid		(381,714	)
Loss on extinguishment of debt	$	33,635

During the year ended December 31, 2014, we recognized $161,402 of debt discount amortization and interest expense totaling $63,326 applicable to the Typenex Note.

During the year ended December 31, 2014, the fair value of the BCF applicable to Typenex Note accrued interest was $15,320 and this amount was recorded as interest expense and an increase to our derivative liability in our consolidated financial statements.

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NOTES PAYABLE, RELATED PARTIES

12 Months Ended

Dec. 31, 2015

NOTES PAYABLE, RELATED PARTIES [Abstract]

NOTES PAYABLE, RELATED PARTIES

NOTE 13 – NOTES PAYABLE, RELATED PARTIES

On September 30, 2013, we issued a Convertible Note (the "Convertible Note") for $50,000 to NYX Capital Advisors, Inc. (“NYX”), an entity owned by the husband of our former President and director, in connection with $50,000 cash paid by NYX.  The Convertible Note bears no interest and was convertible at any time, at the option of the holder, into 10,000,000 shares of our common stock at $0.005 per share.  The Convertible Note was converted into our common shares on February 24, 2014.

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STOCKHOLDERS' DEFICIT

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' DEFICIT

NOTE 13 – STOCKHOLDERS’ DEFICIT

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, 2015, 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, 2015, 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	$	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 3,080,000 options totaling $612,512, was included in accrued expenses on our condensed 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.

The following table summarizes our stock options outstanding, as of September 30, 2016:

	Nine Months Ended September 30, 2016
	Number of Shares		Weighted Average Remaining Life (years)		Weighted Average Exercise Price
Stock options outstanding, beginning of period		3,680,000		9.1	$	0.26
Issued		—		—		—
Exercised		—		—		—
Expired		—		—		—
Stock options outstanding, end of period		3,680,000		9.1	$	0.26
Stock options exercisable, September 30, 2016		3,680,000		9.1	$	0.26

Common Stock Issued In Exchange For Outstanding Warrant

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 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, 2015, 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.

Warrants:

The following table summarizes our share warrants outstanding as of September 30, 2016 and December 31, 2015:

	Nine Months Ended September 30, 2016
	Number of Shares			Weighted Average Remaining Life (years)		Weighted Average Exercise Price
Warrants outstanding, December 31, 2015		3,000,000			1.00	$	12.00
Issued		956,836			4.53		0.18
Shares issuable at the election of the noteholder in lieu of the payment of interest under the terms of the amended Slainte note		938,287
Exercised		—			—		—
Expired		(3,000,000	)		—		—
Warrants outstanding, end of period		1,895,122			4.53	$	0.18
Warrants exercisable, September 30, 2016		1,895,122			4.53	$	0.18

NOTE 14 – STOCKHOLDERS’ DEFICIT

2014 Change of Control

On February 27, 2014, NYX and Mr. Paul Enright, our former President, entered into a Stock Purchase Agreement, pursuant to which NYX sold to Mr. Enright an aggregate of 40,000,000 shares of our common stock, representing approximately 87% of our issued and outstanding shares as of that date.

On March 26, 2014, we cancelled 41,690,000 previously outstanding shares of our common stock and issued 38,690,000 shares to Messrs. Blackmon, Ruby and Verzura, representing approximately 89% of our issued and outstanding shares as of that date.

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 described in Note 12 above.

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.

Common Stock Issued For Equity Method Investment

On August 25, 2014, we issued 40,000 shares of common stock valued at $88,000, based on the previous trading day’s closing price, as consideration for a 50% ownership interest in CRD. The $88,000 is included in equity method investments on our consolidated balance sheets.

Common Stock Issued For Services

On August 14, 2014, we issued 10,000 shares of common stock valued at $9,200, based on the previous trading day’s closing price, as consideration for marketing services. The $9,200 was recorded as share-based compensation expense and is included in sales and marketing expense in our consolidated statements of operations.

On August 15, 2014, we issued 20,000 shares of common stock valued at $24,800, based on the previous trading day’s closing price, as consideration for consulting services. The $24,800 was recorded as share-based compensation expense and is included in included in general and administrative expenses in our consolidated statements of operations.

On September 17, 2014, we issued 150,000 shares of common stock valued at $162,000, based on the previous trading day’s closing price, as consideration for prepaid investor relations services. The $162,000 was amortized on a straight-line basis over the 12 month term of the investor relations service agreement. During the year ended December 31, 2015 and 2014, we recorded $121,500 and $40,500, respectively, of amortization as share-based compensation expense and included this in general and administrative expenses in our consolidated statements of operations.

On October 17, 2014, we issued 100,000 shares of common stock valued at $40,000, based on the previous trading day’s closing price, as consideration for prepaid product distribution fees. The $40,000 is being amortized on a straight-line basis over the ten year term of the licensing and distribution agreement. During the year ended December 31, 2015 and 2014, we recorded $4,000 and $1,000, respectively, of amortization as share-based compensation expense and included this in cost of revenues in our consolidated statements of operations. The remaining $35,000 as at December 31, 2015, is included in prepaid expenses on our consolidated balance sheets.

On October 22, 2014, we issued 50,000 shares of common stock valued at $24,000, based on the previous trading day’s closing price, as consideration for consulting services. The $24,000 was recorded as share-based compensation expense and is included in included in general and administrative expenses in our consolidated statements of operations.

On October 24, 2014, we issued 20,000 shares of common stock valued at $11,800, based on the previous trading day’s closing price, as consideration for consulting services. The $11,800 was recorded as share-based compensation expense and is included in included in general and administrative expenses in our consolidated statements of operations.

On December 1, 2014, we issued 30,000 shares of common stock valued at $19,500, based on the previous trading day’s closing price, as consideration for prepaid consulting services. The $19,500 was recognized as share-based compensation expense as services were rendered. During the year ended December 31, 2015 and 2014, we recorded $10,579 and $8,921, respectively, of share-based compensation expense and these amounts are included in general and administrative expenses in our consolidated statements of operations.

On December 30, 2014, we issued 20,000 shares of common stock valued at $13,800, based on the previous trading day’s closing price, as consideration for consulting services. The $13,800 was recorded as share-based compensation expense and is included in included in general and administrative expenses in our consolidated statements of operations.

On March 2, 2015, we issued 30,000 shares of common stock valued at $42,600, based on the previous trading day’s closing price, as consideration for consulting services from an independent contractor. The $42,600 of share-based compensation expense is included in included in general and administrative expenses in our consolidated statements of operations.

On April 23, 2015 we issued 60,000 shares of common stock valued at $47,400, based on the previous trading day’s closing price, as consideration for prepaid consulting fees. The $47,400 was recognized as share-based compensation expense as services were rendered. During the year ended December 31, 2015, we recorded $47,400 of share-based compensation expense and included this amount in general and administrative expenses in our consolidated statements of operations.

On April 23, 2015, we issued 126,500 shares of common stock valued at $99,935, based on the previous trading day’s closing price, as consideration for prepaid corporate finance fees. The $99,935 was recognized as share-based compensation expense as services were rendered. During the year ended December 31, 2015, we recorded $99,935 of share-based compensation expense and included this amount in general and administrative expenses in our consolidated statements of operations.

On August 17, 2015 we issued 50,000 shares of common stock valued at $19,000, based on the previous trading day’s closing price, as consideration for prepaid consulting fees. The $19,000 was recognized as share-based compensation expense as services were rendered. During the year ended December 31, 2015, we recognized $19,000 of share-based compensation expense and included this amount in general and administrative expenses in our consolidated statements of operations.

On August 24, 2015, we issued a total of 11,000 shares of common stock valued at $5,280, based on the previous trading day’s closing price, as consideration for consulting services from two independent contractors. The $5,280 of share-based compensation expense is included in included in general and administrative expense in our consolidated statements of operations.

On October 19, 2015, we issued 30,000 shares of common stock valued at $12,000, based on the previous trading day’s closing price, as consideration for prepaid product distribution fees. The $12,000 is being amortized on a straight-line basis over the remaining nine year term of the related licensing and distribution agreement. During the year ended December 31, 2015, we recorded $375 of share-based compensation expense and included this in cost of revenues in our consolidated statements of operations. The remaining $11,625 as at December 31, 2015, is included in prepaid expenses on our consolidated balance sheets.

Warrants:

The following table summarizes our share warrants outstanding as of December 31, 2015 and 2014:

	Year Ended December 31,
	2015					2014
	Number of Shares			Weighted Average Exercise Price		Number of Shares		Weighted Average Exercise Price
Warrants outstanding, beginning of period		3,170,044		$	11.52	—		$	—
Issued		—			—	3,997,692			9.75
Exercised		—			—	—			—
Repurchased and cancelled		(170,044	)		3.00	(827,648	)		3.00
Expired		—			—	—			—
Warrants outstanding, end of period		3,000,000		$	12.00	3,170,044		$	11.52
Warrants exercisable, end of period		3,000,000		$	12.00	3,170,044		$	11.52

The weighted-average remaining contractual life for warrants outstanding and exercisable at December 31, 2015, is 0.25 years. The aggregate intrinsic value of warrants outstanding and exercisable at December 31, 2015 is $0.

As described in Note 12 above, on August 13, 2014, we issued Typenex warrants to purchase 997,692 of our common shares and recorded the $694,525 fair value of these warrants as an increase to common stock on our consolidated balance sheets. On December 29, 2014, we repurchased 827,648 of these warrants, cancelled them and recorded a $576,152 decrease in common stock.  

The warrants were recorded at approximately $0.70 per warrant utilizing the Black Scholes option pricing model and the following assumptions on the date of valuation:

Stock price	$	1.03
Exercise price	$	3.00
Risk free interest rate		0.88	%
Expected term (years)		3.05
Expected volatility		146	%
Expected dividends		0	%

2004 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.

The following table summarizes our stock options outstanding as of December 31, 2015:

	Year Ended December 31, 2015
	Number of Shares		Weighted Average Exercise Price
Stock options outstanding, beginning of period		—	$	—
Issued		600,000		0.70
Exercised		—		—
Expired		—		—
Stock options outstanding, end of period		600,000	$	0.70
Stock options exercisable, end of period		600,000	$	0.70

The weighted-average remaining contractual life for stock options outstanding and exercisable at December 31, 2015, is 9.0 years. The aggregate intrinsic value of options outstanding and exercisable at December 31, 2015 is $0.

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SHARE-BASED COMPENSATION

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

SHARE-BASED COMPENSATION

NOTE 14 – 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 nine months ended September 30, 2016 and 2015 is, as follows:

	Nine Months Ended September 30,
	2016		2015
Share-based compensation expense – consulting services	$	118,160	$	47,880
Share-based compensation expense – amortization of shares issued for prepaid services		—		279,229
Share-based compensation expense – accrual of estimated share-based awards		—		315,000
	$	118,160	$	642,109

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, 2015 and 2014, under our 2014 Equity Incentive Plan. Share-based compensation expense for the years ended December 31, 2015 and 2014 is as follows:

	Year Ended December 31,
	2015		2014
Share-based compensation expense – shares issued for services	$	47,880	$	83,600
Share-based compensation expense – amortization of shares issued for prepaid services		302,789		50,421
Share-based compensation expense – accrual of shares to be issued for services		67,500		—
Share-based compensation expense – accrual of estimated share-based awards to officers		612,512		417,664
	$	1,030,681	$	551,685

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 15 –COMMITMENTS AND CONTINGENCIES

Contractual Obligations and Commercial Commitments

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 nine months ended September 30, 2016, we recognized $118,160 of stock based compensation 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, 2016 and 2015, we recognized no expenses applicable to this agreement At September 30, 2016 and December 31, 2015 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.

Legal Proceedings

We were not subject to any legal proceedings during the nine months ended September 30, 2016, and, to the best of our knowledge, no legal proceedings are pending or threatened.

NOTE 16 –COMMITMENTS AND CONTINGENCIES

Contractual Obligations and Commercial Commitments

On May 6, 2014, we entered into a consultancy 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 negotiations. The agreement provides 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 years ended December 31, 2015 and 2014, we recognized $0 and $160,000 of expense applicable to this agreement and this amount is included in R&D expenses in our consolidated statements of operations. At December 31, 2015 and 2014, 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.

Legal Proceedings

We are involved in disputes and legal actions arising in the normal course of our business. There have been no material developments in legal proceedings in which we are involved during the year ended December 31, 2015.

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INCOME TAXES

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 17 – 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.

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, 2015 and 2014, 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,
	2015		2014
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,
	2015			2014
Net loss carry forward	$	1,124,511		$	962,662
Valuation allowance		(1,124,511	)		(962,662	)
	$	—		$	—

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

	Years Ended December 31,
	2015			2014
Tax benefit at statutory rate	$	1,124,511		$	962,662
Valuation allowance		(1,124,511	)		(962,662	)
	$	—		$	—

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 18 –RELATED PARTY TRANSACTIONS

Affiliate Customer

During 2010, Messrs. Blackmon and Verzura have made loans to, or equity investments in, one of our customers and, effective June 30, 2015, Messrs. Blackmon and Verzura had 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 have classified sales 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.

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, Verzura and Ruby formed Blue River Inc. (“Blue River”), a Colorado corporation in the cannabis industry that plans to manufacture and wholesale medicinal and recreational cannabis products including our Prana medicinals products. During the year ended December 31, 2015, we advanced Blue River $3,284 and included this amount in due from related parties.

Amounts due from related parties consist of:

	December 31,
	2015		2014
Affiliated customer	$	—	$	3,112
Lone Mountain		—		40,900
Blue River		3,284		—
CRD		5,000		—
Total due from related parties	$	8,284	$	44,012

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DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

NOTE 19 –DISCONTINUED OPERATIONS

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 the advanced skin care business. The assets were sold to MySkin Services, Inc. (“MTA”), a business partly owned by Ms. Stoppenhagen, our former President and director, in exchange for a $15,000 payable we owed to Ms. Stoppenhagen and/or MTA. In addition, MTA assumed all costs associated with these assets starting on March 31, 2014. See Note 1 for further detail on our change in operations.

The following details our loss from discontinued operations:

	Years Ended December 31,
	2015		2014
Revenues	$	—	$	20,684
Operating expenses:
Selling, general and administrative		—		63,872
Depreciation		—		—
Loss on disposal of assets		—		15,704
Total operating expenses		—		79,576
Loss from discontinued operations, before income taxes		—		(58,892
Provision for income taxes		—		—
Loss from discontinued operations, net of income taxes	$	—	$	(58,892	)

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2015

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 20 – SUBSEQUENT EVENTS

On January 15, 2016, we awarded 1,050,000 stock options to each of Messrs. Blackmon and 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 gave 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		2.03	%
Expected term (years)		10.0
Expected volatility		173	%
Expected dividends		0	%

On March 18, 2016, we entered into an agreement with Slainte whereby we released Slainte from any and all claims relating to the Slainte Note and 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.

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) $100,000.00 divided by (ii) the product of 0.80% and the average price of our common stock for the 30 trading days immediately prior to the date the put option is exercised.

On March 24, 2016, an unrelated third party agreed to assume all of our obligations pursuant to the $175,000 note payable to WeedMD dated July 7, 2014, in consideration for the transfer by us of 1,100,000 shares of the common stock of WeedMD to the unrelated third party. WeedMD consented to the assumption of the loan and released us from any further liability with respect to the loan.

On March 30, 2016, we borrowed $81,978, from Slainte 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.

The loan, together with interest at 12% per year, is payable on December 30, 2016. We can prepay the loan at any time. If the loan is repaid on or before September 30, 2016, the principal amount which is being repaid will increase by 10%. If the loan is 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.

If the loan is not paid when due, then at any time on or before 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 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 conversion date by the outstanding principal and interest on the loan on the conversion date.

On April 6, 2016, we borrowed $75,000, from Slainte and used the proceeds to repay principal and accrued interest applicable to our $102,000 convertible promissory note dated October 12, 2015, to JSJ Investments Inc.

The loan, together with interest at 12% per year, is payable on December 30, 2016. We may prepay the loan at any time. If the loan is repaid on or before September 30, 2016 the principal amount which is being repaid will increase by 10%. If the loan is 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.

If the loan is not paid when due, then at any time on or before 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 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 conversion date by the outstanding principal and interest on the loan on the conversion date.

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 used to 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%.

In accordance with ASC 855-10 we have analyzed its operations subsequent to December 31, 2015, 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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation – Our condensed consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries UC Nevada L.L.C. and UC Colorado Corporation. All intercompany accounts and transactions have been eliminated.

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”).

Basis of Presentation

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 month and nine month periods ended September 31, 2016 and 2015 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, 2015.

Use of Estimates

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 estimate 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 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.

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

Financial Instruments – We have adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 825, Financial Instruments, which requires disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate that value. For purposes of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.

The carrying amounts of our short-term financial instruments, including accounts receivable, , accounts payable, accrued expenses and deferred revenue approximates fair value due to the relatively short period to maturity for these instruments. Investments in non-marketable equity securities are carried at cost. The carrying amount of our notes payable at September 30, 2016 and December 31, 2015, approximates their fair values based on our incremental borrowing rates.

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.

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 December 31, 2015, 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 years ended December 31, 2015 and 2014.

Cash and Cash Equivalents

Cash and Cash Equivalents - We consider investments with original maturities of 90 days or less to be cash equivalents. We did not have cash equivalents as of September 30, 2016 and December 31, 2015.

Cash and Cash Equivalents - We consider investments with original maturities of 90 days or less to be cash equivalents. We do not have any cash equivalents as of December 31, 2015 or December 31, 2014.

Accounts Receivable

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 September 30, 2016 and December 31, 2015, 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 $4,340 and $0 as of December 31, 2015 and 2014, respectively. We recorded bad debt expense, included in general and administrative expenses, of $24,185 and $0 during the years ended December 31, 2015 and 2014, respectively.

Prepaid Expenses

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

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

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 20 years. We test for impairment of our intangible assets on an annual basis.

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

Investments in Non-Marketable Equity Securities – Our investments in non-marketable equity securities are carried at cost, less write-down-for-impairments, and are adjusted for impairment based on methodologies, and assessment of the impact of 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 noncurrent assets.

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

Long-Lived Assets –In accordance with 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.

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, 2015 or December 31, 2014.

Equity Method Investments

Equity Method Investments – Our investments in entities representing ownership of at least 20% but less than 50%, where we exercise significant influence, are accounted for under the equity method.

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.

Deferred Revenue

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.

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

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) is 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 form of stock, warrants or other financial assets is recognized when the services are performed. The value of revenue is measured using the Black-Scholes model for warrants.

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. Generally, our suppliers drop-ship orders to our clients with origin terms. For any shipments with destination terms, we defer revenue until delivery is made to the customer. During the years ended December 31, 2015 and 2014, sales returns were not significant and as such, no sales return allowance had been recorded as of December 31, 2015 or December 31, 2014.

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

Cost of Revenues - Our cost of revenues consists primarily of costs associated with the production and delivery of our products and services. These include expenses related to the production, packaging and labeling of our Prana medicinals products and consulting expense related to our advisory services.

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.

Shipping and Handling Costs

Shipping and Handling Costs - For product sales, shipping and handling costs are included as a component of cost of revenues. During the years ended December 31, 2015 and 2014, we incurred shipping and handling costs of $1,013 and $0, respectively.

Advertising Costs

Advertising Costs - All advertising costs are expensed as incurred. During the years ended December 31, 2015 and 2014, we incurred $16,500 and $304 of advertising costs, respectively, and included these costs in sales and marketing expense in our consolidated statements of operations.

Research and Development Expenses

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.

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 – 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 - 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.

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

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.

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

Income Taxes

Income Taxes - We follow the provisions of ASC 740, Income Taxes. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

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

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.

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

Net Income 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,
	2016		2015		2016		2015
Warrants to purchase common stock		1,895,122		3,000,000		1,895,122		3,000,000
Stock options		3,680,000		600,000		3,680,000		600,000
Total potentially dilutive securities		5,575,122		3,600,000		5,575,122		3,600,000

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.

	Years Ended December 31,
	2015		2014
Warrants to purchase common stock		3,000,000		3,997,692
Stock options		600,000		—
Total potentially dilutive securities		3,600,000		3,997,692

Other Comprehensive Income (Loss)

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 nine months ended September 30, 2016 and 2015, we did not have any gains and losses resulting from activities or transactions that resulted in comprehensive income or loss.

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, 2015 and 2014, we did not have any gains and losses resulting from activities or transactions that resulted in other comprehensive income or loss.

Segment Reporting

Segment Reporting – UCANN operates as one segment.

Segment Reporting – UCANN operates as one segment.

Concentration of Credit Risk

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 Revenues:

	Nine Months Ended September 30,						Three Months Ended September 30,
	2016			2015			2016			2015
Customer A		88	%		9	%		80	%		35	%
Customer B		12	%		25	%		20	%		34	%
Customer C		—			19	%		—			31	%
Customer D		—			37	%		—			0	%

Percentage of Accounts Receivable:

	September 30, 2016			December 31, 2015
Customer A		57	%		56	%
Customer B		43	%		41	%
Customer C		—			1	%

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,
	2015			2014
Customer A		36	%		—	%
Customer B		32	%		80	%
Customer C		18	%		4	%

Percentage of Accounts Receivable:

	Years Ended December 31,
	2015			2014
Customer D		56	%		—	%
Customer E		41	%		—	%
Customer F		—	%		46	%
Customer G		—	%		33	%
Customer H		1	%		21	%

Recently Issued Accounting Pronouncements

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 2017, 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.

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.

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 April 2015, the FASB issued guidance requiring us to present debt issuance costs in the balance sheet as a reduction from the related debt liability rather than as an asset. Amortization of these costs will continue to be reported as interest expense. This guidance is effective for us at the beginning of fiscal year 2016, and early adoption is allowed. Retrospective application is required. Upon adoption, the deferred financing costs associated with our notes payable will be reclassified from “Deferred financing costs” to “Notes payable, net.”

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. Early adoption is permitted for all companies in any interim or annual period. We have not determined in what period it will adopt or what adoption method we will use and we are currently assessing the impact that this guidance may have on our consolidated financial statements.

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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Accounting Policies [Abstract]

Schedule of potentially dilutive securities that have been excluded from the computation of diluted net loss per share, because the effect of their inclusion would have been 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,
	2016		2015		2016		2015
Warrants to purchase common stock		1,895,122		3,000,000		1,895,122		3,000,000
Stock options		3,680,000		600,000		3,680,000		600,000
Total potentially dilutive securities		5,575,122		3,600,000		5,575,122		3,600,000

	Years Ended December 31,
	2015		2014
Warrants to purchase common stock		3,000,000		3,997,692
Stock options		600,000		—
Total potentially dilutive securities		3,600,000		3,997,692

Schedule of significant concentrations in revenues and accounts receivable

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

Percentage of Revenues:

	Nine Months Ended September 30,						Three Months Ended September 30,
	2016			2015			2016			2015
Customer A		88	%		9	%		80	%		35	%
Customer B		12	%		25	%		20	%		34	%
Customer C		—			19	%		—			31	%
Customer D		—			37	%		—			0	%

Percentage of Accounts Receivable:

	September 30, 2016			December 31, 2015
Customer A		57	%		56	%
Customer B		43	%		41	%
Customer C		—			1	%

Percentage of Revenue:

	Years Ended December 31,
	2015			2014
Customer A		36	%		—	%
Customer B		32	%		80	%
Customer C		18	%		4	%

Percentage of Accounts Receivable:

	Years Ended December 31,
	2015			2014
Customer D		56	%		—	%
Customer E		41	%		—	%
Customer F		—	%		46	%
Customer G		—	%		33	%
Customer H		1	%		21	%

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INVESTMENTS IN NON-MARKETABLE EQUITY SECURITIES (Tables)

12 Months Ended

Dec. 31, 2015

Investments, All Other Investments [Abstract]

Schedule of Fair Value Assumptions Used to Value Warrants

Risk free interest rate	0.60	%
Expected term (years)	0.5
Expected volatility	70	%
Expected dividends	0	%

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PREPAID EXPENSES (Tables)

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Prepaid Expense, Current [Abstract]

Schedule of prepaid expenses

Prepaid expenses and other assets consist of:

	September 30, 2016		December 31, 2015
Prepaid investor relations services	$	—	$	1,667
Prepaid licensing fees		—		35,000
Other prepaid services and fees		—		19,674
	$	—	$	56,341

	December 31,
	2015		2014
Prepaid investor relations services	$	1,667	$	121,500
Prepaid licensing fees		35,000		39,000
Other prepaid services and fees		19,674		16,900
	$	56,341	$	177,400

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EQUITY METHOD INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2015

Equity Method Investments and Joint Ventures [Abstract]

Schedule of equity method investments

	December 31,
	2015		2014
Lone Mountain Partners, LLC – 25% interest	$	—	$	50,000
Cannabinoid Research & Development Company Limited – 50% interest		88,000		88,000
Total equity method investments	$	88,000	$	138,000

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ACCRUED EXPENSES (Tables)

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Accrued Liabilities, Current [Abstract]

Schedule of accrued expenses

Our accrued expenses consist of:

	September 30, 2016		December 31, 2015
Accrued consulting fees	$	152,500	$	110,000
Accrued wages and related expenses		—	$	629,780
Accrued interest expense		142,446	$	101,185
Accrued other expenses		67,500	$	87,568
	$	362,446	$	928,533

	December 31,
	2015		2014
Accrued consulting fees	$	110,000	$	110,000
Accrued wages and related		629,780		433,963
Accrued interest expense		101,185		6,832
Accrued other expenses		87,568		—
Total accrued expenses	$	928,533	$	550,795

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FAIR VALUE MEASUREMENTS AND DERIVATIVE LIABILITIES (Tables)

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Schedule of liabilities carried at fair value measured on a recurring basis

The following table provides the liabilities carried at fair value measured on a recurring basis as of September 30, 2016.

	Level 1		Level 2		Level 3		Total
Derivative liabilities - convertible notes	$	—	$	—	$	—	$	—
Derivative liabilities - warrants		—		547,200		—		547,200
Total	$	—	$	547,200	$	—	$	547,200

	Level 1		Level 2		Level 3		Total
Derivative liabilities	$	—	$	—	$	383,581	$	383,581

Schedule of reconciliation of beginning and ending balances for financial instruments carried at fair value measured on a recurring basis

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. 2015	$	383,581
Loss on revaluation of derivative liabilities during the period		370,805
Loss on modification and cure of default of note payable to Slainte Ventures		237,027
Effect of payoff of JSJ and Vis Vires convertible notes		(178,484	)
Conversion of note payable to Tangiers Investment Group		(265,729	)
Derivative liabilities as of September 30, 2016	$	547,200

Derivative liabilities as of December 31, 2014	$	—
Additions to derivative liabilities for convertible debt conversion features recorded as debt discount		355,293
Additions to derivative liabilities for interest payable conversion features recorded as interest expense		4,695
Loss on revaluation of derivative liabilities during the year		23,593
Derivative liabilities as of December 31, 2015	$	383,581

Derivative liability as of December 31, 2013	$	—
Additions to derivative liability for convertible debt conversion feature recorded as debt discount		151,937
Additions to derivative liability for interest payable conversion feature recorded as interest expense		15,320
Gain on revaluation of derivative liability during the year		(6,099	)
Settlement of derivative liability on December 29, 2014		(161,158	)
Derivative liability as of December 31, 2014	$	—

Schedule of key inputs in valuation of embedded conversion features

These warrants are accounted for as a liability under ASC 815. The Company assesses the fair value of the warrants quarterly based on the Black-Scholes pricing model. See below for variables used in assessing the fair value.

	September 30, 2016			December 31, 2015
Expected life (years)		5.0			4.96
Risk-free interest rate		1.41	%		1.21	%
Expected volatility		226	%		227	%

Risk-free interest rate	0.43% – 0.72%
Dividend yield	—
Volatility	146% – 172%
Expected life in years	1.72 – 2.09
Exercise price	$3.00

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DEFERRED REVENUE (Tables)

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Deferred Revenue Disclosure [Abstract]

Schedule of deferred revenue

Our deferred revenue consists of:

	September 30, 2016			December 31, 2015
Deferred revenue - WeedMD	$	428,750		$	563,750
Deferred revenue - FoxBarry		—			200,000
		428,750			763,750
Less - current portion		(180,000	)		(380,000	)
Deferred revenue, net of current portion	$	248,750		$	383,750

	December 31,
	2015			2014
Deferred revenue – WeedMD	$	563,750			$	743,750
Deferred revenue - FoxBarry		200,000				200,000
		763,750				943,750
Less – current portion		(380,000	)			(500,000
Deferred revenue, net of current portion	$	383,750			$	443,750

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NOTES PAYABLE (Tables)

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

Notes Payable [Abstract]

Schedule of notes payable

Our notes payable consisted of the following:

	September 30, 2016		December 31, 2015
Note payable - WeedMD	$	—	$	175,000
Note payable - Slainte Ventures, LLC		600,000		600,000
Total notes payable	$	600,000	$	775,000

	December 31,
	2015		2014
Note payable - WeedMD	$	175,000	$	175,000
Note payable – Slainte		600,000		600,000
Total notes payable	$	775,000	$	775,000

Schedule of variables used in assessing fair value

These warrants are accounted for as a liability under ASC 815. The Company assesses the fair value of the warrants quarterly based on the Black-Scholes pricing model. See below for variables used in assessing the fair value.

	September 30, 2016			December 31, 2015
Expected life (years)		5.0			4.96
Risk-free interest rate		1.41	%		1.21	%
Expected volatility		226	%		227	%

Risk-free interest rate	0.43% – 0.72%
Dividend yield	—
Volatility	146% – 172%
Expected life in years	1.72 – 2.09
Exercise price	$3.00

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CONVERTIBLE NOTE PAYABLE (Tables)

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2015

CONVERTIBLE NOTE PAYABLE [Abstract]

Schedule of convertible promissory notes

The following table summarizes our convertible promissory notes as of September 30, 2016:

Issue Date	Issued To	Security	Maturity Date	Interest Rate			Base Conversion Rate	Principal Balance
3/30/2016	Slainte Ventures	Unsecured	12/30/16		12	%	N/A	$	81,978
4/06/16	Slainte Ventures	Unsecured	12/30/16		12	%	N/A		75,000
7/5/2016	Slainte Ventures	Unsecured	12/30/16		12	%	N/A		50,000
8/10/16	JSJ Investments	Unsecured	5/10/17		12	%	$0.20 per share during first 180 days; 45% discount thereafter		125,000
								$	331,978

Issue Date	Issued to		Maturity  Date	Interest  Rate	Default  Interest  Rate	Base  Conversion  Rate	VCR Look  back  Period	VCR Calculated  Using	Principal
10/6/2015	Vis Viers Group, Inc.	Unsecured	6/30/2016	8%	22%	58%	10 days	3 lowest closing bids	$	59,000.00
10/12/15	JSJ Investments Inc.	Unsecured	7/8/2016	12%	18%	55%	10 days	5 lowest trades		102,000.00
12/9/15	Tangiers Investment Group, LLC	Secured by Certain Assets	12/8/2016	10%	20%	55%	10 days	3 lowest closing bids		220,000.00
Total principal outstanding at December 31, 2015									$	381,000.00

Schedule of recorded loss on extinguishment of debt

Convertible note payable	$	1,657,500
Less: unamortized discount		(822,250	)
Accrued interest payable		63,326
Derivative liability		161,158
Typenex Warrants #2 - #6 repurchased		576,152
Less: investor notes receivable		(1,250,000	)
Less: accrued interest receivable		(37,807	)
Less: cash paid		(381,714	)
Loss on extinguishment of debt	$	33,635

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STOCKHOLDERS' DEFICIT (Tables)

9 Months Ended

12 Months Ended

Sep. 30, 2016

Dec. 31, 2016

Dec. 31, 2015

Summary of share warrants outstanding

The following table summarizes our share warrants outstanding as of September 30, 2016 and December 31, 2015:

	Nine Months Ended September 30, 2016
	Number of Shares			Weighted Average Remaining Life (years)		Weighted Average Exercise Price
Warrants outstanding, December 31, 2015		3,000,000			1.00	$	12.00
Issued		956,836			4.53		0.18
Shares issuable at the election of the noteholder in lieu of the payment of interest under the terms of the amended Slainte note		938,287
Exercised		—			—		—
Expired		(3,000,000	)		—		—
Warrants outstanding, end of period		1,895,122			4.53	$	0.18
Warrants exercisable, September 30, 2016		1,895,122			4.53	$	0.18

	Year Ended December 31,
	2015					2014
	Number of Shares			Weighted Average Exercise Price		Number of Shares		Weighted Average Exercise Price
Warrants outstanding, beginning of period		3,170,044		$	11.52	—		$	—
Issued		—			—	3,997,692			9.75
Exercised		—			—	—			—
Repurchased and cancelled		(170,044	)		3.00	(827,648	)		3.00
Expired		—			—	—			—
Warrants outstanding, end of period		3,000,000		$	12.00	3,170,044		$	11.52
Warrants exercisable, end of period		3,000,000		$	12.00	3,170,044		$	11.52

Summary of stock options outstanding

The following table summarizes our stock options outstanding, as of September 30, 2016:

	Nine Months Ended September 30, 2016
	Number of Shares		Weighted Average Remaining Life (years)		Weighted Average Exercise Price
Stock options outstanding, beginning of period		3,680,000		9.1	$	0.26
Issued		—		—		—
Exercised		—		—		—
Expired		—		—		—
Stock options outstanding, end of period		3,680,000		9.1	$	0.26
Stock options exercisable, September 30, 2016		3,680,000		9.1	$	0.26

	Year Ended December 31, 2015
	Number of Shares		Weighted Average Exercise Price
Stock options outstanding, beginning of period		—	$	—
Issued		600,000		0.70
Exercised		—		—
Expired		—		—
Stock options outstanding, end of period		600,000	$	0.70
Stock options exercisable, end of period		600,000	$	0.70

Stock Options [Member]

Schedule of assumptions used for valuation utilizing the Black Scholes option pricing model for fair value

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	%

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	%

Common Stock Issued for Warrant Outstanding [Member]

Schedule of assumptions used for valuation utilizing the Black Scholes option pricing model for fair value

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	%

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	%

Warrant [Member]

Schedule of assumptions used for valuation utilizing the Black Scholes option pricing model for fair value

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	%

Stock price	$	1.03
Exercise price	$	3.00
Risk free interest rate		0.88	%
Expected term (years)		3.05
Expected volatility		146	%
Expected dividends		0	%

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SHARE-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of share-based compensation expense

	Year Ended December 31,
	2015		2014
Share-based compensation expense – shares issued for services	$	47,880	$	83,600
Share-based compensation expense – amortization of shares issued for prepaid services		302,789		50,421
Share-based compensation expense – accrual of shares to be issued for services		67,500		—
Share-based compensation expense – accrual of estimated share-based awards to officers		612,512		417,664
	$	1,030,681	$	551,685

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Schedule of sources and tax effects of the differences for the periods

	Years Ended December 31,
	2015		2014
Statutory U.S. federal tax rate	39%		39%
Effect of increase in valuation allowance	(39%	)	(39%	)
	—%		—%

Schedule of changes in cumulative net deferred tax assets

	December 31,
	2015			2014
Net loss carry forward	$	1,124,511		$	962,662
Valuation allowance		(1,124,511	)		(962,662	)
	$	—		$	—

Schedule of reconciliation of income taxes computed at the statutory rate

	Years Ended December 31,
	2015			2014
Tax benefit at statutory rate	$	1,124,511		$	962,662
Valuation allowance		(1,124,511	)		(962,662	)
	$	—		$	—

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RELATED PARTY TRANSACTIONS (Tables)

12 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

Schedule of amounts due from related parties

	December 31,
	2015		2014
Affiliated customer	$	—	$	3,112
Lone Mountain		—		40,900
Blue River		3,284		—
CRD		5,000		—
Total due from related parties	$	8,284	$	44,012

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DISCONTINUED OPERATIONS (Tables)

12 Months Ended

Dec. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Loss from Discontinued Operations

	Years Ended December 31,
	2015		2014
Revenues	$	—	$	20,684
Operating expenses:
Selling, general and administrative		—		63,872
Depreciation		—		—
Loss on disposal of assets		—		15,704
Total operating expenses		—		79,576
Loss from discontinued operations, before income taxes		—		(58,892
Provision for income taxes		—		—
Loss from discontinued operations, net of income taxes	$	—	$	(58,892	)

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SUBSEQUENT EVENTS (Tables)

12 Months Ended

Dec. 31, 2015

Subsequent Events [Abstract]

Schedule of assumptions on the date of valuation utilizing the Black Scholes option pricing model for fair value of each option

Stock price	$	0.20
Exercise price	$	0.20
Risk free interest rate		2.03	%
Expected term (years)		10.0
Expected volatility		173	%
Expected dividends		0	%

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BUSINESS ORGANIZATION AND NATURE OF OPERATIONS (Details) - USD ($)	1 Months Ended
	Mar. 31, 2014	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014	Mar. 26, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Amount of payable owed to former officer and director, exchanged for assets sold	$ 1,500,000
Number of common shares issued in exchange for certain intellectual property	38,690,000
Total number of common shares previously outstanding, cancelled during period					41,690,000
Common stock, shares outstanding		47,832,198	44,988,500	44,060,000	43,620,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2016 USD ($) Item	Dec. 31, 2015 USD ($) Item	Dec. 31, 2014 USD ($)
Property, Plant and Equipment [Line Items]
Cash equivalents
Number of operating segment | Item	1	1
Allowance for doubtful accounts	$ 30,000	$ 4,340
Bad debt expense		24,185
Shipping and handling costs		1,013
Advertising Costs		$ 16,500	$ 304
Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	10 years	3 years
Estimated useful life		10 years
Equity Method Investments, Percentage	20.00%	20.00%
Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	20 years	5 years
Estimated useful life		20 years
Equity Method Investments, Percentage	50.00%	50.00%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of anti-dilutive securities) (Details) - shares	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per share	5,575,122	3,600,000	5,575,122	3,600,000	3,600,000	3,997,692
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per share	1,895,122	3,000,000	1,895,122	3,000,000	3,000,000	3,997,692
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per share	3,680,000	600,000	3,680,000	600,000	600,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of concentration of credit risk) (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Revenue [Member] | Customer A [Member]
Concentration Risk [Line Items]
Concentration risk percentage	80.00%	35.00%	88.00%	9.00%	36.00%	0.00%
Revenue [Member] | Customer B [Member]
Concentration Risk [Line Items]
Concentration risk percentage	20.00%	34.00%	12.00%	25.00%	32.00%	80.00%
Revenue [Member] | Customer C [Member]
Concentration Risk [Line Items]
Concentration risk percentage		31.00%		19.00%	18.00%	4.00%
Revenue [Member] | Customer D [Member]
Concentration Risk [Line Items]
Concentration risk percentage		0.00%		37.00%
Accounts Receivable [Member] | Customer A [Member]
Concentration Risk [Line Items]
Concentration risk percentage			57.00%		56.00%
Accounts Receivable [Member] | Customer B [Member]
Concentration Risk [Line Items]
Concentration risk percentage			43.00%		41.00%
Accounts Receivable [Member] | Customer C [Member]
Concentration Risk [Line Items]
Concentration risk percentage					1.00%
Accounts Receivable [Member] | Customer D [Member]
Concentration Risk [Line Items]
Concentration risk percentage					56.00%	0.00%
Accounts Receivable [Member] | Customer E [Member]
Concentration Risk [Line Items]
Concentration risk percentage					41.00%	0.00%
Accounts Receivable [Member] | Customer F [Member]
Concentration Risk [Line Items]
Concentration risk percentage					0.00%	46.00%
Accounts Receivable [Member] | Customer G [Member]
Concentration Risk [Line Items]
Concentration risk percentage					0.00%	33.00%
Accounts Receivable [Member] | Customer H [Member]
Concentration Risk [Line Items]
Concentration risk percentage					1.00%	21.00%

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GOING CONCERN (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
GOING CONCERN [Abstract]
Net loss (income)	$ 296,575	$ 318,055	$ 962,953	$ 1,974,906	$ 2,883,362	$ 2,468,364
Net cash used in operating activities			258,607	$ 304,297	525,148	1,189,057
Working capital deficit	2,132,349		2,132,349		2,410,679
Accumulated deficit	$ 6,471,282		$ 6,471,282		$ 5,508,329	$ 2,624,967

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INVESTMENTS IN NON-MARKETABLE EQUITY SECURITIES (Schedule of Assumptions) (Details)

9 Months Ended

12 Months Ended

Sep. 30, 2016

Sep. 30, 2015

Dec. 31, 2015

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]

Risk free interest rate

1.41%

1.21%

Expected term

5 years

4 years 11 months 16 days

Expected volatility

226.00%

227.00%

Cost-method Investments [Member] | Warrant [Member] | WeedMD RX Inc. (''WMD'') [Member]

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]

Pricing model

Black Scholes

Risk free interest rate

0.60%

Expected term

6 months

Expected volatility

70.00%

Expected dividends

0.00%

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INVESTMENTS IN NON-MARKETABLE EQUITY SECURITIES (Narrative) (Details) - USD ($)				9 Months Ended	12 Months Ended
	Dec. 09, 2014	Jun. 09, 2014	Jun. 09, 2014	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014	Mar. 24, 2016	Jun. 30, 2014
Schedule of Cost-method Investments [Line Items]
Common shares, price per share					$ 0.17
Investments in non-marketable equity securities				$ 15,125	$ 205,275	$ 593,750
Loss on investment in non-marketable equity securities					388,475	300,000
Notes payable				600,000	$ 775,000	$ 775,000
WeedMD RX Inc. (''WMD'') [Member]
Schedule of Cost-method Investments [Line Items]
Common shares received in exchange for future consulting services and use of our intellectual property		1,187,500	1,187,500
Warrants received in exchange for future consulting services and use of our intellectual property		3,000,000	3,000,000
Equity Method Investments, Percentage		4.29%	4.29%
Exercise price of warrants received to purchase shares								$ 0.50
Common shares, price per share					$ 0.50
Investments in non-marketable equity securities				$ 593,750	$ 593,750		$ 15,125
Warrants, price per warrant					$ 0.10
Warrants expired	3,000,000
Loss on investment in non-marketable equity securities					$ 300,000
Sale of common stock				1,100,000	1,100,000
Notes payable				$ 175,000
Shares of investment owned							87,500
CAD [Member]
Schedule of Cost-method Investments [Line Items]
Warrants, price per warrant					$ 0.50

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PREPAID EXPENSES (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid investor relations services		$ 1,667	$ 121,500
Prepaid licensing fees		35,000	39,000
Other prepaid services and fees		19,674	16,900
Total prepaid expenses		$ 56,341	$ 177,400

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INTANGIBLES (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Design Marks and Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful life	20 years	10 years
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful life	10 years	20 years

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EQUITY METHOD INVESTMENTS (Schedule of equity method investments) (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014	Aug. 25, 2014	Aug. 15, 2014	Aug. 14, 2014	Dec. 31, 2013
Schedule of Equity Method Investments [Line Items]
Equity method investments	$ 88,000	$ 88,000	$ 138,000
Lone Mountain [Member]
Schedule of Equity Method Investments [Line Items]
Interest owned (as a percentage)		25.00%	25.00%			25.00%	25.00%
Equity method investments			$ 50,000			$ 50,000	$ 50,000
CRD [Member]
Schedule of Equity Method Investments [Line Items]
Interest owned (as a percentage)		50.00%	50.00%	50.00%	50.00%		50.00%
Equity method investments		$ 88,000	$ 88,000	$ 88,000	$ 88,000		$ 88,000

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EQUITY METHOD INVESTMENTS (Narrative) (Details) - USD ($)		3 Months Ended		6 Months Ended		9 Months Ended		12 Months Ended
	Aug. 15, 2014	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014	Jul. 16, 2015	Aug. 25, 2014	Aug. 14, 2014	Dec. 31, 2013
Schedule of Equity Method Investments [Line Items]
Equity method investments		$ 88,000			$ 138,000	$ 88,000		$ 88,000	$ 138,000
Due from related parties		8,284			$ 44,012	8,284		8,284	44,012
Equity in net loss of unconsolidated affiliate							$ (90,900)	$ (90,900)
CRD [Member]
Schedule of Equity Method Investments [Line Items]
Interest acquired (as a percentage)	50.00%				50.00%			50.00%	50.00%		50.00%		50.00%
Equity method investments	$ 88,000				$ 88,000			$ 88,000	$ 88,000		$ 88,000		$ 88,000
Shares of common stock issuable for acquisition of interest	40,000
Lone Mountain [Member]
Schedule of Equity Method Investments [Line Items]
Interest acquired (as a percentage)					25.00%			25.00%	25.00%			25.00%	25.00%
Equity method investments					$ 50,000				$ 50,000			$ 50,000	$ 50,000
Operating Losses				$ 400,000
Advances to affiliate					40,900
Due from related parties					$ 40,900				$ 40,900
Equity in net loss of unconsolidated affiliate				$ 90,900
Ownership interest transferred (as a percent)										25.00%

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ACCRUED EXPENSES (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014
Accrued Liabilities, Current [Abstract]
Accrued consulting fees	$ 152,500	$ 110,000	$ 110,000
Accrued wages and related		629,780	433,963
Accrued interest expense	142,446	101,185	6,832
Accrued other expenses	67,500	87,568
Total accrued expenses	$ 362,446	$ 928,533	$ 550,795

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FAIR VALUE MEASUREMENTS AND DERIVATIVE LIABILITIES (Schedule of Convertible Notes Payable) (Details)	9 Months Ended
	Sep. 30, 2016 USD ($)
Reconciliation of beginning and ending balances for financial instruments carried at fair value measured on a recurring basis
Derivative liability at the beginning of the period	$ 383,581
Derivative liability at the end of the period	547,200
Convertible Notes Payable [Member]
Reconciliation of beginning and ending balances for financial instruments carried at fair value measured on a recurring basis
Derivative liability at the beginning of the period	383,581
Loss on revaluation of derivative liabilities during the period	370,805
Loss on modification and cure of default of note payable to Slainte Ventures	237,027
Effect of payoff of JSJ and Vis Vires convertible notes	(178,484)
Conversion of a portion of the convertible note payable to Tangiers Investment Group	(265,729)
Derivative liability at the end of the period	$ 547,200

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FAIR VALUE MEASUREMENTS AND DERIVATIVE LIABILITIES (Schedule of fair value measured on a recurring basis) (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	$ 547,200	$ 383,581
Warrant [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	547,200
Convertible Note [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities
Level 1 [Member] | Warrant [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities
Level 1 [Member] | Convertible Note [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	547,200
Level 2 [Member] | Warrant [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	547,200
Level 2 [Member] | Convertible Note [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities		$ 383,581
Level 3 [Member] | Warrant [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities
Level 3 [Member] | Convertible Note [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities

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FAIR VALUE MEASUREMENTS AND DERIVATIVE LIABILITIES (Schedule of reconciliation of beginning and ending balances) (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014
Reconciliation of beginning and ending balances for financial instruments carried at fair value measured on a recurring basis
Derivative liability at the beginning of the period	$ 383,581
Derivative liability at the end of the period	547,200	$ 383,581
Derivative Financial Instruments, Liabilities [Member]
Reconciliation of beginning and ending balances for financial instruments carried at fair value measured on a recurring basis
Derivative liability at the beginning of the period	$ 383,581
Settlement of derivative liability on December 29, 2014			$ (161,158)
Derivative liability at the end of the period		383,581
Derivative Financial Instruments, Liabilities [Member] | Interest Expense [Member]
Reconciliation of beginning and ending balances for financial instruments carried at fair value measured on a recurring basis
Additions to derivative liability recorded in statements of operations		4,695	15,320
Derivative Financial Instruments, Liabilities [Member] | Gain (Loss) on Derivative Instruments [Member]
Reconciliation of beginning and ending balances for financial instruments carried at fair value measured on a recurring basis
Additions to derivative liability recorded in statements of operations		23,593	(6,099)
Derivative Financial Instruments, Liabilities [Member] | Amortization of Debt Discount [Member]
Reconciliation of beginning and ending balances for financial instruments carried at fair value measured on a recurring basis
Additions to derivative liability recorded in statements of operations		$ 355,293	$ 151,937

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FAIR VALUE MEASUREMENTS AND DERIVATIVE LIABILITIES (Schedule of key inputs in valuation) (Details) - $ / shares	9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Risk-free interest rate (as a percent)	1.41%	1.21%
Volatility (as a percent)	226.00%	227.00%
Expected life in years	5 years	4 years 11 months 16 days
Derivative Financial Instruments, Liabilities [Member] | Fair Value, Measurements, Recurring [Member] | Level 3 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Dividend yield
Exercise price (in dollars per share)			$ 3.00
Derivative Financial Instruments, Liabilities [Member] | Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Maximum [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Risk-free interest rate (as a percent)			0.72%
Volatility (as a percent)			172.00%
Expected life in years			2 years 1 month 2 days
Derivative Financial Instruments, Liabilities [Member] | Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Minimum [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Risk-free interest rate (as a percent)			0.43%
Volatility (as a percent)			146.00%
Expected life in years			1 year 8 months 19 days

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FAIR VALUE MEASUREMENTS AND DERIVATIVE LIABILITIES (Narrative) (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Accrued interest payable			$ 63,326
Convertible Note [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument initial borrowing	$ 322,000
Accrued interest payable	$ 28,724
Typenex Co Investment Llc [Member] | Convertible Note [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument initial borrowing		$ 381,000	282,500
Accrued interest payable		$ 5,121	$ 28,473

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DEFERRED REVENUE (Narrative) (Details) - USD ($)			3 Months Ended		6 Months Ended	9 Months Ended		12 Months Ended
	Jun. 09, 2014	Jun. 09, 2014	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014	Dec. 28, 2014
Deferred Revenue Arrangement [Line Items]
Deferred revenue			$ 428,750		$ 943,750	$ 428,750		$ 763,750	$ 943,750
WeedMD RX Inc. (''WMD'') [Member]
Deferred Revenue Arrangement [Line Items]
Common shares received in exchange for future consulting services and use of our intellectual property	1,187,500	1,187,500
Warrants received in exchange for future consulting services and use of our intellectual property	3,000,000	3,000,000
Fair value of securities recorded as deferred revenue		$ 893,750
Deferred revenue recognized per month						15,000		15,000
Total deferred revenue recognized			45,000	$ 45,000	$ 150,000	135,000	$ 135,000	180,000	150,000
Initial revenue recognized period					3 years
Deferred revenue			428,500		$ 743,750	428,500		563,750	743,750
Fox Barry Farms Llc [Member]
Deferred Revenue Arrangement [Line Items]
Prepaid royalty payment										$ 200,000
Deferred revenue			$ 200,000		$ 200,000	$ 200,000		$ 200,000	$ 200,000

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DEFERRED REVENUE (Schedule of deferred revenue) (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Deferred Revenue Arrangement [Line Items]
Deferred revenue	$ 428,750	$ 763,750		$ 943,750
Less - current portion	(180,000)	(380,000)		(500,000)
Deferred revenue, net of current portion	248,750	383,750		443,750
WeedMD RX Inc. (''WMD'') [Member]
Deferred Revenue Arrangement [Line Items]
Deferred revenue	428,500	563,750		743,750
Less - current portion		(180,000)
Fox Barry Farms Llc [Member]
Deferred Revenue Arrangement [Line Items]
Deferred revenue	$ 200,000	200,000		$ 200,000
Less - current portion		$ (200,000)

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NOTES PAYABLE (Narrative) (Details) - USD ($)	1 Months Ended				9 Months Ended	12 Months Ended
	Dec. 30, 2016	Dec. 17, 2016	Jul. 31, 2014	Mar. 31, 2014	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014	Jul. 02, 2016	Apr. 06, 2016	Mar. 30, 2016	Mar. 16, 2016	Dec. 18, 2015	Dec. 18, 2014	Jul. 07, 2014
Short-term Debt [Line Items]
Debt instrument, interest rate	12.00%
Number of shares of common stock issued				38,690,000
Number of trading days	10 days
Loss on the change in fair value of warrant liability					$ 310,173
Recognition of an extinguishment loss					133,077
Accrued interest payable					$ 142,446	$ 101,185	$ 6,832
SlainteVentures, LLC [Member]
Short-term Debt [Line Items]
Debt instrument, interest rate								12.00%	12.00%	12.00%		18.00%
Number of shares called by warrants											416,667
Warrant exercise price					$ 0.18
Warrant Term					5 years
Default rate of interest under the note												80.00%
SlainteVentures, LLC [Member] | Forecast [Member]
Short-term Debt [Line Items]
Value of shares of common stock issued		$ 100,000
Number of trading days		30 days
Notes Payable [Member] | Unrelated Third Party [Member]
Short-term Debt [Line Items]
Debt instrument, face amount													$ 600,000
Debt instrument, interest rate													12.00%
Default rate of interest under the note													18.00%
Debt issuance costs													$ 13,500
Interest expense						80,482	2,565
Accrued interest payable						83,047	2,565
Notes Payable [Member] | WeedMD RX Inc. (''WMD'') [Member]
Short-term Debt [Line Items]
Debt instrument, face amount														$ 175,000
Debt instrument, interest rate														5.00%
Number of shares of common stock issued			1,100,000
Interest expense						8,750	4,267
Accrued interest payable						$ 13,017	$ 4,267

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NOTES PAYABLE (Schedule of Notes Payable) (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014
Short-term Debt [Line Items]
Notes payable	$ 600,000	$ 775,000	$ 775,000
Unrelated Third Party [Member] | Notes Payable [Member]
Short-term Debt [Line Items]
Notes payable		600,000	600,000
WeedMD RX Inc. (''WMD'') [Member]
Short-term Debt [Line Items]
Notes payable	175,000
WeedMD RX Inc. (''WMD'') [Member] | Notes Payable [Member]
Short-term Debt [Line Items]
Notes payable		175,000	$ 175,000
SlainteVentures, LLC [Member] | Notes Payable [Member]
Short-term Debt [Line Items]
Notes payable	600,000	600,000
Donaldson Consulting [Member] | Notes Payable [Member]
Short-term Debt [Line Items]
Notes payable

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NOTES PAYABLE (Schedule of key inputs in valuation) (Details)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Notes Payable [Abstract]
Expected life (years)	5 years	4 years 11 months 16 days
Risk-free interest rate	1.41%	1.21%
Expected volatility	226.00%	227.00%

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CONVERTIBLE NOTES PAYABLE (Summary of Convertible Promissory Notes Issued) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 30, 2016	Aug. 10, 2016	Dec. 31, 2015	Dec. 31, 2014
Interest Rate		12.00%
Total principal outstanding	$ 331,978			$ 381,000	$ 1,657,500
Slainte Ventures Issued 3/30/2016 [Member] | 2016 Convertible Notes [Member]
Issue Date	Mar. 30, 2016
Maturity Date	Dec. 30, 2016
Interest Rate	12.00%
Total principal outstanding	$ 81,978
Slainte Ventures Issued 4/6/2016 [Member] | 2016 Convertible Notes [Member]
Issue Date	Apr. 06, 2016
Maturity Date	Dec. 30, 2016
Interest Rate	12.00%
Total principal outstanding	$ 75,000
Slainte Ventures Issued 7/5/16 [Member] | 2016 Convertible Notes [Member]
Issue Date	Jul. 05, 2016
Maturity Date	Dec. 30, 2016
Interest Rate	12.00%
Total principal outstanding	$ 50,000
JSJ Investments [Member]
Interest Rate			12.00%
JSJ Investments [Member] | 2016 Convertible Notes [Member]
Issue Date	Aug. 10, 2016
Maturity Date	May 10, 2017
Interest Rate	12.00%
Base Conversion Rate	$0.20 PER SHARE DURING FIRST 180 DAYS; 45% DISCOUNT THEREAFTER
Total principal outstanding	$ 125,000

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CONVERTIBLE NOTES PAYABLE (Schedule of summarizes our convertible promissory notes issued) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 30, 2016	Sep. 30, 2016	Dec. 31, 2014
Interest Rate		12.00%
Total principal outstanding	$ 381,000		$ 331,978	$ 1,657,500
Vis Viers Group, Inc. [Member] | 2015 Convertible Notes [Member]
Issue Date	Oct. 06, 2015
Maturity Date	Jun. 30, 2016
Interest Rate	8.00%
Default Interest Rate	22.00%
Base Conversion Rate	58.00%
VCR Look back Period	10 days
VCR Calculated Using	3 lowest closing bids
Total principal outstanding	$ 59,000
JSJ Investments Inc. [Member] | 2015 Convertible Notes [Member]
Issue Date	Oct. 12, 2015
Maturity Date	Jul. 08, 2016
Interest Rate	12.00%
Default Interest Rate	18.00%
Base Conversion Rate	55.00%
VCR Look back Period	10 days
VCR Calculated Using	5 lowest trades
Total principal outstanding	$ 102,000
Tangiers Investment Group, LLC [Member] | 2015 Convertible Notes [Member]
Issue Date	Dec. 09, 2015
Maturity Date	Dec. 08, 2016
Interest Rate	10.00%
Default Interest Rate	20.00%
Base Conversion Rate	55.00%
VCR Look back Period	10 days
VCR Calculated Using	3 lowest closing bids
Total principal outstanding	$ 220,000

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CONVERTIBLE NOTE PAYABLE (Schedule of Recorded a Loss on Extinguishment of Debt) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2014	Sep. 30, 2016	Dec. 31, 2015
CONVERTIBLE NOTE PAYABLE [Abstract]
Convertible note payable	$ 1,657,500	$ 331,978	$ 381,000
Less: unamortized discount	(822,250)
Accrued interest payable	63,326
Derivative liability	161,158
Warrants repurchased	576,152
Less: investor notes receivable	(1,250,000)
Less: accrued interest receivable	(37,807)
Less: cash paid	(381,714)
Loss on extinguishment of debt	$ 33,635

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CONVERTIBLE NOTE PAYABLE (Narrative) (Details)							1 Months Ended			3 Months Ended		9 Months Ended		12 Months Ended
	Aug. 10, 2016 USD ($) $ / shares	Jul. 05, 2016 USD ($) $ / shares	Apr. 06, 2016 USD ($) $ / shares	Mar. 31, 2016 $ / shares	Aug. 15, 2014 USD ($)	Aug. 13, 2014 USD ($) Item $ / shares shares	Dec. 30, 2016 $ / shares	Mar. 31, 2016 USD ($)	Mar. 30, 2016 USD ($)	Sep. 30, 2016 USD ($) shares	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) shares	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($) $ / shares shares	Dec. 31, 2014 USD ($) $ / shares shares	Dec. 31, 2013 USD ($)	Jul. 02, 2016	Dec. 18, 2015	Feb. 10, 2015 $ / shares shares	Sep. 30, 2013 USD ($) $ / shares
Debt Instrument [Line Items]
Convertible note payable										$ 331,978		$ 331,978		$ 381,000	$ 1,657,500
Less - unamortized discount										0		0		(272,793)
Convertible notes payable-current portion, net										331,978		331,978		108,207
Debt instrument, interest rate							12.00%
Original issue discount															822,250
Exercise price (in dollars per share) | $ / shares																			$ 1.59
Net cash proceeds received from initial borrowing												316,478				$ 50,000
Loss on origination of derivative liability										(331,618)		(332,456)		(23,593)	6,099
Unamortized debt discount applicable to initial borrowing [Abstract]
Less: loss on origination of derivative															(12,810)
Fair value of the Warrant issued recorded as debt discount under remaining borrowing															576,152
Components of convertible debt, net
Debt discount - conversion feature expensed as loss on origination of derivative															(12,810)
Debt discount amortization and interest expense												266,711		$ 82,500	$ 161,402
Repurchased and cancelled (shares) | shares														(170,044)	(827,648)
Deferred financing costs, net														$ 32,400
Amortization of deferred financing costs														8,700
Accrued interest payable															63,326
Interest income recognized															37,807
Proceeds from debt, net															$ 761,500
Average closing price of common stock | $ / shares							$ 0.45
Warrant [Member]
Debt Instrument [Line Items]
Exercise price (in dollars per share) | $ / shares														$ 0.70	$ 0.70
Typenex Co Investment Llc [Member] | Five Unsecured Investor Notes [Member]
Debt Instrument [Line Items]
Convertible note payable						$ 1,657,500
Typenex Co Investment Llc [Member] | Warrant [Member]
Debt Instrument [Line Items]
Number of warrants issued to purchase shares of common stock | shares						997,692													170,044
Number of shares for which warrant became exercisable | shares						170,044
Number of tranches in which remaining warrants are exercisable into number of shares | Item						5
Frequency of number of shares of common stock issuable under the Warrants | Item						3
Expiration date						Aug. 31, 2017
Convertible Note [Member]
Debt Instrument [Line Items]
Debt instrument, face amount																				$ 50,000
Debt instrument, term						25 months
Debt conversion, price per share | $ / shares						$ 3.00														$ 0.005
Debt instrument initial borrowing										322,000		322,000
Components of convertible debt, net
Note																				$ 50,000
Accrued interest payable										$ 28,724		$ 28,724
Convertible Note [Member] | Warrant [Member]
Debt Instrument [Line Items]
Exercise price (in dollars per share) | $ / shares						$ 3.00
Convertible Note [Member] | Typenex Co Investment Llc [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate						10.00%
Debt instrument, face amount						$ 1,657,500
Original issue discount					$ 225,000	150,000
Legal expenses					32,500	7,500
Payment of brokerage fees						25,000
Net cash proceeds received from initial borrowing					25,000
Debt instrument initial borrowing														$ 381,000	$ 282,500
Loss on origination of derivative liability					12,810
Portion of fair value of initial borrowing conversion feature recorded as debt discount under initial borrowing					139,127
Unamortized debt discount applicable to initial borrowing [Abstract]
Debt discount - Warrant #1															118,373
Debt discount - conversion feature					151,937
Unamortized debt discount - end of period					282,500
Debt Instrument Initial Borrowing Unamortized, Discount															25,000
Debt instrument remaining borrowing					1,375,000
Original issue discount under remaining borrowing					125,000
Fair value of the Warrant issued recorded as debt discount under remaining borrowing					576,152
Total debt discount under remaining borrowing					125,000
Components of convertible debt, net
Note						$ 1,657,500
Debt discount - conversion feature					$ 151,937
Debt discount amortization and interest expense															161,402
Interest expense															63,326
Fair value of the conversion feature applicable to accrued interest															$ 15,320
Repurchased and cancelled (shares) | shares															827,648
Accrued interest payable														$ 5,121	$ 28,473
2016 Convertible Notes [Member]
Components of convertible debt, net
Authorized but unissued common stock | shares										10,200,000		10,200,000
2016 Convertible Notes [Member] | Minimum [Member]
Components of convertible debt, net
Prepayment premiums														10.00%
2016 Convertible Notes [Member] | Maximum [Member]
Components of convertible debt, net
Prepayment premiums														40.00%
2015 Convertible Notes [Member]
Debt Instrument [Line Items]
Number of trading days immediately preceding the applicable conversion														180 days
Components of convertible debt, net
Debt discount amortization and interest expense														$ 82,500
Holding rate of issued and outstanding common stock														9.99%
Authorized but unissued common stock | shares														10,200,000
Deferred financing costs, net														$ 41,100
Amortization of deferred financing costs														8,700
Aggregate fair value of the derivative liabilities														355,293
Accrued interest payable														5,121
Additional Interest payable														$ 4,694
2015 Convertible Notes [Member] | Minimum [Member]
Components of convertible debt, net
Prepayment premiums														10.00%
Minimum default penalty amount, rate														25.00%
2015 Convertible Notes [Member] | Maximum [Member]
Components of convertible debt, net
Prepayment premiums														40.00%
Minimum default penalty amount, rate														50.00%
JSJ Investments [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate	12.00%
Components of convertible debt, net
Minimum default penalty amount, rate	15.00%
Proceeds from debt, net	$ 125,000
Average closing price of common stock | $ / shares	$ 0.45
Conversions rate on issue and outstandng common stock	4.99%
JSJ Investments [Member] | 2016 Convertible Notes [Member]
Debt Instrument [Line Items]
Convertible note payable										$ 125,000		$ 125,000
Debt instrument, interest rate										12.00%		12.00%
SlainteVentures, LLC [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate			12.00%						12.00%								12.00%	18.00%
Number of trading days immediately preceding the applicable conversion			10 days
Components of convertible debt, net
Minimum default penalty amount, rate				15.00%
Accrued interest payable			$ 102,000
Proceeds from debt, net		$ 50,000	$ 75,000						$ 81,978
Average closing price of common stock | $ / shares		$ 0.45	$ 0.45	$ 0.45
Advances from officers and directors			$ 52,500
SlainteVentures, LLC [Member] | Vis Vires Group, Inc. [Member]
Components of convertible debt, net
Repayment of principal and accrued interest								$ 59,000

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NOTES PAYABLE, RELATED PARTIES (Details)	1 Months Ended		12 Months Ended
	Sep. 30, 2013 USD ($) Item $ / shares	Dec. 31, 2011	Dec. 31, 2014	Dec. 30, 2016	Aug. 13, 2014 $ / shares	Dec. 31, 2013 USD ($)
Related Party Transaction [Line Items]
Debt instrument, interest rate				12.00%
Convertible note payable, related party						$ 50,000
Former President [Member] | Notes Payable, Other Payables [Member]
Related Party Transaction [Line Items]
Debt instrument, maturity date		Dec. 31, 2013
Convertible Note [Member]
Related Party Transaction [Line Items]
Debt instrument, face amount	$ 50,000
Number of common stock shares debt instrument can be converted to | Item	10,000,000
Debt conversion, price per share | $ / shares	$ 0.005				$ 3.00
Debt instrument, conversion date			Feb. 24, 2014

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STOCKHOLDERS' DEFICIT (Stock Option Activity) (Narrative) (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Jan. 12, 2016	Jan. 12, 2015	Jan. 09, 2015	Dec. 31, 2014	May 01, 2014
Common stock, per share value							$ 0.001
2014 Stock Incentive Plan [Member]
Awarded stock options					$ 200,000
Common stock, per share value					$ 0.70
2014 Stock Incentive Plan [Member] | Mr. Ruby [Member]
Awarded stock options				$ 980,000
Common stock, per share value				$ 0.20
Stock Options [Member]
Awarded stock options			$ 1,050,000
Stock options	3,680,000	600,000			600,000
Fair value of options		417,664	612,512
Weighted-average remaining contractual life for stock options outstanding and exercisable	9 years 1 month 6 days	9 years
Aggregate intrinsic value of options outstanding and exercisable		$ 0

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STOCKHOLDERS' DEFICIT (Change of control, Stock split, Equity offering, and Change in Authorized Capital) (Details) - USD ($)	1 Months Ended
	Aug. 28, 2014	Mar. 31, 2014	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014	May 02, 2014	May 01, 2014	Dec. 31, 2013
Stockholders' Equity Note [Abstract]
Common stock sold under stock purchase agreement, representing approximately 87% of the issued and outstanding shares of the Company	40,000,000
Shares cancelled		41,690,000
Shares issued to Messrs. Blackmon, Ruby and Verzura, representing approximately 89% of issued and outstanding shares		38,690,000
Number of units sold through equity offering		600,000
Proceeds from sale of units		$ 900,000
Per share price A Warrant holders can purchase each share of the Company's common stock during the two year period commencing April 1, 2014		$ 7.50
Per share price B Warrant holders can purchase each share of the Company's common stock during the three year period commencing April 1, 2014		$ 15.00
Preferred stock, shares authorized			10,000,000	10,000,000	10,000,000	10,000,000	5,000,000	10,000,000
Preferred stock, par value per share							$ 0.001
Preferred stock, no par value
Common stock, shares authorized			100,000,000	100,000,000	100,000,000	100,000,000	50,000,000	100,000,000
Common stock, par value per share							$ 0.001
Common stock, no par value			$ 0

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STOCKHOLDERS' DEFICIT (Schedule of Assumptions on Date of Valuation Utilizing for Fair Value of Warrants) (Details) - $ / shares			9 Months Ended	12 Months Ended
	Jan. 12, 2016	Feb. 10, 2015	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014
Warrants price (on dollars per shares)		$ 1.59
Stock price (in dollars per share)		1.59
Exercise price (in dollars per share)		$ 3.00
Risk free interest rate (as a percent)		1.05%
Expected term (years)		2 years 7 months 6 days
Expected volatility (as a percent)		183.00%
Expected dividends (as a percent)		0.00%
Warrant [Member]
Warrants price (on dollars per shares)				$ 0.70	$ 0.70
Stock price (in dollars per share)				1.03
Exercise price (in dollars per share)				$ 3.00
Risk free interest rate (as a percent)				0.88%
Expected term (years)				3 years 18 days
Expected volatility (as a percent)				146.00%
Expected dividends (as a percent)				0.00%
Stock Options [Member]
Warrants price (on dollars per shares)	$ 0.20		$ 0.70	$ 0.70
Stock price (in dollars per share)	0.20		0.70	0.70
Exercise price (in dollars per share)	$ 0.20		$ 0.70	$ 0.70
Risk free interest rate (as a percent)	1.98%		1.98%	1.98%
Expected term (years)	10 years		10 years	10 years
Expected volatility (as a percent)	173.00%		173.00%	173.00%
Expected dividends (as a percent)	0.00%		0.00%	0.00%

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STOCKHOLDERS' DEFICIT (Common Stock Issued For Services, Warrants and 2004 Equity Incentive Plan) (Details) - USD ($)																	3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 19, 2015	Aug. 24, 2015	Aug. 17, 2015	Apr. 23, 2015	Mar. 02, 2015	Feb. 10, 2015	Dec. 30, 2014	Dec. 29, 2014	Dec. 01, 2014	Oct. 24, 2014	Oct. 17, 2014	Sep. 17, 2014	Aug. 25, 2014	Aug. 15, 2014	Aug. 14, 2014	Aug. 13, 2014	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014	Nov. 20, 2014	Jun. 09, 2014	Dec. 31, 2013
Number of shares of common stock issued for services							20,000			20,000				20,000	10,000
Value of shares of common stock issued for services							$ 13,800			$ 24,000				$ 24,800	$ 9,200						$ 226,215	$ 305,100
Number of shares of common stock committed to be issued for services													40,000
Value of shares of common stock committed to be issued for services													$ 88,000
Equity method investments																	$ 88,000		$ 88,000		88,000	138,000
Warrants issued with convertible debt																						694,525
Purchase and cancellation of warrants																						(576,152)
Loss on extinguishment of debt and repurchase of warrants																				$ (768,602)	(768,602)	(33,635)
Issuance of Stock and Warrants for Services or Claims																			$ 118,160	$ 47,880	47,880	$ 83,600
Independent Contractor [Member]
Number of shares of common stock issued for services		11,000			30,000
Value of shares of common stock issued for services		$ 5,280			$ 42,600
Issuance of Stock and Warrants for Services or Claims					$ 42,600
Accounting Service Provider Two [Member]
Number of shares of common stock issued for services			50,000
Value of shares of common stock issued for services			$ 19,000
Issuance of Stock and Warrants for Services or Claims																					19,000
Accounting Service Provider [Member]
Number of shares of common stock issued for services	30,000			60,000
Value of shares of common stock issued for services	$ 12,000			$ 47,400
Issuance of Stock and Warrants for Services or Claims	$ 12,000																				47,400
Investment Banking Service Provider [Member]
Number of shares of common stock issued for services				126,500
Value of shares of common stock issued for services				$ 99,935
Issuance of Stock and Warrants for Services or Claims																					49,967
Accounting Service Provider Three [Member]
Issuance of Stock and Warrants for Services or Claims																					$ 375
CRD [Member]
Equity Method Investments, Percentage													50.00%	50.00%							50.00%	50.00%			50.00%
Equity method investments													$ 88,000	$ 88,000							$ 88,000	$ 88,000			$ 88,000
Lone Mountain [Member]
Equity Method Investments, Percentage															25.00%						25.00%	25.00%			25.00%
Equity method investments															$ 50,000							$ 50,000			$ 50,000
WeedMD RX Inc. (''WMD'') [Member]
Equity Method Investments, Percentage																								4.29%
Stock Incentive Plan2014 [Member]
Maximum number of shares to be issued																							4,000,000
Number of shares available for issue																						4,000,000
General and Administrative Expense [Member]
Value of shares of common stock issued for services							$ 13,800			$ 24,000				$ 24,800
Selling and Marketing Expense [Member]
Value of shares of common stock issued for services															$ 9,200
Prepaid Expenses and Other Current Assets [Member]
Issuance of Stock and Warrants for Services or Claims																					11,625
Shares issued on December 1, 2014 [Member]
Number of shares of common stock issued for services									30,000
Value of shares of common stock issued for services									$ 19,500													$ 19,500
Shares issued on December 1, 2014 [Member] | General and Administrative Expense [Member]
Value of shares of common stock issued for services																						8,921
Shares issued on December 1, 2014 [Member] | Prepaid Expenses and Other Current Assets [Member]
Value of shares of common stock issued for services																						10,579
Shares issued on October 17, 2014 [Member]
Number of shares of common stock issued for services											100,000
Value of shares of common stock issued for services											$ 40,000											$ 40,000
Amortization term																						10 years
Shares issued on October 17, 2014 [Member] | General and Administrative Expense [Member]
Value of shares of common stock issued for services																					4,000	$ 1,000
Shares issued on October 17, 2014 [Member] | Prepaid Expenses and Other Current Assets [Member]
Value of shares of common stock issued for services																					35,000
Shares issued on September 17, 2014 [Member]
Number of shares of common stock issued for services												150,000
Value of shares of common stock issued for services												$ 162,000										$ 162,000
Amortization term																						12 months
Shares issued on September 17, 2014 [Member] | General and Administrative Expense [Member]
Value of shares of common stock issued for services																					$ 121,500	$ 40,500
Typenex Co Investment Llc [Member] | Warrant [Member]
Number of shares of common stock issued for services						621,000
Value of shares of common stock issued for services						$ 987,390
Number of warrants issued to purchase shares of common stock						170,044										997,692
Warrants issued with convertible debt																$ 694,525
Purchase and cancellation of warrants								$ (576,152)
Fair value of Warrant						$ 218,788
Loss on extinguishment of debt and repurchase of warrants						$ 768,602

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STOCKHOLDERS' DEFICIT (Common Stock Issued For Services, Warrants) (Details) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014
Number of Shares
Warrants outstanding, beginning of period (in shares)	3,000,000	3,170,044
Issued (in shares)	956,836		3,997,692
Exercised (in shares)
Repurchased and cancelled (shares)		(170,044)	(827,648)
Expired (in shares)	(3,000,000)
Warrants outstanding, end of period (in shares)	1,895,122	3,000,000	3,170,044
Warrants exercisable at the end of the period (in shares)	1,895,122	3,000,000	3,170,044
Weighted Average Remaining Life (years)
Warrants outstanding, beginning of period	1 year
Issued	4 years 6 months 11 days
Warrants exercisable at the end of the period	4 years 6 months 11 days
Warrants outstanding, end of period	1 year
Weighted Average Exercise Price
Warrants outstanding, beginning of period (in dollars per share)	$ 12.00	$ 11.52
Issued (in dollars per share)	0.18		9.75
Exercised (in dollars per share)
Repurchased and cancelled (in dollars per share)
Expired (in dollars per share)
Warrants outstanding, end of period (in dollars per share)	0.18	12.00	11.52
Warrants exercisable at the end of the period (in dollars per share)	$ 0.18		$ 11.52

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STOCKHOLDERS' DEFICIT (Schedule of stock option activity) (Details) - Stock Options [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Number of Shares
Stock options outstanding, beginning of period	600,000
Issued		600,000
Exercised
Expired
Stock options outstanding, end of period	3,680,000	600,000
Stock options exercisable, end of period	3,680,000	600,000
Weighted Average Remaining Life (years)
Stock options outstanding, beginning of period	9 years 1 month 6 days
Stock options outstanding, end of period	9 years 1 month 6 days
Stock options exercisable, end of period	9 years 1 month 6 days	9 years
Weighted Average Exercise Price
Stock options outstanding, beginning of period	$ 0.70
Issued		0.70
Exercised		0.70
Expired
Stock options outstanding, end of period	0.26	0.70
Stock options exercisable, end of period	$ 0.26	$ 0.70

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STOCKHOLDERS' DEFICIT (Schedule of Warrants activity) (Details) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014
Number of Shares
Warrants outstanding, beginning of period (in shares)	3,000,000	3,170,044
Issued (in shares)	956,836		3,997,692
Shares issuable at the election of the noteholder in lieu of the payment of interest under the terms of the amended Slainte note.	938,287
Exercised (in shares)
Repurchased and cancelled (shares)		(170,044)	(827,648)
Expired (in shares)	(3,000,000)
Warrants outstanding, end of period (in shares)	1,895,122	3,000,000	3,170,044
Warrants exercisable at the end of the period (in shares)	1,895,122	3,000,000	3,170,044
Weighted Average Remaining Life (years)
Warrants outstanding, beginning of period	1 year
Issued	4 years 6 months 11 days
Warrants outstanding, end of period	4 years 6 months 11 days
Warrants exercisable at the end of the period	4 years 6 months 11 days
Weighted Average Exercise Price
Warrants outstanding, beginning of period (in dollars per share)	$ 12.00	$ 11.52
Issued (in dollars per share)	0.18		9.75
Exercised (in dollars per share)
Repurchased and cancelled (in dollars per share)
Expired (in dollars per share)
Warrants outstanding, end of period (in dollars per share)	0.18	12.00	11.52
Warrants exercisable at the end of the period (in dollars per share)	$ 0.18		$ 11.52

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SHARE-BASED COMPENSATION (Details) - USD ($)	9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-based compensation expense - shares issued for services	$ 118,160	$ 47,880	$ 47,880	$ 83,600
Share-based compensation expense - amortization of shares issued for prepaid services		279,229	302,789	50,421
Share-based compensation expense - accrual of shares to be issued for services			67,500
Share-based compensation expense - accrual of estimated share-based awards		315,000	612,512	417,664
Share-based compensation	$ 118,160	$ 642,109	$ 1,030,681	$ 551,685

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($)		1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	May 06, 2014	Feb. 20, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014	May 01, 2014
Long-term Purchase Commitment [Line Items]
Common stock, price per share									$ 0.001
Research and development							$ 329	$ 182,606
Consultancy Agreement [Member]
Long-term Purchase Commitment [Line Items]
Agreement, term	9 months
Total payments	$ 200,000
Initial payment	50,000
Additional payment	$ 50,000
Shares issued for agreement	100,000				100,000			100,000
Research and development								$ 150,000
Accrued expenses			$ 110,000		$ 110,000		$ 110,000	$ 110,000
Expenses recognized					$ 118,160
Percentage of completion			80.00%		80.00%		80.00%	80.00%
Costs recognized							$ 0	$ 160,000
Consulting Agreement [Member]
Long-term Purchase Commitment [Line Items]
Agreement, term		12 months
Warrant term		5 years
Initial payment		$ 7,500
Shares issued for agreement		250,000
Common stock, price per share		$ 0.18
Research and development

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INCOME TAXES (Narrative) (Details)	12 Months Ended
	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Expiration term	20 years

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INCOME TAXES (Schedule of Sources and Tax Effects of Differences for Periods) (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Sources and tax effects of the differences
Statutory U.S. federal tax rate	39.00%	39.00%
EEffect of increase in valuation allowance	(39.00%)	(39.00%)
Effective income tax rate (as a percent)

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INCOME TAXES (Schedule of Changes in Cumulative Net Deferred Tax Assets) (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Net deferred tax assets
Net loss carry forward	$ 1,124,511	$ 962,662
Valuation allowance	(1,124,511)	(962,662)
Net deferred tax assets

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INCOME TAXES (Schedule of Reconciliation of Income Taxes Computed at Statutory Rate) (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Reconciliation of income taxes computed at statutory rate
Tax benefit at statutory rate					$ 1,124,511	$ 962,662
Valuation allowance					(1,124,511)	(962,662)
Income tax expense (benefit)

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RELATED PARTY TRANSACTIONS (Schedule of Amounts Due from Related Parties) (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014
Related Party Transaction [Line Items]
Total due from related parties	$ 8,284	$ 8,284	$ 44,012
Affiliated customer [Member]
Related Party Transaction [Line Items]
Total due from related parties			3,112
Lone Mountain [Member]
Related Party Transaction [Line Items]
Total due from related parties			40,900
Blue River [Member]
Related Party Transaction [Line Items]
Total due from related parties		3,284
CRD [Member]
Related Party Transaction [Line Items]
Total due from related parties		$ 5,000

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DISCONTINUED OPERATIONS (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Mar. 31, 2014
Discontinued Operations and Disposal Groups [Abstract]
Amount of payable owed to former officer and director, exchanged for assets sold			$ 1,500,000
Revenues		$ 20,684
Operating expenses:
Selling, general and administrative		63,872
Depreciation
Loss on disposal of assets		15,704
Total operating expenses		79,576
Loss from discontinued operations, before income taxes		(58,892)
Provision for income taxes
Loss from discontinued operations, net of income taxes		$ (58,892)

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SUBSEQUENT EVENTS (Schedule of Assumptions on Date of Valuation Utilizing Black Scholes Option Pricing Model for Fair Value of Each Stock Options) (Details) - $ / shares	Jan. 15, 2016	Feb. 10, 2015
Subsequent Event [Line Items]
Stock price (in dollars per share)		$ 1.59
Exercise price (in dollars per share)		$ 3.00
Risk free interest rate (as a percent)		1.05%
Expected term (years)		2 years 7 months 6 days
Expected volatility (as a percent)		183.00%
Expected dividends (as a percent)		0.00%
Stock Options [Member]
Subsequent Event [Line Items]
Stock price (in dollars per share)	$ 0.20
Exercise price (in dollars per share)	$ 0.20
Risk free interest rate (as a percent)	2.03%
Expected term (years)	10 years
Expected volatility (as a percent)	173.00%
Expected dividends (as a percent)	0.00%

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SUBSEQUENT EVENTS (Details) - USD ($)			1 Months Ended							12 Months Ended
	Apr. 06, 2016	Jan. 15, 2016	Dec. 30, 2016	Dec. 17, 2016	Apr. 30, 2016	Mar. 30, 2016	Mar. 24, 2016	Mar. 18, 2016	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014
Subsequent Event [Line Items]
Interest rate (as a percent)			12.00%
Number of trading days			10 days
Average closing price of common stock			$ 0.45
Proceeds from debt, net											$ 761,500
Number of shares of common stock issued									38,690,000
JSJ Investments Inc. [Member]
Subsequent Event [Line Items]
Repayment of principal and accrued interest					$ 102,000
Slainte [Member]
Subsequent Event [Line Items]
Number of trading days				30 days
Proceeds from debt, net	$ 75,000					$ 81,978
Number of shares of common stock issued								416,667
Warrant exercise price								$ 0.18
Value of shares of common stock issued				$ 100,000
Repayment of principal and accrued interest	$ 102,000					$ 59,000
Unrelated Third Party [Member] | WeedMD [Member]
Subsequent Event [Line Items]
Debt covenant amount							$ 175,000
Number of shares of common stock issued							1,100,000
Ernest Blackmon [Member]
Subsequent Event [Line Items]
Proceeds from debt, net					25,000
Tony Verzura [Member]
Subsequent Event [Line Items]
Proceeds from debt, net					$ 25,000
2014 Stock Incentive Plan [Member] | Mr. Ruby [Member]
Subsequent Event [Line Items]
Minimum term to be hold for conversion		10 days
Number of shares of common stock issued		980,000
Warrant exercise price		$ 0.20
Fair value of option (in dollars per share)		$ 0.20
2014 Stock Incentive Plan [Member] | Blackmon and Verzura [Member]
Subsequent Event [Line Items]
Minimum term to be hold for conversion		10 days
Number of shares of common stock issued		1,050,000
Warrant exercise price		$ 0.20
Fair value of option (in dollars per share)		$ 0.20