CANNAPHARMARX, INC.

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 2014

TABLE OF CONTENTS

CAUTIONARY NOTE CONCERNING FORWARD-LOOKINGFORWARD LOOKING STATEMENTS

In addition to historical information, some of the information presented in this

This Annual Report on Form 10-K contains “forward-looking statements”forward-looking statements within the meaning of Section 27A of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Although CannaPharmaRx,1933 and Section 21E of the Securities Exchange Act of 1934. The statements regarding Capital Art, Inc. (the “Company,contained in this Report that are not historical in nature, particularly those that utilize terminology such as “may,” which may also be referred to as “we,“will,” “us”“should,” “likely,” “expects,” “anticipates,” “estimates,” “believes” or “our”) believes that its expectations“plans,” or comparable terminology, are forward-looking statements based on reasonablecurrent expectations and assumptions, within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from our expectations. Such forward-looking statements are subject toentail various risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks and uncertainties include, butexpressed in such forward-looking statements.

Important factors known to us that could cause such material differences are not limited to, our ability to raise debt and/or equity to meet ongoing operating expenses, our ability to consummate a merger with CannaPharmaRx, Inc. (Colorado) to create value for our shareholders, as well as other risks set forth throughout this Annual Report on Form 10-K, including under “Item 1. Business,” “Item 1A. Risk Factors,” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You are urged to carefully consider these factors, as well as other information containedidentified in this Annual Report on Form 10-K and in our other periodic reports and documents filed with the Securities and Exchange Commission (the “SEC”).

Given these risks and uncertainties, readers are cautioned not to put undue reliance on any forward-looking statements. Forward-looking statements contained in this Annual Report speak only as of the date of this Annual Report. We undertake no obligation to correct or update any forward-looking statementstatements, whether as a result of new information, future events circumstances or other factors arising or comingotherwise. You are advised, however, to our attention afterconsult any future disclosures we make on related subjects in future reports to the date hereof.SEC.

PART I

ITEMItem 1. BUSINESSBusiness.

SUMMARY

The Company wasHistory

We were originally incorporated asin the State of Colorado in August 1998 under the name “Network Acquisitions, Inc.” We changed our name to Cavion Technologies, Inc. in February 1999 and subsequently to Concord Ventures, Inc. in October 2006. On December 21, 2000, we filed for protection under Chapter 11 of the United States Bankruptcy Code. In connection with the filing, on February 16, 2001, we sold our entire business, and all of our assets, for the benefit of our creditors. After the sale, we still had liabilities of $8.4 million and were subsequently dismissed by the Court from the Chapter 11 reorganization, effective March 13, 2001, at which time the last of our remaining directors resigned. On March 13, 2001, we had no business or other source of income, no assets, no employees or directors, outstanding liabilities of approximately $8.4 million and had terminated our duty to file reports under securities law. In February 2008, we were re-listed on the OTC Bulletin Board.

In April 2010, Concord Ventures, Inc. ("Concord"), a Colorado corporation, incorporated three new subsidiary companies, CCVG, Inc. ("CCVG"), CCAPS Co. ("CCAPS") and Golden Dragon Holding Co. ("Golden Dragon"). All three of the new subsidiary companies were domiciled in Delaware.

In order for Concord to re-domicile in Delaware from Colorado, on September 29,2010, Concord entered into an Agreement and Plan of Merger ("the State of Delaware in December 2010 as aMerger Agreement") with its wholly owned subsidiary, CCVG. Under the terms of the Merger Agreement, Concord Ventures, Inc. (“Concord”). In late October 2014,shares of common stock converted automatically to CCVG shares, without change or necessity to reissue. Also under the Company changed its legal name to CannaPharmaRx, Inc. (or “CannaPharmaRx”).Merger Agreement, CCVG became the surviving company domiciled in Delaware.

CannaPharmaRx, Inc. (together

Effective December 31, 2010, CCVG completed an Agreement and Plan of Merger and Reorganization y (the “Reorganization") with its consolidatedCCAPS and Golden Dragon, both becoming wholly-owned subsidiaries of CCVG. The Reorganization provided for the “Company” or “CannaPharmaRx”) ismerger of CCVG with and into CCAPS, with CCAPS being the surviving corporation in that merger. Contemporaneously with CCVG's merger with and into CCAPS, the shareholders of CCVG were converted into our shareholders on a Delaware corporation whose shares areone share for one share basis.

As a result of this reorganization Golden Dragon became the surviving publicly quoted onparent holding company with CCAPS, the OTCQB operated bysurviving corporation of the OTC Markets Group, Inc.merger between CCVG and CCAPS, becoming the sole remaining wholly-owned subsidiary of Golden Dragon.

Transactions Involving CannaPharmaRx, Inc., a Colorado corporation

On May 9, 2014, the Companywe entered into a Share Purchase Agreement (the “Share“Share Purchase Agreement”Agreement”) with CannaPharmaRx,CannaPharmaRX, Inc., a Colorado corporation (“CannaRx”Canna Colorado”), and David Cutler, thea former President, Chief Executive Officer, Chief Financial Officer and director of theour Company. Under the Share Purchase Agreement, CannaRxCanna Colorado purchased 1,421,120 restricted shares of the Company’sour common stock from Mr. Cutler and an additional 9,000,000 restricted shares of the Company’s common stockshares directly from the Company. As a result of the Share Purchase Agreement, CannaRx is the Company’s largest stockholder.us.

On May 15, 2014, the Companywe entered into an Agreement and Plan of Merger (the “Merger Agreement”) with CannaRx and CPHR Acquisition Corp., a newly formed and wholly owned subsidiary“Plan of the Company (“CPHR”Merger”), pursuant to which CPHRCanna Colorado would be merged with and into CannaRx, resulting in CPHR ceasing its corporate existence and CannaRx becomingbecome a subsidiary of the Company. In October 2014, we changed our legal name to “CannaPharmaRx, Inc.” During the fourth quarter of 2014, in light of the Cohen litigation described in Item 3, below (Legal Proceedings) of, as well as in the notes to our financial statements included in this report, the parties determined to abandondelay the closing of the transaction contemplated by the original Plan of Merger. After this litigation settled, on April 21, 2015, we entered into an Amended and Restated Agreement and Plan of Merger (the “Merger Agreement”) with Canna Colorado and CPHR Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of our Company (“Acquisition Sub”), pursuant to which Acquisition Sub merged with and into Canna Colorado, with Canna Colorado remaining as the surviving corporation and wholly-owned non-operating subsidiary of our Company and the outstanding shares of Canna Colorado converted into 9,750,000 shares of our common stock (the “Merger”). The Merger Agreement amended and restated in its entirety the Plan of Merger from May 2014.

On January 29, 2015, we received a deficiency notice from the Financial Industry Regulatory Authority (“FINRA”), stating that FINRA would not process our name change from October 2014 due to questions about our ownership raised in the Cohen litigation described above. We appealed the notice, arguing among other things that the ownership of our Company was not at issue in the Cohen litigation. On March 20, 2015, FINRA reversed the deficiency notice and subsequently processed ours request to change our name and trading symbol.

On June 29, 2015, we closed the Merger Agreement, and the Company and certain shareholders of CannaRx entered into share exchange agreements, as an alternate means of acquiring CannaRx. In anticipationwith 100% of the settlementCanna Colorado shareholders exchanging, on a 1:1 exchange ratio, a total of 9,750,000 Canna Colorado shares in return for a total of 9,750,000 shares of our common stock. Additionally, pursuant to the Merger, all of the Cohen litigation, the Company subsequently decided to terminate the share exchange agreements and pursue the consummationshares of our common stock previously owned by Canna Colorado were cancelled. Canna Colorado is now a merger agreement or another transaction on similar terms. By consummatingwholly-owned subsidiary.

As a merger agreement or a similar transaction, the Company intends to cause CannaRx to become a subsidiaryresult of the Company, and to operate its business through CannaRx.

BUSINESS OF OUR COMPANY

We intend to become aaforesaid transactions, we became an early-stage pharmaceutical company whose purpose iswas to advance cannabinoid discovery. Cannabinoids are a class of chemicals activeresearch and discovery using proprietary formulation and drug delivery technology then under development. We also intended to own and operate compounding and specialty pharmacies. We regularly engaged in discussions to acquire such pharmacies and to finance such acquisitions, but to date but have not successfully consummated any such acquisition.

We intended to accomplish the endocannabinoid system. following:

We did not intend to advance endocannabinoid science and research and development and to work to bring novel prescription, personal care, and veterinary cannabinoid-based products to market in the U.S. and worldwide.

We intend to operate our operations in compliance with all applicable federal laws and regulations, including those enforced by the U.S. Drug Enforcement Administration (“DEA”), U.S. Department of Agriculture (“USDA”), U.S. Food and Drug Administration (“FDA”) and U.S. Federal Trade Commission (“FTC”). We are NOTbecome a “marijuana” industry-related marketing or service company attempting to operate outside of federal “marijuana”marijuana prohibitions.

Our then management understandsunderstood the wide range of efficacies that the cannabis plant possesses, and is applyingtried to apply the pharmaceutical research, manufacturing and the distribution system that is already in place to provide novel treatments to patients who can benefit from cannabinoid therapies.

We intend

It was also an aspect of our strategy to serve the marketplace for drug productsacquire, own and operate marijuana grow facilities which were federally licensed to operate in the following therapeutic categories: schizophrenia and other psychotic disorders, oncology, infectious disease, pain management, multiple sclerosis, inflammatory disease, gastrointestinal disorders and ophthalmology.Canada.

We have a limited operating history in our proposed business and have never generated operating revenue. We make no representation, is made, nor is there anyand can provide no assurance, that our Company will be able to successfully operate as we intend or to raise the necessary capital required to conduct such operations.

During our fiscal year ended December 31, 2015, we attempted to accomplish the following:

Research & Development and Commercialization Product Portfolio

CannaPharmaRx intends. We intended to research, develop and potentially commercialize a diverse line of cannabinoid-based products that will meet the needs of healthcare providers serving various human and veterinary patient population needs. Products will be labeled for medical indications, strengths, dosing and safety, as well as route of administration.

Compounding PharmaciesPharmacies.

We intendintended to acquire multiple licensed pharmacies and pharmacy compounding centers. Each center will compound non-sterile, standardized and labeled products.

Patient AcquisitionAcquisition.

CannaPharmaRx believes We believed that patient acquisition will play an important role in the success of itsour business. CannaPharmaRxWe had has relationships with specialty pharmacy providers treating patients with diseases requiring concomitant or mono-cannabinoid therapies.

Cannabinoid Sourcing PlatformPlatform.

Once enough clinical and safety data is amassed and CannaPharmaRx understandswe began to understand consumer needs, it intendswe intended to outsource, build, acquire or partner with a pharmaceutical manufacturing facility for product development to further ensure consistency of product quality, as well as to control manufacturing costs due to scalable economies.

RECRUIT Registry^™ Development and Implementation. We intendintended to design, develop and implement a longitudinal database metaregistry compendium, branded as the RECRUIT Registry^™, for product usage, clinical management and outcomes reporting supported by real-world evidence from data gathering through our monitoring. We completed a software development project for the related registry website in late 2014, but the database is not yetnever became operational.

Post Marketing Surveillance Platform ToolsTools.

We intendintended to design applications to provide healthcare providers with a prescribing and monitoring tool for theirour patients to track and report the clinical outcomes from their use of cannabinoid products, including the following types of tools:

Physician Portal – Will provide physicians with access to information about common medical conditions, and assist physicians in matching CannaPharmaRxour formulary products to the needs of theirour patients.

Patient Portal – Will allow patients to make product selections based upon disease and available products. Applications designed for hand-held and mobile electronic devices, such as a smart phone or iPad, will allow the patients to report and track their therapies, side effects, and dosage adjustments, as well as disease progress and clinical outcomes.

Pharmacist Portal – Will provide pharmacists with access to data allowing them to provide clinical therapy management of patients on cannabinoid therapy.

Payer Portal – Will provide payers with access to cost-benefit analyses to assist with access, reimbursement and formulary decision for care delivery, quality and anticipated outcomes.

Value Differentiation

We intendintended to provide licensed healthcare providers with a safe environment for their patients to receive cannabinoid-based products, while being able to develop their own compendium and knowledge of real-world clinical evidence. CannaPharmaRx intendsWe intended to provide healthcare providers such as physicians and pharmacists with tools to track the results of cannabinoid therapy and document retrospective results. This may allow them to learn and apply intelligence to future prescribing decisions.

Clinical Research and Real World Evidence-based Medicine

We intendintended to provide cannabinoid-based products and monitor patients in controlled studies as well as real-world environments. We also intendintended to collaborate with the leading scientific and medical researchers working with cannabinoid-based products and patients.

Public Relations

We intendintended to establish our operating subsidiary as the new model in the United States for the safe manufacture and distribution of cannabinoid-based products. With the guiding principle of promoting the best interests of patient safety, we intend to communicate with our peers in the pharmaceutical, legal, scientific and medical communities regarding the best practices to use in approaching the development of cannabinoid-based therapies. Publication dissemination will help make known our mission of bringing novel endocannabinoid therapeutics to underserved patient populations through professional and public media relations.

Background – The Science of Endocannabinoids

The recent identification of cannabinoid receptors and their endogenous lipid ligands has triggered an exponential growth of studies exploring the human endocannabinoid system – the largest identified system of receptors in the human body – and its regulatory functions in health and disease. Such studies have been greatly facilitated by the introduction of selective cannabinoid receptor antagonists and inhibitors of endocannabinoid metabolism and transport, as well as mice deficient in cannabinoid receptors or the endocannabinoid-degrading enzyme fatty acid amidohydrolase.

In the past decades, the endocannabinoid system has been implicated in a growing number of physiological functions, both in the central and peripheral nervous systems and in peripheral organs. More importantly, modulating the activity of the endocannabinoid system may have therapeutic promise in a wide range of disparate diseases and pathological conditions, ranging from mood and anxiety disorders, movement disorders such as Parkinson’s and Huntington’s diseases, neuropathic pain, multiple sclerosis and spinal cord injury, to cancer, atherosclerosis, myocardial infarction, stroke, hypertension, glaucoma, obesity/metabolic syndrome, and osteoporosis, among others.

An impediment to the development of cannabinoid medications has been the psychoactive properties of plant-derived or synthetic agonists, mediated by CB1 receptors, which are illegal under federal law and the laws of many states and other jurisdictions. However, this problem does not arise when the therapeutic aim is achieved by treatment with a CB1 receptor antagonist, such as in obesity, and may also be absent when the action of endocannabinoids is enhanced indirectly through blocking their metabolism or transport. The use of selective CB2 receptor agonists, which lack psychoactive properties, could represent another promising avenue for certain conditions.

The abuse potential of plant-derived cannabinoids may also be limited through the use of preparations with controlled composition and the careful selection of dose and route of administration. We believe that the growing number of preclinical studies and clinical trials with compounds that modulate the endocannabinoid system are likely to result in new and entirely legal novel therapeutic approaches in a number of diseases for which current treatments do not fully address patients’ needs.

CannaPharmaRx intends

We intended to further develop as well as leverage itsour commercial, health system and academic relationships, domestically and worldwide, to further explore and exploit the endocannabinoid system (eCS), and commence extensive discovery, research, and development of cannabinoid molecules, potentially offering not only new insights into the mechanisms underlying the therapeutic actions of plant-derived phytocannabinoids, but also producing molecular targets for pharmacotherapy.

Innovative Development of Prescription, Personal Care and Veterinary Products

Prescription Brand Medicines: CannaPharmaRx intendsWe intended to invest in the due diligence of drug discovery through product registration and approvals by regulatory authorities in the U.S. and abroad. It is the Company’swas our intent that itsour products will be vetted through the accepted, proven and rigorous FDA drug research and development process: Discovery, Pre-clinical, Formulation, Proof-of-Concept, Phase I, Phase II, Phase III, and post-marketing Phases IV and V.

There is substantial pre-clinical evidence in the worldwide literature on the effects of cannabinoid substances in animal models. CannaPharmaRx hasWe had already undertaken an in-depth analysis into these data to help determine which compounds may be further studied in additional animal models and to move selected compounds into early clinical evaluation in humans.

By developing collaborative relationships and working together through such collaborations with pharmaceutical and biotechnology companies, research and academic institutions, as well as physicians and researchers, both domestically and worldwide, CannaPharmaRx intendsWe intended to develop both single and combination prescription entity products and bring them to market. CannaPharmaRx intendsmarket, as well as to develop protocols, apply to institutional review boards, and conduct animal and human Phase I – Phase V clinical trials.

CannaPharmaRx intends

We hoped to partner with existing organizations that comply with good manufacturing practices (GMP) guidelines for the manufacture of pharmaceutical products and comply with good clinical practices (GCP) guidelines in the conduct of clinical trials. Our goal is to become the worldwide leader in cannabinoid science and in the research, development and commercialization of cannabinoid-based molecules for prescription and personal care drug candidates.

Our purpose is to innovate to bring cannabinoid-based therapies that significantly improve patients’ lives to market. Research and development will be at the heart of our purpose as we work to transform advanced science and technologies into the therapies that matter most.

We intendintended to focus our efforts in core areas where we believebelieved we willwould be best positioned to bring needed therapies to patients. This includes chronic inflammatory disease, oncology, pain, neurosciences, and metabolic disorders. All are specialty areas in which our executive team has expertise. We bring differentiated capabilities in medicine design and development, and our approach will be to collaborate in new and dynamic ways with other innovators across the health landscape including academic scientists, patient foundations, governments, other biopharmaceutical companies and treating physicians.

To execute on our commitment, we are developingattempted to develop an extensive international network of prominent scientists in the cannabinoid field and are also hiring a leadership team with extensive experience in developing plant-based prescription pharmaceutical products.

Where advantageous, we planplanned to enter into license agreements with other pharmaceutical companies. We planplanned on retaining control over product development and also retaining the manufacturing expertise for our products.

Personal Care and Neutraceutical Product Therapies: CannaPharmaRx intendsWe intended to establish a cannabinoid sourcing platform that can potentially supply manufacturers with pharmaceutical grade products. We planplanned to develop strategic relationships and to complete acquisitions that will establish CannaPharmaRxus as a global leader in cannabinoid supply. We understandunderstood the need to establish a current Good Manufacturing Practice (“cGMP”) facility for packaging, testing, and logistics. CannaPharmaRx seesWe sought an opportunity to provide compounding pharmacies with cannabinoid molecules and compounds. CannaPharmaRxWe also intendsintended to supply the cannabinoid material needs to neutraceutical and personal care industries.

Veterinary products: Current research suggests that many animals have a higher prevalence of endocannabinoid receptors than humans. Given this evidence in animal models, CannaPharmaRx believes cannabinoid therapeutic applications in the veterinary marketplace will be numerous, and development will run parallel to the human prescription program.

Company Vision

In order to implement our business plan we needed to raise a significant amount of money, which we were unable to accomplish. See “Part II, Item 7, Management’s Discussion – Liquidity and Strategy

Our vision is to:Capital Resources” for a discussion of this issue.

Our goals are to:early 2016. See “Part III, Item 10, Management,” below.

The cannabis-related industry is currently undergoing a rapid metamorphosis, from an estimated $30-50 billion dollar U.S. federal and state illegal industry just a few years ago, to a state-regulated (but still federally illegal) estimated $1.53 billion industry. Industry analysts project sales to grow as much as 700% over the next five years, which would make it one of the fastest-growing industries in the US. One possible impediment to growth could be the emergence of regulatory issues, as matters involving purity, quality, dosages, and side effects become better understood.

At the date of this filing, 23 states and the District of Columbiareport we have adopted medical or adult use legislations. Industry analysts estimate 14 more states will follow suit by 2018.

The pharmaceutical industry is a $325 billion U.S. market, with the largest growth coming from the sector known as specialty pharmacy. Specialty pharmaceuticals currently account for $112 billion in U.S. sales, and the industry is expected to grow to 50% of total revenue by 2017. Over 900 specialty products are currently in the pipeline, most to treat cancer, inflammatory disease, HIV/AIDS, epilepsy, Parkinson’s disease, multiple sclerosis, and other rare disorders. CannaPharmaRx intends to leverage its expertise and relationships in the specialty pharmacy industry to facilitate positioning of cannabinoid-based medicines as specialty pharmacy products, within all of the applicable federal regulatory guidelines.

CannaPharmaRx management believes that because of its strong knowledge in both the pharmaceutical and cannabinoid industries, it is in a position to capitalize on theno employees except our current and future needs of the healthcare and cannabinoid industries to produce viable, consistent, safe medicinal products that are manufactured and distributed through the traditional healthcare system, in full compliance with all applicable federal regulations.

Success Factors

We believe that we must achieve in certain critical areas to facilitate our success, including:management. See “Part III, Item 10, Management” below.

Management Strengths

CannaPharmaRx’s leadership team brings over 150 years of combined expertise in pharmaceutical and proprietary healthcare including extensive knowledge of the global changing landscape for healthcare products and services. We believe our management has strengths, competencies, and proprietary expertise in both pharmaceutical and cannabinoid areas, including but not limited to:Competition

Product and Service Opportunities

CannaPharmaRx intends to focus its operations on four key areas:

Each of these business units intends to focus on three areas for marketing and sales of its products:

Acquiring/Building Compounding Specialty Pharmacies

Management believes that compounding and specialty pharmacies play a vital role in the pharmacy industry. They are equipped to meet patient needs with customized prescription medicine – an essential service. We believe that compounding pharmacies hold the potential for significantly higher net margins than traditional pharmacies. Additionally, they can provide a conduit for local patient and provider research and development, as well as a gateway to specialty prescribers, which should allow us to better understand and serve the needs of both physicians and consumers.

CannaPharmaRx intends to acquire and/or build specialty compounding pharmacies. We will be mindful of federal and state laws regarding ownership of pharmacies as well as manufacturing facilities and intend to operate in compliance with applicable law.

Management believes that owning and operating compounding centers and/or specialty pharmacies will contribute value in the form of revenue and earnings. Once it begins operating in this area, CannaPharmaRx intends to create a compendium of products and formulations that will be compounded in sterile, local environments to meet the particularized needs of both prescribers and patients. The Company is currently in discussions to acquire such a specialty pharmaceutical compounding business and to obtain the financing to fund this acquisition.

We intend to pursue this strategy because we believe it will allow CannaPharmaRx to:

Cannabinoid Development Strategy

CannaPharmaRx’s distribution strategy for cannabinoid medicines is expected to include placing product lines in the following channels: e-commerce sites, mass market internet, retail chains, national and regional chain drugstores, nutraceutical stores and wholesalers. CannaPharmaRx’s senior leadership team has well-established, long-term relationships and access to key decision makers in these markets.

IT Data and Registry

CannaPharmaRx is developing a research and surveillance registry platform designed to link medical prescribers to dispensaries to track patient outcomes in various disease states. CannaPharmaRx is designing a registry platform, branded as the RECRUIT Registry™, to include the following capabilities:

We believe that, once our RECRUIT Registry™ platform is operational and a significant amount of clinical and transactional data is being tracked and gathered, we will be well-positioned to communicate outcomes to providers and to leverage the data for purposes of FDA submissions.

Competition

There are other emerging pharmaceutical companies that are exploring cannabinoid-based molecules. These companies have products at all stages of development, from discovery to Phase 3, and launched commercially. CannaPharmaRx expectsWe expected that products that theywe develop will be competitive in the marketplace with other products serving the same market sectors. CannaPharmaRxOur management believesbelieved that our team’s experience in bringing products to market willwould permit the Companyus to achieve success despite the existence of other developmental companies. CannaPharmaRx will strive to be the first to bring medicines to market in certain therapeutic areas in order to gain a competitive advantage.

We believebelieved some of our likely competitors will include:

There are competitors in the cannabinoid pharmaceutical industry with far greater resources, particularly financial and marketing resources, which might compete with our Company.us. Such resources could overwhelm our Company’s efforts and cause our Companyus to not meet its stated objectives. See Item 1A (Risk Factors).

Capital Requirements

We expect our capital requirements for limited operations (prior to significant investments in R&D or the completion of any planned acquisitions) in fiscal year 2015 will be as follows:

We may change any or all of the above categories in the execution of our business model. None of the above line items are to be considered fixed or unchangeable. We may need substantial additional capital to support our capital requirements. We have to date not recognized any revenues from our existing operating activities.

We must raise additional funds to support our expected operating plan and our continued operations. We cannot provide any assurances that we will be able to raise such funds or whether we would be able to raise such funds on terms that are favorable to us. We may seek to borrow monies from lenders at commercial rates, but such lenders will probably be at higher than bank rates, which higher rates could, depending on the amount borrowed, render the net operating income of any of our planned profitable businesses insufficient to cover the interest burden.

Currently, we have no committed source for any funds as of the date hereof. No representation is made that any funds will be available when needed. In the event funds cannot be raised if and when needed, we may not be able to carry out our business plan and could fail in business as a result of these uncertainties.

MARKETS, REGULATION AND TAXATION

Regulatory Progress

The prospect for cannabinoid-based pharmaceuticals to be approved through the FDA approval pathway has been the subject of statements from the White House, Congress and the DEA. The White House Office of National Drug Control Policy states on its “Answers to the Frequently Asked Questions About Marijuana” on the White House website that the FDA has recognized and approved the medicinal use of isolated components of the “marijuana” plant and related synthetic compounds. In its June 2012 report titled “Reducing the U.S. Demand for Illegal Drugs,” the U.S. Senate Caucus on International Narcotics Control expressed the view that the development of “marijuana”-based therapeutics through an approved FDA process is the best route to explore. In its April 2013 report titled “The DEA Position on Marijuana,” the DEA expressed support for ongoing research into potential medicinal uses of marijuana’s active ingredients. Our Company intendsintended to focus only on non-THC, hemp based products, which are exempt from the Canadian Controlled Drugs and Substances Act and the Industrial Hemp Regulations promulgated thereunder (although not under U.S. federal law), so long as the THC component is less than .3% (the legal definition of “hemp,” a cultivar of cannabis).

Regulations

DEA Registration and Inspection of Facilities

Facilities conducting research, manufacturing, distributing, importing or exporting, or dispensing controlled substances must be registered to perform these activities and have the security, control, recordkeeping, reporting and inventory mechanisms that comply with DEA regulations to prevent drug loss and diversion. All these facilities must renew their registrations annually, except dispensing facilities, which must renew every three years. The DEA conducts periodic inspections of certain registered establishments that handle controlled substances. Obtaining the necessary registrations from the DEA may result in delays, which could be substantial. Furthermore, failure to maintain compliance with the U.S. Controlled Substances Act, as amended (the “CSA”), particularly non-compliance resulting in loss or diversion, can result in regulatory action that could have a material adverse effect on our business, financial condition and results of operations. The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to restrict, suspend or revoke those registrations. In certain circumstances, violations could lead to criminal proceedings.

State-Controlled Substances Laws

Individual states have also established controlled substance laws and regulations. Though these controlled substances laws often mirror federal law, because the states are separate jurisdictions, they may place products on their controlled substances schedules. While some states automatically schedule a drug based on federal action, other states schedule drugs through rulemaking or a legislative action. State scheduling may delay commercial sale of any product for which we obtain federal regulatory approval and adverse scheduling could have a material adverse effect on the commercial marketability of such product. We or our partners must also obtain separate state registrations, permits or licenses in order to be able to obtain, handle, and distribute controlled substances for clinical trials or commercial sale, and failure to meet applicable regulatory requirements could lead to enforcement and sanctions by the states in addition to those from the DEA or otherwise arising under federal law.

Clinical Trials

To conduct clinical trials of a preparation with a controlled substance in the United States prior to approval, research sites must submit a research protocol to the DEA and obtain and maintain a DEA researcher registration that will allow those sites to handle dispense and obtain the product. If the DEA delays or denies the grant of a research registration to one or more research sites, the clinical trial could be significantly delayed, and we could lose clinical trial sites. The importer for the clinical trials must also obtain a Schedule I importer registration and an import permit for each import.

Government Regulation and Product Approval

FDA Approval Process

In the United States, pharmaceutical products are subject to extensive regulation by the FDA. The U.S. Federal Food, Drug, and Cosmetic Act, and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products. Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to approve pending new drug applications (“NDAs”), warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.

Pharmaceutical product development in the United States typically involves pre-clinical laboratory and animal tests, the submission to the FDA of an investigational new drug application (“IND”), which must become effective before clinical testing may commence, and adequate, well-controlled clinical trials to establish the safety and effectiveness of the drug for each indication for which FDA approval is sought. Satisfaction of FDA pre-market approval requirements typically takes many years and the actual time required may vary substantially based upon the type, complexity, and novelty of the product or disease.

Pre-clinical tests include laboratory evaluation of product chemistry, formulation, and toxicity, as well as animal trials to assess the characteristics and potential safety and efficacy of the product. The conduct of the pre-clinical tests must comply with federal regulations and requirements, including good laboratory practices. The results of pre-clinical testing are submitted to the FDA as part of an IND along with other information, including information about product chemistry, manufacturing and controls, and a proposed clinical trial protocol. Long term pre-clinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.

A 30-day waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans. If the FDA has neither commented on nor questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin.

Clinical trials involve the administration of the investigational new drug to healthy volunteers or patients under the supervision of a qualified investigator. Clinical trials must be conducted: (i) in compliance with federal regulations, (ii) in compliance with Good Clinical Practice (“GCP”), an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators, and monitors, and (iii) under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. Each protocol involving testing on U.S. patients and subsequent protocol amendments must be submitted to the FDA as part of the IND.

The FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time or impose other sanctions if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients. The trial protocol and informed consent information for patients in clinical trials must also be submitted to an institutional review board “IRB”, for approval. An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements or may impose other conditions.

Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap. In Phase 1, the initial introduction of the drug into healthy human subjects or patients, the drug is tested to assess metabolism, pharmacokinetics, pharmacological actions, side effects associated with increasing doses, and, if possible, early evidence on effectiveness. Phase 2 usually involves trials in a limited patient population to determine the effectiveness of the drug for a particular indication, dosage tolerance, and optimum dosage, and to identify common

adverse effects and safety risks. If a compound demonstrates evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 trials are undertaken to obtain the additional information about clinical efficacy and safety in a larger number of patients, typically at geographically dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug. In most cases, the FDA requires two Phase 3 clinical trials to demonstrate the efficacy of the drug. A single Phase 3 trial with other confirmatory evidence may be sufficient in rare instances where the trial is a large multi-center trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity, or prevention of a disease with potentially serious outcome, and confirmation of the result in a second trial would be practically or ethically impossible.

After completion of the required clinical testing, an NDA is prepared and submitted to the FDA. FDA approval of the NDA is required before marketing of the product may begin in the United States. The NDA must include the results of all pre-clinical, clinical, and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture, and controls. The cost of preparing and submitting an NDA is substantial. Under federal law, the submission of most NDAs is additionally subject to a substantial application user fee, currently exceeding $2,169,000, and the manufacturer and/or sponsor under an approved NDA are also subject to annual product and establishment user fees, currently exceeding $104,000 per product and $554,000 per establishment. These fees are typically increased annually.

The FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of NDAs. Most such applications for standard review drug products are reviewed within ten to twelve months, while most applications for priority review drugs are reviewed in six to eight months. Priority review can be applied to drugs that the FDA determines offer major advances in treatment, or provide a treatment where no adequate therapy exists. For biologics, priority review is further limited only for drugs intended to treat a serious or life-threatening disease relative to the currently approved products. The review process for both standard and priority review may be extended by FDA for three additional months to consider certain late-submitted information, or information intended to clarify information already provided in the submission.

The FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or efficacy, to an advisory committee, which is typically a panel that includes clinicians and other experts, for review, evaluation, and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured. The FDA will not approve the product unless compliance with current good manufacturing practices or cGMP is satisfactory and the NDA contains data that provide substantial evidence that the drug is safe and effective in the indication studied.

After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete response letter. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing, or information, in order for the FDA to reconsider the application. If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included.

An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition of NDA approval, the FDA may require a risk evaluation and mitigation strategy (“REMS”) to help ensure that the benefits of the drug outweigh the potential risks. REMS can include medication guides, communication plans for health care professionals, and elements to assure safe use (“ETASU”). ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patient registries. The requirement for REMS can materially affect the potential market and profitability of the drug. Moreover, product approval may require substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.

The Hatch-Waxman Act

Orange Book Listing

In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent whose claims cover the applicant’s product. Upon approval of a drug, each of the patents listed in the application for the drug is then published in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book. Drugs listed in the Orange Book can, in turn, be cited by potential generic competitors in support of approval of an abbreviated new drug application (“ANDA”). An ANDA provides for marketing of a drug product that has the same active ingredients in the same strengths and dosage form as the listed drug and has been shown through bioequivalence testing to be therapeutically equivalent to the listed drug. Other than the requirement for bioequivalence testing, ANDA applicants are not required to conduct, or submit results of, pre-clinical or clinical tests to prove the safety or effectiveness of their drug product. Drugs approved in this way are commonly referred to as “generic equivalents” to the listed drug, and can often be substituted by pharmacists under prescriptions written for the original listed drug.

The ANDA applicant is required to certify to the FDA concerning any patents listed for the approved product in the FDA’s Orange Book. Specifically, the applicant must certify that: (i) the required patent information has not been filed; (ii) the listed patent has expired; (iii) the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or (iv) the listed patent is invalid or will not be infringed by the new product. The ANDA applicant may also elect to submit a section viii statement, certifying that its proposed ANDA label does not contain (or carves out) any language regarding the patented method-of-use, rather than certify to a listed method-of-use patent.

If the applicant does not challenge the listed patents, the ANDA application will not be approved until all the listed patents claiming the referenced product have expired.

A certification that the new product will not infringe the already approved product’s listed patents, or that such patents are invalid, is called a Paragraph IV certification. If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the ANDA has been accepted for filing by the FDA. The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA until the earlier of 30 months, expiration of the patent, settlement of the lawsuit, or a decision in the infringement case that is favorable to the ANDA applicant.

The ANDA application also will not be approved until any applicable non-patent exclusivity listed in the Orange Book for the referenced product has expired.

Exclusivity

Upon NDA approval of a new chemical entity (“NCE”), which is a drug that contains no active moiety that has been approved by the FDA in any other NDA, that drug receives five years of marketing exclusivity during which time the FDA cannot receive any ANDA seeking approval of a generic version of that drug.

Certain changes to a drug, such as the addition of a new indication to the package insert, are associated with a three-year period of exclusivity during which the FDA cannot approve an ANDA for a generic drug that includes the change.

An ANDA may be submitted one year before NCE exclusivity expires if a Paragraph IV certification is filed. If there is no listed patent in the Orange Book, there may not be a Paragraph IV certification, and, thus, no ANDA may be filed before the expiration of the exclusivity period.

For a botanical drug, FDA may determine that the active moiety is one or more of the principle components or the complex mixture as a whole. This determination would affect the utility of any 5-year exclusivity as well as the ability of any potential generic competitor to demonstrate that it is the same drug as the original botanical drug.

Patent Term Extension

After NDA approval, owners of relevant drug patents may apply for up to a five-year patent extension. The allowable patent term extension is calculated as half of the drug’s testing phase — the time between IND submission and NDA submission — and all of the review phase — the time between NDA submission and approval up to a maximum of five years. The time can be shortened if FDA determines that the applicant did not pursue approval with due diligence. The total patent term after the extension may not exceed 14 years.

For patents that might expire during the application phase, the patent owner may request an interim patent extension. An interim patent extension increases the patent term by one year and may be renewed up to four times. For each interim patent extension granted, the post-approval patent extension is reduced by one year. The director of the PTO must determine that approval of the drug covered by the patent for which a patent extension is being sought is likely. Interim patent extensions are not available for a drug for which an NDA has not been submitted.

Advertising and Promotion

Once an NDA is approved, a product will be subject to certain post-approval requirements. For instance, FDA closely regulates the post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the internet.

Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved labeling. Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA or NDA supplement before the change can be implemented. An NDA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing NDAs.

Adverse Event Reporting and GMP Compliance

Adverse event reporting and submission of periodic reports is required following FDA approval of an NDA. The FDA also may require post-marketing testing, known as Phase 4 testing, REMS, and surveillance to monitor the effects of an approved product, or the FDA may place conditions on an approval that could restrict the distribution or use of the product. In addition, quality control, drug manufacture, packaging, and labeling procedures must continue to conform to current good manufacturing practices, or cGMPs, after approval. Drug manufacturers and certain of their subcontractors are required to register their establishments with FDA and certain state agencies. Registration with the FDA subjects entities to periodic unannounced inspections by the FDA, during which the agency inspects manufacturing facilities to assess compliance with cGMPs. Accordingly, manufacturers must continue to expend time, money and effort in the areas of production and quality-control to maintain compliance with cGMPs. Regulatory authorities may withdraw product approvals or request product recalls if a company fails to comply with regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized problems are subsequently discovered.

INTELLECTUAL PROPERTY

Intellectual Property

We currently do not hold any patents or patent applications. We hold one registered trademark, RECRUIT Registry^™. This report contains additional trademarks, service marks, or trade names of others. Our use or display of other parties’ trademarks, service marks or trade names is not intended to imply and does not imply a relationship with, or endorsement of, such parties. We seek to protect our proprietary information, including our trade secrets and proprietary know-how, by requiring our employees, consultants and other advisors to execute confidentiality agreements upon the commencement of their employment or engagement. These agreements generally provide that all confidential information developed or made known during the course of the relationship with us be kept confidential and not be disclosed to third parties except in specific circumstances. In the case of our employees, the agreements also typically provide that all inventions resulting from work performed for us, utilizing our property or relating to our business and conceived or completed during employment shall be our exclusive property to the extent permitted by law. Where appropriate, agreements we obtain with our consultants also typically contain similar assignment of invention provisions. Further, we generally require confidentiality agreements from business partners and other third parties that receive our confidential information.

RESEARCH AND DEVELOPMENTSubsequent Events

For

We intend to review opportunities to acquire other cannabis related companies in the years ended December 31, 2014near future. Any discussions or negotiations with these companies would be confidential in nature and 2013,there can be no future assurances we spent $589,783will make any acquisitions in the cannabis sector or another other industry.

Also in April 2018, we issued 60,000 shares of our Series A Convertible Preferred Stock at a price of $1.00 per share to our current management, all of whom are accredited investors. Each share of Series A Convertible Preferred Stock is convertible into 1,250 shares of common stock and $0, respectively,vote on researchan as converted basis. The rights and development expenses.designations of these Preferred Shares include the following:

EMPLOYEES

In July 2018, we commenced an offering of up to $2MM of convertible notes.  The notes carry an interest rate of 12% and are convertible into shares of our common stock at the lesser of $0.40 or 50% discount to the market price on the date of conversion.  The term of the notes is for one year and they must be converted upon closing a financing, acquisition or other form of business combination in an amount greater than $5 million.  As of March 30, 2014, our Companythe date of this report we have accepted aggregate subscriptions of $640,000 in this Offering, none of which has nine full-time employees, not including external consultants.been converted. The offering remains open as of the date of this Report. 

ITEMItem 1A. RISK FACTORS

RISKS RELATED TO OUR COMPANY AND THE BUSINESS

Our proposed core product line has historically been prohibited by federal and state law and is now subject to a rapidly-changing regulatory regime.

The Company intends to produce a number of cannabinoid-based products. Since the enactment of the CSA in 1970, federal law has designated cannabis as an illicit substance and imposed strict penalties for the use, possession, sale, cultivation and transportation of cannabis. However, in recent years, a number of states and the District of Columbia have decriminalized or legalized the retail sale or use of cannabis, although cannabis remains prohibited in a majority of states. In response to state law developments, the U.S. Department of Justice (the “Justice Department”) issued guidance on August 29, 2013 announcing its revised stance toward prosecutorial enforcement of the federal cannabis ban. The Justice Department intends to refrain from interfering with state-level cannabis regulatory regimes, provided that certain federal enforcement priorities are not violated (e.g., sale of cannabis to minors). However, the Justice Department’s guidance is a nonbinding document that does not restrict the federal government or any state. As a result, the regulatory regime governing the cannabis industry at the federal and state level remains in flux. Further, there is no guarantee that the current trend toward liberalization of U.S. federal and state cannabis laws will continue. Due to the highly unpredictable regulatory environment in which we operate, our Company could be adversely affected by action at the U.S. federal or state level to place additional restrictions on the use or sale of cannabinoid-based products, or by other sudden changes in the U.S. cannabis regulatory regime.

We will be dependent on the success of our products, none of which may receive regulatory approval or be successfully commercialized.

Our success will depend on our ability to successfully commercialize the cannabinoid-based products we plan to develop. However, we may never receive U.S. regulatory approval for any such product we develop. Even if completed clinical trials conducted for U.S. approval of a product we develop show positive results, there can be no assurance that the FDA will approve a pharmaceutical for any given indication for several potential reasons, including failure to follow Good Clinical Practice, or GCP, negative assessment of risk/benefit, unacceptable risk of abuse or diversion, insufficient product quality control and standardization, non-GMP compliant manufacturing facilities, unreliable dose counters, and failure to agree on appropriate clinical endpoints.

Our ability to successfully commercialize our products will depend on, among other things, our ability to:Risk Factors.

Our failure with respect to any of the factors above could have a material adverse effect on our business, results of operations and financial condition.

Our products, if developed and approved, may be unable to achieve the expected market acceptance and, consequently, limit our ability to generate revenue from new products.

Even when product development is successful and regulatory approval has been obtained, our ability to generate significant revenue depends on the acceptance of our products by physicians and patients. We cannot assure you that any products we develop will achieve market acceptance and revenue if and when they obtain the requisite regulatory approvals. The market acceptance of any product depends on a number of factors, including the indication statement and warnings approved by regulatory authorities in the product label, continued demonstration of efficacy and safety in commercial use, physicians’ willingness to prescribe the product, reimbursement from third-party payers such as government health care systems and insurance companies, the price of the product, the nature of any post-approval risk management plans mandated by regulatory authorities, competition, and marketing and distribution support. Any factors preventing or limiting the market acceptance of our products could have a material adverse effect on our business, results of operations and financial condition.

If we fail to obtain and sustain an adequate level of reimbursement for our products by third-party payers, sales and profitability would be adversely affected.

Medical treatment for patients is and will continue to be expensive. Given the type of products we intend to develop, we expect that many patients and their families will not be capable of paying for our products themselves. There will be no commercially viable market for our products without reimbursement from third-party payers. Additionally, even if there is a commercially viable market, if the level of third-party reimbursement is below our expectations, our business, results of operations and financial condition could be adversely affected.

Third-party payers, such as government programs, including Medicare, or private health care insurers, carefully review and increasingly question the coverage of, and challenge the prices charged for medical products and services, and many third-party payers limit coverage of or reimbursement for newly approved health care products. Reimbursement rates from private health insurance companies vary depending on the company, the insurance plan and other factors. A current trend in the U.S. health care industry as well as in other countries around the world is toward cost containment. Large public and private payers, managed care organizations, group purchasing organizations and similar organizations are exerting increasing influence on decisions regarding the use of, and reimbursement levels for, particular treatments. In particular, third-party payers may limit the covered indications. Cost-control initiatives could decrease the price we might establish for any commercialized product, which could have a material adverse effect on our business, results of operations and financial condition.

Problems in our manufacturing process, failure to comply with manufacturing regulations or unexpected increases in our manufacturing costs could harm our business, results of operations and financial condition.

The manufacturing of our planned products will necessitate compliance with international Good Manufacturing Practice (“GMP”) and other federal and international regulatory requirements. Our ability to successfully manufacture products will involve obtaining botanical raw material from specific cannabinoid plants under highly controlled and standardized conditions, extraction and purification processes, manufacture of finished products and labeling and packaging, which includes product information, tamper evidence and anti-counterfeit features. In addition, we will have to ensure consistency among our batches, including clinical batches and, if approved, marketing batches. Demonstrating such consistency may require typical manufacturing controls as well as clinical data. We will also have to ensure that our batches conform to complex release specifications. If we are unable to manufacture products in accordance with regulatory specifications, or if there are disruptions in our manufacturing process due to damage, loss or otherwise, or failure to pass regulatory inspections of our manufacturing facilities, we may not be able to meet the current demand for product or supply sufficient product for use in clinical trials, and this may also harm our ability to commercialize our products on a timely or cost-competitive basis, if at all. Any problems in our manufacturing process could have a material adverse effect on our business, results of operations and financial condition.

Business interruptions could delay us in the process of developing our product candidates.

We may not be able to identify or acquire at a reasonable cost a suitable manufacturing facility. Loss of access to manufacturing facilities, stored inventory or laboratory facilities through fire or other causes, or loss of our botanical raw material due to pathogenic infection or other causes, could have an adverse effect on our ability to conduct product development activities and to conduct our business. We currently have insurance coverage to compensate us for such business interruptions; however, such coverage may prove insufficient to fully compensate us for the damage to our business resulting from any significant property or casualty loss to our inventory or facilities.

If product liability lawsuits are successfully brought against us, we could incur substantial liabilities and may be required to limit the commercialization of our products.

Although we do not currently have any product candidates in clinical trials or any commercialized products, to the extent we make further progress in product development, we would face potential product liability exposure related to the testing of our product candidates in human clinical trials. We would likely face exposure to claims by an even greater number of persons if we begin marketing and distributing our products commercially in the United States and elsewhere, including those relating to misuse of our product. We may be unable to avoid significant liability if any product liability lawsuit is brought against us. Although we have purchased insurance to cover product liability lawsuits, if we cannot successfully defend ourselves against product liability claims, or if such insurance coverage is inadequate, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

We depend upon our senior management and other key personnel and our ability to attract and retain employees.

Our success materially depends upon the efforts of our management and other key personnel, including but not limited to Gerry Crocker, our Chief Executive Officer and director. If we lose the services of Mr. Crocker or any other executive officers or significant employees, our business would likely be materially and adversely affected.

Our future success also depends, in part, upon our ability to attract and retain qualified management personnel and other employees. The loss of the services of any member of our senior management or the inability to hire or retain experienced management personnel could adversely affect our ability to execute our business plan and harm our operating results. Because of the specialized scientific and managerial nature of our business, we rely heavily on our ability to attract and retain qualified scientific, technical and managerial personnel. The competition for qualified personnel in the pharmaceutical field is intense. Due to this intense competition, we may be unable to continue to attract and retain qualified personnel necessary for the development of our business or to recruit suitable replacement personnel. Any difficulties in obtaining and retaining qualified officers and employees could have a material adverse effect on our operations.

We expect to face intense competition, often from companies with greater resources and experience than we have.

The pharmaceutical industry is highly competitive and subject to rapid change. The industry continues to expand and evolve as an increasing number of competitors and potential competitors enter the market. Many of these competitors and potential competitors have substantially greater financial, technological, managerial and research and development resources and experience than we have. Some of these competitors and potential competitors have more experience than we have in the development of cannabinoid products, including validation procedures and regulatory matters. In addition, our products, if successfully developed, will compete with, product offerings from large and well-established companies that have greater marketing and sales experience and capabilities than we or our collaboration partners have. If we are unable to compete successfully, we may be unable to grow and sustain our revenue.

Failure of our information technology systems could significantly disrupt the operation of our business.

Our ability to execute our business plan and to comply with regulatory requirements with respect to data control and data integrity depends, in part, on the continued and uninterrupted performance of our IT systems. These systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious human acts and natural disasters. Moreover, despite network security and back-up measures, some of our servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems. Despite the precautionary measures we have taken to prevent unanticipated problems that could affect our IT systems, sustained or repeated system failures or problems arising with respect to any of our IT systems that interrupt our ability to generate and maintain data, and in particular to operate our proprietary technology platform, could adversely affect our ability to operate our business.

Legislative or regulatory reform of the health care system in the United States and foreign jurisdictions may affect our ability to profitably sell our products, if approved.

Our ability to commercialize our future products successfully, alone or with collaborators, will depend in part on the extent to which coverage and reimbursement for the products will be available from government and health administration authorities, private health insurers and other third-party payors. The continuing efforts of the United States and foreign governments, insurance companies, managed care organizations and other payors of health care services to contain or reduce health care costs may adversely affect our ability to set prices for our products which we believe are fair, and our ability to generate revenues and achieve and maintain profitability.

Specifically, in both the United States and some foreign jurisdictions, there have been a number of legislative and regulatory proposals to change the health care system in ways that could affect our ability to sell our products profitably. For example, the U.S. Patient Protection and Affordable Care Act (as amended, the “PPACA”) substantially changes the way healthcare is financed by both governmental and private insurers.

We expect further federal and state proposals and health care reforms to continue to be proposed by legislators, which could limit the prices that can be charged for the products we develop and may limit our commercial opportunity.

The continuing efforts of government and other third-party payors to contain or reduce the costs of health care through various means may limit our commercial opportunity. It will be time consuming and expensive for us to go through the process of seeking coverage and reimbursement from Medicare and private payors. Our products may not be considered cost effective, and government and third-party private health insurance coverage and reimbursement may not be available to patients for any of our future products or sufficient to allow us to sell our products on a competitive and profitable basis. Our results of operations could be adversely affected by the PPACA and by other health care reforms that may be enacted or adopted in the future. In addition, increasing emphasis on managed care in the United States will continue to put pressure on the pricing of pharmaceutical products. Cost control initiatives could decrease the price that we or any potential collaborators could receive for any of our future products and could adversely affect our ability to generate revenue in the U.S. market and maintain profitability.

We are at an early stage of development and we may not be able to successfully develop and commercialize our products and technologies.

The development of our products is subject to the risks of failure commonly experienced in the development of products based upon innovative technologies and the expense and difficulty of obtaining approvals from regulatory agencies. Drug discovery and development is time consuming, expensive and unpredictable. On average, only one out of many thousands of chemical compounds discovered by researchers proves to be both medically effective and safe enough to become an approved medicine. All of our proposed products are in the preclinical or early clinical stage of development and will require significant additional funding for research, development and clinical testing before we are able to submit them to any of the regulatory agencies for clearances for commercial use.

The process from discovery to development to regulatory approval can take several years and drug candidates can fail at any stage of the process. Late stage clinical trials often fail to replicate results achieved in earlier studies. Historically, in our industry more than half of all compounds in development failed during Phase 2 trials and 30% failed during Phase 3 trials. We cannot assure you that we will be able to complete successfully any of our research and development activities. Even if we do complete them, we may not be able to market successfully any of the products or be able to obtain the necessary regulatory approvals or assure that healthcare providers and payors will accept our products. We also face the risk that any or all of our products will not work as intended or that they will be unsafe, or that, even if they do work and are safe, that our products will be uneconomical to manufacture and market on a large scale. Due to the extended testing and regulatory review process required before we can obtain marketing clearance, we do not expect to be able to commercialize any therapeutic drug for several years, either directly or through our corporate partners or licensees.

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

We will be subject to extensive regulation by U.S. federal and state and foreign governments in each of the markets where we intend to seek approval of the products we plan to develop and where we market such products, if approved. We will have to adhere to all regulatory requirements including the FDA’s Good Laboratory Practice, cGMP, and GCP requirements. If we or our suppliers fail to comply with applicable regulations, including FDA pre-or post-approval cGMP requirements, then the FDA or other foreign regulatory authorities could sanction us. Even if a drug is FDA-approved, regulatory authorities may impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-marketing trials.

If any of the products we successfully develop is approved in the United States, it will be subject to ongoing regulatory requirements for labeling, packaging, storage, advertising, promotion, sampling, record-keeping and submission of safety and other post-market information, including both federal and state requirements in the United States. In addition, manufacturers and manufacturers’ facilities are required to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to cGMP. As such, we and our contract manufacturers (in the event we use contract manufacturers) will be subject to continual review and periodic inspections to assess compliance with cGMP. Accordingly, we and others with whom we work must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production, quality control and quality assurance. We will also be required to report certain adverse reactions and production problems, if any, to the FDA, and to comply with requirements concerning advertising and promotion for our products. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved label. As such, we may not promote our products for indications or uses for which they do not have FDA approval.

If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of the product, a regulatory agency may impose restrictions on that product or us, including requiring withdrawal of the product from the market. If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may:

Any government investigation of alleged violations of law could require us to expend significant time and resources in response, and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenue from the products we develop. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our business and our operating results will be adversely affected. Additionally, if we are unable to generate revenue from sales of product, our potential for achieving profitability will be diminished and the capital necessary to fund our operations will be increased.

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

If we are found in violation of federal or state “fraud and abuse” laws, we may be required to pay a penalty and/or be suspended from participation in federal or state health care programs, which may adversely affect our business, financial condition and results of operations.

If we obtain marketing approval for our products in the United States, we will then be subject to various federal and state health care “fraud and abuse” laws, including anti-kickback laws, false claims laws and other laws intended to reduce fraud and abuse in federal and state health care programs, which could affect us particularly upon successful commercialization of our products in the United States. The Medicare and Medicaid Patient and Program Protection Act of 1987 (as amended, the federal “Anti-Kickback Statute”) makes it illegal for any person, including a prescription drug manufacturer (or a party acting on its behalf), to knowingly and willfully solicit, receive, offer or pay any remuneration that is intended to induce the referral of business, including the purchase, order or prescription of a particular drug for which payment may be made under a federal health care program, such as Medicare or Medicaid. Under federal government regulations, some arrangements, known as safe harbors, are deemed not to violate the federal Anti-Kickback Statute. Although we seek to structure our business arrangements in compliance with all applicable requirements, these laws are broadly written, and it is often difficult to determine precisely how the law will be applied in specific circumstances. Accordingly, it is possible that practices we adopt may be challenged under the federal Anti-Kickback Statute. False claims laws prohibit anyone from knowingly and willfully presenting or causing to be presented for payment to third-party payers, including government payers, claims for reimbursed drugs or services that are false or fraudulent, claims for items or services that were not provided as claimed, or claims for medically unnecessary items or services. Cases have been brought under false claims laws alleging that off-label promotion of pharmaceutical products or the provision of kickbacks has resulted in the submission of false claims to governmental health care programs. Under the Health Insurance Portability and Accountability Act of 1996, we are prohibited from knowingly and willfully executing a scheme to defraud any health care benefit program, including private payers, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services. Violations of fraud and abuse laws may be punishable by criminal and/or civil sanctions, including fines and/or exclusion or suspension from federal and state health care programs such as Medicare and Medicaid and debarment from contracting with the U.S. government. In addition, private individuals have the ability to bring actions on behalf of the government under the federal False Claims Act as well as under the false claims laws of several states.

Many states have adopted laws similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for health care services reimbursed by any source, not just governmental payers. In addition, California and a few other states have passed laws that require pharmaceutical companies to comply with the U.S. Department of Health and Human Services’s April 2003 Office of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers and/or the Pharmaceutical Research and Manufacturers of America Code on Interactions with Health Care Professionals. In addition, several states impose other marketing restrictions or require pharmaceutical companies to make marketing or price disclosures to the state. There are ambiguities as to what is required to comply with these state requirements and if we fail to comply with an applicable state law requirement we could be subject to penalties.

Neither the government nor the courts have provided definitive guidance on the application of fraud and abuse laws to our proposed business. Law enforcement authorities are increasingly focused on enforcing these laws, and it is possible that some of our practices may be challenged under these laws. While we believe we have structured our business arrangements to comply with these laws, it is possible that the government could allege violations of, or convict us of violating, these laws. If we are found in violation of one of these laws, we could be required to pay a penalty and could be suspended or excluded from participation in federal or state health care programs, and our business, results of operations and financial condition may be adversely affected.

We have a limited history of operations and we may incur losses.

As a company with a limited operating history, we are subject to all of the risks associated with a new business enterprise. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stages of development, especially in challenging and competitive industries. We are unable to give you any assurance that we will generate material revenues or that any revenues generated will be sufficient for us to continue operations or achieve profitability.

We have limited assets and a working capital deficit.

As of the date of this filing, we have limited assets and a substantial working capital deficit. Our success will initially depend upon continuing our business and growing our business by raising the necessary funds to expand operations.

For future additional capital requirements, we may raise capital by issuing equity or convertible debt securities, and if we do, the percentage ownership of our existing stockholders may be diluted.

If adequate funds are not available on acceptable terms, we may be unable to fund the expansion of our business.

We may not realize a profit on our business acquisitions in a timely manner, which could materially and adversely affect us.

We intend to acquire other businesses, in particular specialty pharmacy and compounding business. If we complete any such acquisitions, we may not realize a significant cash return if debt service exceeds net operating income on our business acquisitions. Therefore, if any of our business activities are subject to delays or operating losses, our growth may be hindered and our results of operations and cash flows may be adversely affected. In addition, new acquisition activities, regardless of whether or not they are ultimately successful, typically require substantial time and attention from management. Furthermore, maintaining our management capabilities involves significant expense, including compensation expense for our personnel and related overhead. Therefore, if we do not realize a positive cash flow return on our business activities in order to offset these costs and expenses, we could be materially and adversely affected.

Our ability to use our net operating loss carry forwards will be subject to additional limitation, which could potentially result in increased future tax liability.

As of December 31, 2014, we had federal and state net operating loss carryforwards due to prior period losses, which, if not utilized, will begin to expire in 2030 for both federal and state purposes. These net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our profitability. In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, our ability to utilize net operating loss carryforwards or other tax attributes, such as research tax credits, in any taxable year may be further limited if we experience an “ownership change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. Future issuances of our stock, including in connection with a merger agreement or similar transaction, could cause an “ownership change.” It is possible that any future ownership change could have a material effect on our ability to use our net operating loss carryforwards or other tax attributes, which could adversely affect our profitability.

We may be subject to litigation in the ordinary course of business.

We have been, and may continue to be, from time to time, subject to various legal proceedings and claims, including those described in Item 3 (Legal Proceedings). Any such claims, whether with or without merit, could be time-consuming and expensive to defend and could divert management’s attention and resources. We cannot assure that the outcome of all current or future litigation will not have a material adverse effect on the Company and its results of operations.

Conflicts of Interest.

Certain conflicts of interest may exist between our Company and our officers and directors. They have other business interests to which they devote their attention, and may be expected to continue to do so although management time should be devoted to the business of our Company. As a result, conflicts of interest may arise that can be resolved only through exercise of such judgment as is consistent with fiduciary duties to our Company. See Item 13 (Certain Relationships, Related Transactions and Director Independence) for a discussion of some potential conflicts that may exist.

Need for Additional Financing.

Our Company has budgeted funds expected to be enough to carry on the proposed business to mid-2015. In the event our Company decides to expand our operations, we may have very limited funds to do so. The ultimate success of our Company will depend upon our ability to raise additional capital. We regularly consider the need for, and seek viable sources of, additional capital. There is no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to our Company. If not available, our Company’s operations will be limited to those that can be financed with its modest capital.

Limited Revenue History.

Our Company is considered in development stage. Our Company must be regarded as a new or development venture with all of the unforeseen costs, expenses, problems, risks and difficulties to which such ventures are subject.

No Assurance of Success or Profitability.

There is no assurance that our Company will ever operate profitably. There is no assurance that we will generate profits, or that the value of our Company’s shares will be increased thereby.

Lack of Diversification.

Because of the limited financial resources that we have, it is unlikely that we will be able to diversify our operations. Our probable inability to diversify our activities into more than one area will subject us to economic fluctuations within our business or industry and therefore increase the risks associated with our operations.

Dependence upon Outside Advisors.

To supplement the business experience of our officers and directors, we may be required to employ accountants, technical experts, appraisers, attorneys, or other consultants or advisors. Our Company’s management, without any input from stockholders, will make the selection of any such advisors. Furthermore, it is anticipated that such persons may be engaged on an “as needed” basis without a continuing fiduciary or other obligation to our Company. In the event our Company considers it necessary to hire outside advisors, they may elect to hire persons who are affiliates, if they are able to provide the required services.

RISKS RELATED TO CONTROLLED SUBSTANCES

Controlled substance legislation differs between countries and legislation in certain countries may restrict or limit our ability to our product candidates.

Most countries are parties to the Single Convention on Narcotic Drugs of 1961 as amended by the 1972 Protocol, which governs international trade and domestic control of narcotic substances, including cannabis extracts. Countries may interpret and implement their treaty obligations in a way that creates a legal obstacle to our obtaining marketing approval in those countries for any products we develop. These countries may not be willing or able to amend or otherwise modify their laws and regulations to permit our products to be marketed, or achieving such amendments to the laws and regulations may take a prolonged period of time. In the case of countries with similar obstacles, we would be unable to market our product candidates in countries in the near future or perhaps at all if the laws and regulations in those countries do not change.

At some point the products we develop may be subject to U.S. controlled substance laws and regulations and failure to comply with these laws and regulations, or the cost of compliance with these laws and regulations, may adversely affect the results of our business operations, both during clinical development and post approval, and our financial condition.

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

RISKS RELATED TO OUR STOCK

We may in the future issue shares which could cause a loss of control by our present management and current stockholders.

We may issue shares of our common stock, including as consideration for the cash or assets or services, that would, upon issuance, represent a majority of the voting power and equity of our Company. The result of such an issuance would be that those new stockholders could control our Company, and persons unknown could replace our current management at that time. Such an occurrence would result in a greatly reduced percentage of ownership of our Company by our current shareholders, which could present significant risks to investors.

We have not paid dividends but may in the future.

We have not paid dividends on our common stock. While we intend to pay dividends in future after allocating adequate reserves, we do not expect to have sufficient reserves to pay dividends in the foreseeable future and we do not guarantee, commit or undertake that dividends will be paid in the future.

A limited public market exists for our common stock at this time, and there is no assurance of a future market.

There is a very limited public market for our common stock, and no assurance can be given that a market will develop or that a shareholder ever will be able to liquidate his investment without considerable delay, if at all. If a market should develop, the price may be highly volatile. Due to the low price of our securities, many brokerage firms may not be willing to effect transactions in our securities. Even if a purchaser finds a broker willing to effect a transaction in our shares, the combination of brokerage commissions, state transfer taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of our shares as collateral for any loans.

The regulation of penny stocks by the SEC may discourage the tradability of our securities.

We are a “penny stock” company. None of our securities currently trade in any marketsmaller reporting company and if available for trading, will be subjectnot required to an SEC rule that imposes special sales practice requirements upon broker-dealers who sell such securities other than pursuant to a valid exemption. For non-exempt transactions, the broker-dealer must provide the purchaser with a riskinclude this disclosure document and certain information regarding the penny stock and broker-dealer’s compensation, approve the purchaser’s account for transactions in penny stocks, make a special suitability determination for the purchaser and receive the purchaser’s written agreement to the transaction prior to the sale. Effectively, this discourages broker-dealers from executing trades in penny stocks. Consequently, the rule will affect the ability of purchasers to sell their securities in any market that might develop therefore because it imposes additional regulatory burdens on penny stock transactions.

In addition, the SEC has adopted a number of rules to regulate “penny stocks.” Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-9 under the U.S. Securities Exchange Act of 1934, as amended (“the Exchange Act”). Because our securities constitute “penny stocks” within the meaning of the rules, the rules would apply to us and to our securities. The rules will further affect the ability of owners of shares to sell our securities in any market that might develop for them because it imposes additional regulatory burdens on penny stock transactions.

Shareholders should be aware that, according to SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale selling of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level.

Rule 144 sales in the future may have a depressive effect on our stock price.

Our shareholders may be able to use Rule 144 as an exemption for resale, but resales under Rule 144 could have a depressive effect on the market trading price, if any. Investors will have no effective way to combat this.

Our stock will in all likelihood continue to be thinly traded and as a result you may be unable to sell at or near ask prices or at all if you need to liquidate your shares.

The shares of our common stock may continue to be thinly-traded on the OTC Bulletin Board or OTCQB under the symbol “CPMD”, meaning that the number of persons interested in purchasing our common shares at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we come to the attention of such persons, they tend to be risk-averse and may be reluctant to follow an unproven, early-stage company such as ours or purchase or recommend the purchase of any of our securities until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our securities is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on securities prices. We cannot give you any assurance that an active public trading market for our common stock will ever develop or be sustained, or that any trading levels will be sustained. Due to these conditions, we can give investors no assurance that they will be able to sell their shares at or any prices or at all if they need money or otherwise desire to liquidate their securities of our Company.Form 10-K annual report.

Our common stock market prices may be volatile, which substantially increases the risk that you may not be able to sell your securities at or above the price that you may pay for the security.

Because of the limited trading market for our common stock and because of the possible price volatility, you may not be able to sell your shares of common stock when you desire to do so. The inability to sell your securities in a rapidly declining market may substantially increase your risk of loss because of such illiquidity and because the price for our securities may suffer greater declines because of our price volatility.

The price of our common stock may be higher or lower than the price you may pay. Certain factors, some of which are beyond our control, that may cause our share price to fluctuate significantly include, but are not limited to the following:

On occasion, the stock markets have experienced extreme price and volume fluctuations. In some cases, these fluctuations are unrelated or disproportionate to the operating performance or prospects of the underlying company. These market and industry factors may materially and adversely affect our stock price, regardless of our performance. In the past, class action litigation often has been brought against companies following periods of volatility in the market price of those companies common stock. If we become involved in this type of litigation in the future, it could result in substantial costs and diversion of management attention and resources, which could have a further negative effect on your investment in our stock.

Our business is highly speculative and the investment is therefore highly risky.

Due to the speculative nature of our business, it is probable that an investment in shares will result in a total loss to the investor. Investors should be able to financially bear the loss of their entire investment. Investment should, therefore, be limited to that portion of discretionary funds not needed for normal living purposes or for reserves for disability and retirement.

The ongoing economic downturn and continued uncertainty in the financial markets and other adverse changes in general economic or political conditions may adversely affect our industry, business and results of operations.

The global credit and financial markets have continued to experience disruptions, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability. There can be no assurance that there will not be future deterioration in credit and financial markets and confidence in economic conditions. These economic uncertainties affect businesses such as ours in a number of ways, making it difficult to accurately forecast and plan our future business activities. We are unable to predict the likely duration and severity of the current disruptions in the credit and financial markets and adverse global economic conditions, and if the current uncertain economic conditions continue or further deteriorate, our business and results of operations could be materially and adversely affected.

Potential changes in accounting practices and/or taxation may adversely affect our financial results.

We cannot predict the impact that future changes in accounting standards or practices may have on our financial results. New accounting standards could be issued that change the way we record revenues, expenses, assets and liabilities. These changes in accounting standards could adversely affect our reported earnings. Increases in direct and indirect income tax rates could affect after tax income. Equally, increases in indirect taxes could affect our products affordability and reduce our sales.

We will rely on third parties for services in conducting our business and any disruption of these relationships could adversely affect our business.

We will have contracts with third parties. If these relationships are disrupted for any reason our results of operation and financial condition could be adversely affected.

ITEM 1B.UNRESOLVED STAFF COMMENTS

None.

Item 2. Properties.

During our fiscal year ended December 31, 2015, we leased approximately 2,000 square feet of office space in Carneys Point, New Jersey.

On April 1, 2018 we changed our principal place of business to 2 Park Plaza, Suite 1200 – B. Irvine, CA. 92614, phone: 949-652-6838. This space is provided to us on a twelve month term by a company to which Mr. Nicosia, one of our directors, serves as Chief Executive Officer. Our monthly rent is $1,000, however, as of the date of this filing, we have not made any rent payments and continue to accrue those amounts as accounts payable. We believe this location will be sufficient for our business purposes for the foreseeable future.

Cohen Litigation

Item 3. Legal Proceedings.

On October 30, 2014, Gary M. Cohen (“Mr. Cohen”), former president, Chief Operating Officer and board member of CannaRx, filed a lawsuit against CannaRx in the Circuit Civil Court of the Thirteenth Judicial District in and for Hillsborough County, Florida, in Division T. On November 11, 2014, the Companywe sued Mr. Cohen in the U.S. District Court for the District of New Jersey, alleging tortious interference with business relationships and defamation due to publishing fake press releases on the Internet concerning his lawsuit against CannaRx, Inc. et al. The Company seeks damages, punitive damages, costs and attorney’s fees and injunctive relief. On November 26, 2014, Mr. Cohen amended his October 30 complaint naming the Company, CannaRx and certain of their officers and directors as defendants. In his amended complaint, Mr. Cohen alleged various employment-related contract and wrongful termination claims, as well as claims alleging breach of fiduciary duty, misappropriation of assets, tortious interference with business relationships, unjust enrichment, conspiracy, violations of corporate law regarding his access to internal corporate information, a derivative action on behalf of CannaPharmaRx, Inc. and alleged violations of U.S. federal securities laws, the Sarbanes-Oxley Act of 2002 and the U.S. Internal Revenue Code. Mr. Cohen seeks compensatory damages, disgorgement of corporate profits and distributions, pre-judgment and post-judgment interest and an injunction appointing a receiver for CannaPharmaRx, Inc. Mr. Cohen’s claims arose out of the removal of Mr. Cohen as an officer and director of CannaRx, which occurred on or about October 23, 2014.us.

All the named defendants in the Florida lawsuit have maintained that Mr. Cohen’s claims and allegations are false and lack legal merit. Following the filing of Mr. Cohen’s amended complaint, the defendants removed Mr. Cohen’s lawsuit from state court in Hillsborough County, Florida—where it was filed originally—to the U.S. District Court in Tampa, Florida. In addition, all of the defendants have filed motions to dismiss Mr. Cohen’s entire lawsuit, which motions are still pending. On March 11, 2015, the District Court ordered the parties to brief the question of whether the District Court has subject matter jurisdiction over the lawsuit.

On March 25, 2015, the Company andwe reached an agreement with Mr. Cohen agreed in principle to the terms of a settlement agreement that would resolveresolved the aforementioned lawsuits. As part of that agreement in principle the Companywe agreed to purchase all of Mr. Cohen’s 2,250,000 shares of CannaRx for a purchase price of $350,000, with $85,000 payable up front and the remainder payable in equal installments of $15,000 per month over the next 17 months, and a final payment of $10,000 in the eighteenth month. In addition the Company would grantto this $350,000 cash expense, we issued Mr. Cohen 600,000 unregistered restricted shares of itsour common stock to Mr. Cohen as part of the settlement. On March 30, 2015, the partners entered into a settlement and release of claims agreement that incorporates their agreement in principle.stock.

FINRA Action

On January 29, 2015, the Companywe received a deficiency notice from the Financial Industry Regulatory Authority (“FINRA”), stating that FINRA would not process the Company’sour name change from October 2014 due to questions about the Company’sour ownership raised in the Cohen litigation described above. The CompanyWe appealed the notice, arguing among other things that the ownership of theour Company was not at issue in the Cohen litigation. On March 20, 2015, FINRA reversed the deficiency notice and subsequently processed the Company’sours request to change itsour name and trading symbol.

In addition to the above-mentioned matters, we may be subject, from time to time, to various legal proceedings and claims. Any such claims, whether with or without merit, could be time-consuming and expensive to defend and could divert management’s attention and resources. We cannot assure that the outcome of all current or future litigation will not have a material adverse effect on the Companyus and itsour results of operations.operation.

ITEM 4.MINE SAFETY DISCLOSURES

Not Applicable.

PART II

ITEMItem 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESMarket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information.Information

Shares

Our common stock is quoted on the over the counter pink sheets under the trading symbol “CPMD.” Trading volume in our Common Stock is very limited. As a result, the trading price of our Common Stock is subject to significant fluctuations.

There can be no assurance that a liquid market will develop in the foreseeable future.

Transfer of our common stock are presently traded on the over-the-counter market on the OTC Bulletin Board maintained by FINRA and are quoted on the OTC Markets’ OTCQBmay also be restricted under the trading symbol “CPMD”.securities or blue sky laws of certain states and foreign jurisdictions. Consequently, investors may not be able to liquidate their investments and should be prepared to hold the common stock for an indefinite period of time.

The following table sets forth the range of high and low sales pricesbid quotations for the Company’s common stock for each of the fiscal quarters for the past two yearsour Common Stock as reported on the OTC Markets’ OTCQB andon the OTC Bulletin Board. These prices represent inter-dealer prices without adjustmentspink sheets for mark-up, mark-down, or commission and do not necessarily reflect actual transactions.the periods indicated.

Record Holders.As of September 6, 2018, the closing price of our Common Stock was. $0.55 per share.

There were approximately 130 holders of record as of March 30, 2015. A registered stockholder may be a broker or other entity holding shares in street name for one or more customers who beneficially own the shares.

Our transfer agent is Mountain Share Transfer, Inc., PO Box 191767, Atlanta, GA 31119. Their telephone number is (303) 460-1149.

Dividends.

We have not paid or declared cash distributions or dividends on our shares of common stockThe Securities Enforcement and do not intend to pay cash dividends in the foreseeable future.

Future cash dividends will be determined by our board of directors based upon our earnings, financial condition, capital requirements and other relevant factors.

Penny Stock Rules.Reform Act of 1990

Broker-dealer

The Securities and Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the SEC.stocks. Penny stocks are generally are equity securities with a price of less than $5.00. Excluded from the penny stock designation are$5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange/systemexchange or soldsystem).

As of the date of this Report, our Common Stock is defined as a “penny stock” under the Securities and Exchange Act. It is anticipated that our Common Stock will remain a penny stock for the foreseeable future. The classification of penny stock makes it more difficult for a broker-dealer to established customerssell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his/her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or accredited investors.her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from thethose rules, to deliver a standardized risk disclosure document that provides information about penny stocks andprepared by the risks in the penny stock market. Commission, which:

The broker-dealer also must provide, the customer with current bid and offer quotations for theprior to effecting any transaction in a penny stock, to the compensation of the

broker-dealer and its salesperson in connection with the transaction, and the monthly account statements showing the market value of each penny stock held in the customer’s account.

In addition, the penny stock rules generally require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’spurchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to the transaction.

transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements maywill have the effect of reducing the level of trading activity in the secondary market for aour stock that becomesbecause it will be subject to thethese penny stock rules. Therefore, stockholders may have difficulty selling their securities.

Holders

As of December 31, 2015, there were 17,960,741 shares of our common stock issued and outstanding, which were held by 205 stockholders of record, not including those persons holding shares in “street name.” As of the date of this Report there were 17,960,741 Common Shares issued and outstanding, held by 205 holders of record, not including those persons holding shares in “street name.”

Stock Transfer Agent

Our stock transfer agent for our securities is Mountain Share Transfer, Inc., 2030 Powers Ferry Road SE, Suite 212, Atlanta, GA 30339. Their telephone number is (303) 460-1149.

Dividends

We have becomenever declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.

Reports

We are subject to certain reporting requirements and furnish annual financial reports to our stockholders, certified by our independent accountants, and furnish unaudited quarterly financial reports in our quarterly reports filed electronically with the penny stock rules, investors may find it more difficult to sell their securities.

Recent Unregistered Sales of Securities

On May 9, 2014,SEC. All reports and information filed by us can be found at the Company issued 9,000,000 shares of restricted stock for the deposit of $296,000 to pay payables and closing expensesSEC website, www.sec.gov. As of the Company, in connection with the Share Purchase Agreement. The shares were issued in reliance upon Rule 506 of Regulation D under the U.S. Securities Act of 1933, as amended (“Regulation D”).

On May 12, 2014, the Company offered accredited investors 6,000,000 shares at $0.50 per share in a private placement offering which closed in September 2014 with 5,995,000 shares sold for a total of $3,000,000 in gross proceeds. The shares were issued in reliance upon Rule 506 of Regulation D.

In March 2015, the Company offered accredited investors up to 1,500,000 shares at $1.50 per share in a private placement offering. Through March 30, 2015, 303,000 shares were subscribed for a total of $454,500 in anticipated gross proceeds. The shares are being offered, and upon the closing of the offering will be issued, in reliance upon Rule 506 of Regulation D.

See also “EQUITY COMPENSATION PLAN INFORMATION” under Item 12 (“Security Ownership of Certain Beneficial Owners and Management”)date of this Annual Report on Form 10-K.report we need to file quarterly and annual reports for 2016, 2017 and 2018 which we intend to file in the near future.

Item 6.  Selected Financial Data.

As a “smallersmaller reporting company” as defined by Item 10 of Regulation S-K,company, we are not required to provide information required by this Item.information.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONItem 7.Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the consolidatedour audited financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the other financial information included“safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this Annual Report.Report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward looking statements.

OVERVIEW

AboutOverview and History

We were originally incorporated in the CompanyState of Colorado in August 1998 under the name “Network Acquisitions, Inc.” We changed our name to Cavion Technologies, Inc. in February 1999 and subsequently to Concord Ventures, Inc. in October 2006. On December 21, 2000, we filed for protection under Chapter 11 of the United States Bankruptcy Code. In connection with the filing, on February 16, 2001, we sold our entire business, and all of our assets, for the benefit of our creditors. After the sale, we still had liabilities of $8.4 million and were subsequently dismissed by the Court from the Chapter 11 reorganization, effective March 13, 2001, at which time the last of our remaining directors resigned. On March 13, 2001, we had no business or other source of income, no assets, no employees or directors, outstanding liabilities of approximately $8.4 million and had terminated our duty to file reports under securities law. In February 2008, we were re-listed on the OTC Bulletin Board.

The Company was

In April 2010, Concord Ventures, Inc. ("Concord"), a Colorado corporation, incorporated asthree new subsidiary companies, CCVG, Inc. ("CCVG"), CCAPS Co.("CCAPS") and Golden Dragon Holding Co. ("Golden Dragon"). All three of the new subsidiary companies were domiciled in Delaware.

In order for Concord to re-domicile in Delaware from Colorado, on September 29, 2010, Concord entered into an Agreement and Plan of Merger ("the State of Delaware in December 2010 as aMerger Agreement") with its wholly owned subsidiary, CCVG. Under the terms of the Merger Agreement, Concord Ventures, Inc. (“Concord”). In late October 2014,shares of common stock converted automatically to CCVG hares, without change or necessity to reissue. Also under the Company changed its name to CannaPharmaRx, Inc.Merger Agreement, CCVG became the surviving company domiciled in Delaware.

Effective December 31, 2010, CCVG completed an Agreement and Plan of Merger and Reorganization y (the “Reorganization") with CCAPS and Golden Dragon, both becoming wholly-owned subsidiaries of CCVG. The Company isReorganization provided for the merger of CCVG with and into CCAPS, with CCAPS being the surviving corporation in that merger. Contemporaneously with CCVG's merger with and into CCAPS, the shareholders of CCVG were converted into our shareholders on a one share for one share basis.

As a result of this reorganization Golden Dragon became the surviving publicly quoted parent holding company seeking to create value for our shareholders by merging with another entity with experienced managementCCAPS, the surviving corporation of the merger between CCVG and opportunities for growth in return for sharesCCAPS, becoming the sole remaining wholly-owned subsidiary of our common stock. Golden Dragon.

On May 9, 2014, the Companywe entered into a Share Purchase Agreement (the “Share“Share Purchase Agreement”Agreement”) with CannaPharmaRx,CannaPharmaRX, Inc., a Colorado corporation (“CannaRx”Canna Colorado”), and David Cutler, thea former President, Chief Executive Officer, Chief Financial Officer and director of theour Company. Under the Share Purchase Agreement, CannaRxCanna Colorado purchased 1,421,120 restricted shares of the Company’sour common stock from Mr. Cutler and an additional 9,000,000 restricted shares of the Company’s common stockshares directly from the Company.us.

On May 15, 2014, the Companywe entered into an Agreement and Plan of Merger (the “Merger Agreement”) with CannaRx and CPHR Acquisition Corp., a newly formed and wholly owned subsidiary“Plan of the Company (“CPHR”Merger”), pursuant to which CPHRCanna Colorado would be

merged with and into CannaRx, resulting in CPHR ceasing its corporate existence and CannaRx becomingbecome a subsidiary of theour Company. In October 2014, we changed our legal name to “CannaPharmaRx, Inc.” During the fourth quarter of 2014, in light of the Cohen litigation described in Part I, Item 3, below (Legal Proceedings) of, as well as in the notes to our financial statements included in this report,,the parties determined to abandondelay the closing of the transaction contemplated by the original Plan of Merger. After this litigation settled, on April 21, 2015, we entered into an Amended and Restated Agreement and Plan of Merger (the “Merger Agreement”) with Canna Colorado and CPHR Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of our Company (“Acquisition Sub”), pursuant to which Acquisition Sub merged with and into Canna Colorado, with Canna Colorado remaining as the surviving corporation and wholly-owned non-operating subsidiary of our Company and the outstanding shares of Canna Colorado converted into 9,750,000 shares of our common stock (the “Merger”). The Merger Agreement amended and restated in its entirety the Plan of Merger from May 2014.

On January 29, 2015, we received a deficiency notice from the Financial Industry Regulatory Authority (“FINRA”), stating that FINRA would not process our name change from October 2014 due to questions about our ownership raised in the Cohen litigation described above. We appealed the notice, arguing among other things that the ownership of our Company was not at issue in the Cohen litigation. On March 20, 2015, FINRA reversed the deficiency notice and subsequently processed ours request to change our name and trading symbol.

On June 29, 2015, we closed the Merger Agreement, and the Company and certain shareholders of CannaRx entered into share exchange agreements, as an alternate means of acquiring CannaRx. In anticipationwith 100% of the settlementCanna Colorado shareholders exchanging, on a 1:1 exchange ratio, a total of 9,750,000 Canna Colorado shares in return for a total of 9,750,000 shares of our common stock. Additionally, pursuant to the Merger, all of the Cohen litigation, the Company subsequently decided to terminate the share exchange agreements and pursue the consummationshares of our common stock previously owned by Canna Colorado were cancelled. Canna Colorado is now a merger agreement or another transaction on similar terms. By consummatingwholly-owned subsidiary.

As a merger agreement or a similar transaction, the Company intends to cause CannaRx to become a subsidiaryresult of the Company,aforesaid transactions, we became an early-stage pharmaceutical company whose purpose was to advance cannabinoid research and discovery using proprietary formulation and drug delivery technology then under development. We also intended to own and operate compounding and specialty pharmacies. We regularly engaged in discussions to acquire such pharmacies and to operate its business through CannaRx.finance such acquisitions, but to date but have not successfully consummated any such acquisition.

CannaPharmaRx’s purpose is

We have never been subject to innovate to bring cannabinoid-based therapies to market that improve patients’ lives. Research and development is at the heart of our mission as we work to transform advanced science and technologies into the therapies that matter most to patients and clinicians.any bankruptcy proceeding. Our executive management team has over 150offices are located at Our principal place of business is located at 2 Park Plaza, Suite 1200B, Irvine, CA, 92614, phone (949) 652-6838. Our website address is www.cannapharmarx.com.

Results Of Operations

Comparison of Results of Operations for our fiscal years of combined pharmaceutical industry experience developing and marketing prescription products. For more information, please visit www.cannapharmarx.com. The information contained on our website, or accessible thereby, is not a part of this Annual Report on Form 10-K.

The Company operates as a single segment.

RESULTS OF OPERATIONS

Fiscal Year Endedended December 31, 2015 and 2014 Compared To The Fiscal Year Ended December 31, 2013

Revenue

During the years ended December 31, 20142015 and 2013,2014, we did not recognize any revenues from our activities. We do not anticipate recognizing revenues in the near future givenunless and until we acquire a new business. No assurance can be provided that our operational activities are purely administrative in nature.this will occur.

Research and Development ExpensesStock-based compensation

During the year ended December 31, 2014,2015, we incurred $589,783$7,435,004 in researchstock based compensation solely due to the issuance of stock options to our management and development expenses,employees, compared to no such expenses incurred in$579,565 during the yearsame 12 month period ended December 31, 2013. Research2014. Due to the departure of most of management and development expenses consist mainlythe employees, the stock was forfeited and as a result amortization of consulting fees, salaries, and fringe benefits including stock-based compensation.the stock option expense ended with their departure. As of December 31, 2014, we had $728,125 of unamortized stock expense will be amortized in full by June 30, 2018.

General and Administrative ExpensesOperating expenses

During the year ended December 31, 2014,2015, we incurred $1,437,204$11,652,460 in general and administrativeoperating expenses compared to $80,311 we incurred$3,974,486 in general and administrative expenses in the year ended December 31, 2013, an increase of $1,356,893. In 2014, general and administrative expenses consisted primarily of consulting fees, salaries and fringe benefits, including stock-based compensation, and legal fees associated both with the legal proceedings outlined under Item 3 of this Annual Report, as well as the acquisition of the Golden Dragon Holding Co. shell company. In 2013, general and administrative expenses were primarily limited to legal and accounting expenses incurred in maintaining our public reporting status.

Legal Settlement Expenses

As more fully described in Item 3, in the fourth quarter of 2014, the former President, Chief Operating Officer and board member of CannaRx, Gary M. Cohen, filed a lawsuit against CannaRx. On March 25, 2015, the Company and Mr. Cohen agreed in principle to the terms of a settlement agreement that will resolve the aforementioned lawsuits. As part of that agreement in principle, the Company agreed to purchase all of Mr. Cohen’s 2,250,000 shares of CannaRx for a purchase price of $350,000, with $85,000 payable up front and the remainder payable in equal installments of $15,000 per month over the next 17 months, and a final payment of $10,000 in the eighteenth month. In addition to this $350,000 cash expense, the Company will grant 600,000 unregistered restricted shares of its common stock to Mr. Cohen as part of the settlement. The value of these shares at the existing market price added an additional non-cash expense of $1,597,500 to the company’s legal settlementoperating expenses for the yearsame period ended December 31, 2014. The legal settlementAside from the increase in stock-based compensation described above, the increase of $2,720,035 in operating expenses in 2015 is primarily attributable to an increase in virtually every expense accrued for this matter therefore totals $1,947,500 and is reflectedcategory. Investor relation costs increased by $1,262,586 in the Company’s 2014 statement of operations.

Operating Loss

In the year ended December 31, 2014, we recognized an operating loss of $3,974,487,2015 compared to an operating loss2014 as a result of $80,311the issuance of $1,153,643 in warrants and $127,115 in cash arising from our private offering, employee wages increased $795,715 as a result of hiring of increased management, professional fees increased by $195,420 in 2015 compared to 2014 as a result of the year ended December 31, 2013,settlement of the Cohen litigation described throughout this Report and $383,000 in brokerage fees, as a varianceresult of $3,894,176 due to the factorsissuance of our securities as discussed above.broker commissions.

Interest and Other Income (Expenses) Net

In

Other expense, net was $90,472 for the year ended December 31, 2014, we incurred net interest expense of $3,946 in interest and other income (expenses) net,2015 compared to $14,095 in the year ended December 31, 2013, an decreaseother expense net of $10,149. The decrease in interest expense in the year ended December 31, 2014 as compared to the year ended December 31, 2013 reflected the termination in May 2014 of the Company’s obligation under the note payable to the former majority shareholder on May 9, 2014, as well as interest earned on excess funds in 2014.

Loss before Income Tax

In the year ended December 31, 2014, we recognized a loss before income taxes of $3,978,433, compared to loss before taxes of $94,406 in the year ended December 31, 2013, an increase of $3,884,027, due to the factors discussed above.

Provision$3,947 for Income Taxes

No provision for income taxes was recorded in either the year ended December 31, 2014, or 2013 asa difference of $86,525 in additional expense. Substantially all of this difference is attributable to a loss of $87,748 on the disposal of assets for the period ended December 31, 2015

As a result, we incurred taxable losses in both periods.

Net Loss

Ina net loss of $11,742,932 (approximately $0.77 per share) for the year ended December 31, 2014, we realized a net loss of $3,978,4332015, compared to a net loss of $94,406 in$3,978,433 (approximately $0.36 per share) during the year ended December 31, 2013, an increase of $3,884,027, due to the factors set forth above.2014.

LIQUIDITY AND CAPITAL RESOURCES

During the year ended

As of December 31, 2014,2015, we usedhad $2,621 in cash.

As of December 31, 2015, we had a stockholders’ deficit of $684,542 and a working capital deficit of $684,542.

Net cash of $1,541,106 in our operating activities, compared to $11,017 cash we used in operating activities duringwas $2,548,759 for the fiscal yearperiod ended December 31, 2013,2015 compared to net cash used in operating activities of $1,541,106. The increase of $1,007,653 in 2015 is primarily attributable to an increase of $1,530,089. During the year ended December 31, 2014 we incurred net losses of $3,978,433 which, after noncash adjustments and changes in operating losses in 2015.

Net cash provided by investing activities was $135,670 in 2015 compared to net cash used of $(150,721) in 2014. The difference is attributable to a refund of the $50,000 deposit paid toward an acquisition and the disposal of fixed assets and liabilities, reflected operating usage of $1,541,106. During the year ended December 31, 2013 we incurred net losses of $94,406 which, after adjustmentin 2015 that had been purchased in 2015 for $60,000 in noncash compensatory loan increases, which were partially offset by a positive movement in operating liabilities of $23,389, reflecting operating usage of $11,017.

During the year ended December 31, 2014, the Company invested $100,721 in new equipment and software and paid a $50,000 deposit against a specialty pharmacy acquisition, for total2014.

Net cash flows used for investingprovided by financing activities was $810,471 in 2015 compared to $3,297,066 in 2014. This reduction in cash provided by financing activities of 150,721. No cash was provided by or used in investing activities during$2,486,595 is primarily due to a reduction of proceeds from the fiscal year ended December 31, 2013.

During the year ended December 31, 2014, we received net proceedssales of common stock of $3,331,000 from financing activities throughin 2014 to $804,550 in 2015.

We have no revenue-producing operations or other source of income as of the issuancedate of this Report, or during 2015.

In March 2015, we commenced a private placement of our common stock to accredited investors at $1.50 per share (the “Private Placement”). Through September 30, 2015, we issued an aggregate of 536,334 shares and received $804,500 in a private placement transaction, while utilizing $33,934 to pay-down related party debt of the previous majority owner. During the year ended December 31, 2013, we received net proceeds from related party debt of $10,992 from the previous majority shareholder.gross proceeds.

We had a working capital deficit (current assets less current liabilities) of $290,931 (which includes an offset of $1,597,500 in current liabilities that will be settled in stock) and an accumulated deficit of $21,145,348 as of December 31, 2014.

In our financial statements for the fiscal years ended December 31, 2015 and 2014, and 2013, the ReportReports of the Independent Registered Public Accounting Firm includesFirms each include an explanatory paragraph that describes substantial doubt about our ability to continue as a going concern. OurThese financial statements for the fiscal years ended December 31, 2014 and 2013 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. To preserve liquidity, effective October 2015, we took certain steps to manage and reduce our operating costs and based on our current financial projections, we believe we have sufficient existing cash resources to fund current operations into November 2015. However, current revenue growth expectations are not sufficient to sustain operations.

It is our current intention to seekraise debt and/or equity financing to fund ongoing operating expenses and to create value for our shareholders.expenses. There is no assurance that these events will be satisfactorily completed or at terms acceptable to us. Any issuance of equity securities, if accomplished, could cause substantial dilution to existing stockholders. Any failure by us to successfully implement these plans would have a material adverse effect on our business, including the Company.possible inability to continue operations.

Subsequent Events – Recent Financings

In April 2018, we commenced an offering of up to 60,000 shares of our Series A Convertible Preferred Stock at $1.00 per share to our current management, who invested prior to assuming their respective management positions with us. Each is an accredited investor. An aggregate of 60,000 shares of Series A Convertible Preferred Stock were subscribed for a total of $60,000 in gross proceeds. Each share of Series A Convertible Preferred Stock converts into 1,250 shares of common stock and vote on an as converted basis.

In July 2018, we commenced a private offering of up to $2,000,000 of 12% Convertible Debentures. Each Convertible Debenture is convertible into shares of our common stock (a) issues equity securities (“Equity Securities”) in a transaction or series of related transactions resulting in aggregate gross proceeds to us of at least $5,000,000, including conversion of the Convertible Debenture and any other indebtedness, or issuance of Equity Securities in connection with any business combination, including a merger or acquisition (a “Qualified Financing”), then the Convertible Debenture, and any accrued but unpaid interest thereon, will automatically convert into the equity securities issued pursuant to the Qualified Financing at a conversion price equal to the lesser of (i) 50% of the per share price paid by the purchasers of such equity securities in the Qualified Financing or (ii) $0.40 per share. Or (b) . If a Debenture has not been previously converted pursuant to a Qualified Financing, then, upon Holders election prior to the Maturity Date or effective upon the Maturity Date, the Holder may elect to convert the Debenture into shares of our Common Stock at a conversion price equal to the lesser of (i) 50% of the market price for our Common Stock as of the Maturity Date or (ii) $0.40 per share.

To date, we have received $640,000 in subscriptions under this offering. The Convertible Debenture is being offered in reliance upon Rule 506 of Regulation D. We intend to use the proceeds from this offering working capital and costs associated with identifying and consummating an acquisition..

We must raise additional funds to support our expected operating plan and our continued operations. We cannot provide any assurances that we will be able to raise such funds or whether we would be able to raise such funds on terms that are favorable to us. We may seek to borrow monies from lenders at commercial rates, but such lenders will probably be at higher than bank rates, which higher rates could, depending on the amount borrowed, render the net operating income of any of our planned profitable businesses insufficient to cover the interest burden.

Currently, we have no committed source for any funds as of the date hereof. No representation is made that any funds will be available when needed. In the event funds cannot be raised if and when needed, we may not be able to carry out our business plan and could fail in business as a result of these uncertainties.

Inflation

Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the year ended December 31, 2015.

Critical Accounting Policies and Estimates

Critical Accounting PoliciesEstimates

All companies are required

Our financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to include a discussionmake estimates, judgments and assumptions that affect reported amounts of criticalassets, liabilities, revenues and expenses. We continually evaluate the accounting policies and estimates used into prepare the preparation of their financial statements. On an on-going basis, we evaluate our critical accounting policies and estimates. We base ourThe estimates are based on historical experience and on various other assumptions that we believebelieved to be reasonable under the circumstances, thecurrent facts and circumstances. Actual amounts and results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results maycould differ from these estimates under different assumptions or conditions.

Our significantmade by management. Certain accounting policies that require significant management estimates and are describeddeemed critical to our results of operations or financial position are discussed in Noteour Annual Report on Form 10-K for the year ended December 31, 2014 in the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Recently Adopted Accounting Standards. In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09 – Revenues from Contracts with Customers, which introduces a new five-step framework for revenue recognition. The core principle of the standard is that entities should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled for those goods or services. The ASU also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The standard can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. On August 12, 2015, the FASB issued ASU 2015-14,Revenue from Contracts with Customers (Topic 606) - Deferral of Effective Date, which defers the effective date of ASU 2014-09 to January 1, 2018 with early adoption beginning January 1, 2017. Management is currently evaluating the impact of the new revenue recognition standards and does not believe the adoption of ASU 2014-09 will have a material impact on our financial statements.

In March 2016, the FASB issued ASU 2016-08,Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations and includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. ASU 2016-08 is effective January 1, 2018 to be in alignment with the effective date of ASU 2014-09, as discussed above. Management is currently assessing its procedures for determining the revenues derived from principal versus agents in connection with the impact of adopting this new accounting standard on the Company’s financial statements and does not believe that the adoption of ASU 2016-08 will have a material impact on our financial statements.

In April 2016, the FASB issued ASU 2016-10,Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.The amendments in this update affect the guidance in ASU 2014-09, which is not yet effective. The amendments in ASU 2016-10 clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. ASU 2016-10 is effective January 1, 2018 to be in alignment with the effective date of ASU 2014-09, as discussed above. Management is currently assessing the potential impact of adopting this new accounting standard on the Company’s financial statements in connection with revenues recognized from licensing our vast archive of photographic images.

In May 2016, the FASB issued ASU 2016-12,Revenue from Contracts from Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.The amendments in this update affect the guidance in ASU 2014-09, which is not yet effective. The core principle of the guidance in Topic 606 is that an entity should recognize revenue 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. The amendments in ASU 2016-12 do not change the core principle of the guidance in Topic 606, but instead affect only the narrow aspects noted in Topic 606. ASU 2016-12 is effective January 1, 2018 to be in alignment with the effective date of ASU 2014-09, as discussed above. Management evaluated ASU 2016-12 and does not believe the adoption of ASU 2016-12 will have a material impact on our financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements–Going Concern, (Subtopic 204-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This ASU requires management to evaluate each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Management has evaluated ASU 2014-15 and does not believe the adoption of ASU-2014-15 will have a material effect on our financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. ASU No. 2015-11 clarifies that inventory should be held at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling price, less the estimated costs to complete, dispose and transport such inventory. ASU No. 2015-11 will be effective for fiscal years and interim periods beginning after December 15, 2016. ASU No. 2015-11 is required to be applied prospectively and early adoption is permitted. Management considered and evaluated ASU 2015-11 and does not believe the adoption of ASU 2015-11 will have a material effect on our financial statements.

In November 2015, the FASB issued ASU 2015-17,Balance Sheet Classification of Deferred Taxes, which requires entities to present deferred tax assets and liabilities as non-current in a classified balance sheet, instead of separating into current and non-current amounts. ASU 2015-17 is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods, on a prospective or retrospective basis. Early adoption is permitted for all companies in any interim or annual period. Management evaluated ASU 2015-17 and does not believe the adoption of this new accounting standard will have a material impact on our financial statements for future reporting periods.

In January 2016, the FASB issued ASU 2016-01,Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments including requirements to measure most equity investments at fair value with changes in fair value recognized in net income, to perform a qualitative assessment of equity investments without readily determinable fair values, and to separately present financial assets and liabilities by measurement category and by type of financial asset on the balance sheet or the accompanying notes to the financial statements included instatements. ASU 2016-01 will be effective for the Company beginning on January 1, 2018, and will be applied by means of a cumulative effect adjustment to the balance sheet, except for effects related to equity securities without readily determinable values, which will be applied prospectively. Management is currently evaluating the potential impact of adopting this Annual Report. These policies were selected because theynew accounting standard on our financial statements.

In February 2016, the FASB issued ASU 2016-02,Leases, which requires an entity to recognize long-term lease arrangements as assets and liabilities on the balance sheet of the lessee. Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all long-term leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The amendments also require certain new quantitative and qualitative disclosures regarding leasing arrangements. ASU 2016-02 will be effective for the applicationCompany beginning on January 1, 2019. Lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of significant management judgment and represent the more significant accounting policies and methods that are broadly appliedearliest comparative period presented in the preparationfinancial statements. Early adoption is permitted. Management does not believe the adoption of ASU 2016-02 will have a material impact on the Company’s financial statements.

In March 2016, the FASB issued ASU 2016-05,Derivatives and Hedging: Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships, which clarifies that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument would not, in and of itself, be considered a termination of the derivative instrument, provided that all other hedge accounting criteria continue to be met. ASU 2016-05 is effective for the Company beginning on January 1, 2017. Early adoption is permitted, including in an interim period. Management evaluated ASU 2016-05 and does not believe the adoption of this this new accounting standard will have a material impact on the Company’s financial statements.

In March 2016, the FASB issued ASU 2016-06,Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments, which aims to reduce the diversity of practice in identifying embedded derivatives in debt instruments. ASU 2016-06 clarifies that the nature of an exercise contingency is not subject to the “clearly and closely” criteria for purposes of assessing whether the call or put option must be separated from the debt instrument and accounted for separately as a derivative. ASU 2016-06 will be effective for the Company beginning on January 1, 2017. Management evaluated ASU 2016-06 and does not believe the adoption of this new accounting standard will have a material impact on our financial statements. However, it should be noted that we