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UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549

FORM 10-K

 ANNUAL REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2011

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF TH E SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________to___________

Commission file number 000-28911

CANNABIS SCIENCE, INC.
(Exact name of registrant as specified in its charter)


Nevada  

91-1869677

(State or Other Jurisdiction of Incorporation of Organization)

(I.R.S. Employer Identification No.) 

 

 

6946 N Academy Blvd, Suite B #254

Colorado Springs, CO 80918

(888) 889-0888

(Address of principal executive offices) (ZIP Code) 

(Registrants telephone number, including area code)   

 


Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o   No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yeso  No þ

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  Yes ¨ No þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer ¨     Accelerated filer o  Non-accelerated filer   o   Smaller reporting company þ  

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

As of June 30, 2011 [this is supposed to be the most recent 2nd quarter so it shouldnt be updated], which was the last business day of the registrants most recent second fiscal quarter, the aggregate market value of the registrants

Common Stock held by non-affiliates of the registrant was $5,271,983 based on the closing sale price of $0.04 per share on that date.  For the purposes of the foregoing calculation only, all directors, executive officers, related parties and holders of more than 10% of the issued and outstanding common stock of the registrant have been deemed affiliates.

Number of common shares outstanding at April 16, 2012:  384,670,574


 

                                      

              


PART I

 


ITEM 1.  DESCRIPTION OF BUSINESS


Forward-looking Statements


This annual report contains forward-looking statements.  These statements relate to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.


Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Except as required by applicable laws, including the securities laws of the United States, we do not intend to update any of the forward-looking statements so as to conform these statements to actual results.


As used in this annual report, the terms "we", "us", "our", the Company, and "Cannabis Science" mean Cannabis Science, Inc., unless otherwise indicated.


All dollar amounts refer to U.S. dollars unless otherwise indicated.


Overview


Cannabis Science, Inc. (formerly Gulf Onshore, Inc.)  (We, us or the Company), was incorporated under the laws of the State of Colorado, on February 29, 1996, as Patriot Holdings, Inc.  On August 26, 1999, the Company changed its name to National Healthcare Technology, Inc., and commenced a business plan to develop Magkelate, a patented intravenous drug developed to re-establish normal electrolyte balance in ischemic tissue and certain other patents for medical instruments and medical instrument technology.  On January 14, 2000, the Company filed its Form 10SB12G.  In 2002, the Company ceased its medical technology business following the death of Magkelates inventor.  The Company conducted no substantial business until 2005.


In July 2005, the Company acquired Es3, Inc., a Nevada Corporation ("Es3"), pursuant to the terms of an Exchange Agreement (the "Exchange Agreement") by and among the Company, Crown Partners, Inc., a Nevada corporation ("Crown Partners"), Es3, and certain stockholders of Es3 (the "Es3 Stockholders").  Under the terms of the Exchange Agreement, the Company acquired all of the outstanding capital stock of Es3 in exchange for the issuance of 191,828 shares of the Company's common stock (adjusted for splits) to the Es3 Stockholders, Crown Partners and certain consultants.  The transactions effected by the Exchange Agreement were accounted for as a reverse merger, and recapitalization.  In addition, the Company changed its accounting year-end from September 30 to December 31, which was Es3's accounting year-end.  The Company then commenced business manufacturing and marketing products under the name Special Stone Surfaces.  The Company sold its shares in Es3 in October 2005, and thereafter conducted no substantial business until 2006.


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On April 3, 2006, the Company acquired a group of oil and gas leases in Oklahoma in exchange for issuance of common stock and commenced the business of oil and gas exploration and production, mineral lease purchasing and all activities associated with acquiring, operating and maintaining the assets of such operations.  On June 6, 2007, the Company changed its name from National Healthcare Technology, Inc., to Brighton Oil & Gas, Inc., and converted to a Nevada corporation.  The Company acquired additional oil and gas leases during 2007, all for issuance of common stock; in October 2007, the Company acquired leases from K & D Equity Investments, Inc., a Texas corporation in a transaction that effected a change of control, with K & D acquiring a majority stake in the Company.  The Company also entered into a Line of Credit Agreement with South Beach Live, Inc., a Florida corporation, to provide it with working capital of up to $100,000 on a revolving credit line.  The Agreement permitted South Beach the right to repayment on demand, or to convert amounts owed for shares.


On March 25, 2008 the Company changed its name to Gulf Onshore, Inc.  On June 6, 2008, the Company entered into an Asset Acquisition Agreement with K & D to acquire additional leases (the Leases) in exchange for common stock and a Stock Purchase Agreement (SPA) with South Beach Live, Inc., a Florida corporation, to purchase 100% of the common shares of Curado Energy Resources, Inc., a Texas corporation (Curado).  Curado is registered with the Texas Railroad Commission as an oil and gas well operator, and is the operator for the Leases.  The Company acquired the Leases into Curado, in exchange for shares issued to K & D.  The Company issued South Beach a promissory note for $250,000, payable in 1 year at 10% interest, which was guaranteed by Curado.  The Company consolidated the operations of Curado commencing in 3Q 2008.


In August 2008, the Company granted South Beach a security interest in its Curado shares and the Curado assets, in exchange for concessions from South Beach regarding further cash advances and future stock conversions.  This transaction was contemplated and further consummated by the Company due to declining oil prices throughout 3Q 2008 and increased operating costs, which made continued oil and gas operations on the Leases unprofitable.  The Company was also continually drawing down on its Line of Credit Agreement with South Beach that created unsustainable working capital pressure.  


On October 6, 2008, in the face of further oil price declines and general economic conditions, the Company and South Beach entered into an Accord and Satisfaction Agreement under which the Company surrendered its interest in the Putnam M oil and gas lease in Throckmorton Co., Texas in exchange for a complete release on the Promissory Note and Line of Credit.  In addition, the Company waived any claim on the shares of Curado common stock that secured the Promissory Note or the assets of Curado.  South Beach then made claim against Curado under the guarantee agreement and then exercised its rights under the collateral agreement.  As a result, the Companys 4Q 2008, financial statements reflected the foreclosure of Curado and its assets, and furthermore that the Company has, once again, become a Development Stage Company seeking a new business partner or acquisition.  A Form 8-K reflecting this transaction was timely filed.

 

On March 30, 2009, the Company entered into an agreement with Cannex Therapeutics, LLC, (Cannex) a California limited liability company, and its principal, medical cannabis pioneer and entrepreneur Steven W. Kubby, to acquire all of their interest in certain assets used to conduct a cannabis research and development business.  The asset purchase agreement includes all of Cannexs and Kubbys intellectual property rights, formulas, patents, trademarks, client base, hardware and software, including the website www.phytiva.com.  The Company and its largest stockholder, K & D Equities, Inc., exchanged a total of 10,600,000 shares of common stock for the assets of Cannex; the Company issued 2,100,000 shares to Cannex, and K & D transferred 8,500,000 shares to Cannex and others.  A Form 8-K reflecting this transaction was timely filed.  Please see Note 1 to the financial statements.


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As part of the Agreement, on April 1, 2009, the Company appointed Mr. Kubby as President and CEO, Richard Cowan as Director and CFO, and Robert Melamede Ph. D., as Director and Chief Science Officer.  Each of them was also appointed as a director.  All of the Companys current directors then resigned.  On April 7, 2009, the Company changed its name to Cannabis Science, Inc., and obtained a new CUSIP number.  Its shares now trade under the symbol CBIS.OB.  A Form 8-K was timely filed, with a copy of the Asset Acquisition Agreement and Board Resolution ratifying the Agreement provided as exhibits thereto.


On April 7, 2009, the Company changed its name to Cannabis Science, Inc., reflecting its new business mission: Cannabis Science, Inc. is at the forefront of medical marijuana research and development.  The Company works with world authorities on phytocannabinoid science targeting critical illnesses, and adheres to scientific methodologies to develop, produce, and commercialize phytocannabinoid-based pharmaceutical products.  In sum, we are dedicated to the creation of cannabis-based medicines, both with and without psychoactive properties, to treat disease and the symptoms of disease, as well as for general health maintenance.  The Company obtained a new CUSIP number as well.  Cannabis Science Inc. has also launched its new website www.cannabisscience.com reflecting its new name.


On May 7, 2009 the Company common shares commenced trading under the new stock symbol OTCBB: CBIS.


On August 18, 2010, the Company entered into a license agreement with Rockbrook, Inc. to license its proprietary medical cannabis products and delivery methods.  Rockbrook is a licensed Colorado medical marijuana dispensary.  Under the license agreement, Rockbrook will pay license fees to Cannabis Science throughout the course of its operation.  As of December 31, 2011, the Company is re-assessing the license agreement with Rockbrook and how to move forward in a cohesive arrangement with the other license agreements and acquisitions the Company is working on.

 

On February 9, 2012, the Company signed a license agreement with Apothecary Genetics Investments LLC. to produce several Cannabis Science Brand Formulations for the California medical cannabis market. As well, Apothecary will provide research and development facilities with full circle operations including a California laboratory facility for internal research and development, along with 16 unique genetic strains specifically generated and maintained by a cancer survivor who recognizes the importance of proper growth and breeding.  In consideration of this agreement, on January 1, 2012, the Company entered into a 25 year management agreement with Dr. Mohammad Afaneh to act Chief Operating Officer of Cannabis Science, Inc.  Dr. Afaneh received 28,500,000 common shares valued at $299,250 under this agreement.  In addition, on February 10, 2012, Dr. Afaneh signed a management bonus agreement where he received 5,000,000 common shares valued at $185,000 as a signing bonus for entering into his management agreement.  In addition, on January 1, 2012, the Company entered into a 25 year management agreement with Bret Bogue to act as Director of Horticulture and head of research and development.  Mr. Bogue received 28,500,000 common shares valued at $299,250 under this agreement. In addition, on February 10, 2012, Mr. Bogue signed a management bonus agreement where he received 5,000,000 common shares valued at $185,000 as a signing bonus for entering into his management agreement.


On February 9, 2012, the Company acquired GGECO University, Inc. (GGECO), an online video-based medical cannabis education system, offering courses dealing with medical cannabis law, the benefits of medical marijuana, cooking, horticulture, and bud tending.  Following the university's name change to Cannabis Science University, the Company hopes to use this platform to educate the general public, patients, and even those who have already been involved in the medical cannabis industry on the medical benefits of cannabis, how it is grown, how to use it safely, and the many applications or ways to administer the medication.  In consideration of this agreement, the Company issued 25,000,000 common shares to the principals of GGECO.


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On March 21, 2012, the Company acquired Cannabis Consulting Inc. (CCI Group), which consists of a group of businesses operated by Robert J. Kane, including: all contracted rights, properties, patents, trademarks, and distribution rights and agreements pertaining to Cannabis Consulting Inc., Robert Kane



Partners, Kaneabis Consulting, Kaneabis Fund, Kaneabis Report, and Kaneabis Radio.  In conjunction with the acquisitions, Robert Kane was promoted to V.P. of Investor Relations for the Company. Consideration paid for the CCI Group was 1,000,000 common shares to issued to the principal, Mr. Robert Kane.


The Company is in the development stage as defined in Accounting Standards Codification (ASC) Topic 915.




ITEM 1A.  RISK FACTORS

 

Not applicable.



ITEM 2.  PROPERTIES


We currently lease a laboratory and office space at 6946 N Academy Blvd, Suite B #254, Colorado Springs, CO 80918, on a month to month basis.



ITEM 3.  LEGAL PROCEEDINGS

 

As of April 16, 2012, there are not any material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we or any of our subsidiaries, GGECO or CCI Group, are a party or of which any of our properties is the subject.  Also, our management is not aware of any legal proceedings contemplated by any governmental authority against us.

 


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

None.

 

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PART II

 

ITEM 5.  MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

Our common stock is not traded on any exchange.  Our common stock is quoted on the OTC Bulletin Board, under the trading symbol CBIS.OB.  The market for our stock is highly volatile.  We cannot assure you that there will be a market in the future for our common stock.  The OTC Bulletin Board securities are not listed and traded on the floor of an organized national or regional stock exchange.  Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers in stocks.  OTC Bulletin Board stocks are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.

The following table shows the high and low prices of our common shares on the OTC Bulletin Board for each quarter within the two most recent fiscal years.  The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:

 

Fiscal Year Ending December 2010 

 

 HIGH

 

 LOW

Quarter Ending March 31, 2010 

 

  0.44


  0.21

Quarter Ending June 30, 2010 

 

  0.25


  0.10

Quarter Ending September 30, 2010    

 

  0.11


  0.04

Quarter Ending December 31, 2010 

 

  0.26

   

  0.04






Fiscal Year Ending December 2011 

 

 HIGH

 

 LOW

Quarter Ending March 31, 2011 

 

  0.14


  0.03

Quarter Ending June 30, 2011 

 

  0.09


  0.04

Quarter Ending September 30, 2011    

 

  0.06


  0.02

Quarter Ending December 31, 2011 

 

  0.03


  0.01

 

 

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Holders

 

As of December 31, 2011, there were 235 stockholders of record, including CEDE & Co., which holds shares for the beneficial interest of an unknown number of stockholders in brokerage accounts.


Dividends

 

We have not declared or paid cash dividends or made distributions in the past, and we do not anticipate that we will pay cash dividends or make distributions in the foreseeable future.  We currently intend to retain and reinvest future earnings, if any, to finance and expand our operations.


Recent Sales of Unregistered Securities

 

During the fiscal year ended December 31, 2011, we did not sell any shares in unregistered offerings


As set out below, we have issued securities in exchange for services, properties and for debt, using exemptions available under the Securities Act of 1933.


During the three months ended December 31, 2011, the Company entered into debt settlement agreements with several parties as follows:


On October 4, 2011, the Company issued 6,500,000 common shares from the Companys 2011 Stock Compensation Plan B to two consultants for services rendered with a fair market value of $156,000 based on the closing price of the Companys common stock on September 28, 2011 which was $0.024 per share.


On October 12, 2011, the Company issued 8,000,000 common shares for settlement of $8,000 of stockholder debt, for a loss on settlement of $168,000, assigned from the stockholder note payable originating on July 15, 2010 and July 30, 2010, and owing at December 31, 2010.


On October 13, 2011, the Company issued 3,000,000 common shares for settlement of $3,000 of stockholder debt, for a loss on settlement of $64,200, assigned from the stockholder note payable originating on March 2, 2011.


On October 13, 2011, the Company issued 4,500,000 common shares from the Companys 2011 Stock Compensation Plan B to a consultant for services rendered with a fair market value of $100,800 based on the closing price of the Companys common stock on October 11, 2011 which was $0.0224 per share.


On October 26, 2011, the Company issued 5,800,000 common shares for settlement of $5,800 of stockholder debt, for a loss on settlement of $165,200, assigned from the stockholder note payable originating on July 15, 2010 and August 5, 2010, and owing at December 31, 2010.


On November 4, 2011, the Company issued 30,000,000 common shares for settlement of $30,000 of stockholder debt, for a loss on settlement of $570,000, assigned from the stockholder note payable originating on August 16, 2010, September 2, 10, 14, and 17, 2010 and October 7 and 13, 2010, and owing at December 31, 2010.


On November 22, 2011, the Company issued 17,000,000 common shares for settlement of $17,000 of stockholder debt, for a loss on settlement of $323,000, assigned from the stockholder note payable originating on August 16, 2010, September 2, 10 and 14, 2010 and October 13, 2010, and owing at December 31, 2010.


On November 23, 2011, the Company issued 9,000,000 common shares for settlement of $9,000 of stockholder debt, for a loss on settlement of $171,000, assigned from the stockholder note payable originating on August 16, 2010, and owing at December 31, 2010.

 

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On December 9, 2011, the Company issued 13,500,000 common shares for settlement of $13,500 of stockholder debt, for a loss on settlement of $256,500, assigned from the stockholder note payable originating on March 2, 2011.


On December 21, 2011, the Company issued 18,500,000 common shares for settlement of $18,500 of stockholder debt, for a loss on settlement of $166,500, assigned from the stockholder note payable originating on October 13, 2010 and May 18, 2011.


On December 28, 2011, the Company issued 5,500,000 common shares for settlement of $13,500 of stockholder debt, for a loss on settlement of $256,500, assigned from the stockholder note payable originating on March 2, 2011.


All relating shares were issued to settle the aforementioned debt.


 

ITEM 6.  SELECTED FINANCIAL DATA

 

Not applicable.



ITEM 7.  MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

 

This report contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  When used in this Form 10-K, the words "anticipate", "estimate", "expect", "project" and similar expressions are intended to identify forward-looking statements.  Such statements are subject to certain risks, uncertainties and assumptions including the possibility that the Company's proposed plan of operation will fail to generate projected revenues.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected.  The Company's actual results could differ materially from those set forth on the forward looking statements as a result of the risks set forth in the Company's filings with the Securities and Exchange Commission, general economic conditions, and changes in the assumptions used in making such forward looking statements.

 


General


In Q1 of 2008, the Company acquired all of the assets of Cannex Therapeutics, LLC from Cannex and Steven W. Kubby, and committed to the research and development of cannabis based medical products.  The Company owns intellectual property related to a whole cannabis extract lozenge, which has demonstrated some efficacy in non-blind informal testing.  Other research indicates that cannabis extracts available in non-smoked forms, including lozenges and topical creams, may have medicinal uses in treating a variety of diseases, the symptoms of those diseases, and for analgesic purposes.


The Company is committed to research and development of cannabis extract medicines ("product") and intends to pursue Independent New Drug certification, possibly under the Orphan Drug Act, for such treatments but faces two significant challenges in accomplishing this business objective, namely financing and government regulation.


The Company is undercapitalized, and will be reliant on outside financing from sales of securities or issuance of debt instruments.  Management expects many traditional lenders will be reluctant to provide the Company with capital in light of its financial condition and the nature of its expected business; so that any financing activities will likely be expensive and result in dilution to stockholders of the Company.  In this regard, it should be noted that the Asset Acquisition Agreement among Cannex, the Company and K & D Equity Investments, Inc. contains non-dilution provisions that provided additional shares to K & D in the event our shares are sold privately for less than $1.00 per share.  The Company can make no representation that financing for its business will be available, regardless of cost.



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Furthermore, although cannabis has been used for medicinal purposes for over 5,000 years, there is a significant prejudice against development of smoked cannabis medical products amongst the medical and law enforcement communities.  In spite of recent statements by the current administration that indicate a softening of these views, marijuana is still classified as a controlled substance.  The Company can provide no assurances that it can develop and market its intended product, or how long government approval, if obtained, will take.


Recent Developments


Cannabis Science is laying a solid foundation for entrance into the FDA and other government regulatory agencies for developing medicines for cancer, autism, Influenza, PTSD and other ailments.


The Company's goal is not the legalization of marijuana, but instead the development of FDA-approved and legal non-smoked cannabis-based medicines.  The Company faces not only the challenges of other business at an early stage of development, but special problems arising from the nature of its own business.  Notwithstanding, stockholders and prospective stockholders should recognize that any investment in our Company is risky and speculative, and could result in a total loss.

 

Results of Operations


Limited Revenues


Since our inception on January 27, 2005 to December 31, 2011, we have earned limited revenues of $90,107.  During the fiscal year ended December 31, 2011 we generated license revenues of $73,702.  As of December 31, 2011, we had an accumulated deficit of $70,536,669.  At this time, our ability to generate any significant revenues continues to be uncertain.  There is substantial doubt about our ability to continue as a going concern.  Our financial statements do not include any adjustment that might result from the outcome of this uncertainty.


Net Loss


We incurred a net loss of $70,513,417 since January 27, 2005 (date of inception) to December 31, 2011.  Our net loss increased, from $8,153,680 for the fiscal year ended December 31, 2010 to $8,339,044 for the fiscal year ended December 31, 2011, an increase of $185,364.  For the fiscal year ended December 31, 2011, our net loss per share was $0.05, compared to a net loss per share of $0.13 per share for the fiscal year ended December 31, 2010.


Expenses


Our total expenses from January 27, 2005 (date of inception) to December 31, 2011 were $67,050,723 and consisted of $1,206,974 in investor relations, $32,806,677 in professional fees, $160,417 in technology license royalties, $5,089,811 in impairment of oil and gas well lease, $4,870,337 in net gain on settlement of liabilities, $81,582 in depreciation and amortization and $22,834,925 in general and administrative fees.  Total expenses increased $221,547 to $8,412,158 for the fiscal year ended December 31, 2011 from total expenses of $8,190,611 for the same period in 2010.


Our investor relations expenses increased $24,680 to $86,182 for the fiscal year ended December 31, 2011 from $61,502 for the same period in 2010.  This was due to increased stock related compensation for investor relations engagements in 2011 from 2010.


Our professional fees decreased $16,599 to $118,749 for the fiscal year ended December 31, 2011 from $135,348 for the same period in 2010 due to decreased securities filing activity.


The loss on settlement of liabilities increased $347,450 to $5,129,800 for the year ended December 31, 2011 from $4,782,350 in 2010.  This increase was due to increased settlement of debt through stock and resulting losses on the settlements.


Our general and administrative expenses decreased by $129,056 from $3,184,121 for the fiscal year ended December 31, 2010 to $3,055,065 for the same period ended December 31, 2011.  The decrease in general and administrative expenses was mainly due to an decrease in management and consulting fees for executives of the Company and consultants.  Other general and administrative expenses consist of advertising, office supplies, transfer agent costs, travel expenses, rent, communication expenses (cellular, internet, fax, and telephone), office maintenance, courier and postage costs and office equipment.


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Liquidity and Capital Resources


As of December 31, 2011, our current assets totaled $5,325 which was comprised of $2,197 in cash and cash equivalents and $3,128 in prepaid expenses and deposits.  As of December 31, 2011, we had $47,588 in intangible assets, net of accumulated amortization, $6,666 in long-term deposits, and $967 in property and equipment, net of accumulated depreciation.  As of December 31, 2011 we had a working capital deficit of $2,285,621.


Our net loss of $70,573,417 from January 27, 2005 (date of inception) to December 31, 2011 was mostly funded by debt financing.  We expect to incur substantial losses over the next two years.  During the fiscal year ended December 31, 2011 our cash position increased slightly by $1,007.


During the fiscal year ended December 31, 2011, we received net cash of $237,480 from financing activities compared to $343,437 for the same period in 2010.  We used net cash of $236,473 in operating activities compared to $341,876 for the same period in 2010.  And we used net cash of $0 in investing activities compared for the fiscal year ended December 31, 2011 compared to $614 for the same period in 2010.


We are currently not in good short-term financial standing.  We anticipate that we may only generate any limited revenues in the near future and we will not have enough positive internal operating cash flow until we can generate substantial revenues, which may take the next two years to fully realize.  There is no assurance we will achieve profitable operations.  We have historically financed our operations primarily by cash flows generated from the sale of our equity securities and through cash infusions from officers and outside investors in exchange for debt and/or common stock.


Business Development

 

Our business and product development will follow two parallel paths.  We will create cannabis pharmaceuticals with and without psychoactive properties.  Both of these lines will have numerous proven health benefits for treating autism, blood pressure, cancer and cancer side effects, along with other illnesses, including for general health maintenance.


We are positioned to pursue the development of phytocannabinoid-based pharmaceutical grade products.  The endocannabinoid system normally regulates blood pressure through its capacity to dilate blood vessels and reduce adrenergic stimuli.  Additionally, there is a developing body of evidence that shows both the tumor killing properties of endo- and phyto- cannabinoids, and their ability to inhibit metastasis in a variety of cancers.


The Company is working to navigate the regulatory framework for its phytocannabinoid science towards developing cannabis-based therapeutics that will holistically promote health by restoring biochemical balance.  By adhering to underlying scientific principles, the Company will manipulate all-pervasive phytocannabinoid processes to target a variety of disparate illnesses. 


Cannabis Science is also positioning to explore insights that indicate an intrinsic link between novel cancer and HIV technologies and the cannabinoid system; with the goal of demonstrating that our pharmaceuticals will enhance biochemical markers that are indicative of a successful HIV therapy based on recent paradigm breaking discoveries.


10

              



The Company is currently focused on FDA approval of its first medical cannabis product targeted for veterans.  Many veterans are already using herbal cannabis to self-medicate to relieve the symptoms of PTSD.  Consequently, there is a clear need for standardized, FDA approved, oral cannabis products which can, and should be, provided to veterans and others who can benefit from its use.  Medical cannabis has far fewer and milder side effects than most currently prescribed pharmaceutical products do.  We are working hard to have one or more products ready for FDA clinical trials as soon as possible.


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


On February 9, 2012, the Company acquired GGECO University, Inc. (GGECO), an online video-based medical cannabis education system, offering courses dealing with medical cannabis law, the benefits of medical marijuana, cooking, horticulture, and bud tending.  Following the university's name change to Cannabis Science University, the Company hopes to use this platform to educate the general public, patients, and even those who have already been involved in the medical cannabis industry on the medical benefits of cannabis, how it is grown, how to use it safely, and the many applications or ways to administer the medication.  In consideration of this agreement, the Company issued 25,000,000 common shares to the principals of GGECO.


On March 21, 2012, the Company acquired Cannabis Consulting Inc. (CCI Group), which consists of a group of businesses operated by Robert J. Kane, including: all contracted rights, properties, patents, trademarks, and distribution rights and agreements pertaining to Cannabis Consulting Inc., Robert Kane Partners, Kaneabis Consulting, Kaneabis Fund, Kaneabis Report, and Kaneabis Radio.  In conjunction with the acquisitions, Robert Kane was promoted to V.P. of Investor Relations for the Company. Consideration paid for the CCI Group was 1,000,000 common shares to issued to the principal, Mr. Robert Kane.


The Company anticipates having to raise additional capital to fund operations over the next 12 months.  To the extent that it is required to raise additional funds to acquire properties, and to cover costs of operations, the Company intends to do so through additional public or private offerings of debt or equity securities.


As of December 31, 2011 the Company had two full-time employees.


 

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

11

              

 

CANNABIS SCIENCE, INC.


(A DEVELOPMENT STAGE COMPANY)


FINANCIAL STATEMENTS


DECEMBER 31, 2011

 

 

 

Report of Independent Registered Public Accounting Firm

 

 F-2

 

 

 

Balance Sheets

 

 F-3

 

 

 

Statements of Operations

 

 F-4

 

 

 

Statements of Stockholders' Equity/(Deficit)

 

 F-5-6

 

 

 

Statements of Cash Flows

 

 F-7

 

 

 

Notes to Financial Statements

 

F-8 to F-16

 

 

                               

              

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





Board of Directors and Stockholders

Cannabis Science, Inc.


We have audited the accompanying balance sheets of Cannabis Science, Inc. (the Company) (a development stage company) as of December 31, 2011 and 2010 and the related statements of operations, stockholders equity (deficit) and cash flows for the years then ended, and for the period January 27, 2005 (Inception) through December 31, 2011.  These financial statements are the responsibility of the Companys management.  Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cannabis Science, Inc. at December 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended and for the period January 27, 2005 through December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company has no revenues and has a working capital deficiency, both of which raise substantial doubt about its ability to continue as a going concern.  Management's plans in regard to these matters are also described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.




/s/  Turner, Stone & Company, L.L.P.


Certified Public Accountants

Dallas, Texas

April 16, 2012


 


F-2

              


 


 

CANNABIS SCIENCE, INC.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

DECEMBER 31, 2011 AND 2010

 

 

 

 

 

 

ASSETS

 

December 31,

2011

$

 

 

December 31,

2010

$

 

Current assets:

 

 

 

 

 

 

Cash

 

2,197

 

 

1,190

 

Prepaid expenses and deposits

 

 

3,128

 

 

 

18,009

 

         Total current assets

 

5,325

 

 

19,199

 

 

 

 

 

 

 

Deposits

6,666

 

6,666

Property and equipment, net of accumulated depreciation (Note 7)

 

967

 

 

2,181

 

 

 

 

Intangibles, net of accumulated amortization (Note 8)

47,588

 

68,736

 

 

 

 

 

 

TOTAL ASSETS

 

60,546

 

 

96,782

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

476,590

 

 

393,753

 

Accrued expenses, primarily management fees

 

1,163,126

 

 

375,000

 

Advances from related parties

156,818

 

107,835

Advances from officer

 

-

 

 

1,807

 

Convertible management bonuses

 

 

300,000

 

 

 

300,000

 

Advances from stockholders

 

 

194,413

 

 

 

171,509

 

Deferred license revenue

 

-

 

 

73,334

         Total current liabilities

 

2,290,947

 

 

1,423,238

 

 

 

 

 

 

 

Commitments and contingencies (Note 6)

 

Stockholders' deficit:

 

 

 

 

 

 

 

Preferred stock, $.001 par value, 1,000,000 shares authorized,

999,999 shares issued and outstanding at December 31, 2011 and 2010

 

1,000

 

 

1,000

 

Common stock, $.001 par value, 850,000,000 shares authorized,

305,420,574 issued and outstanding as of December 31, 2011 and 101,170,574 at December 31, 2010

 

305,421

 

 

101,171

 

Common stock, Class A, $.001 par value, 100,000,000 shares authorized, 0 issued and outstanding as of December 31, 2011 and 2010

 

 

-

 

 

 

-

 

Prepaid consulting

(379,156

)

(1,322,630

)

Additional paid-in capital

 

68,379,003

 

 

62,091,628

 

Deficit accumulated during the development stage

 

(70,536,669

)

 

(62,197,625

)

         Total stockholders' deficit

 

(2,230,401

)

 

(1,326,456

)

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

 

60,546

 

 

96,782

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 












 

 

 

 

 

 

 

 

 





 


 

 

 

 

 

 

 

 


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

F-3

              


CANNABIS SCIENCE, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
AND THE CUMULATIVE PERIOD FROM JANUARY 27, 2005 (INCEPTION) TO DECEMBER 31, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2011

$

 

 

December 31, 2010

$

 

 

Period from January 27, 2005 (inception) to December 31, 2011

$

REVENUE

 

73,702

 

4,166

 

 

90,107

 

OPERATING EXPENSES

 

 

 

 

Investor relations

86,182

73,337

1,218,809

Professional fees

 

118,749

 

135,348

 

32,769,929

Technology license royalties

 

-

 

-

 

160,417

Impairment of oil and gas well lease

 

-

 

-

 

5,089,811

Net loss (gain) on settlement of liabilities

 

5,129,800

 

4,647,500

 

4,735,487

Depreciation and amortization

22,362

27,290

81,582

General and administrative

 

3,055,065

 

3,307,135

 

22,957,939

Total operating expenses

 

8,412,158

 

8,190,611

 

67,013,974

 

 

 

 

OPERATING PROFIT (LOSS)

 

(8,338,456

)

 

(8,186,445

)

 

(66,923,867

)

 

 

 

 

Other income

-

35,791

66,021

Interest expense, net

 

(588

)

 

(3,026

)

 

(153,962

)

Beneficial conversion feature

-

-

(1,098,992

)

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

 

(8,339,044

)

 

(8,153,680

)

 

(68,110,800

)

 

 

 

 

Income tax provision

 

-

 

-

 

(2,035,065

)

Income tax benefit (Note 3)

 

-

 

-

 

1,210,270

 

 

-

 

-

 

(824,795

)

NET INCOME (LOSS) FROM CONTINUING OPERATIONS

 

(8,339,044

)

 

(8,153,680

)

 

(68,935,595

)

 

 

 

 

 

Discontinued operations

-

-

(2,425,869

)

Income tax benefit

-

-

824,795

                

-

-

(1,601,074

)

NET INCOME (LOSS)

(8,339,044

)

(8,153,680

)

(70,536,669

)

 

NET INCOME (LOSS) PER SHARE FROM CONTINUING OPERATIONS – BASIC AND DILUTED

 

(0.05

)

 

(0.13

)

 

NET INCOME (LOSS) PER SHARE FROM DISCONTINUED OPERATIONS – BASIC AND DILUTED

-

 

-

 

NET INCOME (LOSS) PER SHARE – BASIC AND DILUTED

(0.05

)

(0.13

)

WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC

AND DILUTED

 

152,228,519

 

 

63,098,346

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 













 

 


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

F-4

              



 

CANNABIS SCIENCE, INC.

(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY/(DEFICIT)
FOR THE PERIOD FROM jANUARY 27, 2005 (INCEPTION) TO DECEMBER 31, 2011

 

 

 

 

 

 

 

 

 

 Additional

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Common

 

 

 

Preferred

 Paid-in

 

 

Prepaid

 

 

 

 Accumulated

 

 

 

 

 

 

 

Shares

 

 

Par

$

 

 

 

Shares

Par

$

Capital

$

 

 

Consulting

 

 

 

Deficit

$

 

 

Totals

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 27, 2005

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Founder’s Stock Issued

 

 

83,800

 

 

84

 

 

 

(84)

 

 

-

 

 

 

-

 

 

-

 

Stock Issued for Debt

 

 

8,000

 

 

8

 

 

 

399,992

 

 

-

 

 

 

-

 

 

400,000

 

Shares Issued for License Agreement

 

 

86,188

 

 

86

 

 

 

(86)

 

-

 

 

 

-

 

 

-

Effect of Reverse Merger

 

 

13,840

 

 

14

 

 

 

(200,014)

 

-

 

 

 

-

 

 

(200,000)

Divestiture of Subsidiary to Related Party

 

 

-

 

 

-

 

 

 

544,340

 

 

-

 

 

 

-

 

 

544,340

 

Net Loss

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

(807,600

)

 

(807,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2005

 

 

191,828

 

 

192

 

-

-

744,148

 

 

-

 

 

 

(807,600

)

 

(63,260)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares Issued for Employment

 

 

45,500

 

 

45

 

 

 

8,487,455

 

 

-

 

 

 

-

 

 

8,487,500

 

Shares Issued for Services

 

 

171,080

 

 

171

 

 

 

28,798,329

 

 

( 7,633,750)

 

 

-

 

 

21,164,750

 

Shares Issued for Lease Agreement

 

 

6,770

 

 

7

 

 

 

406,193

 

 

-

 

 

 

(350,200

)

 

56,000

 

Net Loss

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

(36,906,584

)

 

(36,906,584)

Balance at December 31, 2006

 

 

415,178

 

 

415

 

                               

-

 

           -

38,436,125

 

 

(  7,633,750)

 

 

(38,064,384

)

 

(7,261,594

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares Issued For Services

 

 

63,020

 

 

63

 

 

 

528,285

 

 

(    387,500)

 

 

 

 

 

140,848

 

Shares Issued for Debt Conversion

 

 

350,000

 

 

350

 

-

-

349,650

 

 

-

 

 

 

 

 

350,000

 

Amortization of Beneficial Conversion Feature

 

 

-

 

 

-

 

 

 

1,066,657

 

 

-

 

 

 

 

 

 

1,066,657

 

Amortization of shares issued for services

 

 

-

 

 

-

 

-

-

-

 

 

8,021,250

 

 

 

 

 

8,021,250

 

Shares Issued for Properties

 

 

500,000

 

 

500

 

 

 

4,999,500

 

 

-

 

 

 

 

 

 

5,000,000

 

Net loss

 

 

 

 

 

-

-

 

 

-

 

 

 

(15,007,117

)

 

(15,007,117)

Balance at December 31, 2007

 

 

1,328,198

 

 

1,328

 

 

-

 

-

45,380,217

 

 

-

 

 

 

(53,071,501

)

 

(7,689,956)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of Beneficial Conversion Feature

 

 

-

 

 

-

 

-

-

32,335

 

 

-

 

 

 

 

 

32,335

 

Cancellation and Amortization of Shares

 

 

(919)

 

(1)

 

-

-

1

 

 

-

 

 

 

 

 

-

 

Common stock issued for cash

 

 

10,000

 

 

10

 

-

-

19,990

 

 

-

 

 

 

 

 

20,000

 

Common stock issued for debt conversion

 

 

990,000

 

 

990

 

-

-

98,010

 

 

-

 

 

 

 

 

99,000

 

Common stock issued for acquisition

 

 

10,000,000

 

 

10,000

 

-

-

2,490,000

 

 

-

 

 

 

 

 

2,500,000

 

Common stock issued for services

 

 

270,000

 

 

270

 

-

-

128,230

 

 

-

 

 

 

 

 

128,500

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

3,559,617

 

 

3,559,617

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2008

 

 

12,597,279

 

 

12,597

 

 

 

-

-

48,148,783

 

 

-

 

 

 

(49,511,884

)

 

(1,350,504)

 

Common stock issued for cash

2,522,495

2,523

 

-

-

197,552

-

 

200,075

Common stock issued for services

8,855,000

8,855

 

-

-

2,507,195

-

 

2,516,050

Cancellation of stock

(10,000)

(10)

 

-

-

10

-

 

-

-

Common stock issued for debt settlements

3,680,000

3,680

 

 

-

 

-

2,020,320

 

 

2,024,000

Preferred stock issued for services

-

-

 

 

999,999

 

1,000

-

-

 

-

1,000

Stock issued for assets

2,100,000

2,100

 

 

 

123,900

 

 

126,000

 

Net Loss

 

 

 

 

 

 

 

-

-

 

 

 

-

 

 

 

(4,532,061

)

(4,532,061)

 

Balance at December 31, 2009

 

 

29,744,774

 

 

 

29,745

 

 

 

999,999

1,000

 

52,997,760

 

 

-

 

 

 

 

(54,043,945

)

 

 

(1,015,440)

Common stock issued for cash

 

 

1,245,800

 

 

 

1,246

 

 

 

-

-

 

137,540

 

 

-

 

 

 

 

-

 

 

 

138,786

 

Common stock issued for services

 

 

26,680,000

 

 

 

26,680

 

 

 

 

-

 

-

 

3,670,978

 

 

(3,530,808

 

)

 

 

 

-

 

 

 

166,850

 

Amortization of shares issued for services

 

 

-

 

 

 

-

 

 

 

 

-

 

-

 

-

 

 

2,208,178

 

 

 

 

-

 

 

 

2,208,178

 

Common stock issued for debt settlements

 

 

42,750,000

 

 

 

42,750

 

 

 

 

-

 

-

 

5,249,600

 

 

-

 

 

 

 

-

 

 

 

5,292,350

 

Common stock issued for acquisition write-off

 

 

350,000

 

 

 

350

 

 

 

 

-

 

-

 

36,150

 

 

-

 

 

 

 

-

 

 

 

36,500

 

Shares pending cancelation

 

 

400,000

 

 

 

400

 

 

 

-

-

 

(400)

 

-

 

 

 

 

-

 

 

 

-

 

 

Net Loss

 

 

 

 

 

 

 

 

-

-

 

 

 

-

 

 

 

 

(8,153,680)

 

 

(8,153,680)

 

Balance at December 31, 2010

 

 

101,170,574

 

 

 

101,171

 

 

 

999,999

1,000

 

62,091,628

 

 

(1,322,630)

 

 

 

 

(62,197,625)

 

 

(1,326,456)

 

Common stock issued for services

 

 

37,250,000

 

 

 

36,850

 

 

 

-

-

 

1,157,575

 

 

(1,146,700)

 

 

 

-

 

 

 

47,725

 

Amortization of shares issued for services

 

 

-

 

 

 

-

 

 

 

-

-

 

-

 

 

2,090,174

 

 

 

 

-

 

 

 

2,090,174

 

Common stock issued for debt settlements

 

 

167,400,000

 

 

 

167,400

 

 

 

-

-

 

5,129,800

 

 

-

 

 

 

 

-

 

 

 

5,297,200

 

 

Net Loss

 

 

-

 

 

 

-

 

 

 

-

-

 

-

 

 

-

 

 

 

 

(8,339,044)

 

 

 

(8,339,044)

 

Balance at December 31, 2011

 

 

305,820,574

 

 

 

305,421

 

 

 

999,999

1,000

 

68,379,003

 

 

(379,156)

 

 

 

(70,536,669)

 

 

 

(2,230,401)

 


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


 

F-5

              


CANNABIS SCIENCE, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

AND THE CUMULATIVE PERIOD FROM JANUARY 27, 2005 (INCEPTION) TO DECEMBER 31, 2011

   

 

 

 

 

 

 

 

 

 Additional

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Common

 

 

 

Preferred

 Paid-in

 

 

Prepaid

 

 

 

 Accumulated

 

 

 

 

 

 

 

Shares

 

 

Par

$

 

 

 

Shares

Par

$

Capital

$

 

 

Consulting

 

 

 

Deficit

$

 

 

Totals

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 27, 2005

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Founder’s Stock Issued

 

 

83,800

 

 

84

 

 

 

(84

)

 

-

 

 

 

-

 

 

-

 

Stock Issued for Debt

 

 

8,000

 

 

8

 

 

 

399,992

 

 

-

 

 

 

-

 

 

400,000

 

Shares Issued for License Agreement

 

 

86,188

 

 

86

 

 

 

(86

)

 

-

 

 

 

-

 

 

-

Effect of Reverse Merger

 

 

13,840

 

 

14

 

 

 

(200,014

)

 

-

 

 

 

-

 

 

(200,000

)

Divestiture of Subsidiary to Related Party

 

 

-

 

 

-

 

 

 

544,340

 

 

-

 

 

 

-

 

 

544,340

 

Net Loss

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

(807,600

)

 

(807,600

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2005

 

 

191,828

 

 

192

 

-

-

744,148

 

 

-

 

 

 

(807,600

)

 

(63,260

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares Issued for Employment

 

 

45,500

 

 

45

 

 

 

8,487,455

 

 

-

 

 

 

-

 

 

8,487,500

 

Shares Issued for Services

 

 

171,080

 

 

171

 

 

 

28,798,329

 

 

( 7,633,750)

 

 

-

 

 

21,164,750

 

Shares Issued for Lease Agreement

 

 

6,770

 

 

7

 

 

 

406,193

 

 

-

 

 

 

(350,200

)

 

56,000

 

Net Loss

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

 

(36,906,584

)

 

(36,906,584

)

Balance at December 31, 2006

 

 

415,178

 

 

415

 

                               

-

 

           -

38,436,125

 

 

(  7,633,750)

 

 

(38,064,384

)

 

(7,261,594

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares Issued For Services

 

 

63,020

 

 

63

 

 

 

528,285

 

 

(    387,500)

 

 

 

 

 

140,848

 

Shares Issued for Debt Conversion

 

 

350,000

 

 

350

 

-

-

349,650

 

 

-

 

 

 

 

 

350,000

 

Amortization of Beneficial Conversion Feature

 

 

-

 

 

-

 

 

 

1,066,657

 

 

-

 

 

 

 

 

 

1,066,657

 

Amortization of shares issued for services

 

 

-

 

 

-

 

-

-

-

 

 

8,021,250

 

 

 

 

 

8,021,250

 

Shares Issued for Properties

 

 

500,000

 

 

500

 

 

 

4,999,500

 

 

-

 

 

 

 

 

 

5,000,000

 

Net loss

 

 

 

 

 

-

-

 

 

-

 

 

 

(15,007,117

)

 

(15,007,117

)

Balance at December 31, 2007

 

 

1,328,198

 

 

1,328

 

 

-

 

-

45,380,217

 

 

-

 

 

 

(53,071,501

)

 

(7,689,956

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of Beneficial Conversion Feature

 

 

-

 

 

-

 

-

-

32,335

 

 

-

 

 

 

 

 

32,335

 

Cancellation and Amortization of Shares

 

 

(919

)

 

(1

)

 

-

-

1

 

 

-

 

 

 

 

 

-

 

Common stock issued for cash

 

 

10,000

 

 

10

 

-

-

19,990

 

 

-

 

 

 

 

 

20,000

 

Common stock issued for debt conversion

 

 

990,000

 

 

990

 

-

-

98,010

 

 

-

 

 

 

 

 

99,000

 

Common stock issued for acquisition

 

 

10,000,000

 

 

10,000

 

-

-

2,490,000

 

 

-

 

 

 

 

 

2,500,000

 

Common stock issued for services

 

 

270,000

 

 

270

 

-

-

128,230

 

 

-

 

 

 

 

 

128,500

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

3,559,617

 

 

3,559,617

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2008

 

 

12,597,279