UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549





FORM
10-Q



(Mark
One)

|[X] | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ----------------------------------------------------------------------------------------



For
the quarterly period ended March 31, 2019



|[  ] | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|---- | -----------------------------------------------------------------------------------------



For
the transition period from __________ to __________



COMMISSION
FILE NUMBER: 000-55753



Canbiola.
inc.

(Exact
name of Registrant as specified in its charter)



|Florida                                                                                |  | 20-3624118                                                  
|-------------------------------------------------------------------------------------- |  | ------------------------------------------------------------
|(State
        or other jurisdiction of
        incorporation
        or organization) |  | (I.R.S.
        Employer
        Identification
        No.)



960
South Broadway, Suite 120

Hicksville
NY 11801

(Address
of principal executive offices)



(516)
590-1846

(Registrant’s
telephone number, including area code)







(Former
name, former address and former fiscal, if changed since last report)



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



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]



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





|Large
    accelerated filer                 | [  ] | Accelerated
    filer         | [  ]
|------------------------------------------- | ---- | ----------------------------- | ----
|Non-accelerated
    filer                   | [  ] | Smaller
    reporting company | [X] 
|Emerging
    Growth Company                 | [X]  |                               |     
|(Do
not check if smaller reporting company) |      |                               |     



If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]





Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [  ] Yes [X]
No



The
number of shares of the registrant’s only class of common stock issued and outstanding as of May 17, 2019 was 552,992,664
shares.






















CANBIOLA,
INC.

FORM
10-Q

March
31, 2019



TABLE
OF CONTENTS



|                                |                                                                                        | Page
    No.
|------------------------------- | -------------------------------------------------------------------------------------- | ------------
|PART I. - FINANCIAL INFORMATION
|Item 1.                         | Financial Statements                                                                   | 3           
|                                | Consolidated Balance Sheets March 31, 2019 and December 31, 2018                       | 3           
|                                | Consolidated Statements of Operations – Three Months Ended March 31, 2019 and 2018     | 4           
|                                | Consolidated Statements of Cash Flows – Three Months Ended March 31, 2019 and 2018     | 5           
|                                | Condensed Notes to Unaudited Consolidated Financial Statements.                        | 6           
|Item 2.                         | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 23          
|Item 3                          | Quantitative and Qualitative Disclosures About Market Risk.                            | 24          
|Item 4                          | Controls and Procedures.                                                               | 24          
|PART II - OTHER INFORMATION    
|                                |                                                                                        |             
|Item 1.                         | Legal Proceedings                                                                      | 24          
|Item 1A.                        | Risk Factors                                                                           | 24          
|Item 2.                         | Unregistered Sales of Equity Securities and Use of Proceeds                            | 24          
|Item 3.                         | Defaults Upon Senior Securities                                                        | 25          
|Item 4.                         | Mine Safety Disclosures                                                                | 25          
|Item 5.                         | Other Information                                                                      | 25          
|Item 6.                         | Exhibits                                                                               | 25          



2







PART
I - FINANCIAL INFORMATION



Item
1. Financial Statements.



Canbiola,
Inc. and Subsidiary

Consolidated
Balance Sheets



|                                                                                                                                               |  | March 31, 2019 |             |   | December 31, 2018 |  
|---------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ----------- | - | ----------------- | -
|Assets                                                                                                                                         |  |                |             |   |                   |  
|Current assets:                                                                                                                                |  |                |             |   |                   |  
|Cash and cash equivalents                                                                                                                      |  | $              | 567,291     |   |                   | $
|Accounts receivable, less allowance for doubtful accounts of $0 and $0, respectively                                                           |  |                | 324,449     |   |                   |  
|Inventory                                                                                                                                      |  |                | 77,110      |   |                   |  
|Prepaid expenses - current                                                                                                                     |  |                | 238,079     |   |                   |  
|Deposit - current                                                                                                                              |  |                | 150,000     |   |                   |  
|Total current assets                                                                                                                           |  |                | 1,356,929   |   |                   |  
|                                                                                                                                               |  |                |             |   |                   |  
|Property and equipment, at cost less accumulated
    depreciation of $34,738 and $20,248, respectively                                         |  |                | 743,368     |   |                   |  
|                                                                                                                                               |  |                |             |   |                   |  
|Other assets:                                                                                                                                  |  |                |             |   |                   |  
|Deposit - noncurrent                                                                                                                           |  |                | 19,787      |   |                   |  
|Prepaid expenses - noncurrent                                                                                                                  |  |                | 2,061,356   |   |                   |  
|Note receivable - noncurrent                                                                                                                   |  |                | 19,389      |   |                   |  
|Intangible assets, net of accumulated amortization of $2,194 and $0,
    respectively                                                          |  |                | 196,461     |   |                   |  
|Goodwill (Note 4)                                                                                                                              |  |                | 55,849      |   |                   |  
|Right-of-Use Asset                                                                                                                             |  |                | 90,591      |   |                   |  
|Total other assets                                                                                                                             |  |                | 2,443,433   |   |                   |  
|                                                                                                                                               |  |                |             |   |                   |  
|Total assets                                                                                                                                   |  | $              | 4,543,730   |   |                   | $
|                                                                                                                                               |  |                |             |   |                   |  
|Liabilities and Stockholders’ Deficiency                                                                                                       |  |                |             |   |                   |  
|Current liabilities:                                                                                                                           |  |                |             |   |                   |  
|Notes and loans payable                                                                                                                        |  | $              | 17,370      |   |                   | $
|Accounts payable                                                                                                                               |  |                | 126,747     |   |                   |  
|Accrued officers compensation                                                                                                                  |  |                | 68,750      |   |                   |  
|Other accrued expenses payable                                                                                                                 |  |                | 44,955      |   |                   |  
|Current portion of lease liability                                                                                                             |  |                | 31,466      |   |                   |  
|Total current liabilities                                                                                                                      |  |                | 289,288     |   |                   |  
|                                                                                                                                               |  |                |             |   |                   |  
|Non-current portion of lease liability                                                                                                         |  |                | 59,125      |   |                   |  
|                                                                                                                                               |  |                |             |   |                   |  
|Total liabilities                                                                                                                              |  |                | 348,413     |   |                   |  
|                                                                                                                                               |  |                |             |   |                   |  
|Commitments and contingencies (Notes 14)                                                                                                       |  |                |             |   |                   |  
|                                                                                                                                               |  |                |             |   |                   |  
|Stockholders’ deficiency:                                                                                                                      |  |                |             |   |                   |  
|Preferred stock, authorized 5,000,000 shares:                                                                                                  |  |                |             |   |                   |  
|Series A Preferred stock, no par value:
    authorized 20 shares, issued and outstanding 17 and 18     shares, respectively                    |  |                | 4,546,924   |   |                   |  
|Series B Preferred stock, $0.001 par value: authorized 500,000 shares, issued and outstanding
    342,853 and 499,958 shares,     respectively |  |                | 322         |   |                   |  
|Common stock, no par value; authorized 750,000,000 shares, issued and
    outstanding 548,487,714 and 440,566,325 shares, respectively         |  |                | 18,531,529  |   |                   |  
|Additional Paid-in capital                                                                                                                     |  |                | 872,976     |   |                   |  
|Additional Paid-in capital – Stock Options (Note 12)                                                                                           |  |                | 202,200     |   |                   |  
|Accumulated deficit                                                                                                                            |  |                | (19,958,634 | ) |                   |  
|Total stockholders’ deficiency                                                                                                                 |  |                | 4,195,317   |   |                   |  
|                                                                                                                                               |  |                |             |   |                   |  
|Total liabilities and stockholders’ deficiency                                                                                                 |  | $              | 4,543,730   |   |                   | $



See notes to consolidated financial statements.



3







Canbiola,
Inc. and Subsidiary

Consolidated
Statements of Operations and Comprehensive Loss

Three
Months Ended March 31, 2019 and 2018

(Unaudited)



|                                                                                                                    |  | 2019 |             |   | 2018 |  
|------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | -
|Revenues                                                                                                            |  |      |             |   |      |  
|Product Sales                                                                                                       |  | $    | 515,360     |   |      | $
|Service Revenue                                                                                                     |  |      | 1,800       |   |      |  
|Total Revenues                                                                                                      |  |      | 517,160     |   |      |  
|Cost of product sales                                                                                               |  |      | 262,553     |   |      |  
|Gross Profit                                                                                                        |  |      | 254,607     |   |      |  
|                                                                                                                    |  |      |             |   |      |  
|Operating costs and expenses:                                                                                       |  |      |             |   |      |  
|Officers and directors compensation (including stock- based compensation of $262,420 and
    $202,800 respectively) |  |      | 445,550     |   |      |  
|Consulting fees (including stock-based compensation of $565,776 and $11,000, respectively)                          |  |      | 663,751     |   |      |  
|Advertising expense                                                                                                 |  |      | 26,388      |   |      |  
|Hosting expense                                                                                                     |  |      | 450         |   |      |  
|Rent expense                                                                                                        |  |      | 11,860      |   |      |  
|Professional fees                                                                                                   |  |      | 37,836      |   |      |  
|Depreciation of property and equipment                                                                              |  |      | 2,765       |   |      |  
|Amortization of intangible assets                                                                                   |  |      | 2,194       |   |      |  
|Other                                                                                                               |  |      | 235,881     |   |      |  
|                                                                                                                    |  |      |             |   |      |  
|Total operating expenses                                                                                            |  |      | 1,426,675   |   |      |  
|                                                                                                                    |  |      |             |   |      |  
|Loss from operations                                                                                                |  |      | (1,172,068  | ) |      |  
|                                                                                                                    |  |      |             |   |      |  
|Other income (expense):                                                                                             |  |      |             |   |      |  
|Interest income                                                                                                     |  |      | -           |   |      |  
|Income (expense) from derivative liability                                                                          |  |      | -           |   |      |  
|Interest expense (including amortization of debt
    discounts of $0 and $28,464, respectively)                     |  |      | (446        | ) |      |  
|                                                                                                                    |  |      |             |   |      |  
|Other income (expense) - net                                                                                        |  |      | (446        | ) |      |  
|                                                                                                                    |  |      |             |   |      |  
|Income (Loss) before provision for income taxes                                                                     |  |      | (1,172,514  | ) |      |  
|                                                                                                                    |  |      |             |   |      |  
|Provision for income taxes                                                                                          |  |      | -           |   |      |  
|                                                                                                                    |  |      |             |   |      |  
|Net income (loss) and comprehensive loss                                                                            |  | $    | (1,172,514  | ) |      | $
|                                                                                                                    |  |      |             |   |      |  
|Net income (loss) per common share - basic and diluted                                                              |  | $    | (0.00       | ) |      | $
|                                                                                                                    |  |      |             |   |      |  
|Weighted average common shares outstanding –                                                                        |  |      |             |   |      |  
|Basic                                                                                                               |  |      | 501,585,684 |   |      |  
|Diluted                                                                                                             |  |      | 732,708,830 |   |      |  



See notes to consolidated financial statements.





4







Canbiola,
Inc. and Subsidiary

Consolidated
Statements of Cash Flows

(Unaudited)



|                                                                                |  | Three Months Ended March 31, |           
|------------------------------------------------------------------------------- |  | ---------------------------- | ----------
|                                                                                |  | 2019                         |           
|Operating Activities:                                                           |  |                              |           
|Net income                                                                      |  | $                            | (1,172,514
|Adjustments to reconcile net loss to net cash used in operating
    activities: |  |                              |           
|Stock-based compensation, net of prepaid stock- based consulting fees           |  |                              | 828,196   
|Expense from derivative liability                                               |  |                              | -         
|Depreciation of property and equipment - General                                |  |                              | 2765      
|Depreciation of property and equipment - COGS                                   |  |                              | 5,198     
|Amortization of intangible assets                                               |  |                              | 2,194     
|Amortization of debt discounts                                                  |  |                              | -         
|Changes in operating assets and liabilities:                                    |  |                              |           
|Accounts receivable                                                             |  |                              | (285,277  
|Inventory                                                                       |  |                              | 9,994     
|Security deposit                                                                |  |                              | (121,061  
|Accounts payable                                                                |  |                              | 38,819    
|Accrued officers compensation                                                   |  |                              | -         
|Other accrued expenses payable                                                  |  |                              | 1,177     
|                                                                                |  |                              |           
|Net cash used in operating activities                                           |  |                              | (690,509  
|                                                                                |  |                              |           
|Investing Activities:                                                           |  |                              |           
|Intangible assets additions                                                     |  |                              | (50,000   
|Fixed assets additions                                                          |  |                              | (694,212  
|                                                                                |  |                              |           
|Net cash used in investing activities                                           |  |                              | (744,212  
|                                                                                |  |                              |           
|Financing Activities:                                                           |  |                              |           
|Repayments of notes and loans payable                                           |  |                              | (1,835    
|Proceeds received from notes and loans payable                                  |  |                              | -         
|Proceeds from sale of common stock                                              |  |                              | 1,196,100 
|Proceeds from sale of Series B preferred stock                                  |  |                              | -         
|                                                                                |  |                              |           
|Net cash provided by financing activities                                       |  |                              | 1,194,265 
|                                                                                |  |                              |           
|Increase (decrease) in cash and cash equivalents                                |  |                              | (240,456  
|                                                                                |  |                              |           
|Cash and cash equivalents, beginning of period                                  |  |                              | 807,747   
|                                                                                |  |                              |           
|Cash and cash equivalents, end of period                                        |  | $                            | 567,291   
|                                                                                |  |                              |           
|SUPPLEMENTAL CASH FLOW INFORMATION:                                             |  |                              |           
|Income taxes paid                                                               |  | $                            | -         
|Interest paid                                                                   |  | $                            | -         
|                                                                                |  |                              |           
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                                    |  |                              |           
|                                                                                |  |                              |           
|Issuance of common stock in acquisition of Intangible assets                    |  | $                            | 148,655   
|Issuance of common stock in satisfaction of Officers compensation               |  | $                            | 54,340    
|Issuance of common stock in satisfaction of directors fees                      |  | $                            | -         
|Issuance of common stock for services rendered                                  |  | $                            | 497,220   



See
notes to consolidated financial statements.



5









Canbiola,
Inc. and Subsidiary

Notes
to Consolidated Financial Statements

Three
Months Ended March 31, 2019 and 2018

(Unaudited)



NOTE
1 – Organization and Description of Business



Canbiola,
Inc. was originally incorporated as WrapMail, Inc. (“WRAP”) in Florida on October 11, 2005. Effective January 5, 2015,
WRAP acquired 100% ownership of Prosperity Systems, Inc. (“Prosperity”), a New York corporation incorporated on April
2, 2008. The Company is in the process of dissolving Prosperity. The Company acquired 100% of the membership interests in Pure
Health Products, LLC, a New York limited liability company (“PHP” or “Pure Health Products”) effective
December 28, 2018. The Company formed Duramed, Inc., a Nevada corporation (“Duramed”) in November 2018, to facilitate
the manufacture and sale of durable medical equipment incorporating CBD.



Effective
December 27, 2010, WRAP effected a 10 for 1 forward stock split of its common stock. Effective June 4, 2013, WRAP effected a 1
for 10 reverse stock split of its common stock. The accompanying consolidated financial statements retroactively reflect these
stock splits.



On
May 15, 2017, WRAP changed its name to Canbiola, Inc. (the “Company” or “CANB” or “Canbiola”).



Canbiola
specializes in the production and sale of a variety of hemp derived Cannabidiol (“CBD”) products such as oils, creams,
moisturizers, isolate, gel caps, concentrate and water. Canbiola is developing its own line of proprietary products as well as
seeking synergistic value through acquisitions in the Hemp Industry. Canbiola aims to be the premier provider of the highest quality
hemp CBD products on the market through sourcing the very best raw material and developing a variety of products we believe will
improve people’s lives in a variety of areas.



The
Company also operates document management and email marketing platforms. The Company used to operate its document and information
platform from its wholly owned subsidiary, Prosperity Systems, Inc; however, after the acquisition of Prosperity, the Company
transferred Prosperity’s operations to the Company directly.



For
the periods presented, the assets, liabilities, revenues, and expenses are those of CANB. Prosperity had no activity for the periods
presented. Financial information for PHP and Duramed in the periods have been consolidated with the Company’s financials.



NOTE
2 – Going Concern Uncertainty



The
consolidated financial statements have been prepared on a “going concern” basis, which contemplates the realization
of assets and liquidation of liabilities in a normal course of business. As of March 31, 2019, the Company had cash and cash equivalents
of $567,291 and a working capital of $1,067,641. For the three months ended March 31, 2019 and 2018, the Company had net loss
of $1,172,514 and a gain of $407,558, respectively. These factors raise substantial doubt as to the Company’s ability to
continue as a going concern. The Company plans to improve its financial condition by raising capital through sales of shares of
its common stock. Also, the Company plans to expand its operation of CBD products to increase its profitability. The consolidated
financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going
concern.



NOTE
3 – Summary of Significant Accounting Policies



(a)
Principles of Consolidation



The
consolidated financial statements include the accounts of CANB and its wholly owned subsidiaries, Pure Health products, Duramed,
and Prosperity. All intercompany balances and transactions have been eliminated in consolidation.



6









(b)
Use of Estimates



The
preparation of financial statements in conformity with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.



(c)
Fair Value of Financial Instruments



The
Company’s financial instruments consist of cash and cash equivalents, accounts receivable, notes receivable, notes and loans
payable, accounts payable, and accrued expenses payable. Except for the noncurrent note receivable, the fair value of these financial
instruments approximate their carrying amounts reported in the balance sheets due to the short term maturity of these instruments.
Based on comparable instruments with similar terms, the fair value of the noncurrent note receivable approximates its carrying
value.



Pursuant
to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent,
objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the
fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes
the inputs into three levels that may be used to measure fair value:



Level
1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.



Level
2 - applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or
liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities
in markets with insufficient volume or infrequent transactions (less active markets); or model derived valuations in which significant
inputs are observable or can be derived principally from, or corroborated by, observable market data.



Level
3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant
to the measurement of the fair value of the assets or liabilities.



(d)
Cash and Cash Equivalents



The
Company considers all liquid investments purchased with a maturity of three months or less to be cash equivalents.



(e)
Inventory



All
inventories are finished goods and stated at the lower of cost or net realizable value. Cost is principally determined using the
first-in, first-out (FIFO) method.



(f)
Property and Equipment, Net



Property
and equipment, net, is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method
over the estimated useful lives of the respective assets. Maintenance and repairs are charged to operations as incurred.



(g)
Intangible Assets, Net



Intangible
assets, net, are stated at cost less accumulated amortization. Amortization is calculated using the straight-line method over
the estimated economic lives of the respective assets.



7







(h)
Goodwill and Intangible Assets with Indefinite Lives



The
Company does not amortize goodwill and intangible assets with indefinite useful lives, but instead tests for impairment at least
annually. When conducting the annual impairment test for goodwill, the Company compares the estimated fair value of a reporting
unit containing goodwill to its carrying value. If the estimated fair value of the reporting unit is determined to be less than
its carrying value, goodwill is reduced, and an impairment loss is recorded.



(i)
Long-lived Assets



The
Company reviews long-lived assets held and used, intangible assets with finite useful lives and assets held for sale for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an evaluation
of recoverability is required, the estimated undiscounted future cash flows associated with the asset is compared to the asset’s
carrying amount to determine if a write-down is required. If the undiscounted cash flows are less than the carrying amount, an
impairment loss is recorded to the extent that the carrying amount exceeds the fair value.



(j)
Revenue Recognition



The
Company recognizes revenue in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) 606, Revenue from Contracts with Customers, which requires that five basic steps be followed
to recognize revenue: (1) a legally enforceable contract that meets criterial standards as to composition and substance is identified;
(2) performance obligations relating to provision of goods or services to the customer are identified; (3) the transaction price,
with consideration given to any variable, noncash, or other relevant consideration, is determined; (4) the transaction price is
allocated to the performance obligations; and (5) revenue is recognized when control of goods or services is transferred to the
customer with consideration given, whether that control happens over time or not. Determination of criteria (3) and (4) are based
on our management’s judgments regarding the fixed nature of the selling prices of the products and services delivered and
the collectability of those amounts.



Private
Label Customers, Global CBD, LLC and TZ Wholesale, are wholesale distributors of the Company’s product, under their own
wholesale private label brand. The products are made to Company specifications, and shipped directly to the wholesaler. The pricing
is predicated upon a volume discount negotiated at the time of the placement of the orders. Product is produced and labeled in
the Washington manufacturing facility and shipped directly to the Private Label customer who re-distributes to their retail and
other customers. The products are fully paid when shipped.



Revenue
from product sales is recognized when an order has been obtained, the price is fixed and determinable, the product is shipped,
title has transferred, and collectability is reasonably assured.



The
Company’s Duramed Division provides a sam® Pro 2.0 medical device to patients through a doctor program whereby the physician
evaluates the patients needs for medical necessity, and if determined that the device use would be beneficial, writes a prescription
for the patient who signs a rental form, for a 35 day cycle for the unit, that is submitted to Duramed who bills the appropriate
insurance company. The insurance company pays the invoice, or a negotiated amount via arbitration, and that revenue is reported
as revenue when invoiced to the insurance carrier. The collected amount is reconciled with the invoice amount on a daily basis.



(k)
Cost of Product Sales



The
cost of product sale is the total cost incurred to obtain a sale and the cost of the goods sold, and the Company’s policy
is to recognize it in the same manner as, and in conjunction with, revenue recognition. Cost of product sale primarily consisted
of the costs directly attributable to revenue recognized and includes expenses related to the production, packaging and labeling
of our CBD products.



8







(l)
Stock-Based Compensation



Stock-based
compensation is accounted for at fair value in accordance with Accounting Standards Codification (“ASC”) Topic 718,
“Compensation – Stock Compensation” (“ASC718”) and ASC 505-50, “Equity – Based Payments
to Non-Employees.”



In
addition to requiring supplemental disclosures, ASC 718 addresses the accounting for share-based payment transactions in which
a company receives goods or services in exchange for (a) equity instruments of the company or (b) liabilities that are based on
the fair value of the company’s equity instruments or that may be settled by the issuance of such equity instruments. ASC
718 focuses primarily on accounting for transactions in which a company obtains employee services in share-based payment transactions.



In
accordance with ASC 505-50, the Company determines the fair value of the stock based payment as either the fair value of the consideration
received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity
instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either
(1) the date at which a commitment for performance by the counterparty to earn the equity instrument is reached, or (2) the date
at which the counterparty’s performance is complete.



Options
and warrants



The
fair value of stock options and warrants is estimated on the measurement date using the Black-Scholes model with the following
assumptions, which are determined at the beginning of each year and utilized in all calculations for that year:



Risk-Free
Interest Rate.



We
utilized the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected term of our awards.



Expected
Volatility.



We
calculate the expected volatility based on a volatility index of peer companies as we did not have sufficient historical market
information to estimate the volatility of our own stock.



Dividend
Yield.



We
have not declared a dividend on its common stock since its inception and have no intentions of declaring a dividend in the foreseeable
future and therefore used a dividend yield of zero.



Expected
Term.



The
expected term of options granted represents the period of time that options are expected to be outstanding. We estimated the
expected term of stock options by using the simplified method. For warrants, the expected term represents the actual term of the
warrant.



Forfeitures.



Estimates
of option forfeitures are based on our experience. We will adjust our estimate of forfeitures over the requisite service period
based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures
will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of compensation
expense to be recognized in future periods.



9









(m)
Advertising



Advertising
costs are expensed as incurred and amounted to $26,388 and $22,333 for the period ended March 31, 2019 and 2018, respectively.



(n)
Research and Development



Research
and development costs are expensed as incurred. In the period ended March 31, 2019 and 2018, the Company spent $17,500 and $2,500
in research and development which was expenses as spent, respectively.



(o)
Income Taxes



Income
taxes are accounted for under the assets and liability method. Current income taxes are provided in accordance with the laws of
the respective taxing authorities. Deferred income taxes are provided for the estimated future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases
and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect
for the year in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by
a valuation allowance when, in the opinion of management, it is not more likely than not that some portion or all of the deferred
tax assets will be realized.



The
Company has adopted the provisions required by the Income Taxes topic of the FASB Accounting Standards Codification. The Codification
Topic requires the recognition of potential liabilities as a result of management’s acceptance of potentially uncertain
positions for income tax treatment on a “more-likely-than-not” probability of an assessment upon examination by a
respective taxing authority. The Company believes that it has not taken any uncertain tax positions and thus has not recorded
any liability.



(p)
Net Income (Loss) per Common Share



Basic
net income (loss) per common share is computed on the basis of the weighted average number of common shares outstanding during
the period.



Diluted
net income (loss) per common share is computed on the basis of the weighted average number of common shares and dilutive securities
(such as stock options and convertible securities) outstanding. Dilutive securities having an anti-dilutive effect on diluted
net income (loss) per share are excluded from the calculation. For the periods presented, the diluted net loss per share calculation
excluded the effect of Series B preferred stocks and stock options outstanding (see Notes 7, 8 and 10).



(q)
Recent Accounting Pronouncements



In
May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (Topic 606) which establishes revenue
recognition standards. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017. The impact of
ASU 2014-09 on the Company’s financial statements has not been significant.



In
2016, the FASB issued ASU 2016-2 (Topic 842) which establishes a new lease accounting model for lessees. Under the new guidance,
lessees will be required to recognize right of use assets and liabilities for most leases having terms of 12 months or more. Effective
January 1, 2019, we adopted this new accounting guidance using the effective date transition method, which permits entities to
apply the new lease standards using a modified retrospective transition approach at the date of adoption. As such, historical
periods will continue to be measured and presented under the previous guidance while current and future periods subject to this
new accounting guidance. Upon adoption we recorded a $100,681 right-of-use asset related to our one operating lease (see Note
13) and a $90,591 lease liability.



(r)
Reclassifications



Certain
amounts in the prior year consolidated financial statements have been reclassified to conform to the current year presentation.
These reclassification adjustments had no effect on the Company’s previously reported net income.



10









NOTE
4 – Acquisition of Pure Health Products, LLC



Effective
December 28, 2018, CANB acquired 100% ownership of Pure Health Products, LLC (“Pure Health”) in exchange for the cancellation
of CANB’s $75,000 note receivable from Pure Health and $10,827 accrued interest thereon and issuance of 3,096,827 newly
issued shares of CANB common stock (valued at the $0.0578 closing trading price on December 28, 2018 or $178,997, see Note 11).
The acquisition has been accounted for in the accompanying consolidated financial statements as a purchase transaction. Accordingly,
the financial position and results of operations of Pure Health prior to the date of the acquisition have been excluded from the
accompanying consolidated financial statements.



The
estimated fair values of the identifiable net assets of Pure Health at December 28, 2018 (effective date of acquisition) consisted
of:



|Cash and cash equivalents                       |  | $ | 404     | 
|----------------------------------------------- |  | - | ------- | 
|Accounts receivable from CANB                   |  |   | 16,676  | 
|Inventory                                       |  |   | 79,652  | 
|Property and equipment, net                     |  |   | 7,559   | 
|                                                |  |   |         | 
|Security deposit                                |  |   | 2,100   | 
|                                                |  |   |         | 
|Total assets                                    |  |   | 106,391 | 
|                                                |  |   |         | 
|Accounts payable, including $34,419 due to CANB |  |   | 49,825  | 
|                                                |  |   |         | 
|Total liabilities                               |  |   | 49,825  | 
|                                                |  |   |         | 
|Identifiable net assets                         |  | $ | 56,566  | 



Goodwill
of $55,849 (excess of the $112,415 fair value of the 3,096,827 shares of CANB common stock issued to Pure Health’s stockholders
over the $56,566 identifiable net assets of Pure Health at December 28, 2018 after reflecting the $85,827 cancellation of the
$75,000 note payable and $10,827 accrued interest) was recorded from the acquisition.



The
following pro forma information summarizes the results of operations for the periods indicated as if the acquisition occurred
at December 31, 2017. The pro forma information is not necessarily indicative of the results that would have been reported had
the transaction actually occurred on December 31, 2017, nor is it intended to project results of operations for any future period.





|                                                      |  | Three Months Ended |            
|----------------------------------------------------- |  | ------------------ | -----------
|                                                      |  | March 31,          |            
|                                                      |  | 2019               |            
|                                                      |  |                    |            
|Product sales                                         |  | $                  | 515,360    
|                                                      |  |                    |            
|Cost of product sales                                 |  |                    | 262,553    
|                                                      |  |                    |            
|Gross profit on product sales                         |  |                    | 252,807    
|                                                      |  |                    |            
|Service revenue                                       |  |                    | 1,800      
|                                                      |  |                    |            
|Total gross profit                                    |  |                    | 254,607    
|                                                      |  |                    |            
|Operating expenses                                    |  |                    | 1,426,675  
|                                                      |  |                    |            
|Loss from operations                                  |  |                    | (1,172,068 
|                                                      |  |                    |            
|Other income (loss) - net                             |  |                    | (446       
|                                                      |  |                    |            
|Net income (loss)                                     |  | $                  | (1,172,514 
|Net income (loss) per common share- basic and diluted |  | $                  | (0.00      
|                                                      |  |                    |            
|Weighted average common shares outstanding –          |  |                    |            
|Basic                                                 |  |                    | 501,585,684
|Diluted                                               |  |                    | 732,708,830





11







NOTE
5 – Inventories



Inventories consist of:



|               |  | March 31, 2019 |        |  | December 31, 2018 |  
|-------------- |  | -------------- | ------ |  | ----------------- | -
|Raw materials  |  | $              | 72,148 |  |                   | $
|               |  |                |        |  |                   |  
|Finished goods |  |                | 4,962  |  |                   |  
|Total          |  | $              | 77,110 |  |                   | $



NOTE
6 – Notes Receivable



Notes
receivable consist of:



|                                                                                                                       |  | March 31, 2019 |        |  | December 31, 2018 |  
|---------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------ |  | ----------------- | -
|Note receivable dated November 30, 2015 from Stock Market Manager, Inc, interest at 3% per annum due November 30, 2020 |  | $              | 19,389 |  |                   | $
|                                                                                                                       |  |                |        |  |                   |  
|Total                                                                                                                  |  |                | 19,389 |  |                   |  
|                                                                                                                       |  |                |        |  |                   |  
|Current portion of notes receivable                                                                                    |  |                | -      |  |                   |  
|Noncurrent portion of notes receivable                                                                                 |  | $              | 19,389 |  |                   | $



Stock
Market Manager, Inc is affiliated with Carl Dilley, a Company director. In 2018, the Company received services from Stock Market
Manager valued at $19,611 in exchange for the cancellation of $19,611 in note receivables.



12









NOTE
7 – Property and Equipment, Net



Property
and Equipment, net, consist of:



|                         |  | March 31, 2019 |         |   | December 31, 2018 |  
|------------------------ |  | -------------- | ------- | - | ----------------- | -
|                         |  |                |         |   |                   |  
|Furniture & Fixtures     |  | $              | 19,018  |   |                   | $
|                         |  |                |         |   |                   |  
|Office Equipment         |  |                | 12,378  |   |                   |  
|                         |  |                |         |   |                   |  
|Manufacturing Equipment  |  |                | 746,710 |   |                   |  
|                         |  |                |         |   |                   |  
|Total                    |  |                | 778,106 |   |                   |  
|                         |  |                |         |   |                   |  
|Accumulated amortization |  |                | (34,738 | ) |                   |  
|                         |  |                |         |   |                   |  
|Net                      |  | $              | 743,368 |   |                   | $



NOTE
8 – Intangible Assets, Net



Intangible
assets, net, consist of:



|                                                                    |  | March 31, 2019 |         |   | December 31, 2018 |  
|------------------------------------------------------------------- |  | -------------- | ------- | - | ----------------- | -
|                                                                    |  |                |         |   |                   |  
|Video conferencing software acquired by Prosperity in December 2009 |  | $              | 30,000  |   |                   | $
|                                                                    |  |                |         |   |                   |  
|Enterprise and audit software acquired by Prosperity in April 2008  |  |                | 20,000  |   |                   |  
|                                                                    |  |                |         |   |                   |  
|Patent costs incurred by WRAP                                       |  |                | 6,880   |   |                   |  
|                                                                    |  |                |         |   |                   |  
|CBD Technology                                                      |  |                | 198,655 |   |                   |  
|                                                                    |  |                |         |   |                   |  
|Other                                                               |  |                | 3,548   |   |                   |  
|                                                                    |  |                |         |   |                   |  
|Total                                                               |  |                | 259,083 |   |                   |  
|                                                                    |  |                |         |   |                   |  
|Accumulated amortization and Impairment                             |  |                | (60,428 | ) |                   |  
|                                                                    |  |                |         |   |                   |  
|Net                                                                 |  | $              | 198,655 |   |                   | $



The
CBD related technology were purchased from Hudilab, Inc. (“HUDI”) and Seven Chakras, LLC (“Seven Chakras”)
in the three months ended March 31, 2019. On January 14, 2019, the Company and PHP (collectively, the “buyer”) entered
into a License and Acquisition Agreement (the “LAA”) with HUDI. Pursuant to the LAA, HUDI will sell the technology
owned by it to the buyer in exchange for 7,500,000 shares of CANB common stock. On January 14, 2019, the shares were issued to
the owner of HUDI and valued at $131,625. On January 31, 2019, PHP entered into an Asset Purchase Agreement (the “Agreement”)
with Seven Chakras, LLC (“Seven Chakras”). Pursuant to the Agreement, PHP purchased the rights and title to (i) Seven
Chakras’ proprietary formulas, methods, trade secrets, and know-how related to the production of Seven Chakras’ products
containing cannabidiol (“CBD”), (ii) Seven Chakras’ tradename, domain name, and social media sites, and (iii)
other assets of Seven Chakras including but not limited to raw materials, equipment, packaging and labeling materials, mailing
lists, and marketing materials (collectively, the “Assets”). On February 20, 2019, the Company issued 1,000,000 shares
of CANB common stock valued at $17,030 to owners of Seven Chakras as additional consideration, along with the $50,000 cash payments,
pursuant to the agreement.



13







The
other intangible assets relate to the document management and email marketing divisions. Since December 31, 2017, the Company
do not expect any future positive cash flow from these divisions. Accordingly, the net carrying value of these intangible assets
was reduced to $0.



NOTE
9 – Notes and Loans Payable





Notes
and loans payable consist of:



|                                                                                                                                                                            |  | March 31, 2019 |        |  | December 31, 2018 |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------ |  | ----------------- | -
|Note payable to brother of Marco Alfonsi, Chief Executive Officer of the Company, interest at 10% per annum, due August 22, 2016 (now past due)                             |  |                | 5,000  |  |                   |  
|                                                                                                                                                                            |  |                |        |  |                   |  
|Note payable to Carl Dilley, a director of the Company, interest at 12.99% per annum, due February 1, 2021                                                                  |  |                | 10,899 |  |                   |  
|                                                                                                                                                                            |  |                |        |  |                   |  
|Loan payable to Mckenzie Webster Limited (“MWL”), an entity controlled by the former Chairman of the Board of Directors of the Company, non-interest bearing, due on demand |  |                | 3,000  |  |                   |  
|                                                                                                                                                                            |  |                |        |  |                   |  
|Total                                                                                                                                                                       |  | $              | 18,899 |  |                   | $



NOTE
9 – Preferred Stock



Each
share of Series A Preferred Stock is convertible into 10,000,000 shares of CANB common stock and is entitled to 20,000,000 votes.



Each
share of Series B Preferred Stock has the first preference to dividends, distributions and payments upon liquidation, dissolution
and winding-up of the Company, and is entitled to an accrued cumulative but not compounding dividend at the rate of 5% per annum
whether or not declared. After six months of the issuance date, such share and any accrued but unpaid dividends can be converted
into common stock at the conversion price which is the lower of (i) $0.0101; or (ii) the lower of the dollar volume weighted average
price of CANB common stock on the trading day prior to the conversion day or the dollar volume weighted average price of CANB
common stock on the conversion day. The shares of Series B Preferred Stock have no voting rights.



On
January 22, 2018, the Company issued 87,368 shares of CANB Series B Preferred Stock to RedDiamond Partners LLC (“RedDiamond”)
pursuant to an amended Securities Purchase Agreement dated January 9, 2018, in exchange for proceeds of $83,000, or $0.95 per
CANB Series B Preferred share.



On
February 12, 2018, the Company issued 1 share of CANB Series A Preferred Stock to David Posel pursuant to a service agreement.
The fair value of the issuance is $373,000 and will be amortized over the vesting period of four years.



On
February 16, 2018, the Company issued 3 shares of CANB Series A Preferred Stock to Andrew Holtmeyer pursuant to a service agreement.
The fair value of the issuance is $1,020,000 and will be amortized over the vesting period of one year.



On
February 16, 2018, the Company issued 87,368 shares of CANB Series B Preferred Stock to RedDiamond Partners LLC (“RedDiamond”)
pursuant to an amended Securities Purchase Agreement dated January 9, 2018, in exchange for proceeds of $83,000, or $0.95 per
CANB Series B Preferred share.



On
March 20, 2018, the Company issued 87,368 shares of CANB Series B Preferred Stock to RedDiamond Partners LLC (“RedDiamond”)
pursuant to an amended Securities Purchase Agreement dated January 9, 2018, in exchange for proceeds of $83,000, or $0.95 per
CANB Series B Preferred share.



On
April 13, 2018, April 25, 2018, May 3, 2018, June 19, 2018 and June 25, 2018, RedDiamond Partners converted its 10,000 shares,
10,000 shares, 10,000 shares, 15,000 shares and 10,000 shares of CANB Series B Preferred Stock to 1,287,129 shares, 1,287,129
shares, 1,287,129 shares, 3,545,455 shares, and 2,363,636 shares of CANB common stock, respectively.



14









On
May 14, 2018, the Company issued 1 share of CANB Series A Preferred Stock to a consultant pursuant to a Consulting Agreement dated
May 11, 2018. The $150,000 fair value of the issuance was partially charged to consulting fees in the three months ended September
30, 2018.



From
July 24, 2018 to September 26, 2018, RedDiamond Partners converted aggregately 263,263 shares of CANB Series B Preferred Stock
to 53,839,743 shares of CANB common stock.



On
August 28, 2018, September 14, 2018 and September 19, 2018, the Company issued 36,842 shares, 105,263 shares, and 105,263 shares
of CANB Series B Preferred Stock, respectively, to RedDiamond Partners LLC (“RedDiamond”) pursuant to an amended Securities
Purchase Agreement dated January 9, 2018, in exchange for proceeds of $35,000, $100,000 and $100,000, respectively, or $0.95 per
CANB Series B Preferred share.



From
October 2, 2018 to November 7, 2018, RedDiamond Partners converted aggregately 101,736 shares of CANB Series B Preferred Stock
to 13,094,733 shares of CANB common stock.



On
October 23, 2018 and November 14, 2018, the Company issued 200,000 shares and 52,500 shares of CANB Series B Preferred Stock,
respectively, to RedDiamond Partners LLC (“RedDiamond”) in exchange for proceeds of $190,000 and $49,875, respectively,
or $0.95 per CANB Series B Preferred share.



On
December 28,2018, Marco Alfonsi converted 3 shares of CANB Series A Preferred Stock to 30,000,000 shares of CANB common stock.



On
December 29, the Company issued 8 shares of CANB Series A Preferred Stock to three officers of the company (1 share to Stanley
L. Teeple, 5 shares to Pasquale Ferro and 2 shares to Andrew Holtmeyer), pursuant to the employment agreements with them. The
fair value of the issuance totaled at $4,624,000 and will be amortized over the vesting period of four years.



On
January 28, 2019, the Company issued 10,000,000 shares of CANB common stock to a consultant of the Company in exchange for the
retirement of 1 share of CANB Series A Preferred Stock.



From
February 21, 2019 to March 12, 2019, the Company issued aggregately 20,221,436 shares of CANB common stock to RedDiamond in exchange
for the retirement of 157,105 shares of CANB Series B Preferred Stock.



NOTE
11 – Common Stock



On
February 7, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $9,825 fair
value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended March 31,
2018.



On
February 9, 2018, the Company issued 3,000,000 and 3,000,000 shares of CANB common stock to its two directors for services rendered,
respectively. The $101,400 fair value of each 3,000,000 shares of CANB common stock was charged to directors fees in the three
months ended March 31, 2018. The shares issued to one of the directors were converted to options at June 11, 2018 (see Note 10).



On
February 13, 2018, the Company issued 150,000 shares of CANB common stock to a consultant for services rendered. The $5,085 fair
value of the 150,000 shares of CANB common stock was partially charged to consulting fees in the three months ended March 31,
2018.



On
February 14, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $8,500 fair
value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended March 31,
2018.



15









On
February 19, 2018, the Company issued 150,000 shares of CANB common stock to a consultant for services rendered. The $5,280 fair
value of the 150,000 shares of CANB common stock was partially charged to consulting fees in the three months ended March 31,
2018.



On
February 26, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $11,375 fair
value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended March 31,
2018.



On
March 1, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $10,900 fair
value of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended March 31, 2018.



On
March 20, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $6,500 fair
value of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended March 31, 2018.



On
April 13, 2018, April 25, 2018, May 3, 2018, June 19, 2018 and June 25, 2018, the Company issued 1,287,129 shares, 1,287,129 shares,
1,287,129 shares, 3,545,455 shares, and 2,363,636 shares of CANB common stock to RedDiamond in exchange for the retirement of
10,000 shares, 10,000 shares, 10,000 shares, 15,000 shares and 10,000 shares of CANB Series B Preferred Stock, respectively.



On
May 9, 2018, the Company issued 125,000 shares of CANB common stock to a consultant for services rendered.. The $1,812 fair value
of the 125,000 shares of CANB common stock was partially charged to consulting fees in the three months ended June 30, 2018.



On
May 29, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $5,000 fair value
of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended June 30, 2018.



On
May 31, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $4,600 fair value
of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended June 30, 2018.



On
June 4, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $5,750 fair value
of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended June 30, 2018.



On
June 11, 2018, the Company agreed to issue 2,749,429 shares of CANB common stock to a lender in satisfaction of notes payable
of $15,000 and accrued interest payable of $4,246. The shares was issued at August 24, 2018.



On
June 18, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $6,250 fair value
of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended June 30, 2018.



On
June 22, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $8,250 fair value
of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended June 30, 2018.



From
July 24, 2018 to September 26, 2018, the Company issued aggregately 53,839,743 shares of CANB common stock to RedDiamond in exchange
for the retirement of 263,263 shares of CANB Series B Preferred Stock.



On
July 31, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $3,225 fair value
of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended September 30, 2018.



16









On
August 9, 2018, Company received a conversion notice from a lender. As a result, 9,544,292 shares of CANB common stock was issued
to the lender in satisfaction of notes payable of $50,000 and accrued interest payable of $7,266 at August 21, 2018.



On
August 28, 2018, the Company issued 2,000,000 shares of CANB common stock to a consultant for services rendered. The $159,600
fair value of the 2,000,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September
30, 2018.



On
September 6, 2018, the Company issued 300,000 shares of CANB common stock to a consultant for services rendered. The $16,500 fair
value of the 300,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September
30, 2018.



On
September 6, 2018, the Company issued 500,000 shares of CANB common stock to a consultant for services rendered. The $27,500 fair
value of the 500,000 shares of CANB common stock was charged to consulting fees in the three months ended September 30, 2018.



On
September 6, 2018, the Company issued 8,430,331 shares of CANB common stock to a lender in satisfaction ofnotes
payable of $38,500 and accrued interest payable of $7,867.



On
September 7, 2018, the Company issued 5,121,694 shares of CANB common stock to a lender in satisfaction ofnotes
payable of $25,000 and accrued interest payable of $3,169.



On
September 7, 2018, the Company issued 10,045,667 shares of CANB common stock to a lender in satisfaction ofnotes
payable of $50,000 and accrued interest payable of $10,274.



On
September 8, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $11,500 fair
value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September
30, 2018.



On
September 10, 2018, the Company issued 500,000 shares of CANB common stock to a consultant for services rendered. The $19,950
fair value of the 500,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September
30, 2018.



On
September 17, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $10,750
fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September
30, 2018.



On
September 18, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $13,725
fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September
30, 2018.



On
September 20, 2018, the Company issued 7,407,407 shares of CANB common stock to an investor pursuant to a Stock Purchase Agreement
dated September 17, 2018, in exchange for proceeds of $200,000, or $0.027 per CANB common share.



On
September 21, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $14,500
fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September
30, 2018.



On
September 25, 2018, the Company issued 2,000,000 shares of CANB common stock to a consultant for services rendered. The $97,400
fair value of the 2,000,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September
30, 2018.



From
October 2, 2018 to November 7, 2018, the Company issued aggregately 13,094,733 shares of CANB common stock to RedDiamond in exchange
for the retirement of 101,736 shares of CANB Series B Preferred Stock.



17









From
November 5, 2018 to December 28, 2018, the Company issued aggregately 2,125,000 shares of CANB common stock to multiple consultants
for services rendered. The $80,665 fair value of the 2,125,000 shares of CANB common stock was partially charged to consulting
fees in the three months ended December 30, 2018.



From
December 3, 2018 to December 28, 2018, the Company issued aggregately 1,500,000 shares of CANB common stock to three board members
for services rendered. The $62,342 fair value of the 1,500,000 shares of CANB common stock was charged to director fees in the
three months ended December 30, 2018.



From
December 3, 2018 to December 28, 2018, the Company issued aggregately 22,413,794 shares of CANB common stock to multiple investors
pursuant to relative Stock Purchase Agreements dated on various dates, in exchange for total proceeds of $650,000.



On
December 11, 2018, the Company issued 891,089 shares of CANB common stock to RedDiamond in satisfaction of dividend payable of
$9.000.



On
December 19, 2018, the Company issued 891,089 shares of CANB common stock to Auctus, LLC pursuant to a cashless exercise of stock
options.



On
December 21, 2018, Company received a conversion notice from a lender. As a result, 9,372,100 shares of CANB common stock was
issued to the lender in satisfaction of notes payable of $83,500 and accrued interest payable of $10,221.



On
December 21, 2018, Company issued aggregately 4,370,629 shares of CANB common stock to four officers of the Company in satisfaction
of accrued compensation of $192,300.



On
December 28, 2018, the Company issued 3,096,827 shares of CANB common stock for the acquisition of Pure Health Products, LLC.



On
December 28, 2018, the Company issued 245,789 shares of CANB common stock to an officer of the Company pursuant to the Employment
Agreement dated December 29, 2018 with Andrew Holtmeyer. The $10,371 fair value of the issuance was charged to stock-based compensation
in the three months ended December 31, 2018.



On
December 29, the Company issued 30,000,000 shares of CANB common stock to Marco Alfonsi in exchange for the return of 3 shares
of CANB Series A Preferred Stock owned by Marco Alfonsi.



From
January 4, 2019 to March 27, 2019, the Company issued aggregately 41,431,994 shares of CANB common stock to multiple investors
pursuant to relative Stock Purchase Agreements dated on various dates, in exchange for total proceeds of $1,196,100.



On
January 14, 2019, the Company issued 7,500,000 shares of CANB common stock to Hudilab, Inc. (“HUDI”), pursuant to
a License and Acquisition Agreement for purchase of the technology owned by HUDI.



From
January 18, 2019 to March 17, 2019, the Company issued aggregately 24,600,000 shares of CANB common stock to multiple consultants
for services rendered.



From
January 19, 2019 to March 27, 2019, the Company issued aggregately 1,167,959 shares of CANB common stock to employee and officers
of the Company pursuant to employee agreement and in satisfaction of accrued compensation for the quarter ended March 31, 2019.



On
February 5, 2019, the Company issued 2,000,000 shares to the owner of TZ Wholesale LLC, pursuant to a Memorandum of Understanding
(the “MOU”) dated November 9, 2018.



On
February 20, 2019, the Company issued 1,000,000 shares of CANB common stock to owners of Seven Chakras pursuant to an Asset Purchase
Agreement (the “Agreement”) with Seven Chakras, LLC dated January 31, 2019.







NOTE
12 – Stock Options and Warrants



A
summary of stock options and warrants activity follows:



|                           |  | Shares of Common Stock Exercisable Into |          
|-------------------------- |  | --------------------------------------- | ---------
|                           |  | Stock                                   |          
|                           |  | Options                                 |          
|Balance, December 31, 2017 |  |                                         | 50,000   
|Granted in 2018            |  |                                         | 6,000,000
|Cancelled in 2018          |  |                                         | -        
|Exercised in 2018          |  |                                         | -        
|                           |  |                                         |          
|Balance, December 31, 2018 |  |                                         | 6,050,000
|Granted in Q1 2019         |  |                                         | -        
|Cancelled in Q1 2019       |  |                                         | -        
|Exercised in Q1 2019       |  |                                         | -        
|                           |  |                                         |          
|Balance, March 31, 2019    |  |                                         | 6,050,000





18











Issued and outstanding stock options as of March 31, 2019 consist of:





|Year    |  | Number Outstanding |           |  | Exercise |   |       | Year of    | 
|------- |  | ------------------ | --------- |  | -------- | - | ----- | ---------- | 
|Granted |  | And Exercisable    |           |  | Price    |   |       | Expiration | 
|        |  |                    |           |  |          |   |       |            | 
|2009    |  |                    | 50,000    |  |          | $ | 1.000 |            | 
|2018    |  |                    | 6,000,000 |  |          | $ | 0.001 |            | 
|        |  |                    |           |  |          |   |       |            | 
|Total   |  |                    | 3,050,000 |  |          |   |       |            | 



On
June 11, 2018, the Company granted 3,000,000 options of CANB common stock to Carl Dilley, a former director of the Company, in
exchange for the retirement of a total of 3,000,000 shares of CANB common stock from Carl Dilley. The options are exercisable
for the purchase of one share of the Registrant’s Common Stock at an exercise price of $0.001 per share. The Options are
fully vested and are exercisable as of the Grant Date and all shall expire June 11, 2023. The value of the Stock Options ($84,000)
were calculated using the Black Scholes option pricing model and the following assumptions: (i) $0.028 share price, (ii) 5 years
term, (iii) 262.00% expected volatility, (iv) 2.80% risk free interest rate and the difference between this value and the fair
value of retired shares was expensed in the quarterly period ended June 30, 2018.



On
October 21, 2018, the Company granted 3,000,000 options of CANB common stock to Stanley L. Teeple, an officer and Director of
the Company. The options are exercisable for the purchase of one share of the Registrant’s Common Stock at an exercise price
of $0.001 per share. The Options are fully vested and are exercisable as of the Grant Date and all shall expire October 1, 2023.
The values of the Stock Options ($118,200) were calculated using the Black Scholes option pricing model and the following assumptions:
(i) $0.0395 share price, (ii) 5 years term, (iii) 221.96% expected volatility, (iv) 3.05% risk free interest rate and the fair
value of options was expensed in the quarterly period ended December 31, 2018



Issued
and outstanding warrants as of March 31, 2019 consist of:



|Year    |  | Number Outstanding |           |  | Exercise |   |         | Year of    | 
|------- |  | ------------------ | --------- |  | -------- | - | ------- | ---------- | 
|Granted |  | And Exercisable    |           |  | Price    |   |         | Expiration | 
|        |  |                    |           |  |          |   |         |            | 
|2010    |  |                    | 247,500   |  |          | $ | 1.00    |            | 
|2018    |  |                    | 2,000,000 |  |          | $ | 0.04345 | (a)        | 
|        |  |                    |           |  |          |   |         |            | 
|Total   |  |                    | 2,247,500 |  |          |   |         |            | 



(a)
110% of the closing price of the Company’s common stock on the date that the Holder funds the full purchase price of the
Note.



NOTE
13 – Income Taxes



No
provisions for income taxes were recorded for the periods presented since the Company incurred net losses in those periods.



19







The
provisions for (benefits from) income taxes differ from the amounts determined by applying the U.S. Federal income tax rate of
21% and 35% to pretax income (loss) as follows:



|                                                           |  | Three Months March 31, |         
|---------------------------------------------------------- |  | ---------------------- | --------
|                                                           |  | 2019                   |         
|                                                           |  |                        |         
|Expected income tax (benefit) at 21%                       |  | $                      | (246,228
|                                                           |  |                        |         
|Non-deductible stock-based compensation                    |  |                        | 173,921 
|                                                           |  |                        |         
|Non-deductible amortization of debt discounts              |  |                        | -       
|                                                           |  |                        |         
|Non-deductible expense from derivative liability           |  |                        | -       
|                                                           |  |                        |         
|Increase in deferred income tax assets valuation allowance |  |                        | 72,307  
|                                                           |  |                        |         
|Provision for (benefit from) income taxes                  |  | $                      | -       





Deferred
income tax assets consist of:



|                                |  | March 31, |            |   | December 31, |  
|------------------------------- |  | --------- | ---------- | - | ------------ | -
|                                |  | 2019      |            |   | 2018         |  
|                                |  |           |            |   |              |  
|Net operating loss carryforward |  |           | 1,716,900  |   |              |  
|                                |  |           |            |   |              |  
|Valuation allowance             |  |           | (1,716,900 | ) |              |  
|                                |  |           |            |   |              |  
|Net                             |  | $         | -          |   |              | $





Based
on management’s present assessment, the Company has not yet determined it to be more likely than not that a deferred income
tax asset of $1,716,900 attributable to the future utilization of the $5,131,252 net operating loss carryforward as of December
31, 2018 will be realized. Accordingly, the Company has maintained a 100% allowance against the deferred income tax asset in the
financial statements at March 31, 2019. The Company will continue to review this valuation allowance and make adjustments as appropriate.
The net operating loss carryforward expires in years 2025, 2026, 2027, 2028, 2029, 2030, 2031, 2032, 2033, 2034, 2035, 2036, 2037,
2038 and 2039 in the amount of $1,369, $518,390, $594,905, $686,775, $159,141, $151,874, $135,096, $166,911, $311,890, $25,511,
$338,345, $386,297, $496,798, $713,162 and $344,318, respectively.



Current
tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership
occurs. Therefore, the amount available to offset future taxable income may be limited.



The
Company’s U.S. Federal and state income tax returns prior to 2014 are closed and management continually evaluates expiring
statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. The statute of limitations
on the 2014 tax year returns expired in September 2018.



The
Company recognizes interest and penalties associated with uncertain tax positions as part of the income tax provision and would
include accrued interest and penalties with the related tax liability in the consolidated balance sheets. There were no interest
or penalties paid during 2018 and 2017.



20







NOTE
14 – Commitments and Contingencies



Employment
Agreements



On
October 3, 2017, the Company executed an Executive Employment Agreement with Marco Alfonsi (“Alfonsi”) for Alfonsi
to serve as the Company’s chief executive officer and interim chief financial officer and secretary for cash compensation
of $10,000 per month. Pursuant to the agreement, the Company issued a share of CANB Series A Preferred Stock to Alfonsi on October
4, 2017 (see Note 8). Alfonsi may terminate his employment upon 30 days written notice to the Company. The Company may terminate
Alfonsi’s employment upon written notice to Alfonsi by a vote of the Board of Directors. At November 12, 2018, this Agreement
was terminated due to the execution of a new Employment Agreement with Marco Alfonsi for Alfonsi to serve as the Company’s
chief executive officer for cash compensation of $15,000 per month. Pursuant to the agreement, three of the eight previously issued
shares of CANB Series A Preferred Stock will be returned to the Company and converted into 30,000,000 common shares. On December
Alfonsi may terminate his employment upon 30 days written notice to the Company. The Agreement has an initial term of four years
and can be terminated upon the resignation or death of Mr. Alfonsi, and also can be terminated by the Company due to the failure
or neglect of Mr. Alfonsi to perform his duties, or due to the misconduct of Mr. Alfonsi in connection with the performance.



On
February 12, 2018, the Company executed an Executive Service Agreement (“Agreement”) with David Posel. The Agreement
provides that Mr. Posel services as the Company’s Chief Operating Officer for a term of 4 years. The Agreement also provides
for compensation to Mr. Posel of $5,000 cash per month and the issuance of 1 share of Series A Preferred Stock at the inception
of the Agreement. The Agreement can be terminated upon the resignation or death of Mr. Posel, and also can be terminated by the
Company due to the failure or neglect of Mr. Posel to perform his duties, or due to the misconduct of Mr. Posel in connection
with the performance. On February 12, 2018, 1 share of CANB Series A Preferred Stock were issued to Mr. Posel (see Note 8). Since
execution of the Posel Agreement, Mr. Posel has been re-assigned to COO for Pure Health Products, the Company’s subsidiary.



On
February 16, 2018, the Company executed an Executive Service Agreement (“Agreement”) with Andrew W Holtmeyer. The
Agreement provides that Mr. Holtmeyer services as the Company’s Executive Vice President Business for a term of 3 years.
The Agreement also provides for compensation to Mr. Holtmeyer of $10,000 cash per month and the issuance of 3, 2 and 1 share of
Series A Preferred Stock at the beginning of each year. The Agreement can be terminated upon the resignation or death of Mr. Holtmeyer,
and also can be terminated by the Company due to the failure or neglect of Mr. Holtmeyer to perform his duties, or due to the
misconduct of Mr. Holtmeyer in connection with the performance. At December 29, 2018, this Agreement was terminated due to the
execution of a new Employment Agreement with Andrew W Holtmeyer. The Agreement provides that Mr. Holtmeyer services as the Company’s
Executive Vice President Business for a term of 4 years. The Agreement also provides for compensation to Mr. Holtmeyer of $15,000
cash per month and the issuance of 245,789 shares of common stock upon signing of the agreement.



On
October 15, 2018, the Company executed an Employment Agreement (“Agreement”) with Stanley L. Teeple. The Agreement
provides that Mr. Teeple services as the Company’s Chief Financial Officer and Secretary for a term of 4 years. The Agreement
also provides for compensation to Mr. Teeple of $15,000 cash per month and the issuance of 1 share of Series A Preferred Stock
upon execution of the Agreement. The Agreement can be terminated upon the resignation or death of Mr. Teeple, and also can be
terminated by the Company due to the failure or neglect of Mr. Teeple to perform his duties, or due to the misconduct of Mr. Teeple
in connection with the performance.



On
December 28, 2018, the Company executed an Employment Agreement (“Agreement”) with Pasquale Ferro for Mr. Ferro to
serve as Pure Health Products’ president for cash compensation of $15,000 per month and the total issuance of 5 share of
Series A Preferred Stock proportionately vesting at the beginning of each year for a term of 4 years. Mr. Ferro may terminate
his employment upon 30 days written notice to the Company. The Agreement has an initial term of four years and can be terminated
upon the resignation or death of Mr. Ferro, and also can be terminated by the Company due to the failure or neglect of Mr. Ferro
to perform his duties, or due to the misconduct of Mr. Ferro in connection with the performance.



21







Consulting
Agreements



On
September 6, 2017, the Company executed a Consulting Agreement with T8 Partners LLC (“T8”) for T8 to serve as the
Company’s consultant for stock compensation of a total of 10,000,000 restricted shares. Pursuant to the agreement, the Company
issued 2,500,000 restricted shares of CANB common stock to T8 on September 7, 2017. Effective October 27, 2017, the Company terminated
the agreement due to non-performance by T8. The Company won the arbitration proceedings against T8 and T8 has been ordered to
return its shares to the Company.



On
November 9, 2017, the Company executed a Consulting Agreement with Healthcare Advisory Group Company (“Healthcare”)
for Healthcare to serve as the Company’s consultant for stock compensation of a total of 5,000,000 restricted shares. Pursuant
to the agreement, the Company issued 2,500,000 restricted shares of CANB common stock to Healthcare on November 9, 2017. Effective
March 6, 2018, the Company terminated the agreement due to non-performance by Healthcare.



Lease
Agreements



On
December 1, 2014, Prosperity entered into a lease agreement with KLAM, Inc. for office space in Hicksville, New York for an initial
term of one year commencing December 1, 2014. The lease provides for monthly rentals of $2,500 and provides Prosperity an option
to renew the lease after the initial term. The Company has continued to occupy this space after November 30, 2015 under a month
to month arrangement at $2,500 per month. KLAM, Inc. is controlled by the wife of the Company’s chief executive officer
Marco Alfonsi.



On
September 11, 2015, the Company executed a lease agreement with an unrelated third party for office space in Hicksville, New York
for a term of 37 months. The lease provides for monthly rentals of $2,922 for lease year 1, $3,009 for lease year 2, and $3,100
for lease year 3. The lease also provides for additional rent based on increases in base year operating expenses and real estate
taxes. On August 6, 2018, the Company renewed the lease agreement for a term of 36 months starting November 1, 2018. The lease
provides for monthly rentals of $3,193 for lease year 1, $3,289 for lease year 2, and $3,388 for lease year 3.



Rent
expense for the year ended December 31, 2018 and 2017 was $67,165 and $65,060, respectively.



At
March 31, 2019, the future minimum lease payments under non-cancellable operating leases were:



|Year ended December 31, 2019 |  |   | 28,932  | 
|---------------------------- |  | - | ------- | 
|Year ended December 31, 2020 |  |   | 39,666  | 
|Year ended December 31, 2021 |  |   | 33,880  | 
|Total                        |  | $ | 102,478 | 



The
lease liability of $90,591 at March 31, 2019 as presented in the Consolidated Balance Sheet represents the discounted (at our
10% estimated incremental borrowing rate) value of the future lease payments of 102,478 at March 31, 2019.



Major
Customers



For
the three months ended March 31, 2019, there were no customers that accounted for more than 10% of total revenues.



For
the three months ended March 31, 2018, one customer accounted for approximately 13% of total revenues.



NOTE
15 – Related Party Transactions



ProAdvanced
Group, Inc. (“PAG”), an entity controlled by the Company’s chief executive officer, is a customer of CANB. At
March 31, 2019, CANB had an account receivable from PAG of $7,240. For the three months ended March 31, 2019, CANB had revenues
from PAG of $0.



Island
Stock Transfer (“IST”), an entity controlled by Carl Dilley, a former Company director, is both a customer and vendor
of CANB. At March 31, 2019, CANB had an account receivable from IST of $7,932. For the three months ended March 31, 2019, CANB
had revenues from IST of $0.



Stock
Market Manager, Inc. is also an entity controlled by Mr. Dilley. For the three months ended March 31, 2019, CANB had an account
payable to Stock Market Manager Inc. of $1,676.



During
the three months ended March 31, 2019, we had products and service sales to related parties totaling $0.



NOTE
16 – Subsequent Events



From
April 29, 2019 to May 1, 2019, the Company issued aggregately 4,504,950 shares of CANB common stock to RedDiamond in exchange
for the retirement of 35,000 shares of CANB Series B Preferred Stock.



In
accordance with FASB ASC 855, Subsequent Events, the Company has evaluated subsequent events through May 17, 2019, the date on
which these consolidated financial statements were available to be issued. Except as disclosed above, there were no material subsequent
events that required recognition or additional disclosure in these consolidated financial statements.



22







ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



General



Canbiola,
Inc. was originally formed as a Florida corporation on October 11, 2005, under the name of WrapMail, Inc. Effective January 5,
2015, we acquired 100% ownership of Prosperity Systems, Inc., which the Company is in the process of dissolving. Effective December
28, 2018, we acquired 100% ownership of Pure Health Products. In November 2018, we formed Duramed as a wholly-owned subsidiary.
The Company is presently in the process of dissolving Prosperity.



We
manufacture and sell products containing CBD. We also provide document, project, marketing and sales management systems to our
residual business clients through our website and proprietary software, which divisions are being wound-down. The consolidated
financial statements include the accounts of CANB and its wholly owned subsidiary Pure Health Products and DuraMed for the three
months ended March 31, 2019.



Results
of Operations



Three
Months Ended March 31, 2019 compared with Three Months Ended March 31, 2018:



Revenues
increased $447,391 from $69,769 in 2018 to $517,160 in 2019.



Cost
of product sales increased $217,966 from $44,587 in 2018 to $262,553 in 2019 due to the expansion of current product sales and
launch of new product sales in Duramed.



Officers
and director’s compensation increased $182,750 from $262,800 in 2018 to $445,550 in 2019. The 2019 expense amount(445,550)
includes stock-based compensation($262,420) paid to officers and employees. The 2018 expense amount ($262,800) includes stock-based
compensation ($202,800) paid to the advisory board members.



Consulting
fees increased $387,843 from $275,908 in 2018 to $663,751 in 2019. The 2019 expense amount ($663,751) includes stock-based compensation
of $565,776, resulting from stock issued for the service of consultants. The 2018 expense amount ($275,908) includes stock-based
compensation of $11,000, resulting from stock issued for the service of consultants.



Advertising
expense increased $4,055 from $22,333 in 2018 to $26,388 in 2019.



Hosting
expense decreased $3,218 from $3,668 in 2018 to $450 in 2019.



Rent
expense decreased $4,405 from $16,265 in 2018 to $11,860 in 2019.



Professional
fees increased $24,453 from $13,383 in 2018 to $37,836 in 2019.



Depreciation
of property and equipment increased $1,962 from $803 in 2018 to $2,765 in 2019.



Amortization
of intangible assets increased $2,194 from $0 in 2018 to $2,194 in 2019.



Other
operating expenses increased $171,168 from $64,713 in 2018 to $235,881 in 2019. The increase was due largely to higher referral
fees, travel expense, and news announcement fees in 2019 compared to 2018.



Net
income decreased $1,580,072 from income of $407,558 in 2018 to a loss of $1,172,514 in 2019. The decrease was due to the $766,802
increase in total operating expenses and the decrease of $1,042,695 in other income – net from $1,042,249 other income –
net in 2018 to $446 other expense– net in 2019, offset by the $447,391 increase in revenues.



23







Liquidity
and Capital Resources



At
March 31, 2019, we had cash and cash equivalents of $567,291 and working capital of $1,067,641.



Cash
and cash equivalents decreased $240,456 from $807,747 at December 31, 2018 to $567,291 at March 31, 2019. For the three months
ended March 31, 2019, $1,194,265 was provided by financing activities, $744,212 was used in investing activities, and $690,509
was used in operating activities.



We
currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit
or any other sources.



We
currently have no commitments with any person for any capital expenditures.



We
have no off-balance sheet arrangements.



ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



None.



ITEM
4. CONTROLS AND PROCEDURES



(A)
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES



As
of March 31, 2019, our principal executive officer and principal financial officer conducted an evaluation regarding the effectiveness
of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act). Based upon the
evaluation of these controls and procedures, our principal executive officer and principal financial officer concluded that our
disclosure controls and procedures were not effective as of the end of the period covered by this report.



(B)
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING



There
were no changes in our internal control over financial reporting in our fiscal quarter for the period March 31, 2019 covered by
this Quarterly Report on Form 10-Q, that have materially affected, or are reasonably likely to materially affect our internal
control over financial reporting.



PART
II - OTHER INFORMATION



ITEM
1. LEGAL PROCEEDINGS



We
are not currently a party to any legal proceedings.



ITEM
1A. RISK FACTORS



As
a smaller reporting company, we are not required to provide risk factors in this Form 10-Q.



ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



Sales
of unregistered securities during the quarterly period ended March 31, 2019 follows:



From
January 4, 2019 to March 27, 2019, the Company issued aggregately 41,431,994 shares of CANB common stock to multiple investors
pursuant to relative Stock Purchase Agreements dated on various dates, in exchange for total proceeds of $1,196,100.



On
January 14, 2019, the Company issued 7,500,000 shares of CANB common stock to Hudilab, Inc. (“HUDI”), pursuant to
a License and Acquisition Agreement for purchase of the technology owned by HUDI.



24







From
January 18, 2019 to March 17, 2019, the Company issued aggregately 24,600,000 shares of CANB common stock to multiple consultants
for services rendered.



From
January 19, 2019 to March 27, 2019, the Company issued aggregately 1,167,959 shares of CANB common stock to employee and officers
of the Company pursuant to employee agreement and in satisfaction of accrued compensation for the quarter ended March 31, 2019.



On
February 5, 2019, the Company issued 2,000,000 shares to the owner of TZ Wholesale LLC, pursuant to a Memorandum of Understanding
(the “MOU”) dated November 9, 2018.



On
February 20, 2019, the Company issued 1,000,000 shares of CANB common stock to owners of Seven Chakras pursuant to an Asset Purchase
Agreement (the “Agreement”) with Seven Chakras, LLC dated January 31, 2019.



With
respect to the transactions noted above, each of the recipients of securities of the Company was an accredited investor, or is
considered by the Company to be a “sophisticated person”, inasmuch as each of them has such knowledge and experience
in financial and business matters that they are capable of evaluating the merits and risks of receiving securities of the Company.
No solicitation was made and no underwriting discounts were given or paid in connection with these transactions. The Company believes
that the issuance of its securities as described above was exempt from registration with the Securities and Exchange Commission
pursuant to Section 4(a)(2) of the Securities Act of 1933.



ITEM
3. DEFAULTS UPON SENIOR SECURITIES



None.



ITEM
4. MINE SAFETY DISCLOSURES



Not
applicable.



ITEM
5. OTHER INFORMATION



None.



ITEM
6. EXHIBITS



|3.1  |  | Articles of Incorporation, as amended*                                                                                                        
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|3.2  |  | Bylaws*                                                                                                                                       
|31.1 |  | Chief Executive Officer certification under Section 302 of the Sarbanes-Oxley Act of 2002                                                     
|31.2 |  | Chief Financial Officer certification under Section 302 of the Sarbanes-Oxley Act of 2002                                                     
|32.1 |  | Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|32.2 |  | Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|     |  |                                                                                                                                               
|*    |  | filed
    with the Form S-1 Registration Statement filed with the SEC on December 2, 2015 and incorporated herein by reference.               



25







SIGNATURES



Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.



|                       | CANBIOLA,
    INC.
|---------------------- | ------------------
|                       |                   
|Date:
    May 23, 2019 | By:               
|                       |                   
|                       |                   
|Date:
    May 23, 2019 | By:               
|                       |                   



26