UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM
10-K



(Mark
One)



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



For
the Fiscal Year Ended December 31, 2018



OR



[  ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE



For
the Transition Period From ____________ to ____________



Commission
File Number: 333-208293



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
        Number)



960
South Broadway, Suite 120, Hicksville NY 11801,

(Address
of principal executive offices)



516-590-1846

Registrant’s
telephone number, including area code:



None

Securities
Registered Pursuant to Section 12(b) of the Act:



Common
Stock, par value $0.001 per share

Securities
Registered Pursuant to Section 12(g) of the Act:



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ]
No [X]



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



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 time that the registrant was required to submit and post such files). Yes [X] No [  ]



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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. (Check one):



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



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 Act). Yes [  ] No [X]



The
aggregate market value of voting stock held by non-affiliates of the registrant on June 30, 2018, was $4,466,469, based on the
last reported sale price of the registrant’s Common Stock on the OTC Markets on that date.



As
of April 12, 2019, the registrant had outstanding 548,487,714 shares of common stock, $0.00 par value per share.


















CANBIOLA,
INC.

2017
FORM 10-K ANNUAL REPORT

TABLE
OF CONTENTS



|Item
    No.                                         |  | Description                                                                                                   |  | Page
|---------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------- |  | ----
|                                                     |  |                                                                                                               |  |     
|Cautionary Note Regarding Forward-Looking Statements |  | 3                                                                                                            
|                                                     |  |                                                                                                               |  |     
|                                                     |  | PART I                                                                                                        |  |     
|Item
    1.                                          |  | Business.                                                                                                     |  | 5   
|Item
    1A.                                         |  | Risk Factors.                                                                                                 |  | 8   
|Item
    1B.                                         |  | Unresolved Staff Comments.                                                                                    |  | 8   
|Item
    2.                                          |  | Properties.                                                                                                   |  | 8   
|Item
    3.                                          |  | Legal Proceedings.                                                                                            |  | 8   
|Item
    4.                                          |  | Mine Safety Disclosures.                                                                                      |  | 8   
|                                                     |  |                                                                                                               |  |     
|                                                     |  | PART II                                                                                                       |  |     
|Item
    5.                                          |  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |  | 8   
|Item
    6.                                          |  | Selected Financial Data.                                                                                      |  | 10  
|Item
    7.                                          |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations.                        |  | 11  
|Item
    7A.                                         |  | Quantitative and Qualitative Disclosures About Market Risk.                                                   |  | 12  
|Item
    8.                                          |  | Financial Statements and Supplementary Data.                                                                  |  | 12  
|Item
    9.                                          |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.                         |  | 12  
|Item
    9A.                                         |  | Controls and Procedures.                                                                                      |  | 12  
|Item
    9B.                                         |  | Other Information.                                                                                            |  | 13  
|                                                     |  |                                                                                                               |  |     
|                                                     |  | PART III                                                                                                      |  |     
|Item
    10.                                         |  | Directors, Executive Officers and Corporate Governance.                                                       |  | 13  
|Item
    11.                                         |  | Executive Compensation.                                                                                       |  | 15  
|Item
    12.                                         |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.               |  | 16  
|Item
    13.                                         |  | Certain Relationships and Related Transactions, and Director Independence.                                    |  | 18  
|Item
    14.                                         |  | Principal Accounting Fees and Services.                                                                       |  | 18  
|                                                     |  |                                                                                                               |  |     
|                                                     |  | PART IV                                                                                                       |  |     
|Item
    15.                                         |  | Exhibits, Financial Statement Schedules.                                                                      |  | 19  
|                                                     |  |                                                                                                               |  |     
|Signatures                                           |  | 20                                                                                                           



2







CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS



Certain
statements contained or incorporated by reference in this Annual Report on Form 10-K are considered forward-looking statements
(within the meaning of the Private Securities Litigation Reform Act of 1995) concerning our business, results of operations, economic
performance and/or financial condition, based on management’s current expectations, plans, estimates, assumptions and projections.
Forward-looking statements are included, for example, in the discussions about:



| | ● | strategy;                                                                         
| | - | ----------------------------------------------------------------------------------
| | ● | new
    product discovery and development;                                        
| | ● | current
    or pending clinical trials;                                           
| | ● | our
    products’ ability to demonstrate efficacy or an acceptable safety profile;
| | ● | actions
    by regulatory authorities;                                            
| | ● | product
    manufacturing, including our arrangements with third-party suppliers; 
| | ● | product
    introduction and sales;                                               
| | ● | royalties
    and contract revenues;                                              
| | ● | expenses
    and net income;                                                      
| | ● | credit
    and foreign exchange risk management;                                  
| | ● | liquidity;                                                                        
| | ● | asset
    and liability risk management;                                          
| | ● | the
    outcome of litigation and other proceedings;                              
| | ● | intellectual
    property rights and protection;                                  
| | ● | economic
    factors;                                                             
| | ● | competition;
    and                                                              
| | ● | legal
    risks.                                                                  



Any
statements contained in this report that are not statements of historical fact may be deemed forward-looking statements. Forward-looking
statements generally are identified by the words “expects,” “anticipates,” “believes,” “intends,”
“estimates,” “aims,” “plans,” “may,” “could,” “will,”
“will continue,” “seeks,” “should,” “predict,” “potential,” “outlook,”
“guidance,” “target,” “forecast,” “probable,” “possible” or the negative
of such terms and similar expressions. Forward-looking statements are subject to change and may be affected by risks and uncertainties,
most of which are difficult to predict and are generally beyond our control. Forward-looking statements speak only as of the date
they are made, and we undertake no obligation to update any forward-looking statement in light of new information or future events,
except as required by law, although we intend to continue to meet our ongoing disclosure obligations under the U.S. securities
laws and other applicable laws.



3







We
caution you that a number of important factors could cause actual results or outcomes to differ materially from those expressed
in, or implied by, the forward-looking statements, and therefore you should not place too much reliance on them. These factors
include, among others, those described herein, under “Risk Factors” and elsewhere in this Annual Report and in our
other public reports filed with the Securities and Exchange Commission. It is not possible to predict or identify all such factors,
and therefore the factors that are noted are not intended to be a complete discussion of all potential risks or uncertainties
that may affect forward-looking statements. If these or other risks and uncertainties materialize, or if the assumptions underlying
any of the forward-looking statements prove incorrect, our actual performance and future actions may be materially different from
those expressed in, or implied by, such forward-looking statements. We can offer no assurance that our estimates or expectations
will prove accurate or that we will be able to achieve our strategic and operational goals.



Forward-looking
statements are based on information we have when those statements are made or management’s good faith belief as of that
time with respect to future events, and are subject to significant risks and uncertainties that could cause actual performance
or results to differ materially from those expressed in or suggested by the forward-looking statements.



Moreover,
new risks regularly emerge and it is not possible for our management to predict or articulate all risks we face, nor can we assess
the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to
differ from those contained in any forward-looking statements. All forward-looking statements included in this prospectus are
based on information available to us on the date of this Annual Report. Except to the extent required by applicable laws or rules,
we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information,
future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on
our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this Annual Report.



JUMPSTART
OUR BUSINESS STARTUPS ACT



We
qualify as an “emerging growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS
Act”) as we do not have more than $1,000,000,000 in annual gross revenue and did not have such amount as of December 31,
2018, the last day of our last fiscal year. We are electing to use the extended transition period for complying with new or revised
accounting standards under Section 102(b)(1) of the JOBS Act.



As
an emerging growth company, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements that are
otherwise applicable to public companies. These provisions include, but are not limited to:



| | ● | being
    permitted to present only two years of audited financial statements and only two years of related “Management’s
    Discussion and Analysis of Financial Condition and Results of Operations” in this annual report;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ● | not
    being requested to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended
    (“Sarbanes-Oxley Act”);                                                          
| | ● | reduced
    disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements;
    and                                                                            
| | ● | exemptions
    from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden
    parachute payments not previously approved.                                   



We
will remain an emerging growth company until the earliest to occur of: (i) our reporting $1 billion or more in annual gross revenues;
(ii) the end of fiscal year 2019; (iii) our issuance, in a three year period, of more than $1 billion in non-convertible debt;
and (iv) the end of the fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million
on the last business day of our second fiscal quarter.



4







PART
I



|Item 1. | Business
|------- | --------



Company
Overview



Canbiola,
Inc. was originally incorporated as WrapMail, Inc. (“WRAP”) in Florida on October 11, 2005 in order to tap into a
largely un-serviced segment of the web-based advertising industry. 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.



Effective
January 5, 2015, WRAP acquired 100% ownership of Prosperity Systems, Inc. (“Prosperity”), a New York corporation incorporated
on April 2, 2008, in order to acquire Prosperity’s office productivity software suite as a complement to WRAP’s existing
intellectual property. After its acquisition, the Company transferred Prosperity’s operations to WRAP and is presently in
the process of dissolving Prosperity. For the periods presented, the assets, liabilities, revenues, and expenses are those of
the Company. Prosperity had no activity for the periods presented.



Around
the first quarter of 2017, the Company began to transition into the Hemp CBD industry and now primarily offers health and beauty
products and supplements containing CBD. On May 15, 2017, WRAP changed its name to Canbiola, Inc. (the “Company” or
“CANB” or “Canbiola”) to reflect its transition.



Business



The
Company’s primary business is the development, production and sale of products and delivery devices containing CBD. The
Company’s products contain CBD derived from Hemp and include products such as oils, creams, moisturizers, isolate, and gel
caps. In addition to offering white labeled products, Canbiola has developed its own line of proprietary products, as well as
seeking synergistic value through acquisitions of products and brands in the Hemp industry. Canbiola aims to be the premier provider
of the highest quality natural 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.



“CBD”
Business



Cannabidiol
(“CBD”) is one of nearly 85 naturally occurring compounds (cannabinoids) found in industrial hemp (it is also contained
in marijuana, but the Company’s products are derived only from hemp). CBD is non-psychoactive and is thought to have numerous
uses, including, but not limited to, for pain, insomnia, epilepsy, anxiety, inflammation, and nausea. Unlike CBD derived from
marijuana, CBD derived from the seeds and stalks of industrial hemp is generally considered “legal” in the U.S. so
long as it contains less than 0.3% of “THC,” another, but psychoactive, cannabinoid found in cannabis. This purported
“legal status” is because the 2018 Farm Bill removed hemp as a Schedule I drug under the Controlled Substances Act
and hemp may now be grown as a commodity crop, with restrictions; however, the 2018 Farm Bill did not specifically legalize CBD.
Until Congress promulgates rules and regulations relating to hemp derived CBD under the 2018 Farm Bill, the “legal”
status of CBD from hemp, or the processes the Company may have to implement (and at what expense), are still unknowns. A similar
paradigm exists under various state laws with which the Company will have to comply. In any case, CBD derived from marijuana,
marijuana and other marijuana derivatives are federally illegal in the U.S. under the Controlled Substances Act, despite being
medically or recreationally legal in numerous states, which is why the Company has established procedures to ensure that its CBD
is derived from hemp in compliance with the Farm Bill.The Company has all of its hemp based raw materials (isolate) tested by
a 3tf party independent laboratory and those results are posted on the Company web site.



In
order to facilitate its operations, the Company has (and will) form or acquire a number of subsidiaries. Its goal is to eventually
operate a vertically integrated hemp conglomerate that has operations spanning from seed to sale. Currently, the Company’s
primary focus is the development, sale and manufacture of CBD products. The Company’s products are marketed under the tradename
“Canbiola.,” and sold via its website and through doctors and other medical professionals with which the Company enters
into distribution agreements. The Company also manufactures and/or sells separately branded CBD products through its subsidiaries
and websites for “Pure Leaf Oil” brand and “Seven Chakras” brand.



5







In
December, 2018, the Company acquired 100% of the membership interests in Pure Health Products, LLC, a New York limited liability
company (“PHP” or “Pure Health Products”), with which it had had and has an exclusive production agreement,
pursuant to an Acquisition Agreement (“PHP Acquisition Agreement”). PHP manufactures and packages the Company’s
CBD infused products. PHP may also white label / rebrand or relabel the Company’s products pursuant to “white label
agreements” entered into between the Company and/or PHP and third-party customers. Through PHP, the Company is able to control
the manufacturing process of its products while reducing its production costs. In January, 2019, PHP acquired certain assets from
Seven Chakras, LLC (“Seven Chakras”), a former competitor, which assets included the rights and title to (i) Seven
Chakras’ proprietary formulas, methods, trade secrets, and know-how related to the production of Seven Chakras’ CBD
products, (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. The Company
believes the acquisition of Seven Chakra’s assets will bring accretive value and expand the Company’s market base.
The Severn Chakras has a customer following in the northwest and compliments the Canbiola and Pure Leaf Oil brands with additional
new products such as bath bombs, stress relief products, and lotions. Seven Chakras has its own internet website and continues
in its direct marketing to its customer base.



In
November 2018, the Company formed Duramed, Inc., a Nevada corporation (“Duramed”) to facilitate the manufacture and
sale of durable medical equipment incorporating CBD. On January 14, 2019, Duramed entered into a Memorandum of Understanding (the
“Sam MOU”) with Sam International (“Sam”) and ZetrOZ Systems LLC (“ZetrOZ” and, collectively
with Sam, the “Manufacturers”). Pursuant to the Sam MOU, the Manufacturers granted Duramed the exclusive right to
distribute sam® Pro 2.0 (SA271) and sam® Gel Coupling Patches (UB-14-72) within the United States for the Personal Injury
Protection/No Fault Market during the term of the MOU. Duramed has agreed to purchase monthly minimums from the Manufacturers
at a price per Unit of $2,447. The exclusivity of the Distribution License granted to Duramed under the MOU is dependent upon
meeting the monthly minimum. In addition, Duramed was granted the right to distribute sam® Gel Capture Patches (UB-14-24).
Duramed will get rebates of 2%-3% based on the volume of Products sold by it. The initial term of the Sam MOU expires December
31, 2019 (the “Initial Term”). The agreement contemplated by the MOU will automatically renew for additional one-year
terms at the end of each calendar year, providedthe monthly minimums have been met. The primary thrust of the Duramed
Division is to market to patients via doctors via a device rental program reimbursable by insurance carriers to help patient with
pain reductions and faster healing.



The
CBD and cannabis markets are flooded with competition ranging from mom and pop operations to multi-million-dollar conglomerates,
many with longer operating histories, more capital and/or more industry knowledge than the Company. The Company hopes to partner
with or engage industry specialists to help set it apart from its numerous competitors. One of those points of differentiation
is its 3rd party independent testing “Certificate of Analysis” conducted on all of the CBD isolate products
it purchases and posting of those lab results on its website.



The
statements found herein have not been evaluated by the Food and Drug Administration (FDA) and the Company’s products are
not intended to diagnose, treat, cure or prevent any disease or medical condition.



WRAPmail



The
Company owns a patented technology that combines custom marketing content with organization e-mail to provide a next generation
marketing platform for organizations and personal use. WRAPMail had provided software solutions for marketing and is no longer
being sold or serviced.



We
are not aware of any competitors developing a similar solution to WRAPmail, possibly giving us first mover advantage. Nonetheless,
we may face competition from stationary letterhead, bulk e-mail and similar product providers.



Currently
the Company is not pursuing additional customers for WRAPmail but does continue to service current customers using the software.



Bullseye



The
Bullseye Productivity Suite is a cloud-based system that consolidates all necessary office productivity tools into one online
experience, accessible everywhere when you need it with full disaster recovery mechanisms built in. All functions and features
are audited to help users with corporate governance and compliance issues.



6







The
Company is not presently seeking additional customers for Bullseye but continues to service the existing customer base.



Intellectual
Property



We
own the following patents for our WRAPmail technology: US patent no. 8572275 issued on October 29, 2013. This patent expires in
October 2033. On July 20, 2015, WRAPmail filed for a new patent under the title: Method, System and Software for Dynamically Extracting
Content for Integration with Instant Messages, which application is still pending and not being actively pursued by the Company.



The
above patents relate to the document management and email marketing divisions. Due to diminishing revenue from these divisions,
the Company’s accountant determined to reduce the fair value of these patents to $0.



The
Company employes through its Pure Health Products LLC Division, two full time product researchers and CBD technology experts who,
on a daily basis, set the quality standards and new product development status and time-line agendas under the direct supervision
of the company’s management team.



Employees



The
Company currently has four full-time employee and seven under services agreements.



Reports
to Security Holders



Our
common stock is registered under the Securities Exchange Act of 1934 and we are required to file current, quarterly and annual
reports and other information with the SEC. You may read and copy any document that we file at the SEC’s public reference
facilities at 100 F. Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-732-0330 for more information about its
public reference facilities. Our SEC filings are available to you free of charge at the SEC’s web site at www.sec.gov. We
are an electronic filer with the SEC and, as such, our information is available through the Internet site maintained by the SEC
that contains reports, proxy and information statements and other information regarding issuers that file electronically with
the SEC. This information may be found at www.sec.gov and posted on our website at www.canbiola.com.



Research
and Development



In
fiscal year 2017 and 2018 we spent respectively $37,000 and $75,000 in research and development which was expenses as spent.



Government
Regulation



The
cultivation and sale of hemp and hemp products is federally regulated under the United States Farm Bill. The 2018 Farm Bill removed
hemp as a Schedule 1 Substance under the Controlled Substances Act; however, rules and regulations relating to manufacture and
sale of CBD products under the Farm Bill must still be promulgated and are expected to impact the Company’s operations.
As the legal CBD industry and our product lines expand, it is uncertain what other statutory schemes and agencies will start to
regulate our CBD products. The FDA currently still considers the addition of CBD to food products or supplements to be illegal
and prohibits the advertisement of CBD products with health claims. The Company must also comply with each state’s laws
relating to the sale of hemp based CBD products. These regulations may affect, among others, the way the Company manufactures
and distributes its products, the way the Company is taxed, the way the Company banks, the location of the Company’s facilities,
the content and testing of the Company’s products, and the quality of the Company’s services.



Through
our document management and email marketing platforms, we are also subject to general business regulations and laws as well as
Federal and state regulations and laws specifically governing the Internet and e-commerce. Existing and future laws and regulations
may impede the growth of the Internet, e-commerce or other online services, and increase the cost of providing online services.
These regulations and laws may cover sweepstakes, taxation, tariffs, user privacy, data protection, pricing, content, copyrights,
distribution, electronic contracts and other communications, consumer protection, broadband residential Internet access and the
characteristics and quality of services. It is not clear how existing laws governing issues such as property ownership, sales,
use and other taxes, libel and personal privacy apply to the Internet and e-commerce. Unfavorable resolution of these issues may
harm our business and results of operations.



7







Transfer
Agent



We
had engaged Island Stock Transfer, located at 15500 Roosevelt Blvd, Suite 301, Clearwater, FL 33760, as our stock transfer agent.
Phone: 727.289.0010. Our former director, Carl Dilley, is a principal of Island Stock Transfer.



On
April 1st, 2019 we changed Transfer Agents to Transhare Corporation located at 15500 Roosevelt Blvd, Suite 302, Clearwater
FL 33760.



|Item 1A. | Risk Factors
|-------- | ------------



We
are a smaller reporting company and not required to provide the information in this Item.



|Item 1B. | Unresolved Staff Comments
|-------- | -------------------------



Not
applicable.



|Item 2. | Properties
|------- | ----------



The
Company does not currently own any real property. We do however lease office space in Hicksville, New York. The Company’s
wholly-owned subsidiary, Pure Health Products, operates its manufacturing facility in the state of Washington.



|Item 3. | Legal Proceedings
|------- | -----------------



We
are not aware of any pending or threatened legal proceedings in which we are involved, except as disclosed herein. On or around
May 11, 2018, the Company initiated arbitration proceedings against T8 Partners, Inc., a New York Corporation (“T8”),
pursuant to the American Arbitration Association (“AAA”) rules, for breach of contract and return of 2.5M shares of
the Company’s common stock for non-performance by T8 under a services contract. The case, Case No. 01-18-0001-8823, is being
heard in AAA’s Los Angeles Regional Office.



|Item 4. | Mine Safety Disclosures
|------- | -----------------------



Not
applicable.



PART
II



|Item 5. | Market for Registrant’s
    Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|------- | ----------------------------------------------------------------------------------------------------------------



Market
Information



Our
common stock is listed for quotation on OTCQB Market’s under the symbol “CANB.” Our common stock began trading
in April 2011. Trading in our common stock has historically lacked consistent volume, and the market price has been volatile.



8







The
following table presents, for the periods indicated, the high and low bid prices of the Company’s common stock and is based
upon information provided by OTC Market. These quotations below reflect inter-dealer prices, without retail mark-up, mark-down,
or commission, and may not necessarily represent actual transactions.



|               |  | 2018 |     
|-------------- |  | ---- | ----
|               |  | High |     
|First Quarter  |  | $    | 0.05
|Second Quarter |  | $    | 0.03
|Third Quarter  |  | $    | 0.10
|Fourth Quarter |  | $    | 0.10



|               |  | 2017 |     
|-------------- |  | ---- | ----
|               |  | High |     
|First Quarter  |  | $    | 0.09
|Second Quarter |  | $    | 0.04
|Third Quarter  |  | $    | 0.03
|Fourth Quarter |  | $    | 0.04



The
last reported sale price of the Company’s common stock as of April 12, 2019 was $0.039 per share.



Record
Holders



As
April 12, 2019, there were 548,487,714 shares of common stock issued and outstanding to approximately 163 shareholders of record.



Dividends



The
Company paid $13,779 in in-kind dividends on its Class B Preferred Stock by the issuance of common stock to the Class B holders
in 2018 and $0 in 2017. 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 Series B Preferred Stock have no voting rights.



We
do not anticipate paying any cash dividends in the foreseeable future. Except for its Class B Preferred Stock, the payment of
dividends is within the discretion of our Board of Directors and will depend on our earnings, capital requirements, financial
condition, and other relevant factors. There are no restrictions that currently limit our ability to pay dividends on our common
stock other than those generally imposed by applicable state law.



Securities
Authorized for Issuance under Equity Compensation Plans



We
do not now have, or plan to have in the near future, an equity incentive plan.



Recent
Sales of Unregistered Securities



The
following is a summary of transactions since our previous disclosure on our Form 10-Q filed with the Securities and Exchange Commission
on November 14, 2018 involving sales of our securities that were not registered under the Securities Act of 1933, as amended (the
“Securities Act”). Each offer and sale were exempt from registration under either Section 4(a)(2) of the Securities
Act or Rule 506(b) under Regulation D of the Securities Act.



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.



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.



9







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 and key executives 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 a key executive of the Company pursuant to the Employment
Agreement dated December 29, 2018 with Andrew Holtmeyer. The $14,207 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.



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
return 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.



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 the owner of Hudilab, Inc., pursuant to a License and
Acquisition Agreement dated January 14, 2019.



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 key employees 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 dated January 31, 2019.



|Item 6. | Selected Financial Data
|------- | -----------------------



Not
required for smaller reporting companies.



10







|Item 7. | Management’s Discussion and Analysis of Financial Condition
    and Results of Operation
|------- | ----------------------------------------------------------------------------------------



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 from the date of its acquisition
on December 28, 2018.



Results
of Operations



Year
Ended December 31, 2018 compared with Year Ended December 31, 2017:



Revenues
increased $545,857 from $122,746 in 2017 to $668,603 in 2018. The increase was due to the growth of CBD product sales.



Cost
of product sales increased $361,068 from $44,466 in 2017 to $405,434 in 2018 due to the growth of product sales and outreach into
additional market segments such as wholesale and private label opportunities.



Officers
and director’s compensation and payroll taxes increased $1,324,581 from to $154,406 in 2017 to $1,478,987 in 2018. The 2017
expense amount ($154,406) consists of salaries accrued to our Chief Executive Officer ($84,000) and stock based compensation of
($63,902) pursuant to their respective employment agreements and related payroll taxes ($6,504). The 2018 expense amount ($1,478,987)
includes additional stock-based compensation of ($1,255,193) pursuant to their respective employment agreements and related payroll
taxes ($2,559).



Consulting
fees increased $1,384,902 from $284,741 in 2017 to $1,669,443 in 2018. The 2017 expense amount ($284,741) includes stock-based
compensation of ($167,688), resulting from stock issued for the service of consultants. The 2018 expense amount ($1,669,443) includes
stock-based compensation of ($1,527,107), resulting from stock issued for the service of consultants.



Advertising
expense increased $55,994 from $28,322 in 2017 to $84,316 in 2018.



Hosting
expense decreased $7,266 from $21,963 in 2017 to $14,697 in 2018.



Rent
expense increased $2,105 from $65,060 in 2017 to $67,165 in 2018.



Professional
fees increased $22,172 from $95,546 in 2017 to $117,718 in 2018.



Depreciation
of property and equipment increased $2,246 from $3,227 in 2017 to $5,473 in 2018.



Amortization
of intangible assets decreased $3,972 from $3,972 in 2017 to $0 in 2018.



Other
operating expenses increased $107,215 from $133,829 in 2017 to $241,044 in 2018. The increase was due largely to higher commission
fees, supplies expense and shipping expenses in 2018 compared to 2017.



Net
loss increased $1,972,558 from $2,139,719 in 2017 to $4,112,277 in 2018. The increase was due to the $2,877,777 increase in total
operating expenses offset by the $730,430 decrease in other expense - net, and by the $184,989 increase in gross profit.



11







Liquidity
and Capital Resources



At
December 31, 2018, the Company had cash and cash equivalents of $807,747 and a working capital of $939,582. Cash and cash equivalents
increased $806,095 from $1,652 at December 31, 2017 to $807,747 at December 31, 2018. For the year ended December 31, 2018, $1,605,644
was provided by financing activities, $753,569 was used in operating activities, and $45,980 was used in investing activities.



The
Company currently has 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
    7A. | Quantitative
    and Qualitative Disclosure About Market Risk
|------------ | -------------------------------------------------------------



Not
applicable.



|Item
    8. | Financial
    Statements and Supplementary Data
|----------- | -----------------------------------------------



Our
Consolidated Financial Statements and Notes thereto, for the fiscal years ended December 31, 2018 and 2017 and the report of BMKR,
LLP, our independent registered public accounting firm, are set forth on pages F-1 through F-27 of this Annual Report.



|Item
    9. | Changes
    in and Disagreements with Accountants on Accounting and Financial Disclosure
|----------- | ----------------------------------------------------------------------------------------



Not
applicable.



|Item
    9A. | Controls
    and Procedures
|------------ | ---------------------------



Evaluation
of Disclosure Controls and Procedures



Disclosure
controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under
the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and
forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including
the Chief Executive Officer (CEO), as appropriate, to allow timely decisions regarding required disclosure. Based on the evaluation,
the CEO has concluded that our disclosure controls and procedures are ineffective to ensure that information disclosed by us in
the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms. This determination was based on the small size of our accounting staff,
the lack of segregation of duties and the lack of an audit committee.



To
address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our
financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles.
Accordingly, management believes that the financial statements included in this report fairly present in all material respects
our financial condition, results of operations and cash flows for the periods presented.



Management
Report on Internal Control over Financial Reporting



Our
management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control
system was designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.



Any
internal control system, no matter how well designed, has inherent limitations and may not prevent or detect misstatements. Accordingly,
even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation
and presentation.



12







Management,
with the participation of our Chief Executive Officer, has evaluated the effectiveness of our internal control over financial
reporting as of December 31, 2018 based on criteria established in Internal Control—Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, because of the Company’s limited resources
and limited number of employees, and the absence of an audit committee, management concluded that, as of December 31, 2018, our
internal control over financial reporting is not effective in providing reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting
principle, which creates a material weakness. A material weakness is a deficiency, or a combination of deficiencies, in internal
control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s
annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness means there is
a risk that our financial reports or other filings may contain an error or inaccuracy or not submitted timely.



There
was a material weakness in the Company’s internal control over financial reporting due to the fact that the Company did
not have an adequate process established to ensure appropriate levels of review of accounting and financial reporting matters,
which resulted in our closing process not identifying all required adjustments and disclosures in a timely fashion. We expect
that the Company will need to hire accounting personnel with the requisite knowledge to improve the levels of review of accounting
and financial reporting matters. The Company may experience delays in doing so and any such additional employees would require
time and training to learn the Company’s business and operating processes and procedures. For the near-term future, until
such personnel are in place, this will continue to constitute a material weakness in the Company’s internal control over
financial reporting that could result in material misstatements in the Company’s financial statements not being prevented
or detected.



Changes
in Internal Control over Financial Reporting



There
have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f)
under the Securities and Exchange Act of 1934) during the year ended December 31, 2018 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.



|Item
    9B. | Other
    Information
|------------ | ---------------------



None.



PART
III



|Item
    10. | Directors,
    Executive Officers and Corporate Governance
|------------ | ----------------------------------------------------------



Our
board of directors is elected annually by our shareholders. The board of directors elects our executive officers annually. Our
directors and executive officers as of April __, 2019 are as follows:



|Name                  |  | Age |  | Position                      
|--------------------- |  | --- |  | ------------------------------
|Marco
    Alfonsi     |  | 57  |  | CEO,
    Director, Chairman   
|Stanley
    L. Teeple |  | 70  |  | CFO,
    Secretary, Director  
|Andrew
    Holtmeyer  |  | 57  |  | VP
    of Business Development



Marco
Alfonsi,CEO and Chairman Director has been a financial service professional for the past 20 years. Mr. Alfonsi was appointed
director and CEO of the Company in or around January 2015. Immediately prior to that, he spent eight years serving as the CEO
of Prosperity Systems, Inc.



Throughout
his career, Mr. Alfonsi was directly and indirectly involved in raising over $100 million dollars for small and medium sized business.
Prior to his involvement in the financial services industry, Mr. Alfonsi has owned, operated, financed and sold several businesses.
Mr. Alfonsi successfully started and managed two companies (ExecuteDirect.com, and Bakers Express of New York, Inc.), and held
senior management positions with a number of financial institutions, including: Global American Investments, Clark Street Capital
and Basic Investors.



13







Stanley
L. Teeple –Mr. Teeple was engaged from 2017-2018 with Solis Tek, Inc. (OTCQB:SLTK) a California based publicly traded
corporation as Senior Vice President, Corporate Secretary, and Chief Compliance Officer. Solis Tek, Inc. a NV Corporation, is
a developer of lighting and nutrient products, and most recently in cultivation and processing for the cannabis industry. Previously,
from 2015-2016 Mr. Teeple was Chief Financial Officer and Secretary for Zonzia Media, Inc. (OTC:ZONX), a provider of streaming
video and content to cable subscribers and hotel networks throughout the eastern US. From 2008 to 2014 Mr. Teeple was Chief Financial
Officer and Secretary of Indigo-Energy, Inc. (OTC:IDGG) a publicly traded company in the oil and gas exploration business. Over
the prior three plus decades Mr. Teeple through his turnaround consulting business, Stan Teeple, Inc., has held numerous senior
management positions in several public and private companies across a broad spectrum of industries. Additionally, he has operated
and worked for various court appointed trustees and principals as CEO, COO, and CFO in the entertainment, pharmaceuticals, food,
travel, and tech industries. He operated his consulting business on a project-to-project basis and holds various other directorships.
His businesses operational strengths include knowing how to manage and maximize the resources and preserve the integrity of a
company from start-up through to maturity and corporate compliance in a regulatory environment.



Andrew
Holtmeyer – Mr. Holtmeyer started his business career in the financial services sector. During his 20 year career on
wall street, Mr. Holtmeyer worked at and built several investment firms that employed hundreds of salesmen. During the last 5
years of his career, he concentrated mostly on investment banking. After leaving the financial sector, Mr. Holtmeyer started a
highly successful consulting firm, which concentrated on raising capital for small to mid-sized companies that were both private
and public. After selling his consulting business, Mr. Holtmeyer started a very successful real estates business which is now
run by his family.



Carl
Dilley, 63, served on our Board of Directors until he resigned for personal reasons on February 21, 2019.



David
Posel, 39, served as the Company’s COO during 2018, when the Company’s operations were limited to its contractual
arrangement with Pure Health Products. After acquiring PHP directly, Mr. Posel was transitioned to COO of PHP.



Board
Committees



We
have not yet established an audit committee, compensation committee, or nominating committee. During 2018, the functions ordinarily
handled by these committees were handled by our entire Board.



Family
Relationships



There
are no familial relationships between any of our officers and directors.



Director
or Officer Involvement in Certain Legal Proceedings



Our
current directors and executive officers have not been involved in any legal proceedings as described in Item 401(f) of Regulation
S-K in the past ten years.



Director
Independence



The
Company is not currently listed on any national securities exchange that has a requirement that the board of directors be independent.
None of the Company’s directors are independent.



Code
of Ethics



We
have not adopted a Code of Ethics that applies to all of our employees and officers, and the members of our Board of Directors
due to the financial constraints of doing so.



Section
16(a) Beneficial Ownership Reporting Compliance



Section
16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class
of our equity securities, to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater
than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.
Based on our review of the reports filed by Reporting Persons, we believe that, during the year ended December 31, 2018, the following
Reporting Persons did not meet all applicable Section 16(a) filing requirements: (i) Stanley Teeple, (ii) David Posel, and (iii)
Carl Dilley. Otherwise, we believe that the Reporting Persons met such filing requirements.



14







|Item
    11. | Executive
    Compensation
|------------ | --------------------------



The
table below summarizes all compensation awarded to, earned by, or paid to our executive officers and directors for all services
rendered in all capacities to us during the previous two fiscal years, as of December 31, 2018.



|Executive
    Summary Compensation Table
|----------------------------------------
|                                        
|Name
    and principal position         
|Marco Alfonsi(1)                        
|CEO and Director                        
|Stanley L. Teeple(2)                    
|Andrew Holtmeyer(3)                     
|David Posel (4)                         



(1)
Pursuant to an employment agreement entered on or around May 14, 2015, Marco Alfonsi was entitled to receive compensation of $6,000
per month through September 31, 2017 when the contract expired. On or around October 3, 2017, the Company entered into a new employment
agreement with Mr. Alfonsi whereby he was entitled to receive $10,000 per month for a period of three years. Mr. Alfonsi also
received one share of Class A Preferred Stock upon his execution of the new agreement. In addition, on or around October 4, 2017,
the Company authorized the issuance of an additional two shares of Class A Preferred Stock to Mr. Alfonsi in consideration for
cancellation of approximately $120,000 of deferred income owed to Mr. Alfonsi. The Company entered into a new employment agreement
dated October 21, 2018 Mr. Alfonsi, pursuant to which Mr. Alfonsi agreed to continue to serve as the Company’s Chief Executive
Officer (“CEO”) and accept appointment as Chairman of the Board of Directors (“Chairman”) for an initial
term of four (4) years. He is entitled to receive $15,000 per month and other compensation under the new agreement.



(2)
Pursuant to an employment agreement entered on or around October 15, 2018, 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 fair value of the Series A preferred
Stock is $578,000 and has a vesting period of four years. In 2018, the amortized portion of Series A preferred Stock is $144,500.



(3)
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. On 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. In 2018, the Company issued 5
shares of Series A preferred shares valued at $3,910,000 and the amortization in 2018 is $1,169,658.



(4)
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. In the fourth quarter, this Agreement was terminated due to the execution of a new Employment Agreement between
Pure Health Products, LLC and David Posel. The fair value of the Series A preferred Stock is $373,000 and has a vesting period
of four years. In 2018, the amortized portion of Series A preferred Stock related to Mr. Posel’s service as an executive
is $58,720.



15







We
do not have an equity incentive plan and no named executive officer has unexercised outstanding equity awards.



The
table below summarizes all compensation awarded to, earned by, or paid to our non-interested directors for all services rendered
in all capacities to us during the previous two fiscal years, as of December 31, 2018.



|Non-Interested
    Director Summary Compensation Table
|------------------------------------------------------
|                                                      
|Name
    and principal position                       
|Carl Dilley(1)                                        
|Director                                              



| | (1) | Mr.
    Dilley resigned from the Company on February 21, 2019.
| | --- | --------------------------------------------------------------



No
director has received cash compensation for their directorship. We do not have a compensation committee and compensation for our
directors and officers is determined by our board of directors.



We
reimburse Non-Employee Directors for actual out-of-pocket costs incurred to attend board meetings. No additional compensation
is paid for attendance in person or by telephone at board meetings.



|Item
    12. | Security
    Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|------------ | --------------------------------------------------------------------------------------------------



The
following tables set forth the ownership, as of April 12, 2019, of our common stock by each person known by us to be the beneficial
owner of more than 5% of our outstanding voting stock, our directors, and our executive officers and directors as a group. To
the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise
noted. There are not any pending or anticipated arrangements that may cause a change in control. The Company’s principal
office is the business address for each of the named shareholders.



There
are 548,487,714 shares of common stock outstanding as of April 12, 2019, and 17 shares of Series A preferred stock issued and
outstanding, which in aggregate are convertible into 170,000,000 shares of common stock at any time and represent 340,000,000
votes. There is a total of approximately 888,487,714 votes eligible to be cast in any Company vote as of April 15, 2019.



On
April 12, 2019, Red Diamond Partners LLC (“Red Diamond”) owned 342,853 shares of Series B Preferred Stock, which is
convertible into approximately 44,129,594 shares of common stock, subject to ownership percentage limitations; however, Series
B Preferred Stock is non-voting.



The
information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the
rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these
rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote
or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to
own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within
60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may
be deemed to be a beneficial owner of the same securities.



16







Except
as otherwise indicated and under applicable community property laws, we believe that the beneficial owners of our common stock
listed below have sole voting and investment power with respect to the shares shown. Unless stated otherwise, the business address
for these shareholders is 960 South Broadway, Suite 120, Hicksville NY 11801.



|Name                                                  |  | Title          |  | Number
    of Common Shares |            |  | %
    of Common Shares |  |       | Number
    of Series A Preferred Shares |  |  | %
    of Series A Preferred Shares |  |  | %
    of Eligible Votes |       |   | Number
    of Warrants currently exercisable or exercisable in the next 60 days | 
|----------------------------------------------------- |  | -------------- |  | --------------------------- | ---------- |  | ---------------------- |  | ----- | --------------------------------------- |  |  | ---------------------------------- |  |  | ----------------------- | ----- | - | ------------------------------------------------------------------------------- | 
|Marco Alfonsi[1]                                      |  | CEO, Director  |  |                             | 59,398,915 |  |                        |  | 10.83 | %                                       |  |  | 5                                  |  |  |                         | 29.41 | % |                                                                                 | 
|Stanley L. Teeple[2]                                  |  | CFO, Director  |  |                             | 980,752    |  |                        |  | 0.18  | %                                       |  |  | 1                                  |  |  |                         | 5.88  | % |                                                                                 | 
|Andrew Holtmeyer[3]                                   |  | Vice President |  |                             | 1,107,769  |  |                        |  | 0.20  | %                                       |  |  | 5                                  |  |  |                         | 29.41 | % |                                                                                 | 
|All officers and directors as a group
    [3 persons] |  |                |  |                             | 61,487,436 |  |                        |  | 11.21 | %                                       |  |  | 11                                 |  |  |                         | 64.70 | % |                                                                                 | 



(1)
As of April 12, 2019, Marco Alfonsi owns approximately 59,398,915 shares of common stock and 5 shares of Series A preferred stock,
which are convertible into 50,000,000 shares and equal 100,000,000 votes. Prior to October 29, 2015, Mr. Alfonsi owned 81,000,000
shares of the Company’s common stock, at which time it was agreed that he would retire 50,000,000 shares of common stock
for 5 shares of Series A Preferred Stock. In addition to the listed shares, four members of Mr. Alfonsi’s family hold an
aggregate of 10,000,000 shares of common stock, which shares have not been included in the above calculations.



(2)
As of April 12, 2019, Stanley L. Teeple owns approximately 980,752 shares of common stock and 1 shares of Series A preferred stock,
which are convertible into 10,000,000 shares and equal 20,000,000 votes.



(3)
As of April 12, 2019, Andrew Holtmeyer owns approximately 1,107,769 shares of common stock and 5 shares of Series A preferred
stock, which are convertible into 50,000,000 shares and equal 100,000,000 votes.



The
following tables set forth the ownership of our common stock by each person known by us to be the beneficial owner of more than
5% of our outstanding voting stock, excluding our directors and our executive officers



|Name                        |  | Number
    of Common Shares |            |  | %
    of Common Shares |  |       | Number
    of Preferred A Shares |  |  | %
    of Shares |  |  | %
    of Eligible Votes |       |   | Number
    of Warrants currently exercisable or exercisable in the next 60 days | 
|--------------------------- |  | --------------------------- | ---------- |  | ---------------------- |  | ----- | -------------------------------- |  |  | --------------- |  |  | ----------------------- | ----- | - | ------------------------------------------------------------------------------- | 
|McKenzie Webster Limited[1] |  |                             | 64,879,916 |  |                        |  | 11.83 | %                                |  |  | 0               |  |  |                         | 0     | % |                                                                                 | 
|Pasquale Ferro [2]          |  |                             | 22,172,159 |  |                        |  | 4.04  | %                                |  |  | 5               |  |  |                         | 29.41 | % |                                                                                 | 



| | (1) | McKenzie
    Webster Limited is controlled by the Company’s former director and CFO, Rolv Heggenhougen. The business address for
    this shareholder is 445 NE 12th Ave., Fort Lauderdale, Florida 33301.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Pasquale
    Ferro is the President of Pure Health Products, LLC, a wholly owned subsidiary of the Company.                                                                                               



The
above tables are based upon information derived from our stock records. Except as otherwise indicated below and under applicable
community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment
power with respect to the shares shown.



17







|Item
    13. | Certain
    Relationships and Related Party Transactions
|------------ | --------------------------------------------------------



Except
as described herein (or within the section entitled Executive Compensation of this prospectus), none of the following parties
(each a “Related Party”) has, in our fiscal years ended 2017 and 2018, had any material interest, direct or indirect,
in any transaction with us or in any presently proposed transaction that has or will materially affect us:



|● | any
    of our directors or officers;                                                                                                                                      
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|● | any
    person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our outstanding
    shares of common stock; or
|● | any
    member of the immediate family (including spouse, parents, children, siblings and in- laws) of any of the above persons.                                           



ProAdvanced
Group, Inc. (“PAG”), an entity controlled by the Company’s chief executive officer, is a customer of CANB. At
December 31, 2018, CANB had an account receivable from PAG of $7,240. For the year ended December 31, 2018, CANB had revenues
from PAG of $5,000.



Island
Stock Transfer (“IST”), an entity controlled by Carl Dilley, a Company director, is both a customer and vendor of
CANB. At December 31, 2018, CANB had an account receivable from IST of $7,035 and an account payable to IST of $1,454. For the
year ended December 31, 2018, CANB had revenues from IST of $4,000.



Stock
Market Manager, Inc. is also an entity controlled by Mr. Dilley. For the year ended December 31, 2018, CANB had an account payable
to Stock Market Manager Inc. of $1,676.



In
order to facilitate its operations, the Company has entered into a Production Agreement with Pure Health Products, LLC (“PHP”),
a New York limited liability company. Pursuant to the Production Agreement, PHP will manufacture, package, and sell the Company’s
CBD infused products on an exclusive basis. PHP will not produce or manufacture any product containing any cannabis or hemp derivative
for any person or entity other than the Company, and the Company controls the ingredients, recipe, manufacturing processes and
procedures and quality and taste parameters for all Products produced at the PHP facility. PHP may also white label / rebrand
or relabel the products on the Company’s behalf pursuant to “white label agreements” entered into between the
Company and third-party customers. Credit card sales are processed through PHP as well. Through its contractual relationship with
PHP, the Company is able to control the manufacturing process of its products while reducing its production costs. In addition,
the Company has the option to acquire certain assets of PHP should it elect to take over direct manufacture of its Products. For
the year ended December 31, 2018, purchase of CBD infused products from PHP totaled $274,556.50. Effective December 28, 2018,
the Company acquired Pure Health Products, LLC.



During
the year ended December 31, 2018, we had products and service sales to related parties totaling $5,000.



|Item
    14. | Principal
    Accounting Fees and Services
|------------ | ------------------------------------------



The
following table sets forth fees billed to us by BMKR, LLP, our independent registered public accounting firm, during the fiscal
years ended December 31, 2018 and December 31, 2017 for: (i) services rendered for the audit of our annual financial statements
and the review of our quarterly financial statements; (ii) services by our independent registered public accounting firms that
are reasonably related to the performance of the audit or review of our financial statements and that are not reported as audit
fees; (iii) services rendered in connection with tax compliance, tax advice and tax planning; and (iv) all other fees for services
rendered.



|                     |  | December
    31, 2018 |        |  | December
    31, 2017 |  
|-------------------- |  | --------------------- | ------ |  | --------------------- | -
|                     |  |                       |        |  |                       |  
|Audit Fees           |  | $                     | 23,965 |  |                       | $
|Audited Related Fees |  | $                     |        |  |                       | $
|Tax Fees             |  | $                     |        |  |                       | $
|All Other Fees       |  | $                     |        |  |                       | $



18







PART
IV



|Item
    15. | Exhibits,
    Financial Statement Schedules.
|------------ | --------------------------------------------



Exhibits
Schedule



The
following exhibits are filed with this Annual Report:



|Exhibit |  | Description                                                                                                                                   
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|        |  |                                                                                                                                               
|2.1     |  | Share Exchange Agreement with Prosperity*                                                                                                     
|3.1     |  | Articles of Incorporation, as amended*                                                                                                        
|3.2     |  | Bylaws*                                                                                                                                       
|10.1    |  | Agreement with RedDiamond Partners LLC                                                                                                        
|10.2    |  | Amended Agreement with RedDiamond Partners LLC                                                                                                
|10.3    |  | Agreement with Pure Health Products, LLC                                                                                                      
|10.4    |  | Employment Agreement with Marco Alfonsi                                                                                                       
|10.5    |  | Employment Agreement with Stanley L. Teeple                                                                                                   
|10.6    |  | Employment Agreement with Andrew Holtmeyer                                                                                                    
|10.7    |  | Employment Agreement with Pasquale Ferro                                                                                                      
|10.8    |  | Agreement with Hudilab, Inc.                                                                                                                  
|10.9    |  | Agreement with TZ Wholesale LLC                                                                                                               
|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.
|- | -------------------------------------------------------------------------------------------------------------------------------



19







SIGNATURES



In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.



|                         | Canbiola,
    Inc.
|------------------------ | ------------------
|                         |                   
|Date:
    April 16, 2019 | By:               
|                         | Name:             
|                         | Title:            
|                         |                   



In
accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.



|Person                    |  | Capacity |  | Date              
|------------------------- |  | -------- |  | ------------------
|                          |  |          |  |                   
|/s/
    Marco Alfonsi     |  | Director |  | April
    16, 2019
|Marco
    Alfonsi         |  |          |  |                   
|                          |  |          |  |                   
|                          |  |          |  |                   
|/s/
    Stanley L. Teeple |  | Director |  | April
    16, 2019
|Stanley
    L. Teeple     |  |          |  |                   



20







CANBIOLA,
INC. AND SUBSIDIARY



Index
to Financial Statements



|Years
    Ended December 31, 2018 and 2017                   | Pages
|------------------------------------------------------------ | -----
|                                                             |      
|Financial
    Statements                                     |      
|                                                             |      
|Report of Independent Registered Public Accounting Firm      | F-2  
|                                                             |      
|Consolidated Balance Sheets                                  | F-3  
|                                                             |      
|Consolidated Statements of Operations and Comprehensive Loss | F-4  
|                                                             |      
|Consolidated Statements of Stockholders’ Equity              | F-5  
|                                                             |      
|Consolidated Statements of Cash Flows                        | F-6  
|                                                             |      
|Notes to Consolidated Financial Statements                   | F-7  



F-1







|BMKR,
    LLP                              |                    | 
|------------------------------------------ | ------------------ | 
|Certified
    Public Accountants           |                   
|                                           | T
    631 293-5000
|1200
    Veterans Memorial Hwy., Suite 350 | F
    631 234-4272
|Hauppauge,
    New York 11788              | www.bmkr.com      










|Thomas
    G. Kober, CPA                                      |  | Charles
                                         W. Blanchfield, CPA (Retired)
|------------------------------------------------------------- |  | ------------------------------------------------------------------------------
|Alfred
                                         M. Rizzo, CPA |  | Bruce
    A. Meyer, CPA (Retired)                                             
|Joseph
    Mortimer. CPA                                      |  |                                                                               



REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To
the Board of Directors and

Stockholders
of Canbiola, Inc



Opinion
on the Financial Statements



We
have audited the accompanying consolidated balance sheets of Canbiola Inc. (the Company) as of December 31. 2018 and 2017, and
the related consolidated statements of operations, consolidated stockholders’ equity. and cash flows for each of the years
in the two year period ended December 3!, 2018, and the related notes (collectively referred to as the financial statements).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the two year period
ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.



Basis
for Opinion



These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opm1on on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.



We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are tree of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its intemal control over financial
reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but
not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.



Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.



Going
Concern



The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the
financial statements, the Company incurred a net loss of $4,112,277 during the year ended December 31, 2018, and as of that date,
had an accumulated deficit of $18,768,753 The company is in arears with certain vendor creditors which, among other things, cause
the balances to become due on demand. The Company is not aware of any alternate sources of capital to meet such demands, if made.



As
discussed in note 2 to the financial statements, the Company’s significant operating losses raise substantial doubt about
its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the
outcome of this uncertainty. Our opinion is not modified with respect to that matter.







We
have served as the Company’s auditor since 2014. Hauppauge,



NY



April
15, 2019



Member
American Institute of Certified Public Accounts

Member
Public Company Accounting Oversight Board



F-2







Canbiola,
Inc. and Subsidiary

Consolidated
Balance Sheets



|                                                                                                                                           |  | December
    31, 2018 |             |   | December
    31, 2017 |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------- | ----------- | - | --------------------- | -
|Assets                                                                                                                                     |  |                       |             |   |                       |  
|Current assets:                                                                                                                            |  |                       |             |   |                       |  
|Cash
    and cash equivalents                                                                                                              |  | $                     | 807,747     |   |                       | $
|Accounts receivable,
    less allowance for doubtful accounts of $0 and $0, respectively                                                   |  |                       | 39,172      |   |                       |  
|Inventory                                                                                                                                  |  |                       | 87,104      |   |                       |  
|Note receivable
    - current                                                                                                              |  |                       | -           |   |                       |  
|Prepaid
    expenses - current                                                                                                             |  |                       | 210,351     |   |                       |  
|Total
    current assets                                                                                                                   |  |                       | 1,144,374   |   |                       |  
|                                                                                                                                           |  |                       |             |   |                       |  
|Property and
    equipment, at cost less accumulated depreciation of $26,775 and $20,248, respectively                                     |  |                       | 59,619      |   |                       |  
|                                                                                                                                           |  |                       |             |   |                       |  
|Other assets:                                                                                                                              |  |                       |             |   |                       |  
|Deposits                                                                                                                                   |  |                       | 48,726      |   |                       |  
|Prepaid expenses
    - noncurrent                                                                                                          |  |                       | 2,365,719   |   |                       |  
|Note receivable
    - noncurrent                                                                                                           |  |                       | 19,389      |   |                       |  
|Goodwill
    (Note 4)                                                                                                                      |  |                       | 55,849      |   |                       |  
|Total
    other assets                                                                                                                     |  |                       | 2,489,683   |   |                       |  
|                                                                                                                                           |  |                       |             |   |                       |  
|Total assets                                                                                                                               |  | $                     | 3,693,675   |   |                       | $
|                                                                                                                                           |  |                       |             |   |                       |  
|Liabilities
    and Stockholders’ Deficiency                                                                                               |  |                       |             |   |                       |  
|Current liabilities:                                                                                                                       |  |                       |             |   |                       |  
|Notes and loans
    payable                                                                                                                |  | $                     | 19,205      |   |                       | $
|Derivative Liability                                                                                                                       |  |                       | -           |   |                       |  
|Accounts payable                                                                                                                           |  |                       | 73,059      |   |                       |  
|Accrued officers
    compensation                                                                                                          |  |                       | 68,750      |   |                       |  
|Other
    accrued expenses payable                                                                                                         |  |                       | 43,778      |   |                       |  
|Total
    current liabilities and total liabilities                                                                                        |  |                       | 204,792     |   |                       |  
|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 18 and 8 shares, respectively                     |  |                       | 4,557,424   |   |                       |  
|Series B Preferred
    stock, $0.001 par value: authorized 500,000 shares, issued and outstanding 499,958 and 157,985 shares, respectively |  |                       | 479         |   |                       |  
|Common stock, no
    par value; authorized 750,000,000 shares, issued and outstanding 440,566,325 and 225,572,323 shares, respectively     |  |                       | 16,624,557  |   |                       |  
|Additional Paid-in
    capital                                                                                                             |  |                       | 872,976     |   |                       |  
|Additional Paid-in
    capital – Stock Options (Note 12)                                                                                   |  |                       | 202,200     |   |                       |  
|Accumulated
    deficit                                                                                                                    |  |                       | (18,768,753 | ) |                       |  
|Total stockholders’
    deficiency                                                                                                         |  |                       | 3,488,883   |   |                       |  
|                                                                                                                                           |  |                       |             |   |                       |  
|Total liabilities
    and stockholders’ deficiency                                                                                         |  | $                     | 3,693,675   |   |                       | $



See
notes to consolidated financial statements.



F-3







Canbiola,
Inc. and Subsidiary

Consolidated
Statements of Operations and Comprehensive Loss

Years
Ended December 31, 2018 and 2017



|                                                                                                                    |  | 2018 |             |   | 2017 |  
|------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | -
|Revenues                                                                                                            |  |      |             |   |      |  
|Product
    Sales                                                                                                   |  | $    | 651,978     |   |      | $
|Service
    Revenue                                                                                                 |  |      | 16,625      |   |      |  
|Total Revenues                                                                                                      |  |      | 668,603     |   |      |  
|Cost
    of product sales                                                                                           |  |      | 405,534     |   |      |  
|Gross Profit                                                                                                        |  |      | 263,069     |   |      |  
|                                                                                                                    |  |      |             |   |      |  
|Operating costs and expenses:                                                                                       |  |      |             |   |      |  
|                                                                                                                    |  |      |             |   |      |  
|Officers and directors
    compensation (including stock-based compensation of $1,255,193 and $63,902 respectively) |  |      | 1,478,987   |   |      |  
|Consulting fees
    (including stock-based compensation of $1,524,107 and $167,688, respectively)                   |  |      | 1,669,443   |   |      |  
|Advertising expense                                                                                                 |  |      | 84,316      |   |      |  
|Hosting expense                                                                                                     |  |      | 14,697      |   |      |  
|Rent expense                                                                                                        |  |      | 67,165      |   |      |  
|Professional fees                                                                                                   |  |      | 117,718     |   |      |  
|Depreciation of
    property and equipment                                                                          |  |      | 5,473       |   |      |  
|Amortization of
    intangible assets                                                                               |  |      | -           |   |      |  
|Other                                                                                                               |  |      | 241,044     |   |      |  
|                                                                                                                    |  |      |             |   |      |  
|Total
    operating expenses                                                                                        |  |      | 3,678,843   |   |      |  
|                                                                                                                    |  |      |             |   |      |  
|Loss from operations                                                                                                |  |      | (3,415,774  | ) |      |  
|                                                                                                                    |  |      |             |   |      |  
|Other income (expense):                                                                                             |  |      |             |   |      |  
|Cancellation of Debt                                                                                                |  |      | -           |   |      |  
|Loss on Forgiveness
    of receivable from Pure Health Products                                                     |  |      | (85,827     | ) |      |  
|Loss on debt conversion                                                                                             |  |      | (1,299,369  | ) |      |  
|Loss on stock issuance                                                                                              |  |      | (649,259    | ) |      |  
|Impairment of intangible
    assets                                                                                 |  |      | -           |   |      |  
|Interest income                                                                                                     |  |      | 10,325      |   |      |  
|Income (expense)
    from derivative liability                                                                      |  |      | 1,591,137   |   |      |  
|Interest
    expense (including amortization of debt discounts of $176,497 and $50,315, respectively)               |  |      | (263,510    | ) |      |  
|                                                                                                                    |  |      |             |   |      |  
|Other
    income (expense) - net                                                                                    |  |      | (696,503    | ) |      |  
|                                                                                                                    |  |      |             |   |      |  
|Loss before provision for income taxes                                                                              |  |      | (4,112,277  | ) |      |  
|                                                                                                                    |  |      |             |   |      |  
|Provision for
    income taxes                                                                                      |  |      | -           |   |      |  
|                                                                                                                    |  |      |             |   |      |  
|Net loss and
    comprehensive loss                                                                                 |  | $    | (4,112,277  | ) |      | $
|                                                                                                                    |  |      |             |   |      |  
|Net loss per
    common share - basic and diluted                                                                   |  | $    | (.01        | ) |      | $
|                                                                                                                    |  |      |             |   |      |  
|Weighted average common shares outstanding –                                                                        |  |      |             |   |      |  
|Basic                                                                                                               |  |      | 276,026,704 |   |      |  
|Diluted                                                                                                             |  |      | 423,881,781 |   |      |  



F-4







Canbiola,
Inc. and Subsidiary

Consolidated
Statements of Stockholders’ Deficiency

Years
Ended December 31, 2017 and 2018



|                                                                                                            |  | Preferred Stock A, |    |   | Preferred Stock B,   |   |           | Common
Stock,    |  |  | Additional |   |  |             |      |   |        | 
|----------------------------------------------------------------------------------------------------------- |  | ------------------ | -- | - | -------------------- | - | --------- | ---------------- |  |  | ---------- | - |  | ----------- | ---- | - | ------ | 
|                                                                                                            |  | no
    par value   |    |   | $0.001
    par value |   |           | no
    par value |  |  | Paid-in    |   |  | Accumulated |      |   |        | 
|                                                                                                            |  | Shares             |    |   | Amount               |   |           | Shares           |  |  | Amount     |   |  | Shares      |      |   | Amount | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Balance,
    December 31, 2016                                                                              |  |                    | 10 |   |                      | $ | 103,664   |                  |  |  | -          |   |  |             | -    |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on February 2, 2017 for services rendered                                      |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on February 13, 2017 in satisfaction of debt and accrued interest              |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on March 22, 2017 in satisfaction of debt and accrued interest                 |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on April 17, 2017 for services rendered                                        |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on June 21, 2017 for services rendered                                         |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on June 28, 2017 for services rendered                                         |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on August 25, 2017 in satisfaction of debt and accrued interest                |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on August 25, 2017 for services rendered                                       |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on September 5, 2017 for services rendered                                     |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on September 7, 2017 for services rendered                                     |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on September 11, 2017 for services rendered                                    |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on September 25, 2017 for services rendered                                    |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of Series A Preferred Stock on October 4, 2017 in satisfaction of accrued officer compensation |  |                    | 3  |   |                      |   | 191,705   |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Sale
    of Series B Preferred Stock on October 13, 2017 at $0.95 per share                                 |  |                    |    |   |                      |   |           |                  |  |  | 157,985    |   |  |             | 150  |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on November 2, 2017 for services rendered                                      |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on November 9, 2017 for services rendered                                      |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock and retirement of Series A preferred stock on November 30, 2017                |  |                    | (5 | ) |                      |   | (51,832   | )                |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on December 5, 2017 for services rendered                                      |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on December 7, 2017 for services rendered                                      |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on December 18, 2017 for services rendered                                     |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock on December 25, 2017 for services rendered                                     |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Net
    loss                                                                                                |  |                    | -  |   |                      |   | -         |                  |  |  | -          |   |  |             | -    |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Balance,
    December 31, 2017                                                                              |  |                    | 8  |   |                      | $ | 243,537   |                  |  |  | 157,985    |   |  | $           | 150  |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of Series A Preferred Stock in2018 pursuant to employment andconsulting agreement              |  |                    | 13 |   |                      |   | 4,441,690 |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Sale
    of Series B Preferred Stock in 2018                                                                |  |                    |    |   |                      |   |           |                  |  |  | 761,972    |   |  |             | 749  |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock in 2018 for services rendered                                                  |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock in 2018 for Preferred B dividends                                              |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock in 2018 in Satisfaction of debt and accrued interest                           |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock in 2018 for Warrant exercise                                                   |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock in 2018 in Satisfaction of accrued compensation                                |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock in 2018 for Acquisition of PureHealth, LLC                                     |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of stock options for retirement Of common shares                                               |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of stock options                                                                               |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Sale
    of common stocks in 2018                                                                           |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock and retirement of Series A preferred stock In 2018                             |  |                    | (3 | ) |                      |   | (127,803  | )                |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Issuance
    of common stock and retirement of Series B preferred stock In 2018                             |  |                    |    |   |                      |   |           |                  |  |  | (419,999   | ) |  |             | (420 | ) |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Net
    loss                                                                                                |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|                                                                                                            |  |                    |    |   |                      |   |           |                  |  |  |            |   |  |             |      |   |        | 
|Balance,
    December 31, 2018                                                                              |  |                    | 18 |   |                      | $ | 4,557,424 |                  |  |  | 499,958    |   |  | $           | 479  |   |        | 



F-5







Canbiola,
Inc. and Subsidiary

Consolidated Statements of Cash Flows



|                                                                                       |  | Year Ended December 31, |           
|-------------------------------------------------------------------------------------- |  | ----------------------- | ----------
|                                                                                       |  | 2018                    |           
|Operating Activities:                                                                  |  |                         |           
|Net loss                                                                               |  | $                       | (4,112,277
|Adjustments to reconcile net loss to net cash used in operating activities:            |  |                         |           
|Stock-based compensation, net of prepaid stock- based consulting fees                  |  |                         | 2,779,300 
|Loss on Forgiveness of receivable from Pure Health Products                            |  |                         | 85,827    
|Loss on stock issuance                                                                 |  |                         | 649,259   
|Loss on debt conversion                                                                |  |                         | 1,299,369 
|Debt issuance expense                                                                  |  |                         | 14,000    
|Impairment of intangible assets                                                        |  |                         | -         
|Expense from derivative liability                                                      |  |                         | (1,591,137
|Depreciation of property and equipment                                                 |  |                         | 5,473     
|Amortization of intangible assets                                                      |  |                         | -         
|Amortization of debt discounts                                                         |  |                         | 176,497   
|Bad debt expense                                                                       |  |                         | -         
|Changes in operating assets and liabilities:                                           |  |                         |           
|Accounts receivable                                                                    |  |                         | (33,097   
|Inventory                                                                              |  |                         | 2,382     
|Security deposit                                                                       |  |                         | (34,939   
|Prepaid expenses                                                                       |  |                         | -         
|Accounts payable                                                                       |  |                         | (115,235  
|Accrued officers compensation                                                          |  |                         | 85,900    
|Other accrued expenses payable                                                         |  |                         | 35,109    
|                                                                                       |  |                         |           
|Net cash used in operating activities                                                  |  |                         | (753,569  
|                                                                                       |  |                         |           
|Investing Activities:                                                                  |  |                         |           
|                                                                                       |  |                         |           
|Cash received from acquisition of Pure Health Products, LLC                            |  |                         | 404       
|Note receivable - current                                                              |  |                         | -         
|Fixed assets additions                                                                 |  |                         | (46,384   
|                                                                                       |  |                         |           
|Net cash used in investing activities                                                  |  |                         | (45,980   
|                                                                                       |  |                         |           
|Financing Activities:                                                                  |  |                         |           
|Repayments of notes and loans payable                                                  |  |                         | (123,231  
|Proceeds received from notes and loans payable                                         |  |                         | 155,000   
|Proceeds from sale of common stock                                                     |  |                         | 850,000   
|Proceeds from sale of Series B preferred stock                                         |  |                         | 723,875   
|                                                                                       |  |                         |           
|Net cash provided by financing activities                                              |  |                         | 1,605,644 
|                                                                                       |  |                         |           
|Increase (decrease) in cash and cash equivalents                                       |  |                         | 806,095   
|                                                                                       |  |                         |           
|Cash and cash equivalents, beginning of period                                         |  |                         | 1,652     
|                                                                                       |  |                         |           
|Cash and cash equivalents, end of period                                               |  | $                       | 807,747   
|                                                                                       |  |                         |           
|SUPPLEMENTAL CASH FLOW INFORMATION:                                                    |  |                         |           
|Income taxes paid                                                                      |  | $                       | -         
|Interest paid                                                                          |  | $                       | -         
|                                                                                       |  |                         |           
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                                           |  |                         |           
|Issuance of common stock in satisfaction of debt                                       |  | $                       | 262,000   
|                                                                                       |  |                         |           
|Issuance of common stock in satisfaction Of officers compensation                      |  | $                       | 282,200   
|                                                                                       |  |                         |           
|Issuance of common stock in acquisition of PureHealth, LLC                             |  | $                       | 178,997   
|                                                                                       |  |                         |           
|Cancellation of note receivable and accrued interest in exchange for service           |  | $                       | 19,611    
|                                                                                       |  |                         |           
|Cancellation of note receivable and accrued interest in acquisition of PureHealth, LLC |  | $                       | 85,827,25 
|                                                                                       |  |                         |           
|Issuance of common stock in satisfaction of accrued interest                           |  | $                       | 43,043    



See
notes to consolidated financial statements.



F-6







Canbiola,
Inc. and Subsidiary

Notes
to Consolidated Financial Statements

Years
Ended December 31, 2018 and 2017



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 and Duramed had no activity
for the periods presented. Financial information for PHP from December 28, 2018 to December 31, 2018 has 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 December 31, 2018, the Company had cash and cash
equivalents of $807,747 and a working capital of $939,582. For the years ended December 31, 2018 and 2017, the Company had net
losses of $4,112,277 and $2,139,719, 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 (from its
acquisition date of December 28, 2018), Duramed, and Prosperity from the date of its acquisition on January 5, 2015. All intercompany
balances and transactions have been eliminated in consolidation.



F-7







(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.



(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.





F-8







(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. For 2018, Global CBD, LLC revenue of $44,602 represents approximately
9% and TZ Wholesale revenue of $17,172 represents approximately 3.5% of total Company revenues for the year ended December 31,
2018.



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.



Additionally,
the Company also generates revenue from email marketing and cloud service provided to several existing customers. The service
revenue is recognized over agreed periods of services delivered to customers, provided there are no uncertainties regarding customer
acceptance, persuasive evidence of an arrangement exists; the sales price is fixed or determinable; and collectability is deemed
probable.



(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.



F-9







(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.





F-10







(m)
Advertising



Advertising
costs are expensed as incurred and amounted to $84,316 and $28,322 for the year ended December 31, 2018 and 2017, respectively.



(n)
Research and Development



Research
and development costs are expensed as incurred. In fiscal year 2017 and 2018, the Company spent $37,000 and $75,000 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. ASU
2016-2 is effective for fiscal years beginning after December 15, 2018.



The
impact on the Company’s financial statements has not yet been determined.



(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.



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.



F-11







The
estimated fair values of the identifiable net assets of Pure Health at December 28, 2018 (effective date of acquisition), after
cancellation of the $75,000 note payable to CANB and $10,827 accrued interest thereon, 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, 2016. The pro forma information is not necessarily indicative of the results that would have been reported had
the transaction actually occurred on December 31, 2016, nor is it intended to project results of operations for any future period.



|                                             |  | Year Ended   |            
|-------------------------------------------- |  | ------------ | -----------
|                                             |  | December 31, |            
|                                             |  | 2018         |            
|                                             |  |              |            
|Product sales                                |  | $            | 651,978    
|Cost of product sales                        |  |              | 224,894    
|Gross profit on product sales                |  |              | 427,084    
|Service revenue                              |  |              | 16,625     
|                                             |  |              |            
|Total gross profit                           |  |              | 443,709    
|                                             |  |              |            
|Operating expenses                           |  |              | 4,674,321  
|                                             |  |              |            
|Loss from operations                         |  |              | (4,203,613 
|                                             |  |              |            
|Other income (loss) - net                    |  |              | (2,671,581 
|                                             |  |              |            
|Net loss                                     |  | $            | (6,875,194 
|                                             |  |              |            
|Net loss per common share- basic and diluted |  | $            | (0.02      
|                                             |  |              |            
|Weighted average common shares outstanding – |  |              |            
|Basic                                        |  |              | 276,026,704
|Diluted                                      |  |              | 423,881,781



F-12







NOTE
5 – Inventories



Inventories consist of:



|               |  | December 31, 2018 |        |  | December 31, 2017 |  
|-------------- |  | ----------------- | ------ |  | ----------------- | -
|Raw materials  |  | $                 | 79,652 |  |                   | $
|               |  |                   |        |  |                   |  
|Finished goods |  |                   | 7,452  |  |                   |  
|Total          |  | $                 | 87,104 |  |                   | $



NOTE
6 – Notes Receivable



Notes
    receivable consist of:



|                                                                                                                                                                                                                            |  | December 31, 2018 |        |  | December 31, 2017 |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------ |  | ----------------- | -
|Secured Promissory note dated October 17, 2017 due from Pure Health Products, LLC (“PHP”), interest at 12% per annum, due October 17, 2018, secured by assets of PHP. Cancelled in acquisition of Pure Health Products, LLC |  | $                 | -      |  |                   | $
|                                                                                                                                                                                                                            |  |                   |        |  |                   |  
|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 |  |                   | $



Pursuant
to an option Agreement dated November 10, 2017, the Company has an option expiring November 10, 2027 to purchase certain specified
assets of Pure Health for $75,000, payable via cancellation of Pure Health’s obligations under the Secured Promissory Note
or in cash or cash equivalent.



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.







F-13









NOTE
7 – Property and Equipment, Net



Property
and Equipment, net, consist of:

|                         |  | December 31, |         |   | December 31, |  
|------------------------ |  | ------------ | ------- | - | ------------ | -
|                         |  | 2018         |         |   | 2017         |  
|                         |  |              |         |   |              |  
|Furniture & Fixtures     |  | $            | 19,018  |   |              | $
|                         |  |              |         |   |              |  
|Office Equipment         |  |              | 20,992  |   |              |  
|                         |  |              |         |   |              |  
|Manufacturing Equipment  |  |              | 46,384  |   |              |  
|                         |  |              |         |   |              |  
|Total                    |  |              | 86,394  |   |              |  
|                         |  |              |         |   |              |  
|Accumulated amortization |  |              | (26,775 | ) |              |  
|                         |  |              |         |   |              |  
|Net                      |  | $            | 59,619  |   |              | $



NOTE
8 – Intangible Assets, Net



Intangible
assets, net, consist of:



|                                                                    |  | December 31, |         |   | December 31, |  
|------------------------------------------------------------------- |  | ------------ | ------- | - | ------------ | -
|                                                                    |  | 2018         |         |   | 2017         |  
|                                                                    |  |              |         |   |              |  
|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   |   |              |  
|                                                                    |  |              |         |   |              |  
|Other                                                               |  |              | 3,548   |   |              |  
|                                                                    |  |              |         |   |              |  
|Total                                                               |  |              | 60,428  |   |              |  
|                                                                    |  |              |         |   |              |  
|Accumulated amortization and Impairment                             |  |              | (60,428 | ) |              |  
|                                                                    |  |              |         |   |              |  
|Net                                                                 |  | $            | 0       |   |              | $





The
above intangible assets relate to the document management and email marketing divisions. At December 31, 2017, we do not expect
any future positive cash flow from these divisions. Accordingly, we have recorded an impairment expense of $21,509 at December
31, 2017 and reduced the net carrying value of these intangible assets to $0.



F-14







NOTE
9 – Notes and Loans Payable



|Notes and loans payable consist of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                   |        |  |                   |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------ |  | ----------------- | -
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | December 31, 2018 |        |  | December 31, 2017 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                   |        |  |                   |  
|Convertible notes payable to lender dated from March 15, 2016 (as amended June 2, 2016) to November 15, 2017, interest at rates ranging from 12% to 14.99% per annum, due from April 6, 2017 to May 15, 2018, partially converted at March 22, 2017 and the remaining notes convertible into Common Stock at a Conversion Price equal to the lesser of (i) $0.01 per share or (ii) 50% of the lowest Closing Bid Price of the Common Stock for the 30 Trading Days preceding the Conversion Date – net of unamortized debt discount of $0 and $1,815, respectively-fully converted on August 31, 2018                        |  |                   | -      |  |                   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                   |        |  |                   |  
|Convertible notes payable to lender dated February 1, 2016 (as amended December 21, 2016) and December 21, 2016, interest at 12% per annum, due February 1, 2017 and May 20, 2017, convertible into Common Stock at a Conversion Price equal to the lesser of (i) $0.01 per share or (ii) 50% of the lowest Closing Bid Price of the Common Stock for the 30 Trading Days preceding the Conversion Date – net of unamortized debt discount of $0 and $0, respectively. The note date dated February 1, 2016 was fully converted at June 11, 2018 while note dated December 21, 2016 was fully converted at September 7, 2018 |  |                   | -      |  |                   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                   |        |  |                   |  
|Convertible notes payable to Pasquale and Rosemary Ferro dated from May 2, 2017 to August 10, 2018, interest at 12% per annum, due at June 30, 2020 (as amended August 13, 2018), convertible into Common Stock at a Conversion Price equal to the lesser of (i) $0.01 per share or (ii) 50% of the lowest Closing Bid Price of the Common Stock for the 30 Trading Days preceding the Conversion Date – net of unamortized debt discount of $25,009 and $19,613, respectively. The notes were fully converted at August 9, 2018 and December 21, 2018.                                                                      |  |                   | -      |  |                   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                   |        |  |                   |  
|Convertible note payable to lender dated August 8, 2017 interest at 12% per annum, due August 8, 2018, convertible into Common Stock at a Conversion Price equal to the lesser of (i) $0.01 per share or (ii) 50% of the lowest Closing Bid Price of the Common Stock for the 30 Trading Days preceding the Conversion Date – net of unamortized debt discount of $0 and $15,068, respectively. The notes were fully converted at August 31, 2018.                                                                                                                                                                           |  |                   | -      |  |                   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                   |        |  |                   |  
|Convertible note payable to lender dated June 6, 2018, interest at 12% per annum, due March 6, 2019, convertible into Common Stock at a Conversion Price equal to the lesser of 55% of the lowest Closing Bid . Price of the Common Stock for the 25 Trading Days preceding the (i) Inception date or (ii) the Conversion Date – net of unamortized debt discount of $57,509 and $0, respectively. The note was fully paid off at October 19, 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 |  |                   | $



F-15







The
derivative liability of the convertible notes payable consists of:



|                                                                                                                                                                                                                                      |  | December
    31, 2018 |   |  | December
    31, 2017    |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------- | - |  | ------------------------ | -
|                                                                                                                                                                                                                                      |  | Face
    Value        |   |  | Derivative
    Liability |  
|                                                                                                                                                                                                                                      |  |                       |   |  |                          |  
|Convertible
    notes payable to lender dated from March 15, 2016 (as amended June 2, 2016) to November 15, 2017, due from April
    6, 2017 to May 15, 2018. Fully converted on August 31, 2018                                      |  | $                     | - |  |                          | $
|                                                                                                                                                                                                                                      |  |                       |   |  |                          |  
|Convertible
    notes payable to lender dated February 1, 2016 (as amended December 21, 2016) and December 21, 2016, due February
    1, 2017 and May 20, 2017. The notes were fully converted at June 11, 2018 and September 7, 2018 |  |                       | - |  |                          |  
|                                                                                                                                                                                                                                      |  |                       |   |  |                          |  
|Convertible
    notes payable to Pasquale and Rosemary Ferro dated from May 25, 2017 to January 8, 2018, due at June 30, 2020
    (as amended August 13, 2018),                                                                       |  |                       | - |  |                          |  
|                                                                                                                                                                                                                                      |  |                       |   |  |                          |  
|Convertible
    notes payable to lender dated June 6, 2018, due March 6, 2019. Fully paid off at October 19, 2018.                                                                                                                    |  |                       | - |  |                          |  
|Convertible
    notes payable to lender dated August 8, 2017, due August 8, 2018. Fully converted at August 31, 2018                                                                                                                  |  |                       | - |  |                          |  
|Totals                                                                                                                                                                                                                                |  | $                     | - |  |                          | $



The
above convertible notes outstanding at December 31, 2017 contained a variable conversion feature based on the future trading price
of the Company common stock. Therefore, the number of shares of common stock issuable upon conversion of the notes was indeterminate.
Accordingly, we recorded the fair value of the embedded conversion features as a derivative liability at the respective issuance
dates (or amendment dates) of the notes ($445,112 total for the year ended December 31, 2017) and charged the applicable amounts
to debt discounts of ($182,750 total for the year ended December 31, 2017) and the remainder to other expense ($262,362 total
for the year ended December 31, 2017). The increase (decrease) in the fair value of the derivative liability from the respective
issuance dates (or amendment dates) of the notes to the measurement date ($926,819 total increase for the year ended December
31, 2017) are charged (credited) to other expense (income). The fair value of the derivative liability of the notes is measured
at the respective issuance dates and quarterly thereafter using the Black Scholes option pricing model. Assumptions used for the
calculations of the derivative liability of the notes at December 31, 2017 include (1) stock price of $0.0335 per share, (2) exercise
price of $0.0045 per share, (3) terms ranging from 0 days to 220 days, (4) expected volatility of 287% and (5) risk free interest
rates ranging from 0.00% to 1.58%.



In
2018, all convertible notes containing embedded conversion features were satisfied and the Company recognized income from derivative
liability of $1,591,137



NOTE
10 – 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.



F-16







The
Company issued a total of 10 shares of CANB Series A Preferred Stock (5 shares to Mckenzie Webster Limited and 5 shares to Marco
Alfonsi) in exchange for the retirement of a total of 100,000,000 shares of CANB common stock (50,000,000 shares from Mckenzie
Webster Limited and 50,000,000 shares from Marco Alfonsi).



On
October 4, 2017, the Company issued 3 shares of CANB Series A Preferred Stock to Alfonsi: 2 shares were the consideration for
Alfonsi’s cancellation of accrued salaries payable of $127,803 owed to Alfonsi and 1 share (valued at $63,902) was issued
pursuant to the new employment agreement with Alfonsi.



On
November 30, 2017, MWL converted its 5 shares of CANB Series A Preferred Stock to 50,000,000 shares of CANB common stock.



On
December 5, 2017, the Company issued 157,985 shares of CANB Series B Preferred Stock to RedDiamond Partners LLC (“RedDiamond”)
pursuant to a Securities Purchase Agreement (the “SPA”) dated October 13, 2017, in exchange for proceeds of $150,000,
or $0.95 per CANB Series B Preferred share.



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 $257,370 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 $703,800 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.



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 $105,000 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.



F-17







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 $3,375,520 and will be amortized over the vesting period of four years.



NOTE
11 – Common Stock



On
February 2, 2017, the Company issued 200,000 shares of CANB common stock to a financial consultant for services rendered. The
$11,000 fair value of the 200,000 shares of CANB common stock was charged to consulting fees in the three months ended March 31,
2017.



On
February 13, 2017, the Company issued 1,685,900 shares of CANB common stock to the brother of the Chief Executive Officer of the
Company in satisfaction of notes payable of $15,000 and accrued interest payable of $1,859.



On
March 22, 2017, the Company issued 6,785,316 shares of CANB common stock to a lender in satisfaction of notes payable of $50,000
and accrued interest payable of $5,979.



On
April 17, 2017, the Company issued 5,000,000 shares of CANB common stock to a consultant for services rendered. The $125,000 fair
value of the 5,000,000 shares of CANB common stock was charged to consulting fees in the three months ended June 30, 2017.



On
June 21, 2017, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $5,975 fair value
of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended June 30, 2017.



On
June 28, 2017, 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 charged to consulting fees in the three months ended June 30, 2017.



On
August 25, 2017, the Company issued 7,142,857 shares of CANB common stock to a lender in satisfaction of notes payable of $50,000
and accrued interest payable of $3,331.



On
August 25, 2017, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $3,750 fair
value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September
30, 2017.



On
September 5, 2017, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $4,375 fair
value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September
30, 2017.



On
September 7, 2017, the Company issued 2,500,000 shares of CANB common stock to a consultant for services rendered. The $32,750
fair value of the 2,500,000 shares of CANB common stock was charged to consulting fees in the three months ended September 30,
2017. On July 12, 2018, the consultant agreed to return the 2,500,000 shares

to
the Company due to the lack of service after an arbitration was filed on May 11,2018.



On
September 11, 2017, the Company issued 250,000 and 250,000 shares of CANB common stock to two consultants for services rendered,
respectively. The $3,350 fair value of each 250,000 shares of CANB common stock was partially charged to consulting fees in the
three months ended September 30, 2017.



On
September 25, 2017, the Company issued 2,500,000 shares of CANB common stock to a consultant for services rendered. The $2,525
fair value of the 2,500,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September
30, 2017.



F-18









On
November 2, 2017, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $1,725 fair
value of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended December 31, 2017.



On
November 9, 2017, the Company issued 2,500,000 shares of CANB common stock to a consultant for services rendered. The $21,250
fair value of the 2,500,000 shares of CANB common stock was partially charged to consulting fees in the three months ended December
31, 2017.



On
November 30, 2017, the Company issued 50,000,000 shares of CANB common stock to Mckenzie Webster Limited in exchange for the retirement
of 5 shares of CANB Series A Preferred Stock.



On
December 5, 2017, the Company issued 250,000 and 250,000 shares of CANB common stock to two consultants for services rendered,
respectively. The $3,000 fair value of each 250,000 shares of CANB common stock was partially charged to consulting fees in the
three months ended December 31, 2017.



On
December 7, 2017, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $4,500 fair
value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended December 31,
2017.



On
December 18, 2017, the Company issued 500,000 shares of CANB common stock to a consultant for services rendered. The $9,050 fair
value of the 500,000 shares of CANB common stock was partially charged to consulting fees in the three months ended December 31,
2017.



On
December 25, 2017, the Company issued 250,000 and 250,000 shares of CANB common stock to two consultants for services rendered,
respectively. The $7,250 fair value of each 250,000 shares of CANB common stock was partially charged to consulting fees in the
three months ended December 31, 2017.



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.



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.



F-19









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.



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.



F-20









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 of notes 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 of notes 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.



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.



F-21









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.



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, 2016 |  |                                         | 50,000   
|Granted in 2017            |  |                                         | -        
|Expired in 2017            |  |                                         | -        
|                           |  |                                         |          
|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





Issued
and outstanding stock options as of December 31, 2018 consist of:



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



On
June 11, 2018, the Company granted 3,000,000 options of CANB common stock to Carl Dilley, a 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.



F-22







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 December 31, 2018 consist of:



|Year    |  | Number Outstanding
And |           |  | Exercise |   |         | Year of    | 
|------- |  | ---------------------- | --------- |  | -------- | - | ------- | ---------- | 
|Granted |  | 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.



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:







|                                                            |  | Year Ended December 31, |         
|----------------------------------------------------------- |  | ----------------------- | --------
|                                                            |  | 2018                    |         
|                                                            |  |                         |         
|Expected income tax (benefit) at 21% and 35%                |  | $                       | (663,578
|                                                            |  |                         |         
|Loss on forgiveness of receivable from Pure Health products |  |                         | 18,024  
|                                                            |  |                         |         
|Loss on stock issuance                                      |  |                         | 36,344  
|                                                            |  |                         |         
|Loss on debt conversion                                     |  |                         | 272,867 
|                                                            |  |                         |         
|Non-deductible stock-based compensation                     |  |                         | 583,653 
|                                                            |  |                         |         
|Non-deductible amortization of debt discounts               |  |                         | 37,064  
|                                                            |  |                         |         
|Non-deductible impairment of intangible assets              |  |                         | -       
|                                                            |  |                         |         
|Non-deductible expense from derivative liability            |  |                         | (334,139
|                                                            |  |                         |         
|Increase in deferred income tax assets valuation allowance  |  |                         | 250,235 
|                                                            |  |                         |         
|Provision for (benefit from) income taxes                   |  | $                       | -       







F-23









Deferred
income tax assets consist of:



|                                |  | December 31, |            |   | December 31, |  
|------------------------------- |  | ------------ | ---------- | - | ------------ | -
|                                |  | 2018         |            |   | 2017         |  
|                                |  |              |            |   |              |  
|Net operating loss carryforward |  |              | 1,644,593  |   |              |  
|                                |  |              |            |   |              |  
|Valuation allowance             |  |              | (1,644,593 | ) |              |  
|                                |  |              |            |   |              |  
|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 $1,644,593 attributable to the future utilization of the $4,786,934 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 December 31, 2018. 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 and 2038 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 and $713,162, 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.



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.



F-24







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).



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.



Consulting
Agreements



On
July 29, 2017, the Company executed a Consulting Agreement with Andrew W Holtmeyer for Mr. Holtmeyer to serve as the Company’s
consultant for monthly cash payment of $5,000 through July 29, 2018. Effective February 16, 2018, the Company terminated the agreement
due to the replacement of an Executive Service Agreement.



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. On July 12, 2018, the Company received a response from T8
Partners LLC (“T8”) confirming that the 2,500,000 shares requested to be returned by the Company in an
arbitration filed on May 11, 2018 will be returned to the Company. The Company is awaiting the result of that
arbitration.



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.



F-25







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
December 31, 2018, the future minimum lease payments under non-cancellable operating leases were:



|Year ended December 31, 2019 |  |   | 38,508  | 
|---------------------------- |  | - | ------- | 
|Year ended December 31, 2020 |  |   | 39,666  | 
|Year ended December 31, 2021 |  |   | 33,880  | 
|                             |  |   |         | 
|Total                        |  | $ | 112,054 | 



Major
Customers



For
the year ended December 31, 2018, one customer accounted for approximately 16% of total revenues.



For
the year ended December 31, 2017, three customers accounted for approximately 45%, 29% and 14%, respectively, of total service
revenues.



Public
Offering of Units



On
August 2, 2016, the Company’s Registration Statement on Form S-1 was declared effective by the Securities and Exchange Commission.
On a self-underwritten basis, the Company was offering up to 40,000,000 Units at a price of $0.05 per Unit or $2,000,000 maximum.
Each Unit consisted of one share of Company common stock and one warrant to purchase 1⁄2 share of Company common stock at
a price of $0.10 per share for a period of three years. There was no minimum offering amount or escrow required as a condition
to closing. The offering terminated May 17, 2017.





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
December 31, 2018, CANB had an account receivable from PAG of $7,240. For the year ended December 31, 2018, CANB had revenues
from PAG of $5,000.



Island
Stock Transfer (“IST”), an entity controlled by Carl Dilley, a former Company director, is both a customer and vendor
of CANB. At December 31, 2018, CANB had an account receivable from IST of $7,035 and an account payable to IST of $1,454. For
the year ended December 31, 2018, CANB had revenues from IST of $4,000.



Stock
Market Manager, Inc. is also an entity controlled by Mr. Dilley. For the year ended December 31, 2018, CANB had an account payable
to Stock Market Manager Inc. of $1,676.



F-26









In
order to facilitate its operations, the Company has entered into a Production Agreement with Pure Health Products, LLC (“PHP”),
a New York limited liability company. Pursuant to the Production Agreement, PHP will manufacture, package, and sell the Company’s
CBD infused products on an exclusive basis. PHP will not produce or manufacture any product containing any cannabis or hemp derivative
for any person or entity other than the Company, and the Company controls the ingredients, recipe, manufacturing processes and
procedures and quality and taste parameters for all Products produced at the PHP facility. PHP may also white label / rebrand
or relabel the products on the Company’s behalf pursuant to “white label agreements” entered into between the
Company and third-party customers. Credit card sales are processed through PHP as well. Through its contractual relationship with
PHP, the Company is able to control the manufacturing process of its products while reducing its production costs. In addition,
the Company has the option to acquire certain assets of PHP should it elect to take over direct manufacture of its Products. For
the year ended December 31, 2018, purchase of CBD infused products from PHP totaled $274,556.50. Effective December 28, 2018,
the Company acquired Pure Health Products, LLC.



During
the year ended December 31, 2018, we had products and service sales to related parties totaling $5,000.



NOTE
16 – Subsequent Events



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.



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 and PHP (collectively, the “buyer”) entered into a License and Acquisition Agreement
(the “LAA”) with Hudilab, Inc. (“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.



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
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 to owners of Seven Chakras
pursuant to the agreement.



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.



As
a result of Canbiola’s acquisition of Pure Health products, it conducted a corporate re-alignment including naming Pasquale
Ferro President and moving David Possel from Chief Operating Officer of Canbiola to Chief Operations Officer Pure Health Products.



In
accordance with FASB ASC 855, Subsequent Events, the Company has evaluated subsequent events through October 30, 2018, 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.



F-27