NOTE 1 –BUSINESS ORGANIZATION AND NATURE OF OPERATIONS

Background and Current Operations

Prana Therapeutics, Inc ("we", "our", "us", "PTI", or “the Company”), was formed as a Delaware corporation, on November 11, 2012. We are a clinical stage biotech company focused on developing targeted polymolecular therapeutics for the prevention of negative side effects of chemotherapy, management of rheumatoid arthritis and treatment of brain cancer. The Company occupies space in a research laboratory provided by the University of Florida Research Foundation (“UFRF”), and our corporate officers are professors or staff members in the Department of Neurosurgery at the University of Florida, College of Medicine. Current and former principal shareholders of the Company, in their capacity as research scientists, filed on behalf of UFRF, patents related to the composition of matter and use claims on developed technology in the United States and internationally. We own the exclusive, world-wide license to the technology covered by the patents, through a licensing agreement with UFRF.

On July 14, 2017, United Cannabis Corporation (“UCANN”) acquired 95% of our Company in a one-for-one exchange of 5,730,000 shares of common stock of the Company for 5,730,000 of common stock of UCANN. The purchase price had a fair market value of $5,070,500, based upon the closing price of $0.85 per share on the OTC QB exchange on July 14, 2017, including the cost to purchase by UCANN of 400,000 shares of our common stock for $200,000. Our Company will continue to be operated on a standalone, independent basis.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates - The preparation of our financial statements in conformity with GAAP requires us to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of our financial statements and the reported amounts of revenues and expenses during the periods presented.

We make our estimates of the ultimate outcome for these items based on historical trends and other information available when our financial statements are prepared. We recognize changes in estimates in accordance with the accounting rules for the estimates, which are typically in the period when new information becomes available. We believe that our significant estimates, assumptions and judgments are reasonable, based upon information available at the time they were made. Our actual results could differ from these estimates, making it possible that a change in these estimates could occur in the near term.

Fair Value of Financial Instruments  - Our financial instruments consist principally of cash and cash equivalents and grant payable. We value our financial assets and liabilities using fair value measurements. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows:

The carrying amount of our cash and cash equivalents, and other current assets and liabilities in our financial statements approximates fair value because of the short-term nature of the instruments.

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There have been no changes in Level 1, Level 2, and Level 3 categorizations and no changes in valuation techniques for these assets or liabilities for the years ended December 31, 2016 and 2015.

Cash and Cash Equivalents - We consider investments with original maturities of 90 days or less to be cash equivalents.

Intangible Assets – Our intangible assets are comprised of provisional patent applications and applications for a design mark and trademarks. Our intangible assets will be amortized on a straight-line basis over estimated useful lives of 20 years for patents, and 10 years for design marks and trademarks, once the applications are approved. Costs associated with applications that are not approved will be expensed in the period that the application is rejected or abandoned. We test for impairment of our intangible assets on an annual basis.

Long-Lived Assets –In accordance with the FASB Accounting Standards Codification (“ASC”) 350, we regularly review the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. The carrying value and ultimate realization of these assets is dependent upon our estimates of future earnings and benefits that we expect to generate from their use. If our expectations of future results and cash flows are significantly diminished, intangible assets and other long-lived assets may be impaired and the resulting charge to operations may be material. When we determine that the carrying value of intangibles or other long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, we use the projected undiscounted cash flow method to determine whether an impairment exists, and then measure the impairment using discounted cash flows.

Research and Development Expenses - Research and development (“R&D”) costs are charged to expense as incurred. Our R&D costs include, but are not limited to, consulting service fees and materials and supplies used in the development of our proprietary products and services.

General and Administrative Expenses - General and administrative expenses consist primarily of personnel-related costs, rent, corporate costs, fees for professional and consulting services, advertising costs, and other costs of administration such as marketing, human resources, finance and administrative roles.

Stock-Based Compensation – We account for stock option grants issued and vesting to employees based on ASC 718, Compensation – Stock Compensation , whereas the award is measured at its fair value at the date of grant and is amortized ratably over the vesting period. Accounting for stock-based compensation to employees requires the measurement and recognition of compensation expense for all share-based payment awards made to employees based on estimated fair values. We estimate the fair value of all stock option awards on the date of grant using the Black-Scholes-Merton pricing model, which is affected by our stock price, as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, actual and projected employee option exercise behaviors, risk free interest rates and expected dividends. We also estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from our estimates.

Income Taxes - Income taxes are recorded using the asset and liability method. Under the asset and liability method, tax assets and liabilities are recognized for the tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using the enacted tax rates expected to apply when the asset is realized, or the liability settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that enactment occurs. To the extent that we do not consider it more likely than not that a future tax asset will be recovered, we will provide a valuation allowance against the excess.

We follow the provisions of ASC 740, Income Taxes . As a result of ASC 740, we make a comprehensive review of our portfolio of tax positions in accordance with recognition standards established by ASC 740. As a result of the implementation of ASC 740, we recognized no material adjustments to liabilities or stockholders’ deficit.

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When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken, or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in our financial statements in the period during which, based on all available evidence, we believe it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured, as described above, is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets, along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Interest and penalties associated with unrecognized tax benefits, if any, are classified as interest expense and penalties, and are included in selling, general and administrative expenses in our statements of operations.

However, since all of our income through December 31, 2016 has been derived from a research grant, we have provided no provision for taxes on income in reliance on the Internal Revenue code that allows fund recipients to defer the recognition of income taxes until such time as associated costs and expenses are incurred. Since, at the time all of the grant funds received under the research grant were expended, the income from the grant match the costs and expenses incurred in pursuing the related research program, and thus, no taxable gain or loss was realized by the Company.

Commitments and Contingencies - Certain conditions may exist as of the date our financial statements are issued, which may result in a loss, but which will only be resolved when one or more future events occur or fail to occur. We assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, we evaluate the perceived merits of the legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.

Earnings (Loss) Per Share - We compute net loss per share in accordance with ASC 260, Earnings per Share . Under the provisions of ASC 260, basic net loss per share includes no dilution and is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. Earnings (loss) per share takes into consideration shares of common stock outstanding (computed under basic net loss per share) and potentially dilutive securities that are not anti-dilutive. Potentially dilutive securities outlined in the table below have been excluded from the computation of diluted net loss per share, because the effect of their inclusion would have been anti-dilutive:

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NOTE 3 – GOING CONCERN

Our financial statements have been prepared on a going concern basis, which assumes we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future. However, we have not been focused on generating revenues, since we are a clinical stage biotech company focused, for the most part, on developing targeted polymolecular therapeutics. As a result, we have had minimal sales since our inception, and during the year ended December 31, 2016, we incurred a loss of $234,995, used cash of $13,887 in our operating activities, and have an accumulated deficit of $210,900 at December 31, 2016. We have funded our operations, for the most part, through a research grant, and the sale of our common stock to capital sources. Our ability to continue as a going concern is dependent on our ability to be able to continue to attract funds from capital sources or lenders, however, there is no assurance that will be satisfactorily able do so.

NOTE 4 – STOCKHOLDERS’ EQUITY

Purchase of Common Shares by Founders

On December 14, 2016, the founders of the Company purchased 550,000 shares of common stock at a price of $$0.10 per shares. At the time the founders purchased their shares of common stock, there was no public market for our common shares in that we were a privately held company at that time. However, shortly thereafter, we sold shares to third-party investors at a price of $0.50 per share. Thus, we recognized a loss on the sale the 550,000 shares of common stock to our founders, in order to mark the sale to market, in the amount of $220,000, during the year ended December 31, 2016.

Stock Options

On July 1, 2016, we awarded 200,000 stock options to two research assistants that provided research support to the Company. The options were fully vested at the time of grant and give the option holder the right to purchase shares of our common stock at $0.10 per share during the five-year term of the option. At the time the stock options were granted, there was no public market for our common shares, and thus the valuation of the options was determined by our board of directors to be the fair market value of a share of our common stock at the date of grant. The following table summarizes our stock options outstanding at December 31, 2016 and 2015:

NOTE 5 – COMMITMENTS AND CONTINGENCIES

Contractual Obligations and Commercial Commitments

Research Laboratory

Under the terms of a research agreement entered into in October 2017 with the University of Florida Trustees (“UFT”), we committed to pay UFT $151,772, upon the execution of the research agreement, and $75,886 in each of the months of February 2018 and June 2018, for a total commitment of $303,544.

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Research Grant

In August of 2013, we were received a research grant from Accelerate Brain Cancer Cure, Inc. (“ABC”) in the amount of $75,000 to be used by us for the development and testing of brain cancer therapies (the “Grant”). Under the terms of the Grant, within 15 years after the effective date of the Grant, if one or more products resulting from the Grant is brought to market, then the Company will owe ABC the repayment of the Grant in the following amounts, based upon the following cumulative net profit benchmarks:

Net profits are defined by the Grant, for the most part, as gross amounts received by the Company from third party licensees for the sale of pharmaceutical products derived from, or embodying, the brain cancer therapies that are approved for sale to the public by a regulatory agency. Such gross amounts received are not to include the non-commercial sale of products. The gross amounts received by the Company from third party licensees may be reduced by the fully allocated cost of production, adjusted for certain discounts and credits, plus the cost of marketing, which may not exceed fifty percent of gross receipts, packaging and transportation material costs and certain other costs. We have not sold any products that were derived from therapies created under the Grant. At December 31, 2015, $18,892 of fund proceeds from the Grant are available to the Company, and as such, are classified as restricted cash and as deferred grant income on our balance sheet, at December 31, 2015.

Legal Proceedings

We were not subject to any legal proceedings during the years ended December 31, 2016 and 2015, and, to the best of our knowledge, no legal proceedings are pending or threatened.

NOTE 6 - SUBSEQUENT EVENTS

Subsequent Analysis of Operations

In accordance with ASC 855-10, we have analyzed our operations subsequent to December 31, 2016, to the date these financial statements were issued, and have determined that, other than as disclosed above, we do not have any material subsequent events to disclose in these financial statements.

Private Placement of Common Shares

In October 2016, our Board of Directors authorized a private offering of up to 1,000,000 shares of our common stock to potential investors at a price of $0.50 per share. Subsequent to the year ended December 31, 2016, we received total cash proceeds from the offering of $365,000, plus we received a stock subscription for 300,000 shares for consideration of a note receivable in the amount of $150,000 from United Cannabis Corporation, the corporate entity that ultimately purchased 95% of our Company on July14, 2017.

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

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

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

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