Table of Contents
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-216845
PROSPECTUS SUPPLEMENT
(To Prospectus dated April 21, 2017)
CANNABICS PHARMACEUTICALS INC.
10,000,000 Shares of Common Stock
Warrants to Purchase up to 5,000,000
Shares of Common Stock
We are offering up to 10,000,000 shares
of our common stock, par value $0.0001 per share, which we refer to as our common stock, together with warrants to purchase 5,000,000
shares of common stock (and the shares issuable from time to time upon exercise of the warrants) at a combined purchase price of
$0.75 per share of common stock and warrant, to institutional investors pursuant to this prospectus supplement and the accompanying
prospectus and a securities purchase agreement with such investors. Each warrant is exercisable upon issuance, has a five year
term from the date of its issuance and will be exercisable at an exercise price of $1.00 per share. The exercise price of the warrants
is subject to adjustment in the event that we issue certain securities at any time while the warrants are outstanding at an effective
price below the exercise price. See “Description of the Securities we are Offering.” The shares of common stock and
warrants will be purchased together but are immediately separable upon issuance.
Our common stock is quoted on the OTC Market
Group’s OTCQB Over-the-Counter Bulletin Board (“OTCQB”) under the symbol “CNBX.” On September 21,
2018, the closing price for our common stock, as reported on the OTCQB, was $1.02 per share.
Investing in our securities involves
a high degree of risk. Please read “
Risk Factors
” beginning on page S-7 of this prospectus supplement, and in our
Annual Report on Form 10-K for the year ended August 31, 2017, and our Quarterly Report for the quarter ended May 31, 2018, which
are incorporated by reference into this prospectus supplement.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
supplement is truthful or complete. Any representation to the contrary is a criminal offense.
A.G.P./Alliance Global Partners is acting
as the sole placement agent on this transaction. The placement agent is not purchasing or selling any of our securities offered
by this prospectus supplement, nor is it required to arrange the purchase or sale of any specific number or dollar amount of securities,
but has agreed to use its reasonable best efforts to arrange for the sale of all of our securities offered hereby. There is no
required minimum number of securities that must be sold as a condition to completion of the offering. We have agreed to pay the
placement agent the placement agent fees set forth in the table below.
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Per Share and Warrant
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Total
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Public Offering Price
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$
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0.75
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$
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7,500,000
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Placement Agent Fees(1)
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$
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0.0525
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$
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525,000
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Proceeds to us (before expenses)
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$
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0.6975
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$
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6,975,000
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(1)
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We have also agreed to reimburse the placement agent for certain of its legal fees and expenses with respect to this offering and to grant warrants to purchase shares of our common stock to the placement agent. For additional information about the compensation payable to the placement agent, see “
Plan of Distribution
” on page S-15.
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We expect that delivery of shares of the common stock and the
warrants being offered pursuant to this prospectus supplement and the accompanying prospectus will be made on or about September
26, 2018.
A.G.P.
The date of this prospectus supplement is
September 24, 2018.
Table of Contents
You should rely only on the information
contained in or incorporated by reference in this prospectus supplement, the accompanying prospectus and in any free writing prospectus
that we have authorized for use in connection with this offering. We have not, and the placement agent has not, authorized anyone
to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely
on it. We are not, and the placement agent is not, making an offer to sell these securities in any jurisdiction where the offer
or sale is not permitted. You should assume that the information in this prospectus supplement, the accompanying prospectus, the
documents incorporated by reference in this prospectus supplement and the accompanying prospectus, and in any free writing prospectus
that we have authorized for use in connection with this offering, is accurate only as of the date of those respective documents.
Our business, financial condition, results of operations and prospects may have changed since those dates. You should read this
prospectus supplement, the accompanying prospectus, the documents incorporated by reference in this prospectus supplement and the
accompanying prospectus, and any free writing prospectus that we have authorized for use in connection with this offering, in their
entirety before making an investment decision. You should also read and consider the information in the documents to which we have
referred you in the section of this prospectus supplement entitled “Incorporation of Certain Information by Reference”
and the sections of the accompanying prospectus entitled “Incorporation of Certain Information by Reference” and “Where
You Can Find More Information.”
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement and the accompanying
prospectus form part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission, or
SEC, using a “shelf” registration process. This document contains two parts. The first part consists of this prospectus
supplement, which provides you with specific information about this offering. The second part, the accompanying prospectus, provides
more general information, some of which may not apply to this offering. Generally, when we refer only to the “prospectus,”
we are referring to both parts combined. This prospectus supplement may add, update or change information contained in the accompanying
prospectus. To the extent that any statement we make in this prospectus supplement is inconsistent with statements made in the
accompanying prospectus or any documents incorporated by reference herein or therein, the statements made in this prospectus supplement
will be deemed to modify or supersede those made in the accompanying prospectus and such documents incorporated by reference herein
and therein.
This prospectus
supplement and the accompanying prospectus do not constitute an offer to sell, or a solicitation of an offer to purchase,
the securities offered by this prospectus supplement and the accompanying prospectus in any jurisdiction to or from any
person to whom or from whom it is unlawful to make such offer or solicitation of an offer in such jurisdiction.
Unless the context otherwise requires,
we use the terms “Cannabics Pharmaceuticals Inc.,” “Cannabics” “we,” “us,” “the
Company” and “our” in this prospectus supplement to refer to Cannabics Pharmaceuticals Inc. and its subsidiaries.
All references in this prospectus supplement
to our consolidated financial statements include, unless the context indicates otherwise, the related notes.
The industry and market data and other
statistical information contained in the documents we incorporate by reference are based on management’s own estimates, independent
publications, government publications, reports by market research firms or other published independent sources, and, in each case,
are believed by management to be reasonable estimates. Although we believe these sources are reliable, we have not independently
verified the information.
The information contained in this prospectus
supplement or the accompanying prospectus is accurate only as of the date of this prospectus supplement or the accompanying prospectus,
regardless of the time of delivery of this prospectus supplement, the accompanying prospectus or of any sale of the shares. We
further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any
document that is incorporated by reference in this prospectus supplement or the accompanying prospectus were made solely for the
benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such
agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties
and covenants should not be relied on as accurately representing the current state of our affairs.
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus supplement and the accompanying
prospectus contain, and the documents incorporated herein and therein by reference contain, forward-looking statements that involve
risks and uncertainties. The forward-looking statements are contained principally in the sections of this prospectus supplement,
the accompanying prospectus and the documents incorporated herein and therein by reference under the captions “Prospectus
Supplement Summary,” “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and “Business.” In some cases, you can identify forward-looking
statements by terms such as “may,” “might,” “will,” “objective,” “intend,”
“should,” “seek,” “aim,” “think,” “optimistic,” “strategy,”
“goals,” “sees,” “new,” “guidance,” “future,” “continue,”
“drive,” “growth,” “long-term,” “develop,” “possible,” “emerging,”
“opportunity,” “pursue,” “could,” “can,” “would,” “expect,”
“believe,” “anticipate,” “project,” “target,” “design,” “estimate,”
“predict,” “potential,” “plan” or the negative of these terms, and similar expressions intended
to identify forward-looking statements. These forward-looking statements are not historical facts, but reflect our management’s
views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties,
you should not place undue reliance on these forward-looking statements. Forward-looking statements include, but are not limited
to, statements about:
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the size and growth of the potential markets for our products and the ability to serve those markets;
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our expectations regarding our expenses and revenue, the sufficiency of our cash resources and
needs for additional financing;
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the rate and degree of market acceptance of any of our products;
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our expectations regarding competition;
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our anticipated growth strategies;
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our ability to attract or retain key personnel;
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our ability to establish and maintain development partnerships;
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our expectations regarding federal, state and foreign regulatory requirements;
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regulatory developments in the U.S. and foreign countries, especially those related to change in, and enforcement of, cannabis
laws;
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our ability to obtain and maintain intellectual property protection for our products;
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the anticipated trends and challenges in our business and the market in which we operate; and
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our use of proceeds from this offering.
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Forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially
different from any future results, performances or achievements expressed or implied by the forward-looking statements.
Any forward-looking statement made by us
in this prospectus supplement and the accompanying prospectus speaks only as of the date on which it is made. Except as required
by law, we assume no obligation to update these statements publicly, or to update the reasons actual results could differ materially
from those anticipated in these statements, even if new information becomes available in the future. These forward-looking statements
represent our estimates and assumptions only as of the respective dates of this prospectus supplement and the accompanying prospectus.
Unless required by U.S. federal securities
laws, we do not intend to update any of these forward-looking statements to reflect circumstances or events that occur after the
statement is made.
You should read this prospectus supplement,
the accompanying prospectus and the documents that we reference herein and therein and have filed as exhibits to the registration
statement, of which this prospectus supplement is a part, completely and with the understanding that our actual future results
may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
PROSPECTUS SUPPLEMENT SUMMARY
The following summary highlights information
contained elsewhere in or incorporated by reference into this prospectus supplement and accompanying prospectus. It may not contain
all of the information that is important to you. You should carefully read this prospectus supplement and the accompanying prospectus,
including the documents incorporated by reference, which are described under “Incorporation of Certain Information by Reference”
in this prospectus supplement and under “Incorporation of Certain Information by Reference” and “Where You Can
Find More Information” in the accompanying prospectus. You should also carefully consider the matters discussed in the section
entitled “Risk Factors” in this prospectus supplement, in the accompanying prospectus and in other periodic reports
incorporated herein by reference.
About Cannabics Pharmaceuticals Inc.
Cannabics Pharmaceuticals Inc.
Cannabics is a pioneer in the constellation
of cannabis cancer and diagnostics. Personalization of cannabinoid-based treatments is the main scope of the company, addressing
the rapidly growing yet unmet need of cancer patients who are prescribed with cannabis. The multifactorial benefits of cannabis
create an arising need that may unravel a new attitude to cancer treatment and prevention. The palliative aspects of cannabis such
as reducing pain and nausea, propel the market to create OTC and pharma grade cannabis products to cancer patients. With minor
side effects and
no toxicity
, the only barrier to millions of cancer patients is worldwide regulation. The legalization
of cannabis worldwide is being generated both by medical and financial processes exposing and legitimizing cannabis consumption
as a medical treatment. The number of cancer patients, caregivers and doctors that are exposed to cannabis is growing rapidly as
new countries i.e. Germany, Canada, Australia and others adopt new regulations and introduce natural cannabis products to the health
system. Since the palliative properties of cannabis as pain and nausea reduction are widely accepted by physicians, along with
a growing body of clinical proof, and patient advocating these benefits; we believe that in next decade a large percentage of cancer
patients worldwide will be treated with cannabis in varied medications both pharmaceutical and as nutraceutical. It is already
scientifically proven that cannabinoids impact cell cycle though partially known biological mechanisms and impact many aspects
of human biology and health. This unique situation in which a highly active compounds (i.e. THC, CBD) consumed by large portions
of the population creates an unmet need to decipher the biological and clinical prospects of these compounds. Cannabics’
vision is to build a platform of data from which medications can be formulated, patients diagnosed and treated in a personalized
manner. Our goal is to seek novel technologies in cancer medicine and assimilate them into cannabinoid medicine. The results we
have gained in performing invitro studies and clinical studies are part of a growing holistic prospect of the treatment of cancer
and other indications with cannabis. We have recently finished our first clinical study and leveraged our R&D lab to perform
invitro tests and develop new formulations. As pioneers in this mission, we hope and believe that the database we create and the
knowledge we gain will serve any cancer patient who is administered cannabis and will lead to better and more predictable outcomes.
The still confining U.S. regulation creates an advantage for Cannabics which is specifically licensed to do such research and clinical
studies by the Israeli Healthy Ministry.
Cancer and Cannabinoids
Natural products have served as vital resources for cancer therapy
(e.g.,Vinca alkaloids, paclitaxel, etc., which are used as conventional chemotherapeutic agents) and are also sources for novel
drugs. Natural products from plants therefore represent an excellent resource for targeted therapies, as phytochemicals and herbal
mixtures act multi-specifically, i.e. they attack multiple targets at the same time. Furthermore, the problem of drug
resistance may be approached by integrating phytochemicals and phyto-therapy into academic western medicine through derivation
and integration of data and as adjunct to conventional treatments. The integration of phytochemicals and phyto-therapy into cancer
medicine represents a valuable asset to chemically synthesized chemicals and therapeutic antibodies. Cannabinoids are excellent
candidates for this approach. Cannabinoids are a class of over 60 compounds derived from the plant
cannabis sativa
, as well
as the synthetic or endogenous versions of these compounds. Cannabinoids show specific cytotoxicity against tumor cells, while
protecting healthy tissue from apoptosis. These effects are exerted through cannabinoid receptors CB1 and CB2 in mammals
and through non-receptor signaling pathways. Recent studies suggest that cannabinoids contribute to maintaining balance in cell
proliferation and that targeting the endo-cannabinoid system can affect growth of several different types of cancer, including
gliomas, breast, colon, prostate, and hepatocellular carcinoma.
Personalized
Medicine
Despite significant progress
in cancer diagnostics and development of novel therapeutic regimens, successful treatment of advanced forms of cancer is
still a challenge and may require personalized therapeutic approaches.
Our licensed Israeli facility operates
a unique research and development laboratory which combines high throughput screening, (HTS) capabilities with the most advanced
data tools. The HTS platform allows us to test many compounds on cancerous cell lines and tissues and measure the therapeutics
effects of these compounds. Our advantage is in the specialized library which is composed of a collection of cannabis extracts
and pure natural and synthetic cannabinoids. The library will also include a costumed cannabinoid matrix, to assess the possible
interaction of combination therapy.
Our lab is equipped with a collection of state of the art instruments
to enable miniaturization and automation of a variety of biological assays. The automated system is comprised of:
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High Content Screening (HCS) Platform, which is an automated cellular imaging and analysis platform designed for quantitative microscopy.
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Flow Cytometry, which enables multi-parametric single cell analysis.
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Automated workstation, for liquid handling for dispensing accurate and reproducible volumes of liquids and compounds.
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Multimode microplate reader, designed for fast measurements of numerous biological reactions/processes.
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The integration of these instruments is
enabled via a robotic arm, which allows a continuous process which utilizes all instruments.
Readouts generated from these instruments provide us with insights
to the effect of our cannabinoid library on parameters such as, proliferation inhibition, apoptosis induction, angiogenesis prevention
and toxicity on cancerous cells.
These experiments will produce multiplexed data composed of
images of cells, cell specific markers and the extent/signal of the biological response. The biological response will be measured
using different concentration of cannabinoids and their combinations, thus determining the most effective cannabinoid treatment
for a specific cancer type.
Personalized medicine refers to customization
of treatment on the individual patient level, while Precision Medicine is a contemporary term that describes the utilization of
molecular diagnostics to classify disease, and where possible, delivery of select treatment based on causal genetic variants. Current
day molecular characterization of disease using next generation sequencing enables a sensitive and specific diagnosis established
by genotype. Correlating essential genotype with disease-modifying genes, environmental influences, and individual polymorphisms
may help explain variations in phenotype.
Precision cancer medicine relies on the possibility
to match, in daily medical practice, detailed genomic profiles of a patient's disease with a portfolio of drugs targeted against
tumor-specific alterations. Clinical blockade of oncogenes is effective but only transiently; an approach to monitor clonal evolution
in patients and develop therapies that also evolve over time may result in improved therapeutic control and survival outcomes.
We are currently in a process of commercializing
a diagnostic test which is based on liquid biopsies of patients suffering from epithelial cancers.
Our proprietary test fuses two separate aspects
which in fact complement each other:
1. Cell Count - The test uses CTC technology
that marks and counts cancer cells from the blood sample. This test is a marker for cancer progression and treatment efficacy.
It could be implemented as a follow up of disease progression while the patient is treated with Cannabis. We hypothesize that the
accumulated data will eventually be a predictor for actual treatment outcome.
2. Cannabinoid Sensitivity Test. – This
test counts number of live and dead cancer cells after been exposed to cannabinoid compounds such as THC or CBD and their combinations.
As in the CTC count, after gaining multiple data sets and merging them with the expanding database; the test could better predict
treatment outcome.
By providing personalized patient data, doctors
will make better informed decisions about the cannabinoid treatment encompassing prioritized active compounds, dosages, treatment
regime and follow up. These tests could be taken on a weekly/monthly basis, thus enabling treatment alteration due to cancer progression
and biology. We have designed our own proprietary “big data” system specifically tailored for this, and these results
will be submitted through a patient oriented, highly secure system.
We have developed a proprietary capsule as a treatment to improve
cancer related cachexia/anorexia syndrome (“CACS”) in advanced cancer patients. The main purpose in the treatment of
patients with advanced cancer and CACS is to gain weight and improve Quality of Life (“QoL”). We believe that QoL in
patients with CACS is inversely related to reduced appetite and weight-loss.
Our clinical study was led by Professor Gil Bar-Sela, the Deputy
Director of the Division of Oncology at Rambam Health Care Campus, Head of the Palliative and Supportive Oncology Unit, and Head
of the service for Melanoma and Sarcoma Patients. The main endpoints of the treatment of patients with advanced cancer and CACS
are weight gain and quality of life (QoL). The study is fully registered with the US NIH under "Cannabics Capsules as Treatment
to Improve Cancer Related CACS in Advanced Cancer Patients", Identifier NCT02359123, and may be found
at
https://clinicaltrials.gov/ct2/show/NCT02359123
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Corporate Information
Our principal corporate offices are located
at #3 Bethesda Metro Center, Suite 700, Bethesda, Maryland, 20814 and our telephone number is (877) 424-2429. Our internet address
is
www.Cannabics.com
Our website and the information contained on that site, or connected to that site, are not incorporated
into and are not a part of this prospectus supplement or the accompanying prospectus.
THE OFFERING
Common Stock Offered by Us
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10,000,000 shares of common stock.
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Warrants
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Warrants to purchase up to 5,000,000 shares of common stock.
Each share of common stock will be sold with a warrant exercisable for 0.5 shares of our common stock.
Each warrant is exercisable upon issuance, has a five year term
from the date of its issuance and will be exercisable at an exercise price of $1.00 per share. The exercise price of the warrants
is subject to adjustment in the event that we issue certain securities at any time while the warrants are outstanding at an effective
price below the exercise price. See “Description of the Securities we are Offering.” This prospectus supplement also
relates to the offering of the shares of common stock issuable upon exercise of the warrants.
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Common Stock to be Outstanding Immediately After this Offering
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131,853,165 shares of common stock, assuming no exercise of the warrants issued in the offering.
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Use of Proceeds
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We expect the net proceeds from this offering will be approximately $
6,975,000
after deducting placement agent fees, as described in “
Plan of Distribution
,” on page S-15 and
estimated offering expenses payable by us. We intend to use the net proceeds from this offering for working capital and for
other general corporate purposes. See “
Use of Proceeds
” on page S-12
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Risk Factors
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This investment involves a high degree of risk. See the information contained in or incorporated by reference under “
Risk Factors
” beginning on page S-7 of this prospectus supplement and in the documents incorporated by reference into this prospectus supplement.
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OTCQB Symbol
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“CNBX”. We do not plan on applying to list the warrants on the OTCQB or any national securities exchange or nationally recognized trading system. Without an active trading market, the liquidity of the warrants will be limited.
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The number of shares of our common
stock to be outstanding after this offering is based on the actual number of shares outstanding as of September 24, 2018, which
was 121,853,165, and excludes as of such date:
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1,000,000 shares of common stock issuable upon exercise of outstanding warrants, at a weighted-average exercise price of
approximately $2.00 per share;
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5,000,000 shares of common stock issuable upon the exercise of warrants to be issued to investors in this offering at an exercise
price of $1.00 per share; and
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750,000 shares of common stock issuable upon the exercise of warrants to be issued to the placement agent at an exercise price
of $0.9375 per share.
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RISK FACTORS
Investing in our securities involves a high degree of risk.
You should carefully consider the risks described herein and in the documents incorporated by reference in this prospectus supplement
and the accompanying prospectus, as well as other information we include or incorporate by reference into this prospectus supplement
and the accompanying prospectus, before making an investment decision. Our business, financial condition or results of operations
could be materially adversely affected by the materialization of any of these risks. The trading price of our securities could
decline due to the materialization of any of these risks, and you may lose all or part of your investment. This prospectus and
the documents incorporated herein by reference also contain forward-looking statements that involve risks and uncertainties. Actual
results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including
the risks described herein and in the documents incorporated herein by reference, including (i) Annual Report on Form 10-K
for fiscal year ended August 31, 2017, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, each of which is on file
with the SEC and is incorporated herein by reference and (ii) other documents we file with the SEC that are deemed incorporated
by reference into this prospectus. See the sections of this prospectus supplement entitled “Where You Can Find Additional
Information” and “Incorporation of Certain Information by Reference.” Additional risks and uncertainties not
presently known to us, or that we currently see as immaterial, may also harm our business.
Risks Relating to this Offering
We have broad discretion to determine how to use the proceeds
raised in this offering, and we may not use the proceeds effectively.
Our management will have broad discretion
over the use of proceeds from this offering, and we could spend the proceeds from this offering in ways with which you may not
agree or that do not yield a favorable return. We currently intend to use the net proceeds from this offering for working capital
and for other general corporate purposes. We have not allocated specific amount of the net proceeds from this offering for any
of the foregoing purposes. If we do not invest or apply the proceeds of this offering in ways that improve our operating results,
we may fail to achieve expected financial results, which could have a material adverse effect on our business, financial condition
and result of operation.
You will experience immediate and substantial dilution
when you purchase shares in this offering.
You will incur immediate and substantial
dilution as a result of this offering. After giving effect to the assumed sale by us of 10,000,000 shares of our common stock in
this offering at the offering price of $0.75 per share of common stock and warrant, and after deducting the placement agent fees
and estimated offering expenses payable by us, investors in this offering will suffer an immediate dilution of $0.68 per
share.
If we issue additional common stock, or
securities convertible into or exchangeable or exercisable for common stock, our stockholders, including investors who purchase
shares of common stock in this offering, may experience additional dilution, and any such issuances may result in downward pressure
on the price of our common stock. We may not be able to sell shares or other securities in any other offering at a price per share
that is equal to or greater than the price per share paid by investors in this offering, and investors purchasing shares or other
securities in the future could have rights superior to existing stockholders. See “
Dilution
” on page S-13 of this
prospectus supplement for a more detailed discussion of the dilution you will incur in connection with this offering.
The issuance of additional equity securities may negatively
impact the trading price of our common stock.
We have issued equity securities in the
past, will issue equity securities in this offering and expect to continue to issue equity securities to finance our activities
in the future. In addition, outstanding options to purchase our common stock may be exercised and additional options and warrants
may be issued, resulting in the issuance of additional shares of common stock. The issuance by us of additional equity securities,
including the shares of common stock issuable upon exercise of the warrants issued by us in this offering, would result in dilution
to our stockholders, and even the perception that such an issuance may occur could have a negative impact on the trading price
of our common stock.
The warrants are speculative in nature.
The warrants do not confer any rights of
common stock ownership on its holders, such as voting rights or the right to receive dividends, but rather merely represent the
right to acquire shares of common stock at a fixed price for a limited period of time. Specifically, commencing on the date of
issuance, holders of the warrants may exercise their right to acquire the common stock and pay an exercise price of $1.00
per share, subject to certain adjustments, prior to five years from the date on which such warrants were issued, after which date
any unexercised warrants will expire and have no further value. The exercise price of the warrants is subject to adjustment in
the event that we issue certain securities at any time while the warrants are outstanding at an effective price below the exercise
price. Moreover, following this offering, the market value of the warrants, if any, is uncertain and there can be no assurance
that the market value of the warrants will equal or exceed their imputed offering price. The warrants will not be listed or quoted
for trading on any market or exchange. There can be no assurance that the market price of the common stock will ever equal or exceed
the exercise price of the warrants, and consequently, whether it will ever be profitable for holders of the warrants to exercise
the warrants.
The exercise price of the warrants offered by this prospectus
supplement will not be adjusted for certain dilutive events.
The exercise price of the warrants offered
by this prospectus supplement is subject to adjustment for certain events, including, but not limited to, certain issuances of
capital stock, options, convertible securities and other securities below the exercise price of the warrants. However, the exercise
price will not be adjusted for dilutive issuances of securities considered “excluded securities” and there may be transactions
or occurrences that may adversely affect the market price of our common stock or warrants without resulting in an adjustment of
the exercise prices of the warrants.
We do not intend to pay dividends on our common stock
and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.
We have never declared or paid any cash dividend on our common
stock and do not currently intend to do so for the foreseeable future. We currently anticipate that we will retain future earnings
for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the
foreseeable future. Therefore, the success of an investment in shares of our common stock will depend upon any future appreciation
in their value. There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which
our stockholders have purchased their shares.
A substantial number of shares of
our common stock may be sold in this offering, which could cause the price of our common stock to decline.
In this offering, we will sell up to 10,000,000
shares of common stock, collectively representing approximately 8.2% of our outstanding common stock as of September 24, 2018.
This sale and any future sales of a substantial number of shares of our common stock in the public market, or the perception that
such sales may occur, could adversely affect the price of our common stock. We cannot predict the effect, if any, that market sales
of those shares of common stock or the availability of those shares of common stock for sale will have on the market price of our
common stock.
The trading market for our common
stock is limited.
We are quoted on the OTCQB under the trading
symbol “CNBX” and are not traded or listed on any securities exchange. The OTCQB is regarded as a junior trading venue.
This may result in limited shareholder interest and hence lower prices for our common stock than might otherwise be obtained. In
addition, it may be difficult for our shareholders to sell their shares without depressing the market price for our shares or at
all. As a result of these and other factors, our shareholders may not be able to sell their shares. Further, an inactive market
may also impair our ability to raise capital by selling shares of our common stock and may impair our ability to enter into strategic
partnerships or acquire companies or products by using our shares of common stock as consideration. If an active market for our
common stock does not develop or is not sustained, it may be difficult for our shareholders to sell shares of our common stock.
Our principal stockholders, executive
officers and directors own a significant percentage of our common stock and will be able to exert a significant control over matters
submitted to the stockholders for approval.
Our officers and directors, and stockholders
who own more than 5% of our common stock beneficially own a significant percentage of our common stock. This significant concentration
of share ownership may adversely affect the trading price for our common stock because investors often perceive disadvantages in
owning stock in companies with controlling stockholders. These stockholders, if they acted together, could significantly influence
all matters requiring approval by the stockholders, including the election of directors. The interests of these stockholders may
not always coincide with the interests of other stockholders.
If we fail to establish or maintain
effective internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud,
and investor confidence and the market price of our common stock may, therefore, be adversely impacted.
Our reporting obligations as a public company
place a significant strain on our management, operational and financial resources, and systems for the foreseeable future. Annually,
we are required to prepare a management report on our internal control over financial reporting containing our management’s
assessment of the effectiveness of our internal control over financial reporting. Management concluded that our internal control
over financial reporting was not effective as of August 31, 2017. At such time as the Company’s status with the SEC changes
to that of an accelerated filer from a smaller reporting company, our independent registered public accounting firm will be required
to attest to and report on our management’s assessment of the effectiveness of our internal control over financial reporting.
Under such circumstances, even if our management concludes that our internal control over financial reporting are effective, our
independent registered public accounting firm may still decline to attest to our management’s assessment or may issue a report
that is qualified if it is not satisfied with our controls or the level at which our controls are documented, designed, operated
or reviewed, or if it interprets the relevant requirements differently from us.
The market price of our common stock
may be volatile and may be affected by market conditions beyond our control. The market price of our common stock is subject to
significant fluctuations in response to, among other factors:
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variations in our operating results and market conditions specific to our business;
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the emergence of new competitors or new technologies;
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operating and market price performance of other companies that investors deem comparable;
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changes in our Board or management;
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sales or purchases of our common stock by insiders;
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commencement of, or involvement in, litigation;
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changes in governmental regulations, in particular with respect to the cannabis industry; and
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general economic conditions and slow or negative growth of related markets.
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In addition, if the market for stocks in
our industry, or the stock market in general, experiences a loss of investor confidence, the market price of our common stock could
decline for reasons unrelated to our business, financial condition, or results of operations. If any of the foregoing occurs, it
could cause the price of our common stock to fall and may expose us to lawsuits that, even if unsuccessful, could be costly to
defend and a distraction to our board of directors and management.
Since our securities are currently
quoted on the OTCQB, our stockholders may face significant restrictions on the resale of our securities due to state “Blue
Sky” laws and the sale of shares of our common stock in this offering is subject to state “Blue Sky” laws.
Each state has its own securities laws,
often called “blue sky” laws, which (i) limit sales of securities to a state’s residents unless the securities
are registered in that state or qualify for an exemption from registration, and (ii) govern the reporting requirements for
broker-dealers doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration
in place to cover the transaction, or the transaction must be exempt from registration. The applicable broker must be registered
in that state. We do not know whether our common stock will be registered or exempt from registration under the laws of any state.
Since our common stock is currently quoted on the OTCQB, a determination regarding registration will be made by those broker-dealers,
if any, who agree to serve as the market-makers for our common stock. There may be significant state blue sky law restrictions
on the ability of investors to sell, and on purchasers to buy, our common stock and the warrants. You should therefore consider
the resale market for our common stock and the warrants to be limited, as you may be unable to resell your common stock and the
warrants without the significant expense of state registration or qualification.
In addition, since our common stock is
currently quoted on the OTCQB, neither shares of our common stock nor the warrants sold in this offering are “covered securities”
for purposes of the Securities Act. The term “covered security” applies to securities preempted under federal law from
state securities registration requirements due to their oversight by federal authorities and self-regulatory authorities, such
as national securities exchanges. Because our common stock and our warrants are not “covered securities,” the sale
of shares of our common stock and warrants in this offering is subject to compliance with “blue sky” laws in each state
or an exemption therefrom.
Prior to this offering, we have conducted
private placements with accredited investors pursuant to Regulation D under the Securities Act. We filed Form Ds relating to such
private placements with the SEC, but have not made any notice filings with state securities regulators. State securities regulators
may assess penalties and fines on us in the future based on our failure to make such notice filings.
The application of the “penny stock” rules
could adversely affect the market price of our common shares and increase your transaction costs to sell those shares.
The SEC has adopted Rule 3a51-1 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), which establishes the definition of a “penny stock,” for
the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price
of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, Rule 15g-9
under the Exchange Act requires: (a) that a broker or dealer approve a person’s account for transactions in penny stocks;
and (b) the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased.
In order to approve a person’s account for transactions
in penny stocks, the broker or dealer must (i) obtain financial information and investment experience objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has
sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction
in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (A)
sets forth the basis on which the broker or dealer made the suitability determination and (B) that the broker or dealer received
a signed, written agreement from the investor prior to the transaction.
Generally, brokers may be less willing to execute transactions
in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common
stock and cause a decline in the market value of our stock.
RECENT SALES OF SECURITIES
From September 1, 2017 through the date
of this filing, we issued
1,758,326
unregistered shares of Company common stock for
services pursuant to contracts
, with an aggregate current market value of $1,371,494, and
we sold 5,595,256 shares of our common stock to investors in private placements in exchange for gross proceeds of $503,573.00
.
These
securities were issued without registration under the Securities Act in reliance on registration exemptions contained in Section
4(a)(2) of the Securities Act and Regulation D as transactions by an issuer not involving any public offering. The recipients
of securities in each such transaction represented their intention to acquire the securities for investment only and not with a
view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates
and other instruments issued in such transactions. The sales of these securities were made without general solicitation or advertising.
USE OF PROCEEDS
We estimate
the net proceeds from this offering will be approximately $6,975,000, after deducting
placement agent fees
and
our estimated offering expenses.
We intend to use the net proceeds from
this offering, together with other available funds, for working capital and for other general corporate purposes, which may include,
among other things, working capital, product development, acquisitions, capital expenditures, and other business opportunities.
We have not yet determined the amount of net proceeds to be used specifically for any of
the foregoing purposes
.
Pending use of the proceeds as described
above, we intend to invest the net proceeds of this offering in short-term, interest-bearing, investment-grade securities or certificates
of deposit.
The amounts and timing of our actual expenditures
will depend on numerous factors. We may find it necessary or advisable to use the net proceeds for other purposes, and we will
have broad discretion in the application of the net proceeds and investors will be relying on the judgment of our management regarding
the application of the net proceeds from this offering.
Based upon our historical and anticipated
future growth and our financial needs, we may engage in additional financings of a character and amount that we determine as the
need arises. We may raise additional capital through additional public or private financings, the incurrence of debt and other
available sources.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital
stock. We currently intend to retain future earnings, if any, and all currently available funds for use in the operation and expansion
of our business and do not anticipate paying any cash dividends in the foreseeable future. Any future determination related to
our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results
of operations, capital requirements, business prospects and other factors the board of directors deems relevant, and subject to
the restrictions contained in our current or future financing instruments.
DILUTION
Our net tangible book value as of May 31, 2018 was approximately
$2,636,402, or $0.02 per share. We calculate net tangible book value per share by dividing our net tangible book value, which is
tangible assets less liabilities to be settled with cash, by the number of outstanding shares of our common stock as of May 31,
2018.
After giving effect to the sale of 10,000,000 shares of our
common stock at the offering price of $0.75 per share and warrant, and after deducting placement agent fees and estimated offering
expenses payable by us, our net tangible book value as of May 31, 2018 would have been approximately $9,456,402, or $0.07 per share
of common stock, which excludes the warrants to purchase 5,000,000 shares of our common stock to be issued to investors in this
offering. This represents an immediate increase in the net tangible book value of $0.05 per share to existing stockholders and
an immediate dilution in net tangible book value of $0.68 per share to new investors purchasing shares of common stock in this
offering. The following table illustrates this per share dilution:
Offering price per share of common stock and warrant
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$
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0.75
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Net tangible book value per share of common stock as of May 31, 2018
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$
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0.02
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Increase in net tangible book value per share of common stock attributable to new investors
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$
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0.05
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As adjusted net tangible book value per share of common stock after this offering
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$
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0.07
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Net dilution per share of common stock to new investors
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$
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0.68
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The number of shares of our common stock to be outstanding after
this offering is based on 120,821,782 shares of our common stock outstanding as of May 31, 2018 and excludes as of such date:
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1,000,000 shares of common stock issuable upon exercise of outstanding warrants, at a weighted-average exercise price of
approximately $2.00 per share;
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5,000,000 shares of common stock issuable upon the exercise of warrants to be issued to investors in this offering at an exercise
price of $1.00 per share; and
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750,000 shares of common stock issuable upon the exercise of warrants to be issued to the
placement agent at an exercise price of $0.9375 per share.
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To the extent that outstanding warrants are exercised, investors
purchasing our common stock in this offering will experience further dilution. In addition, we may choose to raise additional capital
due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating
plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance
of these securities could result in further dilution to our stockholders.
DESCRIPTION OF THE SECURITIES WE ARE
OFFERING
We are offering up to 10,000,000 shares
of our common stock, together with warrants to purchase up to 5,000,000 shares of common stock (and the shares issuable from time
to time upon exercise of the warrants) at a combined purchase price of $0.75 per share of common stock and warrant.
Common Stock
The material terms and provisions of our
common stock are described under the caption “Description of Capital Stock – Common
Stock” beginning on page 6 of the accompanying prospectus.
Warrants
The following is a brief summary of the
material terms of the warrants offered pursuant to this prospectus supplement and is subject in all respects to the provisions
contained in the warrants.
Exercisability.
Holders
may exercise warrants at any time up to 11:59 p.m., New York time, on the date that is five years after the date on which
such warrants were issued. The warrants are exercisable, at the option of each holder, in whole or in part, by delivering to us
a written exercise notice accompanied, within two trading days, by payment in full for the number of shares of our common stock
purchased upon such exercise (except in the case of a cashless exercise discussed below). The holder of warrants does not have
the right to exercise any portion of the warrant if the holder would beneficially own in excess of 4.99% of the shares of our common
stock outstanding immediately after giving effect to such exercise. This percentage may, however, be raised or lowered to
an amount not to exceed 9.99% at the option of the holder upon at least 61 days’ prior notice from the holder to us.
Cashless Exercise.
At
any time when a registration statement covering the issuance of the shares of common stock issuable upon exercise of the warrants
is not effective, the holder may, at its option, exercise its warrants on a cashless basis. When exercised on a cashless basis,
a portion of the warrant is cancelled in payment of the purchase price payable in respect of the number of shares of our common
stock purchasable upon such exercise.
Exercise Price.
The
exercise price of common stock purchasable upon exercise of the warrants is $1.00 per share. The exercise price and the number
of shares issuable upon exercise of the warrants is subject to appropriate adjustment in the event of recapitalization events,
stock dividends, stock splits, stock combinations or similar events affecting our common stock. In addition, if, at any time while
the warrants are outstanding, subject to certain limited exceptions, we sell or grant any option to purchase or sell or grant any
right to reprice, or otherwise dispose of or issue, any of our shares of common stock or securities convertible into or exercisable
for our common stock at an effective price per share that is lower than the exercise price of the warrants then in effect, then
the exercise price of the warrants will be reduced to equal such lower price.
Fundamental Transactions.
If we
consummate any merger, consolidation, sale or other reorganization event in which our common stock is converted into or exchanged
for securities, cash or other property, or if we consummate certain sales or other business combinations, then following such event,
the holders of the warrants will be entitled to receive upon exercise of the warrants the kind and amount of securities, cash or
other property that the holders would have received had they exercised the warrants immediately prior to such event. At the holder’s
election, exercisable at any time concurrently with, or within 30 days after, the consummation of certain Fundamental Transactions,
(as defined in the warrant), we or any successor entity shall purchase the warrant from the holder by paying the holder an amount
of cash equal to the Black-Scholes value (determined in accordance with the provisions of the warrant).
Transferability.
The
warrants may be transferred at the option of the holder without obtaining our consent.
Exchange Listing.
We
do not plan on making an application to quote the warrants on the OTCQB, any national securities exchange or any other nationally
recognized trading system. Our common stock underlying the warrants is quoted on the OTCQB.
Rights as Stockholder.
Except
as otherwise provided in the warrants or by virtue of such holder’s ownership of shares of our common stock, the holders
of the warrants do not have the rights or privileges of holders of our common stock, including any voting rights, until they exercise
their warrants.
Fractional Shares.
No
fractional shares of common stock will be issued upon the exercise of the warrants. Rather, the number of shares of common stock
to be issued will be rounded up to the nearest whole number.
PLAN OF DISTRIBUTION
We have entered
into a securities purchase agreement with investors for the purchase of shares of common stock and warrants offered in this offering.
In connection with this offering, we have engaged A.G.P./Alliance Global Partners as our placement agent subject to the terms and
conditions of the placement agency agreement dated the date of this prospectus supplement. The placement agent is not purchasing
or selling any of our shares of common stock or warrants offered by this prospectus supplement, nor is it required to arrange the
purchase or sale of any specific number or dollar amount of shares of common stock and warrants, but has agreed to use its reasonable
best efforts to arrange for the sale of all of our shares of common stock and warrants offered hereby. We or the placement agent
may distribute this prospectus supplement and the accompanying prospectus electronically.
We will pay
the placement agent a placement agent fee equal to 7% of the gross proceeds of this offering. In addition, we will pay to the
placement agent a fee equal to 7% of the cash exercise price proceeds from the cash exercise of the warrants offered hereby with
48 hours of receipt of such proceeds. We will also reimburse the placement agent for out of pocket expenses incurred by the placement
agent in connection with this offering, including the fees and expenses of the placement agent’s legal counsel, not to exceed
an aggregate of $60,000. The placement agent has agreed to reimburse us for up to $75,000 in connection with this offering. In
addition, we have agreed to issue to the placement agent warrants to purchase up to 5.0% of the aggregate number of shares of
common stock sold in this offering and shares underlying warrants sold in this offering (750,000 shares). The placement agent
warrants will have substantially the same terms as the warrants issued to the investors in this offering, except that the placement
agent warrants will have an exercise price equal to $0.9375, or 125% of the offering price per share and warrant (combined) and
will be exercisable for a period of three years commencing six months from the closing date of this offering. Pursuant to FINRA
Rule 5110(g), the placement agent warrants and any shares issued upon exercise of the placement agent warrants shall not be sold,
transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction
that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately following
the date of effectiveness or commencement of sales of this offering, except the transfer of any security: (i) by operation of
law or by reason of our reorganization; (ii) to any FINRA member firm participating in the offering and the officers or partners
thereof, if all securities so transferred remain subject to the lock-up restriction set forth above for the remainder of the time
period; (iii) if the aggregate amount of our securities held by the placement agent or related persons do not exceed 1% of the
securities being offered; (iv) that is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided
that no participating member manages or otherwise directs investments by the fund and the participating members in the aggregate
do not own more than 10% of the equity in the fund; or (v) the exercise or conversion of any security, if all securities remain
subject to the lock-up restriction set forth above for the remainder of the time period. We also have granted the placement agent
a tail cash fee equal to 7% of the gross proceeds from any offering, within six months following the closing of the offering,
to investors whom the placement agent contacted or introduced to us directly or indirectly in connection with this offering.
We estimate
the total expenses of this offering that will be payable by us, excluding the placement agent’s fees and expenses will be
approximately $15,000. After deducting certain fees due to the placement agent and our estimated offering expenses, we expect
the net proceeds from this offering will be approximately $6,975,000.
We have agreed
to indemnify the placement agent against certain liabilities, including liabilities under the Securities Act, and liabilities arising
from breaches and representations and warranties contained in the placement agency agreement. We have also agreed to contribute
to payments the placement agent may be required to make in respect of such liabilities.
We and each of
our directors and officers have agreed not to offer, sell, agree to sell, directly or indirectly, or otherwise dispose of any shares
of common stock or any securities convertible into or exchangeable for shares of common stock without the prior written consent
of the placement agent for a period of 90 days after the date of this prospectus supplement. These lock-up agreements provide limited
exceptions and their restrictions may be waived at any time by the placement agent.
The placement
agent may be deemed to be an “underwriter” within the meaning of the Securities Act.
For the complete
terms of the securities purchase agreement and the placement agency agreement, you should refer to the form securities purchase
agreement and form placement agency agreement which are filed as exhibits to a Current Report on Form 8-K filed with the SEC in
connection with this offering, which are incorporated by reference into the registration statement of which this prospectus supplement
is part.
Determination of Offering Price
The public offering price of the shares
of common stock and warrants we are offering was negotiated between us and the investors, in consultation with the placement agent
based on the trading of our common stock prior to the offering, among other things. Other factors considered in determining the
public offering price of the shares of our common stock we are offering include the history and prospects of the Company, the stage
of development of our business, our business plans for the future and the extent to which they have been implemented, an assessment
of our management, general conditions of the securities markets at the time of the offering and such other factors as were deemed
relevant.
Transfer Agent and Registrar
The transfer agent and registrar for our
common stock is Cleartrust LLC.
Listing
Our common stock is quoted on the OTCQB
under the symbol “CNBX.”
LEGAL MATTERS
The validity of the shares of common stock
offered hereby will be passed upon for us by David E. Price Esq., Attorney at Law. Certain legal matters in connection with this
offering will be passed upon for the placement agent by Zysman, Aharoni, Gayer and Sullivan & Worcester LLP, New York, New
York.
EXPERTS
The consolidated balance sheets of Cannabics
Pharmaceuticals Inc. as of August 31, 2017 and 2016, and the related consolidated statements of operations, stockholders’
equity, and cash flows for each of the years in the two-year period ended August 31, 2017, have been audited by Weinstein
& Co, independent registered public accounting firm, as stated in their report dated December 8, 2017, which is incorporated
by reference herein. Such financial statements have been incorporated herein by reference in reliance on the reports of such firm
given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE
INFORMATION
We have filed with the SEC a registration
statement on Form S-3 under the Securities Act of 1933, as amended (“Securities Act”), with respect to the securities
covered by this prospectus supplement. This prospectus supplement and the accompanying prospectus, which is a part of the registration
statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules filed
therewith. For further information with respect to us and the securities covered by this prospectus supplement, please see the
registration statement and the exhibits filed with the registration statement. A copy of the registration statement and the exhibits
filed with the registration statement may be inspected without charge at the Public Reference Room maintained by the SEC, located
at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information about
the operation of the Public Reference Room. The SEC also maintains an Internet website that contains reports, proxy and information
statements and other information regarding registrants that file electronically with the SEC. The address of the website is http://www.sec.gov.
We are subject to the information requirements
of the Exchange Act and, in accordance therewith, file annual, quarterly and special reports, proxy statements and other information
with the SEC. You may read and copy any document we file at the SEC’s Public Reference Room at 100 F Street, Washington,
D.C. 20549. You may call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room.
These documents also may be accessed through the SEC’s electronic data gathering, analysis and retrieval system, or EDGAR,
via electronic means, including the SEC’s home page on the Internet (
www.sec.gov
).
We post on our public website (
http://www.Cannabics.com
)
our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically
file such material with, or furnish it to, the SEC. Our website and the information contained on that site, or connected to that
site, are not incorporated into and are not a part of this prospectus supplement or the accompanying prospectus.
INCORPORATION OF CERTAIN INFORMATION
BY REFERENCE
The SEC allows us to incorporate by reference the information
and reports we file with them, which means that we can disclose important information to you by referring you to those publicly
available documents. The information incorporated by reference is an important part of this prospectus supplement, and information
that we file later with the SEC will automatically update and supersede the information already incorporated by reference. We are
incorporating by reference the documents listed below, which we have already filed with the SEC, and any future filings we make
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, except as to any portion of any future report or
document that is not deemed filed under such provisions, prior to the completion or termination of the offering of the securities
described in this prospectus supplement:
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Our Annual Report on
Form 10-K
for the year ended August 31, 2017 filed with the SEC on December 8, 2017;
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Our Quarterly Report on
Form 10-Q
for the three months ended November 30, 2017 filed with the SEC on January 16, 2018;
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Our Quarterly Report on
Form 10-Q
for the three months ended February 28, 2018 filed with the SEC on April 5, 2018;
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Our Quarterly Report on
Form 10-Q
for the three months ended May 31, 2018 filed with the SEC on July 16, 2018;
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Our Current Reports on Form 8-K filed with the SEC on
November 13,
2017
,
November 13,
2017
,
December
19, 2017
,
January
30, 2018
,
February 14,
2018
,
May
2, 2018
,
and
August 14, 2018
; and
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The description of our common stock contained in our registration statement on
Form 8-A
, dated January 12, 2007, filed with the SEC on January 16, 2007, and any amendment or report filed with the SEC for the purpose of updating the description.
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Any statement contained in a document incorporated
or deemed to be incorporated by reference in this prospectus supplement is modified or superseded for purposes of the prospectus
supplement to the extent that a statement contained in this prospectus supplement or in any other subsequently filed document that
also is or is deemed to be incorporated by reference herein modifies or supersedes such statement.
Upon request, we will provide, without
charge, to each person, including any beneficial owner, to whom a copy of this prospectus supplement is delivered a copy of the
documents incorporated by reference into this prospectus supplement. You may request a copy of these filings, and any exhibits
we have specifically incorporated by reference as an exhibit in this prospectus, at no cost by writing or telephoning us at the
following address:
Cannabics Pharmaceuticals Inc.
#3 Bethesda
Metro Center, Suite 700
Bethesda, Maryland 20814
(877) 424-2429
This prospectus supplement is part of a
registration statement we filed with the SEC. We have incorporated exhibits into this registration statement. You should read the
exhibits carefully for provisions that may be important to you.
PROSPECTUS
$80,000,000
CANNABICS
PHARMACEUTICALS INC.
Common
Stock
Preferred
Stock
Warrants
Units
and
7,966,444
Shares of Common Stock Offered by Selling Stockholders
We may from time to time, in one or more
offerings, at prices and on terms that we will determine at the time of each offering, sell common stock, preferred stock, warrants,
or a combination of these securities, or units, for an aggregate initial offering price of up to $80,000,000. In addition, selling
stockholders to be named in a prospectus supplement may from time to time offer and sell up to 7,966,444 shares of our common stock.
We will not receive any of the proceeds from the sale of our common stock by the selling stockholders.
This prospectus provides a general description
of the securities we may offer. Each time we or any of the selling stockholders offer and sell securities, we or such selling stockholders
will provide specific terms of the securities offered and, if applicable, the selling stockholders, in a supplement to this prospectus.
We may also authorize one or more free writing prospectuses to be provided to you in connection with these offerings. A prospectus
supplement and any free writing prospectus may also add, update, or change information contained in this prospectus. You should
carefully read this prospectus, the applicable prospectus supplement, and any related free writing prospectus, as well as the documents
incorporated or deemed to be incorporated by reference in this prospectus, before you invest in any of our securities offered hereby.
This prospectus may not be used to offer
and sell securities unless accompanied by a prospectus supplement.
Our common stock is quoted on the OTCQB
tier of the marketplace maintained by OTC Markets Group Inc., under the symbol “CNBX.” On March 20, 2017, the last
reported sales price for our common stock as reported on the OTCQB on was $2.7199.
We or the selling stockholders may offer
and sell the securities described in this prospectus and any prospectus supplement to or through one or more underwriters, broker-dealers,
agents, directly to purchasers, or through any other means described in this prospectus under “Plan of Distribution”
and in supplements to this prospectus in connection with a particular offering of securities. If any underwriters, dealers or agents
are involved in the sale of any of these securities, their names and any applicable purchase price, fee, commission or discount
arrangement between or among them will be set forth, or will be calculable from the information set forth, in the applicable prospectus
supplement. The price to the public of such securities and the net proceeds we expect to receive from such sale will also be set
forth in a prospectus supplement.
You should carefully read this prospectus
and any prospectus supplement, together with additional information described in the sections of this prospectus titled “Incorporation
of Certain Information by Reference” and “Where You Can Find More Information,” before you invest in any of our
securities.
An investment in our stock is extremely
speculative and involves a high degree of risk. Please refer to the section of this prospectus titled “Risk Factors”
beginning on page 4, in addition to Risk Factors contained in the applicable prospectus supplement before making an investment
decision.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy
of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is April 21,
2017
Table
of Contents
About
This Prospectus
This prospectus is part of a registration
statement on Form S-3 that we filed with the United States Securities and Exchange Commission (“SEC”), using a “shelf”
registration process. Under this shelf process, we may, from time to time, sell any combination of the securities described in
this prospectus in one or more offerings up to an aggregate dollar amount of $80,000,000. In addition, the selling stockholders
may from time to time sell up to an aggregate amount of 7,966,444 shares of our common stock in one or more offerings. This prospectus
provides you with a general description of the securities we or the selling stockholders may offer.
Each time we or the selling stockholders sell
securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. We
may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to
these offerings, hereinafter referred to as a free writing prospectus. The prospectus supplement and any free writing prospectus
may also add to, update, or change information contained in the prospectus, and, accordingly, to the extent inconsistent, information
in this prospectus will be superseded by the information in the prospectus supplement or the free writing prospectus, as applicable.
You should carefully read this prospectus, any prospectus supplement, and any free writing prospectus, together with the additional
information described under the heading “Information Incorporated by Reference.”
The prospectus supplement to be attached to
the front of this prospectus may describe, as applicable, the terms of the securities offered, the initial public offering price,
the price paid for the securities, net proceeds, and the other specific terms related to the offering of the securities.
This prospectus may not be used to offer
and sell securities unless accompanied by a prospectus supplement.
You should only rely on the information contained
or incorporated by reference in this prospectus and any prospectus supplement or free writing prospectus relating to a particular
offering. No person has been authorized to give any information or make any representations in connection with this offering other
than those contained or incorporated by reference in this prospectus, any accompanying prospectus supplement, and any related free
writing prospectus in connection with the offering described herein and therein, and, if given or made, such information or representations
must not be relied upon as having been authorized by us. Neither this prospectus nor any prospectus supplement nor any related
free writing prospectus shall constitute an offer to sell or a solicitation of an offer to buy offered securities in any jurisdiction
in which it is unlawful for such person to make such an offering or solicitation. This prospectus does not contain all of the information
included in the registration statement. For a more complete understanding of the offering of the securities, you should refer to
the registration statement, including its exhibits.
You should read the entire prospectus and
any prospectus supplement and any related free writing prospectus, as well as the documents incorporated by reference into this
prospectus or any prospectus supplement or any related free writing prospectus, before making an investment decision. Neither the
delivery of this prospectus or any prospectus supplement or any free writing prospectus nor any sale made hereunder shall under
any circumstances imply that the information contained or incorporated by reference herein or in any prospectus supplement or free
writing prospectus is correct as of any date subsequent to the date hereof or of such prospectus supplement or free writing prospectus,
as applicable. You should assume that the information appearing in this prospectus, any prospectus supplement, any free writing
prospectus, or any document incorporated by reference is accurate only as of the date of the applicable documents, regardless of
the time of delivery of this prospectus or any sale of securities. Our business, financial condition, results of operations and
prospects may have changed since that date.
As used in this prospectus, references to
“Cannabics,” the “Company,” “we,” “our” and “us” refer to Cannabics
Pharmaceuticals Inc. and its consolidated subsidiaries, unless otherwise indicated.
Prospectus
summary
This summary description about Cannabics and
its business highlights selected information contained elsewhere in this prospectus or incorporated in this prospectus by reference.
This summary does not contain all of the information you should consider before deciding to invest in our securities. You should
carefully read this entire prospectus and any applicable prospectus supplement, including each of the documents incorporated herein
or therein by reference, before making an investment decision. Investors should carefully consider the information set forth under
“Risk Factors” on page 4 and incorporated by reference to our annual report on Form 10-K and our quarterly reports
on Form 10-Q, and any amendments thereto.
Overview
We are an early stage biotechnology company
engaged in discovering, developing, and commercializing personalized anti-cancer and palliative treatments. Our research and development
is based in Israel, where we have obtained a license from the Ministry of Health for both scientific and clinical research. We
are focused on harnessing the therapeutic properties of natural cannabinoid formulations and diagnostics. Cannabics engages in
developing individually tailored natural therapies for cancer patients, utilizing advanced screening systems and personalized bioinformatics
tools.
Our business model is solely based on technology
development and out-licensing of our intellectual property to global pharmaceutical and biotechnology companies, in addition to
other suitable strategic partners, but always in accordance with the law of each applicable jurisdiction. Cannabics does not manufacture,
distribute, dispense, or possess any controlled substances, including cannabis or cannabis-based preparations, in the United States.
Cancer Diagnostics
Utilizing novel biological screening technologies,
we monitor the antitumor effects of arrays of botanical extracts on cell lines and biopsies. The data collected propels the development
of proprietary and novel compounds targeted to diverse types of tumors. This technology enables us to perform lab tests that offer
doctors and their patients a profile of personalized treatment with cannabinoids. We believe that our personalized approach minimizes
harmful side effects, with more successful outcomes and lower costs than the traditional “trial-and-error” approach
to treatment. We are presently conducting diagnostic validation studies in collaboration with academic institutes and lab facilities,
and expect to have preliminary results available by March 2018.
Anti-Cancer Treatments
We are developing botanical cannabinoid formulations
based on our proprietary diagnostic procedures designated for the treatment of cancer and its side-effects. We are presently conducting
preclinical research on the efficacy of our cannabinoid-based formulations in the treatment of cancer and expect to have preliminary
results available by March 2018. If our diagnostic data cross-linked with clinical outcomes demonstrates that our formulations
have therapeutic and commercial potential, we intend to submit an investigational new drug application with the U.S. Food and Drug
Administration to commence clinical trials.
Palliative Therapies
We have developed our non-pharmaceutical capsules
as a treatment to improve cancer related cachexia/anorexia syndrome (“CACS”) in advanced cancer patients. The main
purpose in the treatment of patients with advanced cancer and CACS is to prolong life and to improve quality of life (“QoL”)
as far as possible. We believe that QoL in patients with CACS is inversely related to reduced appetite and weight-loss. We are
currently engaged in a clinical study in Israel to determine the efficacy of our proprietary capsules as a treatment to improve
appetite and stem weight-loss associated with CACS in advanced cancer patients. We expect that preliminary results of our study
will be available in July 2017.
Corporate
Information
The Company was originally
incorporated as Thrust Energy Corp. on September 15, 2004, under the laws of the State of Nevada, for the purpose of acquiring
oil and gas exploration properties and non-operating interests. In April 2011, the Company expanded its business to include the
acquisition of mineral exploration rights. On May 5, 2011, the name of the Company was changed to American Mining Corporation.
On April 25, 2014, Cannabics Inc., a Delaware corporation, acquired 99.1% voting control of the Company. On June 19, 2014, the
Company changed its name to Cannabics Pharmaceuticals Inc., and redirected its business focus towards its current operations.
All of our research and development in Israel
is conducted by our wholly-owned subsidiary, G.R.I.N. Ultra Ltd., which was incorporated under the laws of Israel on August 25,
2014. We do not have any other subsidiaries.
Our principal executive offices are located
at #3 Bethesda Metro Center, Suite 700, Bethesda, Maryland, 20814, and our telephone number is (877) 424-2429. Our website address
is http://www.cannabics.com. The information on, or that can be accessed through, our website is not incorporated by reference
into this prospectus and should not be considered to be a part of this prospectus. We have included our website address as an inactive
textual reference only.
“Cannabics,” the Cannabics logo,
and any other trademarks or service marks of Cannabics appearing in this prospectus are trademarked and are the property of Cannabis
Pharmaceuticals Inc. All other trademarks, service marks and trade names referred to in this prospectus are the property of their
respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus, including logos, artwork
and other visual displays, may appear without the ® or ™ symbols, but such references are not intended to indicate in
any way that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor
to these trademarks and trade names.
The
Securities We May Offer
We may offer up to $80,000,000 of common stock,
preferred stock, warrants, and units in one or more offerings and in any combination. In addition, the selling stockholders may
sell up to 7,966,444 shares of our common stock from time to time in one or more offerings. This prospectus provides you with a
general description of the securities we and the selling stockholders may offer. A prospectus supplement, which we will provide
each time we or the selling stockholders offer securities, will describe the specific amounts, prices, and terms of these securities.
Common Stock
Each holder of our common stock is entitled
to one vote for each share of common stock held on all matters submitted to a vote of the stockholders, including the election
of directors. There are no cumulative voting rights. Subject to preferences that may be applicable to any then outstanding preferred
stock, holders of common stock are entitled to receive ratably those dividends, if any, as may be declared from time to time by
our board of directors out of legally available funds. In the event of our liquidation, dissolution, or winding up, holders of
common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment
of all of our debts and other liabilities and the satisfaction of any liquidation preference granted to the holders of any then
outstanding preferred stock.
Preferred Stock
Our board of directors has the authority,
without further action by the stockholders, to issue an unlimited number of series of preferred stock. Our board of directors has
the discretion to determine the rights, preferences, privileges, restrictions, and conditions, including, among others, dividend
rights, conversion rights, voting rights, redemption rights, and liquidation preferences of each series of preferred stock.
Each series of preferred stock will be more
fully described in the particular prospectus supplement that will accompany this prospectus, including redemption provisions, rights
in the event of our liquidation, dissolution or winding up, dividend and voting rights, and rights to convert into common stock.
There is currently no preferred stock outstanding.
Warrants
We may issue warrants for the purchase of
common stock or preferred stock. We may issue warrants independently or together with other securities.
Units
We may issue units comprised of one or more
of the other classes of securities issued by us as described in this prospectus in any combination. Each unit will be issued so
that the holder of the unit is also the holder of each security included in the unit.
Risk
Factors
Investing in our securities involves a high
degree of risk. You should consider carefully the risks and uncertainties described in the sections titled “Risk Factors”
contained in the applicable prospectus supplement and any related free writing prospectus, and under similar headings in our most
recent and any of our subsequent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K,
which are incorporated in this prospectus by reference in their entirety, before deciding whether to purchase any of the securities
being registered pursuant to the registration statement of which this prospectus is a part. These risks and uncertainties are not
the only risks and uncertainties we face. Additional risks and uncertainties not currently known to us, or that we currently view
as immaterial, may also impair our business. If any of the risks or uncertainties described in our SEC filings or any additional
risks and uncertainties actually occur, our business, financial condition, results of operations, and cash flow could be materially
and adversely affected. In that case, the trading price of our common stock could decline and you might lose all or part of your
investment.
Special
Note Regarding Forward Looking Statements
This prospectus, each prospectus supplement,
and the information incorporated by reference in this prospectus and each prospectus supplement contain certain statements that
may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. The words “aim,” “anticipate,” “assume,”
“believe,” “contemplate,” “continue,” “could,” “due,” “estimate,”
“expect,” “goal,” “intend,” “may,” “objective,” “plan,”
“predict,” “positioned,” “potential,” “seek,” “should,” “target,”
“will,” “would” and similar expressions and variations thereof are intended to identify forward-looking
statements, but are not the exclusive means of identifying such statements. Those statements may appear in this prospectus, any
accompanying prospectus supplement, and the documents incorporated herein and therein by reference, particularly in the sections
titled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” and “Business,” and include statements regarding the intent, belief, or
current expectations of Cannabics and our management that are subject to known and unknown risks, uncertainties, and assumptions.
You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties,
and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors.
Forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking
statements. Factors that might cause such a difference include, but are not limited to, those described in “Risk Factors”,
elsewhere in this prospectus or any applicable prospectus supplement, and the documents incorporated by reference in this prospectus.
Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to
our management. These statements, like all statements in this prospectus, speak only as of their date, and we undertake no obligation
to update or revise these statements in light of future developments, except as required by law.
This prospectus, any accompanying prospectus
supplement, and the documents incorporated herein and therein by reference may also contain estimates and other information concerning
our industry that are based on government and industry publications. This information involves a number of assumptions and limitations,
and you are cautioned not to give undue weight to these estimates. These government and industry publications generally indicate
that their information has been obtained from sources believed to be reliable.
RATIO
OF EARNINGS TO FIXED CHARGES AND PREFERENCE DIVIDENDS
Any time preferred shares are offered pursuant
to this prospectus, we will provide a table setting forth our ratio of earnings to fixed charges and preference dividends on a
historical basis in the applicable prospectus supplement, if required.
Use
of Proceeds
Unless otherwise indicated in a prospectus
supplement, we currently intend to use the net proceeds from the sale of the securities under this prospectus for working capital
to support our research and development, including clinical trials, and general corporate purposes.
We may also use a portion of the net proceeds
in connection with any exercise of co-development or co-promotion rights under our collaborations; however, no such rights are
currently exercisable. In addition, we may also use a portion of the net proceeds to acquire, license, and invest in complementary
products, technologies, or businesses; however, we currently have no agreements or commitments to complete any such transactions.
The amounts and timing of our actual expenditures
may vary significantly depending on numerous factors, including cash flows from operations, the anticipated growth of our business,
the progress of our development and commercialization efforts, and the status and results of our clinical trials, as well as results
from any ongoing collaborations and additional collaborations that we may enter into with third parties, and any unforeseen cash
needs. As a result, unless otherwise indicated in the prospectus supplement, our management will have broad discretion to allocate
the net proceeds of the offerings. More detailed information regarding use of proceeds will be described in the applicable prospectus
supplement.
We will not receive any proceeds from the
sale of our common stock by the selling stockholders.
Selling
Stockholders
This prospectus also relates to the possible
resale by certain of our stockholders, who we refer to in this prospectus as the “selling stockholders,” of up to an
aggregate maximum amount of 7,966,444 shares of our common stock that were issued and outstanding prior to the original filing
date of the registration statement of which this prospectus forms a part. The shares of common stock being offered by the selling
stockholders were either originally acquired through several private placements of our common stock, or are issuable to the selling
stockholders upon the exercise of warrants. We are registering the shares of common stock in order to permit the selling stockholders
to offer the shares for resale from time to time.
Information about the selling stockholders,
where applicable, including the amount of shares of common stock owned by each selling stockholder prior to the offering, the number
of shares of our common stock to be offered by each selling stockholder, and the amount of common stock to be owned by each selling
stockholder after completion of the offering, will be set forth in an applicable prospectus supplement, documents incorporated
by reference, or in a free writing prospectus we file with the SEC. The applicable prospectus supplement will also disclose whether
any of the selling stockholders has held any position or office with, has been employed by, or otherwise has had a material relationship
with us during the three years prior to the date of the prospectus supplement.
The selling stockholders will not sell any
common stock pursuant to this prospectus until we have identified such selling stockholders and the shares being offered for resale
by such selling stockholders in a prospectus supplement. However, the selling stockholders may sell or transfer all or a portion
of their common stock pursuant to any available exemption from the registration requirements of the Securities Act of 1933, as
amended (“Securities Act”).
Description
of capital stock
The following summary describes our capital
stock and the material provisions of our amended and restated articles of incorporation (the “Articles of Incorporation”)
and our amended and restated bylaws (“Bylaws”), and of Chapter 78 of the Nevada Revised Statutes (“NRS”).
Because the following is only a summary, it does not contain all of the information that may be important to you. For a complete
description, you should refer to our Articles of Incorporation, and our Bylaws, copies of which are incorporated by reference as
exhibits to the registration statement of which this prospectus is a part.
General
Our
authorized capital stock consists of 900,000,000 shares of common stock, par value $0.0001, and 100,000,000 shares of preferred
stock, par value $0.0001. As of March 20, 2017, there were 114,676,233 shares of our common stock issued and outstanding, 555,555
shares of our common stock subject to outstanding warrants, and no shares of preferred stock issued or outstanding.
As of
March 20, 2017, there were approximately 60 holders of record of our common stock. This number does not include beneficial owners
whose shares are held by nominees in street name.
Common
Stock
Voting Rights
Each outstanding share of our common stock
entitles the holder thereof to one vote per share on all matters submitted to a stockholder vote. Our common stock does not carry
any cumulative voting rights. As a result, holders of a majority of the shares of our common stock voting for the election of directors
can elect all of our directors. At all meetings of stockholders, except where otherwise provided by statute or by our Articles
of Incorporation or our Bylaws, the presence in person or by proxy duly authorized by holders of not less than a majority of the
stockholding voting power shall constitute a quorum for the transaction of business. A vote by the holders of a majority of our
outstanding shares is required to effect certain fundamental corporate changes such as liquidation, merger, or an amendment to
our Articles of Incorporation.
Dividends
Holders of our common stock are entitled to
share in all dividends that our board of directors, in its discretion, declares from legally available funds.
Liquidation
In the event of liquidation, dissolution or
winding up, each outstanding share entitles its holder to participate
pro rata
in all assets that remain after payment of
liabilities and after providing for each class of stock, if any, having preference over our common stock.
Other Rights and Preferences
Holders of our common stock have no pre-emptive,
subscription, or conversion rights, and there are no redemption or sinking fund provisions applicable to our common stock. The
rights, preferences, and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of
the holders of shares of any series of preferred stock that we may designate and issue in the future.
Quotation
Our common stock is quoted on the OTCQB
tier of the marketplace maintained by OTC Markets Group Inc., under the symbol “CNBX.”
Indemnification
Our Articles of Incorporation limits the liability
of our directors and officers to the full extent permitted by the NRS and provides that we will indemnify each of our directors
and officers to the full extent permitted by the NRS. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, or persons controlling us under the foregoing provisions, we have been informed that in
the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Transfer Agent and Registrar
The transfer agent and registrar for our common
stock is ClearTrust, LLC, whose address is 16540 Pointe Village Dr., Suite 210, Lutz, Florida 33558 (telephone: 813-235-4490; e-mail:
inbox@cleartrusttransfer.com).
Preferred
Stock
Our board of directors has the authority,
without action by the stockholders, to designate and issue up to an aggregate of 100,000,000 shares of preferred stock in one or
more series. The board of directors can fix the rights, preferences, and privileges of the shares of each series and any of its
qualifications, limitations, or restrictions. Our board of directors may authorize the issuance of preferred stock with voting
or conversion rights that could adversely affect the voting power or other rights of the holders of common stock. The issuance
of preferred stock, while providing flexibility in connection with possible future financings and acquisitions and other corporate
purposes could, under certain circumstances, have the effect of delaying or preventing a change in control of Cannabics. In addition,
the issuance of preferred stock, depending on the rights and preferences associated with such stock, might harm the market price
of our common stock.
We are authorized to issue shares of preferred
stock in one or more series as may be determined by our board of directors, who may establish, from time to time, the number of
shares to be included in each series, may fix the designation, powers, preferences, and rights of the shares of each such series,
and any qualifications, limitations, or restrictions thereof without obtaining the affirmative vote or the written consent of our
stockholders. Any preferred stock so issued by our board of directors may rank senior to our common stock with respect to the payment
of dividends or amounts upon liquidation, dissolution, or winding up of Cannabics, or both. Under certain circumstances, the issuance
of preferred stock or the existence of unissued preferred stock might tend to discourage or render more difficult a merger or other
change of control. No shares of preferred stock are currently outstanding.
Our board of directors is empowered to authorize
and direct the payment of dividends to the holders of our preferred stock in shares of any class or series of our capital stock,
including shares of common stock, as it may determine, without obtaining the affirmative vote or the written consent of our stockholders.
The issuance of shares of preferred stock,
while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect
of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, a majority of our outstanding
voting stock.
Registration
Rights
We are party to various subscription agreements,
the terms of which grant the holders of approximately 7,966,444 shares of our common stock, including 555,555 shares of our common
stock subject to outstanding warrants, the right to demand that we file a registration statement for their shares of our common
stock or request that their shares of our common stock be covered by a registration statement that we are otherwise filing. These
shares are referred to in this prospectus as “Registrable Securities.”
Demand Registration Rights
A holder of 1,111,110 shares of the Registrable
Securities has the right to demand that we file a registration statement to register all of its Registrable Securities.
Piggyback Registration Rights
If we propose to register any of our securities
for sale to the public under the Securities Act, by filing a registration statement, the holders of 6,855,334 shares of Registrable
Securities are entitled to receive notice of such registration and to request that we include their Registrable Securities for
resale in such registration statement.
Expenses of Registration; Indemnification
We are generally required to bear all registration
expenses incurred in connection with any offerings pursuant to the demand and piggyback registration rights described above, other
than underwriting commissions and discounts. The relevant subscription agreements contain customary indemnification provisions
with respect to registration rights.
Anti-takeover
Effects of Our Articles of Incorporation and Bylaws
Our Articles of Incorporation and Bylaws contain
certain provisions that may have anti-takeover effects, making it more difficult for or preventing a third party from acquiring
control of Cannabics or changing our board of directors and management.
According to our Articles of Incorporation
and Bylaws, neither the holders of our common stock nor the holders of our preferred stock have cumulative voting rights in the
election of our directors. The present ownership by a single stockholder of a significant portion of our issued and outstanding
common stock and lack of cumulative voting make it more difficult for other stockholders to replace our board of directors or for
a third party to obtain control of Cannabics by replacing our board of directors.
The authorization of classes of common stock
or preferred stock with either specified voting rights or rights providing for the approval of extraordinary corporate action could
be used to create voting impediments or to frustrate persons seeking to effect a merger or to otherwise gain control of Cannabics
by diluting their stock ownership. In addition, the ability of our directors to distribute shares of any class or series (within
limits imposed by applicable law) as a dividend in respect of issued shares of preferred stock could be used to dilute the stock
ownership or voting rights of a person seeking to obtain control of Cannabics and effectively delay or prevent a change in control
without further action by the stockholders.
Nevada
Anti-Takeover laws
Business Combinations
The “business combination” provisions
of NRS 78.411 to 78.444, inclusive, prohibit a Nevada corporation with at least 200 stockholders from engaging in various “combination”
transactions with any interested stockholder for a period of three years after the date of the transaction in which the person
became an interested stockholder, unless the transaction is approved by the board of directors prior to the date the interested
stockholder obtained such status; or after the expiration of the three-year period, unless:
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the transaction is approved by the board of directors or a majority of the voting power held by disinterested stockholders;
or
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if the consideration to be paid by the interested stockholder is at least equal to the highest of: (a) the highest price per
share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination
or in the transaction in which it became an interested stockholder, whichever is higher, (b) the market value per share of common
stock on the date of announcement of the combination and the date the interested stockholder acquired the shares, whichever is
higher, or (c) for holders of preferred stock, the highest liquidation value of the preferred stock, if it is higher.
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A “combination” is defined to
include mergers or consolidations or any sale, lease exchange, mortgage, pledge, transfer, or other disposition, in one transaction
or a series of transactions, with an “interested stockholder” having: (a) an aggregate market value equal to 5% or
more of the aggregate market value of the assets of the corporation, (b) an aggregate market value equal to 5% or more of the aggregate
market value of all outstanding shares of the corporation, or (c) 10% or more of the earning power or net income of the corporation.
In general, an “interested stockholder”
is a person who, together with affiliates and associates, owns (or within three years, did own) 10% or more of a corporation's
voting stock. The statute could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may
discourage attempts to acquire Cannabics even though such a transaction may offer our stockholders the opportunity to sell their
stock at a price above the prevailing market price.
Control Share Acquisitions
The “control share” provisions
of NRS 78.378 to 78.3793, inclusive, which apply only to Nevada corporations with at least 200 stockholders, including at least
100 stockholders of record who are Nevada residents, and which conduct business directly or indirectly in Nevada, prohibit an acquirer,
under certain circumstances, from voting its shares of a target corporation's stock after crossing certain ownership threshold
percentages, unless the acquirer obtains approval of the target corporation's disinterested stockholders. The statute specifies
three thresholds: one-fifth or more but less than one-third, one-third but less than a majority, and a majority or more, of the
outstanding voting power. Once an acquirer crosses one of the above thresholds, those shares in an offer or acquisition and acquired
within 90 days thereof become “control shares” and such control shares are deprived of the right to vote until disinterested
stockholders restore the right. These provisions also provide that if control shares are accorded full voting rights and the acquiring
person has acquired a majority or more of all voting power, all other stockholders who do not vote in favor of authorizing voting
rights to the control shares are entitled to demand payment for the fair value of their shares in accordance with statutory procedures
established for dissenters’ rights.
DESCRIPTION
OF WARRANTS
We may issue warrants for the purchase of
preferred stock or common stock. Warrants may be issued independently or together with any preferred stock or common stock, and
may be attached to or separate from any offered securities. Each series of warrants will be issued under a separate warrant agreement
to be entered into between a warrant agent specified in the agreement and us. The warrant agent will act solely as our agent in
connection with the warrants of that series and will not assume any obligation or relationship of agency or trust for or with any
holders or beneficial owners of warrants. This summary of some provisions of the securities warrants is not complete. You should
refer to the securities warrant agreement, including the forms of securities warrant certificate representing the securities warrants,
relating to the specific securities warrants being offered for the complete terms of the securities warrant agreement and the securities
warrants. The securities warrant agreement, together with the terms of the securities warrant certificate and securities warrants,
will be filed with the Securities and Exchange Commission in connection with the offering of the specific warrants.
The applicable prospectus supplement will
describe the following terms, where applicable, of the warrants in respect of which this prospectus is being delivered:
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the title of the warrants;
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the aggregate number of the warrants;
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the price or prices at which the warrants will be issued;
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the designation, amount and terms of the offered securities
purchasable upon exercise of the warrants;
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if applicable, the date on and after which the warrants
and the offered securities purchasable upon exercise of the warrants will be separately transferable;
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the terms of the securities purchasable upon exercise
of such warrants and the procedures and conditions relating to the exercise of such warrants;
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any provisions for adjustment of the number or amount
of securities receivable upon exercise of the warrants or the exercise price of the warrants;
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the price or prices at which and currency or currencies
in which the offered securities purchasable upon exercise of the warrants may be purchased;
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the date on which the right to exercise the warrants
shall commence and the date on which the right shall expire;
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the minimum or maximum amount of the warrants that may
be exercised at any one time;
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information with respect to book-entry procedures, if
any;
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if appropriate, a discussion of federal income tax consequences;
and
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any other material terms of the warrants, including
terms, procedures and limitations relating to the exchange and exercise of the warrants.
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Warrants for the purchase of common stock
or preferred stock will be offered and exercisable for U.S. dollars only. Warrants will be issued in registered form only.
Upon receipt of payment and the warrant certificate
properly completed and duly executed at the corporate trust office of the warrant agent or any other office indicated in the applicable
prospectus supplement, we will, as soon as practicable, forward the purchased securities. If less than all of the warrants represented
by the warrant certificate are exercised, a new warrant certificate will be issued for the remaining warrants.
Prior to the exercise of any securities warrants
to purchase preferred stock or common stock, holders of the warrants will not have any of the rights of holders of the common stock
or preferred stock purchasable upon exercise, including in the case of securities warrants for the purchase of common stock or
preferred stock, the right to vote or to receive any payments of dividends on the preferred stock or common stock purchasable upon
exercise.
DESCRIPTION
OF UNITS
We may issue units consisting of any combination
of the other types of securities offered under this prospectus in one or more series. We may evidence each series of units by unit
certificates that we will issue under a separate agreement. We may enter into unit agreements with a unit agent. Each unit agent
will be a bank or trust company that we select. We will indicate the name and address of the unit agent in the applicable prospectus
supplement relating to a particular series of units.
The following description, together with the
additional information included in any applicable prospectus supplement, summarizes the general features of the units that we may
offer under this prospectus. You should read any prospectus supplement and any free writing prospectus that we may authorize to
be provided to you related to the series of units being offered, as well as the complete unit agreements that contain the terms
of the units. Specific unit agreements will contain additional important terms and provisions, and we will file as an exhibit to
the registration statement of which this prospectus is a part, or will incorporate by reference from another report that we file
with the SEC, the form of each unit agreement relating to units offered under this prospectus.
If we offer any units, certain terms of that
series of units will be described in the applicable prospectus supplement, including, without limitation, the following, as applicable:
Plan
of Distribution
We and the selling stockholders, if applicable,
may offer and sell the securities offered through this prospectus from time to time (1) to or through underwriters or dealers,
(2) directly to purchasers, including our affiliates, (3) through agents, or (4) through a combination of any of these methods.
The selling stockholders may sell their shares of our common stock covered by this prospectus in private transactions or under
Rule 144 under the Securities Act rather than pursuant to this prospectus. The securities may be distributed at (i) a fixed price
or prices, which may be changed, (ii) market prices prevailing at the time of sale, (iii) varying prices determined at the time
of sale related to the prevailing market prices, or (iv) negotiated prices.
The prospectus supplement relating to any
offering will include the following information:
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the terms of the offering;
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the names of any underwriters or agents;
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the name or names of any managing underwriter or underwriters;
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the purchase price of the securities;
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the net proceeds from the sale of the securities;
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any underwriting discounts, commissions and other items constituting underwriters’ compensation;
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any initial public offering price;
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any discounts or concessions allowed or re-allowed or paid to dealers; and
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any commissions paid to agents.
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We may engage in at-the-market offerings into
an existing trading market in accordance with Rule 415(a)(4). Any at-the-market offering will be through an underwriter or underwriters
acting as principal or agent for us.
Sale
through Underwriters or Dealers
If underwriters are used in the sale, the
underwriters will acquire the securities for their own account, including through underwriting, purchase, security lending or repurchase
agreements with us. The underwriters may resell the securities from time to time in one or more transactions, including negotiated
transactions. Underwriters may sell the securities in order to facilitate transactions in any of our other securities (described
in this prospectus or otherwise), including other public or private transactions and short sales. Underwriters may offer securities
to the public either through underwriting syndicates represented by one or more managing underwriters, or directly by one or more
firms acting as underwriters. Unless otherwise indicated in a prospectus supplement, the obligations of the underwriters to purchase
the securities will be subject to certain conditions, and the underwriters will be obligated to purchase all the offered securities
if they purchase any of them. The underwriters may change from time to time any initial public offering price and any discounts
or concessions allowed or re-allowed or paid to dealers. The prospectus supplement will include the names of the principal underwriters,
the respective amount of securities underwritten, the nature of the obligation of the underwriters to take the securities, and
the nature of any material relationship between an underwriter and us.
Some or all of the securities that we offer
through this prospectus may be new issues of securities with no established trading market. Any underwriters to whom we sell securities
for public offering and sale may make a market in those securities, but they will not be obligated to do so, and they may discontinue
any market making at any time without notice. Accordingly, we cannot assure you of the liquidity of, or continued trading markets
for, any securities offered pursuant to this prospectus.
If dealers are used in the sale of securities
offered through this prospectus, we or the selling stockholders will sell the securities to them as principals. They may then resell
those securities to the public at varying prices determined by the dealers at the time of resale. The prospectus supplement will
include the names of the dealers and the terms of the transaction.
Direct
Sales and Sales through Agents
We or the selling stockholders may sell the
securities offered through this prospectus directly. In this case, no underwriters or agents would be involved. Such securities
may also be sold through agents designated from time to time. The applicable prospectus supplement will name any agent involved
in the offer or sale of the offered securities and will describe any commissions payable to the agent by us or the selling stockholders.
Unless otherwise indicated in the prospectus supplement, any agent will agree to use its reasonable best efforts to solicit purchases
for the period of its appointment.
We or the selling stockholders may sell the
securities directly to institutional investors or others who may be deemed to be underwriters within the meaning of the Securities
Act with respect to any sale of those securities. The terms of any such sales will be described in the prospectus supplement.
Market
Making, Stabilization and Other Transactions
Unless the applicable prospectus supplement
states otherwise, each offered security will be a new issue and will have no established trading market, with the exception of
our common stock. We may elect to list any offered securities on an exchange. Any underwriters that we or the selling stockholders
use in the sale of offered securities may make a market in such securities, but may discontinue such market making at any time
without notice. Accordingly, we cannot assure you of the liquidity of, or continued trading markets for, any securities offered
pursuant to this prospectus.
Any underwriter may also engage in stabilizing
transactions, syndicate covering transactions, and penalty bids in accordance with Rule 104 under the Securities Exchange Act of
1934, as amended. Stabilizing transactions involve bids to purchase the underlying security in the open market for the purpose
of pegging, fixing, or maintaining the price of the securities. Syndicate covering transactions involve purchases of the securities
in the open market after the distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the underwriters to reclaim
a selling concession from a syndicate member when the securities originally sold by the syndicate member are purchased in a syndicate
covering transaction to cover syndicate short positions. Stabilizing transactions, syndicate covering transactions, and penalty
bids may cause the price of the securities to be higher than it would be in the absence of the transactions. The underwriters may,
if they commence these transactions, discontinue them at any time.
Derivative
Transactions and Hedging
We, the underwriters or other agents may engage
in derivative transactions involving the securities. These derivatives may consist of short sale transactions and other hedging
activities. The underwriters or agents may acquire a long or short position in the securities, hold or resell securities acquired,
and purchase options or futures on the securities and other derivative instruments with returns linked to or related to changes
in the price of the securities. In order to facilitate these derivative transactions, we may enter into security lending or repurchase
agreements with the underwriters or agents. The underwriters or agents may effect the derivative transactions through sales of
the securities to the public, including short sales, or by lending the securities in order to facilitate short sale transactions
by others. The underwriters or agents may also use the securities purchased or borrowed from us or others (or, in the case of derivatives,
securities received from us in settlement of those derivatives) to directly or indirectly settle sales of the securities or close
out any related open borrowings of the securities.
Electronic
Auctions
We or the selling stockholders may also make
sales through the Internet or through other electronic means. Since we or the selling stockholders may from time to time elect
to offer securities directly to the public, with or without the involvement of agents, underwriters, or dealers, utilizing the
Internet or other forms of electronic bidding or ordering systems for the pricing and allocation of such securities, you should
pay particular attention to the description of that system we will provide in a prospectus supplement.
Such electronic system may allow bidders to
directly participate, through electronic access to an auction site, by submitting conditional offers to buy that are subject to
acceptance by us, and which may directly affect the price or other terms and conditions at which such securities are sold. These
bidding or ordering systems may present to each bidder, on a so-called “real-time” basis, relevant information to assist
in making a bid, such as the clearing spread at which the offering would be sold, based on the bids submitted, and whether a bidder’s
individual bids would be accepted, prorated or rejected.
Upon completion of such an electronic auction
process, securities will be allocated based on prices bid, terms of bid or other factors. The final offering price at which securities
would be sold and the allocation of securities among bidders would be based in whole or in part on the results of the Internet
or other electronic bidding process or auction.
General
Information
Agents, underwriters, and dealers may be entitled,
under agreements entered into with us, to indemnification by us or the selling stockholders against certain liabilities, including
liabilities under the Securities Act. Agents, dealers, and underwriters may engage in transactions with or perform services for
us in the ordinary course of their businesses.
Legal
Matters
The validity of the issuance of the securities
offered by this prospectus will be passed upon for us by SRK Kronengold Law Office, of Rehovot, Israel. If the validity of any
securities is also passed upon by counsel for the underwriters of an offering of those securities, that counsel will be named in
the prospectus supplement relating to that offering.
Experts
The financial statements of Cannabics appearing
in our Annual Report on Form 10-K for the fiscal years ended August 31, 2016 and 2015 (i) have been audited by Weinberg & Baer
LLC, an independent registered public accounting firm (the report on the financial statements contains an explanatory paragraph
regarding the Company’s ability to continue as a going concern), (ii) are incorporated herein by reference, and (iii) are
given on the authority of said firm as experts in auditing and accounting.
No expert or counsel named in this prospectus
as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being
registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency
basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in Cannabics,
nor was any such expert connected with us as a promoter, managing or principal underwriter, voting trustee, director, officer or
employee.
WHERE
YOU CAN FIND MORE INFORMATION
We file reports, proxy statements, and other
information with the SEC. Information filed with the SEC by us can be inspected and copied at the Public Reference Room maintained
by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of this information by mail from the Public
Reference Section of the SEC at prescribed rates. Further information on the operation of the SEC’s Public Reference Room
in Washington, D.C. can be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site that contains reports,
proxy and information statements and other information about issuers, such as us, who file electronically with the SEC. The address
of that website is http://www.sec.gov.
Our web site address is www.cannabics.com.
The information on our web site, however, is not, and should not be deemed to be, a part of this prospectus.
This prospectus and any prospectus supplement
are part of a registration statement that we filed with the SEC and do not contain all of the information in the registration statement.
The full registration statement may be obtained from the SEC or us, as provided below. Other documents establishing the terms of
the offered securities are or may be filed as exhibits to the registration statement. Statements in this prospectus or any prospectus
supplement about these documents are summaries and each statement is qualified in all respects by reference to the document to
which it refers. You should refer to the actual documents for a more complete description of the relevant matters. You may inspect
a copy of the registration statement at the SEC’s Public Reference Room in Washington, D.C. or through the SEC’s website,
as provided above.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate by
reference” information into this prospectus, which means that we can disclose important information to you by referring you
to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus,
and subsequent information that we file with the SEC will automatically update and supersede that information. Any statement contained
in a previously filed document incorporated by reference will be deemed to be modified or superseded for purposes of this prospectus
to the extent that a statement contained in this prospectus modifies or replaces that statement.
We incorporate by reference our documents
listed below and any future filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended, between the date of this prospectus and the termination of the offering of the securities described in
this prospectus. We are not, however, incorporating by reference any documents or portions thereof, whether specifically listed
below or filed in the future, that are not deemed “filed” with the SEC, including our Compensation Committee report
and performance graph or any information furnished pursuant to Items 2.02 or 7.01 of Form 8-K or related exhibits furnished pursuant
to Item 9.01 of Form 8-K:
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our Annual Report on
Form 10-K
for the fiscal year ended August 31, 2016, filed with the SEC on December 13, 2016;
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the amendment to our Annual Report on
Form 10-K
for the fiscal year ended August 31, 2016, filed with the SEC on March 15,
2017;
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our Quarterly Report on Form 10-Q for the three months ended
November 30, 2016
, filed with the SEC on January 17, 2017;
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the description of our common stock contained in our registration statement on
Form 8-A
, dated January 12, 2007, filed with
the SEC on January 16, 2007, and any amendment or report filed with the SEC for the purpose of updating the description.
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We will furnish without charge to each person
to whom a prospectus is delivered, upon written or oral request, a copy of any or all of the documents incorporated by reference
into this prospectus but not delivered with the prospectus, including exhibits that are specifically incorporated by reference
into such documents. You should direct any requests for documents to:
Cannabics Pharmaceuticals Inc.
# 3 Bethesda Metro Center
Suite 700
Bethesda, MD 20814
Attention: General Counsel
Telephone: (877) 424-2429
10,000,000
Shares of Common Stock
Warrants
to Purchase up to
5,000,000
Shares of Common Stock
PROSPECTUS SUPPLEMENT
A.G.P.
September 24, 2018
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