8. Subsequent Events

Convertible Preferred Stock Issuance

In October 2016, the Company sold 500 shares of convertible preferred stock with a purchase price of $1,000 per share for gross proceeds of $500,000 to a healthcare investment fund under the Series C Preferred Stock Agreement. Each share of Preferred Stock is convertible into 2,500 shares of common stock which results in an effective conversion price of $0.40 per common share. This results in the reduction of the conversion price of the Series B Preferred Stock to $ 0.40 and a reduction in the exercise price of the Series B warrants to $ 0.40. As part of the terms of the Series C Preferred Stock agreement, the Company entered into a Registration Rights Agreement with the purchaser to file a registration statement to register for resale the shares of common stock underlying the preferred shares within 30 days following the closing of the agreement.

Technology License Agreement

In October 2016, the Company entered into a technology license agreement with a third-party manufacturing company in order to biosynthetically manufacture cannabinoids. The terms of the agreement call for an initial payment of $50,000 along with a common stock issuance equal to $50,000 of the Company’s common stock based on the 10 -day volume-weighted average closing price calculated from the effective date of the agreement.