Cannabix Technologies, Inc.: Variable Annuity Life Insurance Case

As of October 17, 19996, Mr. Bruce Goldberger has been a Client with VALIC (Variable Annuity Life Insurance Company) under his Employer (University of Florida) sponsored group plan. Mr. Goldberger currently has 8 active contracts with a combined total of $632,571.25. Mr. Donald Hartman has been Mr. Goldberger’s appointed agent as of 2015.

February 16, 2018 VFA (Valic Financial Advisors) opened a brokerage account for Mr. Goldberger under agent William Gecks who holds a S7 securities license as Mr. Hartman does not, with 2 stock certificates for Cannabix Technologies, Inc. equity, BLOZF. Mr. Goldberger received certificate GS243 for 375,000 shares on April 24, 2015 trading at .33 a share and certificate GS271 for 375,000 shares on June

16, 2015 trading at .15 a share. These certificates were sent to the Depository Trust Company (DTC) on February 21, 2018.

February 21, 2018 VFA received two separate sell orders each for 25,000 shares, first order sold at $1.76 for $43,978.98 a second order sold at $1.70 for $42,499.01.

February 22, 2018 VFA received a sell order, for 110,000 shares which sold at $1.55 for $170,476.06. The total of all three sell orders $256.954.05 was placed into the money market fund.

February 27, 2018 VFA received a request to send a wire in the amount of $256,000.00 to a 3rd party bank at Holden, Carpenter & Roscow, PL Real Estate Trust Account with Ameris Bank account number 00137148 routing number 061201754 signed by the Client along with a Financial Advisor Attestation form signed by the Advisor Donald Hartman. VFA Operations notified the Client, the form was missing the required the signature guarantee to process 3rd party wires.

February 28, 2018 VFA received a second request with the required signature guarantee to wire $256,000.00 to Holden, Carpenter & Roscow, PL Real Estate Trust Account with Ameris Bank account number 00137148 routing number 061201754 signed by the

Client.

On March 13, 2018 VFA received a sell order 50,000 shares which sold at $1.834 for $$91,677.88 and on March 14, VFA received a sell order 165,000 shares which sold at $1.75 for $288,723.32. The total of both sell orders $380,401.20 were placed into the money market fund.

On April 18, 2018 VFA opened a balance equity managed account with an internal transfer of $330,000.00 from account OAG202175.

On April 18, 2018 American General Life Insurance (AGL) received a Value plus Protector life insurance policy for Mr. Goldberger, the application is pending as several items are needed for completion by agent and Client.

An internal review found

National Financial Services (NFS) sent VFA a Service Request through Wealthscape (their online web channel) inquiring about a sizeable amount of Low Priced Securities transferring into the Client’s account and placed a “Low Priced Securities” alert on the account.

A security search of Cannabix Technologies Inc.

(BLOZF) shows it is a common stock trading below 2.00 and is listed on the Canadian Securities Exchange, quoted on the US OTC Pink Sheets, as well as the European Frankfurt Exchange. A Company search of Cannabix Technologies Inc. list it as a Vancouver, British Columbia company developing tools for law enforcement and the workplace in detecting THC (Chemical compound found in cannabis plants/marijuana) using a breathalyzer. A negative news search was conducted on Cannabix Technologies, Inc.; with no suspicious activity noted. The current stock price is trading at $1.45 with a 52 week high $2.95 and 52 weak low of $.40. BLOZF begin trading on August 27, 2017 at $.13 a share with a volume of 4,025 shares. The Cannabis industry in Canada is currently waiting on the passage of the Cannabis Act which will legalize recreational marijuana for adults over 18 in Canada. With this act, industries like Cannabix seek to make revenue on their breathalyzer. If the Cannabis Act does not pass, industry leads for Cannabis stock fear their stock prices will fall.

A negative news search was performed on Bruce Goldberger with no suspicious activity noted. During the search, Mr. Goldberger was found to serve as a Senior Advisor for Cannabix Technologies Inc., in addition to working as professor and director of toxicology at the University of

Florida.

Agent notes found on the Client’s managed application indicate the Client wanted to diversify his portfolio and reduce his volatility as he prepares for retirement. Part of his financial plan included selling his stock as the client stated the stock was volatile and outlook uncertain, he purchased a managed account and paid off his house that is currently being built from the sale of his stock. Additionally, after the death of his wife on July 3, 2017, the Client has turned his focus on self-care and purchased a life policy under AGL.

VFA Operations states no other parties outside the advisor and Client have acted on this account. The current account balance is $595,506.81 with $51,756.81 sitting in cash reserve fund.

Additionally, a review was performed on additional accounts owned by the client (Variable Annuity Life Insurance Company “VALIC” contracts (9335620 8123740, 8552649, 4230047, 5568145, 9370274, C499040, 4230051, and 9335619) with no potentially suspicious activity noted on the contracts.

CONCLUSION AND RECOMMENDATION OF COMPLIANCE REVIEWER

Despite the recent sizable amount of Low Priced Securities transferred, quick Stock Sell, and wire out, I believe the Client and advisor acted in concert to request the trades to raise funds and forward the proceeds to the 3rd party bank to be used to pay off his house and fund a managed account. While NFS originally flagged the account for accepting Low Priced Securities, it has since removed the alert and accepted the securities. I do not believe this case warrants a SAR filing.

CONCLUSION/RATIONALE – AML OFFICER/COMPLIANCE DESIGNEE