On October 11, 2018, Canbiola, Inc. entered into a Production and Distribution Agreement (the “P&D Agreement”) with International Spirits and Beverage Group, Inc. (“ISBG”). Pursuant to the P&D Agreement, the Company agreed to produce, package, and sell certain cannabidiol (CBD) infused products, including fruit chews and non-alcoholic beverages (the “Products”), to ISBG. ISBG controls the ingredients, recipes, manufacturing processes and procedures and quality and taste parameters for all Products and is the manufacturer of all such Products.

ISBG granted the Company a non-exclusive, non-transferable, revocable right to use the ISBG trademarks associated with the Products solely on, and in association with, the Products and associated packaging. ISBG will purchase the Products at a 20% discount to the wholesale prices of Products agreed to in the Agreement. In addition, the Company will receive 10% of the gross sales price of any Products distributed by the company.

ISBG has agreed to indemnify and hold the company harmless from and against any damages arising from the P&D Agreement. The Company has agreed to indemnify and hold ISBG harmless from and against any damages resulting or arising from any material breach of the P&D Agreement, gross negligence or intentional misconduct by the Company. The P&D Agreement otherwise contains standard representations and warranties.