Can B Corp 10-K for FY2019
Can B Corp (NASC)
About this 10-K
Can B Corp filed this 10-K on April 2, 2020, covering the fiscal year ended December 31, 2019 (FY2019).
Headline figures
Fiscal year ended December 31, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.31M
- up 244.8% from $668.6K a year earlier
- Net loss
- $4.59M
- compared with a net loss of $4.11M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2019
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
For the Transition Period From ____________ to ____________
Commission File Number: 000-55753
Can B̅ Corp.
(f/k/a Canbiola, Inc.)
(Exact name of registrant as specified in its charter)
| Florida | 20-3624118 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
960
South Broadway, Suite 120, Hicksville NY 11801
(Address of principal executive offices)
516-595-9544
Registrant’s telephone number, including area code:
None
Securities Registered Pursuant to Section 12(b) of the Act:
| Tile of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock | CANB | N/A |
Common Stock, par value $0.001 per share
Securities Registered Pursuant to Section 12(g) of the Act:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter time that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | [ ] | Accelerated filer | [ ] |
| Non-accelerated filer | [ ] (Do not check if a smaller reporting company) | Smaller reporting company | [X] |
| Emerging Growth Company [X] | |||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]
The aggregate market value of voting stock held by non-affiliates of the registrant on June 30, 2018, was $4,466,469, based on the last reported sale price of the registrant’s Common Stock on the OTC Markets on that date.
As of March 13, 2020, the registrant had outstanding 2,861,740 shares of common stock, $0.00 par value per share.
Can B̅ Corp.
2019 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained or incorporated by reference in this Annual Report on Form 10-K are considered forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) concerning our business, results of operations, economic performance and/or financial condition, based on management’s current expectations, plans, estimates, assumptions and projections. Forward-looking statements are included, for example, in the discussions about:
| ● | strategy; | |
| ● | new product discovery and development; | |
| ● | current or pending clinical trials; | |
| ● | our products’ ability to demonstrate efficacy or an acceptable safety profile; | |
| ● | actions by regulatory authorities; | |
| ● | product manufacturing, including our arrangements with third-party suppliers; | |
| ● | product introduction and sales; | |
| ● | royalties and contract revenues; | |
| ● | expenses and net income; | |
| ● | credit and foreign exchange risk management; | |
| ● | liquidity; | |
| ● | asset and liability risk management; | |
| ● | the outcome of litigation and other proceedings; | |
| ● | intellectual property rights and protection; | |
| ● | economic factors; | |
| ● | competition; and | |
| ● | legal risks. |
Any statements contained in this report that are not statements of historical fact may be deemed forward-looking statements. Forward-looking statements generally are identified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates,” “aims,” “plans,” “may,” “could,” “will,” “will continue,” “seeks,” “should,” “predict,” “potential,” “outlook,” “guidance,” “target,” “forecast,” “probable,” “possible” or the negative of such terms and similar expressions. Forward-looking statements are subject to change and may be affected by risks and uncertainties, most of which are difficult to predict and are generally beyond our control. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any forward-looking statement in light of new information or future events, except as required by law, although we intend to continue to meet our ongoing disclosure obligations under the U.S. securities laws and other applicable laws.
We caution you that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements, and therefore you should not place too much reliance on them. These factors include, among others, those described herein, under “Risk Factors” and elsewhere in this Annual Report and in our other public reports filed with the Securities and Exchange Commission. It is not possible to predict or identify all such factors, and therefore the factors that are noted are not intended to be a complete discussion of all potential risks or uncertainties that may affect forward-looking statements. If these or other risks and uncertainties materialize, or if the assumptions underlying any of the forward-looking statements prove incorrect, our actual performance and future actions may be materially different from those expressed in, or implied by, such forward-looking statements. We can offer no assurance that our estimates or expectations will prove accurate or that we will be able to achieve our strategic and operational goals.
Forward-looking statements are based on information we have when those statements are made or management’s good faith belief as of that time with respect to future events, and are subject to significant risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.
Moreover, new risks regularly emerge and it is not possible for our management to predict or articulate all risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this prospectus are based on information available to us on the date of this Annual Report. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this Annual Report.
JUMPSTART OUR BUSINESS STARTUPS ACT
We qualify as an “emerging growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we do not have more than $1,700,000,000 in annual gross revenue and did not have such amount as of December 31, 2019, the last day of our last fiscal year. We are electing to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.
As an emerging growth company, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:
| ● | being permitted to present only two years of audited financial statements and only two years of related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this annual report; | |
| ● | not being requested to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley Act”); | |
| ● | reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and | |
| ● | exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. |
We will remain an emerging growth company until the earliest to occur of: (i) our reporting $1 billion or more in annual gross revenues; (ii) the end of fiscal year 2019; (iii) our issuance, in a three year period, of more than $1 billion in non-convertible debt; and (iv) the end of the fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million on the last business day of our second fiscal quarter.
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| Item 1. | Business |
Company Overview
Can B̅ Corp. (the “Company,” “CAN B,” “CANB,” “we,” “us,” and “our”) was originally incorporated as WrapMail, Inc. (“WRAP”) in Florida on October 11, 2005 in order to tap into a largely un-serviced segment of the web-based advertising industry. Effective December 27, 2010, WRAP effected a 10 for 1 forward stock split of its common stock. Effective June 4, 2013, WRAP effected a 1 for 10 reverse stock split of its common stock. The accompanying consolidated financial statements retroactively reflect these stock splits. On March 6, 2020, Can B̅ effected a 1 for 300 reverse stock split of its common stock.
Effective January 5, 2015, WRAP acquired 100% ownership of Prosperity Systems, Inc. (“Prosperity”), a New York corporation incorporated on April 2, 2008, in order to acquire Prosperity’s office productivity software suite as a complement to WRAP’s existing intellectual property. After its acquisition, the Company transferred Prosperity’s operations to WRAP. For the periods presented, the assets, liabilities, revenues, and expenses are those of the Company. Prosperity had no activity for the periods presented.
Around the first quarter of 2017, the Company began to transition into the Hemp CBD industry and now operates four distinct health and wellness divisions, Pure Health Products (R&D and manufacturing), Duramed (medical devices), Green Grow Farms, Inc. (cultivation and processing), and licensing under its new agreement with Lifeguard brand. On May 15, 2017, WRAP changed its name to Canbiola, Inc. to reflect its transition. On March 6, 2020 CANB changed its name to “Can B̅ Corp.” in order to segregate its corporate identity from its lead products branded under the “Canbiola” brand.
Business Segments
The Company is in the business of promoting health and wellness through its development and sale of products containing CBD (with no psychoactive THC) the production of hemp biomass, the licensing of durable medical devises and the sale of non-CBD products such as sunscreen and lip balm.
| I- | Pure Health Products – R&D, Manufacturing and “CBD” Business |
The Company’s Research, Development, and core manufacturing arm also is a direct producer, seller and purveyor of products to private label products for multiple distributors of CBD products. The Company’s products contain CBD derived from Hemp and include products such as oils, creams, moisturizers, isolate, and gel caps. In addition to offering white labeled products, the Company has developed its own line of proprietary products. The Company is always seeking synergistic value through acquisitions of products and brands in the Hemp industry. The Company aims to be the premier provider of the highest quality natural Hemp CBD products on the market through sourcing the very best raw material and developing a variety of products we believe will improve people’s lives in a variety of areas.
Cannabidiol (“CBD”) is one of nearly 85 naturally occurring compounds (cannabinoids) found in industrial hemp (it is also contained in marijuana, but the Company’s products are derived only from hemp). CBD is non-psychoactive and is thought to have numerous uses, including, but not limited to, for pain, insomnia, epilepsy, anxiety, inflammation, and nausea. Unlike CBD derived from marijuana, CBD derived from the seeds and stalks of industrial hemp is generally considered “legal” in the U.S. so long as it contains less than 0.3% of “THC,” another, but psychoactive, cannabinoid found in cannabis. This purported “legal status” is because the 2018 Farm Bill removed hemp as a Schedule I drug under the Controlled Substances Act and hemp may now be grown as a commodity crop, with restrictions; however, the 2018 Farm Bill did not specifically legalize CBD. Until Congress promulgates rules and regulations relating to hemp derived CBD under the 2018 Farm Bill, the “legal” status of CBD from hemp, or the processes the Company may have to implement (and at what expense), are still unknowns. A similar paradigm exists under various state laws with which the Company will have to comply. In any case, CBD derived from marijuana, marijuana and other marijuana derivatives are federally illegal in the U.S. under the Controlled Substances Act, despite being medically or recreationally legal in numerous states, which is why the Company has established procedures to ensure that its CBD is derived from hemp in compliance with the Farm Bill. The Company has all of its hemp based raw materials (isolate) tested by a 3rd party independent laboratory and those results are posted on the Company web site.
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The Company’s medical office products are marketed under the tradename “Canbiola,” and sold via medical professionals under distribution agreements. The Company also manufactures and/or sells separately branded CBD products through its subsidiaries and websites for “Pure Leaf Oil”, essentially its retail consumer brand and is sold via the Company’s website as well as direct internet sales for retail use consumers. Additionally, the Pure Leaf Oil products are targeted to be featured in the Company’s new line of vending machines, currently in test markets such as medical facilities and retail centers., Nu Wellness its independent pharmacy brand and targets toward the over three-thousand independent retail drug stores nationally with its first product schedule for roll-out in the 1st quarter 2020. , The” Seven Chakras” brand is targeted toward health clubs, spas, and beauty lines and is expecting a major launch in 2nd quarter 2020 to include a full line of related topical products both with and without CBD. The Severn Chakras has a customer base and following and compliments the Canbiola and Pure Leaf Oil brands with additional new products such as bath bombs, stress relief products, and lotions. Seven Chakras has its own internet website and continues in its direct marketing to its customer base.
In December, 2018, the Company acquired 100% of the membership interests in Pure Health Products, LLC, a New York limited liability company (“PHP” or “Pure Health Products”), with which it had had and has an exclusive production agreement, pursuant to an Acquisition Agreement (“PHP Acquisition Agreement”). PHP manufactures and packages the Company’s CBD infused products. PHP may also white label / rebrand or relabel the Company’s products pursuant to “white label agreements” entered into between the Company and/or PHP and third-party customers. Through PHP, the Company is able to control the manufacturing process of its products while reducing its production costs. In January, 2019, PHP acquired certain assets from Seven Chakras, LLC (“Seven Chakras”), a former competitor, which assets included the rights and title to (i) Seven Chakras’ proprietary formulas, methods, trade secrets, and know-how related to the production of Seven Chakras’ CBD products, (ii) Seven Chakras’ tradename, domain name, and social media sites, and (iii) other assets of Seven Chakras including but not limited to raw materials, equipment, packaging and labeling materials, mailing lists, and marketing materials.
The products are distributed through an array of methods including: 1- For Canbiola brand directly though doctors and medical offices, 2- For Pure Leaf Oil direct to consumer via walk-in business, internet and other distributors, 3- for Seven Chakras via direct sales and through internet sales. The Company’s newest brand Nu Wellness is distributed to independent pharmacies through distributor relationships. The White or Private Label business is sold direct to the companies for distribution through their own network of retailers.
| II- | Duramed Division- Durable Medical Equipment |
Through its medical device division, Duramed, Inc. and DuramedNJ LLC, the Company serves the post-surgery medical patient arena aiming to reduce the reliance of opiates in favor of a wearable ultrasound device to aid in recovery and pain reduction.
In November 2018, the Company formed Duramed, Inc. to facilitate the manufacture and sale of durable medical equipment incorporating CBD. On January 14, 2019, Duramed entered into a Memorandum of Understanding (the “Sam MOU”) with Sam International (“Sam”) and ZetrOZ Systems LLC (“ZetrOZ” and, collectively with Sam, the “Manufacturers”). Pursuant to the Sam MOU, the Manufacturers granted Duramed the exclusive right to distribute sam® Pro 2.0 (SA271) and sam® Gel Coupling Patches (UB-14-72) within the United States for the Personal Injury Protection/No Fault Market during the term of the Sam MOU. Duramed has agreed to purchase monthly minimums from the Manufacturers at a price per Unit of $2,447. The exclusivity of the Distribution License granted to Duramed under the Sam MOU is dependent upon meeting the monthly minimum. In addition, Duramed was granted the right to distribute sam® Gel Capture Patches (UB-14-24). Duramed will get rebates of 2%-3% based on the volume of Products sold by it. The initial term of the Sam MOU expires December 31, 2019 (the “Initial Term”). The agreement contemplated by the Sam MOU will automatically renew for additional one-year terms at the end of each calendar year, provided the monthly minimums have been met. The primary thrust of the Duramed division is to market to patients via doctors via a device rental program reimbursable by insurance carriers to help patient with pain reductions and faster healing.
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On May 29, 2019, the Company created DuramedNJ LLC to execute the same business strategy into the no-fault insurance market in New Jersey that it had developed in New York. That company continues to develop opportunities into 2020.
| III- | Hemp Production, Aggregation, Processing, and Sale |
On July 11, 2019, Canbiola, Inc. (the “Company” or “CANB”) entered into a Joint Venture Agreement (the “JV Agreement”) with NY – SHI, LLC, a New York limited liability company (“NY – SHI”), EWSD I LLC dba SHI Farms, a Delaware limited liability company (“SHI Farms”), NY Hemp Depot LLC, a Nevada limited liability company and wholly-owned subsidiary of CANB (“CANB Sub”). Pursuant to the JV Agreement, NY – SHI and CANB Sub entered into a joint venture for the purpose of jointly implementing a business model referred to as the “Depot Model” (the “Joint Venture”) to aggregate and purchase fully-grown, harvested industrial hemp from third-party farmers (“Farmers”) in the State of New York. The Joint Venture may also sell feminized seeds, clones, and additional materials required to grow and cultivate industrial hemp to the Farmers and provide the Farmers with initial training reasonably required for them to be able to grow industrial hemp and maximize CBD potency.
Pursuant to the JV Agreement, NY – SHI agreed to provide (i) technical expertise regarding the growth and cultivation of industrial hemp, (ii) certain products that may include feminized hemp seeds and/or clone plants to sell to the Farmers, (iii) growing technology and expertise to grow, cultivate, and harvest industrial hemp, including the initial training of Farmers to grow industrial hemp and maximize CBD potency, (iv) use of its cultivating license, which shall be amended to add a New York hemp depot facility (the “NY Hemp Depot Facility”) once such facility is obtained by CANB Sub, and (v) services for the recruitment of Farmers to grow and cultivate industrial hemp for sale to the Joint Venture.
CANB Sub agreed to provide (i) a building for the operation of the NY Hemp Depot Facility, (ii) location services in connection with its securing the building for the NY Hemp Depot Facility, (iii) management and other services for the day-to-day operation of the Joint Venture, and (iv) services for the recruitment of Farmers to grow and cultivate industrial hemp for sale to the Joint Venture. CANB Sub shall have full and complete discretion to manage and control the business and affairs of the Joint Venture, to make all decisions affecting the business and affairs of the Joint Venture, and to take all such actions as it deems necessary or appropriate to accomplish the purposes of the Joint Venture. Notwithstanding the foregoing, unanimous consent between NY – SHI and CANB Sub is required for certain transactions, including but not limited to amending the JV Agreement, obligating the Joint Venture to pay an excess of $20,000 for any transaction or series of transactions, and terminating the Joint Venture.
As consideration for the foregoing, CANB Sub delivered to NY – SHI a cash payment of $500,000.00 upon execution of the JV Agreement. Additionally, per the terms of the JV Agreement, CANB issued $500,000.00 in value of its Common Stock to NY – SHI; provided, however, that the NY – SHI’s cultivating license shall have been amended to add the NY Hemp Depot Facility as a condition to such issuance. SHI Farms has also agreed to sell certain isolate to the Company or its designated affiliate at a discounted rate equal to the cost of processing the isolate from biomass and granted CANB Sub an interest in the 1.5% payments due to SHI Farms in connection with its separate agreements with Mile High Labs.
The “gross profits” from the Joint Venture, which are defined as gross revenues less certain direct operational costs, will be distributed quarterly in arrears with the first distribution scheduled to be made on March 31, 2020, of which 70% is to be distributed to CANB Sub and 30% is to be distributed to NY – SHI.
NY Hemp Depot production is coordinated via the new acquisition of Green Grow Farms, Inc.
On December 4, 2019, the Company entered into a Stock Purchase Agreement (the “GGFI Agreement” with Iconic Brands, Inc., a Nevada corporation (“ICNB”) and Green Grow Farms, Inc., a New York corporation (“GGFI” or “Green Grow” and, collectively with ICNB and the Company, the “Parties”). Pursuant to the terms of the GGFI Agreement, at closing, the Company received 51% equity interest in Green Grow (the “GG Shares”) in exchange for an aggregate of 37,500,000 pre-split shares of the Company’s common stock (the “Purchase Shares”). On June 30, 2020 (the “Valuation Date”), a valuation of the Purchase Shares shall be performed for the purpose of determining whether the Market Price Per Purchase Share (as defined in the GGFI Agreement) on the Valuation Date is less than $1,000,000. In the event that the aggregate Market Price Per Purchase Share on the Valuation Date is less than $1,000,000, the Company shall issue to the ICNB such a number of additional shares (“Additional Purchase Shares”) so that the aggregate value of aggregate shares issued to ICNB for the purchase of the GG Shares (taking into account the Purchase Shares and the Additional Purchase Shares) equals $1,000,000. For purposes of the valuation, Market Price Per Purchase Share shall be determined based upon the 10-day average VWAP for the 10-day period ending on June 30, 2020.
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In the event that ICNB determines to make a distribution of the Purchase Shares to its shareholders, whether by way of dividend or otherwise, the Company agreed to cooperate in the filing of a registration statement (the “Registration Statement”) with the SEC covering the Purchase Shares, if requested by ICNB. ICNB shall be responsible for directly paying all expenses relating to such Registration Statement, including, but not limited to, filing fees, the Company’s counsel legal fees, blue sky filing fees and audit fees. Pursuant to the GGFI Agreement, the Company has agreed to indemnify and hold ICNB harmless from and against any and all liabilities, obligations or claims arising out of or resulting from Green Grow’s operation of its business or its assets after the closing of the GGFI Agreement and the Company’s breach of any covenants, warranties or agreements set forth therein, provided the amount of any indemnification shall not exceed an amount equal to the value of the GG Shares as of the closing. The GGFI Agreement otherwise contains customary representations and warranties, termination rights, and certain covenants of the Parties.
On January 27, 2020, the Company entered into an Amendment to Stock Purchase Agreement (the “Amendment”) with ICNB and Green Grow. The Amendment was to correct a scrivener’s error in the GGFI Agreement. The Amendment clarifies that Additional Purchase Shares will be issued to ICNB only if the Market Price Per Purchase Share on the Valuation Date multiplied by the 37,500,000 pre-split Purchase Shares is less than $1,000,000.
On March 3, 2020, the Company entered into an Agreement (the “Modification Agreement”) with Green Grow, New York Farm Group, Inc., a New York corporation (“NYFG”), Steven Apolant, an individual, and Peter Scalise, an individual, relating to the GGFI Agreement, as amended. Following the closing of the GGFI Agreement, the Company discovered that certain assets of GGFI were valued at less than the amount GGFI had previously represented. In light of the foregoing, pursuant to the Modification Agreement, NYFG agreed to assign to CANB (i) all of the equity interests in GGFI held by NYFG and (ii) 1,000,000 shares of ICNB’s common stock. The ICNB shares are subject to a lock up leak out agreement with ICNB whereby the Company has agreed not to transfer the ICNB shares until July 1, 2020 and for the six (6) months thereafter not sell or transfer more than the greater of 3.5% of ICNB’s trading volume or $5,000. Pursuant to the Modification Agreement, CANB agreed to forgive a loan to Apolise LLC in the amount of $144,310 and to assume the lease liability for 1545 Ocean Ave., Suite 1, Bohemia, NY 11716. Each party to the Modification Agreement also agreed to release the other parties thereto from all claims relating to the GGFI Agreement and the transactions contemplated thereby. As a result of the transaction contemplated by the Modification Agreements, the Company now owns 100% of GGFI.
| IV- | Licensing |
On January 28, 2020, Canbiola, Inc. (the “Company” or “CANB”) entered into a License Agreement (the “Lifeguard Agreement”) with LIFEGUARD LICENSING CORP., a Delaware corporation (“Lifeguard”). Pursuant to the Lifeguard Agreement, Lifeguard granted the Company the right to use its “LIFEGUARDTM” trademark (the “Mark”) in connection with the Company’s manufacture, marketing, distribution, and sale of products (the “License”). In consideration for the License, the Company agreed to pay Lifeguard a royalty equal to six percent (6%) of net sales of its LIFEGUARD branded products on a quarterly basis. The Company further agreed that, regardless of the net sales generated, each royalty payment will be in an amount not less than $60,000, which minimum amount will increase annually following December 31, 2021. The Lifeguard Agreement will continue until December 31, 2025, unless earlier terminated by the parties, and may be renewed for additional five (5)-year terms if certain performance conditions are met.
Under the License, the Company has various performance and sales obligations including initial product introduction timing and Lifeguard has various oversight rights such as audit rights, quality control and inspection rights. Licensor has the right to terminate the License in the event of certain breaches by the Company, at which point, the Company will be required all licensed material; however it will be permitted to sell its existing inventory so long as termination is not due to quality issues. Lifeguard and the Company have agreed to indemnify each other, which indemnification obligations will survive the termination of the Agreement. The Company also agreed to procure and maintain certain insurance policies for the benefit of the Company and Lifeguard.
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The Lifeguard Agreement otherwise contains terms, conditions, and representation common with this type of transaction.
Competitive Conditions
The CBD and cannabis markets are flooded with competition ranging from mom and pop operations to multi-million-dollar conglomerates, many with longer operating histories, more capital and/or more industry knowledge than the Company. The Company hopes to partner with or engage industry specialists to help set it apart from its numerous competitors. One of those points of differentiation is its 3rd party independent testing “Certificate of Analysis” conducted on all of the CBD isolate products it purchases and posting of those lab results on its website.
CBD biomass, that is farmers growing product, has created a glut on the US market with the supply chain breakdown being processing, extraction, and use of product. The Company believes there will be a leveling out of supply and demand but strongly believes that the companies with the greatest potential are those with a final consumer end-use for the product. One of the Company’s strengths is that it built a demand side consumer base prior to any vertical integration. Ergo, our GGFI Division will be growing under our own license in New York for our own manufacturing facility production, for our own customer demand.
The statements found herein have not been evaluated by the Food and Drug Administration (FDA) and the Company’s products are not intended to diagnose, treat, cure or prevent any disease or medical condition.
Intellectual Property
We won the following patents for our WRAPmail technology: US Patent no. 8572275 issued on October 29, 2013. This patent expires in October 2022. On July 20, 2015, WRAPmail filed for a new patent under the title Method, System and Software for Dynamically Extracting Content for integration with Instant Messages, which application is still pending and not being actively pursued by the Company. The above patents relate to the document management and email marketing divisions which are not presently being developed. Due to diminishing revenue from this division, the Company accountant determined to reduce the fair value of these patents to $0.
The Company employs through its Pure Health Product LLC Division, two full time product researchers and developers and technology experts who, on a daily basis, set the quality standards and new product development status and time-line agendas under the direct supervision of the Company’s management team.
Employees
The Company currently has nineteen employees, 17 of which are full-time employees and 2 who are under service agreements.
The Company employs through its Pure Health Products LLC Division, two full time product researchers and CBD technology experts who, on a daily basis, set the quality standards and new product development status and time-line agendas under the direct supervision of the company’s management team. Additionally, there is a division president, three production personnel, and five sales/ marketing and fulfillment personnel.
Duramed, the medical device company employees four people including the division president and 3 field operation personnel.
The remaining four people are corporate staff and general sales and are directly employed by the Company.
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Reports to Security Holders
Our common stock is registered under the Securities Exchange Act of 1934 and we are required to file current, quarterly and annual
reports and other information with the SEC. You may read and copy any document that we file at the SEC’s public reference
facilities at 100 F. Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-732-0330 for more information about its
public reference facilities. Our SEC filings are available to you free of charge at the SEC’s web site at www.sec.gov. We
are an electronic filer with the SEC and, as such, our information is available through the Internet site maintained by the SEC
that contains reports, proxy and information statements and other information regarding issuers that file electronically with
the SEC. This information may be found at www.sec.gov and posted on our website at www.canbiola.com.
Research and Development
In fiscal year 2019 and 2018 we spent $150,000 and $75,000, respectively, in research and development which was expensed as spent.
Government Regulation
The cultivation and sale of hemp and hemp products is federally regulated under the United States Farm Bill. The 2018 Farm Bill removed hemp as a Schedule 1 Substance under the Controlled Substances Act; however, rules and regulations relating to manufacture and sale of CBD products under the Farm Bill must still be promulgated and are expected to impact the Company’s operations. As the legal CBD industry and our product lines expand, it is uncertain what other statutory schemes and agencies will start to regulate our CBD products. The FDA currently still considers the addition of CBD to food products or supplements to be illegal and prohibits the advertisement of CBD products with health claims. The Company must also comply with each state’s laws relating to the sale of hemp-based CBD products. These regulations may affect, among others, the way the Company manufactures and distributes its products, the way the Company is taxed, the way the Company banks, the location of the Company’s facilities, the content and testing of the Company’s products, and the quality of the Company’s services.
The Company is presently growing and cultivating in New York State under a State License provided by its GGFI Division. Once processing the biomass into isolate, it is shipped to the Company’s manufacturing facility in Lacey WA under the provisions of the Farm Bill of 2018.
We are also subject to general business regulations and laws as well as Federal and state regulations and laws specifically governing the Internet and e-commerce. Existing and future laws and regulations may impede the growth of the Internet, e-commerce or other online services, and increase the cost of providing online services. These regulations and laws may cover sweepstakes, taxation, tariffs, user privacy, data protection, pricing, content, copyrights, distribution, electronic contracts and other communications, consumer protection, broadband residential Internet access and the characteristics and quality of services. It is not clear how existing laws governing issues such as property ownership, sales, use and other taxes, libel and personal privacy apply to the Internet and e-commerce. Unfavorable resolution of these issues may harm our business and results of operations. CBD sales are additional state regulated for shipping and the Company maintains a current list.
Transfer Agent
We had engaged Island Stock Transfer, located at 15500 Roosevelt Blvd, Suite 301, Clearwater, FL 33760, as our stock transfer agent. Phone: 727.289.0010. Our former director, Carl Dilley, is a principal of Island Stock Transfer.
On April 1st, 2019 we changed Transfer Agents to Transhare Corporation located at 2849 Executive Drive, Suite 200, Clearwater, FL 33762.
| Item 1A. | Risk Factors |
We are a smaller reporting company and not required to provide the information in this Item.
| Item 1B. | Unresolved Staff Comments |
Not applicable.
| 9 |
| Item 2. | Properties |
The Company does not currently own any real property. We do however lease office space in Hicksville, New York, and Bohemia New York. The Company’s wholly-owned subsidiary, Pure Health Products, operates its manufacturing facility in the state of Washington.
The lease payments are: Pure Health Products in Lacey WA $2,300, Can B̅ Corp. home office in Hicksville NY $3,350, and Green Grow Farms, Inc. in Bohemia NY $1,575.
| Item 3. | Legal Proceedings |
We are not aware of any pending or threatened legal proceedings in which we are involved, except as disclosed herein.
| Item 4. | Mine Safety Disclosures |
Not applicable.
| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Market Information
Our common stock is not registered or traded on any national stock market or NASDAQ but is listed for quotation on OTC market’s OTCQB® Venture Market under the symbol “CANB.” Our common stock began trading April 2011. Trading in our common stock has historically lacked consistent volume, and the market price has been volatile.
The following table presents, for the periods indicated, the high and low bid prices of the Company’s common stock and is based upon information provided by OTC Market. These quotations below reflect inter-dealer prices, without retail mark-up, mark-down, or commission, and may not necessarily represent actual transactions.
| 2019 – Prior to 300:1 reverse stock split | ||||||||
| High | Low | |||||||
| First Quarter | $ | .10 | $ | .03 | ||||
| Second Quarter | $ | .06 | $ | .03 | ||||
| Third Quarter | $ | .04 | $ | .01 | ||||
| Fourth Quarter | $ | .02 | $ | .01 | ||||
| 2018 – Prior to 300:1 reverse stock split | ||||||||
| High | Low | |||||||
| First Quarter | $ | 0.05 | $ | 0.02 | ||||
| Second Quarter | $ | 0.03 | $ | 0.01 | ||||
| Third Quarter | $ | 0.10 | $ | 0.01 | ||||
| Fourth Quarter | $ | 0.10 | $ | 0.03 | ||||
The last reported sale price of the Company’s common stock as of March 13, 2020 was $1.04 per share.
Record Holders
As of March 13, 2020, there were 2,861,740 shares of common stock issued and outstanding to approximately 197 shareholders of record.
| 10 |
Dividends
The Company paid $0 and $13,779 in in-kind dividends on its Series B Preferred Stock by the issuance of common stock to the Series B holders in 2019 and 2018, respectively. Each share of Series B Preferred Stock has the first preference to dividends, distributions and payments upon liquidation, dissolution and winding-up of the Company, and is entitled to an accrued cumulative but not compounding dividend at the rate of 5% per annum whether or not declared. After six months of the issuance date, such share and any accrued but unpaid dividends can be converted into common stock at the conversion price which is the lower of (i) $0.0101; or (ii) the lower of the dollar volume weighted average price of CANB common stock on the trading day prior to the conversion day or the dollar volume weighted average price of CANB common stock on the conversion day. The Series B Preferred Stock have no voting rights. There are no currently outstanding shares of Series B Preferred Stock.
We do not anticipate paying any cash dividends in the foreseeable future. Except for its Series B Preferred Stock, the payment of dividends is within the discretion of our Board of Directors and will depend on our earnings, capital requirements, financial condition, and other relevant factors. There are no restrictions that currently limit our ability to pay dividends on our common stock other than those generally imposed by applicable state law.
Securities Authorized for Issuance under Equity Compensation Plans
We do not have, or plan to have in the near future, an equity incentive plan.
Recent Sales of Unregistered Securities
Note- The share amounts referenced below do not reflect the 300:1 reverse split in March 2020.
The following is a summary of transactions since our previous disclosure on our Form 10-Q filed with the Securities and Exchange Commission on November 19, 2019 involving sales of our securities that were not registered under the Securities Act of 1933, as amended (the “Securities Act”). Each offer and sale were exempt from registration under either Section 4(a)(2) of the Securities Act or Rule 506(b) under Regulation D of the Securities Act.
On December 16, 2019, the Company issued 10,700,000 shares of CANB common stock to RedDiamond as agreed for the early retirement of CANB Series B Preferred Stock converted in August 2019.
From October 1, 2019 through December 31, 2019, the company issued an aggregate of 36,677,274 shares of CANB Common Stock to multiple consultants for services rendered.
From October 1, 2019 through December 31, 2019, the Company issued an aggregate of 4,250,000 shares of CANB Common Stock to members of the Advisory Board, Medical Advisory Board, and Sports Advisory Board for services rendered.
From October 1, 2019 through December 31, 2019, the Company issued an aggregate of 1,500,000 shares of Common Stock under the terms of executive employment agreements.
From October 1, 2019 through December 31, 2019, the Company issued an aggregate of 37,500,000 shares of CANB Common Stock under the terms of an inventory purchase agreement for total inventory of $487,500.
On March 3, 2020, the Company issued an aggregate of 11,650,000 shares of CANB Common Stock to multiple consultants for services rendered.
On March 3, 2020, the Company issued an aggregate of 6,000,000 shares of CANB Common Stock to members of the Advisory Board, Medical Advisory Board, and Sports Advisory Board for services rendered.
| 11 |
| Item 6. | Selected Financial Data |
Not required for smaller reporting companies.
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operation |
General
Can B̅ Corp. was originally formed as a Florida corporation on October 11, 2005, under the name of WrapMail, Inc. Effective January 5, 2015, we acquired 100% ownership of Prosperity Systems, Inc., which the Company is in the process of dissolving. Effective December 28, 2018, we acquired 100% ownership of Pure Health Products. In November 2018, we formed Duramed as a wholly-owned subsidiary. The Company is presently in the process of dissolving Prosperity.
We manufacture and sell products containing CBD. We also provide document, project, marketing and sales management systems to our residual business clients through our website and proprietary software, which divisions are being wound-down. The consolidated financial statements include the accounts of CANB and its wholly-owned subsidiary Pure Health Products from the date of its acquisition on December 28, 2018.
Results of Operations
Year Ended December 31, 2019 compared with Year Ended December 31, 2018:
Revenues increased $1,636,900 from $668,603 in 2018 to $2,305,503 in 2019. The increase was due to the growth of CBD product and durable equipment sales.
Cost of product sales increased $193,050 from $405,534 in 2018 to $598,584 in 2019 due to the growth of product sales and outreach into additional market segments such as wholesale and private label opportunities.
Officers and director’s compensation and payroll taxes increased $784,579 from $1,478,987 in 2018 to $2,263,566 in 2019. The 2019 expense amount ($2,263,566) includes additional stock-based compensation of ($1,210,915) pursuant to their respective employment agreements and related payroll taxes ($39,962). The 2018 expense amount ($1,478,987) includes additional stock-based compensation of ($1,255,193) pursuant to their respective employment agreements and related payroll taxes ($2,559).
Consulting fees increased $412,741 from $1,669,443 in 2018 to $2,082,184 in 2019. The 2018 expense amount ($1,669,443) includes stock-based compensation of ($1,524,107), resulting from stock issued for the service of consultants. The 2019 expense amount ($2,041,934) includes stock-based compensation of ($1,858,837), resulting from stock issued for the service of consultants.
Advertising expense increased $249,125 from $84,316 in 2018 to $333,441 in 2019.
Hosting expense decreased $1,663 from $14,697 in 2018 to $13,034 in 2019.
Rent expense increased $179,803 from $67,165 in 2018 to $246,968 in 2019.
Professional fees increased $169,723 from $117,718 in 2018 to $287,441 in 2019.
Depreciation of property and equipment increased $7,154 from $5,473 in 2018 to $12,627 in 2019.
Amortization of intangible assets increased $142,093 from $0 in 2018 to $142,093 in 2019.
Reimbursed expenses increased $242,585 from $0 in 2018 to $242,585 in 2019.
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Other operating expenses increased $426,053 from $241,044 in 2018 to $667,097 in 2019. The increase was due largely to higher commission fees, supplies expense and office expense in 2019 compared to 2018.
Net loss increased $480,193 from $4,112,277 in 2018 to $4,592,470 in 2019. The increase was due to the $2,612,193 increase in total operating expenses offset by the $690,234 decrease in other expense – net, the $2,084 increase in provision for income taxes and the $1,443,850 increase in gross profit.
Liquidity and Capital Resources
At December 31, 2019, the Company had cash and cash equivalents of $46,540 and a working capital of $2,881,147. Cash and cash equivalents decreased $761,207 from $807,747 at December 31, 2018 to $46,540 at December 31, 2019. For the year ended December 31, 2019, $3,312,495 was provided by financing activities, $2,413,420 was used in operating activities, and $1,660,282 was used in investing activities.
The Company currently has no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.
We currently have no commitments with any person for any capital expenditures.
We have no off-balance sheet arrangements.
| Item 7A. | Quantitative and Qualitative Disclosure About Market Risk |
Not applicable.
| Item 8. | Financial Statements and Supplementary Data |
Our Consolidated Financial Statements and Notes thereto, for the fiscal years ended December 31, 2019 and 2018 and the report of BMKR, LLP, our independent registered public accounting firm, are set forth on pages F-1 through F-30 of this Annual Report.
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
Not applicable.
| Item 9A. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer (CEO), as appropriate, to allow timely decisions regarding required disclosure. Based on the evaluation, the CEO has concluded that our disclosure controls and procedures are ineffective to ensure that information disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. This determination was based on the small size of our accounting staff, the lack of segregation of duties and the lack of an audit committee.
To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
| 13 |
Management Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Any internal control system, no matter how well designed, has inherent limitations and may not prevent or detect misstatements. Accordingly, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Management, with the participation of our Chief Executive Officer, has evaluated the effectiveness of our internal control over financial reporting as of December 31, 2019 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, because of the Company’s limited resources and limited number of employees, and the absence of an audit committee, management concluded that, as of December 31, 2019, our internal control over financial reporting is not effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principle, which creates a material weakness. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness means there is a risk that our financial reports or other filings may contain an error or inaccuracy or not submitted timely.
There was a material weakness in the Company’s internal control over financial reporting due to the fact that the Company did not have an adequate process established to ensure appropriate levels of review of accounting and financial reporting matters, which resulted in our closing process not identifying all required adjustments and disclosures in a timely fashion. We expect that the Company will need to hire accounting personnel with the requisite knowledge to improve the levels of review of accounting and financial reporting matters. The Company may experience delays in doing so and any such additional employees would require time and training to learn the Company’s business and operating processes and procedures. For the near-term future, until such personnel are in place, this will continue to constitute a material weakness in the Company’s internal control over financial reporting that could result in material misstatements in the Company’s financial statements not being prevented or detected.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934) during the year ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
|
Other Information |
None.
| Item 10. | Directors, Executive Officers and Corporate Governance |
Our board of directors is elected annually by our shareholders. The board of directors elects our executive officers annually. Our directors and executive officers as of March 13, 2020 are as follows:
| Name | Age | Position | ||
| Marco Alfonsi | 58 | CEO, Director and Chairman since June 15, 2017 | ||
| Stanley L. Teeple | 72 | CFO, Secretary and Director since October 1, 2018 | ||
| Phil Scala | 68 | Interim COO since August 15, 2019 | ||
| Pasquale Ferro | 57 | President, Pure Health Products since December 31, 2018 | ||
| Andrew Holtmeyer | 59 | VP of Business Development since December 31, 2018 | ||
| David Posel | 41 | COO. Pure Health Products- since February 12, 2018 | ||
| Frederick Alger Boyer, Jr. | 50 | Independent Director appointed October 9, 2019 | ||
| Ronald A. Silver | 84 | Independent Director appointed October 9, 2019 | ||
| James F. Murphy | 72 | Independent Director appointed October 9, 2019 |
| 14 |
Marco Alfonsi, CEO and Chairman Director has been a financial service professional for the past 20 years. Mr. Alfonsi was appointed director and CEO of the Company in or around January 2015. Immediately prior to that, he spent eight years serving as the CEO of Prosperity Systems, Inc.
Throughout his career, Mr. Alfonsi was directly and indirectly involved in raising over $100 million dollars for small and medium sized business. Prior to his involvement in the financial services industry, Mr. Alfonsi has owned, operated, financed and sold several businesses. Mr. Alfonsi successfully started and managed two companies (ExecuteDirect.com, and Bakers Express of New York, Inc.), and held senior management positions with a number of financial institutions, including: Global American Investments, Clark Street Capital and Basic Investors.
Stanley L. Teeple –Mr. Teeple, CFO, Secretary, Director, was engaged from 2017-2018 with Solis Tek, Inc. (OTCQB:SLTK) a California based publicly traded corporation as Senior Vice President, Corporate Secretary , and Chief Compliance Officer. Solis Tek, Inc. a NV Corporation, is a developer of lighting and nutrient products, and most recently in cultivation and processing for the cannabis industry. Previously, from 2015-2016 Mr. Teeple was Chief Financial Officer and Secretary for Zonzia Media, Inc. (OTC:ZONX), a provider of streaming video and content to cable subscribers and hotel networks throughout the eastern US. From 2008 to 2014 Mr. Teeple was Chief Financial Officer and Secretary of Indigo-Energy, Inc. (OTC:IDGG) a publicly traded company in the oil and gas exploration business. Over the prior three plus decades Mr. Teeple through his turnaround consulting business, Stan Teeple, Inc., has held numerous senior management positions in several public and private companies across a broad spectrum of industries. Additionally, he has operated and worked for various court appointed trustees and principals as CEO, COO, and CFO in the entertainment, pharmaceuticals, food, travel, and tech industries. He operated his consulting business on a project-to-project basis and holds various other directorships. His businesses operational strengths include knowing how to manage and maximize the resources and preserve the integrity of a company from start-up through to maturity and corporate compliance in a regulatory environment.
Phil Scala, Interim Chief Operating Officer, 40 year career offers unique expertise in delivering the information needed to make informed decisions, whether in times of crisis or in the course of simply running our business; is highlighted by his 29 years of service with the FBI. Throughout his 29-year career with the FBI, he worked, supervised and lead investigations on nearly every type of federal crime, including securities fraud, white collar crime, money laundering, tax violations, narcotics, racketeering, homicide, violent crime, kidnappings, and public corruptions. Mr. Scala has been the recipient of numerous commendations and awards for outstanding service, notably the FBI Shield of Bravery, as a group commendation, as the SWAT team leader of the Al-Qaeda Bomb Factory Raid, on June 3, 1993.
Mr. Scala was assigned to the Criminal Division of the New York Office. He served in numerous assignments within the Organized
crime branch and was sent to the Defense language Institute in Monterey, California to gain proficiency in the Italian/ Sicilian
languages. From 2003-2008, Mr. Scala, developed and implemented the NY Office’s Leadership Development Program, which assisted
relief supervisors develop excellence in leadership through mentoring, journalizing, “Best Practice” experiences,
and accountability tools. The program was designed to be continuous, progressive, and measurable in assisting the FBI leaders
maximize their leadership potential throughout their careers.
Mr. Scala received his Bachelor’s degree and Master of Business Administration in accounting from St. John’s University, he also earned a Master of Arts degree in Psychology from New York University.
| 15 |
Pasquale Ferro (“Pat” to his friends and co-workers), President of Pure health Products LLC, built Pure Health Products from the ground up inside a vacant warehouse including all mechanical, electrical, environmental, regulatory, and lab-quality specifications. Right out of school Pat began a career in real estate development both on the retail and commercial side of the business. Pat formed a company that would take new or distressed buildings (or anything in-between) and rehab and repair the facilities so they were commercially viable and move-in ready. During the course of this career Pat was often in charge of multiple work crews, union and non-union, for work in demolition, construction, plumbing, electrical, grounds crew and other professionally skilled tradesmen required to complete a building project.
Pat had his first foray into the manufacturing process in 2015 when he started Pure Health Products, LLC, which he developed into a regional research laboratory, new product development resource, and full-on production facility capable of producing capsules, tinctures, drops, salves, tablets and other products for the supplement and custom label community. Later in 2015, Pat connected with Marco Alfonsi, CEO of the Company, and became the production facility for all of the Company’s CBD based products. In late 2018, Pat sold Pure Health Products to the Company and became the President of that wholly-owned facility which he operates and manages today under a long term employment services agreement.
Andrew Holtmeyer, Director of Business Development Mr. Holtmeyer started his business career in the financial services sector. During his 20 year career on Wall Street, Mr. Holtmeyer worked at and built several investment firms that employed hundreds of salesmen. During the last 5 years of his career, he concentrated mostly on investment banking. After leaving the financial sector, Mr. Holtmeyer started a highly successful consulting firm, which concentrated on raising capital for small to mid-sized companies that were both private and public. After selling his consulting business, Mr. Holtmeyer started a very successful real estate business which is now run by his family.
David Posel, COO of Pure Health Products, LLC, 40, served as the Company’s COO during 2018, when the Company’s operations were limited to its contractual arrangement with Pure Health Products. After acquiring PHP directly, Mr. Posel was transitioned to COO of PHP.
Frederick Alger Boyer, Jr. Independent Director, is President & CEO of Advance Care Medical, Inc. - Mr. Boyer has over 25 years of Wall Street experience having worked on both the investment side as well as the banking side of the business Most recently he served as Head of Equities for the New York based investment bank H.C. Wainwright & Co. where he had overseen efforts in capital markets, sales, and trading. Prior to that he worked and or supervised teams at Rodman & Renshaw, Oppenheimer, Piper Jaffray, and Credit Suisse in New York, San Francisco, and Minneapolis. In his various roles he has advised hundreds of companies in their financing efforts both publicly and privately. Mr. Boyer has numerous securities licenses and is a graduate of the University of California at Berkeley.
Ronald A. Silver, Independent Director, was first elected to the Florida House of Representatives In 1978 and continued his tenure in that body until 1992. While in the Florida House, Silver served in major positions including Majority Whip (1984-1986) and Majority Leader (1986-1988). He also chaired various committees including the Select Committee on Juvenile Justice, Criminal Justice, Ethics and Elections and the subcommittee of Appropriations on General Government. He was then elected to the Florida Senate in 1992 and subsequently re-elected, serving as the Majority (Democratic) leader for the 1994 session. During his last term in the Senate he was designated by both the House and Senate as the Dean of the Legislature recognizing his standing as the longest serving member. His career as a lawmaker has yielded a vast and extensive knowledge of public policy issues and the legislative process, allowing him to be an advocate and servant for his diverse community. Throughout his tenure in the House and Senate, Mr. Silver has been known to tackle tough issues, transcend partisanship and build strong coalitions and in addition served on the Judiciary committee, which heard all condominium issues. As Senator, he served on a variety of committees, and was chairman of both the Appropriations Subcommittee on Health and Human Services and Criminal Justice. His career in the Senate has earned praise from his colleagues, in both the legislature and other branches of government throughout the nation. In 1993 Mr. Silver was elected Chairman of the Southern Legislative Conference (17 Southern States) of the Council of State Governments. Most recently, a new prescription drug plan of Medicare-eligible senior citizens in the State of Florida has been named “Silver Saver” in his honor. Since his retirement from the Senate in 2002, Mr. Silver also functions as President of his own consulting firm (Ron Silver & Associates) and maintains his law practice in Miami Beach, Florida. Mr. Silver is married with two children and three grandchildren.
| 16 |
James F. Murphy, Independent Director, brings more than 40 years of investigative and consulting experience as the Founder and President of Sutton Associates. From 1980 to 1984, Mr. Murphy was an Assistant Special Agent in Charge with the Federal Bureau of Investigation, responsible for a territory encompassing more than seven million people. His investigative specialties included organized crime, white-collar crime, labor racketeering and political corruption. From 1976 to 1980, Mr. Murphy was assigned to the Office of Planning and Evaluation at FBI headquarters, Washington, D.C. In this capacity, he evaluated and recommended changes in the FBI’s administrative and investigative programs. Since entering the private sector in 1984, Mr. Murphy has advanced the industry by developing systematic and professional protocols for performing due diligence, as well as other investigative services.
Board Committees
We have not yet established an audit committee, compensation committee, or nominating committee. During 2019, the functions ordinarily handled by these committees were handled by our entire Board.
Family Relationships
There are no familial relationships between any of our officers and directors.
Director or Officer Involvement in Certain Legal Proceedings
Our current directors and executive officers have not been involved in any legal proceedings as described in Item 401(f) of Regulation S-K in the past ten years.
Director Independence
The Company is not currently listed on any national securities exchange that has a requirement that the board of directors be independent. However, in anticipation of a possible exchange up listing, and in an effort toward better Board oversight, the company has engaged three independent Directors making the independent outside Director a majority on the Board of Directors.
Code of Ethics
We have adopted a Code of Ethics that applies to all of our employees and officers, and the members of our Board of Directors. This Code of Ethics is posted on the Company’s website and applies to all executive officers including CEO, CFO and COO.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based on our review of the reports filed by Reporting Persons, we believe that, during the year ended December 31, 2019, the following Reporting Persons did not meet all applicable Section 16(a) filing requirements: (i) Stanley Teeple, (ii) David Posel, and (iii Phil Scala. (iv.) Frederick Alger Boyer, (v.) Ronald Silver, (vi) James Murphy, (vi.) Pasquale Ferro, (vii.) Andrew Holtmeyer. Otherwise, we believe that the Reporting Persons met such filing requirements.
| 17 |
| Item 11. | Executive Compensation |
The table below summarizes all compensation awarded to, earned by, or paid to our executive officers and directors for all services rendered in all capacities to us during the previous two fiscal years, as of December 31, 2019.
| Executive Summary Compensation Table | |||||||||||||||||||||||||||||||||||
| Name and principal position | Year | Salary | Bonus | Stock awards | Option awards | Non-equity incentive plan comp. | Non-qualified deferred comp. earnings | All other comp. | Total | ||||||||||||||||||||||||||
| Marco Alfonsi(1) | 2018 | $ | 104,500 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 104,500 | ||||||||||||||||||
| 2019 | $ | 180,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 180,000 | |||||||||||||||||||
| Stanley L. Teeple(2) | 2018 | $ | 45,000 | $ | 0 | $ | 144,500 | $ | 118,200 | $ | 0 | $ | 0 | $ | 0 | $ | 307,700 | ||||||||||||||||||
| 2019 | $ | 180,000 | $ | 0 | $ | 372,667 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 552,667 | |||||||||||||||||||
| Andrew Holtmeyer(3) | 2018 | $ | 118,400 | $ | 0 | $ | 1,169,658 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 1,288,058 | ||||||||||||||||||
| 2019 | $ | 180,000 | $ | 0 | $ | 105,485 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 285,485 | |||||||||||||||||||
| David Posel (4) | 2018 | $ | 60,000 | $ | 0 | $ | 58,720 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 118,720 | ||||||||||||||||||
| 2019 | $ | 60,000 | $ | 0 | $ | 64,355 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 124,355 | |||||||||||||||||||
| Pasquale Ferro (5) | 2019 | $ | 180,000 | $ | 0 | $ | 527,425 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 707,425 | ||||||||||||||||||
| Johnny Mack PhD (6) | 2019 | $ | 31,154 | $ | 0 | $ | 89,513 | $ | 192,000 | $ | 0 | $ | 0 | $ | 0 | $ | 312,667 | ||||||||||||||||||
| Phil Scala (7) | 2019 | $ | 7,500 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 7,500 | ||||||||||||||||||
(1) Pursuant to an employment agreement entered on or around May 14, 2015, Marco Alfonsi was entitled to receive compensation of $6,000 per month through September 31, 2017 when the contract expired. On or around October 3, 2017, the Company entered into a new employment agreement with Mr. Alfonsi whereby he was entitled to receive $10,000 per month for a period of three years. Mr. Alfonsi also received one share of Series A Preferred Stock upon his execution of the new agreement. In addition, on or around October 4, 2017, the Company authorized the issuance of an additional two shares of Series A Preferred Stock to Mr. Alfonsi in consideration for cancellation of approximately $120,000 of deferred income owed to Mr. Alfonsi. The Company entered into a new employment agreement dated October 21, 2018 Mr. Alfonsi, pursuant to which Mr. Alfonsi agreed to continue to serve as the Company’s Chief Executive Officer (“CEO”) and accept appointment as Chairman of the Board of Directors (“Chairman”) for an initial term of four (4) years. He is entitled to receive $15,000 per month and other compensation under the new agreement.
(2) Pursuant to an employment agreement entered on or around October 15, 2018, Mr. Teeple serves as the Company’s Chief Financial Officer and Secretary for a term of 4 years. The Agreement also provides for compensation to Mr. Teeple of $15,000 cash per month and the issuance of 1 share of Series A Preferred Stock upon execution of the Agreement. The fair value of the Series A preferred share is $578,000 and has a vesting period of four years. An additional share of Series A Preferred Stock was issued in April 2019 per the Agreement. The fair value of the Series A Preferred share issued in April 2019 is $992,250 and has a vesting period of three years. In 2019 and 2018, the amortized portion of Series A preferred shares is $372,667 and $144,500, respectively.
(3) On February 16, 2018, the Company executed an Executive Service Agreement (“Holtmeyer Agreement”) with Andrew W Holtmeyer. The Holtmeyer Agreement provides that Mr. Holtmeyer serves as the Company’s Executive Vice President Business for a term of 3 years. The Holtmeyer Agreement also provides for compensation to Mr. Holtmeyer of $10,000 cash per month and the issuance of 3, 2 and 1 share of Series A Preferred Stock at the beginning of each year. On December 29, 2018, this Holtmeyer Agreement was terminated due to the execution of a new Holtmeyer Employment Agreement with Andrew W Holtmeyer. The Holtmeyer Employment Agreement provides that Mr. Holtmeyer serves as the Company’s Executive Vice President Business for a term of 4 years. The Holtmeyer Employment Agreement also provides for compensation to Mr. Holtmeyer of $15,000 cash per month and the issuance of 245,789 shares of common stock upon signing of the agreement. In 2018, the Company issued 5 shares of Series A preferred shares valued at $3,910,000. In 2019 and 2018, the amortized portion of Series A preferred shares is $105,485 and $1,169,658, respectively.
| 18 |
(4) On February 12, 2018, the Company executed an Executive Service Agreement (“Posel Agreement”) with David Posel. The Posel Agreement provides that Mr. Posel serves as the Company’s Chief Operating Officer for a term of 4 years. The Posel Agreement also provides for compensation to Mr. Posel of $5,000 cash per month and the issuance of 1 share of Series A Preferred Stock at the inception of the Posel Agreement. In the fourth quarter, this Posel Agreement was terminated due to the execution of a new Posel Employment Agreement between Pure Health Products, LLC and David Posel. The fair value of the Series A preferred Stock is $373,000 and has a vesting period of four years. In 2019 and 2018, the amortized portion of Series A preferred Stock related to Mr. Posel’s service as an executive is $64,355 and $58,720, respectively.
(5) On December 28, 2018, the Company executed an Executive Service Agreement (“Ferro Agreement”) with Pasquale Ferro. The Ferro Agreement provides that Mr. Ferro serves as the President of Pure Health Products, LLC for a term of 4 years. The Ferro Agreement also provides for compensation to Mr. Ferro of $15,000 cash per month and the issuance of 5 shares of Series A Preferred Stock upon execution of the Ferro Agreement. The fair value of the Series A preferred shares is $2,109,700 and has a vesting period of four years. In 2019, the amortized portion of Series A preferred stock is $527,425.
(6) On July 10, 2019, the Company executed an Executive Service Agreement (“Mack Agreement”) with Johnny J. Mack. The Mack Agreement provides that Mr. Mack serves as the Chief Operating Officer for a term of 90 days. The Mack Agreement also provided for compensation to Mr. Mack of $7,500 cash per month and the issuance of 3,500,000 shares of common stock within 30 days of execution of the Mack Agreement. The fair value of the common shares is $89,513. On September 10, 2019, the Company executed a Mack Executive Service Agreement (“Second Agreement”) with Mr. Mack. The Second Agreement provides that Mr. Mack serves as the Chief Operating Officer for a term of 1 year. The Second Agreement also provides for compensation to Mr. Mack of $15,000 per month and the option to receive a total of 32,000,000 options (“Options”) to purchase shares of the Company’s common stock, with 8,000,000 Options vesting on the effective date and additional tranches of 8,000,000 Options vesting on each of the first, second, and third anniversaries of the Effective Date. On October 4, 2019, Mr. Mack resigned and is no longer with the Company.
(7) On October 11, 2019, the Company executed an Executive Service Agreement (“Scala Agreement”) with Phil Scala. The Scala Agreement provides that Mr. Scala serves as the Interim Chief Operating Officer for a term of 90 days. The Scala Agreement also provides for compensation to Mr. Scala of $2,500 cash per month. On January 1, 2020, Scala and the Company extended the engagement until March 31, 2020.
We do not have an equity incentive plan and no named executive officer has unexercised outstanding equity awards.
| 19 |
The table below summarizes all compensation awarded to, earned by, or paid to our non-interested directors for all services rendered in all capacities to us during the previous two fiscal years, as of December 31, 2019.
| Non-Interested Director Summary Compensation Table | ||||||||||||||||||||||||||||||
| Name and principal position | Year | Fees Earned or Paid in Cash | Stock awards | Option awards (2) | Non-equity incentive plan comp. | Non-qualified deferred comp. earnings | All other com. | Total | ||||||||||||||||||||||
| Carl Dilley(1) | 2018 | $ | 0 | $ | 0 | $ | 84,000 | $ | 0 | $ | 0 | $ | 0 | $ | 84,000 | |||||||||||||||
| Director | 2019 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||
| Frederick A. Boyer | 2018 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||
| Director | 2019 | $ | 0 | $ | 0 | $ | 63,000 | $ | 0 | $ | 0 | $ | 0 | $ | 63,000 | |||||||||||||||
| Ronald Silver | 2018 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||
| Director | 2019 | $ | 0 | $ | 0 | $ | 63,000 | $ | 0 | $ | 0 | $ | 0 | $ | 63,000 | |||||||||||||||
| James F. Murphy | 2018 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||
| Director | 2019 | $ | 0 | $ | 0 | $ | 63,000 | $ | 0 | $ | 0 | $ | 0 | $ | 63,000 | |||||||||||||||
| (1) | Mr. Dilley resigned from the Company on February 21, 2019. |
| (2) | As of December 31, 2019, Directors Teeple, Boyer, Silver and Murphy each owned 3 million (pre-split) / 10 thousand post-split options to exercise and purchase stock at $.001 at any time until 2023. |
No director has received cash compensation for their directorship. We do not have a compensation committee and compensation for our directors and officers is determined by our board of directors.
We reimburse Non-Employee Directors for actual out-of-pocket costs incurred to attend board meetings. No additional compensation is paid for attendance in person or by telephone at board meetings.
The table below summarizes all outstanding equity awards, as of December 31, 2019 – Prior to 300:1 reverse stock split.
| Outstanding Equity Awards at Fiscal Year-End | ||||||||||||||||||||
| Name and principal position | Grant Date | Grant Type | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price | Option Expiration Date | ||||||||||||||
| Stanley Teeple - CFO | 10/21/18 | Stock Options | 3,000,000 | 0 | $ | .001 | 10/20/23 | |||||||||||||
| Johnny Mack PhD – Ex COO | 9/9/19 | Stock Options | 8,000,000 | 0 | $ | .001 | 9/8/24 | |||||||||||||
| Frederick A. Boyer - Director | 10/15/19 | Stock Options | 3,000,000 | 0 | $ | .001 | 10/14/24 | |||||||||||||
| Ronald Silver - Director | 10/15/19 | Stock Options | 3,000,000 | 0 | $ | .001 | 10/14/24 | |||||||||||||
| James F. Murphy - Director | 10/15/19 | Stock Options | 3,000,000 | 0 | $ | .001 | 10/14/24 | |||||||||||||
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
The following tables set forth the ownership, as of March 13, 2020, of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding voting stock, our directors, and our executive officers and directors as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in control. The Company’s principal office is the business address for each of the named shareholders.
| 20 |
There are 2,861,740 shares of common stock outstanding as of March 13, 2020, and 20 shares of Series A preferred stock issued and outstanding, which in aggregate are convertible into 666,680 shares of common stock at any time and represent 1,333,340 votes. There is a total of approximately 4,192,618 votes eligible to be cast in any Company vote as of March 13, 2020.
The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities.
Except as otherwise indicated and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown. Unless stated otherwise, the business address for these shareholders is 960 South Broadway, Suite 120, Hicksville NY 11801.
| Name | Title | Number of Common Shares | % of Common Shares | Number of Series A Preferred Shares | % of Series A Preferred Shares | % of Eligible Votes | Number of Warrants currently exercisable or exercisable in the next 60 days | |||||||||||||||||||
| Marco Alfonsi [1] | CEO, Director | 197,996 | 6.92 | % | 5 | 25 | % | 12.67 | % | 0 | ||||||||||||||||
| Stanley L. Teeple [2] | CFO, Director | 3,269 | 0.11 | % | 4 | 20 | % | 6.43 | % | 0 | ||||||||||||||||
| Andrew Holtmeyer [3] | Vice President | 3,693 | 0.13 | % | 5 | 25 | % | 8.03 | % | 0 | ||||||||||||||||
| David Posel [4] | COO, Pure Health Products | 0 | 0 | % | 1 | 5 | % | 1.59 | % | 0 | ||||||||||||||||
| Pasquale Ferro [5] | President, Pure Health Products | 74,599 | 2.61 | % | 5 | 25 | % | 9.72 | % | 0 | ||||||||||||||||
| Phil Scala [6] | Interim COO | 2,816 | .10 | % | 0 | 0 | % | .07 | % | 0 | ||||||||||||||||
| All officers and directors as a group [9 persons] | 289,040 | 10.10 | % | 20 | 100 | % | 38.67 | % | 0 | |||||||||||||||||
| (1) | As of March 13, 2020 Marco, Alfonsi owns approximately 197,996 shares of common stock and 5 shares of Series A preferred stock, which are convertible into 166,667 shares and equal 333,334 votes. Prior to October 29, 2015, Mr. Alfonsi owned 270,000 shares of the Company’s common stock, at which time it was agreed that he would retire 166,666 shares of common stock for 5 shares of Series A Preferred Stock. In addition to the listed shares, five adult members of Mr. Alfonsi’s family hold an aggregate of 42,343 shares of common stock, which shares have not been included in the above calculations. | |
| (2) | As of March 13, 2020, Stanley L. Teeple owns approximately 3,269 shares of common stock and 4 shares of Series A preferred stock, which are convertible into 133,334 shares and equal 266,667 votes. | |
| (3) | As of March 13, 2020, Andrew Holtmeyer owns approximately 3,693 shares of common stock and 5 shares of Series A preferred stock, which are convertible into 166,667 shares and equal 333,334 votes. | |
| (4) | As of March 13, 2020, David Posel owns 0 shares of common stock and 1 shares of Series A preferred stock, which is convertible into 33,334 shares and equal 66,666 votes. | |
| (5) | As of March 13, 2020, Pasquale Ferro owns approximately 74,599 shares of common stock and 5 shares of Series A preferred stock, which are convertible into 166,667 shares and equal 333,334 votes. | |
| (6) | As of March 13, 2020, Phil Scala owns approximately 2,816 shares of common stock and 0 shares of Series A preferred stock. | |
| (7) | As of December 31, 2019, Directors Teeple, Boyer, Silver and Murphy each owned 3 million (pre-split) / 10 thousand post-split options to exercise and purchase stock at $.001 at any time until 2023. |
| 21 |
The following tables set forth the ownership of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding voting stock, excluding our directors and our executive officers
| Name | Number of Common Shares | % of Common Shares | Number of Preferred A Shares | % of Shares | % of Eligible Votes | Number of Warrants currently exercisable or exercisable in the next 60 days | ||||||||||||||||||
| McKenzie Webster Limited [1] | 181,000 | 6.32 | % | 0 | 0 | % | 4.31 | % | 0 | |||||||||||||||
| (1) | McKenzie Webster Limited is controlled by the Company’s former director and CFO, Rolv Heggenhougen. The business address for this shareholder is 445 NE 12th Ave., Fort Lauderdale, Florida 33301. |
| Item 13. | Certain Relationships and Related Party Transactions, and Director Independence |
Can B̅ Corp.’s Corporate Governance Guidelines establish standards for evaluating Director independence and requires that a majority of Directors be independent. The Board determines the independence of each Director under Nasdaq governance standards. Those standards identify the types of relationships that, if material, could impair independence. The Board determined that, under the Nasdaq listing standards, the following non-employee Directors are independent: Frederick A. Boyer, Ronald Silver and James F. Murphy. Our non-independent directors are Marco Alfonsi and Stanley L. Teeple.
Except as described herein (or within the section entitled Executive Compensation of this prospectus), none of the following parties (each a “Related Party”) has, in our fiscal years ended 2018 and 2019, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
| ● | any of our directors or officers; |
| ● | any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our outstanding shares of common stock; or |
| ● | any member of the immediate family (including spouse, parents, children, siblings and in- laws) of any of the above persons. |
LI Accounting Associates, LLC (“LIA”), an entity controlled by a relative of the Managing Member PHP, is a vendor of Can B̅ Corp. At December 31, 2019, the Company did not have an account payable due to LIA. For the twelve months ended December 31, 2019, the Company had expenses to LIA of $10,750.
Pasquale Ferro, President of Pure Health Products LLC, manages the R&D and manufacturing of the Company products sold via other subsidiary companies. Mr. Ferro is also a substantial shareholder of the Company but receives no direct compensation from Can B, Corp. other than outlined in his Employment Agreement.
During the twelve months ended December 31, 2019, we had products and service sales to related parties totaling $0.
| Item 14. | Principal Accounting Fees and Services |
The following table sets forth fees billed to us by BMKR, LLP, our independent registered public accounting firm, during the fiscal years ended December 31, 2019 and December 31, 2018 for: (i) services rendered for the audit of our annual financial statements and the review of our quarterly financial statements; (ii) services by our independent registered public accounting firms that are reasonably related to the performance of the audit or review of our financial statements and that are not reported as audit fees; (iii) services rendered in connection with tax compliance, tax advice and tax planning; and (iv) all other fees for services rendered.
| December 31, 2019 | December 31, 2018 | |||||||
| Audit Fees | $ | 34,600 | $ | 23,965 | ||||
| Audited Related Fees | $ | $ | ||||||
| Tax Fees | $ | $ | ||||||
| All Other Fees | $ | $ | ||||||
| 22 |
| Item 15. | Exhibits, Financial Statement Schedules. |
Exhibits Schedule
The following exhibits are filed with this Annual Report:
| (1) | Filed with the Form S-1 Registration Statement filed with the SEC on December 2, 2015 and incorporated herein by reference. |
| (2) | Filed with the Current Report on Form 8-K filed with the SEC on January 15, 2019 and incorporated herein by reference. |
| (3) | Filed with the Annual Report on Form 10-K filed with the SEC on April 16, 2019 and incorporated herein by reference. |
| (4) | Filed with the Annual Report on Form 10-K filed with the SEC on April 6, 2018 and incorporated herein by reference. |
| (5) | Filed with the Current Report on Form 8-K filed with the SEC on January 30, 2019 and incorporated herein by reference. |
| (6) | Filed with the Current Report on Form 8-K filed with the SEC on February 26, 2019 and incorporated herein by reference. |
| (7) | Filed with the Current Report on Form 8-K filed with the SEC on July 18, 2019 and incorporated herein by reference. |
| (8) | Filed with the Current Report on Form 8-K filed with the SEC on January 14, 2020 and incorporated herein by reference. |
| (9) | Filed with the Current Report on Form 8-K filed with the SEC on December 6, 2019 and incorporated herein by reference. |
| (10) | Filed with the Current Report on Form 8-K filed with the SEC on February 18, 2020 and incorporated herein by reference. |
| 23 |
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Can B̅ Corp. | ||
| Date: April 2, 2020 | By: | /s/ Marco Alfonsi |
| Name: | Marco Alfonsi | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer and Principal Accounting Officer) | ||
| Date: April 2, 2020 | By: | /s/ Stanley L. Teeple |
| Name: | Stanley L. Teeple | |
| Title: | Chief Financial Officer | |
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Person | Capacity | Date | ||
| /s/ Marco Alfonsi | Director | April 2, 2020 | ||
| Marco Alfonsi | ||||
| /s/ Stanley L. Teeple | Director | April 2, 2020 | ||
| Stanley L. Teeple | ||||
| /s/ James F. Murphy | Director | April 2, 2020 | ||
| James F. Murphy |
| 24 |
CAN B̅ CORP. AND SUBSIDIARY
Index to Financial Statements
| Years Ended December 31, 2019 and 2018 | Pages | |
| Financial Statements | ||
| Report of Independent Registered Public Accounting Firm | F-2 | |
| Consolidated Balance Sheets | F-3 | |
| Consolidated Statements of Operations and Comprehensive Loss | F-4 | |
| Consolidated Statements of Stockholders’ Equity | F-5 | |
| Consolidated Statements of Cash Flows | F-6 | |
| Notes to Consolidated Financial Statements | F-7 |
| F-1 |
| F-2 |
Consolidated Balance Sheets
| Year Ended December 31, | ||||||||
| 2019 | 2018 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 46,540 | $ | 807,747 | ||||
| Accounts receivable, less allowance for doubtful accounts of $0 and $0, respectively | 1,251,609 | 39,172 | ||||||
| Inventory | 784,497 | 87,104 | ||||||
| Note Receivable | 24,268 | - | ||||||
| Prepaid expenses - current | 1,279,901 | 210,351 | ||||||
| Total current assets | 3,386,815 | 1,144,374 | ||||||
| Property and equipment, at cost less accumulated depreciation of $116,555 and $20,248, respectively | 1,075,242 | 59,619 | ||||||
| Other assets: | ||||||||
| Deposit - noncurrent | 21,287 | 48,726 | ||||||
| Prepaid expenses - noncurrent | 1,179,929 | 2,365,719 | ||||||
| Note receivable - noncurrent | - | 19,389 | ||||||
| Other receivable – noncurrent | 58,206 | - | ||||||
| Intangible assets, net of accumulated amortization of $202,521 and $0, respectively | 1,056,562 | - | ||||||
| Goodwill | 55,849 | 55,849 | ||||||
| Right-of-Use Asset, net of amortization of $6,280 and $0, respectively | 96,980 | - | ||||||
| Total other assets | 2,468,813 | 2,489,683 | ||||||
| Total assets | $ | 6,930,870 | $ | 3,693,675 | ||||
| Liabilities and Stockholders’ Deficiency | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 226,467 | $ | 73,059 | ||||
| Accrued officers’ compensation | 144,363 | 68,750 | ||||||
| Other accrued expenses payable | 61,557 | 43,778 | ||||||
| Notes and loans payable | 35,000 | 19,205 | ||||||
| Current portion of lease liability | 38,281 | - | ||||||
| Total current liabilities | 505,668 | 204,792 | ||||||
| Non-current portion of lease liability | 58,998 | - | ||||||
| Total liabilities | 564,666 | 204,792 | ||||||
| Commitments and contingencies (Notes 14) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, authorized 5,000,000 shares: | ||||||||
| Series A Preferred stock, no par value: authorized 20 shares, issued and outstanding 20 and 18 shares, respectively | 5,539,174 | 4,557,424 | ||||||
| Series B Preferred stock, $0.001 par value: authorized 500,000 shares, issued and outstanding 0 and 499,958 shares, respectively | - | 479 | ||||||
| Common stock, no par value; authorized 1,500,000,000 shares, issued and outstanding 804,281,149 and 440,566,325 shares, respectively | 23,113,077 | 16,624,557 | ||||||
| Additional Paid-in capital | 872,976 | 872,976 | ||||||
| Additional Paid-in capital – Stock Options (Note 11) | 202,200 | 202,200 | ||||||
| Accumulated deficit | (23,361,223 | ) | (18,768,753 | ) | ||||
| Total stockholders’ equity | 6,366,204 | 3,488,883 | ||||||
| Total liabilities and stockholders’ equity | $ | 6,930,870 | $ | 3,693,675 | ||||
See notes to consolidated financial statements.
| F-3 |
Consolidated Statements of Operations and Comprehensive Loss
Years Ended December 31, 2019 and 2018
| 2019 | 2018 | |||||||
| Revenues | ||||||||
| Product Sales | $ | 2,304,303 | $ | 651,978 | ||||
| Service Revenue | 1,200 | 16,625 | ||||||
| Total Revenues | 2,305,503 | 668,603 | ||||||
| Cost of product sales | 598,584 | 405,534 | ||||||
| Gross Profit | 1,706,919 | 263,069 | ||||||
| Operating costs and expenses: | ||||||||
| Officers and director’s compensation (including stock-based Compensation of $1,210,915 and $1,255,193, respectively | 2,263,566 | 1,478,987 | ||||||
| Consulting fees (including stock-based compensation of 1,858,837 and 1,524,107, respectively) | 2,082,184 | 1,669,443 | ||||||
| Advertising expense | 333,441 | 84,316 | ||||||
| Hosting expense | 13,034 | 14,697 | ||||||
| Rent expense | 246,968 | 67,165 | ||||||
| Professional fees | 287,441 | 117,718 | ||||||
| Depreciation of property and equipment | 12,627 | 5,473 | ||||||
| Amortization of intangible assets | 142,093 | - | ||||||
| Reimbursed Expenses | 242,585 | - | ||||||
| Other | 667,097 | 241,044 | ||||||
| Total operating expenses | 6,291,036 | 3,678,843 | ||||||
| Loss from operations | (4,584,117 | ) | (3,415,774 | ) | ||||
| Other income (expense): | ||||||||
| Loss on forgiveness of receivable from Pure Health Products | - | (85,827 | ) | |||||
| Loss of debt conversions | - | (1,299,369 | ||||||
| Loss on stock issuance | - | (649,259 | ) | |||||
| Interest income | 2,524 | 10,325 | ||||||
| Income from derivative liability | - | 1,591,137 | ||||||
| Interest expense (including amortization of debt discounts of $0 and 176,497, respectively | (8,793 | ) | (263,510 | ) | ||||
| Other income (expense) - net | (6,269 | ) | (696,503 | ) | ||||
| Loss before provision for income taxes | (4,590,386 | ) | (4,112,277 | ) | ||||
| Provision for income taxes | 2,084 | - | ||||||
| Loss and comprehensive loss | (4,592,470 | ) | (4,112,277 | ) | ||||
| Net loss per common share - basic and diluted | (.01 | ) | (.01 | ) | ||||
| Weighted average common shares outstanding – | ||||||||
| Basic | 617,557,484 | 276,026,704 | ||||||
| Diluted | 806,215,018 | 423,881,781 | ||||||
See notes to consolidated financial statements.
| F-4 |
Consolidated Statements of Stockholders’ Deficiency
Years Ended December 31, 2018 and 2019
| Preferred Stock A | Preferred Stock B | Common Stock | Additional | |||||||||||||||||||||||||||||||||
| , no par value | , $0.001 par value | , no par value | Paid-in | Accumulated | ||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||
| Balance, December 31, 2017 | 8 | $ | 243,537 | 157,985 | $ | 150 | 225,572,323 | $ | 12,524,042 | $ | 149,850 | ($ | 14,647,476 | ) | ($ | 1,729,897 | ) | |||||||||||||||||||
| Issuance of Series A Preferred Stock in 2018 pursuant to employment and consulting agreement | 13 | 4,441,690 | 4,441,690 | |||||||||||||||||||||||||||||||||
| Sale of Series B Preferred Stock in 2018 | 761,972 | 749 | 723,126 | 723,875 | ||||||||||||||||||||||||||||||||
| Issuance of common stock in 2018 for services rendered | 19,345,789 | 656,306 | 656,306 | |||||||||||||||||||||||||||||||||
| Issuance of common stock in 2018 for Preferred B dividends | 891,089 | 38,379 | (9,000 | ) | 29,379 | |||||||||||||||||||||||||||||||
| Issuance of common stock in 2018 in Satisfaction of debt and accrued interest | 45,263,513 | 1,604,412 | , | 1,604,412 | ||||||||||||||||||||||||||||||||
| Issuance of common stock in 2018 for Warrant exercise | 8,500,000 | 619,880 | 619,880 | |||||||||||||||||||||||||||||||||
| Issuance of common stock in 2018 in Satisfaction of accrued compensation | 4,370,629 | 192,300 | 192,300 | |||||||||||||||||||||||||||||||||
| Issuance of common stock in 2018 for Acquisition of PureHealth, LLC | 3,096,827 | 112,415 | 112,415 | |||||||||||||||||||||||||||||||||
| Issuance of stock options for retirement Of common shares | (3,000,000 | ) | (101,400 | ) | 84,000 | (17,400 | ) | |||||||||||||||||||||||||||||
| Issuance of stock options | 118,200 | 118,200 | ||||||||||||||||||||||||||||||||||
| Sale of common stocks in 2018 | 29,821,201 | 850,000 | 850,000 | |||||||||||||||||||||||||||||||||
| Issuance of common stock and retirement of Series A preferred stock In 2018 | (3 | ) | (127,803 | ) | 30,000,000 | 127,803 | - | |||||||||||||||||||||||||||||
| Issuance of common stock and retirement of Series B preferred stock In 2018 | (419,999 | ) | (420 | ) | 76,704,954 | 420 | - | |||||||||||||||||||||||||||||
| Net loss | (4,112,277 | ) | (4,112,277 | ) | ||||||||||||||||||||||||||||||||
| Balance, December 31, 2018 | 18 | $ | 4,557,424 | 499,958 | $ | 479 | 440,566,325 | $ | 16,624,557 | $ | 1,075,176 | ($ | 18,768,753 | ) | $ | 3,488,883 | ||||||||||||||||||||
| Issuance of Series A Preferred Stock in 2019 pursuant to employment agreement | 3 | 992,250 | 992,250 | |||||||||||||||||||||||||||||||||
| Issuance of common stock for retirement | ||||||||||||||||||||||||||||||||||||
| of Series A Preferred Stock | (1 | ) | (10,500 | ) | 10,000,000 | 10,500 | - | |||||||||||||||||||||||||||||
| Issuance of common stock for retirement of Series B Preferred Stock | (499,958 | ) | (479 | ) | 75,039,446 | 479 | - | |||||||||||||||||||||||||||||
| Sale of common stock in 2019 | 113,866,481 | 3,296,700 | 3,296,700 | |||||||||||||||||||||||||||||||||
| Issuance of common stock in 2019 for acquisition of technology and licenses | 20,574,089 | 648,655 | 648,655 | |||||||||||||||||||||||||||||||||
| Issuance of common stock in 2019 for acquisition of inventory | 37,500,000 | 487,500 | 487,500 | |||||||||||||||||||||||||||||||||
| Issuance of common stock in 2019 for satisfaction of accrued salaries | 667,959 | 54,340 | 54,340 | |||||||||||||||||||||||||||||||||
| Issuance of common stock in 2019 for services rendered | 106,066,849 | 1,990,346 | 1,990,346 | |||||||||||||||||||||||||||||||||
| Net loss | (4,592,470 | ) | (4,592,470 | ) | ||||||||||||||||||||||||||||||||
| 20 | $ | 5,539,174 | - | $ | - | 804,281,149 | $ | 23,113,077 | $ | 1,075,176 | ($ | 23,361,223 | ) | $ | 6,366,204 | |||||||||||||||||||||
See notes to consolidated financial statements.
| F-5 |
Consolidated Statements of Cash Flows
| Year Ended December 31, | ||||||||
| 2019 | 2018 | |||||||
| Operating Activities: | ||||||||
| Net loss | $ | (4,592,470 | ) | $ | (4,112,277 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation, net of prepaid stock- based consulting fees | 3,089,188 | 2,779,300 | ||||||
| Loss on forgiveness of receivable from PHP | - | 85,827 | ||||||
| Loss on stock issuance | - | 649,259 | ||||||
| Loss on debt conversion | - | 1,299,369 | ||||||
| Debt issuance expense | - | 14,000 | ||||||
| Expense from derivative liability | - | (1,591,137 | ||||||
| Depreciation of property and equipment | 89,779 | 5,473 | ||||||
| Amortization of intangible assets | 142,093 | - | ||||||
| Amortization of debt discounts | - | 176,497 | ||||||
| Bad debt expense | 253,483 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,465,920 | ) | (33,097 | ) | ||||
| Inventory | (209,893 | ) | 2,382 | |||||
| Prepaid expenses | (4,760 | ) | - | |||||
| Security deposit | 27,439 | (34,939 | ) | |||||
| Other receivable | (58,206 | ) | - | |||||
| Right-of-use asset | 299 | |||||||
| Accounts payable | 153,408 | (115,235 | ) | |||||
| Accrued officer’s compensation | 144,363 | 85,900 | ||||||
| Other accrued expenses payable | 17,777 | 35,109 | ||||||
| Net cash used in operating activities | (2,413,420 | ) | (753,569 | ) | ||||
| Investing Activities: | ||||||||
| Cash received from acquisition of PHP | - | 404 | ||||||
| Note receivable - current | (4,879 | ) | - | |||||
| Fixed assets additions | (1,105,403 | ) | ||||||
| Intangible assets additions | (550,000 | ) | (46,384 | ) | ||||
| Net cash used in investing activities | (1,660,282 | ) | (45,980 | ) | ||||
| Financing Activities: | ||||||||
| Proceeds received from notes and loans payable | 35,000 | 155,000 | ||||||
| Repayments of notes and loans payable | (19,205 | ) | (123,231 | ) | ||||
| Proceeds from sale of common stock | 3,296,700 | 850,000 | ||||||
| Proceeds from sale of Series B preferred stock | - | 723,875 | ||||||
| Net cash provided by financing activities | 3,312,495 | 1,605,644 | ||||||
| (Decrease)Increase in cash and cash equivalents | (761,207 | ) | 806,095 | |||||
| Cash and cash equivalents, beginning of period | 807,747 | 1,652 | ||||||
| Cash and cash equivalents, end of period | $ | 46,540 | $ | 807,747 | ||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Income taxes paid | $ | 2,084 | $ | - | ||||
| Interest paid | $ | 8,793 | $ | - | ||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Issuance of common stock in acquisition of inventory | $ | 487,500 | $ | - | ||||
| Issuance of common stock in acquisition of intangible assets | $ | 648,655 | $ | - | ||||
| Amortization of prepaid issuance of common Stock for services rendered | $ | 121,000 | $ | - | ||||
| Issuance of common stock in satisfaction of officer’s compensation | $ | 68,750 | $ | 282,200 | ||||
| Issuance of common stock in conversion of Series A Preferred Stock | $ | 10,500 | $ | - | ||||
| Issuance of common stock in retirement of Series B Preferred Stock | $ | 479 | $ | - | ||||
| Issuance of common stock in satisfaction of debt | $ | - | $ | 262,000 | ||||
| Issuance of common stock in acquisition of PHP | $ | - | $ | 178,997 | ||||
| Cancellation of note receivable and accrued interest in exchange for service | $ | - | $ | 19,611 | ||||
| Cancellation of note receivable and accrued interest in acquisition of PHP | $ | - | $ | 85,827,25 | ||||
| Issuance of common stock in satisfaction of accrued interest | $ | - | $ | 43,043 | ||||
See notes to consolidated financial statements.
| F-6 |
Notes to Consolidated Financial Statements
Year Ended December 31, 2019 and 2018
NOTE 1 – Organization and Description of Business
Can B̅ Corp. was originally incorporated as WrapMail, Inc. (“WRAP”) in Florida on October 11, 2005. Effective January 5, 2015, WRAP acquired 100% ownership of Prosperity Systems, Inc. (“Prosperity”), a New York corporation incorporated on April 2, 2008. The Company is in the process of dissolving Prosperity. The Company acquired 100% of the membership interests in Pure Health Products, LLC, a New York limited liability company (“PHP” or “Pure Health Products”) effective December 28, 2018. The Company’s durable equipment products, such as sam® units with CBD infused pads, are marketed and sold through its wholly-owned newly formed subsidiaries, Duramed Inc. (incorporated in or around November 2018) and DuramedNJ LLC (incorporated in or around May 2019) (collectively, “Duramed”). Duramed began operating on or about February1, 2019. The Company’s wholly-owned subsidiary, Radical Tactical LLC (“Radical Tactical”), formed May, 2019 provides the marketplace with millennium targeted product lines such as vapes, gums, and kratom. The Company’s hemp aggregation business is run through NY Hemp Depot LLC (the “Hemp Depot”), which was formed in or around July, 2019. The Company’s hemp farming business is run through Green Grow Farms, Inc. (“Green Grow Farms”), which was formed in August, 2019.
Effective December 27, 2010, WRAP effected a 10 for 1 forward stock split of its common stock. Effective June 4, 2013, WRAP effected a 1 for 10 reverse stock split of its common stock. The accompanying consolidated financial statements retroactively reflect these stock splits of March 6, 2020 for a 300:1 reverse split.
On May 15, 2017, WRAP changed its name to Canbiola, Inc. On March 6, 2020 Canbiola, Inc. changed its name to Can B̅ Corp. (the “Company” or “CANB” or “Can B” or “Registrant”).
Can B̅ specializes in the production and sale of a variety of hemp derived Cannabidiol (“CBD”) products such as oils, creams, moisturizers, isolate, gel caps, spa products, and concentrates. Can B̅ is developing its own line of proprietary products as well as seeking synergistic value through acquisitions in the Hemp Industry. Can B̅ aims to be the premier provider of the highest quality hemp CBD products on the market through sourcing the very best raw material and developing a variety of products we believe will improve people’s lives in a variety of areas.
The Company also owns document management and email marketing platforms which it is seeking to sell or repurpose.
For the periods presented, the assets, liabilities, revenues, and expenses are those of CANB. Prosperity, Radical Tactical, NY Hemp Depot and Green Grow Farms had no activity for the periods presented. Financial information for PHP and Duramed in the periods have been consolidated with the Company’s financials.
NOTE 2 – Going Concern Uncertainty
The consolidated financial statements have been prepared on a “going concern” basis, which contemplates the realization of assets and liquidation of liabilities in a normal course of business. As of December 31, 2019, the Company had cash and cash equivalents of $46,540 and a working capital of $2,881,147. For the years ended December 31, 2019 and 2018, the Company had net loss of $4,592,470 and $4,112,277, respectively. These factors raise substantial doubt as to the Company’s ability to continue as a going concern. The Company plans to improve its financial condition by raising capital through sales of shares of its common stock. Also, the Company plans to expand its operation of CBD products to increase its profitability. The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
| F-7 |
NOTE 3 – Summary of Significant Accounting Policies
(a) Principles of Consolidation
The consolidated financial statements include the accounts of CANB and its wholly-owned subsidiaries, Pure Health Products, Duramed, Prosperity and Radical Tactical. All intercompany balances and transactions have been eliminated in consolidation.
(b) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
(c) Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, notes receivable, notes and loans payable, accounts payable, and accrued expenses payable. Except for the noncurrent note receivable, the fair value of these financial instruments approximate their carrying amounts reported in the balance sheets due to the short term maturity of these instruments. Based on comparable instruments with similar terms, the fair value of the noncurrent note receivable approximates its carrying value.
Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
(d) Cash and Cash Equivalents
The Company considers all liquid investments purchased with a maturity of three months or less to be cash equivalents.
(e) Accounts receivable
Accounts receivable are presented in the balance sheet net of the allowance for doubtful accounts. Accounts receivable are written off when they are determined to be uncollectible. The allowance for doubtful accounts is estimated based on the Company’s historical losses, the existing economic conditions in the industry, and the financial stability of its customers. Bad debt expense was $253,483 and $0 for the years ended December 31, 2019 and 2018.
| F-8 |
(f) Inventory
Inventories consist of raw materials and finished goods and are stated at the lower of cost or net realizable value. Cost is principally determined using the first-in, first-out (FIFO) method.
(g) Prepaid expenses
Prepaid expenses include stock-based officer, employee and consulting compensation of $2,459,830 and $2,576,070 at December 31, 2019 and 2018, respectively. The Company’s policy is to record stock-based compensation as prepaids and expense over the term of employment and consulting agreements.
(h) Property and Equipment, Net
Property and equipment, net, is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the respective assets. Maintenance and repairs are charged to operations as incurred.
(i) Intangible Assets, Net
Intangible assets, net, are stated at cost less accumulated amortization. Amortization is calculated using the straight-line method over the estimated economic lives of the respective assets.
(j) Goodwill
The Company does not amortize goodwill, but instead tests for impairment at least annually. When conducting the annual impairment test for goodwill, the Company compares the estimated fair value of a reporting unit containing goodwill to its carrying value. If the estimated fair value of the reporting unit is determined to be less than its carrying value, goodwill is reduced, and an impairment loss is recorded.
(k) Long-lived Assets
The Company reviews long-lived assets held and used, intangible assets with finite useful lives and assets held for sale for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an evaluation of recoverability is required, the estimated undiscounted future cash flows associated with the asset is compared to the asset’s carrying amount to determine if a write-down is required. If the undiscounted cash flows are less than the carrying amount, an impairment loss is recorded to the extent that the carrying amount exceeds the fair value.
(l) Revenue Recognition
The Company recognizes revenue in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, which requires that five basic steps be followed to recognize revenue: (1) a legally enforceable contract that meets criterial standards as to composition and substance is identified; (2) performance obligations relating to provision of goods or services to the customer are identified; (3) the transaction price, with consideration given to any variable, noncash, or other relevant consideration, is determined; (4) the transaction price is allocated to the performance obligations; and (5) revenue is recognized when control of goods or services is transferred to the customer with consideration given, whether that control happens over time or not. Determination of criteria (3) and (4) are based on our management’s judgments regarding the fixed nature of the selling prices of the products and services delivered and the collectability of those amounts.
Private Label Customers, Global CBD, LLC and TZ Wholesale, are wholesale distributors of the Company’s product, under their own wholesale private label brand. The products are made to Company specifications and shipped directly to the wholesaler. The pricing is predicated upon a volume discount negotiated at the time of the placement of the orders. Product is produced and labeled in the Washington manufacturing facility and shipped directly to the Private Label customer who re-distributes to their retail and other customers. The products are fully paid when shipped.
| F-9 |
Revenue from product sales is recognized when an order has been obtained, the price is fixed and determinable, the product is shipped, title has transferred, and collectability is reasonably assured.
The Company’s Duramed Division provides a sam® Pro 2.0 medical device to patients through a doctor program whereby the physician evaluates the patients’ needs for medical necessity, and if determined that the device use would be beneficial, writes a prescription for the patient who signs a rental form, for a 35 day cycle for the unit, that is submitted to Duramed who bills the appropriate insurance company. The insurance company pays the invoice, or a negotiated amount via arbitration, and that revenue is reported as revenue when invoiced to the insurance carrier. The collected amount is reconciled with the invoice amount on a daily basis.
(m) Cost of Product Sales
The cost of product sale is the total cost incurred to obtain a sale and the cost of the goods sold, and the Company’s policy is to recognize it in the same manner as, and in conjunction with, revenue recognition. Cost of product sale primarily consisted of the costs directly attributable to revenue recognized and includes expenses related to the production, packaging and labeling of our CBD products.
(m) Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance with Accounting Standards Codification (“ASC”) Topic 718, “Compensation – Stock Compensation” (“ASC718”) and ASC 505-50, “Equity – Based Payments to Non-Employees.” In addition to requiring supplemental disclosures, ASC 718 addresses the accounting for share-based payment transactions in which a company receives goods or services in exchange for (a) equity instruments of the company or (b) liabilities that are based on the fair value of the company’s equity instruments or that may be settled by the issuance of such equity instruments. ASC 718 focuses primarily on accounting for transactions in which a company obtains employee services in share-based payment transactions.
In accordance with ASC 505-50, the Company determines the fair value of the stock-based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instrument is reached, or (2) the date at which the counterparty’s performance is complete.
Options and warrants
The fair value of stock options and warrants is estimated on the measurement date using the Black-Scholes model with the following assumptions, which are determined at the beginning of each year and utilized in all calculations for that year:
Risk-Free Interest Rate.
We utilized the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected term of our awards.
Expected Volatility.
We calculate the expected volatility based on a volatility index of peer companies as we did not have sufficient historical market information to estimate the volatility of our own stock.
Dividend Yield.
We have not declared a dividend on its common stock since its inception and have no intentions of declaring a dividend in the foreseeable future and therefore used a dividend yield of zero.
| F-10 |
Expected Term.
The expected term of options granted represents the period of time that options are expected to be outstanding. We estimated the expected term of stock options by using the simplified method. For warrants, the expected term represents the actual term of the warrant.
Forfeitures.
Estimates of option forfeitures are based on our experience. We will adjust our estimate of forfeitures over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of compensation expense to be recognized in future periods.
(o) Advertising
Advertising costs are expensed as incurred and amounted to $333,441 and $84,316 for the years ended December 31, 2019 and 2018, respectively.
(p) Research and Development
Research and development costs are expensed as incurred. In the period ended December 31, 2019 and 2018, the Company spent $150,000 and $75,000 in research and development which was expenses as spent, respectively.
(q) Income Taxes
Income taxes are accounted for under the assets and liability method. Current income taxes are provided in accordance with the laws of the respective taxing authorities. Deferred income taxes are provided for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is not more likely than not that some portion or all of the deferred tax assets will be realized.
The Company has adopted the provisions required by the Income Taxes topic of the FASB Accounting Standards Codification. The Codification Topic requires the recognition of potential liabilities as a result of management’s acceptance of potentially uncertain positions for income tax treatment on a “more-likely-than-not” probability of an assessment upon examination by a respective taxing authority. The Company believes that it has not taken any uncertain tax positions and thus has not recorded any liability.
(r) Net Income (Loss) per Common Share
Basic net income (loss) per common share is computed on the basis of the weighted average number of common shares outstanding during the period.
Diluted net income (loss) per common share is computed on the basis of the weighted average number of common shares and dilutive securities (such as stock options and convertible securities) outstanding. Dilutive securities having an anti-dilutive effect on diluted net income (loss) per share are excluded from the calculation. For the periods presented, the diluted net loss per share calculation excluded the effect of Series B preferred stocks and stock options outstanding (see Notes 9, 10 and 11).
(s) Recent Accounting Pronouncements
In 2016, the FASB issued ASU 2016-2 (Topic 842) which establishes a new lease accounting model for lessees. Under the new guidance, lessees will be required to recognize right of use assets and liabilities for most leases having terms of 12 months or more. Effective January 1, 2019, we adopted this new accounting guidance using the effective date transition method, which permits entities to apply the new lease standards using a modified retrospective transition approach at the date of adoption. As such, historical periods will continue to be measured and presented under the previous guidance while current and future periods subject to this new accounting guidance. Upon adoption we recorded a $100,681 right-of-use asset related to our one operating lease (see Note 14) and a $90,591 lease liability.
| F-11 |
(t) Reclassifications
Certain
amounts in the prior year consolidated financial statements have been reclassified to conform to the current year presentation.
These reclassification adjustments had no effect on the Company’s previously reported net income.
NOTE 4 – Inventories
Inventories consist of:
| December 31, 2019 | December 31, 2018 | |||||||
| Raw materials | $ | 708,239 | $ | 79,652 | ||||
| Finished goods | 76,258 | 7,452 | ||||||
| Total | $ | 784,497 | $ | 87,104 | ||||
NOTE 5 – Notes Receivable
Notes receivable consist of:
| December 31, 2019 | December 31, 2018 | |||||||
| Note receivable dated November 30, 2015 from Stock Market Manager, Inc, interest at 3% per annum due November 30, 2020 | $ | 19,389 | $ | 19,389 | ||||
| Note receivable dated February 8,2019 from an employee, weekly installments of $1,200 with interest at 8% per annum. | 4,879 | - | ||||||
| Total | 24,268 | 19,389 | ||||||
| Current portion of notes receivable | (24,268 | ) | - | |||||
| Noncurrent portion of notes receivable | $ | - | $ | 19,389 | ||||
| F-12 |
NOTE 6 – Property and Equipment, Net
Property and Equipment, net, consist of:
December 31, 2019 | December 31, 2018 | |||||||
| Furniture & Fixtures | $ | 19,018 | $ | 19,018 | ||||
| Office Equipment | 12,378 | 20,992 | ||||||
| Manufacturing Equipment | 355,016 | 46,384 | ||||||
| Medical Equipment | 783,782 | - | ||||||
| Leasehold Improvements | 21,603 | - | ||||||
| Total | 1,191,797 | 86,394 | ||||||
| Accumulated depreciation | (116,555 | ) | (26,775 | ) | ||||
| Net | $ | 1,075,242 | $ | 59,619 | ||||
NOTE 7 – Intangible Assets, Net
Intangible assets, net, consist of:
December 31, 2019 | December 31, 2018 | |||||||
| Video conferencing software acquired by Prosperity in December 2009 | $ | 30,000 | $ | 30,000 | ||||
| Enterprise and audit software acquired by Prosperity in April 2008 | 20,000 | 20,000 | ||||||
| Patent costs incurred by WRAP | 6,880 | 6,880 | ||||||
| Hemp license and technology | 1,000,000 | - | ||||||
| CBD technology | 198,655 | - | ||||||
| Other | 3,548 | 3,548 | ||||||
| Total | 1,259,083 | 60,428 | ||||||
| Accumulated amortization and Impairment | (202,521 | ) | (60,428 | ) | ||||
| Net | $ | 1,056,562 | $ | - | ||||
The CBD related technology were purchased from Hudilab, Inc. (“HUDI”) and Seven Chakras, LLC (“Seven Chakras”) during the three months ended March 31, 2019. On January 14, 2019, the Company and PHP (collectively, the “buyer”) entered into a License and Acquisition Agreement (the “LAA”) with HUDI. Pursuant to the LAA, HUDI will sell the technology owned by it to the buyer in exchange for 7,500,000 (prior to 300:1 reverse split) shares of CANB common stock. On January 14, 2019, the shares were issued to the owner of HUDI and valued at $131,625. On January 31, 2019, PHP entered into an Asset Purchase Agreement (the “Chakras Agreement”) with Seven Chakras, LLC (“Seven Chakras”). Pursuant to the Chakras Agreement, PHP purchased the rights and title to (i) Seven Chakras’ proprietary formulas, methods, trade secrets, and know-how related to the production of Seven Chakras’ products containing cannabidiol (“CBD”), (ii) Seven Chakras’ tradename, domain name, and social media sites, and (iii) other assets of Seven Chakras including but not limited to raw materials, equipment, packaging and labeling materials, mailing lists, and marketing materials (collectively, the “Assets”). On February 20, 2019, the Company issued 1,000,000 (prior to 300:1 reverse split) shares of CANB common stock valued at $17,030 to owners of Seven Chakras as additional consideration, along with the $50,000 cash payments, pursuant to the Chakras Agreement.
| F-13 |
The hemp related license and technology purchased from Shi Farms during the three months ended September 30, 2019. Hemp Depot will contract with farmers in New York to grow hemp under a controlled program of specific strains, cultured feminized seeds, proven technology, and access to processing for their crop. NY Hemp Depot will amalgamate the cultivated off-take from the farmers, combine and fill “super-sacks” for shipping to the processing facility in Colorado to produce high-grade isolate or distillate for use in Can B’s manufacturing facility in Lacey WA.
The other intangible assets relate to the document management and email marketing divisions. Since December 31, 2017, the Company do not expect any future positive cash flow from these divisions. Accordingly, the net carrying value of these intangible assets was reduced to $0.
NOTE 8 – Notes and Loans Payable
Notes and loans payable consist of:
| December 31, 2019 | December 31, 2018 | |||||||
| Note payable to brother of Marco Alfonsi, Chief Executive Officer of the Company, interest at 10% per annum, due August 22, 2016 (now past due) | 5,000 | 5,000 | ||||||
| Note payable to Carl Dilley, a director of the Company, interest at 12.99% per annum, due February 1, 2021 | - | 10,899 | ||||||
| Loan payable to McKenzie Webster Limited (“MWL”), non-interest bearing, due on demand. | - | 3,000 | ||||||
| Loan payable to Pasquale Ferro, interest at 12% per annum, due December 2020. | 30,000 | - | ||||||
| Total | $ | 35,000 | $ | 18,899 | ||||
NOTE 9 – Preferred Stock
Note- The share and vote amounts referenced below are reflected prior to the 300:1 reverse split in March 2020.
Each share of Series A Preferred Stock is convertible into 10,000,000 shares of CANB common stock and is entitled to 20,000,000 votes.
Each share of Series B Preferred Stock has the first preference to dividends, distributions and payments upon liquidation, dissolution and winding-up of the Company, and is entitled to an accrued cumulative but not compounding dividend at the rate of 5% per annum whether or not declared. After six months of the issuance date, such share and any accrued but unpaid dividends can be converted into common stock at the conversion price which is the lower of (i) $0.0101; or (ii) the lower of the dollar volume weighted average price of CANB common stock on the trading day prior to the conversion day or the dollar volume weighted average price of CANB common stock on the conversion day. The shares of Series B Preferred Stock have no voting rights.
On January 22, 2018, the Company issued 87,368 shares of CANB Series B Preferred Stock to RedDiamond Partners LLC (“RedDiamond”) pursuant to an amended Securities Purchase Agreement dated January 9, 2018, in exchange for proceeds of $83,000, or $0.95 per CANB Series B Preferred share.
| F-14 |
On February 12, 2018, the Company issued 1 share of CANB Series A Preferred Stock to David Posel pursuant to a service agreement. The fair value of the issuance is $373,000 and will be amortized over the vesting period of four years.
On February 16, 2018, the Company issued 3 shares of CANB Series A Preferred Stock to Andrew Holtmeyer pursuant to a service agreement. The fair value of the issuance is $1,020,000 and will be amortized over the vesting period of one year.
On February 16, 2018, the Company issued 87,368 shares of CANB Series B Preferred Stock to RedDiamond Partners LLC (“RedDiamond”) pursuant to an amended Securities Purchase Agreement dated January 9, 2018, in exchange for proceeds of $83,000, or $0.95 per CANB Series B Preferred share.
On March 20, 2018, the Company issued 87,368 shares of CANB Series B Preferred Stock to RedDiamond Partners LLC (“RedDiamond”) pursuant to an amended Securities Purchase Agreement dated January 9, 2018, in exchange for proceeds of $83,000, or $0.95 per CANB Series B Preferred share.
On April 13, 2018, April 25, 2018, May 3, 2018, June 19, 2018 and June 25, 2018, RedDiamond Partners converted its 10,000 shares, 10,000 shares, 10,000 shares, 15,000 shares and 10,000 shares of CANB Series B Preferred Stock to 1,287,129 shares, 1,287,129 shares, 1,287,129 shares, 3,545,455 shares, and 2,363,636 shares of CANB common stock, respectively.
On May 14, 2018, the Company issued 1 share of CANB Series A Preferred Stock to a consultant pursuant to a Consulting Agreement dated May 11, 2018. The $150,000 fair value of the issuance was partially charged to consulting fees in the three months ended September 30, 2018.
From July 24, 2018 to September 26, 2018, RedDiamond Partners converted aggregately 263,263 shares of CANB Series B Preferred Stock to 53,839,743 shares of CANB common stock.
On August 28, 2018, September 14, 2018 and September 19, 2018, the Company issued 36,842 shares, 105,263 shares, and 105,263 shares of CANB Series B Preferred Stock, respectively, to RedDiamond Partners LLC (“RedDiamond”) pursuant to an amended Securities Purchase Agreement dated January 9, 2018, in exchange for proceeds of $35,000, $100,000 and $100,000, respectively, or $0.95 per CANB Series B Preferred share.
From October 2, 2018 to November 7, 2018, RedDiamond Partners converted aggregately 101,736 shares of CANB Series B Preferred Stock to 13,094,733 shares of CANB common stock.
On October 23, 2018 and November 14, 2018, the Company issued 200,000 shares and 52,500 shares of CANB Series B Preferred Stock, respectively, to RedDiamond Partners LLC (“RedDiamond”) in exchange for proceeds of $190,000 and $49,875, respectively, or $0.95 per CANB Series B Preferred share.
On December 28,2018, Marco Alfonsi converted 3 shares of CANB Series A Preferred Stock to 30,000,000 shares of CANB common stock.
On December 29, 2018 the Company issued 8 shares of CANB Series A Preferred Stock to three officers of the company (1 share to Stanley L. Teeple, 5 shares to Pasquale Ferro and 2 shares to Andrew Holtmeyer), pursuant to the employment agreements with them. The fair value of the issuance totaled at $4,624,000 and will be amortized over the vesting period of four years.
On January 28, 2019, the Company issued 10,000,000 shares of CANB common stock to a consultant of the Company in exchange for the retirement of 1 share of CANB Series A Preferred Stock.
From February 21, 2019 to March 12, 2019, the Company issued aggregately 20,221,436 shares of CANB common stock to RedDiamond in exchange for the retirement of 157,105 shares of CANB Series B Preferred Stock.
| F-15 |
On May 28, 2019, the Company issued 3 shares of CANB Series A Preferred Stock to Stanley L. Teeple pursuant to the employment agreement with him. The fair value of the issuance totaled at $1,203,000 and will be amortized over the vesting period of four years.
On April 26, 2019, the Company issued 1,930,693 shares of CANB common stock to RedDiamond in exchange for the retirement of 15,000 shares of CANB Series B Preferred Stock.
On May 1, 2019, the Company issued 2,574,257 shares of CANB common stock to RedDiamond in exchange for the retirement of 20,000 shares of CANB Series B Preferred Stock.
On May 9, 2019, the Company issued 7,113,059 shares of CANB common stock to RedDiamond in exchange for the retirement of 55,263 shares of CANB Series B Preferred Stock.
On June 7, 2019, the Company issued 3,217,822 shares of CANB common stock to RedDiamond in exchange for the retirement of 25,000 shares of CANB Series B Preferred Stock.
On August 13, 2019, the Company issued 29,282,179 shares of CANB common stock to RedDiamond in exchange for the retirement of 227,590 shares of CANB Series B Preferred Stock.
On December 16, 2019, the Company issued 10,700,000 shares of CANB common stock to RedDiamond as agreed for the early retirement of CANB Series B Preferred Stock converted in August 2019.
NOTE 10 – Common Stock
Note- The share amounts referenced below are reflected prior to the 300:1 reverse split in March 2020.
On February 7, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $9,825 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended March 31, 2018.
On February 9, 2018, the Company issued 3,000,000 and 3,000,000 shares of CANB common stock to its two directors for services rendered, respectively. The $101,400 fair value of each 3,000,000 shares of CANB common stock was charged to directors fees in the three months ended March 31, 2018. The shares issued to one of the directors were converted to options at June 11, 2018 (see Note 11).
On February 13, 2018, the Company issued 150,000 shares of CANB common stock to a consultant for services rendered. The $5,085 fair value of the 150,000 shares of CANB common stock was partially charged to consulting fees in the three months ended March 31, 2018.
On February 14, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $8,500 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended March 31, 2018.
On February 19, 2018, the Company issued 150,000 shares of CANB common stock to a consultant for services rendered. The $5,280 fair value of the 150,000 shares of CANB common stock was partially charged to consulting fees in the three months ended March 31, 2018.
On February 26, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $11,375 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended March 31, 2018.
| F-16 |
On March 1, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $10,900 fair value of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended March 31, 2018.
On March 20, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $6,500 fair value of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended March 31, 2018.
On April 13, 2018, April 25, 2018, May 3, 2018, June 19, 2018 and June 25, 2018, the Company issued 1,287,129 shares, 1,287,129 shares, 1,287,129 shares, 3,545,455 shares, and 2,363,636 shares of CANB common stock to RedDiamond in exchange for the retirement of 10,000 shares, 10,000 shares, 10,000 shares, 15,000 shares and 10,000 shares of CANB Series B Preferred Stock, respectively.
On May 9, 2018, the Company issued 125,000 shares of CANB common stock to a consultant for services rendered. The $1,812 fair value of the 125,000 shares of CANB common stock was partially charged to consulting fees in the three months ended June 30, 2018.
On May 29, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $5,000 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended June 30, 2018.
On May 31, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $4,600 fair value of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended June 30, 2018.
On June 4, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $5,750 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended June 30, 2018.
On June 11, 2018, the Company agreed to issue 2,749,429 shares of CANB common stock to a lender in satisfaction of notes payable of $15,000 and accrued interest payable of $4,246. The shares was issued at August 24, 2018.
On June 18, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $6,250 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended June 30, 2018.
On June 22, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $8,250 fair value of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended June 30, 2018.
From July 24, 2018 to September 26, 2018, the Company issued aggregately 53,839,743 shares of CANB common stock to RedDiamond in exchange for the retirement of 263,263 shares of CANB Series B Preferred Stock.
On July 31, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $3,225 fair value of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended September 30, 2018.
On August 9, 2018, Company received a conversion notice from a lender. As a result, 9,544,292 shares of CANB common stock was issued to the lender in satisfaction of notes payable of $50,000 and accrued interest payable of $7,266 at August 21, 2018.
On August 28, 2018, the Company issued 2,000,000 shares of CANB common stock to a consultant for services rendered. The $159,600 fair value of the 2,000,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September 30, 2018.
| F-17 |
On September 6, 2018, the Company issued 300,000 shares of CANB common stock to a consultant for services rendered. The $16,500 fair value of the 300,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September 30, 2018.
On September 6, 2018, the Company issued 500,000 shares of CANB common stock to a consultant for services rendered. The $27,500 fair value of the 500,000 shares of CANB common stock was charged to consulting fees in the three months ended September 30, 2018.
On September 6, 2018, the Company issued 8,430,331 shares of CANB common stock to a lender in satisfaction of notes payable of $38,500 and accrued interest payable of $7,867.
On September 7, 2018, the Company issued 5,121,694 shares of CANB common stock to a lender in satisfaction of notes payable of $25,000 and accrued interest payable of $3,169.
On September 7, 2018, the Company issued 10,045,667 shares of CANB common stock to a lender in satisfaction of notes payable of $50,000 and accrued interest payable of $10,274.
On September 8, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $11,500 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September 30, 2018.
On September 10, 2018, the Company issued 500,000 shares of CANB common stock to a consultant for services rendered. The $19,950 fair value of the 500,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September 30, 2018.
On September 17, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $10,750 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September 30, 2018.
On September 18, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $13,725 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September 30, 2018.
On September 20, 2018, the Company issued 7,407,407 shares of CANB common stock to an investor pursuant to a Stock Purchase Agreement dated September 17, 2018, in exchange for proceeds of $200,000, or $0.027 per CANB common share.
On September 21, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $14,500 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September 30, 2018.
On September 25, 2018, the Company issued 2,000,000 shares of CANB common stock to a consultant for services rendered. The $97,400 fair value of the 2,000,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September 30, 2018.
From October 2, 2018 to November 7, 2018, the Company issued aggregately 13,094,733 shares of CANB common stock to RedDiamond in exchange for the retirement of 101,736 shares of CANB Series B Preferred Stock.
From November 5, 2018 to December 28, 2018, the Company issued aggregately 2,125,000 shares of CANB common stock to multiple consultants for services rendered. The $80,665 fair value of the 2,125,000 shares of CANB common stock was partially charged to consulting fees in the three months ended December 30, 2018.
From December 3, 2018 to December 28, 2018, the Company issued aggregately 1,500,000 shares of CANB common stock to three board members for services rendered. The $62,342 fair value of the 1,500,000 shares of CANB common stock was charged to director fees in the three months ended December 30, 2018.
| F-18 |
From December 3, 2018 to December 28, 2018, the Company issued aggregately 22,413,794 shares of CANB common stock to multiple investors pursuant to relative Stock Purchase Agreements dated on various dates, in exchange for total proceeds of $650,000.
On December 11, 2018, the Company issued 891,089 shares of CANB common stock to RedDiamond in satisfaction of dividend payable of $9,000.
On December 19, 2018, the Company issued 891,089 shares of CANB common stock to Auctus, LLC pursuant to a cashless exercise of stock options.
On December 21, 2018, Company received a conversion notice from a lender. As a result, 9,372,100 shares of CANB common stock was issued to the lender in satisfaction of notes payable of $83,500 and accrued interest payable of $10,221.
On December 21, 2018, Company issued aggregately 4,370,629 shares of CANB common stock to four officers of the Company in satisfaction of accrued compensation of $192,300.
On December 28, 2018, the Company issued 3,096,827 shares of CANB common stock for the acquisition of Pure Health Products, LLC.
On December 28, 2018, the Company issued 245,789 shares of CANB common stock to an officer of the Company pursuant to the Employment Agreement dated December 29, 2018 with Andrew Holtmeyer. The $10,371 fair value of the issuance was charged to stock-based compensation in the three months ended December 31, 2018.
On December 29, the Company issued 30,000,000 shares of CANB common stock to Marco Alfonsi in exchange for the return of 3 shares of CANB Series A Preferred Stock owned by Marco Alfonsi.
From January 4, 2019 to March 27, 2019, the Company issued aggregately 41,431,994 shares of CANB common stock to multiple investors pursuant to relative Stock Purchase Agreements dated on various dates, in exchange for total proceeds of $1,196,100.
On January 14, 2019, the Company issued 7,500,000 shares of CANB common stock to Hudilab, Inc. (“HUDI”), pursuant to a License and Acquisition Agreement for purchase of the technology owned by HUDI.
From January 18, 2019 to March 17, 2019, the Company issued aggregately 24,600,000 shares of CANB common stock to multiple consultants for services rendered.
From January 19, 2019 to March 27, 2019, the Company issued aggregately 1,167,959 shares of CANB common stock to employee and officers of the Company pursuant to employee agreement and in satisfaction of accrued compensation for the quarter ended March 31, 2019.
On February 5, 2019, the Company issued 2,000,000 shares to the owner of TZ Wholesale LLC, pursuant to a Memorandum of Understanding (the “MOU”) dated November 9, 2018.
On February 20, 2019, the Company issued 1,000,000 shares of CANB common stock to owners of Seven Chakras pursuant to an Asset Purchase Agreement (the “Agreement”) with Seven Chakras, LLC dated January 31, 2019.
From April 1, 2019 through June 30, 2019 the company issued an aggregate of 15,511,767 shares of CANB Common Stock to multiple consultants for services rendered.
From April 1, 2019 through June 30, 2019, the Company issued an aggregate of 4,174,886 shares of CANB Common Stock to members of the Advisory Board, Medical Advisory Board, and Sports Advisory Board for services rendered.
From April 1, 2019 through June 30, 2019, the Company issued an aggregate of 1,384,621 shares of Common Stock under the terms of executive employment agreements.
| F-19 |
From April 1, 2019 through June 30, 2019, the Company issued an aggregate of 25,862,071 shares of CANB shares under the terms of the Stock Purchase Agreements for total proceeds of $750,000.
From July 1, 2019 through September 30, 2019, the company issued an aggregate of 5,418,301 shares of CANB Common Stock to multiple consultants for services rendered.
From July 1, 2019 through September 30, 2019, the Company issued an aggregate of 5,500,000 shares of CANB Common Stock to members of the Advisory Board, Medical Advisory Board, and Sports Advisory Board for services rendered.
From July 1, 2019 through September 30, 2019, the Company issued an aggregate of 4,800,000 shares of Common Stock under the terms of executive employment agreements.
From July 1, 2019 through September 30, 2019, the Company issued an aggregate of 46,572,416 shares of CANB shares under the terms of the Stock Purchase Agreements for total proceeds of $1,350,600.
From July 1, 2019 through September 30, 2019, the Company issued an aggregate of 12,074,089 shares of CANB shares under the terms of the Joint Venture Agreement.
From October 1, 2019 through December 31, 2019, the company issued an aggregate of 36,677,274 shares of CANB Common Stock to multiple consultants for services rendered.
From October 1, 2019 through December 31, 2019, the Company issued an aggregate of 4,250,000 shares of CANB Common Stock to members of the Advisory Board, Medical Advisory Board, and Sports Advisory Board for services rendered.
From October 1, 2019 through December 31, 2019, the Company issued an aggregate of 1,500,000 shares of Common Stock under the terms of executive employment agreements.
From October 1, 2019 through December 31, 2019, the Company issued an aggregate of 37,500,000 shares of CANB Common Stock under the terms of an inventory purchase agreement for total proceeds of $487,500.
NOTE 11 – Stock Options and Warrants – Prior to 300:1 reverse stock split
A summary of stock options and warrants activity follows:
| Shares of Common Stock Exercisable Into | ||||||||||||
| Stock | ||||||||||||
| Options | Warrants | Total | ||||||||||
| Balance, December 31, 2017 | 50,000 | 247,500 | 297,500 | |||||||||
| Granted in 2018 | 6,000,000 | 2,850,000 | 8,850,000 | |||||||||
| Cancelled in 2018 | - | - | - | |||||||||
| Exercised in 2018 | - | (850,000 | ) | (850,000 | ) | |||||||
| Balance, December 31, 2018 | 6,050,000 | 2,247,500 | 8,297,500 | |||||||||
| Granted in Q1, Q2 & Q3 2019 | 17,000,000 | - | 17,000,000 | |||||||||
| Cancelled in Q1, Q2 Q3, & Q4 2019 | (50,000 | ) | - | (50,000 | ) | |||||||
| Exercised in Q1, Q2 Q3, & Q4 2019 | - | - | - | |||||||||
| Balance, December 31, 2019 | 23,000,000 | 2,247,500 | 25,247,500 | |||||||||
| F-20 |
Issued and outstanding stock options as of December 31, 2019 consist of:
| Year | Number Outstanding | Exercise | Year of | |||||||||
| Granted | And Exercisable | Price | Expiration | |||||||||
| 2018 | 6,000,000 | $ | 0.001 | 2023 | ||||||||
| 2019 | 17,000,000 | $ | 0.001 | 2022 | ||||||||
| 23,000,000 | ||||||||||||
On June 11, 2018, the Company granted 3,000,000 options of CANB common stock to Carl Dilley, a former director of the Company, in exchange for the retirement of a total of 3,000,000 shares of CANB common stock from Carl Dilley. The options are exercisable for the purchase of one share of the Registrant’s Common Stock at an exercise price of $0.001 per share. The Options are fully vested and are exercisable as of the Grant Date and all shall expire June 11, 2023. The value of the Stock Options ($84,000) were calculated using the Black Scholes option pricing model and the following assumptions: (i) $0.028 share price, (ii) 5 years term, (iii) 262.00% expected volatility, (iv) 2.80% risk free interest rate and the difference between this value and the fair value of retired shares was expensed in the quarterly period ended June 30, 2018.
On October 21, 2018, the Company granted 3,000,000 options of CANB common stock to Stanley L. Teeple, an officer and Director of the Company. The options are exercisable for the purchase of one share of the Registrant’s Common Stock at an exercise price of $0.001 per share. The Options are fully vested and are exercisable as of the Grant Date and all shall expire October 1, 2023. The values of the Stock Options ($118,200) were calculated using the Black Scholes option pricing model and the following assumptions: (i) $0.0395 share price, (ii) 5 years term, (iii) 221.96% expected volatility, (iv) 3.05% risk free interest rate and the fair value of options was expensed in the quarterly period ended December 31, 2018
On September 9, 2019, the Company granted 8,000,000 options of CANB common stock to Johnny Mack, a former officer of the Company. The options are exercisable for the purchase of one share of the Registrant’s Common Stock at an exercise price of $0.001 per share. The Options are fully vested and are exercisable as of the Grant Date and all shall expire September 9, 2022. The values of the Stock Options ($192,000) were calculated using the Black Scholes option pricing model and the following assumptions: (i) $0.024 share price, (ii) 3 years term, (iii) 242% expected volatility, (iv) 1.46% risk free interest rate and the fair value of options was expensed in the quarterly period ended September 30, 2019.
On October 15, 2019, the Company granted 3,000,000 options of CANB common stock each to Frederick Alger Boyer, Jr., Ronald A. Silver and James F. Murphy, directors of the Company. The options are exercisable for the purchase of one share of the Registrant’s Common Stock at an exercise price of $0.001 per share. The Options are fully vested and are exercisable as of the Grant Date and all shall expire October 15, 2022. The values of the Stock Options ($63,000 each) were calculated using the Black Scholes option pricing model and the following assumptions: (i) $0.021 share price, (ii) 3 years term, (iii) 242% expected volatility, (iv) 1.60% risk free interest rate and the fair value of options was expensed in the quarterly period ended December 31, 2019.
Issued and outstanding warrants as of December 31, 2019 consist of:
| Year | Number Outstanding | Exercise | Year of | |||||||||
| Granted | And Exercisable | Price | Expiration | |||||||||
| 2010 | 247,500 | $ | 1.00 | 2020 | ||||||||
| 2018 | 2,000,000 | $ | 0.04345 | (a) | 2023 | |||||||
| Total | 2,247,500 | |||||||||||
(a) 110% of the closing price of the Company’s common stock on the date that the Holder funds the full purchase price of the Note.
| F-21 |
NOTE 12 – Income Taxes
No provisions for income taxes were recorded for the periods presented since the Company incurred net losses in those periods.
The provisions for (benefits from) income taxes differ from the amounts determined by applying the U.S. Federal income tax rate of 21% to pretax income (loss) as follows:
| December 31, | ||||||||
| 2019 | 2018 | |||||||
| Expected income tax (benefit) at 21% | $ | (964,419 | ) | $ | (863,578 | ) | ||
| Non-deductible stock-based compensation | 648,729 | 583,653 | ||||||
| Non-deductible amortization of debt discounts | - | 37,064 | ||||||
| Loss on stock issuance | - | 136,344 | ||||||
| Loss on debt conversion | - | 272,867 | ||||||
| Non-deductible expense from derivative liability | - | (334,139 | ) | |||||
| Loan forgiveness | - | 18,024 | ||||||
| Increase in deferred income tax assets valuation allowance | 315,690 | 149,765 | ||||||
| Provision for (benefit from) income taxes | $ | - | $ | - | ||||
Deferred income tax assets consist of:
| December 31, | December 31, | |||||||
| 2019 | 2018 | |||||||
| Net operating loss carryforward | 1,300,168 | 984,478 | ||||||
| Valuation allowance | (1,300,168 | ) | (984,478 | ) | ||||
| Net | $ | - | $ | - | ||||
Based on management’s present assessment, the Company has not yet determined it to be more likely than not that a deferred income tax asset of $1,300,168 attributable to the future utilization of the $6,191,273 net operating loss carryforward as of December 31, 2019 will be realized. Accordingly, the Company has maintained a 100% allowance against the deferred income tax asset in the financial statements at December 31, 2019. The Company will continue to review this valuation allowance and make adjustments as appropriate. The net operating loss carryforward expires in years 2025, 2026, 2027, 2028, 2029, 2030, 2031, 2032, 2033, 2034, 2035, 2036, 2037, 2038 and 2039 in the amount of $1,369, $518,390, $594,905, $686,775, $159,141, $151,874, $135,096, $166,911, $311,890, $25,511, $338,345, $381,638, $499,288, $716,858 and $1,503,282, respectively.
Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.
| F-22 |
The Company’s U.S. Federal and state income tax returns prior to 2015 are closed and management continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. The statute of limitations on the 2015 tax year returns expired in September 2019.
The Company recognizes interest and penalties associated with uncertain tax positions as part of the income tax provision and would include accrued interest and penalties with the related tax liability in the consolidated balance sheets. There were no interest or penalties paid during 2019 and 2018.
NOTE 13 – Segment Information
The Company has one reportable segment: Durable Equipment Products.
The accounting policies of the segment described above are the same as those described in Summary of Significant Accounting Policies in Note 3. The Company evaluates the performance of the Durable Equipment Products segment based on income (loss) before income taxes, which includes interest income.
Durable Equipment Products | ||||
| Three months ended December 31, 2019 | ||||
| Revenue from external customers | 466,920 | |||
| Revenue from other segments | - | |||
| Segment profit | 309,370 | |||
| Segment assets | 1,994,845 | |||
| Twelve months ended December 31, 2019 | ||||
| Revenue from external customers | 1,436,403 | |||
| Revenue from other segments | - | |||
| Segment profit | 809,631 | |||
| Segment assets | 1,994,845 | |||
Three Months Ended December 31, 2019 | Twelve Months Ended December 31, 2019 | |||||||
| Total profit for reportable segment | $ | 309,208 | $ | 810,060 | ||||
| Other income (expense) - net | 162 | (429 | ) | |||||
| Income before income taxes | $ | 309,370 | $ | 809,631 | ||||
NOTE 14 – Commitments and Contingencies
Employment Agreements
On October 3, 2017, the Company executed an Executive Employment Agreement with Marco Alfonsi (“Alfonsi”) for Alfonsi to serve as the Company’s chief executive officer and interim chief financial officer and secretary for cash compensation of $10,000 per month. Pursuant to the agreement, the Company issued a share of CANB Series A Preferred Stock to Alfonsi on October 4, 2017 (see Note 9). Alfonsi may terminate his employment upon 30 days written notice to the Company. The Company may terminate Alfonsi’s employment upon written notice to Alfonsi by a vote of the Board of Directors. At October 21, 2018, this former Agreement was terminated due to the execution of a new Employment Agreement with Marco Alfonsi for Alfonsi to serve as the Company’s chief executive officer for cash compensation of $15,000 per month. Pursuant to the new Agreement, three of the eight previously issued shares of CANB Series A Preferred Stock will be returned to the Company and converted into 30,000,000 common shares. On December Alfonsi may terminate his employment upon 30 days written notice to the Company. The new Agreement has an initial term of four years and can be terminated upon the resignation or death of Mr. Alfonsi, and also can be terminated by the Company due to the failure or neglect of Mr. Alfonsi to perform his duties, or due to the misconduct of Mr. Alfonsi in connection with the performance.
| F-23 |
On February 12, 2018, the Company executed an Executive Service Agreement (“Agreement”) with David Posel. The Agreement provides that Mr. Posel services as the Company’s Chief Operating Officer for a term of 4 years. The Agreement also provides for compensation to Mr. Posel of $5,000 cash per month and the issuance of 1 share of Series A Preferred Stock at the inception of the Agreement. The Agreement can be terminated upon the resignation or death of Mr. Posel, and also can be terminated by the Company due to the failure or neglect of Mr. Posel to perform his duties, or due to the misconduct of Mr. Posel in connection with the performance. On February 12, 2018, 1 share of CANB Series A Preferred Stock were issued to Mr. Posel (see Note 9). Since execution of the Posel Agreement, Mr. Posel has been re-assigned to COO for Pure Health Products, the Company’s subsidiary.
On February 16, 2018, the Company executed an Executive Service Agreement (“Agreement”) with Andrew W Holtmeyer. The Agreement provides that Mr. Holtmeyer services as the Company’s Executive Vice President Business for a term of 3 years. The Agreement also provides for compensation to Mr. Holtmeyer of $10,000 cash per month and the issuance of 3, 2 and 1 share of Series A Preferred Stock at the beginning of each year. The Agreement can be terminated upon the resignation or death of Mr. Holtmeyer, and also can be terminated by the Company due to the failure or neglect of Mr. Holtmeyer to perform his duties, or due to the misconduct of Mr. Holtmeyer in connection with the performance. At December 29, 2018, this Agreement was terminated due to the execution of a new Employment Agreement with Andrew W Holtmeyer. The Agreement provides that Mr. Holtmeyer services as the Company’s Executive Vice President Business for a term of 4 years. The Agreement also provides for compensation to Mr. Holtmeyer of $15,000 cash per month and the issuance of 245,789 shares of common stock (prior to 300:1 reverse stock split) upon signing of the agreement.
On October 15, 2018, the Company executed an Employment Agreement (“Agreement”) with Stanley L. Teeple. The Agreement provides that Mr. Teeple services as the Company’s Chief Financial Officer and Secretary for a term of 4 years. The Agreement also provides for compensation to Mr. Teeple of $15,000 cash per month and the issuance of 1 share of Series A Preferred Stock proportionately vesting over four years beginning December 31, 2018 upon execution of the Agreement. The Agreement can be terminated upon the resignation or death of Mr. Teeple, and also can be terminated by the Company due to the failure or neglect of Mr. Teeple to perform his duties, or due to the misconduct of Mr. Teeple in connection with the performance. In May 2019 Mr. Teeple was granted an additional 3 shares of Series A Preferred.
On December 28, 2018, the Company executed an Employment Agreement (“Agreement”) with Pasquale Ferro for Mr. Ferro to serve as Pure Health Products’ president for cash compensation of $15,000 per month and the total issuance of 5 share of Series A Preferred Stock proportionately vesting at the beginning of each year for a term of 4 years. Mr. Ferro may terminate his employment upon 30 days written notice to the Company. The Agreement has an initial term of four years and can be terminated upon the resignation or death of Mr. Ferro, and also can be terminated by the Company due to the failure or neglect of Mr. Ferro to perform his duties, or due to the misconduct of Mr. Ferro in connection with the performance.
Effective September 6, 2019 (the “Effective Date”), Can B̅ Corp (the “Company” or “CANB”) approved the appointment of Johnny J. Mack (“Mack”) as its President and Chief Operating Officer. Mack had been serving as the Company’s interim COO. The Company and Mack have entered into a new Employee Services Agreement (the “Agreement”) to memorialize the terms of the foregoing. In consideration for Mack’s services, Mack will (i) receive a base salary of $15,000 per month, subject to increase after each yearly anniversary of the Agreement, (ii) be eligible to receive annual cash or stock bonuses, (iii) be entitled to four weeks’ vacation time and five paid days for illness in accordance with the Company’s policies, and (iv) receive a total of 32,000,000 options (“Options”) to purchase shares of the Company’s common stock, with 8,000,000 Options vesting on the effective date and additional tranches of 8,000,000 Options vesting on each of the first, second, and third anniversaries of the Effective Date, assuming Mack’s continued employment. Each Option is exercisable at a price of $0.001 per share (prior to 300:1 reverse stock split). The Company also agreed to hold harmless and indemnify Mack as authorized or permitted by law and the Company’s governing documents, as the same may be amended from time to time, except for acts constituting negligence or willful misconduct by Mack. The Company has agreed to pay Mack a severance in the event the Agreement is terminated by the Company without cause or by Mack for “good reason” or by reason of Mack’s death or disability. On October 4, 2019 Mack resigned from all of his office and director positions and the company settled his termination for payment of all accrued expenses, payout of all accrued time and base compensation of $13,315 and retention of his already earned 8 million options. Mr. Mack has left the Company.
| F-24 |
In addition, on October 10th, 2019 the Company appointed Philip Scala as its interim COO. Mr. Scala has acted as founder and CEO of Pathfinder Consultants International, Inc. (“Pathfinder”) since 2008. Pathfinder offers unique expertise and delivers the information you need to make informed decisions, whether in times of crisis or in the course of simply running your business. Prior to forming Pathfinder, Mr. Scala served the United States both as a Commissioned Officer in the US Army for five years followed by his 29 years of service with the FBI. Mr. Scala received his bachelor’s degree and Master of Business Administration in accounting from St. John’s University, he also earned a Master of Arts degree in Psychology from New York University. The Company has entered into an employment agreement with Mr. Scala. Pursuant to the agreement, Mr. Scala will receive a base salary of $2,500 per month. He will be entitled to incentive bonuses and pay increases in accordance with the Company’s normal policies and procedures. Mr. Scala will also receive options to buy 500,000 common shares of the Company at a price of $0.001 (prior to 300:1 reverse stock split) for a period of three years. The initial term of the agreement is for 90 days. The agreement otherwise contains standard covenants and conditions.
Consulting Agreements
On September 6, 2017, the Company executed a Consulting Agreement with T8 Partners LLC (“T8”) for T8 to serve as the Company’s consultant for stock compensation of a total of 10,000,000 restricted shares (prior to 300:1 reverse stock split). Pursuant to the agreement, the Company issued 2,500,000 restricted shares of CANB common stock to T8 on September 7, 2017. Effective October 27, 2017, the Company terminated the agreement due to non-performance by T8. The Company won the arbitration proceedings against T8 and T8 has been ordered to return its shares to the Company.
On November 9, 2017, the Company executed a Consulting Agreement with Healthcare Advisory Group Company (“Healthcare”) for Healthcare to serve as the Company’s consultant for stock compensation of a total of 5,000,000 restricted shares (prior to 300:1 reverse stock split). Pursuant to the agreement, the Company issued 2,500,000 restricted shares of CANB common stock to Healthcare on November 9, 2017. Effective March 6, 2018, the Company terminated the agreement due to non-performance by Healthcare.
On April 1, 2019, we engaged an advisor to provide consulting services under an Investor Relations and Advisory Agreement (the “Advisory Agreement”). Pursuant to the Advisory Agreement, we agreed to pay the Consulting Firm a restricted common stock monthly fee of $5,500 per month for consulting and services paid in advance of services each month. Starting May 1, 2019, the restricted common stock monthly fee will decrease to $4,000 per month. The number of shares to be issued will be calculated based on the closing price of our common shares on the 1st or preceding day of each month, if the 1st were to fall on a weekend or holiday. The shares shall not have registration rights, and the shares may be sold subject to Rule 144.
Lease Agreements
On December 1, 2014, Prosperity entered into a lease agreement with KLAM, Inc. for office space in Hicksville, New York for an initial term of one year commencing December 1, 2014. The lease provides for monthly rentals of $2,500 and provides Prosperity an option to renew the lease after the initial term. The Company has continued to occupy this space after November 30, 2015 under a month to month arrangement at $2,500 per month.
On September 11, 2015, the Company executed a lease agreement with an unrelated third party for office space in Hicksville, New York for a term of 37 months. The lease provides for monthly rentals of $2,922 for lease year 1, $3,009 for lease year 2, and $3,100 for lease year 3. The lease also provides for additional rent based on increases in base year operating expenses and real estate taxes. On August 6, 2018, the Company renewed the lease agreement for a term of 36 months starting November 1, 2018. The lease provides for monthly rentals of $3,193 for lease year 1, $3,289 for lease year 2, and $3,388 for lease year 3. In October 2019, the Company modified and extended the lease agreement for a term of 30 months starting November 1, 2019. The lease provides for monthly rentals of $3,807.05 for year 1 and $3,921.26 for the remaining eighteen months. The original $100,681 right-of-use asset and $90,591 lease liability was adjusted to $103,260 with the modification.
| F-25 |
The Company leases office space in numerous medical facilities under month-to-month agreements.
Rent expense for the years ended December 31, 2019 and 2018 was $246,968 and $67,165, respectively.
At December 31, 2019, the future minimum lease payments under non-cancellable operating leases were:
| Year ended December 31, 2020 | $ | 45,913 | ||
| Year ended December 31, 2021 | 47,055 | |||
| Year ended December 31, 2022 | 15,685 | |||
| Total | $ | 108,653 |
The lease liability of $97,279 at December 31, 2019 as presented in the Consolidated Balance Sheet represents the discounted (at our 10% estimated incremental borrowing rate) value of the future lease payments of 108,653 at December 31, 2019.
Major Customers
For the twelve months ended December 31, 2019, there were no customers that accounted for more than 10% of total revenues.
For the twelve months ended December 31, 2018, one customer accounted for approximately 16% of total revenues.
NOTE 15 – Related Party Transactions
LI Accounting Associates, LLC (LIA), an entity controlled by a relative of the Managing Member PHP, is a vendor of CANB. At December 31, 2019, CANB did not have an account payable due to LIA. For the twelve months ended December 31, 2019, CANB had expenses to LIA of $10,750.
During the twelve months ended December 31, 2019, we had products and service sales to related parties totaling $0.
NOTE 16 – Subsequent Events
In accordance with FASB ASC 855, Subsequent Events, the Company has evaluated subsequent events through November 1, 2019, the date on which these consolidated financial statements were available to be issued. There were material subsequent events that required recognition or additional disclosure in these consolidated financial statements as follows:
The Company acquired 51% of Green Grow Farms, Inc. (GGFI) in December 2019 for 37.5 million shares of CANB common stock. The remaining 49% of GGFI was held by New York Farm Group (NYFG). Post-closing of the original agreement, the Company discovered certain assets needed reassessment and reconsideration. In settlement of certain claims held by the Company as a result of the foregoing, NYFG agreed to assign the Company its 49% interest in GGFI and 1,000,000 shares of Iconic Brands, Inc (ICNB) stock in consideration for a release from the Company. The settlement agreement was executed on March 3, 2020.
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.
The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. As such, it is uncertain as to the full magnitude that the pandemic will have on our financial condition, liquidity, and future results of operations. Management is actively monitoring the impact of the global situation on our financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, we are not able to estimate the effects of the COVID-19 outbreak on our results of operations, financial condition, or liquidity for the year ended December 31, 2020.
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Exhibit 3.1
Exhibit 4.1
Exhibit 4.2
Exhibit 10.5
Exhibit 10.13
AMENDMENT TO STOCK PURCHASE AGREEMENT
This Amendment to Stock Purchase Agreement (this “Amendment”) is entered into as of the effective date written below by and between Canbiola, Inc., a Florida corporation (“CANB”), on one hand, and Iconic Brands, Inc., a Nevada corporation (“ICNB”) and Green Grow Farms, Inc., a New York corporation (“GGFI”) on the other hand. CANB, ICNB, and GGFI are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, the Parties entered into that certain Stock Purchase Agreement dated December 4, 2019 (the “Agreement”), pursuant to which CANB purchased fifty-one percent (51%) of the issued and outstanding equity interests of GGFI from ICNB in exchange for an aggregate of 37,500,000 shares of CANB’s common stock, nil par value per share; and
WHEREAS, it has come to the attention of the Parties that the Agreement contained a scrivener’s error and the Parties hereby wish to enter into this Amendment to correct such error.
NOW, THEREFORE, the Agreement is hereby amended as follows:
1. Section 2.2(a)(i) of the Agreement is hereby amended and restated in its entirety as follows:
“If the Market Price Per Purchase Share (as defined) on the Valuation Date multiplied by 37,000,000 is less than $1,000,000, CANB shall issue to ICNB such a number of additional shares (“Additional Purchase Shares”) so that the Market Price Per Share multiplied by the aggregate shares issued to ICNB (taking into account the Purchase Shares and the Additional Purchase Shares) equals $1,000,000. For purposes of the valuation, “Market Price Per Purchase Share” shall be determined based upon the 10-day average VWAP for the 10-day period ending on June 30, 2020.”
2. Amendment; Incorporation. Notwithstanding any provision to the contrary, this Amendment shall govern all terms and conditions set forth herein. Except as provided in this Amendment, all terms and conditions of the Agreement remain unchanged. No Party waives any rights described in the Agreement by its execution hereunder, unless specified herein. All other terms and conditions of the Agreement apply except as specifically amended herein. Capitalized terms used herein but not defined shall have the meaning ascribed to them in the Agreement. This Amendment is specifically incorporated into the Agreement.
3. Execution. This Amendment may be executed in counterparts, each of which shall be deemed to be an original instrument, but all such counterparts together shall constitute one and the same instrument. The Parties may execute this Amendment by delivery of signature by facsimile or electronic transmittal, which shall be deemed binding on the Parties.
[Remainder Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, the Parties hereto have executed this Amendment to Stock Purchase Agreement as of the 27th day of January, 2020.
CANB:
Canbiola, Inc.
| By: | ||
| Name: | Marco Alfonsi | |
| Title: | CEO |
ICNB:
Iconic Brands, Inc.
| By: | ||
| Name: | Richard DeCicco | |
| Title: | President |
GGFI:
Green Grow Farms, Inc.
| By: | ||
| Name: | Stephen Apolant | |
| Title: | Director |
| By: | ||
| Name: | Peter Scalise | |
| Title: | President |
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Exhibit 10.15
Exhibit 14.1
CODE OF BUSINESS CONDUCT AND ETHICS
Introduction
We ask for, and expect, a great deal from everyone associated with Can B Corp., (the “Company”). We ask that you produce outstanding results and maintain high standards of business conduct. We ask that you become deeply involved with our business in its many forms. We ask that you work smart and make intelligent and rational decisions, which make the difference in our ability to be successful in our highly competitive industry. At the same time, we also ask that you, as members of this Company, act in ways that will bring credit to yourselves, your families and your associates.
The purpose of this Code of Business Conduct and Ethics (the “Code”) is to set forth the basic principles and guidelines for the employees, officers, and directors of the Company, including the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions (collectively, the “Employees”), and to codify standards reasonably designed to deter wrongdoing.
In addition to strict compliance with legal requirements and local customs, all Employees are expected to be guided by the principles of honesty and professionalism in the conduct of the Company’s affairs, and to comply with the policies contained, referred to, an implicit in this Code. No code of business conduct and ethics can replace the thoughtful behavior of Employees. However, such a Code can focus the board and management on areas of ethical risk, provide guidance to personnel to help them recognize and deal with ethical issues, provide mechanisms promptly to report unethical conduct, and help to foster an awareness of the Company’s obligations to shareholders, other Employees, customers, vendors, and the general public.
You are then responsible for compliance with this Code and, if you are a supervisor or manager, for making sure that those under your supervision know and adhere to it also. Failure to comply with the Code in any respect will result in disciplinary action, termination of employment, or other corrective action determined legally appropriate by the Company. If you are in a situation which you believe may violate or lead to a violation of this Code, a law, or Company policy, follow the guidelines described in Section 23 of this Code.
Section 1. Conflicts of Interest
To maintain the highest degree of integrity in the conduct of the Company’s business and to maintain an Employee’s independent judgment, each Employee must avoid any activity or personal interest that creates or appears to create a conflict of interest between the Employee’s interest and the interests of the Company.
When conducting Can B Corp-related activities, you must devote your undivided loyalty to the business of Can B Corp and avoid (1) any situation that might result in a conflict between your personal interests and the interests of the Company; and (2) any activity or financial interest that might reflect unfavorably on your or the Company’s integrity or high reputation in the business community. In addition, if an activity or investment would be improper for you, it may also be improper for your family members or any business controlled by you or any family member. Absent disclosure to our Legal Counsel of a particular situation which raises a conflict of interest issue to determine whether the situation may continue, you need adhere to the following principles:
| ● | You may not realize any personal gain or profit from the Company’s dealings with suppliers, customers or other firms or persons doing or seeking to do business or competing with Can B Corp. You should avoid situations or the receipt of favors that could interfere with your exercise of independent judgment; cause you to act other than in the best interest of the Company; or deprive Can B Corp of your undivided loyalty. | |
| ● | You may not take, for your own individual benefit, opportunities that are discovered through the use of your Company position or the Company’s property or information. You owe a duty to the Company to advance its legitimate interests whenever the opportunity to do so arises. | |
| ● | Neither you nor members of your family may have a financial interest, direct or indirect, in any firm doing business or competing with Can B Corp, if you are in a position to influence awarding of or managing the business or competition between Can B Corp and that firm, except for publicly traded shares or other securities not exceeding 2% of the outstanding shares or other securities of that company. Any question or waiver must be directed in writing to our Board of Directors and approved by the Board. | |
| ● | Neither you nor any member of your family is permitted to accept money, gifts of more than token value, substantial favors or services, or excessive entertainment, from any person or firm doing business or competing with Can B Corp. Likewise, gifts or favors that you make to any employee of another enterprise (a supplier, a customer, or any other firm) should not be of a nature or amount that could even create the appearance of a bribe, kickback, or unlawful gift. Any attempt to offer a gift of the magnitude that indicates an intent to exert improper influence must be reported promptly to the Company’s Counsel. If because of cultural or other reasons the receipt of a gift exceeding token value cannot be avoided, and/or the gift cannot be returned, the Legal Counsel must be consulted with respect to the gift’s proper disposition, and that disposition must be confirmed in writing to Counsel. |
| ● | You are not permitted to accept outside employment that may adversely affect your relationship with Can B Corp. | |
| ● | If you have any responsibility for or knowledge of the Company’s investments in other companies, you must not make any personal investment, direct or indirect, in those companies. You are not permitted to use information obtained as a result of your relationship with Can B Corp for personal profit or as the basis for a “tip” to others unless the Company has made that information generally available to the public. For example, the purchase of real estate or leasing of acreage near property that you are aware is being considered for leasing or purchase by the Company would be a conflict and thus prohibited. In addition, you must not purchase or sell stock or other securities of Can B Corp or of any other company if because of information you learned in confidence, either directly or indirectly, as a result of your relationship with Can B Corp, you believe that the price of such stock or other security will increase or decrease. Finally, as part of the Company’s desire to avoid even the appearance of any conflict of interest, any director or executive officer or other employee designated by the Company as being subject to the obligation described in this paragraph (or any member of his or her immediate family) who is offered the opportunity to participate in any offering of securities by any person or entity with whom the Company has an investment or commercial banking or other supplier or customer relationship must notify and secure the approval for such participation from the Company’s Counsel before participating in any such offering. See also the Company’s insider trading policy. |
You must report to the Company’s Legal Counsel any personal interests or circumstances that might constitute a conflict of interest, as described above, in the attached Employee Affirmation or as soon as the circumstances arise. Depending on the degree of potential conflict, appropriate action may be taken, which may include requiring you (or a family member) to divest a financial interest, to accept a new position within Canbiola or to return or to pay for gifts or other favors received. Failure to report any actual or potential conflict of interest or continuing to engage in such conduct after being advised of its impropriety, is grounds for disciplinary action, including termination.
Conflicts of interest may not always be clear-cut; thus, if you believe that any transaction or activity may constitute a conflict of interest, you should promptly consult with Canbiola’s Counsel.
Generally, a “conflict of interest” exists when a person’s private interest interferes in any way with the interests of the Company. A conflict situation can arise when an Employee takes actions (or fails to take actions) or has interests that may make it difficult to perform his or her Company work objectively and effectively. Sections 2, 3, and 4 of this Code provide specific examples of conflicts of interest. Loans to, or guarantees of obligations of, Employees and their family members may also create conflicts of interest.
Conflicts of interest are prohibited as a matter of Company policy, except under guidelines approved by the Board of Directors. Conflicts of interest may not always be clear-cut, so if you have a question, you should consult with your manager, or a higher level of management or member of the Company’s Legal Counsel. Any Employee who becomes aware of a conflict or potential conflict should bring it to the attention of supervisor, manager or other appropriate personnel or consult the procedures described in Section 21 of this Code.
Special Rules for Members of the Board of Directors and Executive Officers
The Board of Directors or the Audit Committee of the Board must approve a director’s or an executive officer’s direct or indirect interest in a transaction involving the Company and the director or officer and a third party.
The Board of Directors will determine on a continuing basis whether, in its judgment, a director’s relationship with other business, consulting, legal, charitable or other institutions impair his or her independence as a director.
Only the Board of Directors or the Audit Committee of the Board may grant a waiver of this Code for executive officers and directors.
Loans from the Company to directors and executive officers of the Company are prohibited in accordance with applicable federal law.
Section 2. Interest in Other Business Organizations
Employees or members of their families should not have a “significant financial interest” in any business organization that does, or seeks to do, business with the Company, or is a competitor of the Company, unless such interest has been fully disclosed in writing to the Company’s Legal Counsel, who will determine whether the Employee’s duties with the Company will require him or her to make decisions that could be influenced by such interest.
As a minimum standard, a “significant financial interest” is an aggregate interest of an Employee and family member of more than:
2% of any class of outstanding securities of the firm or corporation, or 10% interest in any partnership or association, or 5% of the total direct and beneficial assets or income of such company.
Family members include spouse, minor or adult child, stepchild, parents, stepparents, brothers, sisters, grandparents, grandchildren, in-laws and any person living in the same household.
An Employee must not conduct business on behalf of the Company with a member of his/her family, or business organization with which the Employee or family member has “significant financial interest” or is a director, officer, employee, creditor, or proprietor. An Employee whose duties bring him or her into contact with an organization that employs a family member should take appropriate precautions to avoid a potential conflict of interest or the suspicion of preferential treatment. The Employee should consult with his or her supervisor and, if necessary, disqualify himself or herself from acting on behalf of the Company.
Section 3. Gifts, Gratuities and Payments to Employees
No Employee should accept gifts, loans, favors, or entertainment, directly or indirectly, from any person, firm, or corporation doing business, or seeking to do business, with the Company, other than nominal gifts or courtesies as described further below. Gifts or loans of cash or other property, or gift certificates in any amount whatsoever, or any form of bribe or kickback, to Employees or members of an Employee’s family by existing or potential suppliers of the Company are forbidden. This policy does not prohibit either giving or receiving reasonable courtesies in the normal course of business.
In the application of this policy, Employees may accept such courtesies only if they meet all of the following criteria:
1. They are consistent with accepted business practice and in a form that is not, will not appear to be, or will not be construed as, a bribe, kickback, payoff or substantial personal benefit to the Employee.
2. They are of nominal value or intended for business use, such as datebooks, desk calendars or reasonable business meals.
3. They do not violate any applicable law, regulation or generally accepted ethical standard.
4. Public disclosure of the facts would not embarrass the Company.
The policy is not intended to eliminate participation in business-related functions and activities that occur in conjunction with seminars, exhibits, meetings and presentations, which often involve lunches, dinners and entertainment. These can be, under the proper circumstances, in the best interest of the Company. Failure to comply with this prohibition in any respect will result in disciplinary action, termination of employment, or other corrective action determined legally appropriate by the Company.
Services offered by a supplier may be accepted by an Employee when the need for the services are associated with a business relationship, and the supplier provides the service to other customers and prospects as a normal part of its business, (e.g., travel agency services). The services should generally be of the type normally used by Employees and allowable on the travel expense account.
If in doubt as to the propriety of any gift or activity, it should be cleared with Legal Counsel or the CEO. In making this judgment, the Employee must go beyond the question of whether the gift or activity would influence an Employee in any way and should consider what unfavorable appearance or interpretation might be placed on this action by a critical third party who has the advantage of hindsight.
Section 4. Corporate Opportunities Converted to Personal Benefit
As a Can B Corp employees, we are obligated to place Can B Corp’s interests in any business transaction ahead of any personal interest or personal gain to the individual employee (and, for purposes of this policy, to the employee’s spouse, family member, roommate, friend or other individual). Each employee is under an affirmative obligation to bring to the attention of his or her supervisor, Legal Counsel or the CEO or CFO any situation that is an actual, alleged or even potential conflict of interest.
Employees are prohibited from taking for themselves personally any business opportunities that are discovered or learned through the use of corporate property, information or position without the consent of the Board of Directors. No Employee may use corporate property, information, or position for personal gain, and no Employee may compete with the Company directly or indirectly. Employees owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.
Section 5. Fair Dealing with Customers, Suppliers, Competitors and Others
Employees who make or are involved in making business decisions for the Company must do so using consistent and unbiased standards. We seek to outperform our competition fairly and honestly by gaining competitive advantages through superior performance, and each Employee should deal fairly with the Company’s customers, suppliers, competitors and Employees.
Section 6. Company Records and Preservation of Assets
Accurate and auditable records of all Company financial transactions must be maintained in conformity with generally accepted accounting principles and local requirements.
Employees are responsible for safeguarding and preserving Company assets and properties under their control. Employees are also responsible for providing an auditable record of financial transactions related to the use of these assets. No “off-the-books” funds (e.g., side cash funds, reserves or allowances) or transactions that are not documented in the Company’s regular accounting system are permitted. Guidelines are as follows:
1. The use of Company funds or assets for any improper or unlawful purpose is prohibited. Improper purposes include the use of Company time, materials, assets or facilities for purposes not related directly to the Company’s business, or the removal or borrowing of the Company’s property without permission.
2. All assets, liabilities, revenues, expenses and transactions must be accurately reported on the books of the Company, in accordance with the Company’s accounting procedures.
3. No false or misleading entries may be made in the books and records of the Company.
4. No undisclosed or unrecorded fund or asset of the Company may be established or maintained for any purpose.
5. No payment on behalf of the Company may be approved or made with the intention or understanding that any part of such payment is being made for any purpose other than that described in the documents supporting such payment.
Dishonest reporting or failure to disclose information that by law or by contract must be disclosed is strictly prohibited by this Code and will not be tolerated. Violation of these guidelines may lead not only to termination of employment, but could also lead to civil or criminal liability or monetary damages for Employees or the Company.
Section 7. Proprietary or Confidential Information
You must not disclose any Company confidential or proprietary information, or confidential information entrusted to you by the Company’s customers, to anyone outside the Company, except when disclosure is authorized by the Company’s Legal Counsel or required by laws or regulations. Furthermore, such information is to be used only in the Company’s business. These obligations apply whether or not you developed the information yourself. You should also limit the disclosure of proprietary information within the Company to those Employees with a “need to know.”
Proprietary or confidential information subject to the foregoing restriction on disclosure includes all non-public information that might be of use to competitors, or harmful to the Company or its customers, if disclosed, such as information of the type contained in patents, copyrights or trademarks, or held as trade secrets. It also includes the business, financial, marketing and service plans associated with products; designs, engineering and manufacturing ideas, know-how and processes; Company business and product plans with outside suppliers and customers; manufacturing performance data; unpublished financial data and reports; information pertaining to acquisition and divestiture plans, directional strategy, and competitive position; product test results; a variety of internal data bases; and personnel and salary information.
Section 8. Compliance with Laws, Rules and Regulations
The Company’s goal is to comply with the spirit and letter of the laws, rules and regulations that apply to our business, and also to endeavor to abide by the highest principles of ethical standards and honor. This means obeying the law, both in letter and in spirit. All Employees must respect and obey the governmental laws, rules and regulations of the cities, states and countries in which we operate. Although not all Employees are expected to know the details of these laws, it is important to know enough to determine when to seek advice from supervisors, managers or other appropriate personnel.
Section 9. Public Communications
All disclosures in reports and documents that the Company files with the U.S. Securities and Exchange Commission (the “SEC”), as well as all other public communications made by the Company, should be complete, fair, accurate, timely and understandable.
Section 10. Insider Trading
On occasion, Employees of the Company come into possession of non-public information concerning the Company and its affairs. This information about the Company comes to us so that we can do our jobs better, not so that we can benefit personally by using inside information in the stock market. Disclosure of material non-public information is against Company policy and knowledge of such information may not be used under any circumstances for the Employee’s personal benefit in the stock market. Failure to observe these rules could potentially expose an Employee to civil or criminal penalties. Material information means: “any information concerning the Company that is not yet public knowledge, but that, if publicly known, could reasonably be expected to affect the price of the Company’s stock, or is likely to be considered important by a reasonable investor.” The Employee’s responsibilities are twofold under SEC rules:
1. Employees cannot buy or sell Can B Corp, Inc. stock at any time when he or she has material information about the Company that is not known to the investing public.
2. Employees cannot tip off others to buy or sell Can B Corp, Inc. stock on the basis of his or her material information that is not known to the investing public.
Similar restrictions apply to trading in the stock of other companies on the basis of non-public information an Employee may learn in the course of his or her employment at the Company.
Limitations on use of information obtained as a result of employment for personal gain is not limited to transactions involving stock. For example, the purchase of real estate near property that an Employee knows is being considered for purchase by the Company constitutes a conflict of interest.
Employees are referred to the Company’s Insider Trading Policy for additional rules and explanations.
Section 11. Gifts, Gratuities and Payments by the Company
All customer relations are maintained on the fundamental premise that our business efforts are based on quality and performance at an agreed price. Accordingly, Employees are prohibited from attempting to promote the Company and its business offerings, or to gain improper concessions for the Company by giving any bribe, kickback, payment, gift, loan or special favor to customers, except casual entertainment or items of nominal value. Any form of indirect payment also is prohibited under this policy. A legitimate use, however, of accepted business techniques, such as employment of a reputable, independent commissioned agent, is proper if done in accordance with established Company policies and procedures and under terms by which the agent is expected to adhere to the similar policies prohibiting improper payments or actions.
Gifts, favors and entertainment may be given to others at Company expense only if they meet all of the following criteria:
1. They are consistent with accepted business practices and in a form that is not, will not appear to be, or will not be construed as, a bribe, kickback, payoff or substantial benefit.
2. They are of nominal value or intended for business use such as datebooks, or desk calendars.
3. They do not violate any applicable law, regulation or generally accepted ethical standard of the locale.
4. Public disclosure of the facts would not embarrass the Company.
5. The cost is allowable under the applicable expense account policy.
The recipient’s policies regarding such gifts, favors and entertainment should be respected.
Business gifts, loans or favors to U.S. federal, state, or municipal employees are strictly forbidden. Business gifts or favors to overseas customers must conform to the Foreign Corrupt Practices Act, local law, and Company policy. The Company’s Foreign Corrupt Practices Act policy is articulated in a separate document and is specifically referenced herein.
The Company adheres to the letter and spirit of the Foreign Corrupt Practices Act. This Act prohibits giving money or items of value to foreign officials for the purpose of obtaining or retaining business from a foreign government or influencing foreign legislation or regulations. The Foreign Corrupt Practices Act further prohibits giving money or items of value to any person or firm where there is reason to believe that it will be passed on to a government official for this purpose. The law also requires that accurate records and accounts be maintained in reasonable detail and prohibits the establishment of off-the-books corporate slush funds. The Foreign Corrupt Practices Act has severe penalties, including fines and imprisonment. All matters pertaining to this statute must be coordinated with the Company’s CFO and legal counsel.
Section 12. Political Contributions
Contributions by the Company to federal candidates, political parties, or political causes must be made in accordance with federal or state law as then in effect. State and local laws often prohibit and restrict contributions by corporate organizations. It is Company policy that no contributions may be made at the state or local level that do not comply with applicable law and without the written approval of the Company’s legal counsel. Laws regarding foreign contributions vary by country and no contributions may be made except in compliance with applicable law, and with written approval of the Company’s legal counsel.
The Company encourages its Employees to become involved in civic affairs and to participate in political activities. Employees must recognize, however, that their involvement and participation must be on an individual basis, on their own time, and at their own expense. Employees may not use any Company facilities, such as supplies, telephones, copy machines, or Company letterhead in connection with political activities, candidates or parties.
Unless specifically directed by the Company, when an Employee speaks on public issues, it must be clear that the comments or statements made are those of the individual and not those of the Company.
Section 13. Non-Discrimination and Non-Harassment
It is the policy of the Company that all Employees should be able to work in an environment free from all forms of unlawful discrimination and harassment. The Company strives to comply fully with all applicable local, state and federal US laws for its US operations and applicable local laws and customs in other countries and to manage its human resources and business operations in ways that promote equitable and respectful treatment of Employees and expects all Employees to follow this practice. Personnel decisions such as compensation, benefits, transfers, layoffs, return from layoffs, training, company-sponsored education, tuition assistance, social and recreation programs will be administered without discrimination. Only valid job requirements will be imposed for promotional opportunities
Sexual or other unlawful harassment by any Employee(s) also is inconsistent with our obligation to provide all Employees with a nondiscriminatory work environment in the US. It is also a violation of US law. The Company will conform with the laws of other locales in which it operates. The Company will not tolerate any unlawful harassment, whether by an Employee toward another, by an Employee toward a customer or a supplier or by a customer or a supplier toward an Employee.
Employees of the Company are expected to know and follow the Company’s Whistleblower policies. Copies of these policies are available in the Employee handbook. Reports of violations should be directed to the Company’s legal counsel for prompt investigation and appropriate corrective action. The Company’s policies prohibit retaliation against any Employee who raises a complaint in good faith.
Section 14. Substance Abuse
The unlawful possession, use, dispensation, distribution, or manufacture of a controlled substance is prohibited within any Company office or facility. Employees who fail to comply with this policy will be terminated.
Section 15. Electronic Communications
All data that is composed, transmitted or received via the Company’s computer communications systems may be considered to be part of the official records of the Company and, as such, may be subject to disclosure to law enforcement or other third parties. Consequently, Employees should always ensure that the information contained in e-mail messages and other transmissions is accurate, appropriate, ethical and lawful.
Computers, computer files, voice mail, the e-mail system, Internet access, and software furnished to Employees are the Company’s property intended for appropriate business use. Employee use of this equipment and systems may be monitored at any time at the Company’s discretion and is subject to the following requirements:
All software provided by the Company must be used in accordance with the software license agreement of the vendor. Illegal duplication of software and its related documentation is prohibited.
An Employee’s personal software, unauthorized, and undocumented software may not be used on Company equipment or otherwise be accessible for use by Employees.
Willful unlawful infringement of a copyright and willful unlawful violation of a software license are prohibited and may expose the Company and the Employee to substantial damages, including criminal penalties.
All use of Company electronic communications equipment and Internet access must be consistent with Company policies, including without limitation policies referenced in this Code.
Information maintained in, or distributed through, Company electronic communications equipment must be consistent with Company policies, including without limitation policies referenced in this Code.
Only authorized Employees may establish or modify Company web sites or access records, files, or equipment of others.
Section 16. Environmental Responsibilities
The Company recognizes the importance of protecting our natural environment and conserving natural resources. The Company is committed to its Employees, customers and the public to operate its business in a manner consistent with environmental stewardship and in compliance with all environmental laws of the locale in which we are operating.
Section 17. Compliance with Antitrust Laws
The objective of U.S. antitrust laws, state antitrust laws, and the antitrust laws in certain countries where the Company does or may do business is to promote vigorous competition in open markets. Violation of U.S. antitrust laws is a serious offense and can result in criminal and/or civil penalties for business entities or imprisonment and/or fines for individuals. An individual who willfully violates the antitrust laws will receive no protection from the Company. Failure to comply with the antitrust laws in any respect will result in disciplinary action, termination of employment, or other corrective action determined legally appropriate by the Company.
Generally speaking, antitrust laws of the United States prohibit agreements, understandings or actions whether oral or written, tacit or explicit, which unreasonably restrain trade. Among the activities found to be clear violations of the law regardless of the intentions of the parties involved (“per se” violations) are any agreements or understandings among competitors to fix or control prices; to boycott specified suppliers or customers; to allocate customers, product, territories, or markets; or to control, limit or reduce production or sales. Such agreements are against public policy and against the policy of the Company.
Relations with Competitors
The antitrust laws prohibit any understanding whatsoever between competitors with respect to price or any element of price (such as discounts or credit terms), including price stabilization. Thus, agreements between competitors to adhere to a specific formula for the determination of price, to restrict production, or to communicate with each other with respect to their prices are just as unlawful as an agreement regarding price itself.
In this regard, Employees must not:
1. Engage in any discussions of such matters with representatives of other companies.
2. Exchange information with competitors relating to prices or other terms or conditions of sale.
3. Attend a meeting with a competitor at which such matters are likely to be discussed.
The Company’s relationships with its customers are also subject to a number of antitrust statutes aimed at protecting its customers.
(a) Restrictive Agreements. The antitrust laws prohibit all understandings or agreements that unreasonably restrain trade. In addition to the per se violations outlined above, which are considered unlawful by themselves without specific proof as to their effect, there are certain types of agreements between sellers and buyers which, while not unlawful by themselves, fall into a danger zone. They should not be considered or consummated without prior consultation with the Company’s legal counsel.
(i) Refusals to Deal. A company generally has the right to select the customers with which it chooses or refuses to do business. However, this is a right which must be exercised by the company alone without consultation with any other outside party.
(ii) Resale restrictions. A basic tenet of the law is that a purchaser of a product has the right to do with it as he chooses without restriction by the seller; thus, an agreement or understanding by the seller and customer with respect to the prices at which the customer will resell the product violates antitrust laws. Restrictions on the area in which resales can be made can also cause serious problems.
(iii) Tying Arrangements. Any arrangement under which a seller having a substantial market position in one product coerces a customer to take a product the customer does not want as a condition for the sale of another product it does want constitutes a “tie-in” sale. Such arrangements should be regarded as per se unlawful and strictly avoided. The commingling in a bid of two products where the commingled price is different from the price of the two articles purchased separately should receive legal review. “Teaming” arrangements, by which the Company and another party cooperate in making a bid to a customer, are not unlawful but should also be reviewed in advance by the Company’s legal counsel.
(b) Discrimination in Pricing. The Robinson-Patman Act prohibits sales of products of like grade and quality at different prices to competing customers where the effect may be to injure competition. To determine whether a Robinson-Patman problem exists, an Employee should ask initially whether the Company has made sales (i) at different prices; (ii) within a reasonably contemporaneous period; (iii) of products of like grade and quality; (iv) to customers who were using or reselling the product in substantially the same competitive market. The Robinson-Patman Act is also applicable to purchasers. It is unlawful to procure a price from a supplier on the basis that the supplier must meet a competitive price which has not actually been offered by another supplier.
Relations with Suppliers
Reciprocal Dealing. The antitrust laws make reciprocal buying and selling illegal where a purchaser with substantial buying power intentionally uses that power as a lever to make sales of its products to its suppliers. The law does not prohibit our purchasing products from companies that purchase from us. It does prohibit any understanding or agreement, whether written or oral and whether expressed or implied, that purchases by one party are contingent upon purchases by the other.
International Transactions. Certain U. S. antitrust laws also apply to international operations and transactions related to imports to, or exports from, the United States. Moreover, the international activities of the Company could be subject to antitrust laws of foreign nations or organizations such as the European Economic Community.
As with other complex laws, it is important that legal advice be sought on any questions regarding antitrust matters, particularly before entering into any agreement, understanding or arrangement.
Section 18. Compliance and Discipline
Failure to comply with the standards contained or referenced in this booklet will result in corrective action that may include disciplinary action, termination, referral for criminal prosecution, requirement to reimburse the Company for any losses or damages or other measures determined appropriate by the Company. If an Employee is charged with a violation of this Code, the matter normally will be dealt with in a manner consistent with any grievance procedure or complaint resolution process applicable in the Employee’s worksite.
Section 19. Certification
At least annually, Company personnel in sensitive positions must complete a certification/questionnaire affirming their commitment to the Code of Business Conduct and Ethics and disclosing violations of the Code. Completion of this questionnaire will be requested by the Chief Executive Officer of Canbiola, Inc. and a report of responses will be made to the Board committee designated with overseeing and enforcing this Code.
The annual questionnaire does not relieve Employees of the continuing obligation to disclose relevant information immediately and, whenever possible, in advance of any proposed action.
Section 20. Waivers of the Code of Business Conduct and Ethics
This Code has been adopted by the Company’s Board of Directors and it applies to all employees, officers and directors of the Company. Any waiver of this Code, including any waiver with respect to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, may be made only by the Company’s Board of Directors or a Board committee designated with overseeing and enforcing this Code. Any such waiver approved by the Board or committee will be promptly disclosed to shareholders in compliance with the relevant rules issued by NASDAQ and the SEC.
Section 21. Problem Solving
While this Code aims to provide answers to Employees, it is impossible to address all possible problems. Often a question presented to an Employee will not have a clear-cut answer and may present difficult choices. As a result, the Company encourages Employees to use the following steps to solve problems regarding policy:
| 1. | Obtain all the facts. |
| 2. | Determine what specifically you are being asked to do. |
| 3. | Clarify your responsibility and whether others should be involved. |
| 4. | Ask yourself: Is it legal? |
| 5. | Also ask yourself: Even if it is legal, is it appropriate? |
| 6. | Discuss the problem with your supervisor or any other person identified in the “Seeking Advice” section. |
Section 22. Seeking Advice/Reporting any Illegal or Unethical Behavior
The Company wants to make sure that all Employees fully understand the Company’s Code of Business Conduct and Ethics and are able to seek advice. Employees are encouraged to ask questions and seek advice before acting, rather than after.
If you are unsure of what a policy requires of you, if you are concerned that the Company may be in violation of the law, or if you feel that a Company policy is being violated, you should seek advice from your supervisor. If you are uncomfortable raising a question about policy with your supervisor, or if you are not satisfied with the resolution by your supervisor, you may contact the Company’s President. If your question or concern relates to accounting, internal accounting controls or auditing matters, contact the Chairman of the Audit Committee of the Company’s Board of Directors.
Disciplinary action will be taken against any Employee who retaliates, directly or indirectly, or encourages others to do so, against an Employee who reports a violation or suspected violation of the Company’s Code of Business Conduct and Ethics. The Company wants Employees to communicate concerns or report misconduct without fear of retribution. It is your responsibility to report misconduct if you become aware of it.
Section 23. Administration of the Code of Business Conduct and Ethics
The Board of Directors shall be responsible for the administration and enforcement of this Code, but may delegate responsibility for administration of the Code to a committee of the Board. The Board (or a Board committee designated with overseeing and enforcing this Code) shall take reasonable steps to monitor and audit compliance with the Code, including establishment of monitoring and auditing systems reasonably designed to detect violations of the Code by Employees. The Board (or a Board committee designated with overseeing and enforcing this Code) shall periodically review the Code and recommend changes when desirable or necessary to (i) ensure continued compliance with applicable rules and regulations, and (ii) make certain that any weaknesses revealed through monitoring, auditing and reporting systems are eliminated or corrected.
No amendments or changes to the Code shall be made by anyone other than the Board of Directors of the Company (or a Board committee designated with overseeing and enforcing this Code). Amendments to this Code shall be publicly disclosed in compliance with rules of the American Stock Exchange and applicable law, rule and regulation.
A copy of the most up-to-date version of the Code shall be posted at all times on the Company’s website and intranet, and the Company’s Internet address and the fact that the Company has posted this Code on its website will be disclosed in the Company’s annual report. In addition, a copy of the most up-to-date version of the Code will be made available in print to any Company shareholder who requests it, and this availability of the Code will be stated in the Company’s annual report.
Section 24. Non-Exclusivity
This Code of Business Conduct and Ethics is not the exclusive set of policies and procedures of the Company. You are expected to comply with all policies and procedures applicable to you, whether or not set forth or referenced in this Code. Further, remedies for non-compliance with this Code of Business Conduct and Ethics are not exclusive and references to possible actions set forth herein shall not limit the Company’s options in addressing non-compliance. Mention of a remedy upon a failure to comply in any one instance shall not limit the applicability of all remedies to all circumstances of noncompliance.
EMPLOYEE AFFIRMATION
I have read and understand the Code of Business Conduct and Ethics. I will take appropriate steps to ensure effective compliance, including by individuals under my supervision, with the Code of Business Conduct and Ethics, all applicable laws and relevant Company policies. I am personally in compliance and I am not aware of violations by others. If I am aware of or have a concern about a possible violation of the Code of Business Conduct and Ethics, Company policy or the law, whether by me or by any other employee, I will report my information or concern directly to the Legal Counsel of the Company.
| Signature | Date |
___________________________
Print name
Please return to: ________________________________
Foreign Corrupt Practices Act
Official Policy Statement
Can B Corp. (“Can B Corp” or the “Company”) has in the past and may in the future engage in its operations and activities outside the United States in complete compliance with the letter and spirit of the Foreign Corrupt Practices Act (the “FCPA”). No Company officer, employee, or agent has the authority to offer payments to a foreign official to induce that official to affect any government act or decision in a manner that will assist the Company, or any of its subsidiaries or divisions, to obtain or retain business. Furthermore, every officer, employee and agent is obligated by Company policy and federal law to keep books, records and accounts that accurately and fairly reflect all transactions and disposition of Company assets.
General Policy
All employees must conduct business in a way which will assure compliance with the FCPA, a United States law that prohibits giving money or any other thing of value to a foreign government official with the intention of corruptly influencing the official’s actions. No payments will be authorized, offered or made, nor gifts or anything of value be promised, directly or indirectly, to any foreign official, political party or official of that political party, or to any candidate for political office, which is intended to corruptly influence an official act or decision of such a person. Every Canbiola employee, agent and contractor must properly account for the use of Canbiola funds and assets. Further, Canbiola will take appropriate steps in its international activities, including accounting practices, contract provisions and training, to assure that its employees, agents, contractors and partners will assist Canbiola in meeting its responsibilities under the FCPA. Failure to comply with this policy may subject a Canbiola employee to discipline approved by the Chief Executive Officer.
Responsibilities
Any Can B Corp employee having information, knowledge or belief of the commission of any act prohibited by this policy, or any
solicitation to engage in any such prohibited act, must report it immediately to the Chief Executive Officer or the Chief Financial
Officer. In cases of uncertainty as to the applicability of the FCPA or this policy concerning any potentially prohibited act,
advice should be sought from the Chief Financial Officer.
Subject to direction from the Chief Executive Officer, Canbiola’s Chief Financial Officer is responsible for devising and maintaining a system of internal accounting controls to assure compliance with the FCPA and this policy. He is also responsible for making and keeping books, records and accounts which accurately and fairly reflect the financial transactions and disposition of the assets of the Company.
Audits of Can B Corp books and records will be conducted by the internal audit function within the Company. Periodic independent audits of Can B Corp books and records will be conducted by outside auditors not less frequently than once each year. Among other objectives, these audits will evaluate Can B Corp compliance with the FCPA. The term “foreign official” means any officer or employee of a foreign government or any department, agency, or instrumentality of that foreign government, or any person acting in an official capacity for or on behalf of such government, department, agency, or instrumentality. The term “foreign official” also includes a member of the immediate family of a foreign official.
Payment to foreign officials to expedite or secure the performance of a routine governmental action as permitted under section 78dd-1(b) of the FCPA may be made only with the express prior approval of the Chief Executive Officer or the Chief Financial Officer.
It is critical that all employees be aware that payments to agents may inadvertently amount to FCPA violations and must take care to assure that they do not inadvertently get caught in an FCPA violation.
Some “Red Flags” That Could Indicate That Payment To An Agent May Involve A Violation Of The FCPA Include:
| ● | An agent who insists on anonymity; | |
| ● | An agent who insists on payment by cash, the use of false invoices, that payment be made in a third country, etc.; | |
| ● | The commission requested by the agent is substantially above the market rate; | |
| ● | The agent states that money is needed to “get the business” or “make the necessary arrangements.” |
Employee Certification
I, _____________, in my capacity as ______________ of Can B Corp., swear under the pains and penalties of perjury that:
| 1. | I have read the Company’s policy on the FCPA and have no questions concerning its provisions, its application, its purpose, or its intent. | |
| 2. | I have not engaged during the previous year in any action that would amount to a covered transaction under the FCPA nor have I ordered or suggested that any other employee or agent or consultant of the Company engage in any action that would amount to a covered transaction under the FCPA. | |
| 3. | I am not aware of any other employee, consultant, or agent of the Company that has committed an act that would be covered under the FCPA, nor am I aware of any other instance that may be construed as a violation of the FCPA. | |
| 4. | I have no reason to believe that any third party whom I have dealt with during the past year has had intent to evade the prescriptions of the FCPA or has in fact violated the FCPA. | |
| 5. | I am aware that there are significant penalties for violations of the FCPA, including criminal penalties. |
| By: |
Employee
I have reviewed the foregoing with the employee and have personally witnessed the employee’s execution of this certification.
| By: | ||
| Authorized Officer |
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Marco Alfonsi, certify that:
1. I have reviewed this Annual Report on Form 10-K of Can B̅ Corp.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| (a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| (a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: April 2, 2020 | By: | /s/ Marco Alfonsi |
| Marco Alfonsi | ||
Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Stanley L. Teeple, certify that:
1. I have reviewed this Annual Report on Form 10-K of Can B̅ Corp.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| (a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| (a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: April 2, 2020 | By: | /s/ Stanley L. Teeple |
| Stanley L. Teeple | ||
Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Can B̅ Corp. (the “Company”) on Form 10-K for the period ended December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Marco Alfonsi, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: April 2, 2020 | By: | /s/ Marco Alfonsi |
| Marco Alfonsi | ||
| Chief Executive Officer |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Can B̅ Corp. (the “Company”) on Form 10-K for the period ended December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stanley L. Teeple, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: April 2, 2020 | By: | /s/ Stanley L. Teeple |
| Stanley L. Teeple | ||
| Chief Financial Officer |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.