Notes
to Consolidated Financial Statements
June
30, 2021
Note
1 – Organization and Description of Business
Can
B̅ Corp. was originally incorporated as WrapMail, Inc. (“WRAP”) in Florida on October 11, 2005. On May 15, 2017, WRAP
changed its name to Canbiola, Inc. On January 16, 2020 Canbiola, Inc. changed its name to Can B̅ Corp. (the “Company”,
“we”, “us”, “our”, “CANB”, “Can B̅” or “Registrant”).
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 runs it manufacturing operations through PHP and holds
and sells several of its brands through PHP as well. The Company’s durable equipment products, such as sam® units with and
without CBD infused pads, are marketed and sold through its wholly-owned subsidiaries, Duramed Inc. (incorporated on November 29, 2018)
and Duramed MI LLC (fka DuramedNJ, LLC) (incorporated on May 29, 2019) (collectively, “Duramed”). Duramed began operating
on or about February 1, 2019. Most of the Company’s consumer products include hemp derived cannabidiol (“CBD”); however,
the Company has just recently begun extracting cannabinol (“CBN”) and cannabigerol (“CBG”) for wholesale to third-parties
looking to incorporate such compounds into their products through its wholly owned subsidiary, Botantical Biotech, LLC (incorporated
March 10, 2021). Botanical Biotech has also begun synthesizing delta-8 from hemp. Delta-8 can produce similar, though less potent, effects
as delta-9 (commonly referred to as THC); however, the legality of hemp derived delta-8 is in a gray area and considered a potential
loophole at this point due to the 2018 hemp bill. The Company’s other subsidiaries did not have operations during the six months
ended June 30, 2021.
The
Company is in the business of promoting health and wellness through its development, manufacture and sale of products containing cannabinoids
derived from hemp biomass and the licensing of durable medical devises. Can B̅’s products include oils, creams, moisturizers,
isolate, gel caps, spa products, and concentrates and lifestyle products. Can B̅ develops its own line of proprietary products as
well seeks synergistic value through acquisitions in the hemp industry. Can B̅ aims to be the premier provider of the highest quality
hemp derived products on the market through sourcing the best raw material and offering a variety of products we believe will improve
people’s lives in a variety of areas.
Note
2 – Liquidity
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 June 30, 2021, the Company had cash and cash equivalents of $1,093,156
and a working capital of $1,040,562.
For the periods ended June 30, 2021 and 2020, the Company had net loss
of $4,919,871 and $2,365,032,
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.
Note
3 – Basis of Presentation and Summary of Significant Accounting Policies
Basis
of Financial Statement Presentation
The
accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information, and with the rules and regulations of the Securities
and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these interim consolidated financial
statements do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of the
management of the Company, as defined below, these unaudited consolidated financial statements include all adjustments necessary to present
fairly the information set forth therein. Results for interim periods are not necessarily indicative of results to be expected for a
full year.
The
consolidated balance sheet information as of December 31, 2020 was derived from the audited consolidated financial statements included
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”). The interim consolidated
financial statements contained herein should be read in conjunction with the 2020 Form 10-K.
Principles
of Consolidation
The
unaudited consolidated financial statements contained herein include the accounts of Can B Corp. and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated.
Can
B̅ Corp. and Subsidiaries
Notes
to Consolidated Financial Statements
June
30, 2021
Covid-19
Commencing
in December 2019, the novel strain of coronavirus (“COVID-19”) began spreading throughout the world, including the first
outbreak in the US in February 2020. On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and recommended
containment and mitigation measures worldwide. COVID-19 has disrupted and continues to significantly disrupt local, regional, and global
economies and businesses. The COVID-19 outbreak is disrupting supply chains and affecting production and sales across a range of industries.
The extent of the impact of COVID-19 on the Company’s operational and financial performance will depend on certain developments,
including the duration and spread of the outbreak, impact on the Company’s customers, employees and vendors, all of which are uncertain
and cannot be predicted. At this point, the extent to which COVID-19 may impact the Company’s financial condition and/or results
of operations is uncertain.
In
response to COVID-19, the Company put into place certain restrictions, requirements and guidelines to protect the health of its employees
and clients, including requiring that certain conditions be met before employees return to the Company’s offices. Also, to protect
the health and safety of its employees, the Company’s daily execution has evolved into a largely virtual model. The Company plans
to continue to monitor the current environment and may take further actions that may be required by federal, state or local authorities
or that it determines to be in the interests of its employees, customers, and partners.
Management
Estimates
The
preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the
financial statements and the reported amounts of revenues and expenses in those financial statements. Certain significant accounting
policies that contain subjective management estimates and assumptions include those related to revenue recognition, inventory, goodwill,
intangible assets and other long-lived assets, income taxes and deferred taxes. Descriptions of these policies are discussed in the Company’s
2020 Form 10-K. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors,
including the current economic environment, and adjusts when facts and circumstances dictate. As future events and their effects cannot
be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if
any, in those estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial
statements in future periods.
Significant
Accounting Policies
The
Company’s significant accounting policies are described in “Note 3: Summary of Significant Accounting Policies” of
our 2020 Form 10-K.
Recently
Adopted Accounting Pronouncements
The
Financial Accounting Standards Board (“FASB”) issued the following accounting pronouncement which became effective for the
Company in 2021, and which did not have a material impact on its condensed consolidated financial statements:
In
December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU
2019-12”), which modifies ASC 740 to simplify the accounting for income taxes. ASU 2019-12 addresses the accounting for hybrid
tax regimes, tax basis step-up in goodwill obtained in a transaction that is not a business combination, separate financial statements
of legal entities not subject to tax, intraperiod tax allocation exception to incremental approach, ownership changes in investments
- changes from a subsidiary to an equity method investment, ownership changes in investments - changes from an equity method investment
to a subsidiary, interim period accounting for enacted changes in tax law and year-to-date loss limitation in interim period tax accounting.
Segment
reporting
As
of June 30, 2021, the Company reports operating results and financial data in one operating and reportable segment. The Chief Executive
Officer, who is the chief operating decision maker, manages the Company as a single profit center in order to promote collaboration,
provide comprehensive service offerings across the entire customer base, and provide incentives to employees based on the success of
the organization as a whole. Although certain information regarding selected products or services is discussed for purposes of promoting
an understanding of the Company’s business, the chief operating decision maker manages the Company and allocates resources at the
consolidated level.
Can
B̅ Corp. and Subsidiaries
Notes
to Consolidated Financial Statements
June
30, 2021
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 loss.
Note
4 – Asset Acquisitions
Botanical
Biotech Asset Acquisition
On
March 11, 2021, Company entered into an Asset Acquisition Agreement, which was fully executed on March 17, 2021, with multiple sellers
(each, a “Seller” and, collectively, the “Sellers”), pursuant to which the Sellers agreed to sell certain assets
to Company, and to transfer such assets to Botanical Biotech, LLC, a newly-formed, wholly-owned subsidiary of the Company (“Transferee”
or “BB”). The assets purchased (“BB Assets”) include certain materials and manufacturing equipment, marketing
or promotional designs, brochures, advertisements, concepts, literature, books, media rights, rights against any other person or entity
in respect of any of the foregoing and all other promotional properties, in each case primarily used, developed or acquired by the Sellers
for use in connection with the ownership and operation of the BB Assets. In exchange for the BB Assets the Company will pay the Seller
a maximum of $355,057, payable half in the form of cash or cash equivalent and half in the form of restricted shares of common stock
of the Company (the “Shares”) at a price per Share equal to the average closing price of the common stock of the Company
during the ten (10) consecutive trading days immediately preceding the closing. The Company has agreed to indemnify the Sellers for certain
breaches of covenants, representations and warranties and for claims relating to the BB Assets following closing.
In
conjunction with the BB asset acquisition, the Company entered into employment agreements with two sellers.
The
Company and BB entered into an employment agreement with Lebsock dated March 11, 2021 (the “Lebsock Agreement”) pursuant
to which Lebsock will serve as the President of BB for a term of three (3) years. The term of the Lebsock Agreement will automatically
renew for an additional 3-year term unless other terminated by either party. Lebsock will receive a base salary equal to $120,000 per
year, subject to an annual increase of not less than 3% on each anniversary of the Lebsock Agreement during the term. The Company also
agreed to issue a stock bonus to Lebsock in accordance with the Company’s Incentive Stock Option Plan (“ISOP”) in an
amount of $100,000, and to pay Lebsock a defined percentage of the EBITDA for BB each calendar quarter (“Profit Split”) according
to a mutually agreed performance target (“Target”). EBITDA is defined as the earnings before interest, depreciation, taxes,
depreciation, and amortization and will be paid as reported by the Company’s accountant and as reviewed by the Company’s
auditor. It will be accumulative on a quarter-to-quarter basis, meaning if one quarter has a negative EBITDA, it would be offset against
the following quarter’s positive EBITDA distribution. Lebsock has the option to accept the Profit Split in either direct cash payment
or Shares, or any combination, at Lebsock’s option. Shares would be valued at the prior 10-day closing price and issued under SEC
Rule 144 restriction.
Effective
March 16, 2021, BB entered into a Consulting Agreement (the “Schlosser Agreement”) with Schlosser pursuant to which Schlosser
has agreed to provide consulting services to BB for a period of 3 months in exchange for compensation equal to $10,000 per month. Schlosser
will also be entitled to reimbursement for certain work-related expenses. Pursuant to the Schlosser Agreement, Schlosser also agreed
to assign to BB all inventions developed by Schlosser in connection with his services to BB. The Schlosser Agreement also contains certain
non-compete and confidentiality provisions. Per the Acquisition Agreement, Schlosser was to receive an employment agreement similar to
the Lebsock Agreement; however, BB and Schlosser elected to enter into the Schlosser Agreement instead.
Can
B̅ Corp. and Subsidiaries
Notes
to Consolidated Financial Statements
June
30, 2021
Note
5 – Inventories
Inventories
consist of:
Schedule of Inventories
Inventory
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
Raw materials
|
|
$
|
273,333
|
|
|
$
|
294,522
|
|
Finished goods
|
|
|
46,910
|
|
|
|
50,432
|
|
Total
|
|
$
|
320,243
|
|
|
$
|
344,954
|
|
Note
6 – Property and Equipment
Property
and equipment consist of:
Summary of Property, Plant and Equipment
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
Furniture and fixtures
|
|
$
|
21,724
|
|
|
$
|
21,727
|
|
Office equipment
|
|
|
12,378
|
|
|
|
12,378
|
|
Manufacturing equipment
|
|
|
561,328
|
|
|
|
397,230
|
|
Medical equipment
|
|
|
776,396
|
|
|
|
776,392
|
|
Leasehold improvements
|
|
|
26,902
|
|
|
|
26,902
|
|
Total
|
|
|
1,398,728
|
|
|
|
1,234,629
|
|
Accumulated depreciation
|
|
|
(309,615
|
)
|
|
|
(239,650
|
)
|
Net
|
|
$
|
1,089,113
|
|
|
$
|
994,979
|
|
Depreciation
expense was $72,342 and
$61,510 for
the six month periods ending June 30, 2021 and 2020, respectively.
Note
7 – Goodwill and Intangible Assets
Intangible
assets consist of:
Schedule of Intangible Assets
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
Technology, IP and patents
|
|
$
|
989,443
|
|
|
$
|
674,240
|
|
Hemp processing registration
|
|
|
85,200
|
|
|
|
85,200
|
|
Total
|
|
|
1,074,643
|
|
|
|
759,440
|
|
Accumulated amortization
|
|
|
(339,911
|
)
|
|
|
(236,431
|
)
|
Intangible assets, net
|
|
$
|
734,732
|
|
|
$
|
523,009
|
|
Amortization
expense was $103,480 and $277,158 for the six months ended, 2021 and 2020, respectively.
Amortization
expense for the balance of 2021, and for each of the next five years and thereafter is estimated to be as follows:
Schedule of Estimated Future Amortization Expense
|
|
|
2021
|
|
Six months ended December 31, 2021
|
|
$
|
48,556
|
|
Fiscal year 2022
|
|
|
97,112
|
|
Fiscal year 2023
|
|
|
97,112
|
|
Fiscal year 2024
|
|
|
97,112
|
|
Fiscal year 2025
|
|
|
86,970
|
|
Thereafter
|
|
|
307,870
|
|
Intangible assets, net
|
|
$
|
734,732
|
|
There
was no goodwill activity during the six months ended June 30, 2021 and 2020.
Can
B̅ Corp. and Subsidiaries
Notes
to Consolidated Financial Statements
June
30, 2021
Note
8 – Notes and Loans Payable
Convertible
Promissory Notes
In
December 2020, the Company entered into a convertible promissory note (“ASOP Note I”) with Arena Special Opportunities Partners
I, LP (“ASOP”). The principal balance of the note is $2,675,239 and it is to be utilized for working capital purposes. The
note matures on January 31, 2022 and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion
options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging,
and determined not to be considered a derivative and therefore has been recorded in liabilities as part of the convertible promissory
note and not bifurcated. In addition, the ASOP convertible promissory note was issued with 3,426,280 common stock warrants. The common
stock purchase warrants entitle the holder to purchase an aggregate of up to 3,426,280 shares of the Company’s common stock at
an exercise price of $0.45 per share. The common stock purchase warrants issued to ASOP are considered derivatives, but satisfied the
criteria for classification as equity instruments, and were bifurcated from the host contract - convertible promissory note and recorded
in equity at their relative fair values with a corresponding debt discount recorded to ASOP Note I. Aggregate amortization of the original
issue discount for the six months ended June 30, 2021 and 2020 was approximately $533,000 and $0, respectively. The principal balance
outstanding at June 30, 2021 was $2,286,792.
In
December 2020, the Company entered into a convertible promissory note (“ASOF Note I”) with Arena Special Opportunities Fund,
LP (“ASOF”). The principal balance of the note is $102,539 and it is to be utilized for working capital purposes. The note
matures on January 31, 2022 and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion
options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging,
and determined not to be considered a derivative and therefore has been recorded in liabilities as part of the convertible promissory
note and not bifurcated. In addition, the ASOF convertible promissory note was issued with 131,325 common stock warrants. The common
stock purchase warrants entitle the holder to purchase an aggregate of up to 131,325 shares of the Company’s common stock at an
exercise price of $0.45 per share. The common stock purchase warrants issued to ASOF are considered derivatives, but satisfied the criteria
for classification as equity instruments, and were bifurcated from the host contract - convertible promissory note and recorded in equity
at their relative fair values with a corresponding debt discount recorded to ASOF Note I. Aggregate amortization of the original issue
discount for the six months ended June 30, 2021 and 2020 was approximately $22,000 and $0, respectively. The principal balance outstanding
at June 30, 2021 was $87,773.
In
May 2021, the Company entered into a convertible promissory note (“ASOP Note II”) with Arena Special Opportunities Partners
I, LP. The principal balance of the note is $1,193,135 and it is to be utilized for working capital purposes. The note matures on January
31, 2022 and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion options contained
in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and determined not
to be considered a derivative and therefore has been recorded in liabilities as part of the convertible promissory note and not bifurcated.
In addition, the ASOP convertible promissory note was issued with 1,529,670 common stock warrants. The common stock purchase warrants
entitle the holder to purchase an aggregate of up to 1,529,670 shares of the Company’s common stock at an exercise price of $0.45
per share. The common stock purchase warrants issued to ASOP are considered derivatives, but satisfied the criteria for classification
as equity instruments, and were bifurcated from the host contract - convertible promissory note and recorded in equity at their relative
fair values with a corresponding debt discount recorded to ASOP Note II. Aggregate amortization of the original issue discount for the
six months ended June 30, 2021 and 2020 was approximately $90,000 and $0, respectively. The principal balance outstanding at June 30,
2021 was $1,073,250.
In
May 2021, the Company entered into a convertible promissory note (“ASOF Note II”) with Arena Special Opportunities Fund,
LP. The principal balance of the note is $306,865 and it is to be utilized for working capital purposes. The note matures on January
31, 2022 and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion options
contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and
determined not to be considered a derivative and therefore has been recorded in liabilities as part of the convertible promissory
note and not bifurcated. In addition, the ASOP convertible promissory note was issued with 393,417 common stock warrants. The
common stock purchase warrants entitle the holder to purchase an aggregate of up to 393,417 shares of the Company’s common
stock at an exercise price of $0.45 per share. The common stock purchase warrants issued to ASOF are considered derivatives, but
satisfied the criteria for classification as equity instruments, and were bifurcated from the host contract - convertible promissory
note and recorded in equity at their relative fair values with a corresponding debt discount recorded to ASOF Note II. Aggregate
amortization of the original issue discount for the six months ended June 30, 2021 and 2020 was approximately $23,000 and $0,
respectively. The principal balance outstanding at June 30, 2021 was $276,750.
Can
B̅ Corp. and Subsidiaries
Notes
to Consolidated Financial Statements
June
30, 2021
PPP
Loan
In
2020, the Company received a loan under the U.S. Small Business Administration’s Paycheck Protection Program established under
the Coronavirus Aid Relief and Economic Security Act (“CARES act”) and related rules and regulations (the “PPP loan”)
of $194,940.
Under
the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of such loans after eight
weeks, if the loan is used for eligible purposes, including to fund payroll costs, mortgage interest, rent and/or utility costs, and
meet certain other requirements, including, the maintenance of employment and compensation levels. The Company plans to use the entire
PPP Loan for qualifying expenses and expects to qualify for full or partial forgiveness under the program.
In
May 2021, the Company received notice of forgiveness of the PPP loan in whole, including all accrued unpaid interest. In fiscal year
2021, the Company recorded the forgiveness of $194,940 of principal and $1,949 of accrued interest for a total of $196,889, which was
included in gain on extinguishment of debt on the Consolidated Statements of Operations.
Related
Party Loan
In
2020, the Company entered into a loan payable to a director of the Company with a principal balance of $224,000. The loan bore interest
at 12% per annum and was due in December 2020. The Company subsequently paid the loan in full in February 2021.
Note
9 – Stockholders’ Equity
Preferred
Stock
Each
share of Series A Preferred Stock is convertible into 33,334 shares of CANB common stock and is entitled to 66,666 votes. All Preferred
Shares shall rank senior to all shares of Common Stock of the Company with respect to liquidation preferences and shall rank pari
passu to all current and future series of preferred stock, unless otherwise stated in the certificate of designation for such preferred
stock. In the event of a Liquidation Event, whether voluntary or involuntary, each holder may elect (i) to receive, in preference to
the holders of Common Stock, a one-time liquidation preference on a per-share amount equal to the per-share value of preferred shares
on the issuance date, as recorded in the Company’s financial records, or (ii) to participate pari passu with the Common
Stock on an as-converted basis. Subject to any adjustments, the Series A holders shall be entitled to receive such dividends paid and
distributions made to the holders of shares of Common Stock on an as converted basis.
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.
Each
share of Series C Preferred Stock has preference to payment of dividends, if and when declared by the Company, compared to shares of
our common stock. Each Preferred Series C share is convertible into 25,000 shares of common stock. The shares of Series C Preferred Stock
have voting rights as if fully converted.
Each
share of Series D Preferred Stock has 10,000 shares of voting rights only pari passu to common shares voting with no conversion rights
and no equity participation. The Company can redeem Series D Preferred Stock at any time for par value.
Can
B̅ Corp. and Subsidiaries
Notes
to Consolidated Financial Statements
June
30, 2021
On
February 8, 2021, the Company’s Board of Directors approved the designation of the Series D Preferred Shares and the number of
shares constituting such series, and the rights, powers, preferences, privileges and restrictions relating to such series. On March 27,
2021, the Company filed an amendment to its articles of incorporation to authorize 4,000 shares of a new Series D Preferred Stock with
a par value of $0.001 each. All Series D Preferred Shares shall rank senior to all shares of Common Stock of the Company with respect
to liquidation preferences and shall rank pari passu to all current and future series of preferred stock, unless otherwise stated
in the certificate of designation for such preferred stock. Each Series D Preferred Share shall have voting rights equal to 10,000 shares
of Common Stock, adjustable at any recapitalization of the Company’s stock. In the event of a liquidation event, whether voluntary
or involuntary, each holder shall have a liquidation preference on a per-share amount equal to the par value of such holder’s Series
D Preferred Shares. The holders shall not be entitled to receive distributions made or dividends paid to the Company’s other stockholders.
Except as otherwise required by law, for as long as any Series D Preferred Shares remain outstanding, the Company shall have the option
to redeem any outstanding share of Series D Preferred Shares at any time for a purchase price of par value per share of Series D Preferred
Shares (“Price per Share”). Should the Company desire to purchase Series D Preferred Shares, the Company shall provide the
Holder with written notice and a check or cash in an amount equal to the number of shares of Series D Preferred Shares being purchased
multiplied by the Price per Share. The shares of Series D Preferred Shares so purchased shall be deemed automatically cancelled and the
Holder shall return the certificates for such share to the Corporation. On or around March 27, 2021, the Company issued Mr. Alfonsi,
Mr. Ferro, and Mr. Teeple Series D Preferred Stock in the amount of 600 shares each and to COO Philip Scala in the amount of 150 shares,
collectively representing 19,500,000 voting shares.
Common
Stock
For
the six months ended June 30, 2021, the Company issued an aggregate of 5,732,000 shares of Common Stock under its Offering Statement
on Form 1-A (File No. 024-11233) (the “Regulation A Offering”).
Note
10 – Stock Options
A
summary of stock options activity for the six months ended June 30, 2021 is as follows:
Summary of Stock Options Activity
|
|
|
Option Shares
|
|
|
Weighted Average Exercise Price
|
|
|
Weighted Average Remaining Contractual Life (Years)
|
|
Outstanding, January 1, 2021
|
|
|
|
1,197,199
|
|
|
$
|
0.36
|
|
|
|
4.42
|
|
Granted
|
|
|
|
561,920
|
|
|
$
|
0.46
|
|
|
|
4.82
|
|
Exercised
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Expired
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding, June 30, 2021
|
|
|
|
1,759,119
|
|
|
$
|
0.39
|
|
|
|
4.53
|
|
Schedule of Non-Vested Option
|
|
|
Option Shares
|
|
|
Weighted Average Grant-Date Fair Value
|
|
Non-vested options, January 1, 2021
|
|
|
|
1,197,199
|
|
|
$
|
0.35
|
|
Granted
|
|
|
|
561,920
|
|
|
$
|
0.46
|
|
Vested
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited
|
|
|
|
-
|
|
|
|
-
|
|
Non-vested options, June 30, 2021
|
|
|
$
|
1,759,119
|
|
|
$
|
0.36
|
|
Note
11 – Income Taxes
The
Company’s income tax provisions for the six and three months ended June 30, 2021 and 2020 reflect the Company’s estimates
of the effective rates expected to be applicable for the respective full years, adjusted for any discrete events, which are recorded
in the period that they occur. These estimates are reevaluated each quarter based on the Company’s estimated tax expense for the
full year. The estimated effective tax rate includes the impact of valuation allowances in various jurisdictions.
Note
12 – Related Party Transactions
For
the six months ended June 30, 2021 and 2020, the Company paid fees to a service provider that is a relative of a director for professional
services in the amount of $9,900 and $42,600, respectively.
Can
B̅ Corp. and Subsidiaries
Notes
to Consolidated Financial Statements
June
30, 2021
Note
13 – Commitments and Contingencies
Employment
Agreements
On
December 28, 2020, the Company entered into new three-year Employment Agreements with CEO Marco Alfonsi, CFO Stanley Teeple, and Pure
Health Products LLC Pasquale Ferro. Under these agreements, they are to receive a i) base salary of fifteen thousand dollars ($15,000.00)
per month, ii) is eligible to receive cash and or stock bonuses, iii) shall receive a stock bonus in accordance with the Company’s
Incentive Stock Option Plan (“ISOP”) in an amount of one-hundred thousand dollars ($100,000) per year of the Agreement, iv)
200 shares of the Company’s Series C Preferred stock, v) usual and customary benefits including expense reimbursement, health and
life insurance plan reimbursements and allowances. Phil Scala. Interim COO also received a similar agreement with a base compensation
of fifty-two thousand annually, $100,000 in ISO, and 20 Preferred C shares.
Consulting
Agreements
On
July 15, 2020, 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
$5,000 per month for the initial 3 months., $6,250 per month for months 4-6., $7,500 per month for month 7 and after. At CANB’s
option, the monthly fee may be payable in part or in whole in cash. Monthly Fee, such amount shall be paid via issuance of restricted
common shares of CANB. The shares are to be issued in the name of Tysadco Partners. The number of common shares earned each month shall
be calculated and issued on a quarterly basis prior to each 90-day period and based on the value at the closing price on the last day
of the preceding period. All common shares earned by the Consultant pursuant to this Agreement shall be issued by CANB on a quarterly
basis.
Lease
Agreements
We
determine if a contract contains a lease at inception. Our material operating lease is office space. Our leases generally have remaining
terms of 1-3 years. Generally, the lease term is the minimum of the noncancelable period of the lease or the lease term inclusive of
reasonably certain renewal periods.
Operating
lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of
lease payments not yet paid. Operating lease assets represent our right to use an
underlying
asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease
incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental
secured borrowing rates corresponding to the maturities of the leases. Our leases typically contain rent escalations over the lease term.
We recognize expense for these leases on a straight-line basis over the lease term.
The
Company leases office space in numerous medical facilities offices under month-to-month agreements.
Rent
expense for the six months ended June 30, 2021 and 2020 was $84,724 and $121,652, respectively.
At
June 30, 2021, the future minimum lease payments under non-cancellable operating leases were:
Schedule of Future Minimum Lease Payments Under Non-cancellable Operating Leases
|
|
|
2021
|
|
Six months ended December 31, 2021
|
|
$
|
23,527
|
|
Fiscal year 2022
|
|
|
14,259
|
|
Total
|
|
$
|
37,786
|
|
Note
14 – Subsequent Events
The
Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the condensed consolidated
financial statements are issued and as of that date, except as reported below, there were no subsequent events that required adjustment
or disclosure in the consolidated financial statements.
On
August 12, 2021 the Company entered into an Equipment Acquisition Agreement with TWS Pharma, LLC, a Wisconsin limited liability company
and L7 TWS Pharma, LLC, a Wisconsin limited liability company (collectively, “TWS”) pursuant to which the Company agreed
to purchase certain equipment and inventory from TWS for a total purchase price equal to $5,316,774, with $1,250,000 payable in a 12-month
promissory note with 6% simple interest and monthly payments of $100,000 due per month, and $4,066,774 payable in shares of the Company’s
common stock valued at $0.62 per share; provided, however, that the Company will withhold $1,750,000 of the shares for a period of ninety
(90) days from the closing date. The first $500,000 of payments of the promissory note will be secured by 1,000,000 shares of CANB’s
common stock.
On
August 13, 2021 the Company entered into an Asset Purchase Agreement with Music City Botanicals, LLC, a Wisconsin limited liability company
(“MCB”) pursuant to which the Company agreed to purchase certain equipment, inventory, and intellectual property from MCB
for a total purchase price equal to $1,394,324, with $498,259 payable in cash and $896,065 payable in shares of the Company’s common
stock valued at $0.62 per share.