Canbiola, Inc. (the “Company”)
inadvertently provided an incorrect contact phone number in its Annual Report on Form 10-K for the fiscal year ended December
31, 2018 (the “Original Filing”) and did not include interactive data (aka XBRL’s) for the Original Filing.
This Amendment No. 1 on Form 10-K (“Amendment No. 1”) is being filed solely to include the Company’s interactive
data and to amend the Company’s phone number.
Notes
to Consolidated Financial Statements
Years
Ended December 31, 2018 and 2017
NOTE
1 – Organization and Description of Business
Canbiola,
Inc. 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 formed Duramed, Inc., a Nevada corporation (“Duramed”) in November 2018, to facilitate
the manufacture and sale of durable medical equipment incorporating CBD
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
May 15, 2017, WRAP changed its name to Canbiola, Inc. (the “Company” or “CANB” or “Canbiola”).
Canbiola
specializes in the production and sale of a variety of hemp derived Cannabidiol (“CBD”) products such as oils, creams,
moisturizers, isolate, gel caps, concentrate and water. Canbiola is developing its own line of proprietary products as well as
seeking synergistic value through acquisitions in the Hemp Industry. Canbiola 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 operates document management and email marketing platforms. The Company used to operate its document and information
platform from its wholly owned subsidiary, Prosperity Systems, Inc; however, after the acquisition of Prosperity, the Company
transferred Prosperity’s operations to the Company directly.
For
the periods presented, the assets, liabilities, revenues, and expenses are those of CANB. Prosperity and Duramed had no activity
for the periods presented. Financial information for PHP from December 28, 2018 to December 31, 2018 has 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, 2018, the Company had cash and cash
equivalents of $807,747 and a working capital of $939,582. For the years ended December 31, 2018 and 2017, the Company had net
losses of $4,112,277 and $2,139,719, 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 – 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 (from its
acquisition date of December 28, 2018), Duramed, and Prosperity from the date of its acquisition on January 5, 2015. 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)
Inventory
All
inventories are finished goods and stated at the lower of cost or net realizable value. Cost is principally determined using the
first-in, first-out (FIFO) method.
(f)
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.
(g)
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.
(h)
Goodwill and Intangible Assets with Indefinite Lives
The
Company does not amortize goodwill and intangible assets with indefinite useful lives, 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.
(i)
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.
(j)
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. For 2018, Global CBD, LLC revenue of $44,602 represents approximately
9% and TZ Wholesale revenue of $17,172 represents approximately 3.5% of total Company revenues for the year ended December 31,
2018.
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.
Additionally,
the Company also generates revenue from email marketing and cloud service provided to several existing customers. The service
revenue is recognized over agreed periods of services delivered to customers, provided there are no uncertainties regarding customer
acceptance, persuasive evidence of an arrangement exists; the sales price is fixed or determinable; and collectability is deemed
probable.
(k)
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.
(l)
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.
|
|
|
|
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.
|
(m)
Advertising
Advertising
costs are expensed as incurred and amounted to $84,316 and $28,322 for the year ended December 31, 2018 and 2017, respectively.
(n)
Research and Development
Research
and development costs are expensed as incurred. In fiscal year 2017 and 2018, the Company spent $37,000 and $75,000 in research
and development which was expenses as spent, respectively.
(o)
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.
(p)
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 7, 8 and 10).
(q)
Recent Accounting Pronouncements
In
May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (Topic 606) which establishes revenue
recognition standards. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017. The impact of
ASU 2014-09 on the Company’s financial statements has not been significant.
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. ASU
2016-2 is effective for fiscal years beginning after December 15, 2018.
The
impact on the Company’s financial statements has not yet been determined.
(r)
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 – Acquisition of Pure Health Products, LLC
Effective
December 28, 2018, CANB acquired 100% ownership of Pure Health Products, LLC (“Pure Health”) in exchange for the cancellation
of CANB’s $75,000 note receivable from Pure Health and $10,827 accrued interest thereon and issuance of 3,096,827 newly
issued shares of CANB common stock (valued at the $0.0578 closing trading price on December 28, 2018 or $178,997, see Note 11).
The acquisition has been accounted for in the accompanying consolidated financial statements as a purchase transaction. Accordingly,
the financial position and results of operations of Pure Health prior to the date of the acquisition have been excluded from the
accompanying consolidated financial statements.
The
estimated fair values of the identifiable net assets of Pure Health at December 28, 2018 (effective date of acquisition), after
cancellation of the $75,000 note payable to CANB and $10,827 accrued interest thereon, consisted of:
Cash and cash equivalents
|
|
$
|
404
|
|
Accounts receivable from CANB
|
|
|
16,676
|
|
Inventory
|
|
|
79,652
|
|
Property and equipment, net
|
|
|
7,559
|
|
Security deposit
|
|
|
2,100
|
|
|
|
|
|
|
Total assets
|
|
|
106,391
|
|
|
|
|
|
|
Accounts payable, including $34,419 due to CANB
|
|
|
49,825
|
|
|
|
|
|
|
Total liabilities
|
|
|
49,825
|
|
|
|
|
|
|
Identifiable net assets
|
|
$
|
56,566
|
|
Goodwill
of $55,849 (excess of the $112,415 fair value of the 3,096,827 shares of CANB common stock issued to Pure Health’s stockholders
over the $56,566 identifiable net assets of Pure Health at December 28, 2018 after reflecting the $85,827 cancellation of the
$75,000 note payable and $10,827 accrued interest) was recorded from the acquisition.
The
following pro forma information summarizes the results of operations for the periods indicated as if the acquisition occurred
at December 31, 2016. The pro forma information is not necessarily indicative of the results that would have been reported had
the transaction actually occurred on December 31, 2016, nor is it intended to project results of operations for any future period.
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Product sales
|
|
$
|
651,978
|
|
|
$
|
90,634
|
|
Cost of product sales
|
|
|
224,894
|
|
|
|
62,958
|
|
Gross profit on product sales
|
|
|
427,084
|
|
|
|
27,676
|
|
Service revenue
|
|
|
16,625
|
|
|
|
43,716
|
|
|
|
|
|
|
|
|
|
|
Total gross profit
|
|
|
443,709
|
|
|
|
71,392
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
4,674,321
|
|
|
|
812,365
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(4,203,613
|
)
|
|
|
(740,973
|
)
|
|
|
|
|
|
|
|
|
|
Other income (loss) - net
|
|
|
(2,671,581
|
)
|
|
|
(1,428,783
|
)
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(6,875,194
|
)
|
|
$
|
(2,169,756
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per common share- basic and diluted
|
|
$
|
(0.02
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding –
|
|
|
|
|
|
|
|
|
Basic
|
|
|
276,026,704
|
|
|
|
165,230,550
|
|
Diluted
|
|
|
423,881,781
|
|
|
|
256,295,851
|
|
NOTE
5 – Inventories
Inventories consist of:
|
|
December 31,
2018
|
|
|
December 31,
2017
|
|
Raw materials
|
|
$
|
79,652
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Finished goods
|
|
|
7,452
|
|
|
|
9,834
|
|
Total
|
|
$
|
87,104
|
|
|
$
|
9,834
|
|
NOTE
6 – Notes Receivable
Notes
receivable consist of:
|
|
December 31,
2018
|
|
|
December 31,
2017
|
|
Secured Promissory note dated October 17, 2017 due from Pure Health Products, LLC (“PHP”), interest at 12% per annum, due October 17, 2018, secured by assets of PHP. Cancelled in acquisition of Pure Health Products, LLC
|
|
$
|
-
|
|
|
$
|
75,000
|
|
|
|
|
|
|
|
|
|
|
Note receivable dated November 30, 2015 from Stock Market Manager, Inc, interest at 3% per annum due November 30, 2020
|
|
|
19,389
|
|
|
|
39,000
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
19,389
|
|
|
|
114,000
|
|
|
|
|
|
|
|
|
|
|
Current portion of notes receivable
|
|
|
-
|
|
|
|
(75,000
|
)
|
Noncurrent portion of notes receivable
|
|
$
|
19,389
|
|
|
$
|
39,000
|
|
Pursuant
to an option Agreement dated November 10, 2017, the Company has an option expiring November 10, 2027 to purchase certain specified
assets of Pure Health for $75,000, payable via cancellation of Pure Health’s obligations under the Secured Promissory Note
or in cash or cash equivalent.
Stock
Market Manager, Inc is affiliated with Carl Dilley, a Company director. In 2018, the Company received services from Stock Market
Manager valued at $19,611 in exchange for the cancellation of $19,611 in note receivables.
NOTE
7 – Property and Equipment, Net
Property
and Equipment, net, consist of:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Furniture & Fixtures
|
|
$
|
19,018
|
|
|
$
|
19,018
|
|
|
|
|
|
|
|
|
|
|
Office Equipment
|
|
|
20,992
|
|
|
|
12,378
|
|
|
|
|
|
|
|
|
|
|
Manufacturing Equipment
|
|
|
46,384
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
86,394
|
|
|
|
31,396
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization
|
|
|
(26,775
|
)
|
|
|
(20,248
|
)
|
|
|
|
|
|
|
|
|
|
Net
|
|
$
|
59,619
|
|
|
$
|
11,148
|
|
NOTE
8 – Intangible Assets, Net
Intangible
assets, net, consist of:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
3,548
|
|
|
|
3,548
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
60,428
|
|
|
|
60,428
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization and Impairment
|
|
|
(60,428
|
)
|
|
|
(60,428
|
)
|
|
|
|
|
|
|
|
|
|
Net
|
|
$
|
0
|
|
|
$
|
0
|
|
The
above intangible assets relate to the document management and email marketing divisions. At December 31, 2017, we do not expect
any future positive cash flow from these divisions. Accordingly, we have recorded an impairment expense of $21,509 at December
31, 2017 and reduced the net carrying value of these intangible assets to $0.
NOTE
9 – Notes and Loans Payable
Notes and loans payable consist of:
|
|
|
|
|
|
|
|
|
December 31,
2018
|
|
|
December 31,
2017
|
|
|
|
|
|
|
|
|
Convertible notes payable to lender dated from March 15, 2016 (as amended June 2, 2016) to November 15, 2017, interest at rates ranging from 12% to 14.99% per annum, due from April 6, 2017 to May 15, 2018, partially converted at March 22, 2017 and the remaining notes convertible into Common Stock at a Conversion Price equal to the lesser of (i) $0.01 per share or (ii) 50% of the lowest Closing Bid Price of the Common Stock for the 30 Trading Days preceding the Conversion Date – net of unamortized debt discount of $0 and $1,815, respectively-fully converted on August 31, 2018
|
|
|
-
|
|
|
|
36,685
|
|
|
|
|
|
|
|
|
|
|
Convertible notes payable to lender dated February 1, 2016 (as amended
December 21, 2016) and December 21, 2016, interest at 12% per
annum, due February 1, 2017 and May 20, 2017, convertible into
Common Stock at a Conversion Price equal to the lesser of (i) $0.01 per
share or (ii) 50% of the lowest Closing Bid Price of the Common Stock
for the 30 Trading Days preceding the Conversion Date – net of
unamortized debt discount of $0 and $0, respectively. The note date dated
February 1, 2016 was fully converted at June 11, 2018 while note dated December 21, 2016 was fully converted at September 7, 2018
|
|
|
-
|
|
|
|
65,000
|
|
|
|
|
|
|
|
|
|
|
Convertible notes payable to Pasquale and Rosemary Ferro dated from
May 2, 2017 to August 10, 2018, interest at 12% per annum, due at June
30, 2020 (as amended August 13, 2018), convertible into Common Stock
at a Conversion Price equal to the lesser of (i) $0.01 per share or (ii) 50%
of the lowest Closing Bid Price of the Common Stock for the 30 Trading
Days preceding the Conversion Date – net of unamortized debt discount
of $25,009 and $19,613, respectively. The notes were fully converted at
August 9, 2018 and December 21, 2018.
|
|
|
-
|
|
|
|
73,887
|
|
|
|
|
|
|
|
|
|
|
Convertible note payable to lender dated August 8, 2017 interest at 12% per annum, due August 8, 2018, convertible into Common Stock at a
Conversion Price equal to the lesser of (i) $0.01 per share or (ii) 50% of
the lowest Closing Bid Price of the Common Stock for the 30 Trading
Days preceding the Conversion Date – net of unamortized debt discount
of $0 and $15,068, respectively. The notes were fully converted at
August 31, 2018.
|
|
|
-
|
|
|
|
9,932
|
|
|
|
|
|
|
|
|
|
|
Convertible note payable to lender dated June 6, 2018, interest at 12% per
annum, due March 6, 2019, convertible into Common Stock at a
Conversion Price equal to the lesser of 55% of the lowest Closing Bid
. Price of the Common Stock for the 25 Trading Days preceding the
(i) Inception date or (ii) the Conversion Date – net of unamortized debt
discount of $57,509 and $0, respectively. The note was fully paid off at
October 19, 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”), an entity controlled by the former Chairman of the Board of Directors of the Company, non-interest bearing, due on demand
|
|
|
3,000
|
|
|
|
3,000
|
|
Total
|
|
$
|
18,899
|
|
|
$
|
193,504
|
|
The
derivative liability of the convertible notes payable consists of:
|
|
December
31, 2018
|
|
|
December
31, 2017
|
|
|
|
Face
Value
|
|
|
Derivative
Liability
|
|
|
Face
Value
|
|
|
Derivative
Liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
notes payable to lender dated from March 15, 2016 (as amended June 2, 2016) to November 15, 2017, due from April
6, 2017 to May 15, 2018. Fully converted on August 31, 2018
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
38,500
|
|
|
|
248,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
notes payable to lender dated February 1, 2016 (as amended December 21, 2016) and December 21, 2016, due February
1, 2017 and May 20, 2017. The notes were fully converted at June 11, 2018 and September 7, 2018
|
|
|
-
|
|
|
|
-
|
|
|
|
65,000
|
|
|
|
418,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
notes payable to Pasquale and Rosemary Ferro dated from May 25, 2017 to January 8, 2018, due at June 30, 2020
(as amended August 13, 2018),
|
|
|
-
|
|
|
|
-
|
|
|
|
93,500
|
|
|
|
611,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
notes payable to lender dated June 6, 2018, due March 6, 2019. Fully paid off at October 19, 2018.
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Convertible
notes payable to lender dated August 8, 2017, due August 8, 2018. Fully converted at August 31, 2018
|
|
|
-
|
|
|
|
-
|
|
|
|
25,000
|
|
|
|
171,765
|
|
Totals
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
222,000
|
|
|
$
|
1,451,137
|
|
The
above convertible notes outstanding at December 31, 2017 contained a variable conversion feature based on the future trading price
of the Company common stock. Therefore, the number of shares of common stock issuable upon conversion of the notes was indeterminate.
Accordingly, we recorded the fair value of the embedded conversion features as a derivative liability at the respective issuance
dates (or amendment dates) of the notes ($445,112 total for the year ended December 31, 2017) and charged the applicable amounts
to debt discounts of ($182,750 total for the year ended December 31, 2017) and the remainder to other expense ($262,362 total
for the year ended December 31, 2017). The increase (decrease) in the fair value of the derivative liability from the respective
issuance dates (or amendment dates) of the notes to the measurement date ($926,819 total increase for the year ended December
31, 2017) are charged (credited) to other expense (income). The fair value of the derivative liability of the notes is measured
at the respective issuance dates and quarterly thereafter using the Black Scholes option pricing model. Assumptions used for the
calculations of the derivative liability of the notes at December 31, 2017 include (1) stock price of $0.0335 per share, (2) exercise
price of $0.0045 per share, (3) terms ranging from 0 days to 220 days, (4) expected volatility of 287% and (5) risk free interest
rates ranging from 0.00% to 1.58%.
In
2018, all convertible notes containing embedded conversion features were satisfied and the Company recognized income from derivative
liability of $1,591,137
NOTE
10 – Preferred Stock
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.
The
Company issued a total of 10 shares of CANB Series A Preferred Stock (5 shares to Mckenzie Webster Limited and 5 shares to Marco
Alfonsi) in exchange for the retirement of a total of 100,000,000 shares of CANB common stock (50,000,000 shares from Mckenzie
Webster Limited and 50,000,000 shares from Marco Alfonsi).
On
October 4, 2017, the Company issued 3 shares of CANB Series A Preferred Stock to Alfonsi: 2 shares were the consideration for
Alfonsi’s cancellation of accrued salaries payable of $127,803 owed to Alfonsi and 1 share (valued at $63,902) was issued
pursuant to the new employment agreement with Alfonsi.
On
November 30, 2017, MWL converted its 5 shares of CANB Series A Preferred Stock to 50,000,000 shares of CANB common stock.
On
December 5, 2017, the Company issued 157,985 shares of CANB Series B Preferred Stock to RedDiamond Partners LLC (“RedDiamond”)
pursuant to a Securities Purchase Agreement (the “SPA”) dated October 13, 2017, in exchange for proceeds of $150,000,
or $0.95 per CANB Series B Preferred share.
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.
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 $257,370 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 $703,800 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 $105,000 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, 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 $3,375,520 and will be amortized over the vesting period of four years.
NOTE
11 – Common Stock
On
February 2, 2017, the Company issued 200,000 shares of CANB common stock to a financial consultant for services rendered. The
$11,000 fair value of the 200,000 shares of CANB common stock was charged to consulting fees in the three months ended March 31,
2017.
On
February 13, 2017, the Company issued 1,685,900 shares of CANB common stock to the brother of the Chief Executive Officer of the
Company in satisfaction of notes payable of $15,000 and accrued interest payable of $1,859.
On
March 22, 2017, the Company issued 6,785,316 shares of CANB common stock to a lender in satisfaction of notes payable of $50,000
and accrued interest payable of $5,979.
On
April 17, 2017, the Company issued 5,000,000 shares of CANB common stock to a consultant for services rendered. The $125,000 fair
value of the 5,000,000 shares of CANB common stock was charged to consulting fees in the three months ended June 30, 2017.
On
June 21, 2017, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $5,975 fair value
of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended June 30, 2017.
On
June 28, 2017, 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 charged to consulting fees in the three months ended June 30, 2017.
On
August 25, 2017, the Company issued 7,142,857 shares of CANB common stock to a lender in satisfaction of notes payable of $50,000
and accrued interest payable of $3,331.
On
August 25, 2017, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $3,750 fair
value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September
30, 2017.
On
September 5, 2017, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $4,375 fair
value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September
30, 2017.
On
September 7, 2017, the Company issued 2,500,000 shares of CANB common stock to a consultant for services rendered. The $32,750
fair value of the 2,500,000 shares of CANB common stock was charged to consulting fees in the three months ended September 30,
2017. On July 12, 2018, the consultant agreed to return the 2,500,000 shares
to
the Company due to the lack of service after an arbitration was filed on May 11,2018.
On
September 11, 2017, the Company issued 250,000 and 250,000 shares of CANB common stock to two consultants for services rendered,
respectively. The $3,350 fair value of each 250,000 shares of CANB common stock was partially charged to consulting fees in the
three months ended September 30, 2017.
On
September 25, 2017, the Company issued 2,500,000 shares of CANB common stock to a consultant for services rendered. The $2,525
fair value of the 2,500,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September
30, 2017.
On
November 2, 2017, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $1,725 fair
value of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended December 31, 2017.
On
November 9, 2017, the Company issued 2,500,000 shares of CANB common stock to a consultant for services rendered. The $21,250
fair value of the 2,500,000 shares of CANB common stock was partially charged to consulting fees in the three months ended December
31, 2017.
On
November 30, 2017, the Company issued 50,000,000 shares of CANB common stock to Mckenzie Webster Limited in exchange for the retirement
of 5 shares of CANB Series A Preferred Stock.
On
December 5, 2017, the Company issued 250,000 and 250,000 shares of CANB common stock to two consultants for services rendered,
respectively. The $3,000 fair value of each 250,000 shares of CANB common stock was partially charged to consulting fees in the
three months ended December 31, 2017.
On
December 7, 2017, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $4,500 fair
value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended December 31,
2017.
On
December 18, 2017, the Company issued 500,000 shares of CANB common stock to a consultant for services rendered. The $9,050 fair
value of the 500,000 shares of CANB common stock was partially charged to consulting fees in the three months ended December 31,
2017.
On
December 25, 2017, the Company issued 250,000 and 250,000 shares of CANB common stock to two consultants for services rendered,
respectively. The $7,250 fair value of each 250,000 shares of CANB common stock was partially charged to consulting fees in the
three months ended December 31, 2017.
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 10).
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.
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.
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.
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.
NOTE
12 – Stock Options and Warrants
A
summary of stock options and warrants activity follows:
|
|
Shares of Common Stock Exercisable Into
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
Warrants
|
|
|
Total
|
|
Balance, December 31, 2016
|
|
|
50,000
|
|
|
|
247,500
|
|
|
|
297,500
|
|
Granted in 2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Expired in 2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
Issued
and outstanding stock options as of December 31, 2018 consist of:
Year
|
|
Number Outstanding
And
|
|
|
Exercise
|
|
|
Year of
|
|
Granted
|
|
Exercisable
|
|
|
Price
|
|
|
Expiration
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
50,000
|
|
|
$
|
1.000
|
|
|
|
2019
|
|
2018
|
|
|
6,000,000
|
|
|
$
|
0.001
|
|
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,050,000
|
|
|
|
|
|
|
|
|
|
On
June 11, 2018, the Company granted 3,000,000 options of CANB common stock to Carl Dilley, a 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
Issued
and outstanding warrants as of December 31, 2018 consist of:
Year
|
|
Number Outstanding
And
|
|
|
Exercise
|
|
|
Year of
|
|
Granted
|
|
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.
NOTE
13 – 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% and 35% to pretax income (loss) as follows:
|
|
Year Ended December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Expected income tax (benefit) at 21% and 35%
|
|
$
|
(663,578
|
)
|
|
$
|
(748,902
|
)
|
|
|
|
|
|
|
|
|
|
Loss on forgiveness of receivable from Pure Health products
|
|
|
18,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on stock issuance
|
|
|
36,344
|
|
|
|
67,043
|
|
|
|
|
|
|
|
|
|
|
Loss on debt conversion
|
|
|
272,867
|
|
|
|
11,334
|
|
|
|
|
|
|
|
|
|
|
Non-deductible stock-based compensation
|
|
|
583,653
|
|
|
|
81,057
|
|
|
|
|
|
|
|
|
|
|
Non-deductible amortization of debt discounts
|
|
|
37,064
|
|
|
|
87,566
|
|
|
|
|
|
|
|
|
|
|
Non-deductible impairment of intangible assets
|
|
|
-
|
|
|
|
7,527
|
|
|
|
|
|
|
|
|
|
|
Non-deductible expense from derivative liability
|
|
|
(334,139
|
)
|
|
|
320,495
|
|
|
|
|
|
|
|
|
|
|
Increase in deferred income tax assets valuation allowance
|
|
|
250,235
|
|
|
|
173,879
|
|
|
|
|
|
|
|
|
|
|
Provision for (benefit from) income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
Deferred
income tax assets consist of:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Net operating loss carryforward
|
|
|
1,644,593
|
|
|
|
1,394,358
|
|
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
|
(1,644,593
|
)
|
|
|
(1,394,358
|
)
|
|
|
|
|
|
|
|
|
|
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 $1,644,593 attributable to the future utilization of the $4,786,934 net operating loss carryforward as of December
31, 2018 will be realized. Accordingly, the Company has maintained a 100% allowance against the deferred income tax asset in the
financial statements at December 31, 2018. 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 and 2038 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, $386,297, $496,798 and $713,162, 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.
The
Company’s U.S. Federal and state income tax returns prior to 2014 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 2014 tax year returns expired in September 2018.
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 2018 and 2017.
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 8). 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 November 12, 2018, this 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 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 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.
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 8).
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 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
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.
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.
Consulting
Agreements
On
July 29, 2017, the Company executed a Consulting Agreement with Andrew W Holtmeyer for Mr. Holtmeyer to serve as the Company’s
consultant for monthly cash payment of $5,000 through July 29, 2018. Effective February 16, 2018, the Company terminated the agreement
due to the replacement of an Executive Service Agreement.
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. 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. On July 12, 2018, the Company received a response from T8
Partners LLC (“T8”) confirming that the 2,500,000 shares requested to be returned by the Company in an
arbitration filed on May 11, 2018 will be returned to the Company. The Company is awaiting the result of that
arbitration.
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. 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.
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. KLAM, Inc. is controlled by the wife of the Company’s chief executive officer
Marco Alfonsi.
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.
Rent
expense for the year ended December 31, 2018 and 2017 was $67,165 and $65,060, respectively.
At
December 31, 2018, the future minimum lease payments under non-cancellable operating leases were:
Year ended December 31, 2019
|
|
|
38,508
|
|
Year ended December 31, 2020
|
|
|
39,666
|
|
Year ended December 31, 2021
|
|
|
33,880
|
|
|
|
|
|
|
Total
|
|
$
|
112,054
|
|
Major
Customers
For
the year ended December 31, 2018, one customer accounted for approximately 16% of total revenues.
For
the year ended December 31, 2017, three customers accounted for approximately 45%, 29% and 14%, respectively, of total service
revenues.
Public
Offering of Units
On
August 2, 2016, the Company’s Registration Statement on Form S-1 was declared effective by the Securities and Exchange Commission.
On a self-underwritten basis, the Company was offering up to 40,000,000 Units at a price of $0.05 per Unit or $2,000,000 maximum.
Each Unit consisted of one share of Company common stock and one warrant to purchase ½ share of Company common stock at
a price of $0.10 per share for a period of three years. There was no minimum offering amount or escrow required as a condition
to closing. The offering terminated May 17, 2017.
NOTE
15 – Related Party Transactions
ProAdvanced
Group, Inc. (“PAG”), an entity controlled by the Company’s chief executive officer, is a customer of CANB. At
December 31, 2018, CANB had an account receivable from PAG of $7,240. For the year ended December 31, 2018, CANB had revenues
from PAG of $5,000.
Island
Stock Transfer (“IST”), an entity controlled by Carl Dilley, a former Company director, is both a customer and vendor
of CANB. At December 31, 2018, CANB had an account receivable from IST of $7,035 and an account payable to IST of $1,454. For
the year ended December 31, 2018, CANB had revenues from IST of $4,000.
Stock
Market Manager, Inc. is also an entity controlled by Mr. Dilley. For the year ended December 31, 2018, CANB had an account payable
to Stock Market Manager Inc. of $1,676.
In
order to facilitate its operations, the Company has entered into a Production Agreement with Pure Health Products, LLC (“PHP”),
a New York limited liability company. Pursuant to the Production Agreement, PHP will manufacture, package, and sell the Company’s
CBD infused products on an exclusive basis. PHP will not produce or manufacture any product containing any cannabis or hemp derivative
for any person or entity other than the Company, and the Company controls the ingredients, recipe, manufacturing processes and
procedures and quality and taste parameters for all Products produced at the PHP facility. PHP may also white label / rebrand
or relabel the products on the Company’s behalf pursuant to “white label agreements” entered into between the
Company and third-party customers. Credit card sales are processed through PHP as well. Through its contractual relationship with
PHP, the Company is able to control the manufacturing process of its products while reducing its production costs. In addition,
the Company has the option to acquire certain assets of PHP should it elect to take over direct manufacture of its Products. For
the year ended December 31, 2018, purchase of CBD infused products from PHP totaled $274,556.50. Effective December 28, 2018,
the Company acquired Pure Health Products, LLC.
During
the year ended December 31, 2018, we had products and service sales to related parties totaling $5,000.
NOTE
16 – Subsequent Events
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.
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 and PHP (collectively, the “buyer”) entered into a License and Acquisition Agreement
(the “LAA”) with Hudilab, Inc. (“HUDI”). Pursuant to the LAA, HUDI will sell the technology owned by it
to the buyer in exchange for 7,500,000 shares of CANB common stock. On January 14, 2019, the shares were issued to the owner of
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
January 31, 2019, PHP entered into an Asset Purchase Agreement (the “Agreement”) with Seven Chakras, LLC (“Seven
Chakras”). Pursuant to the 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 shares of CANB common stock to owners of Seven Chakras
pursuant to the agreement.
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.
As
a result of Canbiola’s acquisition of Pure Health products, it conducted a corporate re-alignment including naming Pasquale
Ferro President and moving David Possel from Chief Operating Officer of Canbiola to Chief Operations Officer Pure Health Products.
In
accordance with FASB ASC 855, Subsequent Events, the Company has evaluated subsequent events through October 30, 2018, the date
on which these consolidated financial statements were available to be issued. Except as disclosed above, there were no material
subsequent events that required recognition or additional disclosure in these consolidated financial statements.