Form 1-A Issuer Information UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 1-A
REGULATION A OFFERING STATEMENT
UNDER THE SECURITIES ACT OF 1933
OMB APPROVAL

FORM 1-A

OMB Number: 3235-0286


Estimated average burden hours per response: 608.0

1-A: Filer Information

Issuer CIK
0001509957
Issuer CCC
XXXXXXXX
DOS File Number
Offering File Number
Is this a LIVE or TEST Filing? LIVE TEST
Would you like a Return Copy?
Notify via Filing Website only?
Since Last Filing?

Submission Contact Information

Name
Phone
E-Mail Address

1-A: Item 1. Issuer Information

Issuer Infomation

Exact name of issuer as specified in the issuer's charter
Can B Corp.
Jurisdiction of Incorporation / Organization
FLORIDA
Year of Incorporation
2005
CIK
0001509957
Primary Standard Industrial Classification Code
WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES
I.R.S. Employer Identification Number
20-3624118
Total number of full-time employees
10
Total number of part-time employees
4

Contact Infomation

Address of Principal Executive Offices

Address 1
960 South Broadway
Address 2
Suite 120
City
Hicksville
State/Country
NEW YORK
Mailing Zip/ Postal Code
11801
Phone
516-595-9544

Provide the following information for the person the Securities and Exchange Commission's staff should call in connection with any pre-qualification review of the offering statement.

Name
Gina Austin, Esq.
Address 1
Address 2
City
State/Country
Mailing Zip/ Postal Code
Phone

Provide up to two e-mail addresses to which the Securities and Exchange Commission's staff may send any comment letters relating to the offering statement. After qualification of the offering statement, such e-mail addresses are not required to remain active.

Financial Statements

Industry Group (select one) Banking Insurance Other

Use the financial statements for the most recent period contained in this offering statement to provide the following information about the issuer. The following table does not include all of the line items from the financial statements. Long Term Debt would include notes payable, bonds, mortgages, and similar obligations. To determine "Total Revenues" for all companies selecting "Other" for their industry group, refer to Article 5-03(b)(1) of Regulation S-X. For companies selecting "Insurance", refer to Article 7-04 of Regulation S-X for calculation of "Total Revenues" and paragraphs 5 and 7 of Article 7-04 for "Costs and Expenses Applicable to Revenues".

Balance Sheet Information

Cash and Cash Equivalents
$ 46540.00
Investment Securities
$ 0.00
Total Investments
$
Accounts and Notes Receivable
$ 1275877.00
Loans
$
Property, Plant and Equipment (PP&E):
$ 1075242.00
Property and Equipment
$
Total Assets
$ 6930870.00
Accounts Payable and Accrued Liabilities
$ 505668.00
Policy Liabilities and Accruals
$
Deposits
$
Long Term Debt
$ 0.00
Total Liabilities
$ 564666.00
Total Stockholders' Equity
$ 6366204.00
Total Liabilities and Equity
$ 6930870.00

Statement of Comprehensive Income Information

Total Revenues
$ 2305503.00
Total Interest Income
$
Costs and Expenses Applicable to Revenues
$ 6291036.00
Total Interest Expenses
$
Depreciation and Amortization
$ 154720.00
Net Income
$ -4592470.00
Earnings Per Share - Basic
$ -0.10
Earnings Per Share - Diluted
$ -0.10
Name of Auditor (if any)
BMKR, LLP

Outstanding Securities

Common Equity

Name of Class (if any) Common Equity
Common
Common Equity Units Outstanding
2861740
Common Equity CUSIP (if any):
13470W103
Common Equity Units Name of Trading Center or Quotation Medium (if any)
OTCMarkets.com

Preferred Equity

Preferred Equity Name of Class (if any)
Series A Preferred
Preferred Equity Units Outstanding
20
Preferred Equity CUSIP (if any)
000000000
Preferred Equity Name of Trading Center or Quotation Medium (if any)
N/A

Preferred Equity

Preferred Equity Name of Class (if any)
Series B Preferred
Preferred Equity Units Outstanding
0
Preferred Equity CUSIP (if any)
000000000
Preferred Equity Name of Trading Center or Quotation Medium (if any)
N/A

Debt Securities

Debt Securities Name of Class (if any)
N/A
Debt Securities Units Outstanding
0
Debt Securities CUSIP (if any):
000000000
Debt Securities Name of Trading Center or Quotation Medium (if any)
N/A

1-A: Item 2. Issuer Eligibility

Issuer Eligibility

Check this box to certify that all of the following statements are true for the issuer(s)

1-A: Item 3. Application of Rule 262

Application Rule 262

Check this box to certify that, as of the time of this filing, each person described in Rule 262 of Regulation A is either not disqualified under that rule or is disqualified but has received a waiver of such disqualification.

Check this box if "bad actor" disclosure under Rule 262(d) is provided in Part II of the offering statement.

1-A: Item 4. Summary Information Regarding the Offering and Other Current or Proposed Offerings

Summary Infomation

Check the appropriate box to indicate whether you are conducting a Tier 1 or Tier 2 offering Tier1 Tier2
Check the appropriate box to indicate whether the financial statements have been audited Unaudited Audited
Types of Securities Offered in this Offering Statement (select all that apply)
Equity (common or preferred stock)
Does the issuer intend to offer the securities on a delayed or continuous basis pursuant to Rule 251(d)(3)? Yes No
Does the issuer intend this offering to last more than one year? Yes No
Does the issuer intend to price this offering after qualification pursuant to Rule 253(b)? Yes No
Will the issuer be conducting a best efforts offering? Yes No
Has the issuer used solicitation of interest communications in connection with the proposed offering? Yes No
Does the proposed offering involve the resale of securities by affiliates of the issuer? Yes No
Number of securities offered
4000000
Number of securities of that class outstanding
3189285

The information called for by this item below may be omitted if undetermined at the time of filing or submission, except that if a price range has been included in the offering statement, the midpoint of that range must be used to respond. Please refer to Rule 251(a) for the definition of "aggregate offering price" or "aggregate sales" as used in this item. Please leave the field blank if undetermined at this time and include a zero if a particular item is not applicable to the offering.

Price per security
$ 3.2500
The portion of the aggregate offering price attributable to securities being offered on behalf of the issuer
$ 13000000.00
The portion of the aggregate offering price attributable to securities being offered on behalf of selling securityholders
$ 0.00
The portion of the aggregate offering price attributable to all the securities of the issuer sold pursuant to a qualified offering statement within the 12 months before the qualification of this offering statement
$ 0.00
The estimated portion of aggregate sales attributable to securities that may be sold pursuant to any other qualified offering statement concurrently with securities being sold under this offering statement
$ 0.00
Total (the sum of the aggregate offering price and aggregate sales in the four preceding paragraphs)
$ 13000000.00

Anticipated fees in connection with this offering and names of service providers

Underwriters - Name of Service Provider
N/A
Underwriters - Fees
$ 0.00
Sales Commissions - Name of Service Provider
TBD
Sales Commissions - Fee
$ 130000.00
Finders' Fees - Name of Service Provider
N/A
Finders' Fees - Fees
$ 0.00
Audit - Name of Service Provider
BMKR, LLP
Audit - Fees
$ 5000.00
Legal - Name of Service Provider
Austin Legal Group, APC
Legal - Fees
$ 30000.00
Promoters - Name of Service Provider
Promoters - Fees
$
Blue Sky Compliance - Name of Service Provider
Blue Sky Compliance - Fees
$
CRD Number of any broker or dealer listed:
0
Estimated net proceeds to the issuer
$ 13000000.00
Clarification of responses (if necessary)
The Company has not identified a selling entity, however it anticipates appointing one or more placement agents or broker-dealers to sell this offering

1-A: Item 5. Jurisdictions in Which Securities are to be Offered

Jurisdictions in Which Securities are to be Offered

Using the list below, select the jurisdictions in which the issuer intends to offer the securities

Selected States and Jurisdictions
ALABAMA
ALASKA
ARIZONA
ARKANSAS
CALIFORNIA
COLORADO
CONNECTICUT
DELAWARE
FLORIDA
GEORGIA
HAWAII
IDAHO
ILLINOIS
INDIANA
IOWA
KANSAS
KENTUCKY
LOUISIANA
MAINE
MARYLAND
MASSACHUSETTS
MICHIGAN
MINNESOTA
MISSISSIPPI
MISSOURI
MONTANA
NEBRASKA
NEVADA
NEW HAMPSHIRE
NEW JERSEY
NEW MEXICO
NEW YORK
NORTH CAROLINA
NORTH DAKOTA
OHIO
OKLAHOMA
OREGON
PENNSYLVANIA
RHODE ISLAND
SOUTH CAROLINA
SOUTH DAKOTA
TENNESSEE
TEXAS
UTAH
VERMONT
VIRGINIA
WASHINGTON
WEST VIRGINIA
WISCONSIN
WYOMING
DISTRICT OF COLUMBIA
PUERTO RICO
ALBERTA, CANADA
BRITISH COLUMBIA, CANADA
MANITOBA, CANADA
NEW BRUNSWICK, CANADA
NEWFOUNDLAND, CANADA
NOVA SCOTIA, CANADA
ONTARIO, CANADA
PRINCE EDWARD ISLAND, CANADA
QUEBEC, CANADA
SASKATCHEWAN, CANADA
YUKON, CANADA
CANADA (FEDERAL LEVEL)

Using the list below, select the jurisdictions in which the securities are to be offered by underwriters, dealers or sales persons or check the appropriate box

None
Same as the jurisdictions in which the issuer intends to offer the securities
Selected States and Jurisdictions

1-A: Item 6. Unregistered Securities Issued or Sold Within One Year

Unregistered Securities Issued or Sold Within One Year

None

Unregistered Securities Issued

As to any unregistered securities issued by the issuer of any of its predecessors or affiliated issuers within one year before the filing of this Form 1-A, state:

(a)Name of such issuer
Can B Corp.
(b)(1) Title of securities issued
Common Stock
(2) Total Amount of such securities issued
1347195
(3) Amount of such securities sold by or for the account of any person who at the time was a director, officer, promoter or principal securityholder of the issuer of such securities, or was an underwriter of any securities of such issuer.
25616
(c)(1) Aggregate consideration for which the securities were issued and basis for computing the amount thereof.
$3,088,100 and services, basis was price negotiated between investors and issuer.
(2) Aggregate consideration for which the securities listed in (b)(3) of this item (if any) were issued and the basis for computing the amount thereof (if different from the basis described in (c)(1)).
Issued to officers and significant employees pursuant to executive employment agreements.

Unregistered Securities Issued

As to any unregistered securities issued by the issuer of any of its predecessors or affiliated issuers within one year before the filing of this Form 1-A, state:

(a)Name of such issuer
Can B Corp.
(b)(1) Title of securities issued
Options to purchase Common Stock
(2) Total Amount of such securities issued
56667
(3) Amount of such securities sold by or for the account of any person who at the time was a director, officer, promoter or principal securityholder of the issuer of such securities, or was an underwriter of any securities of such issuer.
56667
(c)(1) Aggregate consideration for which the securities were issued and basis for computing the amount thereof.
Services rendered. Value was negotiated between officers, directors and the issuer.
(2) Aggregate consideration for which the securities listed in (b)(3) of this item (if any) were issued and the basis for computing the amount thereof (if different from the basis described in (c)(1)).
Services rendered. Value was negotiated between officers, directors and the issuer.

Unregistered Securities Issued

As to any unregistered securities issued by the issuer of any of its predecessors or affiliated issuers within one year before the filing of this Form 1-A, state:

(a)Name of such issuer
Can B Corp.
(b)(1) Title of securities issued
Convertible Debt
(2) Total Amount of such securities issued
775000
(3) Amount of such securities sold by or for the account of any person who at the time was a director, officer, promoter or principal securityholder of the issuer of such securities, or was an underwriter of any securities of such issuer.
0
(c)(1) Aggregate consideration for which the securities were issued and basis for computing the amount thereof.
$704,545. Value was negotiated between company and investors.
(2) Aggregate consideration for which the securities listed in (b)(3) of this item (if any) were issued and the basis for computing the amount thereof (if different from the basis described in (c)(1)).

Unregistered Securities Act

(e) Indicate the section of the Securities Act or Commission rule or regulation relied upon for exemption from the registration requirements of such Act and state briefly the facts relied upon for such exemption
Section 4(a)(2)

 

An offering statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission. Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final Offering circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the offering statement in which such Final Offering Circular was filed may be obtained.

 

PRELIMINARY OFFERING CIRCULAR - SUBJECT TO COMPLETION

 

Can B̅ Corp.

 

 

Registrant’s principal address: 960 South Broadway, Suite 120 Hicksville, NY 11801

Registrant’s telephone number, including area code: 516-595-9544

Registrant’s website: https://canbcorp.com

 

Dated: May [  ], 2020

 

Can B̅ Corp. (herein referred to as “we,” “us,” “our,” “CANB,” and the “Company”) is offering up to 4,000,000 shares of our common stock (the “Shares”) at a price of $______ [between $1.25 and $3.25] per share, for gross proceeds of up to $13,000,000, before deduction of offering expenses, assuming all shares are sold. For more information on the securities offered hereby, please see the item titled “Securities Being Offered” on page 33. The minimum investment established for each investor is $500, unless such minimum is waived by the Company in its sole discretion.

 

Price of Common Stock  

Price to

Public [1]

   

Underwriting

Discount and

Commissions [2]

   

Proceeds to

Issuer [3]

   

Proceeds to

Other

Persons

 
Per Share   $ 1.25-3.25     $ 0.00     $ 1.25-3.25     $ 0.00  
Total Minimum   $ 5,000,000     $ 0.00     $ 5,000,000     $ 0.00  
Total Maximum   $ 13,000,000     $ 0.00     $ 13,000,000     $ 0.00  

 

 

(1) All amounts in this chart and circular are in U.S. dollars unless otherwise indicated.
(2) The Company’s Shares will be offered on a best efforts basis by the Company’s officers and directors. Accordingly, there are no underwriting fees or commissions currently associated with this offering; however, the Company may engage sales associates after this offering commences.
(3) We expect to incur approximately $50,000 in expenses relating to this offering, including legal, accounting, travel, printing and other miscellaneous expenses.

 

We hereby amend this offering circular (“Offering Circular”) on such date or dates as may be necessary to delay our effective date until we will file a further amendment which specifically states that this Offering circular shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 (the “Securities Act”) or until this Offering circular shall become effective on such date as the Commission, acting pursuant to Section 8(a) may determine.

 

Can B̅ Corp. (herein referred to as “we,” “us,” “our,” “CANB,” and the “Company”) is primarily engaged in the development, production and sale of products and delivery devices containing cannabidiol (“CBD”). The Company’s products contain CBD derived from hemp and include products such as oils, creams, moisturizers, isolate, and gel caps. In addition to offering white labeled products, the Company has developed its own line of proprietary products, as well as seeking synergistic value through acquisitions of products and brands in the hemp industry. The Company aims to be the premier provider of the highest quality natural hemp CBD products on the market through sourcing the very best raw material and developing a variety of products we believe will improve people’s lives in a variety of areas.

 

The Company is offering up to 4,000,000 shares of our common stock at a price of $______ [between $1.25 and $3.25] per share, for gross proceeds of up to $13,000,000, before deduction of offering expenses, assuming all shares are sold. The minimum investment established for each investor is $500, unless such minimum is waived by the Company in its sole discretion. Shares offered by the Company will be sold through the Company’s executive officers and directors on a best-efforts basis. We may also engage sales agents licensed through the Financial Industry Regulatory Authority (“FINRA”) and pay such agents cash and/or stock-based compensation, which will be announced through a supplement to this Offering Circular.

 

Generally, no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

 

Our common stock is not now listed on any national securities exchange or the Nasdaq stock market. However, our stock is quoted on the OTC Market’s OTCQB® Venture Market under the symbol “CANB.” While our common stock is on the OTCQB® Venture Market, there has been limited trading volume. There is no guarantee that an active trading market will develop in our securities.

 

We qualify as an “emerging growth company” as defined in the Jumpstart our Business Startups Act (“JOBS Act”).

 

This offering is being made pursuant to Tier 2 of Regulation A (Regulation A Plus), following the Form 1-A Offering Circular disclosure format for smaller reporting companies.

 

This offering is highly speculative and these securities involve a high degree of risk and should be considered only by persons who can afford the loss of their entire investment. See “Risk Factors” on Page 6.

 

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.

 

 

 

 

TABLE OF CONTENTS

 

SUMMARY INFORMATION 3
   
RISK FACTORS 6
   
SPECIAL INFORMATION REGARDING FORWARD LOOKING STATEMENTS 15
   
DILUTION 15
   
PLAN OF DISTRIBUTION 15
   
USE OF PROCEEDS 17
   
DESCRIPTION OF BUSINESS 18
   
DESCRIPTION OF PROPERTY 24
   
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 24
   
DIRECTORS, EXECUTIVE OFFICERS, AND SIGNIFICANT EMPLOYEES 27
   
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS 29
   
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS 31
   
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS 33
   
SECURITIES BEING OFFERED 33
   
FINANCIAL STATEMENTS F-1
   
EXHIBITS 35

 

2

 

 

SUMMARY INFORMATION

 

This summary highlights some of the information in this circular. It is not complete and may not contain all of the information that you may want to consider. To understand this offering fully, you should carefully read the entire circular, including the section entitled “Risk Factors,” before making a decision to invest in our securities. Unless otherwise noted or unless the context otherwise requires, the terms “we,” “us,” “our,” “CANB,” the “Company,” and “Can B̅ Corp.” refer to Can B̅ Corp. together with its wholly owned subsidiaries.

 

The Company

 

The Company was originally incorporated as WRAPMail, Inc. (“WRAP” or “WRAPmail”) in Florida on October 11, 2005 in order to tap into a largely un-serviced segment of the web-based advertising industry. Effective December 27, 2010, WRAP effected a 10-for-1 forward stock split of its common stock. Effective June 4, 2013, WRAP effected a 1-for-10 reverse stock split of its common stock.

 

Effective January 5, 2015, WRAP acquired 100% ownership of Prosperity Systems, Inc. (“Prosperity”), a New York corporation incorporated on April 2, 2008, in order to acquire Prosperity’s office productivity software suite as a complement to WRAP’s existing intellectual property. After its acquisition, the Company transferred Prosperity’s operations to WRAP.

 

In early 2017, the Company transitioned into the hemp-derived cannabidiol (“CBD”) industry. On May 15, 2017, WRAP changed its name to Canbiola, Inc. to reflect its transition.

 

On or around October 5, 2017, the Company approved an increase of its common stock to 750,000,000 shares. On March 12, 2019, the Company approved an increase of its authorized shares to 1,500,000,000. The Company is also authorized to issue a total of 5,000,000 preferred shares, including 20 Series A Preferred Shares and 500,000 Series B Preferred Shares.

 

On January 16, 2019, the Company filed an amendment to its Articles of Incorporation to change the name of the Company to Can B̅ Corp. in order to segregate its corporate identity from its lead products branded under the “Canbiola” brand. On March 2, 2020, the Company filed an amendment to its Articles of Incorporation to effect a 300-to-1 reverse stock split of its issued and outstanding, but not authorized, common stock (the “Reverse Split”). Both actions were declared effective on March 6, 2020. The Reverse Split also affects the number of shares issuable upon conversion of the Company’s convertible securities, such as Preferred Stock, options and warrants.

 

As of May 31, 2020, we had approximately 3,189,285 shares of common stock, 20 shares of Series A Preferred Stock and no shares of Series B Preferred Stock issued and outstanding. The Company’s common shares are currently quoted on OTC Market’s OTCQB® Venture Market under the symbol “CANB.” 

 

Our principal executive offices are located at 960 South Broadway, Suite 120, Hicksville, NY 11801 and our telephone number is 516-595-9544.

 

3

 

 

Business Overview

 

The Company’s primary business is the development, production and sale of products and delivery devices containing hemp-derived CBD. The Company’s products include drops/tinctures, oils, creams, moisturizers, chews, isolate, gel caps, concentrates and durable equipment. In addition to developing, producing and selling CBD products, the Company has joint ventured with a leading hemp processing facility to aggregate hemp biomass from New York farmers to be shipped to the processing facility in Colorado and processed into hemp isolate and distillate (which is then infused into CBD products), from which the Company receives a percentage of the profits and discounted isolate and distillate to include in its products. CANB aims to be the premier provider of the highest quality natural hemp CBD products on the market through sourcing the very best raw material and developing a variety of products we believe will improve people’s lives in a variety of areas.

 

In addition to its direct operations, the Company operates through subsidiaries. The Company develops and sells its “Canbiola” branded products, which are distributed directly by the Company through its website and by partnering doctors who recommend or sell the products to their customers. The Company’s products are produced at its state-of-the-art manufacturing facility in Lacey, WA owned by its wholly owned subsidiary, Pure Health Products, LLC (“Pure Health Products” or “PHP”). Pure Health Products also white labels the Company’s products to be sold by under other brand names by third parties (including its own “Seven Chakras” and “Pure Leaf Oil” brands) and produces private label products for third parties using such parties’ formulations. The Company’s durable equipment products, such as sam® units with CBD infused pads, are marketed and sold through its wholly owned subsidiaries, Duramed Inc. and DuramedNJ LLC (collectively, “Duramed”). The Company’s wholly owned subsidiary, Radical Tactical LLC (“Radical Tactical”), provides the marketplace with millennium targeted product lines such as vapes, gums, and kratom. The Company’s hemp aggregation business is run through NY Hemp Depot LLC (the “Hemp Depot”). The Company’s hemp farming business is run through Green Grow Farms, Inc. (“Green Grow Farms” or “GGFI”), which was formed in August, 2019.

 

The statements found herein have not been evaluated by the Food and Drug Administration (the “FDA”) and the Company’s products are not intended to diagnose, treat, cure or prevent any disease or medical condition.

 

Emerging Growth Company

 

We are an emerging growth company under the JOBS Act. We shall continue to be deemed an emerging growth company until the earliest of:

 

  (a) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,500,000,000 (as such amount is indexed for inflation every five years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;
     
  (b) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective IPO registration statement;
     
  (c) the date on which such issuer has, during the previous three-year period, issued more than $1,500,000,000 in nonconvertible debt; or
     
  (d) the date on which such issuer is deemed to be a ‘large accelerated filer’, as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto.’

 

4

 

 

The Section 107 of the JOBS Act provides that we may elect to utilize the extended transition period for complying with new or revised accounting standards and such election is irrevocable if made. As such, we have made the election to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. Please refer to a discussion under “Risk Factors” of the effect on our financial statements of such election.

 

As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 (the “Exchange Act”) which require the shareholder approval of executive compensation and golden parachutes.

 

We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

 

The Offering

 

This circular relates to the sale of 4,000,000 shares of our common stock (the “Shares”) at a price of $______ [between $1.25 and $3.25] per share, for total offering proceeds of up to $13,000,000 if all offered shares are sold. There is no minimum offering amount and no provision to escrow or return investor funds if any minimum number of shares is not sold. The minimum investment amount established for each investor is $500. All funds raised by the Company from this offering will be immediately available for the Company’s use.

 

The aggregate purchase price to be paid by any investor for the securities sold hereby cannot exceed 10% of the greater of the investor’s annual income or net worth (for entity investors, revenues or net assets for the investor’s most recently completed fiscal year are used instead). The foregoing limitation does not apply to “accredited investors” and non-natural investors.

 

Shares offered by the Company will be sold by our directors and executive officers. We may also elect to engage licensed broker-dealers. No sales agents have yet been engaged to sell shares. All shares will be offered on a “best-efforts” basis. Investors may be publicly solicited through our website, investment websites, social media, or otherwise.

 

This offering will terminate at the earlier to occur of: (i) all shares offered hereby are sold, or (ii) one year from the date this offering circular is qualified with the SEC. Notwithstanding the foregoing, the Company may terminate this offering at any time or extend this offering by 90 days, in its sole discretion.

 

ABOUT THIS CIRCULAR

 

We have prepared this Offering Circular to be filed with the SEC for our offering of securities. The Offering Circular includes exhibits that provide more detailed descriptions of the matters discussed in this Offering Circular.

 

You should rely only on the information contained in this Offering Circular and its exhibits. We have not authorized any person to provide you with any information different from that contained in this Offering Circular. The information contained in this Offering Circular is complete and accurate only as of the date of this Offering Circular, regardless of the time of delivery of this Offering Circular or sale of our shares. This Offering Circular contains summaries of certain other documents, but reference is hereby made to the full text of the actual documents for complete information concerning the rights and obligations of the parties thereto. All documents relating to this offering and related documents and agreements, if readily available to us, will be made available to a prospective investor or its representatives upon request.

 

5

 

 

INDUSTRY AND MARKET DATA

 

The industry and market data used throughout this Offering Circular have been obtained from our own research, surveys or studies conducted by third parties and industry or general publications. Industry publications and surveys generally state that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. We believe that each of these studies and publications is reliable. We have not engaged any person or entity to provide us with industry or market data.

 

TAX CONSIDERATIONS

 

No information contained herein, nor in any prior, contemporaneous or subsequent communication should be construed by a prospective investor as legal or tax advice. We are not providing any tax advice as to the acquisition, holding or disposition of the securities offered herein. In making an investment decision, investors are strongly encouraged to consult their own tax advisor to determine the U.S. Federal, state and any applicable foreign tax consequences relating to their investment in our securities. This written communication is not intended to be “written advice,” as defined in Circular 230 published by the U.S. Treasury Department

 

RISK FACTORS

 

Any investment in our common stock involves a high degree of risk. Investors should carefully consider the risks described below and all of the information contained in this prospectus before deciding whether to purchase our common stock. Our business, financial condition or results of operations could be materially adversely affected by these risks if any of them actually occur. Our common stock is quoted on the OTCQB under the symbol “CANB”. This market is extremely limited and the prices quoted are not a reliable indication of the value of our common stock. As of the date of this Offering Circular, there has not been significant trading of shares of our common stock. The trading price could decline due to any of these risks, and an investor may lose all or part of his, her, or its investment. Some of these factors have affected our financial condition and operating results in the past or are currently affecting us. This Offering Circular also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks described below and elsewhere in this Offering Circular. In addition to the other information provided in this Offering Circular, you should carefully consider the following risk factors in evaluating our business and before purchasing any of our common stock. All material risks identified by the Company are discussed in this section.

 

Risks Related to this Offering and our Common Stock

 

You will experience immediate and substantial dilution in the book value per share of the common stock you purchase.

 

Because the price per share of our common stock being offered will be higher than the book value per share of our common stock, you will suffer substantial dilution in the net tangible book value of the securities you purchase in this offering. See the section titled “Dilution” below for a more detailed discussion of the dilution you will incur if you purchase common stock in this offering.

 

We are subject to the reporting requirements of federal securities laws, which is expensive.

 

We are a public reporting company in the United States and, accordingly, subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and other federal securities laws, and the compliance obligations of the Sarbanes-Oxley Act. The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders causes our expenses to be higher than they would be if we remained a privately-held company.

 

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Our stock price may be volatile, which may result in losses to our stockholders.

 

The stock markets have experienced significant price and trading volume fluctuations, and the market prices of companies quoted on the OTCQB®, where our shares of common stock are quoted, generally have been very volatile and have experienced sharp share-price and trading-volume changes. The trading price of our securities is likely to remain volatile and could fluctuate widely in response to many factors, including but not limited to the following, some of which are beyond our control:

 

  variations in our operating results;
     
  changes in expectations of our future financial performance, including financial estimates by securities analysts and investors;
     
  changes in operating and stock price performance of other companies in our industry;
     
  additions or departures of key personnel; and
     
  future sales of our common stock.

 

Domestic and international stock markets often experience significant price and volume fluctuations. These fluctuations, as well as general economic and political conditions unrelated to our performance, may adversely affect the price of our common stock.

 

In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.

 

Our common shares are thinly-traded, and in the future, may continue to be thinly-traded, and you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate such shares.

 

We cannot predict the extent to which an active public market for our common stock will develop or be sustained due to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained.

 

The market price for our common stock may be particularly volatile given that we are a relatively small company and have experienced losses from operations that could lead to wide fluctuations in our share price. You may be unable to sell your common stock at or above your purchase price if at all, which may result in substantial losses to you.

 

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We do not anticipate paying any cash dividends.

 

We presently do not anticipate that we will pay any dividends on any of our common stock in the foreseeable future. The payment of dividends, if any, would be contingent upon our revenues and earnings, if any, capital requirements, and general financial condition. The payment of any dividends will be within the discretion of our Board of Directors (the “Board”). We presently intend to retain all earnings to implement our business plan; accordingly, we do not anticipate the declaration of any dividends in the foreseeable future.

 

Our common stock may be subject to penny stock rules, which may make it more difficult for our stockholders to sell their common stock.

 

Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the SEC. Penny stocks generally are equity securities with a price of less than $5.00 per share. The penny stock rules require a broker-dealer, prior to a purchase or sale of a penny stock not otherwise exempt from the rules, to deliver to the customer a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules.

 

We may need additional capital, and the sale of additional shares or other equity securities could result in additional dilution to our stockholders.

 

We may require additional capital for the development and commercialization of our products and may require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If our resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity securities could result in additional dilution to our stockholders. The incurrence of additional indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

 

Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

 

Certain of our executive officers, directors and large stockholders own a significant percentage of our outstanding capital stock. As of May 31, 2020, our executive officers, directors, holders of 5% or more of our capital stock and their respective affiliates beneficially owned approximately 10.49% of our outstanding shares of common stock and 36.81% of the eligible votes of the Company. Accordingly, our directors and executive officers have significant influence over our affairs due to their substantial ownership coupled with their positions on our management team and have substantial voting power to approve matters requiring the approval of our stockholders. For example, these stockholders may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This concentration of ownership may prevent or discourage unsolicited acquisition proposals or offers for our common stock that some of our stockholders may believe is in their best interest.

 

If we are unable to implement and maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our reported financial information and the market price of our common stock may be negatively affected.

 

As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal control over financial reporting and provide a management report on the internal control over financial reporting. If we have a material weakness in our internal control over financial reporting, we may not detect errors on a timely basis and our consolidated financial statements may be materially misstated. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, our management will be unable to conclude that our internal control over financial reporting is effective. Moreover, when we are no longer a smaller reporting company, our independent registered public accounting firm will be required to issue an attestation report on the effectiveness of our internal control over financial reporting. Even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may conclude that there are material weaknesses with respect to our internal controls or the level at which our internal controls are documented, designed, implemented or reviewed.

 

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If we are unable to conclude that our internal control over financial reporting is effective, or when we are no longer a smaller reporting company, if our auditors were to express an adverse opinion on the effectiveness of our internal control over financial reporting because we had one or more material weaknesses, investors could lose confidence in the accuracy and completeness of our financial disclosures, which could cause the price of our common stock to decline. Internal control deficiencies could also result in a restatement of our financial results in the future. As of May 31, 2020, we have concluded that are internal controls are not sufficient.

 

If securities or industry analysts do not publish research or reports about our business, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.

 

The trading market for our common stock could be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not currently have and may never obtain research coverage by industry or financial analysts. If no or few analysts commence coverage of us, the trading price of our stock would likely decrease. Even if we do obtain analyst coverage, if one or more of the analysts who cover us downgrade our stock, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

 

Because our management will have broad discretion and flexibility in how the net proceeds from this offering are used, we may use the net proceeds in ways in which you disagree.

 

We currently intend to use the net proceeds from this offering for general corporate purposes, including working capital. The intended use of proceeds from this offering is more particularly described in the Section titled “Use of Proceeds,” however, such description is not binding and the actual use of proceeds may differ from the description contained therein. Accordingly, our management will have significant discretion and flexibility in applying the net proceeds of this offering. You will be relying on the judgment of our management with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the net proceeds are being used appropriately. It is possible that the net proceeds will be invested in a way that does not yield a favorable, or any, return for us. The failure of our management to use such funds effectively could have a material adverse effect on our business, financial condition, operating results and cash flow.

 

The offering price of our shares from the Company has been arbitrarily determined.

 

Our management has determined the shares offered by the Company. The price of the shares we are offering was arbitrarily determined based upon the illiquidity and volatility of our common stock, our current financial condition and the prospects for our future cash flows and earnings, and market and economic conditions at the time of the offering. The offering price for the common stock sold in this offering may be more or less than the fair market value for our common stock.

 

The best efforts structure of this offering may yield insufficient gross proceeds to fully execute our business plan.

 

Our officers and directors are offering shares of our common stock in this offering on a best efforts basis. Officers and directors are not required to sell any specific number or dollar amount of common stock, but will use their best efforts to sell the shares offered by us. As a “best efforts” offering, there can be no assurance that the offering contemplated by this prospectus will result in any proceeds being made available to us.

 

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We may not register or qualify our securities with any state agency pursuant to blue sky regulations.

 

The holders of our shares of common stock and persons who desire to purchase them in the future should be aware that there may be significant state law restrictions upon the ability of investors to resell our shares. We currently do not intend to and may not be able to qualify securities for resale in states which require shares to be qualified before they can be resold by our shareholders.

 

We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.

 

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. The Section 107 of the JOBS Act provides that we may elect to utilize the extended transition period for complying with new or revised accounting standards and such election is irrevocable if made. As such, we have made the election to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. Please refer to a discussion under “Risk Factors” of the effect on our financial statements of such election.

 

As an emerging growth company we are exempt from Section 404(b) of the Sarbanes Oxley Act. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company, we are also exempt from Section 14A (a) and (b) of the Exchange, which require the shareholder approval of executive compensation and golden parachutes.

 

We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

 

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Risks Related to our Business

 

Since we have a limited operating history in our industry, it is difficult for potential investors to evaluate our business.

 

Our short operating history in the CBD industry may hinder our ability to successfully meet our objectives and makes it difficult for potential investors to evaluate our business or prospective operations. As an early stage company, we are subject to all the risks inherent in the financing, expenditures, operations, complications and delays inherent in a new business. Accordingly, our business and success faces risks from uncertainties faced by developing companies in a competitive environment. There can be no assurance that our efforts will be successful or that we will ultimately be able to attain profitability.

 

We may not be able to raise capital when needed, if at all, which would force us to delay, reduce or eliminate our product development programs or commercialization efforts and could cause our business to fail.

 

We expect to need substantial additional funding to pursue additional product development and launch and commercialize our products. There are no assurances that future funding will be available on favorable terms or at all. If additional funding is not obtained, we may need to reduce, defer or cancel additional product development or overhead expenditures to the extent necessary. The failure to fund our operating and capital requirements could have a material adverse effect on our business, financial condition and results of operations.

 

If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts. Any of these events could significantly harm our business, financial condition and prospects.

 

Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.

 

Our historical financial statements have been prepared under the assumption that we will continue as a going concern. Our independent registered public accounting firm has expressed substantial doubt in our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to obtain additional equity financing or other capital, attain further operating efficiencies, reduce expenditures, and, ultimately, generate more revenue. The doubt regarding our potential ability to continue as a going concern may adversely affect our ability to obtain new financing on reasonable terms or at all. Additionally, if we are unable to continue as a going concern, our stockholders may lose some or all of their investment in the Company.

 

We depend heavily on key personnel, and turnover of key senior management could harm our business.

 

Our future business and results of operations depend in significant part upon the continued contributions of our senior management personnel. If we lose their services or if they fail to perform in their current positions, or if we are not able to attract and retain skilled personnel as needed, our business could suffer. Significant turnover in our senior management could significantly deplete our institutional knowledge held by our existing senior management team. We depend on the skills and abilities of these key personnel in managing the product acquisition, marketing and sales aspects of our business, any part of which could be harmed by turnover in the future. We do not have any key person insurance.

 

We expect to face intense competition, often from companies with greater resources and experience than we have.

 

The CBD industry is highly competitive and subject to rapid change. The industry continues to expand and evolve as an increasing number of competitors and potential competitors enter the market. Many of these competitors and potential competitors have substantially greater financial, technological, managerial and research and development resources and experience than we have. Some of these competitors and potential competitors have more experience than we have in the development of CBD products, including validation procedures and regulatory matters. In addition, our products compete with product offerings from large and well-established companies that have greater marketing and sales experience and capabilities than we or our collaboration partners have. If we are unable to compete successfully, we may be unable to grow and sustain our revenue.

 

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We have substantial capital requirements that, if not met, may hinder our operations.

 

We anticipate that we will make substantial capital expenditures for research and product development work and acquisitions. If we cannot raise sufficient capital, we may have limited ability to expend the capital necessary to undertake or complete research and product development work and acquisitions. There can be no assurance that debt or equity financing will be available or sufficient to meet these requirements or for other corporate purposes, or if debt or equity financing is available, that it will be on terms acceptable to us. Moreover, future activities may require us to alter our capitalization significantly. Our inability to access sufficient capital for our operations could have a material adverse effect on our financial condition, results of operations or prospects.

 

Current global financial conditions have been characterized by increased volatility which could negatively impact our business, prospects, liquidity and financial condition.

 

Current global financial conditions and recent market events have been characterized by increased volatility and the resulting tightening of the credit and capital markets has reduced the amount of available liquidity and overall economic activity. We cannot guaranty that debt or equity financing, the ability to borrow funds or cash generated by operations will be available or sufficient to meet or satisfy our initiatives, objectives or requirements. Our inability to access sufficient amounts of capital on terms acceptable to us for our operations will negatively impact our business, prospects, liquidity and financial condition.

 

We will need to grow the size of our organization, and we may experience difficulties in managing any growth we may achieve.

 

As our development and commercialization plans and strategies develop, we expect to need additional research, development, managerial, operational, sales, marketing, financial, accounting, legal, and other resources. Future growth would impose significant added responsibilities on members of management. Our management may not be able to accommodate those added responsibilities, and our failure to do so could prevent us from effectively managing future growth, if any, and successfully growing our company.

 

We may expend our limited resources to pursue a particular product and may fail to capitalize on products that may be more profitable or for which there is a greater likelihood of success.

 

Because we have limited financial and managerial resources, we have focused our efforts on particular products. As a result, we may forego or delay pursuit of opportunities with other products that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Any failure to improperly assess potential products could result in missed opportunities and/or our focus on products with low market potential, which would harm our business and financial condition.

 

We engage in transactions with related parties and such transactions present possible conflicts of interest that could have an adverse effect on us.

 

We have entered, and may continue to enter, into transactions with related parties for financing, corporate, business development and operational services, as detailed herein. Such transactions may not have been entered into on an arm’s-length basis, and we may have achieved more or less favorable terms because such transactions were entered into with our related parties. We rely, and will continue to rely, on our related parties to maintain these services. If the pricing for these services changes, or if our related parties cease to provide these services, including by terminating agreements with us, we may be unable to obtain replacements for these services on the same terms without disruption to our business. This could have a material effect on our business, results of operations and financial condition.

 

Such conflicts could cause an individual in our management to seek to advance his or her economic interests or the economic interests of certain related parties above ours. Further, the appearance of conflicts of interest created by related party transactions could impair the confidence of our investors, which could have a material adverse effect on our liquidity, results of operations and financial condition.

 

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Any inability to protect our intellectual property rights could reduce the value of our technologies and brands, which could adversely affect our financial condition, results of operations and business.

 

Our business is dependent upon our trademarks, trade secrets, copyrights and other intellectual property rights. There is a risk of certain valuable trade secrets being exposed to potential infringers. The efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm our business or our ability to compete. In addition, protecting our intellectual property rights is costly and time consuming. There is a risk that we may have insufficient resources to counter adequately such infringements through negotiation or the use of legal remedies. It may not be practicable or cost effective for us to fully protect our intellectual property rights in some countries or jurisdictions. If we are unable to successfully identify and stop unauthorized use of our intellectual property, we could lose potential revenue and experience increased operational and enforcement costs, which could adversely affect our financial condition, results of operations and business.

 

Our potential for rapid growth and our entry into new markets make it difficult for us to evaluate our current and future business prospects, and we may be unable to effectively manage any growth associated with these new markets, which may increase the risk of your investment and could harm our business, financial condition, results of operations and cash flow.

 

Our entry into the rapidly growing CBD market may place a significant strain on our resources and increase demands on our executive management, personnel and systems, and our operational, administrative and financial resources may be inadequate. We may also not be able to effectively manage any expanded operations, or achieve planned growth on a timely or profitable basis, particularly if the number of customers using our technology significantly increases or their demands and needs change as our business expands. If we are unable to manage expanded operations effectively, we may experience operating inefficiencies, the quality of our products and services could deteriorate, and our business and results of operations could be materially adversely affected.

 

If we are unable to develop and maintain our brand and reputation for our product offerings, our business and prospects could be materially harmed.

 

Our business and prospects depend, in part, on developing and then maintaining and strengthening our brands and reputation in the markets we serve. If problems with our products or technologies cause customers to experience operational disruption or failure or delays, our brand and reputation could be diminished. If we fail to develop, promote and maintain our brand and reputation successfully, our business and prospects could be materially harmed.

 

We could be subject to costly product liability claims related to our products.

 

Since most of our products are intended for human use, we face the risk that the use of our products may result in adverse side effects to people. We face even greater risks upon further commercialization of our products. An individual may bring a product liability claim against us alleging that one of our products causes, or is claimed to have caused, an injury or is found to be unsuitable for consumer use. Any product liability claim brought against us, with or without merit, could result in:

 

  the inability to commercialize our products;
     
  decreased demand for our products;
     
  regulatory investigations that could require costly recalls or product modifications;
     
  loss of revenue;
     
  substantial costs of litigation;
     
  liabilities that substantially exceed our product liability insurance, which we would then be required to pay ourselves;
     
  an increase in our product liability insurance rates or the inability to maintain insurance coverage in the future on acceptable terms, if at all;
     
  the diversion of management’s attention from our business; and
     
  damage to our reputation and the reputation of our products.

 

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Product liability claims may subject us to the foregoing and other risks, which could have a material adverse effect on our business, results of operations, financial condition, and prospects.

 

The legality of certain products containing CBD is currently uncertain and the Company could be subject to enforcement action by the FDA and certain state regulatory agencies.

 

In 2018, the federal Farm Bill removed hemp as a Schedule I drug under the Controlled Substances Act and hemp may now be grown as a commodity crop, with restrictions; however, the 2018 Farm Bill did not specifically legalize CBD. Until Congress promulgates rules and regulations relating to hemp derived CBD, the “legal” status of CBD from hemp, or the processes the Company may have to implement (and at what expense), are still unknowns. A similar paradigm exists under various state laws with which the Company will have to comply. The FDA currently considers the addition of CBD to food products, cosmetics or supplements to be illegal and prohibits the advertisement of CBD products with health claims. In addition, the FDA has recently increased its review of and enforcement against CBD companies. Should the Company become subject to enforcement action by the FDA, it could be forced to spend significant sums defending against such enforcement and ultimately could be forced to stop offering some or all of its CBD products, which would materially, negatively affect the Company’s business and shareholders’ investments. In addition, notwithstanding the intense pressure on FDA to fast-track the CBD approval process, it is likely that the approval process for use of CBD in foods, cosmetics or supplements will take years.

 

Due to the controversy over the cannabis plant within the United States, we face challenges getting our products into stores and into the hands of the end user.

 

The Company intends to release products that contain CBD derived from hemp that are legal within the U.S. However, it is possible we may face scrutiny and run into issues getting our products into stores due to hesitation by stores to carry any product at all affiliated with the cannabis plant, as well as federal, state and local regulations that may restrict our ability to sell CBD products.

 

The novel coronavirus disease of 2019 (“COVID-19”) has had, and continues to have, broad impacts on multiple sectors of the global economy, making it difficult to predict the extent of its impact on our business.

 

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

 

The full impact of the COVID-19 outbreak continues to evolve as of the date of this Offering Circular. As such, it is uncertain as to the full magnitude that the pandemic will have on our financial condition, liquidity, and future results of operations. Management is actively monitoring the impact of the global situation on our financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, we are not able to estimate the effects of the COVID-19 outbreak on our results of operations, financial condition, or liquidity for the foreseeable future.

 

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SPECIAL INFORMATION REGARDING FORWARD LOOKING STATEMENTS

 

Some of the statements in this Offering Circular are “forward-looking statements.” These forward-looking statements involve certain known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among others, the factors set forth above under “Risk Factors.” The words “believe,” “expect,” “anticipate,” “intend,” “plan,” and similar expressions identify forward-looking statements. We caution you not to place undue reliance on these forward-looking statements.

 

We undertake no obligation to update and revise any forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements in this document to reflect any future or developments. However, the Private Securities Litigation Reform Act of 1995 is not available to us as a non-reporting issuer. Further, Section 27A(b)(2)(D) of the Securities Act and Section 21E(b)(2)(D) of the Exchange Act expressly state that the safe harbor for forward looking statements does not apply to statements made in connection with an initial public offering.

 

DILUTION

 

All investors purchasing in from the Company in this offering will experience immediate dilution, as exampled below, and all shareholders in the Company may be subject to dilution from the exercise of convertible securities currently outstanding in the Company, or if the Company issues more of its authorized stock.

 

Our net tangible book value as of December 31, 2019 was $2,274,404, or approximately $0.68 per share (retroactively applying the 300:1 reverse stock split effected in March 2020). Net tangible book value per share represents our total tangible assets less total liabilities, divided by the number of shares of common stock outstanding.

 

Net tangible book value dilution per share of common stock to new investors represents the difference between the amount per share paid by purchasers in this offering and the as adjusted net tangible book value per share of common stock immediately after completion of this offering. After giving effect to our sale of the maximum offering amount of $13,000,000 in securities at $3.25 per share, assuming $0 in offering or other expenses, our as adjusted net tangible book value as of December 31, 2019 would have been approximately $13,941,073, or $2.08 per share (retroactively applying the 300:1 reverse stock split effected in March 2020). This represents an immediate increase in net tangible book value of approximately $1.40 per share to existing stockholders and an immediate dilution in net tangible book value of $1.17 per share to investors of this offering, as illustrated in the following table:

 

Public offering price per share   $ 3.25  
Net tangible book value per share as of December 31, 2019   $ 0.68  
Increase in net tangible book value per share attributable to new investors   $ 1.40  
Adjusted net tangible book value per share as of December 31, 2019   $ 2.08  
Dilution per share to new investors in the offering   $ 1.17  

 

The above calculations assume all 20 outstanding Series A preferred shares have been converted into 666,680 shares of common stock (which they have not) for a total of approximately 3,347,618 shares of common stock outstanding as of December 31, 2019 (retroactively applying the 300:1 reverse stock split effected in March 2020), but do not assume exercise of any other outstanding convertible securities in the Company.

 

PLAN OF DISTRIBUTION

 

We currently plan to have our directors and executive officers sell the Shares offered by the Company on our behalf. Our officers and directors will receive no discounts or commissions. Our executive officers will deliver this circular to those persons who they believe might have interest in purchasing all or a part of this offering. The Company may generally solicit investors, including, but not limited to, the use of social media, newscasts, advertisements, roadshows and the like.

 

There is no minimum offering amount and no provision to escrow or return investor funds if any minimum number of shares is not sold. The minimum investment amount established for each investor is $500. All funds raised by the Company from this offering will be immediately available for the Company’s use.

 

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As of the date of this Offering Circular, we have not entered into any arrangements with any selling agents for the sale of the securities; however, may engage one or more selling agents to sell the securities in the future. If we elect to do so, we will file a supplement to this circular to identify such selling agent(s).

 

Our directors and officers will not register as broker-dealers under Section 15 of the Securities Exchange Act of 1934 in reliance upon Rule 3a4-1. Rule 3a4-1 sets forth those conditions under which a person associated with an issuer may participate in the offering of the issuer’s securities and not be deemed to be a broker-dealer. The conditions are that:

 

the person is not statutorily disqualified, as that term is defined in Section 3(a)(39) of the Exchange Act, at the time of his participation; and
   
the person is not at the time of their participation an associated person of a broker-dealer; and
   
the person meets the conditions of paragraph (a)(4)(ii) of Rule 3a4-1 of the Exchange Act, in that he (i) primarily performs, or is intended primarily to perform at the end of the offering, substantial duties for or on behalf of the issuer otherwise than in connection with transactions in securities; and (ii) is not a broker or dealer, or an associated person of a broker or dealer, within the preceding 12 months; and (iii) does not participate in selling and offering of securities for any issuer more than once every 12 months other than in reliance on paragraphs (a)(4)(i) or (a)(4)(iii) of Rule 3a4-1 of the Exchange Act.

 

Our officers and directors are not statutorily disqualified, are not being compensated, and are not associated with a broker-dealer. They are and will continue to hold their positions as officers or directors following the completion of the offering and have not been during the past 12 months and are currently not brokers or dealers or associated with brokers or dealers. They have not nor will they participate in the sale of securities of any issuer more than once every 12 months.

 

Unless sooner withdrawn or canceled by us, the offering will continue until (i) the maximum offering amount has been sold, or (ii) one year from the date this offering circular is qualified with the SEC. Notwithstanding the foregoing, the Company may terminate this offering at any time or extend this offering by ninety (90) days, in its sole discretion.

 

OTC Markets Considerations

 

The OTC Markets is separate and distinct from the Nasdaq stock market or other national exchange. Nasdaq has no business relationship with issuers of securities quoted on the OTC Markets. The SEC’s order handling rules, which apply to Nasdaq-listed securities, do not apply to securities quoted on the OTC Markets.

 

Although the Nasdaq and other national stock markets have rigorous listing standards to ensure the high quality of their issuers, and can delist issuers for not meeting those standards; the OTC Markets has no listing standards. Rather, it is the market maker who chooses to quote a security on the system, files the application, and is obligated to comply with keeping information about the issuer in its files.

 

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Although we believe being listed on the OTC Markets increases liquidity for our stock, investors may have greater difficulty in getting orders filled than if we were on Nasdaq or other exchange. Investors’ orders may be filled at a price much different than expected when an order is placed. Trading activity in general is not conducted as efficiently and effectively on OTC Markets as with exchange-listed securities. Also, because OTC Markets stocks are usually not followed by analysts, there may be lower trading volume than for Nasdaq-listed securities.

 

Investors must contact a broker-dealer to trade OTC Markets securities. Investors do not have direct access to the quotation service. For OTC Markets securities, there only has to be one market maker.

 

USE OF PROCEEDS

 

The following table illustrates the amount of net proceeds to be received by the Company on the sale of the common shares offered hereby and the intended uses of such proceeds over an approximate twelve (12) month period. It is possible that we may not raise the entire $13,000,000 in shares being offered through this Offering Circular. In such case, we will reallocate the use of proceeds as the board of directors deems to be in the best interests of the Company in order to effectuate its business plan. The intended use of proceeds are as follows:

 

Capital Sources and Uses

 

      100%     75%     50%     25%
Gross Offering Proceeds   $ 13,000,000     $ 9,750,000     $ 6,500,000     $ 3,250,000  
Offering Costs(1)   $ 50,000     $ 50,000     $ 50,000     $ 50,000  
                                 
Use of Net Proceeds:                                
                                 
Compliance and Certification(2)   $ 540,000     $ 440,000     $ 390,000     $ 340,000  
Building and Equipment(3)   $ 4,445,000     $ 2,695,000     $ 1,505,000     $ 680,000  
Business Expansions(4)   $ 1,450,000     $ 1,175,000     $ 450,000     $ 125,000  
Marketing   $ 2,000,000     $ 1,300,000     $ 800,000     $ 290,000  
Research and Development   $ 1,400,000     $ 1,075,000     $ 775,000     $ 350,000  
Staffing Costs   $ 725,000     $ 750,000     $ 600,000     $ 100,000  
Debt Repayment(5)   $ 940,000     $ 940,000     $ 940,000     $ 940,000  
Working Capital(6)   $ 1,450,000     $ 1,325,000     $ 990,000     $ 375,000  

 

Notes:

 

(1) The Company expects to spend approximately $50,000 in expenses relating to this offering, including legal, accounting, travel, printing and other miscellaneous fees.
   
(2) The Company expects to use these funds for filing, legal, accounting, and other costs associated with maintaining SEC compliance. The Company also expects to spend approximately $90,000 to obtain GMP certification.
   
(3) The Company expects to use these funds to buy and maintain equipment necessary for manufacturing its products and to build and expand on its facilities.
   
(4) The Company anticipates using these funds for new rollouts and to increase its presence in territories within the United States.
   
(5) The Company plans to pay down existing debt to two holders of promissory notes.
   
(6) The Company will use working capital to pay for miscellaneous and general operating expenses.

 

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The allocation of the use of proceeds among the categories of anticipated expenditures represents management’s best estimates based on the current status of the Company’s proposed operations, plans, investment objectives, capital requirements, and financial conditions. Future events, including changes in economic or competitive conditions of our business plan or the completion of less than the total offering, may cause the Company to modify the above-described allocation of proceeds. The Company’s use of proceeds may vary significantly in the event any of the Company’s assumptions prove inaccurate. We reserve the right to change the allocation of net proceeds from the offering as unanticipated events or opportunities arise.

 

DETERMINATION OF OFFERING PRICE

 

In determining the offering price of the common stock, we have considered a number of factors including, but not limited to, the illiquidity and volatility of our common stock, our current financial condition and the prospects for our future cash flows and earnings, and market and economic conditions at the time of the offering. The offering price for the common stock sold in this offering may be more or less than the fair market price for our common stock.

 

DESCRIPTION OF BUSINESS

 

Organization

 

We were originally incorporated as WRAPMail, Inc. (“WRAP” or “WRAPMail”) in Florida on October 11, 2005 in order to tap into a largely un-serviced segment of the web-based advertising industry. Effective December 27, 2010, WRAP effected a 10-for-1 forward stock split of its common stock. Effective June 4, 2013, WRAP effected a 1-for-10 reverse stock split of its common stock.

 

Effective January 5, 2015, WRAP acquired 100% ownership of Prosperity Systems, Inc. (“Prosperity”), a New York corporation incorporated on April 2, 2008, in order to acquire Prosperity’s office productivity software suite as a complement to WRAP’s existing intellectual property. After its acquisition, the Company transferred Prosperity’s operations to WRAP and is presently in the process of dissolving Prosperity.

 

In early 2017, the Company transitioned into the hemp-derived CBD industry. On May 15, 2017, WRAP changed its name to Canbiola, Inc. to reflect its transition.

 

On or around October 5, 2017, the Company approved an increase of its common stock to 750,000,000 shares. On March 12, 2019, the Company approved an increase of its authorized shares to 1,500,000,000. The Company is also authorized to issue a total of 5,000,000 preferred shares, including 20 Series A Preferred Shares and 500,000 Series B Preferred Shares.

 

The Company acquired 100% of the membership interests in Pure Health Products, LLC, a New York limited liability company (“Pure Health Products” or “PHP”) effective December 28, 2018. The Company’s durable equipment products, such as sam® units with CBD infused pads, are marketed and sold through its wholly-owned, newly formed subsidiaries, Duramed Inc. (incorporated in Nevada on November 29, 2018) and DuramedNJ LLC (incorporated in Nevada on May 29, 2019) (collectively, “Duramed”). Duramed began operating on or about February1, 2019. The Company’s wholly owned subsidiary, Radical Tactical LLC (“Radical Tactical”), formed May 11, 2019, provides the marketplace with millennium targeted product lines such as vapes, gums, and kratom. The Company’s hemp aggregation business is run through NY Hemp Depot LLC (the “Hemp Depot”), which was formed on July 11, 2019. The Company’s hemp farming business is run through Green Grow Farms, Inc. (“Green Grow Farms”), which was formed in August, 2019.

 

On January 16, 2019, the Company filed an amendment to its Articles of Incorporation to change the name of the Company to Can B̅ Corp. On March 2, 2020, the Company filed an amendment to its Articles of Incorporation to effect a 300-to-1 reverse stock split of its issued and outstanding, but not authorized, common stock (the “Reverse Split”). Both actions were declared effective of March 6, 2020. The Reverse Split also affects the number of shares issuable upon conversion of the Company’s convertible securities, such as Preferred Stock, options and warrants.

 

Our fiscal year ends December 31. Our transfer agent is Transhare Corporation, located at 2849 Executive Drive, Suite 200, Clearwater, FL 33762.

 

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As of May 31, 2020, we had approximately 3,189,285 shares of common stock, 20 shares of Series A Preferred Stock and no shares of Series B Preferred Stock issued and outstanding, as well as approximately 196 shareholders of record. The Company’s common shares are currently quoted on OTC Market’s OTCQB® Venture Market under the symbol “CANB.”.

 

Business

 

The Company’s primary business is the development, production and sale of products and delivery devices containing CBD. The Company’s products contain CBD derived from hemp and include products such as oils, creams, moisturizers, isolate, and gel caps. In addition to offering white labeled products, the Company has developed its own line of proprietary products, as well as seeking synergistic value through acquisitions of products and brands in the hemp industry. The Company aims to be the premier provider of the highest quality natural hemp CBD products on the market through sourcing the very best raw material and developing a variety of products we believe will improve people’s lives in a variety of areas.

 

Business Segments

 

The Company is in the business of promoting health and wellness through its development and sale of products containing CBD (with no psychoactive THC) the production of hemp biomass, the licensing of durable medical devises and the sale of non-CBD products such as sunscreen and lip balm.

 

  I- Pure Health Products – R&D, Manufacturing and “CBD” Business

 

The Company’s Research, Development, and core manufacturing arm also is a direct producer, seller and purveyor of products to private label products for multiple distributors of CBD products. The Company’s products contain CBD derived from hemp and include products such as oils, creams, moisturizers, isolate, and gel caps. In addition to offering white labeled products, the Company has developed its own line of proprietary products. The Company is always seeking synergistic value through acquisitions of products and brands in the hemp industry. The Company aims to be the premier provider of the highest quality natural hemp CBD products on the market through sourcing the very best raw material and developing a variety of products we believe will improve people’s lives in a variety of areas.

 

Cannabidiol (“CBD”) is one of nearly 85 naturally occurring compounds (cannabinoids) found in industrial hemp (it is also contained in marijuana, but the Company’s products are derived only from hemp). CBD is non-psychoactive and is thought to have numerous uses, including, but not limited to, for pain, insomnia, epilepsy, anxiety, inflammation, and nausea. Unlike CBD derived from marijuana, CBD derived from the seeds and stalks of industrial hemp is generally considered “legal” in the U.S. so long as it contains less than 0.3% of “THC,” another, but psychoactive, cannabinoid found in cannabis. This purported “legal status” is because the 2018 Farm Bill removed hemp as a Schedule I drug under the Controlled Substances Act and hemp may now be grown as a commodity crop, with restrictions; however, the 2018 Farm Bill did not specifically legalize CBD. Until Congress promulgates rules and regulations relating to hemp derived CBD under the 2018 Farm Bill, the “legal” status of CBD from hemp, or the processes the Company may have to implement (and at what expense), are still unknowns. A similar paradigm exists under various state laws with which the Company will have to comply. The Company has all of its hemp based raw materials (isolate) tested by a 3rd party independent laboratory and those results are posted on the Company web site.

 

The Company’s medical office products are marketed under the tradename “Canbiola,” and sold via medical professionals referring customers to our products. The Company also manufactures and/or sells separately branded CBD products through its subsidiaries and websites for “Pure Leaf Oil”, essentially its retail consumer brand and is sold via the Company’s website as well as direct internet sales for retail use consumers. Additionally, the Pure Leaf Oil products are targeted to be featured in the Company’s new line of vending machines, currently in test markets such as medical facilities and retail centers. Nu Wellness our independent pharmacy brand and targets toward the over three-thousand independent retail drug stores nationally with its first product scheduled for rollout in the 2nd quarter 2020. , The “Seven Chakras” brand is targeted toward health clubs, spas, and beauty lines and is expecting a major launch in 2nd quarter 2020 to include a full line of related topical products both with and without CBD. The Severn Chakras has a customer base and following and compliments the Canbiola and Pure Leaf Oil brands with additional new products such as bath bombs, stress relief products, and lotions. Seven Chakras has its own internet website and continues in its direct marketing to its customer base.

 

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In December, 2018, the Company acquired 100% of the membership interests in Pure Health Products, LLC, a New York limited liability company (“PHP” or “Pure Health Products”), with which it had had and has an exclusive production agreement, pursuant to an Acquisition Agreement (“PHP Acquisition Agreement”). PHP manufactures and packages the Company’s CBD infused products. PHP may also white label / rebrand or relabel the Company’s products pursuant to “white label agreements” entered into between the Company and/or PHP and third-party customers. Through PHP, the Company is able to control the manufacturing process of its products while reducing its production costs. In January, 2019, PHP acquired certain assets from Seven Chakras, LLC (“Seven Chakras”), a former competitor, which assets included the rights and title to (i) Seven Chakras’ proprietary formulas, methods, trade secrets, and know-how related to the production of Seven Chakras’ CBD products, (ii) Seven Chakras’ tradename, domain name, and social media sites, and (iii) other assets of Seven Chakras including but not limited to raw materials, equipment, packaging and labeling materials, mailing lists, and marketing materials.

 

The products are distributed through an array of methods including: 1- For Canbiola brand directly though doctors and medical offices, 2- For Pure Leaf Oil direct to consumer via walk-in business, internet and other distributors, 3- for Seven Chakras via direct sales and through internet sales. The Company’s newest brand, Nu Wellness, is distributed to independent pharmacies through distributor relationships. The White or Private Label business is sold direct to the companies for distribution through their own network of retailers.

 

  II- Duramed Division- Durable Medical Equipment

 

Through its medical device division, Duramed, Inc. and DuramedNJ LLC, the Company serves the post-surgery medical patient arena aiming to reduce the reliance of opiates in favor of a wearable ultrasound device to aid in recovery and pain reduction.

 

In November 2018, the Company formed Duramed, Inc. to facilitate the manufacture and sale of durable medical equipment (“DME”) incorporating CBD. On January 14, 2019, Duramed entered into a Memorandum of Understanding (the “Sam MOU”) with Sam International (“Sam”) and ZetrOZ Systems LLC (“ZetrOZ” and, collectively with Sam, the “Manufacturers”). Pursuant to the Sam MOU, the Manufacturers granted Duramed the exclusive right to distribute sam® Pro 2.0 (SA271) and sam® Gel Coupling Patches (UB-14-72) within the United States for the Personal Injury Protection/No Fault Market during the term of the Sam MOU. Duramed has agreed to purchase monthly minimums from the Manufacturers at a price per Unit of $2,447. The exclusivity of the Distribution License granted to Duramed under the Sam MOU is dependent upon meeting the monthly minimum. In addition, Duramed was granted the right to distribute sam® Gel Capture Patches (UB-14-24). Duramed will get rebates of 2%-3% based on the volume of Products sold by it. The initial term of the Sam MOU expires December 31, 2019 (the “Initial Term”). The agreement contemplated by the Sam MOU will automatically renew for additional one-year terms at the end of each calendar year, provided the monthly minimums have been met. The primary thrust of the Duramed division is to market to patients via doctors via a device rental program reimbursable by insurance carriers to help patient with pain reductions and faster healing.

 

On May 29, 2019, the Company created DuramedNJ LLC to execute the same business strategy into the no-fault insurance market in New Jersey that it had developed in New York. That Company continues to develop opportunities into 2020.

 

  III- Hemp Production, Aggregation, Processing, and Sale

 

On July 11, 2019, the Company entered into a Joint Venture Agreement (the “JV Agreement”) with NY – SHI, LLC, a New York limited liability company (“NY – SHI”), EWSD I LLC dba SHI Farms, a Delaware limited liability company (“SHI Farms”), NY Hemp Depot LLC, a Nevada limited liability company and wholly-owned subsidiary of CANB (“CANB Sub”). Pursuant to the JV Agreement, NY – SHI and CANB Sub entered into a joint venture for the purpose of jointly implementing a business model referred to as the “Depot Model” (the “Joint Venture”) to aggregate and purchase fully-grown, harvested industrial hemp from third-party farmers (“Farmers”) in the State of New York. The Joint Venture may also sell feminized seeds, clones, and additional materials required to grow and cultivate industrial hemp to the Farmers and provide the Farmers with initial training reasonably required for them to be able to grow industrial hemp and maximize CBD potency.

 

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Pursuant to the JV Agreement, NY – SHI agreed to provide (i) technical expertise regarding the growth and cultivation of industrial hemp, (ii) certain products that may include feminized hemp seeds and/or clone plants to sell to the Farmers, (iii) growing technology and expertise to grow, cultivate, and harvest industrial hemp, including the initial training of Farmers to grow industrial hemp and maximize CBD potency, (iv) use of its cultivating license, which shall be amended to add a New York hemp depot facility (the “NY Hemp Depot Facility”) once such facility is obtained by CANB Sub, and (v) services for the recruitment of Farmers to grow and cultivate industrial hemp for sale to the Joint Venture.

 

CANB Sub agreed to provide (i) a building for the operation of the NY Hemp Depot Facility, (ii) location services in connection with its securing the building for the NY Hemp Depot Facility, (iii) management and other services for the day-to-day operation of the Joint Venture, and (iv) services for the recruitment of Farmers to grow and cultivate industrial hemp for sale to the Joint Venture. CANB Sub shall have full and complete discretion to manage and control the business and affairs of the Joint Venture, to make all decisions affecting the business and affairs of the Joint Venture, and to take all such actions as it deems necessary or appropriate to accomplish the purposes of the Joint Venture. Notwithstanding the foregoing, unanimous consent between NY – SHI and CANB Sub is required for certain transactions, including but not limited to amending the JV Agreement, obligating the Joint Venture to pay an excess of $20,000 for any transaction or series of transactions, and terminating the Joint Venture.

 

As consideration for the foregoing, CANB Sub delivered to NY – SHI a cash payment of $500,000.00 upon execution of the JV Agreement. Additionally, per the terms of the JV Agreement, CANB issued $500,000.00 in value of its Common Stock to NY – SHI; provided, however, that the NY – SHI’s cultivating license shall have been amended to add the NY Hemp Depot Facility as a condition to such issuance. SHI Farms has also agreed to sell certain isolate to the Company or its designated affiliate at a discounted rate equal to the cost of processing the isolate from biomass and granted CANB Sub an interest in the 1.5% payments due to SHI Farms in connection with its separate agreements with Mile High Labs.

 

The “gross profits” from the Joint Venture, which are defined as gross revenues less certain direct operational costs, will be distributed quarterly in arrears with the first distribution scheduled to be made no later than December 31, 2020, of which 70% is to be distributed to CANB Sub and 30% is to be distributed to NY – SHI.

 

NY Hemp Depot production is coordinated via the new acquisition of Green Grow Farms, Inc.

 

On December 4, 2019, the Company entered into a Stock Purchase Agreement (the “GGFI Agreement” with Iconic Brands, Inc., a Nevada corporation (“ICNB”) and Green Grow Farms, Inc., a New York corporation (“GGFI” or “Green Grow” and, collectively with ICNB and the Company, the “Parties”). Pursuant to the terms of the GGFI Agreement, at closing, the Company received 51% equity interest in Green Grow (the “GG Shares”) in exchange for an aggregate of 37,500,000 pre-split shares of the Company’s common stock (the “Purchase Shares”). On June 30, 2020 (the “Valuation Date”), a valuation of the Purchase Shares shall be performed for the purpose of determining whether the Market Price Per Purchase Share (as defined in the GGFI Agreement) on the Valuation Date is less than $1,000,000. In the event that the aggregate Market Price Per Purchase Share on the Valuation Date is less than $1,000,000, the Company shall issue to the ICNB such a number of additional shares (“Additional Purchase Shares”) so that the aggregate value of aggregate shares issued to ICNB for the purchase of the GG Shares (taking into account the Purchase Shares and the Additional Purchase Shares) equals $1,000,000. For purposes of the valuation, Market Price Per Purchase Share shall be determined based upon the 10-day average VWAP for the 10-day period ending on June 30, 2020.

 

In the event that ICNB determines to make a distribution of the Purchase Shares to its shareholders, whether by way of dividend or otherwise, the Company agreed to cooperate in the filing of a registration statement (the “Registration Statement”) with the SEC covering the Purchase Shares, if requested by ICNB. ICNB shall be responsible for directly paying all expenses relating to such Registration Statement, including, but not limited to, filing fees, the Company’s counsel legal fees, blue sky filing fees and audit fees. Pursuant to the GGFI Agreement, the Company has agreed to indemnify and hold ICNB harmless from and against any and all liabilities, obligations or claims arising out of or resulting from Green Grow’s operation of its business or its assets after the closing of the GGFI Agreement and the Company’s breach of any covenants, warranties or agreements set forth therein, provided the amount of any indemnification shall not exceed an amount equal to the value of the GG Shares as of the closing. The GGFI Agreement otherwise contains customary representations and warranties, termination rights, and certain covenants of the Parties.

 

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On January 27, 2020, the Company entered into an Amendment to Stock Purchase Agreement (the “Amendment”) with ICNB and Green Grow. The Amendment was to correct a scrivener’s error in the GGFI Agreement. The Amendment clarifies that Additional Purchase Shares will be issued to ICNB only if the Market Price Per Purchase Share on the Valuation Date multiplied by the 37,500,000 pre-split Purchase Shares is less than $1,000,000.

 

On March 3, 2020, the Company entered into an Agreement (the “Modification Agreement”) with Green Grow, New York Farm Group, Inc., a New York corporation (“NYFG”), Steven Apolant, an individual, and Peter Scalise, an individual, relating to the GGFI Agreement, as amended. Following the closing of the GGFI Agreement, the Company discovered that certain assets of GGFI were valued at less than the amount GGFI had previously represented. In light of the foregoing, pursuant to the Modification Agreement, NYFG agreed to assign to CANB (i) all of the equity interests in GGFI held by NYFG and (ii) 1,000,000 shares of ICNB’s common stock. The ICNB shares are subject to a lock up leak out agreement with ICNB whereby the Company has agreed not to transfer the ICNB shares until July 1, 2020 and for the six (6) months thereafter not sell or transfer more than the greater of 3.5% of ICNB’s trading volume or $5,000. Pursuant to the Modification Agreement, CANB agreed to forgive a loan to Apolise LLC in the amount of $144,310 and to assume the lease liability for 1545 Ocean Ave., Suite 1, Bohemia, NY 11716. Each party to the Modification Agreement also agreed to release the other parties thereto from all claims relating to the GGFI Agreement and the transactions contemplated thereby. As a result of the transaction contemplated by the Modification Agreement, the Company now owns 100% of GGFI.

 

  IV- Licensing

 

On January 28, 2020, the Company entered into a License Agreement (the “Lifeguard Agreement”) with Lifeguard Licensing Corp., a Delaware corporation (“Lifeguard”). Pursuant to the Lifeguard Agreement, Lifeguard granted the Company the right to use its “Lifeguard TM” trademark (the “Mark”) in connection with the Company’s manufacture, marketing, distribution, and sale of products (the “License”). In consideration for the License, the Company agreed to pay Lifeguard a royalty equal to six percent (6%) of net sales of its Lifeguard branded products on a quarterly basis. The Company further agreed that, regardless of the net sales generated, each royalty payment will be in an amount not less than $60,000, which minimum amount will increase annually following December 31, 2021. The Lifeguard Agreement will continue until December 31, 2025, unless earlier terminated by the parties, and may be renewed for additional five (5)-year terms if certain performance conditions are met.

 

Under the License, the Company has various performance and sales obligations including initial product introduction timing and Lifeguard has various oversight rights such as audit rights, quality control and inspection rights. Licensor has the right to terminate the License in the event of certain breaches by the Company, at which point, the Company will be required all licensed material; however it will be permitted to sell its existing inventory so long as termination is not due to quality issues. Lifeguard and the Company have agreed to indemnify each other, which indemnification obligations will survive the termination of the Agreement. The Company also agreed to procure and maintain certain insurance policies for the benefit of the Company and Lifeguard.

 

The Lifeguard Agreement otherwise contains terms, conditions, and representation common with this type of transaction.

 

WRAPmail

 

The Company owns a patented technology that combines custom marketing content with organization e-mail to provide a next generation marketing platform for organizations and personal use. WRAPMail had provided software solutions for marketing and is no longer being sold or serviced.

 

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We are not aware of any competitors developing a similar solution to WRAPmail, possibly giving us first mover advantage. Nonetheless, we may face competition from stationary letterhead, bulk e-mail and similar product providers.

 

Currently the Company is not pursuing additional customers for WRAPmail but does continue to service current customers using the software.

 

Bullseye

 

The Bullseye Productivity Suite is a cloud-based system that consolidates all necessary office productivity tools into one online experience, accessible everywhere when you need it with full disaster recovery mechanisms built in. All functions and features are audited to help users with corporate governance and compliance issues.

 

The Company is not presently seeking additional customers for Bullseye but continues to service the existing customer base.

 

Intellectual Property

 

We own the following patents for our WRAPmail technology: US patent no. 8572275 issued on October 29, 2013. This patent expires in October 2033. On July 20, 2015, WRAPmail filed for a new patent under the title: Method, System and Software for Dynamically Extracting Content for Integration with Instant Messages, which application is still pending and not being actively pursued by the Company. The above patents relate to the document management and email marketing divisions. Due to diminishing revenue from these divisions, the Company’s accountant determined to reduce the fair value of these patents to $0.

 

The Company employs, through its Pure Health Products LLC Division, two product researchers and developers and technology experts who, on a daily basis, set the quality standards and new product development status and time-line agendas under the direct supervision of the company’s management team.

 

Employees

 

The Company currently has a total of 19* employees, 10 of which are full-time and 4 are part-time. The Company also engages independent contractors under services agreements.

 

The Company employs. through its Pure Health Products LLC Division, two product researchers and CBD technology experts who, on a daily basis, set the quality standards and new product development status and time-line agendas under the direct supervision of the company’s management team. Additionally, there is a division president, three production personnel, and five sales/ marketing and fulfillment personnel.

 

Duramed, the medical device company, employs four people including the division president and 3 field operation personnel.

 

The remaining four people are corporate staff and general sales and are directly employed by the Company.

 

* Due to the recent downturn in operations and revenue attributable to the COVID-19 outbreak, 5 of our employees have been temporarily furloughed until such time as the Company’s business returns to pre-outbreak levels.

 

Reports to Security Holders

 

Our common stock is registered under the Exchange Act and we are required to file current, quarterly and annual reports and other information with the SEC. You may read and copy any document that we file at the SEC’s public reference facilities at 100 F. Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-732-0330 for more information about its public reference facilities. Our SEC filings are available to you free of charge at the SEC’s web site at www.sec.gov. We are an electronic filer with the SEC and, as such, our information is available through the Internet site maintained by the SEC that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. This information may be found at www.sec.gov and posted on our website at www.canbcorp.com.

 

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Government Regulation

 

The cultivation and sale of hemp and hemp products is federally regulated under the United States Farm Bill. The 2018 Farm Bill removed hemp as a Schedule 1 Substance under the Controlled Substances Act; however, rules and regulations relating to manufacture and sale of CBD products under the Farm Bill must still be promulgated and are expected to impact the Company’s operations. As the legal CBD industry and our product lines expand, it is uncertain what other statutory schemes and agencies will start to regulate our CBD products. The FDA currently still considers the addition of CBD to food products or supplements to be illegal and prohibits the advertisement of CBD products with health claims. The Company must also comply with each state’s laws relating to the sale of hemp-based CBD products. These regulations may affect, among others, the way the Company manufactures and distributes its products, the way the Company is taxed, the way the Company banks, the location of the Company’s facilities, the content and testing of the Company’s products, and the quality of the Company’s services.

 

The Company is presently growing and cultivating in New York State under a State License provided by its GGFI Division. Once processing the biomass into isolate, it is shipped to the Company’s manufacturing facility in Lacey WA under the provisions of the Farm Bill of 2018.

 

We are also subject to general business regulations and laws as well as Federal and state regulations and laws specifically governing the Internet and e-commerce. Existing and future laws and regulations may impede the growth of the Internet, e-commerce or other online services, and increase the cost of providing online services. These regulations and laws may cover sweepstakes, taxation, tariffs, user privacy, data protection, pricing, content, copyrights, distribution, electronic contracts and other communications, consumer protection, broadband residential Internet access and the characteristics and quality of services. It is not clear how existing laws governing issues such as property ownership, sales, use and other taxes, libel and personal privacy apply to the Internet and e-commerce. Unfavorable resolution of these issues may harm our business and results of operations. CBD sales are additional state regulated for shipping and the Company maintains a current list.

 

Bankruptcy, Receivership, Etc.

 

Not applicable.

 

Legal Proceedings

 

We are not aware of any pending or threatened legal proceedings in which we are involved.

 

Reclassification, Merger, Consolidation, Etc.

 

Not applicable.

 

DESCRIPTION OF PROPERTY

 

The Company does not currently own any real property. We do however lease office space in Hicksville, New York, and Bohemia, New York. The Company’s wholly-owned subsidiary, Pure Health Products, operates its manufacturing facility in Lacey, Washington.

 

The monthly lease payments are: Pure Health Products in Lacey WA $2,300, Can B̅ Corp. home office in Hicksville NY $3,350, and Green Grow Farms, Inc. in Bohemia NY $1,575.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

General

 

Can B̅ Corp. was originally formed as a Florida corporation on October 11, 2005, under the name of WrapMail, Inc. Effective January 5, 2015, we acquired 100% ownership of Prosperity Systems, Inc., which the Company is in the process of dissolving. Effective December 28, 2018, we acquired 100% ownership of Pure Health Products. The Company’s durable equipment products, such as sam® units with CBD infused pads, are marketed and sold through its wholly-owned, subsidiaries, Duramed Inc. (incorporated in Nevada on November 29, 2018) and DuramedNJ LLC (incorporated in Nevada on May 29, 2019) The Company’s wholly owned subsidiary, Radical Tactical LLC, formed May 11, 2019, provides the marketplace with millennium targeted product lines such as vapes, gums, and kratom. The Company’s hemp aggregation business is run through NY Hemp Depot LLC, which was formed on July 11, 2019. The Company’s hemp farming business is run through Green Grow Farms, Inc., which was formed in August, 2019.

 

24

 

 

We manufacture and sell products containing CBD. We also provide document, project, marketing and sales management systems to our residual business clients through our website and proprietary software, which divisions are being wound-down. The consolidated financial statements include the accounts of CANB and its wholly-owned subsidiary Pure Health Products from the date of its acquisition on December 28, 2018.

 

Results of Operations

 

Year Ended December 31, 2019 compared with Year Ended December 31, 2018:

 

Revenues increased $1,636,900 from $668,603 in 2018 to $2,305,503 in 2019. The increase was due to the growth of CBD product and durable equipment sales.

 

Cost of product sales increased $193,050 from $405,534 in 2018 to $598,584 in 2019 due to the growth of product sales and outreach into additional market segments such as wholesale and private label opportunities.

 

Officers and director’s compensation and payroll taxes increased $784,579 from $1,478,987 in 2018 to $2,263,566 in 2019. The 2019 expense amount ($2,263,566) includes additional stock-based compensation of ($1,210,915) pursuant to their respective employment agreements and related payroll taxes ($39,962). The 2018 expense amount ($1,478,987) includes additional stock-based compensation of ($1,255,193) pursuant to their respective employment agreements and related payroll taxes ($2,559).

 

Consulting fees increased $412,741 from $1,669,443 in 2018 to $2,082,184 in 2019. The 2018 expense amount ($1,669,443) includes stock-based compensation of ($1,524,107), resulting from stock issued for the service of consultants. The 2019 expense amount ($2,041,934) includes stock-based compensation of ($1,858,837), resulting from stock issued for the service of consultants.

 

Advertising expense increased $249,125 from $84,316 in 2018 to $333,441 in 2019.

 

Hosting expense decreased $1,663 from $14,697 in 2018 to $13,034 in 2019.

 

Rent expense increased $179,803 from $67,165 in 2018 to $246,968 in 2019.

 

Professional fees increased $169,723 from $117,718 in 2018 to $287,441 in 2019.

 

Depreciation of property and equipment increased $7,154 from $5,473 in 2018 to $12,627 in 2019.

 

Amortization of intangible assets increased $142,093 from $0 in 2018 to $142,093 in 2019.

 

Reimbursed expenses increased $242,585 from $0 in 2018 to $242,585 in 2019.

 

Other operating expenses increased $426,053 from $241,044 in 2018 to $667,097 in 2019. The increase was due largely to higher commission fees, supplies expense and office expense in 2019 compared to 2018.

 

Net loss increased $480,193 from $4,112,277 in 2018 to $4,592,470 in 2019. The increase was due to the $2,612,193 increase in total operating expenses offset by the $690,234 decrease in other expense – net, the $2,084 increase in provision for income taxes and the $1,443,850 increase in gross profit.

 

Liquidity and Capital Resources

 

At December 31, 2019, the Company had cash and cash equivalents of $46,540 and a working capital of $2,881,147. Cash and cash equivalents decreased $761,207 from $807,747 at December 31, 2018 to $46,540 at December 31, 2019. For the year ended December 31, 2019, $3,312,495 was provided by financing activities, $2,413,420 was used in operating activities, and $1,660,282 was used in investing activities.

 

25

 

 

The Company currently has no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.

 

We currently have no commitments with any person for any capital expenditures.

 

We have no off-balance sheet arrangements.

 

Trend Information

 

The COVID-19 outbreak has affected the Company’s operations as set forth below. The full impact of the COVID-19 outbreak continues to evolve as of the date of this Offering Circular. As such, it is uncertain as to the full magnitude that the pandemic will have on our financial condition, liquidity, and future results of operations. Management is actively monitoring the impact of the global situation on our financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, we are not able to estimate the effects of the COVID-19 outbreak on our results of operations, financial condition, or liquidity for the foreseeable future.

 

The Company presently has three operating divisions under its health and wellness umbrella.

 

1- Duramed Inc. is the Company’s durable medical device company focused on a doctor/patient device rental model that is insurance reimbursable via no-fault insurers. The device is a doctor prescribed, FDA approved portable ultrasound device that relieves pain and swelling and aids in post-surgical healing. The Company intends to expand this current business model into Medicare and Workman’s Compensation arenas. Additionally, the Company is looking to expand its product offerings for the medical community with braces and other post-surgical medical devices. The majority of the current inventory of devices is deployed at medical offices primarily in the Tri-State area of New York. Due to the recent COVID-19 outbreak, elective surgeries are not being performed in New York and this has caused a decrease in our medical device rentals. Nonetheless, once doctors are allowed to resume their surgeries and medical practices, the device rental business is expected to recover quickly. Duramed, now in its second year of operation, has honed its local sales and patient model and is primed for a regional rollout with an expanded tech-sales and support staff.

 

2- Pure Health Products, in operation since 2017, was acquired by the Company in December 2018. This research and development (“R&D”) laboratory and production facility is a fully functional developer and manufacturer of a line of products containing CBD. The facility is built in a “clean-room” sanitary environment for all storage, R&D and production and is current Good Manufacturing Practices (GMP) compliant. PHP regularly sources its raw materials, and uses its own isolate extracted from its own hemp biomass, in the production of its CBD products. In March 2020, the Company purchased 100% of Green Grow Farms, Inc., which has a New York hemp cultivation license and currently grows its own hemp, making PHP’s operations fully vertically integrated. PHP has a complete line of CBD tinctures, salves, topicals and related products produced under various specialty branded lines including Seven Chakras (the Spa Line), Nu Wellness (the Pharmacy line), Canbiola (the medical office line), Pure Leaf Oil (the retail line), as well as various custom manufacturing products for private label customers. While PHP has sufficient raw materials in house for several months of production, the COVID-19 outbreak has caused a reduction in sales and caused the manufacturing plant to ship orders but pause production.

 

3- The third division is Lifestyle Brands, which includes specialty product distribution, license of lifestyle brands, and development of new innovative CBD and non-CBD opportunities. The recently announced product offerings include CanB Superfoods, one of the Company’s non-CBD wellness products. CanB Superfoods is a powdered protein mix packed with a high volume of whole, raw superfoods, a smooth chocolate flavor derived from organic raw cacao that can be used as a meal-replacement or snack. The protein mix is non-GMO, vegan, gluten-free and contains goji berry, raw cacao, maca, hemp protein, lecithin, chia seed, flaxseed, green tea, yerba mate, pea protein, banana & vegan probiotics. Additionally, the Company has signed an exclusive license agreement with Lifeguard Licensing Corp. for the well-known Lifeguard ™ Brand name and logo for development and sale of both a CBD and non-CBD line of products. The wellness products will include lip care products such as balms, moisturizers, cold-sore, and topical pain relief products such as salves, sprays, and gels for sunburn relief, rashes, abrasions, and similar products. Consumable products may include energy shots, gummy bears and candy, and beverages such as fruit-based drinks, protein type drinks, carbonated type drinks, and similar. Furthermore, the Company is pursuing new line of Women’s Shave Club products as well as additional branded license opportunities. Development of our Lifestyle Brands has been slowed by the COVID-19 outbreak due to factors such as staff working from home. The Company also believes the peak sale season of its Lifeguard branded products has passed since the Lifeguard line focuses primarily on sun protective products such as sunscreen and lip balms with SPF and the United States is expected to be coping with the COVID-19 outbreak into the summer. Nonetheless, the Company’s management is utilizing the time to better prepare for our selling strategy and coordinating with our manufacturing facilities to give them ample time for production and distribution for a future rollout.

 

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DIRECTORS, EXECUTIVE OFFICERS, AND SIGNIFICANT EMPLOYEES

 

Our board of directors is elected annually by our shareholders. The board of directors elects our executive officers annually. Our directors and executive officers as of May 31, 2020 are as follows:

 

Name   Position   Age   Term of Office
Marco Alfonsi   CEO, Director, Chairman   58   May 14, 2015 – Present
Stanley L. Teeple   CFO, Secretary, Director   72   October 21, 2018 – Present
Andrew Holtmeyer   VP of Business Development   59   February 14, 2018 – Present
Philip Scala   Interim COO   68   October 10, 2019 - Present
Frederick Alger Boyer Jr.   Independent Director   50   October 10, 2019 - Present
Ronald A. Silver   Independent Director   84   October 10, 2019 - Present
James F. Murphy   Independent Director   72   October 10, 2019 - Present
Pasquale Ferro   President of PHP   57   December 31, 2018 - Present
David Posel   COO of PHP   41   February 12, 2018 - Present

 

Marco Alfonsi, CEO and Chairman of the Board of Directors, has been a financial service professional for the past 20 years. Mr. Alfonsi was appointed director and CEO of the Company in or around January 2015. Immediately prior to that, he spent eight years serving as the CEO of Prosperity Systems, Inc.

 

Throughout his career, Mr. Alfonsi was directly and indirectly involved in raising over $100 million dollars for small and medium sized business. Prior to his involvement in the financial services industry, Mr. Alfonsi has owned, operated, financed and sold several businesses. Mr. Alfonsi successfully started and managed two companies (ExecuteDirect.com, and Bakers Express of New York, Inc.), and held senior management positions with a number of financial institutions, including: Global American Investments, Clark Street Capital and Basic Investors.

 

Stanley L. Teeple, CFO, Secretary, and Director, was engaged from 2017-2018 with Solis Tek, Inc. (OTCQB:SLTK) a California based publicly traded corporation as Senior Vice President, Corporate Secretary , and Chief Compliance Officer. Solis Tek, Inc. a NV Corporation, is a developer of lighting and nutrient products, and most recently in cultivation and processing for the cannabis industry. Previously, from 2015-2016 Mr. Teeple was Chief Financial Officer and Secretary for Zonzia Media, Inc. (OTC:ZONX), a provider of streaming video and content to cable subscribers and hotel networks throughout the eastern US. From 2008 to 2014 Mr. Teeple was Chief Financial Officer and Secretary of Indigo-Energy, Inc. (OTC:IDGG) a publicly traded company in the oil and gas exploration business. Over the prior three plus decades Mr. Teeple through his turnaround consulting business, Stan Teeple, Inc., has held numerous senior management positions in several public and private companies across a broad spectrum of industries. Additionally, he has operated and worked for various court appointed trustees and principals as CEO, COO, and CFO in the entertainment, pharmaceuticals, food, travel, and tech industries. He operated his consulting business on a project-to-project basis and holds various other directorships. His businesses operational strengths include knowing how to manage and maximize the resources and preserve the integrity of a company from start-up through to maturity and corporate compliance in a regulatory environment.

 

27

 

 

Phil Scala, Interim Chief Operating Officer, has a 40 year career offering unique expertise in delivering the information needed to make informed decisions, whether in times of crisis or in the course of simply running our business, which is highlighted by his 29 years of service with the FBI. Throughout his 29-year career with the FBI, he worked, supervised and lead investigations on nearly every type of federal crime, including securities fraud, white collar crime, money laundering, tax violations, narcotics, racketeering, homicide, violent crime, kidnappings, and public corruptions. Mr. Scala has been the recipient of numerous commendations and awards for outstanding service, notably the FBI Shield of Bravery, as a group commendation, as the SWAT team leader of the Al-Qaeda Bomb Factory Raid, on June 3, 1993.


Mr. Scala was assigned to the Criminal Division of the New York Office. He served in numerous assignments within the Organized crime branch and was sent to the Defense language Institute in Monterey, California to gain proficiency in the Italian/ Sicilian languages. From 2003-2008, Mr. Scala, developed and implemented the NY Office’s Leadership Development Program, which assisted relief supervisors develop excellence in leadership through mentoring, journalizing, “Best Practice” experiences, and accountability tools. The program was designed to be continuous, progressive, and measurable in assisting the FBI leaders maximize their leadership potential throughout their careers.

 

Mr. Scala received his Bachelor’s degree and Master of Business Administration in accounting from St. John’s University, he also earned a Master of Arts degree in Psychology from New York University.

 

Pasquale Ferro (“Pat” to his friends and co-workers), President of Pure health Products LLC, built Pure Health Products from the ground up inside a vacant warehouse including all mechanical, electrical, environmental, regulatory, and lab-quality specifications. Right out of school Pat began a career in real estate development both on the retail and commercial side of the business. Pat formed a company that would take new or distressed buildings (or anything in-between) and rehab and repair the facilities so they were commercially viable and move-in ready. During the course of this career Pat was often in charge of multiple work crews, union and non-union, for work in demolition, construction, plumbing, electrical, grounds crew and other professionally skilled tradesmen required to complete a building project.

 

Pat had his first foray into the manufacturing process in 2015 when he started Pure Health Products, LLC, which he developed into a regional research laboratory, new product development resource, and full-on production facility capable of producing capsules, tinctures, drops, salves, tablets and other products for the supplement and custom label community. Later in 2015, Pat connected with Marco Alfonsi, CEO of the Company, and became the production facility for all of the Company’s CBD based products. In late 2018, Pat sold Pure Health Products to the Company and became the President of that wholly-owned facility which he operates and manages today under a long term employment services agreement.

 

Andrew Holtmeyer, Vice President of Business Development, started his business career in the financial services sector. During his 20 year career on Wall Street, Mr. Holtmeyer worked at and built several investment firms that employed hundreds of salesmen. During the last 5 years of his career, he concentrated mostly on investment banking. After leaving the financial sector, Mr. Holtmeyer started a highly successful consulting firm, which concentrated on raising capital for small to mid-sized companies that were both private and public. After selling his consulting business, Mr. Holtmeyer started a very successful real estate business which is now run by his family.

 

David Posel, COO of Pure Health Products, LLC, served as the Company’s COO during 2018, when the Company’s operations were limited to its contractual arrangement with Pure Health Products. After acquiring PHP directly, Mr. Posel was transitioned to COO of PHP.

 

Frederick Alger Boyer, Jr., Independent Director, is President & CEO of Advance Care Medical, Inc. Mr. Boyer has over 25 years of Wall Street experience having worked on both the investment side as well as the banking side of the business. Most recently he served as Head of Equities for the New York based investment bank H.C. Wainwright & Co. where he had overseen efforts in capital markets, sales, and trading. Prior to that he worked and or supervised teams at Rodman & Renshaw, Oppenheimer, Piper Jaffray, and Credit Suisse in New York, San Francisco, and Minneapolis. In his various roles he has advised hundreds of companies in their financing efforts both publicly and privately. Mr. Boyer has numerous securities licenses and is a graduate of the University of California at Berkeley.

 

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Ronald A. Silver, Independent Director, was first elected to the Florida House of Representatives In 1978 and continued his tenure in that body until 1992. While in the Florida House, Silver served in major positions including Majority Whip (1984-1986) and Majority Leader (1986-1988). He also chaired various committees including the Select Committee on Juvenile Justice, Criminal Justice, Ethics and Elections and the subcommittee of Appropriations on General Government. He was then elected to the Florida Senate in 1992 and subsequently re-elected, serving as the Majority (Democratic) leader for the 1994 session. During his last term in the Senate he was designated by both the House and Senate as the Dean of the Legislature recognizing his standing as the longest serving member. His career as a lawmaker has yielded a vast and extensive knowledge of public policy issues and the legislative process, allowing him to be an advocate and servant for his diverse community. Throughout his tenure in the House and Senate, Mr. Silver has been known to tackle tough issues, transcend partisanship and build strong coalitions and in addition served on the Judiciary committee, which heard all condominium issues. As Senator, he served on a variety of committees, and was chairman of both the Appropriations Subcommittee on Health and Human Services and Criminal Justice. His career in the Senate has earned praise from his colleagues, in both the legislature and other branches of government throughout the nation. In 1993 Mr. Silver was elected Chairman of the Southern Legislative Conference (17 Southern States) of the Council of State Governments. Most recently, a new prescription drug plan of Medicare-eligible senior citizens in the State of Florida has been named “Silver Saver” in his honor. Since his retirement from the Senate in 2002, Mr. Silver also functions as President of his own consulting firm (Ron Silver & Associates) and maintains his law practice in Miami Beach, Florida. Mr. Silver is married with two children and three grandchildren.

 

James F. Murphy, Independent Director, brings more than 40 years of investigative and consulting experience as the Founder and President of Sutton Associates. From 1980 to 1984, Mr. Murphy was an Assistant Special Agent in Charge with the Federal Bureau of Investigation, responsible for a territory encompassing more than seven million people. His investigative specialties included organized crime, white-collar crime, labor racketeering and political corruption. From 1976 to 1980, Mr. Murphy was assigned to the Office of Planning and Evaluation at FBI headquarters, Washington, D.C. In this capacity, he evaluated and recommended changes in the FBI’s administrative and investigative programs. Since entering the private sector in 1984, Mr. Murphy has advanced the industry by developing systematic and professional protocols for performing due diligence, as well as other investigative services.

 

Board Committees

 

We have not yet established an audit committee, compensation committee, or nominating committee. During 2019, the functions ordinarily handled by these committees were handled by our entire Board of Directors.

 

Family Relationships

 

There are no familial relationships between any of our officers and directors.

 

Director or Officer Involvement in Certain Legal Proceedings

 

Our current directors and executive officers have not at any time in the past five (5) years been convicted in a criminal proceeding (excluding traffic violations and other minor offenses) and no petition under the federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of any such officers or directors, or any partnership in which they were a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing.

 

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

 

The table below summarizes all compensation awarded to, earned by, or paid to our executive officers and directors for all services rendered in all capacities to us during the previous two fiscal years, as of December 31, 2019.

 

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Executive Summary Compensation Table  
Name and principal
position
  Year   Salary     Bonus     Stock
awards
    Option
awards
    Non-
equity
incentive
plan
comp.
    Non-
qualified
deferred
comp.
earnings
    All
other
comp.
    Total  
Marco Alfonsi(1)   2018   $ 104,500     $ 0     $ 0     $ 0     $          0     $ 0     $ 0     $ 104,500  
    2019   $ 180,000     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 180,000  
Stanley L. Teeple(2)   2018   $ 45,000     $ 0     $ 144,500     $ 118,200     $ 0     $ 0     $ 0     $ 307,700  
    2019   $ 180,000     $ 0     $ 372,667     $ 0     $ 0     $ 0     $ 0     $ 552,667  
Andrew Holtmeyer(3)   2018   $ 118,400     $ 0     $ 1,169,658     $ 0     $ 0     $ 0     $ 0     $ 1,288,058  
    2019   $ 180,000     $ 0     $ 105,485     $ 0     $ 0     $ 0     $ 0     $ 285,485  
David Posel (4)   2018   $ 60,000     $ 0     $ 58,720     $ 0     $ 0     $ 0     $ 0     $ 118,720  
    2019   $ 60,000     $ 0     $ 64,355     $ 0     $ 0     $ 0     $ 0     $ 124,355  
Pasquale Ferro (5)   2019   $ 180,000     $ 0     $ 527,425     $ 0     $ 0     $ 0     $ 0     $ 707,425  
Johnny Mack PhD (6)   2019   $ 31,154     $ 0     $ 89,513     $ 192,000     $ 0     $ 0     $ 0     $ 312,667  
Phil Scala (7)   2019   $ 7,500     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 7,500  

 

(1) Pursuant to an employment agreement entered on or around May 14, 2015, Marco Alfonsi was entitled to receive compensation of $6,000 per month through September 31, 2017 when the contract expired. On or around October 3, 2017, the Company entered into a new employment agreement with Mr. Alfonsi whereby he was entitled to receive $10,000 per month for a period of three years. Mr. Alfonsi also received one share of Series A Preferred Stock upon his execution of the new agreement. In addition, on or around October 4, 2017, the Company authorized the issuance of an additional two shares of Series A Preferred Stock to Mr. Alfonsi in consideration for cancellation of approximately $120,000 of deferred income owed to Mr. Alfonsi. The Company entered into a new employment agreement dated October 21, 2018 Mr. Alfonsi, pursuant to which Mr. Alfonsi agreed to continue to serve as the Company’s Chief Executive Officer (“CEO”) and accept appointment as Chairman of the Board of Directors (“Chairman”) for an initial term of four (4) years. He is entitled to receive $15,000 per month and other compensation under the new agreement.

 

(2) Pursuant to an employment agreement entered on or around October 15, 2018, Mr. Teeple serves as the Company’s Chief Financial Officer and Secretary for a term of 4 years. The agreement also provides for compensation to Mr. Teeple of $15,000 cash per month and the issuance of 1 share of Series A Preferred Stock upon execution of the agreement. The fair value of the Series A preferred share is $578,000 and has a vesting period of four years. An additional share of Series A Preferred Stock was issued in April 2019 per the agreement. The fair value of the Series A Preferred share issued in April 2019 is $992,250 and has a vesting period of three years. In 2019 and 2018, the amortized portion of Series A preferred shares is $372,667 and $144,500, respectively.

 

(3) On February 16, 2018, the Company executed an Executive Service Agreement (“Holtmeyer Agreement”) with Andrew W Holtmeyer. The Holtmeyer Agreement provides that Mr. Holtmeyer serves as the Company’s Executive Vice President Business for a term of 3 years. The Holtmeyer Agreement also provides for compensation to Mr. Holtmeyer of $10,000 cash per month and the issuance of 3, 2 and 1 share of Series A Preferred Stock at the beginning of each year. On December 29, 2018, this Holtmeyer Agreement was terminated due to the execution of a new Holtmeyer Employment Agreement with Andrew W Holtmeyer. The Holtmeyer Employment Agreement provides that Mr. Holtmeyer serves as the Company’s Executive Vice President Business for a term of 4 years. The Holtmeyer Employment Agreement also provides for compensation to Mr. Holtmeyer of $15,000 cash per month and the issuance of 245,789 shares of common stock upon signing of the agreement. In 2018, the Company issued 5 shares of Series A preferred shares valued at $3,910,000. In 2019 and 2018, the amortized portion of Series A preferred shares is $105,485 and $1,169,658, respectively.

 

(4) On February 12, 2018, the Company executed an Executive Service Agreement (“Posel Agreement”) with David Posel. The Posel Agreement provides that Mr. Posel serves as the Company’s Chief Operating Officer for a term of 4 years. The Posel Agreement also provides for compensation to Mr. Posel of $5,000 cash per month and the issuance of 1 share of Series A Preferred Stock at the inception of the Posel Agreement. In the fourth quarter of 2018, the Posel Agreement was terminated due to the execution of a new Employment Agreement between Pure Health Products, LLC and David Posel, pursuant to which Mr. Posel agreed to serve as PHP’s Chief Operating Officer. The fair value of the Series A preferred Stock is $373,000 and has a vesting period of four years. In 2019 and 2018, the amortized portion of Series A preferred Stock related to Mr. Posel’s service as an executive is $64,355 and $58,720, respectively.

 

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(5) On December 28, 2018, the Company executed an Executive Service Agreement (“Ferro Agreement”) with Pasquale Ferro. The Ferro Agreement provides that Mr. Ferro serves as the President of Pure Health Products, LLC for a term of 4 years. The Ferro Agreement also provides for compensation to Mr. Ferro of $15,000 cash per month and the issuance of 5 shares of Series A Preferred Stock upon execution of the Ferro Agreement. The fair value of the Series A preferred shares is $2,109,700 and has a vesting period of four years. In 2019, the amortized portion of Series A preferred stock is $527,425.

 

(6) On July 10, 2019, the Company executed an Executive Service Agreement (“Mack Agreement”) with Johnny J. Mack. The Mack Agreement provides that Mr. Mack serves as the Chief Operating Officer for a term of 90 days. The Mack Agreement also provided for compensation to Mr. Mack of $7,500 cash per month and the issuance of 4,000,000 shares of common stock within 30 days of execution of the Mack Agreement. The fair value of the common shares is $89,513. On September 10, 2019, the Company executed a Mack Executive Service Agreement (“Second Agreement”) with Mr. Mack. The Second Agreement provides that Mr. Mack serves as the Chief Operating Officer for a term of 1 year. The Second Agreement also provides for compensation to Mr. Mack of $15,000 per month and the option to receive a total of 32,000,000 options (“Options”) to purchase shares of the Company’s common stock, with 8,000,000 Options vesting on the effective date and additional tranches of 8,000,000 Options vesting on each of the first, second, and third anniversaries of the Effective Date. On October 4, 2019, Mr. Mack resigned and is no longer with the Company.

 

(7) On October 11, 2019, the Company executed an Executive Service Agreement (“Scala Agreement”) with Phil Scala. The Scala Agreement provides that Mr. Scala serves as the Interim Chief Operating Officer for a term of 90 days. The Scala Agreement also provides for compensation to Mr. Scala of $2,500 cash per month. The Scala Agreement renews for additional 90-day periods unless terminated by either party. The Scala Agreement otherwise contains standard covenants and conditions.

 

We do not have an equity incentive plan and no named executive officer has unexercised outstanding equity awards.

 

No director has received cash compensation for their directorship. During the fiscal year 2019, the five (5) members of our Board of Directors received, as a group, options to purchase an aggregate of 30,000 post-split common shares of the Company. It should be noted that Messrs. Alfonsi and Teeple are directors of the Company and received additional compensation for services rendered as executive officers. We do not have a compensation committee and compensation for our directors and officers is determined by our Board of Directors.

 

We reimburse non-employee directors for actual out-of-pocket costs incurred to attend board meetings. No additional compensation is paid for attendance in person or by telephone at board meetings.

 

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS

 

The following table sets forth the ownership, as of May 31, 2020, of our common stock by each person known by us to be the beneficial owner of more than 10% of our outstanding voting stock, our directors, and our executive officers and directors as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in control.

 

There were 3,189,285 shares of common stock outstanding as of May 31, 2020, and 20 shares of Series A preferred stock issued and outstanding, which in aggregate represent 1,333,340 votes and are convertible into approximately 666,680 shares of common stock at any time. As of May 31, 2020, the Company had no shares of Series B Preferred Stock issued or outstanding. There was a total of approximately 4,522,625 votes eligible to be cast in any Company vote as of May 31, 2020.

 

The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities.

 

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Except as otherwise indicated and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown. Unless stated otherwise, the business address for these shareholders is 960 South Broadway, Suite 120, Hicksville, NY 11801.

 

Name   Title   Number
of
Common
Shares
    % of
Common
Shares
    Number
of Series
A
Preferred
Shares
    % of
Series A
Preferred
Shares
    % of
Eligible
Votes
    Number of
Warrants
currently
exercisable
or
exercisable
in the next
60 days
 
Marco Alfonsi [1]   CEO, Director     197,998       6.21 %     5       25 %     11.75 %                0  
Stanley L. Teeple [2]   CFO, Director     13,861       0.43 %     4       20 %     6.20 %     0  
Andrew Holtmeyer [3]   VP of Business Development     3,695       0.12 %     5       25 %     7.45 %     0  
David Posel [4]   COO of Pure Health Products     0       0 %     1       5 %     1.47 %     0  
Pasquale Ferro [5]   President of Pure Health Products     74,599       2.34 %     5       25 %     9.02 %     0  
Phil Scala [6]   Interim COO     4,484       0.14 %     0       0 %     0.10 %     0  
Frederick Alger Boyer Jr. [7]   Independent Director     10,000       0.31 %     0       0.00 %     0.22 %     0  
Senator Ron Silver [8]   Independent Director     16,668       0.52 %     0       0.00 %     0.37 %     0  
James F. Murphy [9]   Independent Director     10,000       0.31 %     0       0.00 %     0.22 %     0  
All officers and directors as a group [9 persons]         331,305       10.49 %     20       100 %     36.81 %     0  

 

  (1) Marco, Alfonsi owns approximately 197,998 shares of common stock and 5 shares of Series A preferred stock, which are convertible into 166,670 shares and equal 333,335 votes. Prior to October 29, 2015, Mr. Alfonsi owned 270,000 shares of the Company’s common stock, at which time it was agreed that he would retire 50,000,000 pre-split of common stock for 5 shares of Series A Preferred Stock. In addition to the listed shares, five adult members of Mr. Alfonsi’s family hold an aggregate of 42,343 shares of common stock, which shares have not been included in the above calculations.
     
  (2) Stanley L. Teeple owns approximately 3,861 shares of common stock, options to purchase an additional 10,000 common shares, and 4 shares of Series A preferred stock, which are convertible into 133,336 shares and equal 266,668 votes.
     
  (3) Andrew Holtmeyer owns approximately 3,695 shares of common stock and 5 shares of Series A preferred stock, which are convertible into 166,670 shares and equal 333,335 votes.
     
  (4) David Posel owns 0 shares of common stock and 1 shares of Series A preferred stock, which is convertible into 33,334 shares and equals 66,667 votes.
     
  (5) Pasquale Ferro owns 69,119 common shares jointly with his wife and 5,483 common shares individually. Mr. Ferro holds 5 shares of Series A Preferred stock individually, which are convertible into 166,670 common shares and equal 333,335 votes. Mr. Ferro is the President of Pure Health Products, LLC, a wholly owned subsidiary of the Company. In addition to the listed shares, a member of Mr. Ferro’s family holds 8,335 shares of common stock, which shares have not been included in the above calculations

 

32

 

 

  (6) Phil Scala owns approximately 2,817 shares of common stock and options to purchase 1,667 common shares.
     
  (7) Frederick Alger Boyer Jr. holds options to purchase 10,000 common shares of the Company.
     
  (8) Ron Silver holds options to purchase 10,000 common shares of the Company and 6,668 shares of common stock.
     
  (9) James F. Murphy holds options to purchase 10,000 common shares of the Company.

 

The above table is based upon information derived from our stock records. Except as otherwise indicated herein and under applicable community property laws, we believe that the beneficial owners of our common stock listed above have sole voting and investment power with respect to the shares shown.

 

INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

 

Except as described herein (or within the section entitled Executive Compensation of this prospectus), none of the following parties (each a “Related Party”) has, in our fiscal years ended 2017 and 2018, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:

 

any of our directors or officers;
any nominee for election as a director;
any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our outstanding shares of common stock; or
any member of the immediate family (including spouse, parents, children, siblings and in- laws) of any of the above persons.

 

LI Accounting Associates, LLC (“LIA”), an entity controlled by a relative of the Managing Member of PHP, is a vendor of CANB. At December 31, 2019, CANB did not have an account payable due to LIA. For the twelve months ended December 31, 2019, CANB had expenses to LIA of $10,750.

 

Pasquale Ferro, President of Pure Health Products LLC, manages the R&D and manufacturing of the Company products sold via other subsidiary companies. Mr. Ferro is also a substantial shareholder of the Company but receives no direct compensation from us other than outlined in his employment agreement.

 

During the twelve months ended December 31, 2019, we had products and service sales to related parties totaling $0.

 

SECURITIES BEING OFFERED

 

The following description is a summary of the material rights of shareholders. Shareholder rights are dictated via the Company’s Articles of Incorporation and Bylaws. Each of the foregoing documents has been filed as an exhibit to this prospectus.

 

Common Stock

 

We are authorized to issue 1,500,000,000 shares of common stock, Nil par value per share. As of May 31, 2020, there were approximately 3,189,285 shares of common stock issued and outstanding, held by approximately 196 shareholders of record.

 

Each share of common stock entitles the holder to one vote, either in person or by proxy, at meetings of shareholders. The holders are not permitted to vote their shares cumulatively. Accordingly, the shareholders of our common stock who hold, in the aggregate, more than fifty percent (50%) of the total voting rights can elect all of our directors and, in such event, the holders of the remaining minority shares will not be able to elect any of such directors. Shareholders may take action by written consent.

 

33

 

 

Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of funds legally available. We have not paid any dividends to common shareholders since our inception, and we presently anticipate that all earnings, if any, will be retained for development of our business. Any future disposition of dividends will be at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, operating and financial condition, capital requirements, and other factors.

 

Holders of our common stock have no pre-emptive rights or other subscription rights, conversion rights, redemption or sinking fund provisions. Upon our liquidation, dissolution or winding up, the holders of our common stock will be entitled to share ratably in the net assets legally available for distribution to shareholders after the payment of all of our debts and other liabilities. There are not any provisions in our Articles of Incorporation or our Bylaws that would prevent or delay change in our control.

 

Preferred Stock

 

We are authorized to issue 5,000,000 shares of preferred stock, including 20 shares of Series A Preferred Stock and 500,000 shares of Series B Preferred Stock. As of May 31, 2020, there were 20 shares of Series A Preferred Stock and no shares of Series B Preferred Stock issued and outstanding.

 

Each share of Series A Preferred Stock is entitled to 66,667 votes and may be converted into 33,334 shares of common stock. Series B Preferred Stock ranks senior to all other stock of the Company. Series B holders are entitled to quarterly dividends in cash or shares of common stock. Series B stock is convertible into shares of common stock and the certificate of designation for the Series B Preferred Stock contains anti-dilution and penalty provisions relating to the conversion into common stock. For a complete description of the rights and privileges of Series B Preferred Stock, refer to the certificate of designation included herewith in Exhibit 3.1, which investors should carefully review.

 

34

 

 

FINANCIAL STATEMENTS

 

CAN B̅ CORP. AND SUBSIDIARY

 

Index to Financial Statements

 

Years Ended December 31, 2019 and 2018   Pages
     
Financial Statements    
     
Report of Independent Registered Public Accounting Firm   F-2
     
Consolidated Balance Sheets   F-3
     
Consolidated Statements of Operations and Comprehensive Loss   F-4
     
Consolidated Statements of Stockholders’ Equity   F-5
     
Consolidated Statements of Cash Flows   F-6
     
Notes to Consolidated Financial Statements   F-7

 

F-1

 

 

 

F-2

 

 

Can B̅ Corp. and Subsidiary

Consolidated Balance Sheets

 

    Year Ended December 31,  
    2019     2018  
Assets                
Current assets:                
Cash and cash equivalents   $ 46,540     $ 807,747  
Accounts receivable, less allowance for doubtful
accounts of $0 and $0, respectively
    1,251,609       39,172  
Inventory     784,497       87,104  
Note Receivable     24,268       -  
Prepaid expenses - current     1,279,901       210,351  
Total current assets     3,386,815       1,144,374  
                 
Property and equipment, at cost less accumulated depreciation of $116,555 and $20,248, respectively     1,075,242       59,619  
                 
Other assets:                
Deposit - noncurrent     21,287       48,726  
Prepaid expenses - noncurrent     1,179,929       2,365,719  
Note receivable - noncurrent     -       19,389  
Other receivable – noncurrent     58,206       -  
Intangible assets, net of accumulated amortization of $202,521 and $0, respectively     1,056,562       -  
Goodwill     55,849       55,849  
Right-of-Use Asset, net of amortization of $6,280 and $0, respectively     96,980       -  
Total other assets     2,468,813       2,489,683  
                 
Total assets   $ 6,930,870     $ 3,693,675  
                 
Liabilities and Stockholders’ Deficiency                
Current liabilities:                
Accounts payable   $ 226,467     $ 73,059  
Accrued officers’ compensation     144,363       68,750  
Other accrued expenses payable     61,557       43,778  
Notes and loans payable     35,000       19,205  
Current portion of lease liability     38,281       -  
Total current liabilities     505,668       204,792  
                 
Non-current portion of lease liability     58,998       -  
                 
Total liabilities     564,666       204,792  
                 
Commitments and contingencies (Notes 14)                
                 
Stockholders’ equity:                
Preferred stock, authorized 5,000,000 shares:                
Series A Preferred stock, no par value: authorized 20 shares, issued and outstanding 20 and 18 shares, respectively     5,539,174       4,557,424  
Series B Preferred stock, $0.001 par value: authorized 500,000 shares, issued and outstanding 0 and 499,958 shares, respectively     -       479  
Common stock, no par value; authorized 1,500,000,000 shares, issued and outstanding 804,281,149 and 440,566,325 shares, respectively     23,113,077       16,624,557  
Additional Paid-in capital     872,976       872,976  
Additional Paid-in capital – Stock Options (Note 11)     202,200       202,200  
Accumulated deficit     (23,361,223 )     (18,768,753 )
Total stockholders’ equity     6,366,204       3,488,883  
                 
Total liabilities and stockholders’ equity   $ 6,930,870     $ 3,693,675  

 

See notes to consolidated financial statements.

 

F-3

 

 

Can B̅ Corp. and Subsidiary

Consolidated Statements of Operations and Comprehensive Loss

Years Ended December 31, 2019 and 2018

 

    2019     2018  
Revenues                
Product Sales   $ 2,304,303     $ 651,978  
Service Revenue     1,200       16,625  
Total Revenues     2,305,503       668,603  
Cost of product sales     598,584       405,534  
Gross Profit     1,706,919       263,069  
                 
Operating costs and expenses:                
                 
Officers and director’s compensation (including stock-based Compensation of $1,210,915 and $1,255,193, respectively     2,263,566       1,478,987  
Consulting fees (including stock-based compensation of 1,858,837 and 1,524,107, respectively)     2,082,184       1,669,443  
Advertising expense     333,441       84,316  
Hosting expense     13,034       14,697  
Rent expense     246,968       67,165  
Professional fees     287,441       117,718  
Depreciation of property and equipment     12,627       5,473  
Amortization of intangible assets     142,093       -  
Reimbursed Expenses     242,585       -  
Other     667,097       241,044  
                 
Total operating expenses     6,291,036       3,678,843  
                 
Loss from operations     (4,584,117 )     (3,415,774 )
                 
Other income (expense):                
Loss on forgiveness of receivable from Pure Health Products     -       (85,827 )
Loss of debt conversions     -       (1,299,369  
Loss on stock issuance     -       (649,259 )
Interest income     2,524       10,325  
Income from derivative liability     -       1,591,137  
Interest expense (including amortization of debt discounts of $0 and 176,497, respectively     (8,793 )     (263,510 )
                 
Other income (expense) - net     (6,269 )     (696,503 )
                 
Loss before provision for income taxes     (4,590,386 )     (4,112,277 )
                 
Provision for income taxes     2,084       -  
                 
Loss and comprehensive loss     (4,592,470 )     (4,112,277 )
                 
Net loss per common share - basic and diluted     (.01 )     (.01 )
                 
Weighted average common shares outstanding –                
Basic     617,557,484       276,026,704  
Diluted     806,215,018       423,881,781  

 

See notes to consolidated financial statements.

 

F-4

 

 

Can B̅ Corp. and Subsidiary

Consolidated Statements of Stockholders’ Deficiency

Years Ended December 31, 2018 and 2019

 

    Preferred Stock A     Preferred Stock B     Common Stock     Additional              
    , no par value     , $0.001 par value     , no par value     Paid-in     Accumulated        
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     Total  
                                                       
Balance, December 31, 2017     8     $ 243,537       157,985     $ 150       225,572,323     $ 12,524,042     $ 149,850     $ (14,647,476 )   ($ 1,729,897 )
                                                                         
Issuance of Series A Preferred Stock in 2018 pursuant to employment and consulting agreement     13       4,441,690                                                       4,441,690  
                                                                         
Sale of Series B Preferred Stock in 2018                     761,972       749                       723,126               723,875  
                                                                         
Issuance of common stock in 2018 for services rendered                                     19,345,789       656,306                       656,306  
                                                                         
Issuance of common stock in 2018 for Preferred B dividends                                     891,089       38,379               (9,000 )     29,379  
                                                                         
Issuance of common stock in 2018 in Satisfaction of debt and accrued interest                                     45,263,513       1,604,412                ,       1,604,412  
                                                                         
Issuance of common stock in 2018 for Warrant exercise                                     8,500,000       619,880                       619,880  
                                                                         
Issuance of common stock in 2018 in Satisfaction of accrued compensation                                     4,370,629       192,300                       192,300  
                                                                         
Issuance of common stock in 2018 for Acquisition of PureHealth, LLC                                     3,096,827       112,415                       112,415  
                                                                         
Issuance of stock options for retirement Of common shares                                     (3,000,000 )     (101,400 )     84,000               (17,400 )
                                                                         
Issuance of stock options                                                     118,200               118,200  
                                                                         
Sale of common stocks in 2018                                     29,821,201       850,000                       850,000  
                                                                         
Issuance of common stock and retirement of Series A preferred stock In 2018     (3 )     (127,803 )                     30,000,000       127,803                       -  
                                                                         
Issuance of common stock and retirement of Series B preferred stock In 2018                     (419,999 )     (420 )     76,704,954       420                       -  
                                                                         
Net loss                                                             (4,112,277 )     (4,112,277 )
                                                                         
Balance, December 31, 2018     18     $ 4,557,424       499,958     $ 479       440,566,325     $ 16,624,557     $ 1,075,176     $ (18,768,753 )   $ 3,488,883  
                                                                         
Issuance of Series A Preferred Stock in 2019 pursuant to employment agreement     3       992,250                                                       992,250  
                                                                         
Issuance of common stock for retirement                                                                        
                                                                         
of Series A Preferred Stock     (1 )     (10,500 )                     10,000,000       10,500                       -  
                                                                         
Issuance of common stock for retirement of Series B Preferred Stock                     (499,958 )     (479 )     75,039,446       479                       -  
                                                                         
Sale of common stock in 2019                                     113,866,481       3,296,700                       3,296,700  
                                                                         
Issuance of common stock in 2019 for acquisition of technology and licenses                                     20,574,089       648,655                       648,655  
                                                                         
Issuance of common stock in 2019 for acquisition of inventory                                     37,500,000       487,500                       487,500  
                                                                         
Issuance of common stock in 2019 for satisfaction of accrued salaries                                     667,959       54,340                       54,340  
                                                                         
Issuance of common stock in 2019 for services rendered                                     106,066,849       1,990,346                       1,990,346  
                                                                         
Net loss                                                             (4,592,470 )     (4,592,470 )
                                                                         
      20     $ 5,539,174       -     $ -       804,281,149     $ 23,113,077     $ 1,075,176     $ (23,361,223 )   $ 6,366,204  

 

See notes to consolidated financial statements.

 

F-5

 

 

Can B̅ Corp. and Subsidiary

Consolidated Statements of Cash Flows

 

    Year Ended December 31,  
    2019     2018  
Operating Activities:                
Net loss   $ (4,592,470 )   $ (4,112,277 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Stock-based compensation, net of prepaid stock- based consulting fees     3,089,188       2,779,300  
Loss on forgiveness of receivable from PHP     -       85,827  
Loss on stock issuance     -       649,259  
Loss on debt conversion     -       1,299,369  
Debt issuance expense     -       14,000  
Expense from derivative liability     -       (1,591,137  
Depreciation of property and equipment     89,779       5,473  
Amortization of intangible assets     142,093       -  
Amortization of debt discounts     -       176,497  
Bad debt expense     253,483       -  
Changes in operating assets and liabilities:                
Accounts receivable     (1,465,920 )     (33,097 )
Inventory     (209,893 )     2,382  
Prepaid expenses     (4,760 )     -  
Security deposit     27,439       (34,939 )
Other receivable     (58,206 )     -  
Right-of-use asset     299          
Accounts payable     153,408       (115,235 )
Accrued officer’s compensation     144,363       85,900  
Other accrued expenses payable     17,777       35,109  
                 
Net cash used in operating activities     (2,413,420 )     (753,569 )
                 
Investing Activities:                
                 
Cash received from acquisition of PHP     -       404  
Note receivable - current     (4,879 )     -  
Fixed assets additions     (1,105,403 )        
Intangible assets additions     (550,000 )     (46,384 )
                 
Net cash used in investing activities     (1,660,282 )     (45,980 )
                 
Financing Activities:                
Proceeds received from notes and loans payable     35,000       155,000  
Repayments of notes and loans payable     (19,205 )     (123,231 )
Proceeds from sale of common stock     3,296,700       850,000  
Proceeds from sale of Series B preferred stock     -       723,875  
                 
Net cash provided by financing activities     3,312,495       1,605,644  
                 
(Decrease)Increase in cash and cash equivalents     (761,207 )     806,095  
                 
Cash and cash equivalents, beginning of period     807,747       1,652  
                 
Cash and cash equivalents, end of period   $ 46,540     $ 807,747  
                 
SUPPLEMENTAL CASH FLOW INFORMATION:                
Income taxes paid   $ 2,084     $ -  
Interest paid   $ 8,793     $ -  
                 
NON-CASH INVESTING AND FINANCING ACTIVITIES:                
                 
Issuance of common stock in acquisition of inventory   $ 487,500     $ -  
                 
Issuance of common stock in acquisition of intangible assets   $ 648,655     $ -  
                 
Amortization of prepaid issuance of common Stock for services rendered   $ 121,000     $ -  
                 
Issuance of common stock in satisfaction of officer’s compensation   $ 68,750     $ 282,200  
                 
Issuance of common stock in conversion of Series A Preferred Stock   $ 10,500     $ -  
                 
Issuance of common stock in retirement of Series B Preferred Stock   $ 479     $ -  
                 
Issuance of common stock in satisfaction of debt   $ -     $ 262,000  
                 
Issuance of common stock in acquisition of PHP   $ -     $ 178,997  
                 
Cancellation of note receivable and accrued interest in exchange for service   $ -     $ 19,611  
                 
Cancellation of note receivable and accrued interest in acquisition of PHP   $ -     $ 85,827,25  
                 
Issuance of common stock in satisfaction of accrued interest   $ -     $ 43,043  

 

See notes to consolidated financial statements.

 

F-6

 

 

Can B̅ Corp. and Subsidiary

Notes to Consolidated Financial Statements

Year Ended December 31, 2019 and 2018

 

NOTE 1 – Organization and Description of Business

 

Can B̅ Corp. was originally incorporated as WrapMail, Inc. (“WRAP”) in Florida on October 11, 2005. Effective January 5, 2015, WRAP acquired 100% ownership of Prosperity Systems, Inc. (“Prosperity”), a New York corporation incorporated on April 2, 2008. The Company is in the process of dissolving Prosperity. The Company acquired 100% of the membership interests in Pure Health Products, LLC, a New York limited liability company (“PHP” or “Pure Health Products”) effective December 28, 2018. The Company’s durable equipment products, such as sam® units with CBD infused pads, are marketed and sold through its wholly-owned newly formed subsidiaries, Duramed Inc. (incorporated in or around November 2018) and DuramedNJ LLC (incorporated in or around May 2019) (collectively, “Duramed”). Duramed began operating on or about February1, 2019. The Company’s wholly-owned subsidiary, Radical Tactical LLC (“Radical Tactical”), formed May, 2019 provides the marketplace with millennium targeted product lines such as vapes, gums, and kratom. The Company’s hemp aggregation business is run through NY Hemp Depot LLC (the “Hemp Depot”), which was formed in or around July, 2019. The Company’s hemp farming business is run through Green Grow Farms, Inc. (“Green Grow Farms”), which was formed in August, 2019.

 

Effective December 27, 2010, WRAP effected a 10 for 1 forward stock split of its common stock. Effective June 4, 2013, WRAP effected a 1 for 10 reverse stock split of its common stock. The accompanying consolidated financial statements retroactively reflect these stock splits of March 6, 2020 for a 300:1 reverse split.

 

On May 15, 2017, WRAP changed its name to Canbiola, Inc. On March 6, 2020 Canbiola, Inc. changed its name to Can B̅ Corp. (the “Company” or “CANB” or “Can B” or “Registrant”).

 

Can B̅ specializes in the production and sale of a variety of hemp derived Cannabidiol (“CBD”) products such as oils, creams, moisturizers, isolate, gel caps, spa products, and concentrates. Can B̅ is developing its own line of proprietary products as well as seeking synergistic value through acquisitions in the Hemp Industry. Can B̅ aims to be the premier provider of the highest quality hemp CBD products on the market through sourcing the very best raw material and developing a variety of products we believe will improve people’s lives in a variety of areas.

 

The Company also owns document management and email marketing platforms which it is seeking to sell or repurpose.

 

For the periods presented, the assets, liabilities, revenues, and expenses are those of CANB. Prosperity, Radical Tactical, NY Hemp Depot and Green Grow Farms had no activity for the periods presented. Financial information for PHP and Duramed in the periods have been consolidated with the Company’s financials.

 

NOTE 2 – Going Concern Uncertainty

 

The consolidated financial statements have been prepared on a “going concern” basis, which contemplates the realization of assets and liquidation of liabilities in a normal course of business. As of December 31, 2019, the Company had cash and cash equivalents of $46,540 and a working capital of $2,881,147. For the years ended December 31, 2019 and 2018, the Company had net loss of $4,592,470 and $4,112,277, respectively. These factors raise substantial doubt as to the Company’s ability to continue as a going concern. The Company plans to improve its financial condition by raising capital through sales of shares of its common stock. Also, the Company plans to expand its operation of CBD products to increase its profitability. The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

 

  F-7  

 

 

NOTE 3 – Summary of Significant Accounting Policies

 

(a) Principles of Consolidation

 

The consolidated financial statements include the accounts of CANB and its wholly-owned subsidiaries, Pure Health Products, Duramed, Prosperity and Radical Tactical. All intercompany balances and transactions have been eliminated in consolidation.

 

(b) Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

(c) Fair Value of Financial Instruments

 

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, notes receivable, notes and loans payable, accounts payable, and accrued expenses payable. Except for the noncurrent note receivable, the fair value of these financial instruments approximate their carrying amounts reported in the balance sheets due to the short term maturity of these instruments. Based on comparable instruments with similar terms, the fair value of the noncurrent note receivable approximates its carrying value.

 

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

(d) Cash and Cash Equivalents

 

The Company considers all liquid investments purchased with a maturity of three months or less to be cash equivalents.

 

(e) Accounts receivable

 

Accounts receivable are presented in the balance sheet net of the allowance for doubtful accounts. Accounts receivable are written off when they are determined to be uncollectible. The allowance for doubtful accounts is estimated based on the Company’s historical losses, the existing economic conditions in the industry, and the financial stability of its customers. Bad debt expense was $253,483 and $0 for the years ended December 31, 2019 and 2018.

 

  F-8  

 

 

(f) Inventory

 

Inventories consist of raw materials and finished goods and are stated at the lower of cost or net realizable value. Cost is principally determined using the first-in, first-out (FIFO) method.

 

(g) Prepaid expenses

 

Prepaid expenses include stock-based officer, employee and consulting compensation of $2,459,830 and $2,576,070 at December 31, 2019 and 2018, respectively. The Company’s policy is to record stock-based compensation as prepaids and expense over the term of employment and consulting agreements.

 

(h) Property and Equipment, Net

 

Property and equipment, net, is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the respective assets. Maintenance and repairs are charged to operations as incurred.

 

(i) Intangible Assets, Net

 

Intangible assets, net, are stated at cost less accumulated amortization. Amortization is calculated using the straight-line method over the estimated economic lives of the respective assets.

 

(j) Goodwill

 

The Company does not amortize goodwill, but instead tests for impairment at least annually. When conducting the annual impairment test for goodwill, the Company compares the estimated fair value of a reporting unit containing goodwill to its carrying value. If the estimated fair value of the reporting unit is determined to be less than its carrying value, goodwill is reduced, and an impairment loss is recorded.

 

(k) Long-lived Assets

 

The Company reviews long-lived assets held and used, intangible assets with finite useful lives and assets held for sale for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an evaluation of recoverability is required, the estimated undiscounted future cash flows associated with the asset is compared to the asset’s carrying amount to determine if a write-down is required. If the undiscounted cash flows are less than the carrying amount, an impairment loss is recorded to the extent that the carrying amount exceeds the fair value.

 

(l) Revenue Recognition

 

The Company recognizes revenue in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, which requires that five basic steps be followed to recognize revenue: (1) a legally enforceable contract that meets criterial standards as to composition and substance is identified; (2) performance obligations relating to provision of goods or services to the customer are identified; (3) the transaction price, with consideration given to any variable, noncash, or other relevant consideration, is determined; (4) the transaction price is allocated to the performance obligations; and (5) revenue is recognized when control of goods or services is transferred to the customer with consideration given, whether that control happens over time or not. Determination of criteria (3) and (4) are based on our management’s judgments regarding the fixed nature of the selling prices of the products and services delivered and the collectability of those amounts.

 

Private Label Customers, Global CBD, LLC and TZ Wholesale, are wholesale distributors of the Company’s product, under their own wholesale private label brand. The products are made to Company specifications and shipped directly to the wholesaler. The pricing is predicated upon a volume discount negotiated at the time of the placement of the orders. Product is produced and labeled in the Washington manufacturing facility and shipped directly to the Private Label customer who re-distributes to their retail and other customers. The products are fully paid when shipped.

 

  F-9  

 

 

Revenue from product sales is recognized when an order has been obtained, the price is fixed and determinable, the product is shipped, title has transferred, and collectability is reasonably assured.

 

The Company’s Duramed Division provides a sam® Pro 2.0 medical device to patients through a doctor program whereby the physician evaluates the patients’ needs for medical necessity, and if determined that the device use would be beneficial, writes a prescription for the patient who signs a rental form, for a 35 day cycle for the unit, that is submitted to Duramed who bills the appropriate insurance company. The insurance company pays the invoice, or a negotiated amount via arbitration, and that revenue is reported as revenue when invoiced to the insurance carrier. The collected amount is reconciled with the invoice amount on a daily basis.

 

(m) Cost of Product Sales

 

The cost of product sale is the total cost incurred to obtain a sale and the cost of the goods sold, and the Company’s policy is to recognize it in the same manner as, and in conjunction with, revenue recognition. Cost of product sale primarily consisted of the costs directly attributable to revenue recognized and includes expenses related to the production, packaging and labeling of our CBD products.

 

(m) Stock-Based Compensation

 

Stock-based compensation is accounted for at fair value in accordance with Accounting Standards Codification (“ASC”) Topic 718, “Compensation – Stock Compensation” (“ASC718”) and ASC 505-50, “Equity – Based Payments to Non-Employees.” In addition to requiring supplemental disclosures, ASC 718 addresses the accounting for share-based payment transactions in which a company receives goods or services in exchange for (a) equity instruments of the company or (b) liabilities that are based on the fair value of the company’s equity instruments or that may be settled by the issuance of such equity instruments. ASC 718 focuses primarily on accounting for transactions in which a company obtains employee services in share-based payment transactions.

 

In accordance with ASC 505-50, the Company determines the fair value of the stock-based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instrument is reached, or (2) the date at which the counterparty’s performance is complete.

 

Options and warrants

 

The fair value of stock options and warrants is estimated on the measurement date using the Black-Scholes model with the following assumptions, which are determined at the beginning of each year and utilized in all calculations for that year:

 

Risk-Free Interest Rate.

 

We utilized the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected term of our awards.

 

Expected Volatility.

 

We calculate the expected volatility based on a volatility index of peer companies as we did not have sufficient historical market information to estimate the volatility of our own stock.

 

Dividend Yield.

 

We have not declared a dividend on its common stock since its inception and have no intentions of declaring a dividend in the foreseeable future and therefore used a dividend yield of zero.

 

  F-10  

 

 

Expected Term.

 

The expected term of options granted represents the period of time that options are expected to be outstanding. We estimated the expected term of stock options by using the simplified method. For warrants, the expected term represents the actual term of the warrant.

 

Forfeitures.

 

Estimates of option forfeitures are based on our experience. We will adjust our estimate of forfeitures over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of compensation expense to be recognized in future periods.

 

(o) Advertising

 

Advertising costs are expensed as incurred and amounted to $333,441 and $84,316 for the years ended December 31, 2019 and 2018, respectively.

 

(p) Research and Development

 

Research and development costs are expensed as incurred. In the period ended December 31, 2019 and 2018, the Company spent $150,000 and $75,000 in research and development which was expenses as spent, respectively.

 

(q) Income Taxes

 

Income taxes are accounted for under the assets and liability method. Current income taxes are provided in accordance with the laws of the respective taxing authorities. Deferred income taxes are provided for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is not more likely than not that some portion or all of the deferred tax assets will be realized.

 

The Company has adopted the provisions required by the Income Taxes topic of the FASB Accounting Standards Codification. The Codification Topic requires the recognition of potential liabilities as a result of management’s acceptance of potentially uncertain positions for income tax treatment on a “more-likely-than-not” probability of an assessment upon examination by a respective taxing authority. The Company believes that it has not taken any uncertain tax positions and thus has not recorded any liability.

 

(r) Net Income (Loss) per Common Share

 

Basic net income (loss) per common share is computed on the basis of the weighted average number of common shares outstanding during the period.

 

Diluted net income (loss) per common share is computed on the basis of the weighted average number of common shares and dilutive securities (such as stock options and convertible securities) outstanding. Dilutive securities having an anti-dilutive effect on diluted net income (loss) per share are excluded from the calculation. For the periods presented, the diluted net loss per share calculation excluded the effect of Series B preferred stocks and stock options outstanding (see Notes 9, 10 and 11).

 

(s) Recent Accounting Pronouncements

 

In 2016, the FASB issued ASU 2016-2 (Topic 842) which establishes a new lease accounting model for lessees. Under the new guidance, lessees will be required to recognize right of use assets and liabilities for most leases having terms of 12 months or more. Effective January 1, 2019, we adopted this new accounting guidance using the effective date transition method, which permits entities to apply the new lease standards using a modified retrospective transition approach at the date of adoption. As such, historical periods will continue to be measured and presented under the previous guidance while current and future periods subject to this new accounting guidance. Upon adoption we recorded a $100,681 right-of-use asset related to our one operating lease (see Note 14) and a $90,591 lease liability.

 

  F-11  

 

 

(t) Reclassifications

 

Certain amounts in the prior year consolidated financial statements have been reclassified to conform to the current year presentation. These reclassification adjustments had no effect on the Company’s previously reported net income.

 

NOTE 4 – Inventories

 

Inventories consist of:

 

    December 31, 2019     December 31, 2018  
Raw materials   $ 708,239     $ 79,652  
                 
Finished goods     76,258       7,452  
Total   $ 784,497     $ 87,104  

 

NOTE 5 – Notes Receivable

 

Notes receivable consist of:

 

    December 31, 2019     December 31, 2018  
Note receivable dated November 30, 2015 from Stock Market Manager, Inc, interest at 3% per annum due November 30, 2020   $ 19,389     $ 19,389  
                 
Note receivable dated February 8,2019 from an employee, weekly installments of $1,200 with interest at 8% per annum.     4,879       -  
                 
Total     24,268       19,389  
                 
Current portion of notes receivable     (24,268 )     -  
Noncurrent portion of notes receivable   $ -     $ 19,389  

 

  F-12  

 

 

NOTE 6 – Property and Equipment, Net

 

Property and Equipment, net, consist of:

 

   

December 31, 2019

   

December 31, 2018

 
             
Furniture & Fixtures   $ 19,018     $ 19,018  
                 
Office Equipment     12,378       20,992  
                 
Manufacturing Equipment     355,016       46,384  
                 
Medical Equipment     783,782       -  
                 
Leasehold Improvements     21,603       -  
                 
Total     1,191,797       86,394  
                 
Accumulated depreciation     (116,555 )     (26,775 )
                 
Net   $ 1,075,242     $ 59,619  

 

NOTE 7 – Intangible Assets, Net

 

Intangible assets, net, consist of:

 

   

December 31, 2019

   

December 31, 2018

 
             
Video conferencing software acquired by Prosperity in December 2009   $ 30,000     $ 30,000  
                 
Enterprise and audit software acquired by Prosperity in April 2008     20,000       20,000  
                 
Patent costs incurred by WRAP     6,880       6,880  
                 
Hemp license and technology     1,000,000       -  
                 
CBD technology     198,655       -  
                 
Other     3,548       3,548  
                 
Total     1,259,083       60,428  
                 
Accumulated amortization and Impairment     (202,521 )     (60,428 )
                 
Net   $ 1,056,562     $ -  

 

The CBD related technology were purchased from Hudilab, Inc. (“HUDI”) and Seven Chakras, LLC (“Seven Chakras”) during the three months ended March 31, 2019. On January 14, 2019, the Company and PHP (collectively, the “buyer”) entered into a License and Acquisition Agreement (the “LAA”) with HUDI. Pursuant to the LAA, HUDI will sell the technology owned by it to the buyer in exchange for 7,500,000 (prior to 300:1 reverse split) shares of CANB common stock. On January 14, 2019, the shares were issued to the owner of HUDI and valued at $131,625. On January 31, 2019, PHP entered into an Asset Purchase Agreement (the “Chakras Agreement”) with Seven Chakras, LLC (“Seven Chakras”). Pursuant to the Chakras Agreement, PHP purchased the rights and title to (i) Seven Chakras’ proprietary formulas, methods, trade secrets, and know-how related to the production of Seven Chakras’ products containing cannabidiol (“CBD”), (ii) Seven Chakras’ tradename, domain name, and social media sites, and (iii) other assets of Seven Chakras including but not limited to raw materials, equipment, packaging and labeling materials, mailing lists, and marketing materials (collectively, the “Assets”). On February 20, 2019, the Company issued 1,000,000 (prior to 300:1 reverse split) shares of CANB common stock valued at $17,030 to owners of Seven Chakras as additional consideration, along with the $50,000 cash payments, pursuant to the Chakras Agreement.

 

  F-13  

 

 

The hemp related license and technology purchased from Shi Farms during the three months ended September 30, 2019. NY Hemp Depot will contract with farmers in New York to grow hemp under a controlled program of specific strains, cultured feminized seeds, proven technology, and access to processing for their crop. NY Hemp Depot will amalgamate the cultivated off-take from the farmers, combine and fill “super-sacks” for shipping to the processing facility in Colorado to produce high-grade isolate or distillate for use in Can B’s manufacturing facility in Lacey WA.

 

The other intangible assets relate to the document management and email marketing divisions. Since December 31, 2017, the Company do not expect any future positive cash flow from these divisions. Accordingly, the net carrying value of these intangible assets was reduced to $0.

 

NOTE 8 – Notes and Loans Payable

 

Notes and loans payable consist of:

 

    December 31, 2019     December 31, 2018  
Note payable to brother of Marco Alfonsi, Chief Executive Officer of the Company, interest at 10% per annum, due August 22, 2016 (now past due)     5,000       5,000  
                 
Note payable to Carl Dilley, a director of the Company, interest at 12.99% per annum, due February 1, 2021     -       10,899  
                 
Loan payable to McKenzie Webster Limited (“MWL”), non-interest bearing, due on demand.     -       3,000  
                 
Loan payable to Pasquale Ferro, interest at 12% per annum, due December 2020.     30,000       -  
                 
Total   $ 35,000     $ 18,899  

 

NOTE 9 – Preferred Stock

 

Note- The share and vote amounts referenced below are reflected prior to the 300:1 reverse split in March 2020.

 

Each share of Series A Preferred Stock is convertible into 10,000,000 shares of CANB common stock and is entitled to 20,000,000 votes.

 

Each share of Series B Preferred Stock has the first preference to dividends, distributions and payments upon liquidation, dissolution and winding-up of the Company, and is entitled to an accrued cumulative but not compounding dividend at the rate of 5% per annum whether or not declared. After six months of the issuance date, such share and any accrued but unpaid dividends can be converted into common stock at the conversion price which is the lower of (i) $0.0101; or (ii) the lower of the dollar volume weighted average price of CANB common stock on the trading day prior to the conversion day or the dollar volume weighted average price of CANB common stock on the conversion day. The shares of Series B Preferred Stock have no voting rights.

 

On January 22, 2018, the Company issued 87,368 shares of CANB Series B Preferred Stock to RedDiamond Partners LLC (“RedDiamond”) pursuant to an amended Securities Purchase Agreement dated January 9, 2018, in exchange for proceeds of $83,000, or $0.95 per CANB Series B Preferred share.

 

  F-14  

 

 

On February 12, 2018, the Company issued 1 share of CANB Series A Preferred Stock to David Posel pursuant to a service agreement. The fair value of the issuance is $373,000 and will be amortized over the vesting period of four years.

 

On February 16, 2018, the Company issued 3 shares of CANB Series A Preferred Stock to Andrew Holtmeyer pursuant to a service agreement. The fair value of the issuance is $1,020,000 and will be amortized over the vesting period of one year.

 

On February 16, 2018, the Company issued 87,368 shares of CANB Series B Preferred Stock to RedDiamond Partners LLC (“RedDiamond”) pursuant to an amended Securities Purchase Agreement dated January 9, 2018, in exchange for proceeds of $83,000, or $0.95 per CANB Series B Preferred share.

 

On March 20, 2018, the Company issued 87,368 shares of CANB Series B Preferred Stock to RedDiamond Partners LLC (“RedDiamond”) pursuant to an amended Securities Purchase Agreement dated January 9, 2018, in exchange for proceeds of $83,000, or $0.95 per CANB Series B Preferred share.

 

On April 13, 2018, April 25, 2018, May 3, 2018, June 19, 2018 and June 25, 2018, RedDiamond Partners converted its 10,000 shares, 10,000 shares, 10,000 shares, 15,000 shares and 10,000 shares of CANB Series B Preferred Stock to 1,287,129 shares, 1,287,129 shares, 1,287,129 shares, 3,545,455 shares, and 2,363,636 shares of CANB common stock, respectively.

 

On May 14, 2018, the Company issued 1 share of CANB Series A Preferred Stock to a consultant pursuant to a Consulting Agreement dated May 11, 2018. The $150,000 fair value of the issuance was partially charged to consulting fees in the three months ended September 30, 2018.

 

From July 24, 2018 to September 26, 2018, RedDiamond Partners converted aggregately 263,263 shares of CANB Series B Preferred Stock to 53,839,743 shares of CANB common stock.

 

On August 28, 2018, September 14, 2018 and September 19, 2018, the Company issued 36,842 shares, 105,263 shares, and 105,263 shares of CANB Series B Preferred Stock, respectively, to RedDiamond Partners LLC (“RedDiamond”) pursuant to an amended Securities Purchase Agreement dated January 9, 2018, in exchange for proceeds of $35,000, $100,000 and $100,000, respectively, or $0.95 per CANB Series B Preferred share.

 

From October 2, 2018 to November 7, 2018, RedDiamond Partners converted aggregately 101,736 shares of CANB Series B Preferred Stock to 13,094,733 shares of CANB common stock.

 

On October 23, 2018 and November 14, 2018, the Company issued 200,000 shares and 52,500 shares of CANB Series B Preferred Stock, respectively, to RedDiamond Partners LLC (“RedDiamond”) in exchange for proceeds of $190,000 and $49,875, respectively, or $0.95 per CANB Series B Preferred share.

 

On December 28, 2018, Marco Alfonsi converted 3 shares of CANB Series A Preferred Stock to 30,000,000 shares of CANB common stock.

 

On December 29, 2018 the Company issued 8 shares of CANB Series A Preferred Stock to three officers of the company (1 share to Stanley L. Teeple, 5 shares to Pasquale Ferro and 2 shares to Andrew Holtmeyer), pursuant to the employment agreements with them. The fair value of the issuance totaled at $4,624,000 and will be amortized over the vesting period of four years.

 

On January 28, 2019, the Company issued 10,000,000 shares of CANB common stock to a consultant of the Company in exchange for the retirement of 1 share of CANB Series A Preferred Stock.

 

From February 21, 2019 to March 12, 2019, the Company issued aggregately 20,221,436 shares of CANB common stock to RedDiamond in exchange for the retirement of 157,105 shares of CANB Series B Preferred Stock.

 

  F-15  

 

 

On May 28, 2019, the Company issued 3 shares of CANB Series A Preferred Stock to Stanley L. Teeple pursuant to the employment agreement with him. The fair value of the issuance totaled at $1,203,000 and will be amortized over the vesting period of four years.

 

On April 26, 2019, the Company issued 1,930,693 shares of CANB common stock to RedDiamond in exchange for the retirement of 15,000 shares of CANB Series B Preferred Stock.

 

On May 1, 2019, the Company issued 2,574,257 shares of CANB common stock to RedDiamond in exchange for the retirement of 20,000 shares of CANB Series B Preferred Stock.

 

On May 9, 2019, the Company issued 7,113,059 shares of CANB common stock to RedDiamond in exchange for the retirement of 55,263 shares of CANB Series B Preferred Stock.

 

On June 7, 2019, the Company issued 3,217,822 shares of CANB common stock to RedDiamond in exchange for the retirement of 25,000 shares of CANB Series B Preferred Stock.

 

On August 13, 2019, the Company issued 29,282,179 shares of CANB common stock to RedDiamond in exchange for the retirement of 227,590 shares of CANB Series B Preferred Stock.

 

On December 16, 2019, the Company issued 10,700,000 shares of CANB common stock to RedDiamond as agreed for the early retirement of CANB Series B Preferred Stock converted in August 2019.

 

NOTE 10 – Common Stock

 

Note- The share amounts referenced below are reflected prior to the 300:1 reverse split in March 2020.

 

On February 7, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $9,825 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended March 31, 2018.

 

On February 9, 2018, the Company issued 3,000,000 and 3,000,000 shares of CANB common stock to its two directors for services rendered, respectively. The $101,400 fair value of each 3,000,000 shares of CANB common stock was charged to directors fees in the three months ended March 31, 2018. The shares issued to one of the directors were converted to options at June 11, 2018 (see Note 11).

 

On February 13, 2018, the Company issued 150,000 shares of CANB common stock to a consultant for services rendered. The $5,085 fair value of the 150,000 shares of CANB common stock was partially charged to consulting fees in the three months ended March 31, 2018.

 

On February 14, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $8,500 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended March 31, 2018.

 

On February 19, 2018, the Company issued 150,000 shares of CANB common stock to a consultant for services rendered. The $5,280 fair value of the 150,000 shares of CANB common stock was partially charged to consulting fees in the three months ended March 31, 2018.

 

On February 26, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $11,375 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended March 31, 2018.

 

  F-16  

 

 

On March 1, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $10,900 fair value of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended March 31, 2018.

 

On March 20, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $6,500 fair value of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended March 31, 2018.

 

On April 13, 2018, April 25, 2018, May 3, 2018, June 19, 2018 and June 25, 2018, the Company issued 1,287,129 shares, 1,287,129 shares, 1,287,129 shares, 3,545,455 shares, and 2,363,636 shares of CANB common stock to RedDiamond in exchange for the retirement of 10,000 shares, 10,000 shares, 10,000 shares, 15,000 shares and 10,000 shares of CANB Series B Preferred Stock, respectively.

 

On May 9, 2018, the Company issued 125,000 shares of CANB common stock to a consultant for services rendered. The $1,812 fair value of the 125,000 shares of CANB common stock was partially charged to consulting fees in the three months ended June 30, 2018.

 

On May 29, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $5,000 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended June 30, 2018.

 

On May 31, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $4,600 fair value of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended June 30, 2018.

 

On June 4, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $5,750 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended June 30, 2018.

 

On June 11, 2018, the Company agreed to issue 2,749,429 shares of CANB common stock to a lender in satisfaction of notes payable of $15,000 and accrued interest payable of $4,246. The shares was issued at August 24, 2018.

 

On June 18, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $6,250 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended June 30, 2018.

 

On June 22, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $8,250 fair value of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended June 30, 2018.

 

From July 24, 2018 to September 26, 2018, the Company issued aggregately 53,839,743 shares of CANB common stock to RedDiamond in exchange for the retirement of 263,263 shares of CANB Series B Preferred Stock.

 

On July 31, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $3,225 fair value of the 250,000 shares of CANB common stock was charged to consulting fees in the three months ended September 30, 2018.

 

On August 9, 2018, Company received a conversion notice from a lender. As a result, 9,544,292 shares of CANB common stock was issued to the lender in satisfaction of notes payable of $50,000 and accrued interest payable of $7,266 at August 21, 2018.

 

On August 28, 2018, the Company issued 2,000,000 shares of CANB common stock to a consultant for services rendered. The $159,600 fair value of the 2,000,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September 30, 2018.

 

  F-17  

 

 

On September 6, 2018, the Company issued 300,000 shares of CANB common stock to a consultant for services rendered. The $16,500 fair value of the 300,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September 30, 2018.

 

On September 6, 2018, the Company issued 500,000 shares of CANB common stock to a consultant for services rendered. The $27,500 fair value of the 500,000 shares of CANB common stock was charged to consulting fees in the three months ended September 30, 2018.

 

On September 6, 2018, the Company issued 8,430,331 shares of CANB common stock to a lender in satisfaction of notes payable of $38,500 and accrued interest payable of $7,867.

 

On September 7, 2018, the Company issued 5,121,694 shares of CANB common stock to a lender in satisfaction of notes payable of $25,000 and accrued interest payable of $3,169.

 

On September 7, 2018, the Company issued 10,045,667 shares of CANB common stock to a lender in satisfaction of notes payable of $50,000 and accrued interest payable of $10,274.

 

On September 8, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $11,500 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September 30, 2018.

 

On September 10, 2018, the Company issued 500,000 shares of CANB common stock to a consultant for services rendered. The $19,950 fair value of the 500,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September 30, 2018.

 

On September 17, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $10,750 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September 30, 2018.

 

On September 18, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $13,725 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September 30, 2018.

 

On September 20, 2018, the Company issued 7,407,407 shares of CANB common stock to an investor pursuant to a Stock Purchase Agreement dated September 17, 2018, in exchange for proceeds of $200,000, or $0.027 per CANB common share.

 

On September 21, 2018, the Company issued 250,000 shares of CANB common stock to a consultant for services rendered. The $14,500 fair value of the 250,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September 30, 2018.

 

On September 25, 2018, the Company issued 2,000,000 shares of CANB common stock to a consultant for services rendered. The $97,400 fair value of the 2,000,000 shares of CANB common stock was partially charged to consulting fees in the three months ended September 30, 2018.

 

From October 2, 2018 to November 7, 2018, the Company issued aggregately 13,094,733 shares of CANB common stock to RedDiamond in exchange for the retirement of 101,736 shares of CANB Series B Preferred Stock.

 

From November 5, 2018 to December 28, 2018, the Company issued aggregately 2,125,000 shares of CANB common stock to multiple consultants for services rendered. The $80,665 fair value of the 2,125,000 shares of CANB common stock was partially charged to consulting fees in the three months ended December 30, 2018.

 

From December 3, 2018 to December 28, 2018, the Company issued aggregately 1,500,000 shares of CANB common stock to three board members for services rendered. The $62,342 fair value of the 1,500,000 shares of CANB common stock was charged to director fees in the three months ended December 30, 2018.

 

  F-18  

 

 

From December 3, 2018 to December 28, 2018, the Company issued aggregately 22,413,794 shares of CANB common stock to multiple investors pursuant to relative Stock Purchase Agreements dated on various dates, in exchange for total proceeds of $650,000.

 

On December 11, 2018, the Company issued 891,089 shares of CANB common stock to RedDiamond in satisfaction of dividend payable of $9,000.

 

On December 19, 2018, the Company issued 891,089 shares of CANB common stock to Auctus, LLC pursuant to a cashless exercise of stock options.

 

On December 21, 2018, Company received a conversion notice from a lender. As a result, 9,372,100 shares of CANB common stock was issued to the lender in satisfaction of notes payable of $83,500 and accrued interest payable of $10,221.

 

On December 21, 2018, Company issued aggregately 4,370,629 shares of CANB common stock to four officers of the Company in satisfaction of accrued compensation of $192,300.

 

On December 28, 2018, the Company issued 3,096,827 shares of CANB common stock for the acquisition of Pure Health Products, LLC.

 

On December 28, 2018, the Company issued 245,789 shares of CANB common stock to an officer of the Company pursuant to the Employment Agreement dated December 29, 2018 with Andrew Holtmeyer. The $10,371 fair value of the issuance was charged to stock-based compensation in the three months ended December 31, 2018.

 

On December 29, the Company issued 30,000,000 shares of CANB common stock to Marco Alfonsi in exchange for the return of 3 shares of CANB Series A Preferred Stock owned by Marco Alfonsi.

 

From January 4, 2019 to March 27, 2019, the Company issued aggregately 41,431,994 shares of CANB common stock to multiple investors pursuant to relative Stock Purchase Agreements dated on various dates, in exchange for total proceeds of $1,196,100.

 

On January 14, 2019, the Company issued 7,500,000 shares of CANB common stock to Hudilab, Inc. (“HUDI”), pursuant to a License and Acquisition Agreement for purchase of the technology owned by HUDI.

 

From January 18, 2019 to March 17, 2019, the Company issued aggregately 24,600,000 shares of CANB common stock to multiple consultants for services rendered.

 

From January 19, 2019 to March 27, 2019, the Company issued aggregately 1,167,959 shares of CANB common stock to employee and officers of the Company pursuant to employee agreement and in satisfaction of accrued compensation for the quarter ended March 31, 2019.

 

On February 5, 2019, the Company issued 2,000,000 shares to the owner of TZ Wholesale LLC, pursuant to a Memorandum of Understanding (the “MOU”) dated November 9, 2018.

 

On February 20, 2019, the Company issued 1,000,000 shares of CANB common stock to owners of Seven Chakras pursuant to an Asset Purchase Agreement with Seven Chakras, LLC dated January 31, 2019.

 

From April 1, 2019 through June 30, 2019 the company issued an aggregate of 15,511,767 shares of CANB Common Stock to multiple consultants for services rendered.

 

From April 1, 2019 through June 30, 2019, the Company issued an aggregate of 4,174,886 shares of CANB Common Stock to members of the Advisory Board, Medical Advisory Board, and Sports Advisory Board for services rendered.

 

From April 1, 2019 through June 30, 2019, the Company issued an aggregate of 1,384,621 shares of Common Stock under the terms of executive employment agreements.

 

  F-19  

 

 

From April 1, 2019 through June 30, 2019, the Company issued an aggregate of 25,862,071 shares of CANB shares under the terms of the Stock Purchase Agreements for total proceeds of $750,000.

 

From July 1, 2019 through September 30, 2019, the company issued an aggregate of 5,418,301 shares of CANB Common Stock to multiple consultants for services rendered.

 

From July 1, 2019 through September 30, 2019, the Company issued an aggregate of 5,500,000 shares of CANB Common Stock to members of the Advisory Board, Medical Advisory Board, and Sports Advisory Board for services rendered.

 

From July 1, 2019 through September 30, 2019, the Company issued an aggregate of 4,800,000 shares of Common Stock under the terms of executive employment agreements.

 

From July 1, 2019 through September 30, 2019, the Company issued an aggregate of 46,572,416 shares of CANB shares under the terms of the Stock Purchase Agreements for total proceeds of $1,350,600.

 

From July 1, 2019 through September 30, 2019, the Company issued an aggregate of 12,074,089 shares of CANB shares under the terms of the Joint Venture Agreement.

 

From October 1, 2019 through December 31, 2019, the company issued an aggregate of 36,677,274 shares of CANB Common Stock to multiple consultants for services rendered.

 

From October 1, 2019 through December 31, 2019, the Company issued an aggregate of 4,250,000 shares of CANB Common Stock to members of the Advisory Board, Medical Advisory Board, and Sports Advisory Board for services rendered.

 

From October 1, 2019 through December 31, 2019, the Company issued an aggregate of 1,500,000 shares of Common Stock under the terms of executive employment agreements.

 

From October 1, 2019 through December 31, 2019, the Company issued an aggregate of 37,500,000 shares of CANB Common Stock under the terms of an inventory purchase agreement for total proceeds of $487,500.

 

NOTE 11 – Stock Options and Warrants – Prior to 300:1 reverse stock split

 

A summary of stock options and warrants activity follows:

 

    Shares of Common Stock Exercisable Into  
    Stock              
    Options     Warrants     Total  
Balance, December 31, 2017     50,000       247,500       297,500  
Granted in 2018     6,000,000       2,850,000       8,850,000  
Cancelled in 2018     -       -       -  
Exercised in 2018     -       (850,000 )     (850,000 )
                         
Balance, December 31, 2018     6,050,000       2,247,500       8,297,500  
Granted in Q1, Q2 & Q3 2019     17,000,000       -       17,000,000  
Cancelled in Q1, Q2 Q3, & Q4 2019     (50,000 )     -       (50,000 )
Exercised in Q1, Q2 Q3, & Q4 2019     -       -       -  
                         
Balance, December 31, 2019     23,000,000       2,247,500       25,247,500  

 

  F-20  

 

 

Issued and outstanding stock options as of December 31, 2019 consist of:

 

Year     Number Outstanding     Exercise     Year of  
Granted     And Exercisable     Price     Expiration  
                     
  2018       6,000,000     $ 0.001       2023  
  2019       17,000,000     $ 0.001       2022  
          23,000,000                  

 

On June 11, 2018, the Company granted 3,000,000 options of CANB common stock to Carl Dilley, a former director of the Company, in exchange for the retirement of a total of 3,000,000 shares of CANB common stock from Carl Dilley. The options are exercisable for the purchase of one share of the Registrant’s Common Stock at an exercise price of $0.001 per share. The Options are fully vested and are exercisable as of the Grant Date and all shall expire June 11, 2023. The value of the Stock Options ($84,000) were calculated using the Black Scholes option pricing model and the following assumptions: (i) $0.028 share price, (ii) 5 years term, (iii) 262.00% expected volatility, (iv) 2.80% risk free interest rate and the difference between this value and the fair value of retired shares was expensed in the quarterly period ended June 30, 2018.

 

On October 21, 2018, the Company granted 3,000,000 options of CANB common stock to Stanley L. Teeple, an officer and Director of the Company. The options are exercisable for the purchase of one share of the Registrant’s Common Stock at an exercise price of $0.001 per share. The Options are fully vested and are exercisable as of the Grant Date and all shall expire October 1, 2023. The values of the Stock Options ($118,200) were calculated using the Black Scholes option pricing model and the following assumptions: (i) $0.0395 share price, (ii) 5 years term, (iii) 221.96% expected volatility, (iv) 3.05% risk free interest rate and the fair value of options was expensed in the quarterly period ended December 31, 2018

 

On September 9, 2019, the Company granted 8,000,000 options of CANB common stock to Johnny Mack, a former officer of the Company. The options are exercisable for the purchase of one share of the Registrant’s Common Stock at an exercise price of $0.001 per share. The Options are fully vested and are exercisable as of the Grant Date and all shall expire September 9, 2022. The values of the Stock Options ($192,000) were calculated using the Black Scholes option pricing model and the following assumptions: (i) $0.024 share price, (ii) 3 years term, (iii) 242% expected volatility, (iv) 1.46% risk free interest rate and the fair value of options was expensed in the quarterly period ended September 30, 2019.

 

On October 15, 2019, the Company granted 3,000,000 options of CANB common stock each to Frederick Alger Boyer, Jr., Ronald A. Silver and James F. Murphy, directors of the Company. The options are exercisable for the purchase of one share of the Registrant’s Common Stock at an exercise price of $0.001 per share. The Options are fully vested and are exercisable as of the Grant Date and all shall expire October 15, 2022. The values of the Stock Options ($63,000 each) were calculated using the Black Scholes option pricing model and the following assumptions: (i) $0.021 share price, (ii) 3 years term, (iii) 242% expected volatility, (iv) 1.60% risk free interest rate and the fair value of options was expensed in the quarterly period ended December 31, 2019.

 

Issued and outstanding warrants as of December 31, 2019 consist of:

 

Year     Number Outstanding     Exercise     Year of  
Granted     And Exercisable     Price     Expiration  
                     
  2010       247,500     $ 1.00       2020  
  2018       2,000,000     $ 0.04345 (a)     2023  
                             
  Total       2,247,500                  

 

(a) 110% of the closing price of the Company’s common stock on the date that the Holder funds the full purchase price of the Note.

 

  F-21  

 

 

NOTE 12 – Income Taxes

 

No provisions for income taxes were recorded for the periods presented since the Company incurred net losses in those periods.

 

The provisions for (benefits from) income taxes differ from the amounts determined by applying the U.S. Federal income tax rate of 21% to pretax income (loss) as follows:

 

    December 31,  
    2019     2018  
             
Expected income tax (benefit) at 21%   $ (964,419 )   $ (863,578 )
                 
Non-deductible stock-based compensation     648,729       583,653  
                 
Non-deductible amortization of debt discounts     -       37,064  
                 
Loss on stock issuance     -       136,344  
                 
Loss on debt conversion     -       272,867  
                 
Non-deductible expense from derivative liability     -       (334,139 )
                 
Loan forgiveness     -       18,024  
                 
Increase in deferred income tax assets valuation allowance     315,690       149,765  
                 
Provision for (benefit from) income taxes   $ -     $ -  

 

Deferred income tax assets consist of:

 

    December 31, 2019     December 31, 2018  
             
Net operating loss carryforward     1,300,168       984,478  
                 
Valuation allowance     (1,300,168 )     (984,478 )
                 
Net   $ -     $ -  

 

Based on management’s present assessment, the Company has not yet determined it to be more likely than not that a deferred income tax asset of $1,300,168 attributable to the future utilization of the $6,191,273 net operating loss carryforward as of December 31, 2019 will be realized. Accordingly, the Company has maintained a 100% allowance against the deferred income tax asset in the financial statements at December 31, 2019. The Company will continue to review this valuation allowance and make adjustments as appropriate. The net operating loss carryforward expires in years 2025, 2026, 2027, 2028, 2029, 2030, 2031, 2032, 2033, 2034, 2035, 2036, 2037, 2038 and 2039 in the amount of $1,369, $518,390, $594,905, $686,775, $159,141, $151,874, $135,096, $166,911, $311,890, $25,511, $338,345, $381,638, $499,288, $716,858 and $1,503,282, respectively.

 

Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.

 

  F-22  

 

  

The Company’s U.S. Federal and state income tax returns prior to 2015 are closed and management continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. The statute of limitations on the 2015 tax year returns expired in September 2019.

 

The Company recognizes interest and penalties associated with uncertain tax positions as part of the income tax provision and would include accrued interest and penalties with the related tax liability in the consolidated balance sheets. There were no interest or penalties paid during 2019 and 2018.

 

NOTE 13 – Segment Information

 

The Company has one reportable segment: Durable Equipment Products.

 

The accounting policies of the segment described above are the same as those described in Summary of Significant Accounting Policies in Note 3. The Company evaluates the performance of the Durable Equipment Products segment based on income (loss) before income taxes, which includes interest income.

 

   

Durable

Equipment

Products

 
Three months ended December 31, 2019      
Revenue from external customers     466,920  
Revenue from other segments     -  
Segment profit     309,370  
Segment assets     1,994,845  
         
Twelve months ended December 31, 2019        
Revenue from external customers     1,436,403  
Revenue from other segments     -  
Segment profit     809,631  
Segment assets     1,994,845  

 

   

Three Months

Ended

December 31,
2019

   

Twelve Months

Ended

December 31,
2019

 
             
Total profit for reportable segment   $ 309,208     $ 810,060  
Other income (expense) - net     162       (429 )
                 
Income before income taxes   $ 309,370     $ 809,631  

 

NOTE 14 – Commitments and Contingencies

 

Employment Agreements

 

On October 3, 2017, the Company executed an Executive Employment Agreement with Marco Alfonsi (“Alfonsi”) for Alfonsi to serve as the Company’s chief executive officer and interim chief financial officer and secretary for cash compensation of $10,000 per month. Pursuant to the agreement, the Company issued a share of CANB Series A Preferred Stock to Alfonsi on October 4, 2017 (see Note 9). Alfonsi may terminate his employment upon 30 days written notice to the Company. The Company may terminate Alfonsi’s employment upon written notice to Alfonsi by a vote of the Board of Directors. At October 21, 2018, this former Agreement was terminated due to the execution of a new Employment Agreement with Marco Alfonsi for Alfonsi to serve as the Company’s chief executive officer for cash compensation of $15,000 per month. Pursuant to the new Agreement, three of the eight previously issued shares of CANB Series A Preferred Stock will be returned to the Company and converted into 30,000,000 common shares. On December Alfonsi may terminate his employment upon 30 days written notice to the Company. The new Agreement has an initial term of four years and can be terminated upon the resignation or death of Mr. Alfonsi, and also can be terminated by the Company due to the failure or neglect of Mr. Alfonsi to perform his duties, or due to the misconduct of Mr. Alfonsi in connection with the performance.

 

  F-23  

 

 

On February 12, 2018, the Company executed an Executive Service Agreement (“Posel Agreement”) with David Posel. The Posel Agreement provides that Mr. Posel services as the Company’s Chief Operating Officer for a term of 4 years. The Posel Agreement also provides for compensation to Mr. Posel of $5,000 cash per month and the issuance of 1 share of Series A Preferred Stock at the inception of the Posel Agreement. The Posel Agreement can be terminated upon the resignation or death of Mr. Posel, and also can be terminated by the Company due to the failure or neglect of Mr. Posel to perform his duties, or due to the misconduct of Mr. Posel in connection with the performance. On February 12, 2018, 1 share of CANB Series A Preferred Stock were issued to Mr. Posel (see Note 9). Since execution of the Posel Agreement, Mr. Posel has been re-assigned to COO for Pure Health Products, the Company’s subsidiary.

 

On February 16, 2018, the Company executed an Executive Service Agreement (“Holtmeyer Agreement”) with Andrew W. Holtmeyer. The Holtmeyer 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 Holtmeyer 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 Holtmeyer Agreement was terminated due to the execution of a new Employment Agreement with Andrew W. Holtmeyer. The second agreement provides that Mr. Holtmeyer services as the Company’s Executive Vice President Business for a term of 4 years. The second agreement also provides for compensation to Mr. Holtmeyer of $15,000 cash per month and the issuance of 245,789 shares of common stock (prior to 300:1 reverse stock split) upon signing of the agreement.

 

On October 15, 2018, the Company executed an Employment Agreement (“Teeple Agreement”) with Stanley L. Teeple. The Teeple Agreement provides that Mr. Teeple services as the Company’s Chief Financial Officer and Secretary for a term of 4 years. The Teeple Agreement also provides for compensation to Mr. Teeple of $15,000 cash per month and the issuance of 1 share of Series A Preferred Stock proportionately vesting over four years beginning December 31, 2018 upon execution of the Teeple Agreement. The Teeple Agreement can be terminated upon the resignation or death of Mr. Teeple, and also can be terminated by the Company due to the failure or neglect of Mr. Teeple to perform his duties, or due to the misconduct of Mr. Teeple in connection with the performance. In May 2019 Mr. Teeple was granted an additional 3 shares of Series A Preferred.

 

On December 28, 2018, the Company executed an Employment Agreement (“Ferro 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 Ferro Agreement has an initial term of four years and can be terminated upon the resignation or death of Mr. Ferro, and also can be terminated by the Company due to the failure or neglect of Mr. Ferro to perform his duties, or due to the misconduct of Mr. Ferro in connection with the performance.

 

Effective September 6, 2019 (the “Effective Date”), Can B̅ Corp (the “Company” or “CANB”) approved the appointment of Johnny J. Mack (“Mack”) as its President and Chief Operating Officer. Mack had been serving as the Company’s interim COO. The Company and Mack have entered into a new Employee Services Agreement (the “Mack Agreement”) to memorialize the terms of the foregoing. In consideration for Mack’s services, Mack was to (i) receive a base salary of $15,000 per month, subject to increase after each yearly anniversary of the Agreement, (ii) be eligible to receive annual cash or stock bonuses, (iii) be entitled to four weeks’ vacation time and five paid days for illness in accordance with the Company’s policies, and (iv) receive a total of 32,000,000 options (“Options”) to purchase shares of the Company’s common stock, with 8,000,000 Options vesting on the effective date and additional tranches of 8,000,000 Options vesting on each of the first, second, and third anniversaries of the Effective Date, assuming Mack’s continued employment. Each Option is exercisable at a price of $0.001 per share (prior to 300:1 reverse stock split). The Company also agreed to hold harmless and indemnify Mack as authorized or permitted by law and the Company’s governing documents, as the same may be amended from time to time, except for acts constituting negligence or willful misconduct by Mack. The Company has agreed to pay Mack a severance in the event the Mack Agreement is terminated by the Company without cause or by Mack for “good reason” or by reason of Mack’s death or disability. On October 4, 2019 Mack resigned from all of his office and director positions and the Company settled his termination for payment of all accrued expenses, payout of all accrued time and base compensation of $13,315 and retention of his already earned 8 million options. Mr. Mack has left the Company.

 

  F-24  

 

 

In addition, on October 10th, 2019 the Company appointed Philip Scala as its interim COO. Mr. Scala has acted as founder and CEO of Pathfinder Consultants International, Inc. (“Pathfinder”) since 2008. Pathfinder offers unique expertise and delivers the information you need to make informed decisions, whether in times of crisis or in the course of simply running your business. Prior to forming Pathfinder, Mr. Scala served the United States both as a Commissioned Officer in the US Army for five years followed by his 29 years of service with the FBI. Mr. Scala received his bachelor’s degree and Master of Business Administration in accounting from St. John’s University, he also earned a Master of Arts degree in Psychology from New York University. The Company has entered into an employment agreement with Mr. Scala. Pursuant to the agreement, Mr. Scala will receive a base salary of $2,500 per month. He will be entitled to incentive bonuses and pay increases in accordance with the Company’s normal policies and procedures. Mr. Scala will also receive options to buy 500,000 common shares of the Company at a price of $0.001 (prior to 300:1 reverse stock split) for a period of three years. The initial term of the agreement is for 90 days. The agreement renews for additional 90-day periods unless terminated by either party. The agreement otherwise contains standard covenants and conditions.

 

Consulting Agreements

 

On September 6, 2017, the Company executed a Consulting Agreement with T8 Partners LLC (“T8”) for T8 to serve as the Company’s consultant for stock compensation of a total of 10,000,000 restricted shares (prior to 300:1 reverse stock split). Pursuant to the agreement, the Company issued 2,500,000 restricted shares of CANB common stock to T8 on September 7, 2017. Effective October 27, 2017, the Company terminated the agreement due to non-performance by T8. The Company won the arbitration proceedings against T8 and T8 has been ordered to return its shares to the Company.

 

On November 9, 2017, the Company executed a Consulting Agreement with Healthcare Advisory Group Company (“Healthcare”) for Healthcare to serve as the Company’s consultant for stock compensation of a total of 5,000,000 restricted shares (prior to 300:1 reverse stock split). Pursuant to the agreement, the Company issued 2,500,000 restricted shares of CANB common stock to Healthcare on November 9, 2017. Effective March 6, 2018, the Company terminated the agreement due to non-performance by Healthcare.

 

On April 1, 2019, we engaged an advisor to provide consulting services under an Investor Relations and Advisory Agreement (the “Advisory Agreement”). Pursuant to the Advisory Agreement, we agreed to pay the Consulting Firm a restricted common stock monthly fee of $5,500 per month for consulting and services paid in advance of services each month. Starting May 1, 2019, the restricted common stock monthly fee will decrease to $4,000 per month. The number of shares to be issued will be calculated based on the closing price of our common shares on the 1st or preceding day of each month, if the 1st were to fall on a weekend or holiday. The shares shall not have registration rights, and the shares may be sold subject to Rule 144.

 

Lease Agreements

 

On December 1, 2014, Prosperity entered into a lease agreement with KLAM, Inc. for office space in Hicksville, New York for an initial term of one year commencing December 1, 2014. The lease provides for monthly rentals of $2,500 and provides Prosperity an option to renew the lease after the initial term. The Company has continued to occupy this space after November 30, 2015 under a month to month arrangement at $2,500 per month.

 

On September 11, 2015, the Company executed a lease agreement with an unrelated third party for office space in Hicksville, New York for a term of 37 months. The lease provides for monthly rentals of $2,922 for lease year 1, $3,009 for lease year 2, and $3,100 for lease year 3. The lease also provides for additional rent based on increases in base year operating expenses and real estate taxes. On August 6, 2018, the Company renewed the lease agreement for a term of 36 months starting November 1, 2018. The lease provides for monthly rentals of $3,193 for lease year 1, $3,289 for lease year 2, and $3,388 for lease year 3. In October 2019, the Company modified and extended the lease agreement for a term of 30 months starting November 1, 2019. The lease provides for monthly rentals of $3,807.05 for year 1 and $3,921.26 for the remaining eighteen months. The original $100,681 right-of-use asset and $90,591 lease liability was adjusted to $103,260 with the modification.

 

  F-25  

 

 

The Company leases office space in numerous medical facilities under month-to-month agreements.

 

Rent expense for the years ended December 31, 2019 and 2018 was $246,968 and $67,165, respectively.

 

At December 31, 2019, the future minimum lease payments under non-cancellable operating leases were:

 

Year ended December 31, 2020   $ 45,913  
Year ended December 31, 2021     47,055  
Year ended December 31, 2022     15,685  
         
Total   $ 108,653  

 

The lease liability of $97,279 at December 31, 2019 as presented in the Consolidated Balance Sheet represents the discounted (at our 10% estimated incremental borrowing rate) value of the future lease payments of 108,653 at December 31, 2019.

 

Major Customers

 

For the twelve months ended December 31, 2019, there were no customers that accounted for more than 10% of total revenues.

 

For the twelve months ended December 31, 2018, one customer accounted for approximately 16% of total revenues.

 

NOTE 15 – Related Party Transactions

 

LI Accounting Associates, LLC (LIA), an entity controlled by a relative of the Managing Member of PHP, is a vendor of CANB. At December 31, 2019, CANB did not have an account payable due to LIA. For the twelve months ended December 31, 2019, CANB had expenses to LIA of $10,750.

 

Pasquale Ferro, President of Pure Health Products LLC, manages the R&D and manufacturing of the Company products sold via other subsidiary companies. Mr. Ferro is also a substantial shareholder of the Company but receives no direct compensation from us other than outlined in his employment agreement.

 

During the twelve months ended December 31, 2019, we had products and service sales to related parties totaling $0.

 

NOTE 16 – Subsequent Events

 

In accordance with FASB ASC 855, Subsequent Events, the Company has evaluated subsequent events through May 20, 2020, the date on which these consolidated financial statements were available to be issued. There were material subsequent events that required recognition or additional disclosure in these consolidated financial statements as follows:

 

The Company acquired 51% of Green Grow Farms, Inc. (GGFI) in December 2019 for 37.5 million shares of CANB common stock. The remaining 49% of GGFI was held by New York Farm Group (NYFG). Post-closing of the original agreement, the Company discovered certain assets needed reassessment and reconsideration. In settlement of certain claims held by the Company as a result of the foregoing, NYFG agreed to assign the Company its 49% interest in GGFI and 1,000,000 shares of Iconic Brands, Inc (ICNB) stock in consideration for a release from the Company. The settlement agreement was executed on March 3, 2020.

 

On April 21, 2020, the Company signed a Secured Convertible Promissory Note with Labrys Fund LP for a principal amount of $225,000. The 6-month note carries 12% annual interest, a 10% OID, and has conversion rights at the lesser of $6 or 80% of the closing stock price per share at the time of conversion and is more fully disclosed in a recently filed Form 8K.

 

On April 24. 2020, the Company was granted a loan from Investors Bank in the amount of approximately $193,250 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times the average monthly payroll expenses.

 

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

 

The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. As such, it is uncertain as to the full magnitude that the pandemic will have on our financial condition, liquidity, and future results of operations. Management is actively monitoring the impact of the global situation on our financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, we are not able to estimate the effects of the COVID-19 outbreak on our results of operations, financial condition, or liquidity for the year ended December 31, 2020.

 

  F-26  

 

 

EXHIBITS

The following exhibits are filed with this offering circular:

 

Exhibit   Description
     
2.1   Articles of Incorporation, as amended(1)
2.2   Bylaws(2)
3.1   Articles of Amendment designating Series A Preferred Stock rights(1)
3.2   Articles of Amendment designating Series B Preferred Stock rights(1)
3.3   Securities Purchase Agreement with FirstFire Global Opportunities Fund, LLC(8)
3.4   Convertible Promissory Note with FirstFire Global Opportunities Fund, LLC(8)
3.5   Security Agreement with FirstFire Global Opportunities Fund, LLC(8)
3.6   Securities Purchase Agreement with Labrys Fund, LP (12)
3.7   Form of Certificate
4.1   Form of Subscription Agreement
6.1   Employment Agreement with Marco Alfonsi(3)
6.2   Employment Agreement with Stanley L. Teeple(3)
6.3   Employment Agreement with Andrew Holtmeyer(3)
6.4   Employment Agreement with Pasquale Ferro(3)
6.5   Employment Agreement with Phil Scala(1)
6.6   Asset Purchase Agreement with Pure Health Products(3)
6.7   Production Agreement with Pure Health Products(4)
6.8   Memorandum of Understanding with Sam International and ZetrOZ Systems LLC(5)
6.9   Asset Purchase Agreement with Seven Chakras, LLC(6)
6.10   Joint Venture Agreement with SHI Farms and NY – SHI(7)
6.11   Green Grow Stock Purchase Agreement(9)
6.12   Green Grow Modification and Lock Up Agreement(1)
6.13   License Agreement with Lifeguard Licensing Corp(10)
7.1   Share Purchase Agreement with Prosperity Systems, Inc., dated January 5, 2015(2)
7.2   Membership Purchase Agreement with Pure Health Products(11)
11.1   Consent of BMKR, LLP
12.1   Opinion of Legality from Austin Legal Group, APC

 

1 Filed with the Annual Report on Form 10-K filed with the SEC on April 2, 2020 and incorporated herein by reference.
2 Filed with the Form S-1 Registration Statement filed with the SEC on December 2, 2015 and incorporated herein by reference.
(3) Filed with the Annual Report on Form 10-K filed with the SEC on April 16, 2019 and incorporated herein by reference.
(4) Filed with the Annual Report on Form 10-K filed with the SEC on April 6, 2018 and incorporated herein by reference.
(5) Filed with the Current Report on Form 8-K filed with the SEC on January 30, 2019 and incorporated herein by reference.
(6) Filed with the Current Report on Form 8-K filed with the SEC on February 26, 2019 and incorporated herein by reference.
(7) Filed with the Current Report on Form 8-K filed with the SEC on July 18, 2019 and incorporated herein by reference.
(8) Filed with the Current Report on Form 8-K filed with the SEC on January 14, 2020 and incorporated herein by reference.
(9) Filed with the Current Report on Form 8-K filed with the SEC on December 6, 2019 and incorporated herein by reference.
(10) Filed with the Current Report on Form 8-K filed with the SEC on February 18, 2020 and incorporated herein by reference.
(11) Filed with the Current Report on Form 8-K filed with the SEC on January 15, 2019 and incorporated herein by reference.
(12) Filed with the Current Report on Form 8-K filed with the SEC on May 19, 2020 and incorporated herein by reference.

 

35

 

 

SIGNATURES

 

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Hicksville, New York, on June 2, 2020.

 

  Can B̅ Corp.
     
June 2, 2020 By: /s/ Marco Alfonsi
  Name: Marco Alfonsi
  Title: Chief Executive Officer
    (Principal Executive Officer and Principal Accounting Officer)
     
June 2, 2020 By: /s/ Stanley L. Teeple
  Name: Stanley L. Teeple
  Title: Chief Financial Officer

 

Pursuant to the requirements of the Securities Act of 1933, this Offering Circular has been signed by the following persons in the capacities and on the date indicated.

 

Signature   Title   Date
         
/s/ Marco Alfonsi   Chief Executive Officer, Chairman, and Director   June 2, 2020
Marco Alfonsi        
         
/s/ Stanley L. Teeple   Chief Financial Officer, Secretary, and Director   June 2, 2020
Stanley L. Teeple        
         
/s/ Frederick Alger Boyer Jr.   Independent Director   June 2, 2020
Frederick Alger Boyer Jr.        
         
/s/ Ron Silver   Independent Director   June 2, 2020
Ron Silver        
         
/s/ James F. Murphy   Independent Director   June 2, 2020
James F. Murphy        

 

36

 

Exhibit 3.7

 

 

 

 

 

Exhibit 4.1

 

Regulation A Subscription Booklet

 

for

 

Can B̅ Corp.

 

The decision to accept or reject a subscription shall be

made in the sole discretion of the CEO or Board of Directors of the Company.

 

 
 

 

Instructions to Prospective Purchasers:

 

This subscription booklet relates to the sale of up to 4,000,000 common shares of Can B̅ Corp., a Florida corporation (the “Company”) pursuant to the Company’s offering under Tier II of Regulation A, promulgated under the Securities Act of 1933, as amended (“Securities Act”).

 

You should examine the suitability of this type of investment in the context of your needs, investment objectives and financial capabilities and you should make independent investigation and decision as to suitability and as to the risk and potential gain involved with the Company. You are encouraged to consult your attorney, accountant, financial consultant or other business or tax adviser regarding the risks and merits of the proposed investment.

 

If after investigation and consultation with our advisors you desire to purchase shares of the Company, then please complete and execute the Subscription Agreement included in this Subscription Booklet and provide (i) a government issued form of picture identification (e.g., passport or driver license) or organizational documents if the investor is an entity, and (ii) a completed IRS Form W-9 (collectively, the “Subscription Documents”) to the Company as directed in the Subscription Agreement.

 

In connection with your subscription, you are required to fund the entire purchase price for your shares at a price of $___________ [$1.25- $3.25] per share (the “Subscription Amount”). The Subscription Documents should be delivered by mail at the below address or as otherwise directed by the Company and Subscription Amounts should be delivered by check or wire as below set forth.

 

Subscription Amounts may be delivered by check to “Can B̅ Corp.” or bank wire as follows:

 

  Check delivery address: Bank wires may be delivered to:
     
  Can B̅ Corp. Bank: Investors Bank
  960 South Broadway, Suite 120   Wantagh Branch
  Hicksville, NY 11801   1164 Wantagh Ave
      Wantagh, New York 11793
    Account name: Can B̅ Corp.
    Account number: 1001127258