UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

 

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Fiscal Year Ended December 31, 2020

 

OR

 

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

 

For the Transition Period From ____________ to ____________

 

Commission File Number: 000-55753

 

Can B̅ Corp.

(f/k/a Canbiola, Inc.)

(Exact name of registrant as specified in its charter)

 

Florida   20-3624118

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification Number)

 

960 South Broadway, Suite 120, Hicksville NY 11801

(Address of principal executive offices)

 

516-595-9544

Registrant’s telephone number, including area code:

 

None

Securities Registered Pursuant to Section 12(b) of the Act:

 

Tile of each class   Trading Symbol(s)   Name of each exchange on which registered
None   CANB   N/A

 

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, Nil par value per share

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]

 

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [X] Smaller reporting company [X]
Emerging Growth Company [  ]    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[  ] Yes [X] No

 

The aggregate market value of voting stock held by non-affiliates of the registrant on December 31, 2020, was $3,758,316 based on the last reported sale price of the registrant’s Common Stock on the OTC Markets on that date.

 

As of March 25, 2021, the registrant had outstanding 16,667,655 shares of common stock, $0.00 par value per share.

 

 

 

 

 

 

Can B̅ Corp.

2019 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

 

Item No.    Description   Page
         
Cautionary Note Regarding Forward-Looking Statements   3
         
    PART I    
Item 1.   Business.   5
Item 1A.   Risk Factors.   10
Item 1B.   Unresolved Staff Comments.   10
Item 2.   Properties.   10
Item 3.   Legal Proceedings.   11
Item 4.   Mine Safety Disclosures.   11
         
    PART II    
Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.   11
Item 6.   Selected Financial Data.   13
Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations.   13
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.   14
Item 8.   Financial Statements and Supplementary Data.   14
Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.   15
Item 9A.   Controls and Procedures.   15
Item 9B.   Other Information.   16
         
    PART III    
Item 10.   Directors, Executive Officers and Corporate Governance.   16
Item 11.   Executive Compensation.   19
Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.   22
Item 13.   Certain Relationships and Related Transactions, and Director Independence.   23
Item 14.   Principal Accounting Fees and Services.   24
         
    PART IV    
Item 15.   Exhibits, Financial Statement Schedules.   25
         
Signatures   26

 

  2  

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain statements contained or incorporated by reference in this Annual Report on Form 10-K are considered forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) concerning our business, results of operations, economic performance and/or financial condition, based on management’s current expectations, plans, estimates, assumptions and projections. Forward-looking statements are included, for example, in the discussions about:

 

  strategy;
  new product discovery and development;
  current or pending clinical trials;
  our products’ ability to demonstrate efficacy or an acceptable safety profile;
  actions by regulatory authorities;
  product manufacturing, including our arrangements with third-party suppliers;
  product introduction and sales;
  royalties and contract revenues;
  expenses and net income;
  credit and foreign exchange risk management;
  liquidity;
  asset and liability risk management;
  the outcome of litigation and other proceedings;
  intellectual property rights and protection;
  economic factors;
  competition; and
  legal risks.

 

Any statements contained in this report that are not statements of historical fact may be deemed forward-looking statements. Forward-looking statements generally are identified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates,” “aims,” “plans,” “may,” “could,” “will,” “will continue,” “seeks,” “should,” “predict,” “potential,” “outlook,” “guidance,” “target,” “forecast,” “probable,” “possible” or the negative of such terms and similar expressions. Forward-looking statements are subject to change and may be affected by risks and uncertainties, most of which are difficult to predict and are generally beyond our control. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any forward-looking statement in light of new information or future events, except as required by law, although we intend to continue to meet our ongoing disclosure obligations under the U.S. securities laws and other applicable laws.

 

We caution you that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements, and therefore you should not place too much reliance on them. These factors include, among others, those described herein, under “Risk Factors” and elsewhere in this Annual Report and in our other public reports filed with the Securities and Exchange Commission. It is not possible to predict or identify all such factors, and therefore the factors that are noted are not intended to be a complete discussion of all potential risks or uncertainties that may affect forward-looking statements. If these or other risks and uncertainties materialize, or if the assumptions underlying any of the forward-looking statements prove incorrect, our actual performance and future actions may be materially different from those expressed in, or implied by, such forward-looking statements. We can offer no assurance that our estimates or expectations will prove accurate or that we will be able to achieve our strategic and operational goals.

 

Forward-looking statements are based on information we have when those statements are made or management’s good faith belief as of that time with respect to future events, and are subject to significant risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.

 

Moreover, new risks regularly emerge and it is not possible for our management to predict or articulate all risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this prospectus are based on information available to us on the date of this Annual Report. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this Annual Report.

 

  3  

 

 

JUMPSTART OUR BUSINESS STARTUPS ACT

 

We qualify as an “emerging growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we do not have more than $1,700,000,000 in annual gross revenue and did not have such amount as of December 31, 2020, the last day of our last fiscal year. We are electing to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.

 

As an emerging growth company, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:

 

  being permitted to present only two years of audited financial statements and only two years of related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this annual report;
  not being requested to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley Act”);
  reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and
  exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

 

We will remain an emerging growth company until the earliest to occur of: (i) our reporting $1 billion or more in annual gross revenues; (ii) the end of fiscal year 2021; (iii) our issuance, in a three year period, of more than $1 billion in non-convertible debt; and (iv) the end of the fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million on the last business day of our second fiscal quarter.

 

  4  

 

 

PART I

 

Item 1. Business

 

Company Overview

 

Can B̅ Corp. (the “Company,” “CAN B,” “CANB,” “we,” “us,” and “our”) was originally incorporated as WrapMail, Inc. (“WRAP”) in Florida on October 11, 2005 in order to tap into a largely un-serviced segment of the web-based advertising industry. Effective 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; however, the Company does not currently actively operate its WRAP or Prosperity divisions pending decision on whether to hold on to, sell or repurpose such assets.

 

Around the first quarter of 2017, the Company began to transition into the Hemp CBD industry and now operates four distinct health and wellness divisions: retail sales (Canbiola, Nu Wellness, Seven Chakras, and Pure Leaf Oil), R&D and manufacturing (Pure Health Products and Botanical Biotech), durable medical devices (Duramed), cultivation and processing (Green Grow Farms, Inc.). On May 15, 2017, WRAP changed its name to Canbiola, Inc. to reflect its transition. On March 6, 2020 CANB changed its name to “Can B̅ Corp.” in order to segregate its corporate identity from its lead products branded under the Canbiola™ brand.

 

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. On March 6, 2020, Can B̅ effected a 1 for 300 reverse stock split of its common stock. The accompanying consolidated financial statements retroactively reflect these stock splits.

 

Business Segments

 

The Company is in the business of promoting health and wellness through its development, manufacture and sale of products containing cannabinoids derived from hemp biomass (without psychoactive effect from THC) and the licensing of durable medical devises.

 

Hemp is thought to contain anywhere from 60 to over 100 naturally occurring compounds (cannabinoids) thought to interact with cannabinoid receptors present on the surface of cells in various parts of the central nervous system. The effects of cannabinoids are thought to depend on the area of the brain involved. Cannabidiol (“CBD”) is probably one of the most well-known of these compounds, thought to have many beneficial uses. CBD is incorporated into many of the Company’s products; however, the Company has just recently begun extracting cannabinol (“CBN”) and cannabigerol (“CBG”) for wholesale to third-parties looking to incorporate such compounds into their products. The Company has all of its hemp based raw materials to incorporated into products tested by a 3rd party independent laboratory. 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 it believes will improve people’s lives in a variety of areas.

 

  5  

 

 

FDA DISCLAIMER

 

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

 

  I-

Retail Sales 

 

The Company currently has four in-house branded CBD products that are sold to consumers, Canbiola™, Nu Wellness™, Seven Chakras™ and Pure Leaf Oil™. On February 22, 2021, the Company entered into an agreement to purchase additional CBD brand assets from Imbibe Health Solutions, LLC, a Delaware limited liability company. The assets will be placed into the Company’s wholly owned subsidiary, Imbibe Wellness Solutions, LLC, a Nevada limited liability company (fka Radical Tactical LLC) (“Imbibe”), and will include the intellectual property rights, including trademarks, logos, know how, formulations, productions procedures, copyrights, social media accounts, domain names and marketing materials relating to the Imbibe™ branded products, including a muscle and joint salve, unscented fizzy bath soak, CALM massage oil, Me x 3 Metabolic Energy (energy and dietary supplement), and Muscle, Joints & Back CBD Cryo Gel. The acquisition of the Imbibe™ assets has not closed and is pending the Company’s due diligence.

 

The Company’s Canbiola™ CBD products are sold via medical professionals under distribution agreements and directly by the Company via its website and vending machines. The Canbiola™ assets are held directly by the Company and include tinctures, soaps, bath soaks, cryo-gel, salves, massage oils, powders, capsules and roll-ons.

 

The Company’s Pure Leaf Oil™ assets are held by its wholly owned subsidiary, Pure Health Products, LLC, a New York limited liability company (“PHP” or “Pure Health Products”). Pure Leaf Oil™ CBD products are sold via PHP’s website, direct to consumer via walk-in business, and through distributors and are meant for retail customers not referred through the medical community. Pure Leaf Oil™ products include massage oils, joint salves, bath salts, nano sprays, drops, and cryo-gels. PHP also holds the assets related to its Seven Chakras™ brand. Seven Chakras™ is targeted toward health clubs, spas, and beauty lines and CBD products include lotion, massage oils, roll-ons, isolate, powders, capsules, and bath soaks. Severn Chakras™ has its own internet website and direct markets to its customer base.

 

PHP has also created a new brand, Nu Wellness™, which it intends to market through distributors as an independent pharmacy brand targeted towards independent retail drug stores. Nu Wellness™ has yet to launch or make sales, which are intended to occur sometime in 2021.

 

  II- R&D and Manufacturing

 

To date, Pure Health Products has acted as the Company’s research and development and manufacturing arm. PHP manufactures all of the Company’s CBD products and also provides white label manufacturing and production services to third parties. Through PHP, the Company is able to control the manufacturing process of its products while reducing its production costs.

 

In December, 2018, the Company acquired 100% of the membership interests in Pure Health Products, with which it had had and has an exclusive production agreement, pursuant to an Acquisition Agreement (“PHP Acquisition Agreement”). 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.

 

Around March 17, 2021, the Company acquired assets through its newly-formed, wholly-owned subsidiary, Botanical Biotech, LLC, a Nevada limited liability company (“BB”or “Botanical Biotech”). Such assets include certain materials and manufacturing equipment and marketing or promotional designs, brochures, advertisements, concepts, literature, books, media rights, rights against any other person or entity in respect of any of the foregoing and all other promotional properties, in each case primarily used, developed or acquired by the Sellers for use in connection with the ownership and operation of the BB Assets. BB has also engaged certain sellers of the BB assets and lab technicians in order to perform research and development and manufacturing of CBG and CBN products to be sold to third parties for incorporation into their products. The Company does not at this time intend to develop or market its own products containing CBG or CBN.

 

  6  

 

 

  III- Durable Medical Equipment

 

Through its medical device division, Duramed, Inc. (“Duramed”) and Duramed MI LLC, a Nevada limited liability company fka DuramedNJ, LLC (“Duramed MI”), the Company serves the post-surgery medical patient arena aiming 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 was dependent upon meeting the monthly minimum, which did not happen. 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. We did not meet the monthly minimums as contemplated by the Sam MOU and as such we are currently distributing the aforementioned products on an at-will, non-exclusive basis.

 

On May 29, 2019, the Company created Duramed MI to execute the same business strategy into the no-fault insurance market in New Jersey that it had developed in New York; however, Duramed MI is not currently operating in NJ and is in the process of moving its operations to Michigan, which have not begun yet.

 

  IV- 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”), Pivt Labs, LLC, a Nevada limited liability company fka NY Hemp Depot LLC (“Pivt”), a wholly-owned subsidiary of CANB . Pursuant to the JV Agreement, NY – SHI and Pivt entered into a joint venture for the purpose of jointly implementing a business model to aggregate and purchase fully-grown, harvested industrial hemp from third-party farmers in the State of New York. The Joint Venture was not formally consummated and has been disbanded, with the parties executing a settlement agreement. Pursuant to the settlement agreement, NY – Shi agreed to return all shares issued to it under the JV Agreement (which return has yet to be processed) but was permitted to keep the cash payment of $500,000.00 made to it by the Company. Before the end of the joint venture NY – SHI’s cultivating license was amended to add Pivt. Pivt currently has no operations but the Company does intend to use it for hemp cultivation in the future, if and when it becomes economically viable to do so.

 

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 125,000 (post split) shares of the Company’s common stock (the “Purchase Shares”). On June 30, 2020 (the “Valuation Date”), a valuation of the Purchase Shares was to be (and was) performed for the purpose of determining whether the Market Price Per Purchase Share (as defined in the GGFI Agreement) on the Valuation Date was less than $1,000,000. In the event that the aggregate Market Price Per Purchase Share on the Valuation Date was less than $1,000,000, the Company was to 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) equaled $1,000,000. For purposes of the valuation, Market Price Per Purchase Share was to be determined based upon the 10-day average VWAP for the 10-day period ending on June 30, 2020. On June 30, 2020, it was determined that ICNB was owed an additional 418,714 shares, which it was issued.

 

  7  

 

 

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. 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. On July 29, 2020, ICNB entered into an agreement whereby ICNB agreed to exchange its CANB Shares for CANB’s 1,000,000 ICNB shares.

 

Through GGFI, the Company grew its own hemp in New York and partnered with third party growers in other states whereby GGFI provided the farmers with seed and training and splits profits with the farmers. GGFI was to supply the Company with all hemp needed for the Company to produce its CBD products, which hemp would be processed by a third party and shipped to the Company’s production facility in Lacey, WA. Notwithstanding the foregoing, currently, it is less expensive to buy CBD isolate than to produce the isolate from hemp grown by the Company. Accordingly, the Company has stopped its Green Grow operations in favor of buying raw products from third parties. If and when it makes economic sense to grow its own hemp again, the Company will resume Green Grow operations.

 

  V- Lifestyle Brands

 

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® trademark (the “Mark”) in connection with the Company’s manufacture, marketing, distribution, and sale of products (the “License”). Due to COVID 19, the Company was delayed in its production of LIFEGUARD® products and has yet to begin such production. Consequently, the Company is in negotiations with Lifeguard to terminate the License and each walk-away. The Company and Lifeguard have yet to execute the settlement agreement but have agreed on terms, being that the Lifeguard Agreement will be terminated, the parties will release any potential claims they may have against one another and the Company will deliver to Lifeguard any promotional or marketing materials and samples developed by the Company under the License.

 

Competitive Conditions

 

The CBD and cannabis markets are flooded with competition ranging from mom and pop operations to multi-million-dollar conglomerates, many with longer operating histories, more capital and/or more industry knowledge than the Company. The Company hopes to partner with or engage industry specialists to help set it apart from its numerous competitors. The Company believes that one of those points of differentiation will be its 3rd party independent testing “Certificate of Analysis” conducted on all of the CBD isolate products it purchases and posting of those lab results on its website. The three largest CBD companies known to the Company are Elixinol LLC, a UK based company with $37 million revenue, GW Pharmaceuticals also UK based with $19 million revenue, and Aurora Cannabis based in Canada with just over $19 million revenue. The top USA companies include Medical Marijuana, CV Sciences, Gaia Herbs, and Charlotte’s Web with respective revenues of $59, $48, $45, and $17 million. Worthy of note is that Charlotte’s Web is on the shelf right next to us at Northwell health.

 

  8  

 

 

Hemp and CBD biomass has glutted the US market, benefiting our manufacturing divisions with less expensive product but causing our hemp cultivation and processing division to become financially imprudent until the oversupply issue has resolved. Thus, we have halted operations in such division for the time being but may resume such operations should a sound opportunity present. Although we have contract farm agreements in place to grow and harvest well over 100 acres of hemp biomass in three states, other raw materials for our finished products have at least three sources of supply in the open market and we have little risk of any ingredient supply at this time.

 

Intellectual Property

 

We won the following patents for our WRAPmail technology: US Patent no. 8572275 issued on October 29, 2013. This patent expires in October 2022. On July 20, 2015, WRAPmail filed for a new patent under the title Method, System and Software for Dynamically Extracting Content for integration with Instant Messages, which application is still pending and not being actively pursued by the Company. The above patents relate to the document management and email marketing divisions which are not presently being developed. Due to diminishing revenue from this division, the Company accountant determined to reduce the fair value of these patents to $0.

 

The Company employs through its Pure Health Product LLC division, two full time product researchers and developers and technology experts who, on a daily basis, set the quality standards and new product development status and time-line agendas under the direct supervision of the Company’s management team. All finished products are stored for time- quality measurement, and EVERY batch of every product is sent to an independent third-party lab for a Certificate of Analysis (“COA”) of the finished products. These COA’s are both listed on our web site and available via the QR code on every retail package.

 

The Company has not registered any of its trademarks with the USPTO or any state agency.

 

Employees

 

The Company, directly or through its subsidiaries, currently has 17 employees, 15 of which are full-time employees, one who is part-time, and one who is under a service agreement.

 

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

 

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

 

Botanical Biotech employs a division President, lab mangers, and one contract lab product designer.

 

The remaining three people are corporate staff and are directly employed by the Company.

 

Reports to Security Holders

 

Our common stock is registered under the Securities Exchange Act of 1934 and we are required to file current, quarterly and annual reports and other information with the SEC. You may read and copy any document that we file at the SEC’s public reference facilities at 100 F. Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-732-0330 for more information about its public reference facilities. Our SEC filings are available to you free of charge at the SEC’s web site at www.sec.gov. We are an electronic filer with the SEC and, as such, our information is available through the Internet site maintained by the SEC that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. This information may be found at www.sec.gov and posted on our website at www.canbiola.com.

 

  9  

 

 

Research and Development

 

In fiscal year 2020 and 2019 we spent $165,000 and $150,000 respectively, in research and development which was expensed as spent.

 

Government Regulation

 

The cultivation and sale of hemp and hemp products is federally regulated under the United States Farm Bill. The 2018 Farm Bill removed hemp as a Schedule 1 Substance under the Controlled Substances Act; however, rules and regulations relating to manufacture and sale of CBD products under the Farm Bill must still be promulgated and are expected to impact the Company’s operations. As the 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, cosmetics 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, with some states allowing the sale of CBD, some states limiting to medical purposes and some states banning outright. 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 has not sought or received approval of any of its products from the FDA or any state agency. Should the Company be sanctioned by the FDA or state agencies, it could materially, negatively impact the Company’s operations and revenue sources.

 

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 additionally state regulated for shipping and the Company maintains a current list.

 

Transfer Agent

 

We have engaged Transhare Corporation located at 2849 Executive Drive, Suite 200, Clearwater, FL 33762 as our transfer agent.

 

Item 1A. Risk Factors

 

We are a smaller reporting company and not required to provide the information in this Item.

 

Item 1B. Unresolved Staff Comments

 

Not applicable.

 

Item 2. Properties

 

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

 

The lease payments are: Pure Health Products in Lacey WA $2,345 per month, Can B̅ Corp. home office in Hicksville NY $3,917 per month, out of which all subsidiaries other than Botanical Biotech and PHP operate.

 

Botanical Biotech has taken over a short-term lease where the lab and production facilities are set up for full operation in Miami while it scouts for a more suitable location. Once a new lease decision is made, the move, if decided upon, and consequent set-up would take approximately three days to relocate.

 

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Item 3. Legal Proceedings

 

We are not aware of any pending or threatened legal proceedings in which we are involved, except as disclosed herein.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

PART II

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

Market Information

 

Our common stock is not registered or traded on any national stock market or NASDAQ but is listed for quotation on OTC market’s OTCQB® Venture Market under the symbol “CANB.” Our common stock began trading April 2011. Trading in our common stock has historically lacked consistent volume, and the market price has been volatile.

 

The following table presents, for the periods indicated, the high and low bid prices of the Company’s common stock and is based upon information provided by OTC Market. These quotations below reflect inter-dealer prices, without retail mark-up, mark-down, or commission, and may not necessarily represent actual transactions.

 

2020 (Post 300:1 Reverse Split)
    High     Low  
First Quarter   $ 6.30     $ 0.95  
Second Quarter   $ 1.98     $ 0.40  
Third Quarter   $ 1.80     $ 0.40  
Fourth Quarter   $ 0.67     $ 0.35  

 

2019 (Pre- 300:1 Reverse Split adjusted for post-split numbers)
    High     Low  
First Quarter   $ 29.40     $ 11.93  
Second Quarter   $ 18.45     $ 11.10  
Third Quarter   $ 13.17     $ 12.90  
Fourth Quarter   $ 6.90     $ 5.94  

 

The last reported sale price of the Company’s common stock as of March 25, 2021 was $0.52 per share.

 

Record Holders

 

As of March 25, 2021, there were 16,667,655 shares of common stock issued and outstanding to approximately 203 shareholders of record.

 

Dividends

 

The Company paid $0 in in-kind dividends on its Series B Preferred Stock by the issuance of common stock to the Series B holders in 2020 and 2019. Each share of Series B Preferred Stock has the first preference to dividends, distributions and payments upon liquidation, dissolution and winding-up of the Company, and is entitled to an accrued cumulative but not compounding dividend at the rate of 5% per annum whether or not declared. After six months of the issuance date, such share and any accrued but unpaid dividends can be converted into common stock at the conversion price which is the lower of (i) $0.0101; or (ii) the lower of the dollar volume weighted average price of CANB common stock on the trading day prior to the conversion day or the dollar volume weighted average price of CANB common stock on the conversion day. The Series B Preferred Stock have no voting rights. There are no currently outstanding shares of Series B Preferred Stock.

 

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We do not anticipate paying any cash dividends in the foreseeable future. Except for its Series B Preferred Stock, of which there are none issued and outstanding, the payment of dividends is within the discretion of our Board of Directors and will depend on our earnings, capital requirements, financial condition, and other relevant factors. There are no restrictions that currently limit our ability to pay dividends on our common stock other than those generally imposed by applicable state law.

 

Securities Authorized for Issuance under Equity Compensation Plans  

 

On July 28, 2020, the Company adopted an Incentive Stock Option Plan (“ISO”). The purpose of this Can B Corp. 2020 ISO (the “Plan”) is to attract, retain, and motivate employees, officers, directors, consultants, agents, advisors and independent contractors of the Company and its Related Companies by providing them the opportunity to acquire a proprietary interest in the Company and to align their interests and efforts to the long-term interests of the Company’s stockholders. The Plan is administered by the Compensation Committee or, in the Board’s sole discretion, the Board. The Compensation Committee shall be composed of two or more directors, each of whom is a “non-employee director” within the meaning of Rule 16b-3(b)(3) promulgated under the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission. As used in this Plan, the term “Compensation Committee” shall be construed as if followed by the words “(if any);” and nothing in this Plan requires the Board to have a Compensation Committee. Except for the terms and conditions explicitly set forth in the Plan and to the extent permitted by applicable law, the Committee shall have full power and exclusive authority, subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board or a Committee composed of members of the Board, to (i) select the Eligible Persons to whom Awards may from time to time be granted under the Plan; (ii) determine the type or types of Award to be granted to each Participant under the Plan; (iii) determine the number of shares of Preferred Stock and/or Common Stock (collectively, “Stock”) to be covered by each Award granted under the Plan; (iv) determine the terms and conditions of any Award granted under the Plan; (v) approve the forms of notice or agreement for use under the Plan; (vi) determine whether, to what extent and under what circumstances Awards may be settled in cash, shares of Preferred Stock and/or Common Stock or other property or canceled or suspended; (vii) determine whether, to what extent and under what circumstances cash, shares of Stock, other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the Participant; (viii) interpret and administer the Plan and any instrument evidencing an Award, notice or agreement executed or entered into under the Plan; (ix) establish such rules and regulations as it shall deem appropriate for the proper administration of the Plan; (x) delegate ministerial duties to such of the Company’s employees as it so determines; and (xi) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan. Subject to adjustment from time to time, a maximum of two thousand (2,000) shares of Class C Preferred Stock and ten million (10,000,000) shares of Common Stock shall be available for issuance under the Plan. Shares issued under the Plan shall be drawn from authorized and unissued shares or shares now held or subsequently acquired by the Company as treasury shares. The Committee shall also, without limitation, have the authority to grant Awards as an alternative to or as the form of payment for grants or rights earned or due under other compensation plans or arrangements of the Company. Subject to earlier termination in accordance with the terms of the Plan and the instrument evidencing the Option, the maximum term of an Option shall be ten years from the Grant Date. An Award may be granted to any employee, officer or director of the Company or a Related Company whom the Committee from time to time selects. An Award may also be granted to any consultant, agent, advisor or independent contractor for bona fide services rendered to the Company or any Related Company that (a) are not in connection with the offer and sale of the Company’s securities in a capital-raising transaction and (b) do not directly or indirectly promote or maintain a market for the Company’s securities.

 

Equity Compensation Plan Information

 

Plan Category   Number of Securities to be Issued Upon Excise of Outstanding Options, Warrants and Rights     Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights     Number of Securities Remaining Available for Future Issuances Under Equity Compensation Plans*  
Equity compensation plans approved by security holders     1,187,199     $ 0.36       58,812.801  
Equity compensation plans not approved by security holders     -       -       -  
Total     1,187,199     $ 0.36       58,812,801  

 

  Represents 2,000 Series C Preferred Shares on an as-converted basis and 8,812,801 shares of common stock available under the Plan. 

 

Recent Sales of Unregistered Securities

 

The following is a summary of transactions since our previous disclosure on our Form 10-Q filed with the Securities and Exchange Commission on November 16, 2020 involving sales of our securities that were not registered under the Securities Act of 1933, as amended (the “Securities Act”). Each offer and sale were exempt from registration under either Section 4(a)(2) of the Securities Act and/or Rule 506(b) or Rule 504 under Regulation D of the Securities Act, unless otherwise indicated.

 

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From October 1, 2020 through December 31, 2020, the company issued an aggregate of 435,311 shares  of CANB Common Stock to multiple consultants for services rendered. The aggregate amount of consideration received totaled $161,123.

 

From October 1, 2020 through December 31, 2020, the Company issued an aggregate of 70,000  shares of CANB Common Stock to members of the Advisory Board, Medical Advisory Board, and Sports Advisory Board for services rendered. The aggregate amount of consideration received totaled $22,155.

 

From October 1, 2020 through December 31, 2020, the Company issued an aggregate of 50,000 shares of Common Stock under the terms of hemp processing use agreement. The aggregate amount of consideration received totaled $15,825.

 

From October 1, 2020 through December 31, 2020, the Company issued an aggregate of 600,000 shares of Common Stock under the terms of Stock Purchase Agreements for total proceeds of $300,000. The aggregate offering price under the Stock Purchase Agreement totaled $.50.

 

From October 1, 2020 through December 31, 2020, the Company issued an aggregate of 193,524 shares of Common Stock to FirstFire Global as agreed for conversion  shares related to a note payable. The aggregate amount of consideration received totaled $61,250.

 

From October 1, 2020 through December 31, 2020, the Company issued an aggregate of 394,304 shares of CANB Common Stock to Arena Special Opportunities Partners I, LP for a commitment fee pursuant to a securities purchase agreement. The aggregate amount of consideration received totaled $124,797.

 

From October 1, 2020 through December 31, 2020, the Company issued an aggregate of 15,133 shares of CANB Common Stock to Arena Special Opportunities Fund, LP for a commitment fee pursuant to a securities purchase agreement. The aggregate amount of consideration received totaled $4,783.

 

From January 1, 2021 through March 31, 2021  the Company issued an aggregate of 6,887,057 shares of Common Stock under its Regulation 1-A offering statement currently in effect. The aggregate offering price under the Stock Purchase Agreement totaled $.50.

 

From January 1, 2021 through March 25, 2021 the Company issued an aggregate 130,750 shares of common stock to various consultants for services. The aggregate amount of consideration received totaled $31,635.

 

From January 1, 2021 through March 25, 2021 the Company issued an aggregate of 355,057 shares of Common Stock under an asset acquisition agreement with Botanical Biotech . LLC for asset purchase which was half in cash and half in equity issuance. The aggregate amount of consideration received totaled $137,673.

  

From January 1, 2021 through March 25, 2021 the Company issued an aggregate of 150 shares of Preferred C shares under multiple employment agreements. The Preferred C shares converted to 3,750,000 shares of Common Stock upon issuance. The aggregate amount of consideration received totaled $145,063.

 

In March through April 2021 the Board of Directors authorized issuance of Preferred D, voting rights only shares, each holding voting rights of 10,000 common to 1 Preferred D to Marco Alfonsi, Stanley Teeple, and Pasquale Ferro in the amount of 600 shares each and to Philip Scala in the amount of 150 shares.

 

Item 6. Selected Financial Data

 

Not required for smaller reporting companies.

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

 

General

 

Can B̅ Corp. was originally formed as a Florida corporation on October 11, 2005, under the name of WrapMail, Inc. Effective January 5, 2015, we acquired 100% ownership of Prosperity Systems, Inc., which the Company is in the process of dissolving. Effective December 28, 2018, we acquired 100% ownership of Pure Health Products. In November 2018, we formed Duramed as a wholly-owned subsidiary. The Company is presently in the process of dissolving Prosperity. 

 

We manufacture and sell products containing CBD. We also provide document, project, marketing and sales management systems to our residual business clients through our website and proprietary software, which divisions are being wound-down. The consolidated financial statements include the accounts of CANB and its wholly-owned subsidiary Pure Health Products from the date of its acquisition on December 28, 2018. Duramed Inc. results reflect their first full year of operation in 2020 and reflect the general downturn in the elective surgery business due to COVID. Green Grow Farms was essentially dormant as it has produced sufficient biomass which was converted into isolate to supply Pure Health products for most of 2021’s anticipated production.

 

Results of Operations

 

Year Ended December 31, 2020 compared with Year Ended December 31, 2019:

 

Revenues decreased $595,834 from $2,305,503 in 2019 to $1,709,669 in 2020. The decrease was due to the COVID-19 pandemic. Essentially, nationally elective surgeries were curtailed in favor of emergency use of all operating rooms and facilities, which dramatically curtailed the use of our ultrasound device associated with patient recovery. Additionally, distributor and medical office sales of our main-line CBD products such as tinctures and salves, were diminished due to closing and limited access to medical office facilities, again directly tied to the COVID pandemic.

 

Cost of product sales decreased $320,522 from $598,584 in 2019 to $278,062 in 2020 due to an oversupply of Hemp and CBD biomass in the market.

 

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Officers and director’s compensation and payroll taxes decreased $561,998 from $2,639,711 in 2019 to $2,077,713 in 2020. The 2020 expense amount ($2,077,713) includes additional stock-based compensation of ($1,589,224) pursuant to their respective employment agreements and related payroll taxes ($33,705). The 2019 expense amount ($2,639,711) includes additional stock-based compensation of ($1,587,060) pursuant to their respective employment agreements and related payroll taxes ($39,962).

 

Consulting fees decreased $2,236,267 from $3,014,329 in 2019 to $778,062 in 2020. The 2020 expense amount ($778,062) includes stock-based compensation of ($669,956), resulting from stock issued for the service of consultants. The 2019 expense amount ($3,014,329) includes stock-based compensation of ($2,831,232), resulting from stock issued for the service of consultants.

 

Advertising expense increased $186,481 from $333,441 in 2019 to $519,922 in 2020.

 

Hosting expense increased $9,747 from $13,034 in 2019 to $22,781 in 2020.

 

Rent expense decreased $12,178 from $246,968 in 2019 to $234,790 in 2020.

 

Professional fees increased $245,772 from $287,441 in 2019 to $533,213 in 2020.

 

Depreciation of property and equipment increased $3,848 from $12,627 in 2019 to $16,475 in 2020.

 

Amortization of intangible assets increased $516,817 from $142,093 in 2019 to $658,910 in 2020.

 

Reimbursed expenses decreased $154,867 from $242,585 in 2019 to $87,718 in 2020.

 

Other operating expenses increased $209,334 from $667,097 in 2019 to $876,431 in 2020. The increase was due largely to higher commission fees, supplies expense and office expense in 2020 compared to 2019.

 

Net loss decreased $184,249 from $5,900,760 in 2019 to $5,716,511 in 2020. The increase was due to the $1,793,311 decrease in total operating expenses offset by the $1,332,530 increase in other expense – net, the $1,220 increase in provision for income taxes and the $275,312 decrease in gross profit.

 

Liquidity and Capital Resources

 

At December 31, 2020, the Company had cash and cash equivalents of $457,798 and a working capital of $1,792,668. Cash and cash equivalents increased $411,258 from $46,540 at December 31, 2019 to $457,798 at December 31, 2020. For the year ended December 31, 2020, $2,383,598 was provided by financing activities, $1,947,091 was used in operating activities, and $25,249 was used in investing activities.  

 

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

 

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

 

We have no off-balance sheet arrangements.  It is anticipated that Green Grow will again begin operations later in 2021 as Pure Health Products revenue increases and the need for additional isolate is present. Today, the available oversupply of isolate makes it cheaper to buy quality product at the market than to grow, harvest, and extract from scratch. Duramed, Inc. is beginning to show improvements in office utilization of its ultrasound device as more surgery centers are reopening.

 

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

 

Not applicable.

 

Item 8. Financial Statements and Supplementary Data

 

Our Consolidated Financial Statements and Notes thereto, for the fiscal years ended December 31, 2020 and 2019 and the report of BMKR, LLP, our independent registered public accounting firm, are set forth on pages F-1 through F-25 of this Annual Report.

 

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

Not applicable.

 

Item 9A. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer (CEO), as appropriate, to allow timely decisions regarding required disclosure. Based on the evaluation, the CEO has concluded that our disclosure controls and procedures are ineffective to ensure that information disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. This determination was based on the small size of our accounting staff and the lack of segregation of duties.

 

To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

 

Management Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

 

Any internal control system, no matter how well designed, has inherent limitations and may not prevent or detect misstatements. Accordingly, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

 

Management, with the participation of our Chief Executive Officer, has evaluated the effectiveness of our internal control over financial reporting as of December 31, 2020 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, because of the Company’s limited resources and limited number of employees, and the absence of an audit committee, management concluded that, as of December 31, 2020, our internal control over financial reporting is not effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principle, which creates a material weakness. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness means there is a risk that our financial reports or other filings may contain an error or inaccuracy or not submitted timely.

 

There was a material weakness in the Company’s internal control over financial reporting due to the fact that the Company did not have an adequate process established to ensure appropriate levels of review of accounting and financial reporting matters, which resulted in our closing process not identifying all required adjustments and disclosures in a timely fashion. We expect that the Company will need to hire accounting personnel with the requisite knowledge to improve the levels of review of accounting and financial reporting matters. The Company may experience delays in doing so and any such additional employees would require time and training to learn the Company’s business and operating processes and procedures. For the near-term future, until such personnel are in place, this will continue to constitute a material weakness in the Company’s internal control over financial reporting that could result in material misstatements in the Company’s financial statements not being prevented or detected.

 

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Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934) during the year ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Item 9B. Other Information

 

In accordance with the employment agreements for Marco Alfonsi, Pasquale Ferro, and Stanley Teeple, respectively, 50 of the 200 Preferred C shares allocated to each employee were issued to each, which were immediately converted, representing 1,250,000 common shares for each person.

On March 27, 2021, the Company filed an amendment to its articles of incorporation to authorize 4,000 shares of a new Series D Preferred Stock with a par value of $0.001 each. All Series D Preferred Shares shall rank senior to all shares of Common Stock of the Company with respect to liquidation preferences and shall rank pari passu to all current and future series of preferred stock, unless otherwise stated in the certificate of designation for such preferred stock. Each Series D Preferred Share shall have voting rights equal to 10,000 shares of Common Stock, adjustable at any recapitalization of the Company’s stock. In the event of a liquidation event, whether voluntary or involuntary, each holder shall have a liquidation preference on a per-share amount equal to the par value of such holder’s Series D Preferred Shares. The holders shall not be entitled to receive distributions made or dividends paid to the Company’s other stockholders. Except as otherwise required by law, for as long as any Series D Preferred Shares remain outstanding, the Company shall have the option to redeem any outstanding share of Series D Preferred Shares at any time for a purchase price of par value per share of Series D Preferred Shares (“Price per Share”). Should the Company desire to purchase Series D Preferred Shares, the Company shall provide the Holder with written notice and a check or cash in an amount equal to the number of shares of Series D Preferred Shares being purchased multiplied by the Price per Share. The shares of Series D Preferred Shares so purchased shall be deemed automatically cancelled and the Holder shall return the certificates for such share to the Corporation. On or around March 27, 2021, the Company issued Mr. Alfonsi, Mr. Ferro, and Mr. Teeple Series D Preferred Stock in the amount of 600 shares each and to COO Philip Scala in the amount of 150 shares, collectively representing 19,500,000 voting shares.

 

On January 1, 2021, the Company issued a convertible promissory note to KORR Acquisition Group, Inc. in the principal amount of $175,000 for consulting services provided. The note had a maturity of one year and accrued interest at a rate of 6% per annum. On or around March 26, the Company paid the note in full. KORR used the proceeds from the Note and re-invested it through the Company’s Regulation A offering.

 

PART III

 

Item 10.  Directors, Executive Officers and Corporate Governance

 

Our board of directors is to be elected annually by our shareholders. The board of directors elects our executive officers annually. Our directors and executive officers as of March 25, 2021 are as follows:

 

Name   Age   Position
Marco Alfonsi   60   CEO, Director and Chairman since June 15, 2017
Stanley L. Teeple   72   CFO, Secretary and Director since October 1, 2018
Phil Scala   69   Interim COO since August 15, 2019
Pasquale Ferro   60   President, Pure Health Products since December 31, 2018
David Posel   43   COO. Pure Health Products- since February 12, 2018
Frederick Alger Boyer, Jr.   52   Independent Director appointed October 9, 2019
Ronald A. Silver   85   Independent Director appointed October 9, 2019
James F. Murphy   73   Independent Director appointed October 9, 2019

 

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

 

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

 

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

 

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

 

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

 

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

 

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.

 

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David Posel, COO of Pure Health Products, LLC, 40, served as the Company’s COO during 2018, when the Company’s operations were limited to its contractual arrangement with Pure Health Products. After acquiring PHP directly, Mr. Posel was transitioned to COO of PHP.

 

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

 

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

 

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 established an audit committee, compensation committee, or nominating committee. With one of the independent Directors sitting as chair of each committee. Mr. Ron Silver is Chairman of the Nominating Committee, Mr. James Murphy is Chairman of the Audit Committee, and Mr. Alger Boyer is Chairman of the Compensation Committee.

 

Family Relationships

 

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

 

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Director or Officer Involvement in Certain Legal Proceedings

 

Our current directors and executive officers have not been involved in any legal proceedings as described in Item 401(f) of Regulation S-K in the past ten years.

 

Director Independence

 

The Company is not currently listed on any national securities exchange that has a requirement that the board of directors be independent. However, in anticipation of a possible exchange up listing, and in an effort toward better Board oversight, the company has engaged three independent Directors making the independent outside directors a majority on the Board of Directors.

 

Code of Ethics

 

We have adopted a Code of Ethics that applies to all of our employees and officers, and the members of our Board of Directors. This Code of Ethics is posted on the Company’s website www.canbiola.com and applies to all executive officers including CEO, CFO and COO.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based on our review of the reports filed by Reporting Persons, we believe that, during the year ended December 31, 2020, the following Reporting Persons did not meet all applicable Section 16(a) filing requirements: (i) Stanley Teeple, (ii) David Posel, and (iii Phil Scala. (iv.) Frederick Alger Boyer, (v.) Ronald Silver, (vi) James Murphy, (vi.) Pasquale Ferro, (vii.) Andrew Holtmeyer, (viii) Marco Alfonsi Otherwise, we believe that the Reporting Persons met such filing requirements.

 

Item 11. Executive Compensation

 

The table below summarizes all compensation awarded to, earned by, or paid to our executive officers and directors for all services rendered in all capacities to us during the previous two fiscal years, as of December 31, 2020.

 

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)     2019     $ 180,000     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 180,000  
      2020     $ 112,500     $ 0     $ 0     $ 93,906     $ 0     $ 0     $ 0     $ 206,406  
Stanley L. Teeple(2)     2019     $ 180,000     $ 0     $ 372,667     $ 117,000     $ 0     $ 0     $ 0     $ 669,667  
      2020     $ 112,500     $ 0     $ 469,301     $ 93,906     $ 0     $ 0     $ 0     $ 675,707  
Andrew Holtmeyer (3)     2019     $ 180,000     $ 0     $ 105,485     $ 0     $ 0     $ 0     $ 0     $ 285,485  
      2020     $ 6,000     $ 0     $ 211,549     $ 0     $ 0     $ 0     $ 0     $ 217,549  
David Posel (4)     2019     $ 60,000     $ 0     $ 64,355     $ 0     $ 0     $ 0     $ 0     $ 124,355  
      2020     $ 60,000     $ 0     $ 64,531     $ 0     $ 0     $ 0     $ 0     $ 124,531  
Pasquale Ferro (5)     2019     $ 180,000     $ 0     $ 527,425     $ 0     $ 0     $ 0     $ 0     $ 707,425  
      2020     $ 112,500     $ 0     $ 528,870     $ 93,906     $ 0     $ 0     $ 0     $ 735,276  
Phil Scala (6)     2019     $ 7,500     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 7,500  
      2020     $ 0     $ 0     $ 0     $ 93,906     $ 0     $ 0     $ 0     $ 93,906  

 

  19  

 

 

(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. On December 28, 2020, Marco Alfonsi signed a three year Employment Agreement. Under that agreement, he is to receive a i) base salary of fifteen thousand dollars ($15,000.00) per month, ii) is eligible to receive cash and or stock bonuses, iii) shall receive a stock bonus in accordance with the Company’s Incentive Stock Option Plan (“ISOP”) in an amount of one-hundred thousand dollars ($100,000) per year of the Agreement, iv) 200 shares of the Company’s Series C Preferred stock, and v) usual and customary benefits including expense reimbursement, health and life insurance plan reimbursements and allowances.

 

(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 provided 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 conversion vesting (but not voting) period of four years. An additional three shares of Series A Preferred Stock were issued in April 2019 per a new employment Agreement. The fair value of the Series A Preferred share issued in April 2019 is $992,250 and has a conversion (but not voting) vesting period of three years. In 2020 and 2019, the amortized portion of Series A preferred shares is $469,301 and $372,667, respectively. On December 28, 2020, Stanley Teeple signed a new three-year Employment Agreement. Under that agreement, he is to receive a i) base salary of fifteen thousand dollars ($15,000.00) per month, ii) is eligible to receive cash and or stock bonuses, iii) shall receive a stock bonus in accordance with the Company’s ISOP in an amount of one-hundred thousand dollars ($100,000) per year of the Agreement, iv) 200 shares of the Company’s Series C Preferred stock, and v) usual and customary benefits including expense reimbursement, health and life insurance plan reimbursements and allowances.

 

(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. April 1, 2020 Mr. Holtmeyer’s Employment Agreement was terminated in favor of a variable rate Commission Agreement with the Company.

 

(4) On February 12, 2018, the Company executed an Executive Service Agreement (“Posel Agreement”) with David Posel. The Posel Agreement provides that Mr. Posel serves as the Company’s Chief Operating Officer for a term of 4 years. The Posel Agreement also provides for compensation to Mr. Posel of $5,000 cash per month and the issuance of 1 share of Series A Preferred Stock at the inception of the Posel Agreement. In the fourth quarter, this Posel Agreement was terminated due to the execution of a new Posel Employment Agreement between Pure Health Products, LLC and David Posel. The fair value of the Series A preferred Stock is $373,000 and has a conversion (but not voting) vesting period of four years. In 2020 and 2019, the amortized portion of Series A preferred Stock related to Mr. Posel’s service as an executive is $64,531 and $64,355, respectively.

 

(5) On December 28, 2018, the Company executed an Executive Service Agreement (“Ferro Agreement”) with Pasquale Ferro. The Ferro Agreement provides that Mr. Ferro serves as the President of Pure Health Products, LLC for a term of 4 years. The Ferro Agreement also provides for compensation to Mr. Ferro of $15,000 cash per month and the issuance of 5 shares of Series A Preferred Stock upon execution of the Ferro Agreement. The fair value of the Series A preferred shares is $2,109,700 and has a conversion (but not voting) vesting period of four years. In 2019, the amortized portion of Series A preferred stock is $527,425. On December 28, 2020, Pasquale Ferro signed a three year Employment Agreement. Under that agreement, he is to receive a i) base salary of fifteen thousand dollars ($15,000.00) per month, ii) is eligible to receive cash and or stock bonuses, iii) shall receive a stock bonus in accordance with the Company’s ISOP in an amount of one-hundred thousand dollars ($100,000) per year of the Agreement, iv) 200 shares of the Company’s Series C Preferred stock, and v) usual and customary benefits including expense reimbursement, health and life insurance plan reimbursements and allowances.

 

  20  

 

  

(6) On October 11, 2019, the Company executed an Executive Service Agreement (“Scala Agreement”) with Phil Scala. The Scala Agreement provides that Mr. Scala serves as the Interim Chief Operating Officer for a term of 90 days. The Scala Agreement also provides for compensation to Mr. Scala of $2,500 cash per month. On January 1, 2020, Scala and the Company extended the engagement until March 31, 2020. On December 28, 2020, Phil Scala signed a three-year Employment Agreement. Under that agreement, he is to receive a i) base salary of fifty-two thousand dollars per year, ii) is eligible to receive cash and or stock bonuses, iii) shall receive a stock bonus in accordance with the Company’s ISOP in an amount of one-hundred thousand dollars ($100,000), iv) 20 shares of the Company’s Series C Preferred stock, and v) usual and customary benefits including expense reimbursement, health and life insurance plan reimbursements and allowances.

 

As of 12-31-2020, there were Incentive Stock Option Awards issued to Marco Alfonsi, Pasquale Ferro, Stanley Teeple, and Phil Scala in the amount of $100,000 each. The Options were issued 12/29/2020 under the ISO Plan, at a strike price of $.361 per share for 277,008 shares for each of the 4 persons named.

 

The table below summarizes all compensation awarded to, earned by, or paid to our non-interested directors for all services rendered in all capacities to us during the previous two fiscal years, as of December 31, 2020.

 

Non-Interested Director Summary Compensation Table
Name and principal position   Year     Fees Earned or Paid in Cash     Stock awards

(1)

    Option awards (2)     Non-equity incentive plan comp.     Non-qualified deferred comp. earnings     All other com.     Total  
Frederick A. Boyer     2019     $     0     $ 0     $ 63,000     $      0     $        0     $ 0     $ 63,000  
Director     2020     $ 0     $ 8,870     $ 0     $ 0     $ 0     $ 0     $ 0  
Ronald Silver     2019     $ 0     $ 0     $ 63,000     $ 0     $ 0     $ 0     $ 63,000  
Director     2020     $ 0     $ 4,650     $

5,625

    $ 0     $ 0     $ 0     $

5,625

 
James F. Murphy     2019     $ 0     $ 0     $ 63,000     $ 0     $ 0     $ 0     $ 63,000  
Director     2020     $ 0     $ 8,870     $ 0     $ 0     $ 0     $ 0     $ 0  

 

  (1)

In September of 2020, both Boyer and Murphy were issued 10,000 each and in December 2020 both Boyer and Murphy were issued an additional 10,000 common shares each. Director Silver was issued 10,000 shares in September 2020.

  (2) As of December 31, 2020, Directors Boyer, Silver and Murphy each owned 10 thousand options to exercise and purchase stock at $.30 at any time until 2023. In 2020, Mr. Silver was issued 12,500 vested options to exercise and purchase stock at $.50 at any time until 2025.

 

No director has received cash compensation for their directorship. We do 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.

 

  21  

 

 

The table below summarizes all outstanding equity awards for officers, as of December 31, 2020.

 

Outstanding Equity Awards at Fiscal Year-End
Name and principal position   Grant Date   Grant Type   Number of Securities Underlying Unexercised Options Exercisable     Number of Securities Underlying Unexercised Options Unexercisable     Option Exercise Price     Option Expiration Date
Stanley Teeple - CFO   10/21/18   Stock Options     10,000                0     $ .30     10/20/23
Johnny Mack PhD – Ex COO   9/9/19   Stock Options     26,667       0     $ .30     9/8/24
Frederick A. Boyer - Director   10/15/19   Stock Options     10,000       0     $ .30     10/14/24
Ronald Silver - Director   10/15/19   Stock Options     10,000       0     $ .30     10/14/24
James F. Murphy - Director   10/15/19   Stock Options     10,000       0     $ .30     10/14/24
                                     
Ronald Silver - Director   12/9/20   Stock Options     12,500       0     $ .50     12/9/25
                                     
Stanley Teeple – CFO   12/29/20   Stock Options     277,008       0     $ .361     12/29/25
                                     
Pasquale Ferro - President   12/29/20   Stock Options     277,008       0     $ .361     12/29/25
                                     
Phil Scala - COO   12/29/20   Stock Options     277,008       0     $ .361     12/29/25
                                     
Marco Alfonsi - CEO   12/29/20   Stock Options     277,008       0     $ .361     12/29/25

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

The following tables set forth the ownership, as of March 25, 2021, of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding voting stock, our directors, and our executive officers and directors as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in control. The Company’s principal office is the business address for each of the named shareholders.

 

There are 16,667,655 shares of common stock outstanding as of March 25, 2021, 20 shares of Series A preferred stock issued and outstanding, which in aggregate are convertible into approximately 666,667 shares of common stock at any time and represent 1,333,333 votes, and 1,950 Series D preferred stock issued and outstanding, which in aggregate represent 19,500,000 votes and are non-convertible. There is a total of approximately 37,501,000 eligible to be cast in any Company vote as of March 25, 2021.

 

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

 

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

 

  22  

 

 

Name   Title  

Number of Common

Shares

    % of Common Shares     Number of Series A Preferred Shares     % of Series A Preferred Shares     Number of Series D Preferred Shares     % of Series D Preferred Shares     % of
Eligible Votes
    Number of Warrants currently exercisable or exercisable in the next 60 days  
Marco Alfonsi [1]   CEO, Director     1,447,996       8.69 %     5       25 %     600       30.77 %     20.75 %     277,008  
Stanley L. Teeple [2]   CFO, Director     1,253,269       7.52 %     4       20 %     600       30.77 %     20.05 %     287,008  
David Posel [3]   COO, Pure Health Products     0       0.0 %     1       5 %               0.18 %     0  
Pasquale Ferro [4]   President, Pure Health Products     1,354,602       8.13 %     5       25 %     600       30.77 %     20.50 %     277,008  
Phil Scala [5]   Interim COO     2,816       0.02 %     0       0 %     150       7.69 %     4.01 %     277,008  
Frederick A. Boyer [6]   Director     20,000       0.12 %     0       0 %           0     0.05 %     10,000  
Ronald Silver [6]   Director     16,668       0.10 %     0       0 %           0     0.04     22,500  
James F. Murphy [6]   Director     20,000       0.12 %     0       0 %           0     0.05     10,000  
All officers and directors as a group [8 persons]         4,115,351       24.69 %     15       75 %     1,950       100 %     65.64 %     1,160,532  

 

  (1)

As of March 25, 2021 Marco, Alfonsi owns approximately 1,447,996 shares of common stock, 5 shares of Series A preferred stock, which are convertible into 166,667 shares and equal 333,334 votes, and 600 shares of Series D preferred stock, which represent 6,000,000 votes. Prior to October 29, 2015, Mr. Alfonsi owned 270,000 shares of the Company’s common stock, at which time it was agreed that he would retire 166,666 shares of common stock for 5 shares of Series A Preferred Stock. Mr. Alfonsi owns 277,008 options to exercise and purchase stock at $.361 at any time until 2025. In addition to the listed shares, five adult members of Mr. Alfonsi’s family hold an aggregate of 42,343 shares of common stock, which shares have not been included in the above calculations.

     
  (2) As of March 25, 2021, Stanley L. Teeple owns approximately 1,253,269 shares of common stock, 4 shares of Series A preferred stock, which are convertible into 133,334 shares and equal 266,667 votes, and 600 shares of Series D preferred stock, which represent 6,000,000 votes. Mr. Teeple owns 10,000 options to exercise and purchase stock at $.001 at any time until October 2023 and 277,008 options to exercise and purchase stock at $.361 at any time until 2025.
     
  (3) As of March 25, 2021, David Posel owns 0 shares of common stock and 1 shares of Series A preferred stock, which is convertible into 33,334 shares and equal 66,666 votes.
     
  (4) As of March 25, 2021, Pasquale Ferro owns 69,119 shares of common stock jointly with his wife, approximately 1,285,483 shares of common stock individually, 5 shares of Series A preferred stock, which are convertible into 166,667 shares and equal 333,334 votes, and 600 shares of Series D preferred stock, which represent 6,000,000 votes. Mr. Ferro owns 277,008 options to exercise and purchase stock at $.361 at any time until 2025.
     
  (5) As of March 25, 2021, Phil Scala owns approximately 2,816 shares of common stock and 150 shares of Series D preferred stock, which represent 1,500,000 votes. Mr. Scala owns 277,008 options to exercise and purchase stock at $.361 at any time until 2025.
     
  (6) As of March 25, 2021, Directors Boyer, Silver and Murphy each owned 10 thousand options to exercise and purchase stock at $.30 at any time until 2023. Mr. Silver owed 12,500 options to exercise and purchase stock at $.50 at any time until 2025. As of March 25, 2021, directors Boyer and Murphy each held 20,000 common shares and director Silver held 16,668 shares of common stock.

 

There are no persons known by us to be the beneficial owner of more than 5% of our outstanding voting stock, excluding our directors and our executive officers.

 

Item 13. Certain Relationships and Related Party Transactions, and Director Independence

 

Can B̅ Corp.’s Corporate Governance Guidelines establish standards for evaluating Director independence and requires that a majority of Directors be independent. The Board determines the independence of each Director under Nasdaq governance standards. Those standards identify the types of relationships that, if material, could impair independence. The Board determined that, under the Nasdaq listing standards, the following non-employee Directors are independent: Frederick A. Boyer, Ronald Silver and James F. Murphy. Our non-independent directors are Marco Alfonsi and Stanley L. Teeple.

 

Except as described herein (or within the section entitled Executive Compensation of this report), none of the following parties (each a “Related Party”) has, in our fiscal years ended 2019 and 2020, 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:

 

  23  

 

 

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

 

LI Accounting Associates, LLC (“LIA”), an entity controlled by a relative of the Managing Member PHP, is a vendor of Can B̅ Corp. At December 31, 2020, the Company did not have an account payable due to LIA. For the twelve months ended December 31, 2020, the Company had expenses to LIA of $64,400.

 

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

 

During the twelve months ended December 31, 2020, we had products and service sales to related parties totaling $0.

 

Item 14. Principal Accounting Fees and Services

 

The following table sets forth fees billed to us by BMKR, LLP, our independent registered public accounting firm, during the fiscal years ended December 31, 2020 and December 31, 2019 for: (i) services rendered for the audit of our annual financial statements and the review of our quarterly financial statements; (ii) services by our independent registered public accounting firms that are reasonably related to the performance of the audit or review of our financial statements and that are not reported as audit fees; (iii) services rendered in connection with tax compliance, tax advice and tax planning; and (iv) all other fees for services rendered.

 

    December 31, 2020     December 31, 2019  
             
Audit Fees   $ 99,233     $ 34,600  
Audited Related Fees   $       $    
Tax Fees   $       $    
All Other Fees   $       $    

 

  24  

 

 

PART IV

 

Item 15. Exhibits, Financial Statement Schedules.

 

Exhibits Schedule

 

The following exhibits are filed with this Annual Report:

 

Exhibit   Description
     
2.1   Share Purchase Agreement with Prosperity Systems, Inc., dated January 5, 2015(2)
2.2   Membership Purchase Agreement with Pure Health Products(6)
2.3   Green Grow Stock Purchase Agreement(4)
2.4   Green Grow Modification Agreement(1)
2.5   Green Grow Settlement Agreement
3.1   Articles of Incorporation, as amended(1)
3.2   Bylaws(2)
4.1   Articles of Amendment designating Series A Preferred Stock rights, as amended(9)
4.2   Articles of Amendment designating Series B Preferred Stock rights(1)
4.3   Articles of Amendment designating Series C Preferred Stock rights(7)
4.4   Articles of Amendment designating Series D Preferred Stock rights
10.1   Employment Agreement with Marco Alfonsi dated December 29, 2020
10.2   Employment Agreement with Stanley L. Teeple dated December 29, 2020
10.3   Employment Agreement with Pasquale Ferro dated December 29, 2020
10.4   Employment Agreement with Phil Scala dated December 29, 2020
10.5   Commission Agreement with Andrew Holtmeyer  
10.6   Employment Agreement with Bradley Lebsock
10.7   Consulting Agreement with Jordan Schlosser
10.8   Memorandum of Understanding with Sam International and ZetrOZ Systems LLC(3)
10.9   License Agreement with Lifeguard Licensing Corp(5)
10.10   Can B̅ Corp. 2020 Incentive Stock Option Plan(8)
10.11   Arena Securities Purchase Agreement
10.12   ASOF Original Issue Discount Senior Secured Convertible Promissory Note
10.13   ASOF Warrant to Purchase Common Stock
10.14   ASOP Original Issue Discount Senior Secured Convertible Promissory Note
10.15   ASOP Warrant to Purchase Common Stock
10.16   Arena Security Agreement
10.17   Arena Intellectual Property Security Agreement
10.18   Arena Registration Rights Agreement
10.19   Arena Holding Escrow Agreement
10.20   Arena Guaranty Agreement from Company Subsidiaries
10.21   Asset Acquisition Agreement with Imbibe
10.22   Asset Acquisition Agreement with various Sellers (Botanical Biotech)
14.1   Code of Ethics(1)
21.1   List of Subsidiaries
31.1   Chief Executive Officer certification under Section 302 of the Sarbanes-Oxley Act of 2002
31.2   Chief Financial Officer certification under Section 302 of the Sarbanes-Oxley Act of 2002
32.1   Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2   Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS   Inline XBRL Instance Document
101.SCH   Inline XBRL Taxonomy Extension Schema
101.CAL   Inline XBRL Taxonomy Extension Calculation
101.DEF   Inline XBRL Taxonomy Extension Definition
101.LAB   Inline XBRL Taxonomy Extension Labels
101.PRE   Inline XBRL Taxonomy Extension Presentation

 

(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 Current Report on Form 8-K filed with the SEC on January 30, 2019 and incorporated herein by reference.
(4) Filed with the Current Report on Form 8-K filed with the SEC on December 6, 2019 and incorporated herein by reference.
(5) Filed with the Current Report on Form 8-K filed with the SEC on February 18, 2020 and incorporated herein by reference.
(6) Filed with the Current Report on Form 8-K filed with the SEC on January 15, 2019 and incorporated herein by reference.
(7) Filed with the Form 1-A/A, Part II, filed with the SEC on July 17, 2020 and incorporated herein by reference.
(8) Filed with the Form 1-A POS, Part II, filed with the SEC on September 11, 2020 and incorporated herein by reference.
(9) Filed with the Current Report on Form 8-K filed with the SEC on November 23, 2020 and incorporated herein by reference.

 

  25  

 

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Can B̅ Corp.
     
Date: April 14, 2021 By: /s/ Marco Alfonsi
  Name: Marco Alfonsi
  Title: Chief Executive Officer
    (Principal Executive Officer and Principal Accounting Officer)
     
Date: April 14, 2021 By: /s/ Stanley L. Teeple
  Name: Stanley L. Teeple
  Title: Chief Financial Officer

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Person   Capacity   Date
         
/s/ Marco Alfonsi   Director   April 14, 2021
Marco Alfonsi        
         
/s/ Stanley L. Teeple   Director   April 14, 2021
Stanley L. Teeple        
         
/s/ James F. Murphy   Director   April 14, 2021
James F. Murphy        

 

  26  

 

 

CAN B̅ CORP. AND SUBSIDIARY

 

Index to Financial Statements

 

Years Ended December 31, 2020 and 2019   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

 

 

 

 

 

 

BMKR, LLP

   
Certified Public Accountants  
  T 631-293-5000
1200 Veterans Memorial Hwy., Suite 350 F 631-234-4272
Hauppauge, New York 11788 www.bmkr.com

 

 

 

Thomas G. Kober CPA Brian Mayhew, CPA Charles W. Blanchfield CPA (Retired)
Alfred M. Rizzo CPA Moises Sa, CPA Bruce A. Meyer CPA (Retired)
Joseph Mortimer CPA Matthew Papadopoulos, CPA  

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and

Stockholders of Can B Corp.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Can B Corp. (the Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the financial statements, the Company incurred a net loss of $5,851,512 during the year ended December 31, 2020 and as of that date, had an accumulated deficit of 30,521,025. Due to recurring losses from operations and the accumulated deficit the Company has stated that substantial doubt exists about the Company’s ability to continue as a going concern.

 

Management’s evaluation of the events and conditions and management’s plans regarding these matters are discussed in note 2 The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to that matter.

 

Critical Audit Matters

 

Critical audit matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosure that are material to the financial statements and (2) involve especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit maters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 

Valuation of common stock and stock options issued for compensation or services

 

As discussed in note 10 to the financial statement, the Company issued $1,988,256 of common stock in 2020 to compensate employees, pay for services or acquire assets. The value of the shares issued is subjective because a discount is applied due to a lack of marketability. The stock issued is restricted for six months due to rule 144.The value of the stock issued is pervasive throughout the financial statement for both 2020 and 2019.

 

We identified the evaluation of the sufficiency of audit evidence over the value of the common stock and options issued as a critical audit matter.

 

The procedures we performed to address this critical audit matter included evaluating the appropriateness of the methodology used to compute the discount and verifying the data inputs.

 

Accounting for and valuation of asset purchases

 

The Company has made acquisitions and or entered into agreements to acquire intellectual property, hemp processing agreements or other business arrangements that require complex judgements as to the proper accounting principle, valuation and the appropriate amortization period. The Company has treated these transactions as asset acquisitions, see note 7.

 

We identified the assessment of the asset acquisition value and whether the transaction should be accounted for as an asset or business acquisition as a critical audit matter.

 

The procedures performed to address the mater included; obtaining and reviewing to legal documents for each transaction, examining the support for the consideration paid to ensure proper valuation and evaluating estimated useful life. We also evaluated if the assets acquired constitute a business as defined by generally accepted accounting principles.

 

Revenue recognition for durable medical equipment

 

The revenue recognition related to durable medical equipment is particularly challenging because of the slow pace of collections and the challenging nature of medical billing and state regulation. In addition, the fact that the DuraMed subsidiary is a new business with a new product operating in the current corona virus adds to the challenging nature.

 

We identified the Company’s revenue recognition policy for durable medical equipment and the sufficiency of audit evidence as a critical accounting matter.

 

The procedures performed to address the matter included; testing the billing during the year, confirming the billing during the year and accounts receivable at year end with the third party biller, examining subsequent cash collections and inquiry of the Company’s outside attorney that is a specialist in this area.

 

Convertible debt

 

The Company issued $ 2,800,000 of convertible debt during the year. The accounting for convertible debt is complex due to the various accounting treatments possible based on the terms of the agreement.

 

We identified the Company’s accounting for convertible debt and the valuation of related warrants as a critical audit matter.

 

The procedures performed to address this matter included: reviewing the agreements, confirming significant terms with the lender and assessing the valuation method used to determine the value of the warrants, recalculating those values.

 

/s/ BMKR, LLP

BMKR,LLP

 

We have served as the Company’s auditor since 2014. Hauppauge, NY 11788

April 12, 2021

 

Member American Institute of Certified Public Accountants

Member Public Company Accounting Oversight Board

 

F-2

 

 

Can B̅ Corp. and Subsidiary

Consolidated Balance Sheets

 

    Year Ended December 31,  
    2020    

2019

(Restated)

 
Assets                
Current assets:                
Cash and cash equivalents   $ 457,798     $ 46,540  
Accounts receivable, less allowance for doubtful
accounts of $485,848 and $0, respectively
    2,003,064       1,251,609  
Inventory     344,954       784,497  
Note Receivable     2,898       24,268  
Prepaid expenses - current     1,209,126       1,279,901  
Total current assets     4,017,840       3,386,815  
                 
Property and equipment, at cost less accumulated depreciation of $239,650 and $116,555, respectively     994,979       1,075,242  
                 
Other assets:                
Deposit - noncurrent     21,287       21,287  
Prepaid expenses - noncurrent     7,405       1,179,929  
Other receivable – noncurrent     12,910       58,206  
Intangible assets, net of accumulated amortization of $236,431 and $202,521, respectively     523,009       1,339,907  
Goodwill     55,849       55,849  
Right-of-Use Asset, net of amortization of $45,086 and $6,280, respectively     58,174       96,980  
Total other assets     678,634       2,752,158  
                 
Total assets   $ 5,691,453     $ 7,214,215  
                 
Liabilities and Stockholders’ Deficiency                
Current liabilities:                
Accounts payable   $ 153,640     $ 226,467  
Accrued officers’ compensation     147,133       144,363  
Other accrued expenses payable     53,362       61,557  
Notes and loans payable     1,827,531       35,000  
Current portion of lease liability     43,506       38,281  
Total current liabilities     2,225,172       505,668  
                 
Long-term liabilities                
Non-current portion of lease liability     15,492       58,998  
Notes and loans payable     194,940       -  
Total long-term liabilities     210,432       58,998  
                 
Total liabilities     2,435,604       564,666  
                 
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, respectively     5,539,174       5,539,174  
Series B Preferred stock, $0.001 par value: authorized 500,000 shares, issued and outstanding 0, respectively     -       -  
Common stock, no par value; authorized 1,500,000,000 shares, issued and outstanding 5,544,590 and 2,680,937 shares, respectively     26,111,978       24,323,712  
Treasury stock     (572,678 )     -  
Additional Paid-in capital     872,976       872,976  
Additional Paid-in capital – Stock Options (Note 11)     962,323       583,200  
Additional Paid-in capital – Warrants     728,100       -  
Accumulated deficit     (30,386,024 )     (24,669,513 )
Total stockholders’ equity     3,255,849       6,649,549  
                 
Total liabilities and stockholders’ equity   $ 5,691,453     $ 7,214,215  

 

See notes to consolidated financial statements.

 

F-3

 

 

Can B̅ Corp. and Subsidiary

Consolidated Statements of Operations and Comprehensive Loss

Years Ended December 31, 2020 and 2019

 

    2020    

2019

(Restated)

 
Revenues                
Product Sales   $ 1,708,419     $ 2,304,303  
Service Revenue     1,250       1,200  
Total Revenues     1,709,669       2,305,503  
Cost of product sales     278,062       598,584  
Gross Profit     1,431,607       1,706,919  
                 
Operating costs and expenses:                
                 
Officers and director’s compensation (including stock-based Compensation of $1,589,224 and $1,587,060, respectively     2,077,713       2,639,711  
Consulting fees (including stock-based compensation of 669,956 and 2,831,232, respectively)     778,062       3,014,329  
Advertising expense     519,922       333,441  
Hosting expense     22,781       13,034  
Rent expense     234,790       246,968  
Professional fees     533,213       287,441  
Depreciation of property and equipment     16,475       12,627  
Amortization of intangible assets     658,910       142,093  
Reimbursed Expenses     87,718       242,585  
Other     876,431       667,097  
                 
Total operating expenses     5,806,015       7,599,326  
                 
Loss from operations     (4,374,408 )     (5,892,407 )
                 
Other income (expense):                
Gain (loss) on disposal of assets - net     (374,116 )     -  
Loss on investment     (40,000 )        
EIDL Grant     10,000       -  
Interest income (forfeited) - net     (3,068 )     2,524  
Interest expense (including amortization finance cost of $725,287 and $0, respectively     (931,615 )     (8,793 )
                 
Other income (expense) - net     (1,338,799 )     (6,269 )
                 
Loss before provision for income taxes     (5,713,207 )     (5,898,676 )
                 
Provision for income taxes     3,304       2,084  
                 
Loss and comprehensive loss     (5,716,511 )     (5,900,760 )
                 
Net loss per common share - basic     (1.62 )     (2.87 )
Net loss per common share - diluted     (1.36 )     (2.20 )
                 
Weighted average common shares outstanding –                
Basic     3,534,739       2,058,525  
Diluted     4,201,419       2,687,383  

 

See notes to consolidated financial statements.

 

F-4

 

 

Can B̅ Corp. and Subsidiary

Consolidated Statements of Stockholders’ Deficiency

Years Ended December 31, 2019 (Restated) and 2020

 

                                        Additional              
    Preferred Stock A     Preferred Stock B     Preferred Stock C     Common Stock, no     Treasury     Paid-in              
    , no par value     , $0.001 par value     , $0.001 par value     par value     Stock     Accumulated              
    Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     Total  
                                                                               
Balance, December 31, 2018     18     $ 4,557,424       499,958     $ 479       -     $ -       1,468,554     $ 16,624,557       -     $ -     $ 1,075,176     $ (18,768,753 )   $ 3,488,883  
                                                                                                         
Issuance of Series A Preferred stock pursuant to employment agreement     3       992,250                                                                                       992,250  
                                                                                                         
Issuance of common stock for retirement of Series A Preferred Stock     (1 )     (10,500 )                                     33,333       10,500                                       -  
                                                                                                         
Issuance of common stock for retirement of Series B Preferred Stock                     (499,958 )     (479 )                     250,131       479                                       -  
                                                                                                         
Sale of common stock in Q1 Q2 & Q3 2019                                                     379,555       3,296,700                                       3,296,700  
                                                                                                         
Issuance of common stock in 2019 for acquisition of technology                                                     68,580       932,000                                       932,000  
                                                                                                         
Issuance of common stock in 2019 for acquisition of inventory                                                     125,000       487,500                                       487,500  
                                                                                                         
Issuance of common stock in 2019 for satisfaction of accrued salaries                                                     2,227       33,153                                       33,153  
                                                                                                         
Issuance of common stock in 2019 for compensation and services rendered                                                     353,557       2,938,823                                       2,938,823  
                                                                                                         
Stock options                                                                                     381,111               381,111  
                                                                                                         
Net loss                                                                                             (5,900,760 )     (5,900,760 )
                                                                                                         
Balance, December 31, 2019     20     $ 5,539,174       -     $ -       -     $ -       2,680,937     $ 24,323,712       -     $ -     $ 1,456,176     $ (24,669,513 )   $ 6,649,549  
                                                                                                         
Issuance of common stock in 2020 for services rendered                                                     941,199       584,338                                       584,338  
                                                                                                         
Issuance of common stock in 2020 for 300:1 reverse stock split rounding                                                     2,460       -                                       -  
                                                                                                         
Issuance of common stock in 2020 pursuant to First Fire note agreement                                                     313,032       357,030                                       357,030  
                                                                                                         
Issuance of common stock in 2020 pursuant to Labrys Fund Equities note agreement                                                     142,545       80,182                                       80,182  
                                                                                                         
Issuance of common stock in 2020 pursuant to Eagle Equities note agreement                                                     20,000       8,745                                       8,745  
                                                                                                         
Issuance of common stock in 2020 pursuant to Arena note agreement                                                     409,417       129,580                                       129,580  
                                                                                                         
Issuance of common stock in 2020 for acquisition of intangible assets                                                     285,000       217,012                                       217,012  
                                                                                                         
Issuance of common stock in 2020 for compensation                                                     30,000       41,625                                       41,625  
                                                                                                         
Issuance of common stock in 2020 for interest                                                     185,000       77,775                                       77,775  
                                                                                                         
Issuance of common stock in 2020 for inventory                                                     478,715       491,979                                       491,979  
                                                                                                         
Treasury stock acquired in 2020                                                     (543,715 )     -       543,715       (560,000 )                     (560,000 )
                                                                                                         
Sale of common stock in 2020                                                     600,000       300,000                                       300,000  
                                                                                                         
Shi Farms shares                                                             (500,000 )             (12,678 )                     (512,678 )
                                                                                                         
Stock options                                                                                     379,123               379,123  
                                                                                                         
Warrants                                                                                     728,100               728,100  
                                                                                                         
Net Loss                                                                                             (5,716,511 )     (5,716,511 )
                                                                                                         
Balance, December 31, 2020     20     $ 5,539,174       -     $ -       -     $ -       5,544,590     $ 26,111,978       543,715     $ (572,678 )   $ 2,563,399     $ (30,386,024 )   $ 3,255,849  

 

See notes to consolidated financial statements.

 

F-5

 

 

Can B̅ Corp. and Subsidiary

Consolidated Statements of Cash Flows

 

    Year Ended December 31,  
      2020      

2019

Restated

 
Operating Activities:                
Net loss   $ (5,716,511 )   $ (5,900,760 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Stock-based compensation, net of prepaid stock- based consulting fees     2,259,180       4,397,478  
Stock-based interest expense     451,680       -  
Gain (loss) on disposal of asset - net     (147,863 )     -  
Depreciation of property and equipment     124,388       89,779  
Amortization of intangible assets     658,910       142,093  
Amortization of debt discounts     273,607       -  
Bad debt expense     270,919       253,483  
Changes in operating assets and liabilities:                
Accounts receivable     (1,022,374 )     (1,465,920 )
Inventory     931,523       (209,893 )
Prepaid expenses     (10,797 )     (4,760 )
Security deposit     -       27,439  
Other receivable     57,974       (58,206 )
Right-of-use asset     525       299  
Accounts payable     (72,827 )     153,408  
Accrued officer’s compensation     2,770       144,363  
Other accrued expenses payable     (8,195 )     17,777  
                 
Net cash used in operating activities     (1,947,091 )     (2,413,420 )
                 
Investing Activities:                
                 
Note receivable     21,370       (4,879 )
Fixed assets additions     (50,219 )     (1,105,403 )
Proceeds from disposal of asset     3,600       -  
Intangible assets additions     -       (550,000 )
                 
Net cash used in investing activities     (25,249 )     (1,660,282 )
                 
Financing Activities:                
Proceeds received from notes and loans payable     4,521,618       35,000  
Repayments of notes and loans payable     (1,359,900 )     (19,205 )
Note payable finance cost     (518,120 )     -  
Proceeds from sale of common stock     300,000       3,296,700  
Acquisition of treasury stock     (560,000 )     -  
                 
Net cash provided by financing activities     2,383,598       3,312,495  
                 
Increase (Decrease) in cash and cash equivalents     411,258       (761,207 )
                 
Cash and cash equivalents, beginning of period     46,540       807,747  
                 
Cash and cash equivalents, end of period   $ 457,798     $ 46,540  
                 
SUPPLEMENTAL CASH FLOW INFORMATION:                
Income taxes paid   $ 3,304     $ 2,084  
Interest paid   $ 206,328     $ 8,793  
                 
NON-CASH INVESTING AND FINANCING
ACTIVITIES:
               
                 
Issuance of common stock in acquisition of inventory   $ 491,980     $ 487,500  
                 
Issuance of common stock in acquisition of intangible assets   $ 217,011     $ 404,345  
                 
Amortization of prepaid issuance of common Stock for services rendered   $ 1,254,096     $ 121,000  
                 
Issuance of common stock in acquisition of note payable (commitment shares)   $ 929,734     $ -  
                 
Issuance of common stock in acquisition of note payable (interest expense)   $ 451,680     $ -  
                 
Issuance of common stock in satisfaction of officer’s compensation   $ -     $ 47,563  
                 
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  

 

See notes to consolidated financial statements.

 

F-6

 

 

Can B̅ Corp. and Subsidiary

Notes to Consolidated Financial Statements

Year Ended December 31, 2020 and 2020

 

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 and without CBD infused pads, are marketed and sold through its wholly-owned subsidiaries, Duramed Inc. (incorporated on November 29, 2018) and Duramed MI LLC fka DuramedNJ, LLC(incorporated on May 29, 2019) (collectively, “Duramed”). Duramed began operating on or about February1, 2019. The Company’s hemp farming business is run through Green Grow Farms, Inc. (“Green Grow Farms”), which was acquired in August, 2019. The Company’s other subsidiary companies did not have operations in 2020.

 

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 March 6, 2020 Can B̅ Corp effected a 300:1 reverse stock split of its common stock.

 

On May 15, 2017, WRAP changed its name to Canbiola, Inc. On January 16, 2020 Canbiola, Inc. changed its name to Can B̅ Corp. (the “Company”, “we”, “us”, “our”, “CANB”, “Can B̅” or “Registrant”).

 

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 and non-hemp lifestyle products. 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.

 

For the periods presented, the assets, liabilities, revenues, and expenses are those of CAN B and its operational subsidiaries. Financial information for PHP, Duramed and Green Grow Farms in the periods have been consolidated with the Company’s financials. Prosperity, Imbibe Wellness Solutions, LLC fka Radical Tactical and Pivt labs, LLC fka NY Hemp Depot had no activity for the periods presented.

 

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, 2020, the Company had cash and cash equivalents of $457,798 and a working capital of $1,118,857. For the years ended December 31, 2020 and 2019, the Company had net loss of $5,851,512 and $5,900,760, respectively. As a result, cash flows may not be sufficient to meet obligations or sustain operations. The Company has plans to improve its financial condition and cash flow. Management believes these plans will alleviate the going concern issue. These plans include:

 

  Satisfying accrued but unpaid compensation through the issuance of stock.
  From January 1,2021 through March 31,2021 the Company raised $2,716,000 from sale of common stock.
  The Company intends to raise additional capital from the sale of common stock.
  Increase sales of products through additional product offerings.
  Increase product sales through expanded marketing programs.

 

The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

 

NOTE 3 – Summary of Significant Accounting Policies

 

(a) Principles of Consolidation

 

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

 

F-7

 

 

(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 $270,919 and $0 for the periods ended December 31, 2020 and 2019.

 

(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 $1,216,531 and $2,459,830 at December 31, 2020 and 2019, respectively. The Company’s policy is to record stock-based compensation as prepaids and expense over the term of employment and consulting agreements.

 

F-8

 

 

(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 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.

 

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.

 

F-9

 

 

(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.

 

(n) Stock-Based Compensation

 

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

 

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

 

Options and warrants

 

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

 

Risk-Free Interest Rate.

 

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

 

Expected Volatility.

 

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

 

Dividend Yield.

 

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

 

Expected Term.

 

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

 

Forfeitures.

 

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

 

F-10

 

 

(o) Advertising

 

Advertising costs are expensed as incurred and amounted to $519,922 and $333,441 for the years ended December 31, 2020 and 2019, respectively.

 

(p) Research and Development

 

Research and development costs are expensed as incurred. In the period ended December 31, 2020 and 2019 the Company spent $165,000nd $150,000 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 10, 11 and 12).

 

(s) Reverse Stock-Split

 

On March 2, 2020, the Company filed an amendment to its Articles of Incorporation with the Florida Secretary of State to effect a 300-to-1 reverse stock split of its issued and outstanding, but not authorized, shares of Common Stock, as reported in the Company’s definitive Schedule 14C filed with the Securities and Exchange Commission on December 13, 2019.

 

All disclosures of common shares and per common share data in the accompanying financial statements and related notes reflect the reverse stock split for all periods presented.

 

(t) 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.

 

(u) 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.

 

F-11

 

 

NOTE 4 – Inventories

 

Inventories consist of:

 

    December 31,
2020
    December 31,
2019
 
Raw materials   $ 294,522     $ 708,239  
                 
Finished goods     50,432       76,258  
Total   $ 344,954     $ 784,497  

 

NOTE 5 – Notes Receivable

 

Notes receivable consist of:

 

    December 31,
2020
    December 31,
2019
 
Note receivable dated November 30, 2015 from Stock Market Manager, Inc, interest at 3% per annum due November 30, 2020   $ -     $ 19,389  
                 
Note receivable dated February 8,2019 from an employee, weekly installments of $1,200 with interest at 8% per annum.     2,898       4,879  
                 
Total     2,898       24,268  
                 
Current portion of notes receivable     (2,898 )     (24,268
Noncurrent portion of notes receivable   $ -     $ -  

 

NOTE 6 – Property and Equipment, Net

 

Property and Equipment, net, consist of:

 

   

December 31,

2020

   

December 31,

2019

 
             
Furniture & Fixtures   $ 21,727     $ 19,018  
                 
Office Equipment     12,378       12,378  
                 
Manufacturing Equipment     397,230       355,016  
                 
Medical Equipment     776,392       783,782  
                 
Leasehold Improvements     26,902       21,603  
                 
Total     1,234,629       1,191,797  
                 
Accumulated depreciation     (239,650 )     (116,555 )
                 
Net   $ 994,979     $ 1,075,242  

 

F-12

 

 

Depreciation expense was $124,388 and $89,779 for the years ended December 31, 2020 and 2019, respectively.

 

NOTE 7 – Intangible Assets, Net

 

Intangible assets, net, consist of:

 

   

December 31,

2020

   

December 31,

2019

 
             
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     482,000       482,000  
                 
Platform account contract     131,812       -  
                 
Hemp processing use     85,200       -  
                 
Other     3,548       3,548  
                 
Total     759,440       1,542,428  
                 
Accumulated amortization and Impairment     (236,431 )     (202,521 )
                 
Net   $ 523,009     $ 1,339,907  

 

Estimated future amortization expense are as follows:

 

December 31,   Amount  
       
2021   $ 120,513  
2022     65,591  
2023     65,591  
2025     65,591  
2026     55,449  
Thereafter     150,274  
         
Total   $ 523,009  

 

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 25,000 shares of CANB common stock. On January 14, 2019, the shares were issued to the owner of HUDI and valued at $382,500. On January 31, 2019, PHP entered into an Asset Purchase Agreement (the “Chakras Agreement”) with 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. On February 20, 2019, the Company issued 3,333 shares of CANB common stock valued at $49,500 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 was purchased from Shi Farms during the three months ended September 30, 2019. Hemp Depot has remained dormant since the Shi Farms deal was consummated and no activity is contemplated. As a result, the Company has written off the remaining intangible asset from Shi Farms. The Company subsequently acquired Green Grow Farms, also a NY State Hemp License holder and intends to 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. Grow Farms Inc. intends to amalgamate the cultivated off-take from the farmers, combine and fill “super-sacks” for shipping to a processing facility to produce high-grade isolate or distillate for use in Can B̅’s manufacturing facility in Lacey WA, if and when it becomes financially prudent for the Company to do so.

 

The hemp processing use agreement with Mediiusa Group, Inc. was entered during the three months ended June 30, 2020. On June 23, 2020, the Company issued 50,000 shares of CANB common stock valued at $69,375. On December 12, 2020, the company issued 50,000 shares of CANB common stock valued at $15,825. Mediiusa Group, Inc. currently holds a valid Industrial Hemp Processor Registration in full force and effect with the State of New York and is authorized to process Hemp, and has granted a five year agreement to processing of Hemp for oil, isolate, or crude for further use by the Company and/or for sale by the Company. During the Term of this Agreement, Mediiusa Group, Inc. agrees to allow CANB to process any and all of the subject Hemp under and/or in connection with the agreement under their above-mentioned Registration.

 

The platform account contract with SRAX, Inc. was entered during the three months ended June 30, 2020. On June 22, 2020, the Company issued 185,000 shares of CANB common stock valued at $131,812. The Platform Account is the SRAX Investors Relations platform to grant access to potential investors and customers via the SRAX website for one year. SRAX grants Can B Corp a non-exclusive, non-transferable and non- sublicensable right to access and use the Platform during the Term, solely by the Authorized Users for User’s own internal business purposes, and in accordance with the terms and conditions of this Agreement. Company reserves all rights in or to the Platform not expressly granted to User in the Agreement. Can B will have previously unattainable access to its customer base for improved investor communication and development of sales opportunities of the Company’s products.

 

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,
2020
    December 31,
2019
 
             
Loan payable to Pasquale Ferro, interest at 12% per annum, due December 2020.   $ 224,000     $ 30,000  
                 
Note payable to brother of Marco Alfonsi, Chief Executive Officer of the Company, interest at 10% per annum, due August 22, 2016.     -       5,000  
                 
Note payable to Arena Special Opportunities Partners I, LP, due September 10, 2021.     2,675,239       -  
                 
Note payable to Arena Special Opportunities Fund, LP, due September 10, 2021.     102,539       -  
                 
Note payable to U.S. Small Business Administration (PPP), interest at 1% per annum. The note matures in January 2023. Payments are deferred for ten months after the end of the covered period. The Note has been submitted to the SBA for forgiveness withing the bank guidelines.     194,940       -  
                 
Total Notes and Loan Payable     3,196,718       35,000  
Less: Unamortized Finance Cost     (1,174,247 )     -  
Less: Current Portion     (1,827,531 )     (35,000 )
Long-term Portion   $ 194,940     $ -  

 

F-14

 

 

NOTE 9 – Preferred Stock

 

Each share of Series A Preferred Stock is convertible into 33,334 shares of CANB common stock and is entitled to 66,666 votes. All Preferred Shares shall rank senior to all shares of Common Stock of the Company with respect to liquidation preferences and shall rank pari passu to all current and future series of preferred stock, unless otherwise stated in the certificate of designation for such preferred stock. In the event of a Liquidation Event, whether voluntary or involuntary, each holder may elect (i) to receive, in preference to the holders of Common Stock, a one-time liquidation preference on a per-share amount equal to the per-share value of preferred shares on the issuance date, as recorded in the Company’s financial records, or (ii) to participate pari passu with the Common Stock on an as-converted basis. Subject to any adjustments, the Series A holders shall be entitled to receive such dividends paid and distributions made to the holders of shares of Common Stock on an as converted basis.

 

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

 

Each share of Series C Preferred Stock has preference to payment of dividends, if and when declared by the Company, compared to shares of our common stock. Each Preferred Series C share is convertible into 25,000 shares of common stock. The shares of Series C Preferred Stock have voting rights as if fully converted.

 

Each share of Series D Preferred Stock has 10,000 shares of voting rights only pari passu to common shares voting with no conversion rights and no equity participation. The Company can redeem Series D Preferred Stock at any time for par value.

 

On January 28, 2019, the Company issued 33,333 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 67,405 shares of CANB common stock to RedDiamond in exchange for the retirement of 157,105 shares of CANB Series B Preferred Stock.

 

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 $1,203,000 and will be amortized over the vesting period of four years.

 

On April 26, 2019, the Company issued 6,436 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 8,581 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 23,710 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 10,726 shares of CANB common stock to RedDiamond in exchange for the retirement of 25,000 shares of CANB Series B Preferred Stock.

 

F-15

 

 

On August 13, 2019, the Company issued 97,607 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 35,666 shares of CANB common stock to RedDiamond as agreed for the early retirement of CANB Series B Preferred Stock converted in August 2019.

 

From January 1, 2021 through March 25, 2021, the Company issued 1,950 shares of CANB Series Preferred D Stock to officers of the Company.

 

In March 2021, the Company issued 50 Preferred C shares each to Marco Alfonsi, Stanley Teeple, and Pasquale Ferro for services rendered. Each Preferred C was immediately issuable as common at 25 thousand to one so the total issuance was 1,250,000 common shares for each recipient.

 

NOTE 10 – Common Stock

 

From January 4, 2019 to March 27, 2019, the Company issued aggregately 138,107 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 25,000 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 82,000 shares of CANB common stock to multiple consultants for services rendered.

 

From January 19, 2019 to March 27, 2019, the Company issued aggregately 3,893 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 6,667 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 3,333 shares of CANB common stock to owners of Seven Chakras pursuant to the Chakras Agreement dated January 31, 2019.

 

From April 1, 2019 through June 30, 2019 the Company issued an aggregate of 51,706 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 13,916 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 4,615 shares of Common Stock under the terms of executive employment agreements.

 

From April 1, 2019 through June 30, 2019, the Company issued an aggregate of 86,207 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 18,061 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 18,333 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 16,000 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 155,241 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 40,247 shares of CANB shares under the terms of the Joint Venture Agreement.

 

F-16

 

 

From October 1, 2019 through December 31, 2019, the Company issued an aggregate of 122,258 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 14,167 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 5,000 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 125,000 shares of CANB Common Stock under the terms of an inventory purchase agreement for total proceeds of $487,500.

 

From January 1, 2020 through March 31, 2020, the Company issued an aggregate of 27,500 shares of CANB Common Stock to multiple consultants for services rendered.

 

From January 1, 2020 through March 31, 2020, the Company issued an aggregate of 31,335 shares of CANB Common Stock to members of the Advisory Board, Medical Advisory Board, and Sports Advisory Board for services rendered.

 

From January 1, 2020 through March 31, 2020, the Company issued an aggregate of 20,000 shares of CANB Common Stock to First Fire Global Opportunities Fund, LLC for a commitment fee pursuant to a junior convertible promissory note purchase agreement.

 

From January 1, 2020 through March 31, 2020, the Company issued an aggregate of 99,508 shares of CANB Common Stock to FirstFire Global Opportunities Fund, LLC for returnable shares pursuant to a junior convertible promissory note purchase agreement.

 

From April 1, 2020 through June 30, 2020, the Company issued an aggregate of 111,734 shares of CANB Common Stock to multiple consultants for services rendered.

 

From April 1, 2020 through June 30, 2020, the Company issued an aggregate of 20,319 shares of CANB Common Stock to members of the Advisory Board, Medical Advisory Board, and Sports Advisory Board for services rendered.

 

From April 1, 2020 through June 30, 2020, the Company issued an aggregate of 30,000 shares of CANB Common Stock to an employee for services rendered.

 

From April 1, 2020 through June 30, 2020, the Company issued an aggregate of 185,000 shares of CANB Common Stock to SRAX, Inc. according to a platform access agreement.

 

From April 1, 2020 through June 30, 2020, the Company issued an aggregate of 50,000 shares of CANB Common Stock to Mediiusa Group, Inc. according to a hemp processing use agreement.

 

From April 1, 2020 through June 30, 2020, the Company issued an aggregate of 24,545 shares of CANB Common Stock to Labrys Fund, L.P. for a commitment fee pursuant to a junior convertible promissory note purchase agreement.

 

From April 1, 2020 through June 30, 2020, the Company issued an aggregate of 118,000 shares of CANB Common Stock to Labrys Fund, L.P. for returnable shares pursuant to a junior convertible promissory note purchase agreement.

 

From April 1, 2020 through June 30, 2020, the Company issued an aggregate of 20,000 shares of CANB Common Stock to Eagle Equities, LLC for a commitment fee pursuant to a junior convertible promissory note purchase agreement.

 

From July 1, 2020 through September 30, 2020, the Company issued an aggregate of 145,000 shares of CANB Common Stock to multiple consultants for services rendered.

 

F-17

 

 

From July 1, 2020 through September 30, 2020, the Company issued an aggregate of 100,000 shares of CANB Common Stock to members of the Advisory Board, Medical Advisory Board, and Sports Advisory Board for services rendered.

 

From July 1, 2020 through September 30, 2020, the Company issued an aggregate of 478,715 shares of CANB Common Stock to members of the Advisory Board, Medical Advisory Board, and Sports Advisory Board for services rendered.

 

From July 1, 2020 through September 30, 2020, the Company received an aggregate of 543,715 shares of CANB Common Stock from an exchange agreement whereby shares of Iconic Brands, Inc. held by the Company were exchanged for shares of stock in the Company held by Iconic Brands, Inc.

 

From July 1, 2020 through September 30, 2020, the Company issued an aggregate of 478,715 shares of CANB Common Stock for the acquisition of inventory.

 

From July 1, 2020 through September 30, 2020, the Company issued an aggregate of 185,000 shares of CANB Common Stock to FirstFire Global Opportunities Fund, LLC pursuant to a junior convertible promissory note purchase agreement.

 

On July 29, 2020, CANB and Iconic Brands (ICNB) completed a share exchange whereby the one million shares of ICNB common stock held by CANB were exchanged for a fair value exchange of five hundred forty three thousand seven hundred fifteen shares of CANB in order to settle a contract valuation true-up with ICNB for the purchase of Green Grow Farms,. Inc.

 

From October 1, 2020 through December 31, 2020, the company issued an aggregate of 435,311 shares of CANB Common Stock to multiple consultants for services rendered.

 

From October 1, 2020 through December 31, 2020, the Company issued an aggregate of 70,000 shares of CANB Common Stock to members of the Advisory Board, Medical Advisory Board, and Sports Advisory Board for services rendered.

 

From October 1, 2020 through December 31, 2020, the Company issued an aggregate of 50,000 shares of Common Stock under the terms of hemp processing use agreement.

 

From October 1, 2020 through December 31, 2020, the Company issued an aggregate of 600,000 shares of Common Stock under the terms of Stock Purchase Agreements for total proceeds of $300,000.

 

From October 1, 2020 through December 31, 2020, the Company issued an aggregate of 193,524 shares of Common Stock to FirstFire Global as agreed for conversion shares related to a note payable.

 

From October 1, 2020 through December 31, 2020, the Company issued an aggregate of 394,304 shares of CANB Common Stock to Arena Special Opportunities Partners I, LP for a commitment fee pursuant to a securities purchase agreement.

 

From October 1, 2020 through December 31, 2020, the Company issued an aggregate of 15,133 shares of CANB Common Stock to Arena Special Opportunities Fund, LP for a commitment fee pursuant to a securities purchase agreement.

 

From January 1, 2021 through March 25, 2021 the Company issued an aggregate of 5,932,000 shares of Common Stock under its Reg A-1 registration currently in effect and an additional 130,750 shares of common stock to various consultants for services.

 

From January 1, 2021 through March 25, 2021 the Company issued an aggregate of 355,057 shares of Common Stock under an asset acquisition agreement with Botanical Biotech.

 

From January 1, 2021 through March 25, 2021 the Company issued an aggregate of 355,250 shares of Common Stock under note conversion agreement.

 

From January 1, 2021 through March 25, 2021 the Company issued an aggregate of 600,000 shares of Common Stock under a note conversion agreement.

 

From January 1, 2021 through March 25, 2021 the Company issued an aggregate of 150 shares of Preferred C shares under multiple employment agreements. The Preferred C shares converted to 3,750,000 shares of Common Stock upon issuance.

 

NOTE 11 – Stock Options and Warrants

 

A summary of stock options and warrants activity follows:

 

    Shares of Common Stock Exercisable Into  
    Stock              
    Options     Warrants     Total  
Balance, December 31, 2018     20,167       7,492       27,659  
Granted in 2019     56,667       -       56,667  
Cancelled in 2019     (167 )     -       (167 )
Exercised in 2019     -       -       -  
                         
Balance, December 31, 2019     76,667       7,492       84,159  
Granted in 2020     1,120,532       3,557,605       4,678,137  
Cancelled 2020     -       -       -  
Exercised 2020     -       -       -  
                         
Balance, December 31, 2020     1,197,199       3,565,097       4,762,296  

 

F-18

 

 

Issued and outstanding stock options as of December 31, 2020 consist of:

 

Year   Number Outstanding     Exercise     Year of  
Granted   And Exercisable     Price     Expiration  
                   
2018     20,000     $ 0.30       2023  
2019     56,667     $ 0.30       2022  

2020

   

1,120,532

   

$

0.361

     

2025

 
     

1,197,199

                 

 

On June 11, 2018, the Company granted 10,000 options of CANB common stock to Carl Dilley, a former director of the Company, in exchange for the retirement of a total of 10,000 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 $0.30 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) $8.40 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 10,000 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 $0.30 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) $11.82 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 26,667 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 $0.30 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) $7.20 share price, (ii) 3 years term, (iii) 463,34% 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 10,000 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 $0.30 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) $6.30 share price, (ii) 3 years term, (iii) 463,34% 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.

 

F-19

 

 

On December 9, 2020, the Company granted 12,500 options of CANB common stock to Ronald A. Silver, a 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 $0.50 per share. The Options are fully vested and are exercisable as of the Grant Date and all shall expire December 9, 2025. The values of the Stock Option ($12,500) was calculated using the Black Scholes option pricing model and the following assumptions: (i) $.45 share price, (ii) 5 years term, (iii) 168% expected volatility, (iv) .41% risk free interest rate and the fair value of options was expensed in the quarterly period ended December 31, 2020.

 

On December 29, 2020, the Company granted 277,008 options of CANB common stock each to Stanley Teeple, Pasquale Ferro, Phil Scala and Marco Alfonsi, Officers of the Company. The options are exercisable for the purchase of one share of the Registrant’s Common Stock at an exercise price of $0.36 per share. The Options are fully vested and are exercisable as of the Grant Date and all shall expire December 29, 2025. The values of the Stock Options ($140,997 each) were calculated using the Black Scholes option pricing model and the following assumptions: (i) $.51 share price, (ii) 5 years term, (iii) 168% expected volatility, (iv) .41% risk free interest rate and the fair value of options was expensed in the quarterly period ended December 31, 2020.

 

Issued and outstanding warrants as of December 31, 2020 consist of:

 

Year   Number Outstanding     Exercise     Year of  
Granted   And Exercisable     Price     Expiration  
                   
2010     825     $ 300       2020  
2018     6,667     $ 13,034 (a)     2023  
2020    

3,557,605

    $

1,273,623

     

2025

 
                         
Total    

3,565,097

                 

 

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

 

NOTE 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,  
    2020     2019  
             
Expected income tax (benefit) at 21%   $ (1,200,467 )   $ (1,239,160 )
                 
Non-deductible stock-based compensation     474,428       923,470  
                 
Non-deductible stock-based interest     94,853       -  
                 
Increase in deferred income tax assets valuation allowance     631,186       315,690  
                 
Provision for (benefit from) income taxes   $ -     $ -  

 

Deferred income tax assets consist of:

 

    December 31,     December 31,  
    2020     2019  
             
Net operating loss carryforward     1,931,355       1,300,168  
                 
Valuation allowance     (1,931,355 )     (1,300,168 )
                 
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 $1,931,355 attributable to the future utilization of the $9,196,924 net operating loss carryforward as of December 31, 2020 will be realized. Accordingly, the Company has maintained a 100% allowance against the deferred income tax asset in the financial statements at December 31, 2020. 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, 2039 and 2040 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, $1,503,282, and $3,005,651, respectively.

 

F-20

 

 

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

 

The Company’s U.S. Federal and state income tax returns prior to 2016 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 2016 tax year returns expired in September 2020.

 

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 2020 and 2019.

 

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, 2020        
Revenue from external customers     367,673  
Revenue from other segments     -  
Segment profit     276,226  
Segment assets     2,603,379  
         
Twelve months ended December 31, 2020        
Revenue from external customers     1,176,220  
Revenue from other segments     -  
Segment profit     691,482  
Segment assets     2,603,379  

 

   

Three Months

Ended

December 31, 2020

   

Twelve Months

Ended

December 31, 2020

 
             
Total profit for reportable segment   $ 278,719     $ 694,828  
Other income (expense) - net     (2,493     (3,346 )
                 
Income before income taxes   $ 276,226     $ 691,482  

 

NOTE 14 – Commitments and Contingencies

 

Employment Agreements 

 

On December 28, 2020, the Company entered into new three-year Employment Agreements with CEO Marco Alfonsi, CFO Stanley Teeple, and Pure Health Products LLC Pasquale Ferro . Under these agreements, the are to receive a i) base salary of fifteen thousand dollars ($15,000.00) per month, ii) is eligible to receive cash and or stock bonuses, iii) shall receive a stock bonus in accordance with the Company’s Incentive Stock Option Plan (“ISOP”) in an amount of one-hundred thousand dollars ($100,000) per year of the Agreement, iv) 200 shares of the Company’s Series C Preferred stock, v) usual and customary benefits including expense reimbursement, health and life insurance plan reimbursements and allowances. Phil Scala. Interim COO also received a similar agreement with a base compensation of fifty-two thousand annually, $100,000 in ISO, and 20 Preferred C shares. The foregoing agreements have replaced the agreements described below.

 

F-21

 

 

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. 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 and chairman of the board 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 were returned to the Company and converted into 30,000,000 common shares. 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.

 

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. 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 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. 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 serves 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 829 shares of common stock upon signing of the agreement. Effective April 1, 2020, Mr. Holtmeyer’s compensation was changed to a straight commission on sales and collection based upon his efforts in lieu of any base compensation. He also will receive no further Company benefits but does retain his previously issued five shares of Series Preferred A Stock.

 

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.

 

F-22

 

 

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 would (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 106,667 options (“Mack Options”) to purchase shares of the Company’s common stock, with 26,667 Mack Options vesting on the effective date and additional tranches of 26,667 Mack 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 $0.30 per share. 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 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 officer 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 26,667 options. Mr. Mack has left the Company.

 

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 1,667 common shares of the Company at a price of $0.30 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 July 15, 2020, we engaged an advisor to provide consulting services under an Investor Relations and Advisory Agreement (the “Advisory Agreement”). Pursuant to the Advisory Agreement, we agreed to pay the Consulting Firm a restricted common stock monthly fee of $5,000 per month for the initial 3 months., $6,250 per month for months 4-6., $7,500 per month for month 7 and after. At CANB’s option, the monthly fee may be payable in part or in whole in cash. Monthly Fee, such amount shall be paid via issuance of restricted common shares of CANB. The shares are to be issued in the name of Tysadco Partners. The number of common shares earned each month shall be calculated and issued on a quarterly basis prior to each 90-day period and based on the value at the closing price on the last day of the preceding period. All common shares earned by the Consultant pursuant to this Agreement shall be issued by CANB on a quarterly basis. CT shall not have registration rights, and the shares may be sold subject to Rule 144.

 

On December 8, 2019, the Company executed a Consulting Agreement with Seacore Capital, Inc. (“Seacore”) for Seacore to serve as the Company’s consultant for stock compensation of a total of 8,333 restricted shares each quarter from 4th quarter 2019 through 3rd quarter 2020. The shares shall not have registration rights, and the shares may be sold subject to Rule 144.

 

F-23

 

 

Lease Agreements

 

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.

 

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

 

Rent expense for the years ended December 31, 2020 and 202019 was $234,790 and $246,968, respectively.

 

At December 31, 2020, the future minimum lease payments under non-cancellable operating leases were:

 

Year ended December 31, 2021     47,055  
Year ended December 31, 2022     15,685  
         
Total   $ 62,740  

 

The lease liability of $43,506 at December 31, 2020 as presented in the Consolidated Balance Sheet represents the discounted (at our 10% estimated incremental borrowing rate) value of the future lease payments of $62,740 at December 31, 2020.

 

Major Customers

 

For the twelve months ended December 31, 2020, there were no customers that accounted for more than 10% of total revenues.

 

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

 

NOTE 15 – Related Party Transactions

 

LI Accounting Associates, LLC (LIA), an entity controlled by a relative of the Managing Member PHP, is a vendor of CANB. At December 31, 2020, CANB did not have an account payable due to LIA. For the twelve months ended December 31, 2020, CANB had expenses to LIA of $64,400.

 

During the twelve months ended December 31, 2020, we had products and service sales to related parties totaling $0.

 

NOTE 16 – Prior Period Adjustment

 

The accompanying consolidated financial statements of the Company have been restated to correct an error made in the prior year. The error relates to an understatement of intangible assets by $283,345 and an understatement of stock- based compensation of $1,308,290. Retained earnings as of December 31, 2020 has been adjusted for the effect of the restatement on the prior year.

 

NOTE 17 – Subsequent Events

 

In accordance with FASB ASC 855, Subsequent Events, the Company has evaluated subsequent events through March 25, 2021, 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:

 

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, 2021.

 

F-24
 

 

On February 8, 2021, the Company’s Board of Directors approved the designation of the Series D Preferred Shares and the number of shares constituting such series, and the rights, powers, preferences, privileges and restrictions relating to such series. On March 27, 2021, the Company filed an amendment to its articles of incorporation to authorize 4,000 shares of a new Series D Preferred Stock with a par value of $0.001 each. All Series D Preferred Shares shall rank senior to all shares of Common Stock of the Company with respect to liquidation preferences and shall rank pari passu to all current and future series of preferred stock, unless otherwise stated in the certificate of designation for such preferred stock. Each Series D Preferred Share shall have voting rights equal to 10,000 shares of Common Stock, adjustable at any recapitalization of the Company’s stock. In the event of a liquidation event, whether voluntary or involuntary, each holder shall have a liquidation preference on a per-share amount equal to the par value of such holder’s Series D Preferred Shares. The holders shall not be entitled to receive distributions made or dividends paid to the Company’s other stockholders. Except as otherwise required by law, for as long as any Series D Preferred Shares remain outstanding, the Company shall have the option to redeem any outstanding share of Series D Preferred Shares at any time for a purchase price of par value per share of Series D Preferred Shares (“Price per Share”). Should the Company desire to purchase Series D Preferred Shares, the Company shall provide the Holder with written notice and a check or cash in an amount equal to the number of shares of Series D Preferred Shares being purchased multiplied by the Price per Share. The shares of Series D Preferred Shares so purchased shall be deemed automatically cancelled and the Holder shall return the certificates for such share to the Corporation. On or around March 27, 2021, the Company issued Mr. Alfonsi, Mr. Ferro, and Mr. Teeple Series D Preferred Stock in the amount of 600 shares each and to COO Philip Scala in the amount of 150 shares, collectively representing 19,500,000 voting shares.

 

On February 22, 2021, the Company entered into a material definitive agreement with its wholly owned subsidiary, Radical Tactical, LLC, a Nevada limited liability company and Imbibe Health Solutions, LLC, a Delaware limited liability company (“Imbibe”), pursuant to which Imbibe agreed to sell certain of its assets to Radical Tactical. The assets to be purchased (“Assets”) include the intellectual property rights, including trademarks, logos, know how, formulations, productions procedures, copyrights, social media accounts, domain names and marketing materials relating to its branded products containing CBD, including a muscle and joint salve, unscented fizzy bath soak, CALM massage oil, Me x 3 Metabolic Energy (energy and dietary supplement), and Muscle, Joints & Back CBD Cryo Gel; inventory; and goodwill. In exchange for the Assets, the Company has agreed to pay Imbibe Sixty-Five Thousand Dollars ($65,000) in the form of shares of common stock of the Company (with standard restricted legend, the “Shares”) at a price per share equal to the average price of the common stock of the Company during the ten (10) consecutive trading days immediately preceding the closing.

 

On March 11, 2021, Company entered into an Asset Acquisition Agreement, which was fully executed on March 17, 2021, with multiple sellers (each, a “Seller” and, collectively, the “Sellers”), pursuant to which the Sellers agreed to sell certain assets to Company, and to transfer such assets to Botanical Biotech, LLC, a newly-formed, wholly-owned subsidiary of the Company (“Transferee” or “BB”). The assets purchased (“BB Assets”) include certain materials and manufacturing equipment; goodwill associated therewith; and marketing or promotional designs, brochures, advertisements, concepts, literature, books, media rights, rights against any other person or entity in respect of any of the foregoing and all other promotional properties, in each case primarily used, developed or acquired by the Sellers for use in connection with the ownership and operation of the BB Assets. In exchange for the BB Assets, the Company originally agreed to pay the Sellers the fair value of the BB Assets, as determined by a neutral third-party appraiser selected by the Company and Sellers. Notwithstanding the foregoing, the parties have agreed that, in lieu of engaging a third-party evaluator, the Company will pay the Seller a maximum of $355,056.78, payable half in the form of cash or cash equivalent and half in the form of restricted shares of common stock of the Company (the “Shares”) at a price per Share equal to the average closing price of the common stock of the Company during the ten (10) consecutive trading days immediately preceding the closing. The Company has agreed to indemnify the Sellers for certain breaches of covenants, representations and warranties and for claims relating to the BB Assets following closing.

 

The Board of Directors had previously designed a Preferred Series C share designation and included that issuance in the Employment Agreements of CEO Marco Alfonsi, CFO, Stanley L. Teeple, and Pure Health Products LLC President Pasquale Ferro in the amount of 200 shares each. Previously the Board had released the issuance of 100 of those shares. The Company released the remaining 100 shares granted under those agreements on March 23, 2021. Out of the 200 each authorized, 50 have been issued to each employee.

 

n January 1, 2021, the Company issued a convertible promissory note to KORR Acquisition Group, Inc. in the principal amount of $175,000 for consulting services provided. The note had a maturity of one year and accrued interest at a rate of 6% per annum. On or around March 26, the Company paid the note in full. KORR used the proceeds from the Note and re-invested it through the Company’s Regulation A offering.

 

F-25

 

 

Exhibit 2.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 4.4

 

 

     
 

 

 

     
 

 

 

     
 

 

 

     
 

 

 

     
 

 

 

     
 

 

 

     
 

 

 

     
 

 

 

     
 

 

 

     

 

 

 

Exhibit 10.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.5

 

Consulting Commission

Agreement Holtmeyer

 

This Consulting Commission Agreement (the “Agreement”) is made and entered into to be effective as of 1st day of April 2020, (the “Effective Date”) between Can B Corp. a FL Corporation located at 960 S. Broadway, Suite 120, Hicksville, NY I1801 (Companyor “CANB ) and Andrew Holtmeyer, an individual (“Consultant”) and collectively referred to as the Parties (“ Parties”) and supersedes any an all prior agreements of any kind with the Parties.

 

WHEREAS:

 

  A. The Consultant has the professional business expertise and experience to assist the Company in development of its hemp-based CBD and durable medical device sales strategy for the medical community in the Michigan and other state markets.
  B. The Consultant is offering its services as a consultant to the Company; and
  C. The Company desires to retain the Consultant as an independent consultant and to memorialize the Consultant’s work for the Company by entering into this written Agreement.
  D. The Parties agree that this Agreement reflects the entire understanding and agreements between the parties hereto.

 

NOW, THEREFORE, in consideration of the premises and promises, warranties and representations herein contained, it is agreed as follows:

 

1. DUTIES. The Company hereby engages the Consultant and the Consultant hereby accepts engagement as a consultant. It is understood and agreed, and it is the express intention of the parties to this Agreement, that the Consultant is an independent contractor, and not an employee or agent of the Company for any purpose whatsoever. Consultant shall perform all duties and obligations as described on Exhibit A hereto and agrees to be available at such times as may be scheduled by the Company. It is understood, however, that the Consultant will maintain Consultant’s own business in addition to providing services to the Company. The Consultant agrees to promptly perform all services required of the Consultant hereunder in an efficient, professional, trustworthy and businesslike manner. A description of the Consultant’s services are attached hereto as Exhibit A and incorporated by reference herein.
   
2. CONSULTING SERVICES & COMPENSATION. The Consultant will be retained as a commissionable Consultant and independent contractor for the Company. For services rendered hereunder, the Consultant shall receive:

 

A monthly commission equal to the lesser of:
  Ten percent of the net sales price of Products sold, for all Products sold at At the Company’s listed Price List, or
  One- third of the Net Profit generated on any sales of the Company’s products

 

Net Sales is defined as the profit margin remaining after paying for COGS, freight, spoilage, returns, uncollectible invoices, and samples.

Products are defined as all products sold as a direct result of Consultant’s efforts for Sale within the Can B catalogue of products, excepting all Duramed Inc. equipment.

 

3. CONFIDENTIALITY. All knowledge and information of a proprietary and confidential nature relating to the Company which the Consultant obtains during the Consulting period, from the Company or the Companys employees, agents or Consultants shall be for all purposes regarded and treated as strictly confidential for so long as such information remains proprietary and confidential and shall be held in trust by the Consultant solely for the Company’s benefit and use and shall not be directly or indirectly disclosed by the Consultant to any person without the prior written consent of the Company, which consent may be withhold by the Company in its sole discretion.

 

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4. INDEPENDENT CONTRACTOR STATUS. Neither party nor its agents or employees are the representatives of the other party for any purpose and neither party has the power or authority as agent, employee or any other capacity to represent, act for, bind or otherwise create or assume any obligation on behalf of the other party for any purpose whatsoever. Nothing express and/or implied in this Agreement to the contrary shall be construed to create any exclusive relationship, principal and agent, joint venture, partnership or any other fiduciary relationship of any kind and/or nature whatsoever between the parties hereto. The Consultant is and shall hereafter remain an independent contractor in cornection with Consultant’s relationship to the Company, and nothing contained in this Agreement shall render the Consultant an agent, servant, employee, contractor, partner, joint venture and/or other fiduciary with the Company for any purpose whatsoever. Neither the parties, nor any of their respective members, officers, directors, agents, servants, and/or contractors of the parties hereto, shall be construed to be the agent, servant, contractor, fiduciary and/or other representative of the other party hereto. Furthermore the Parties hereto fully intend to act and perform as independent contractors, and the provisions hereof are not intended to create any agency, partnership, joint venture, employment relationship and/or other fiduciary relationship of any kind and/or nature whatsoever between the parties hereto other than that of independent parties contracting with each other solely to carry out the provision of this Agreement for the express purposes recited herein. Further, Consultant understands that since the Consultant is not an employee of the Company, the Company will not withhold income taxes or pay any employee taxes on its behalf, nor will it receive any fringe benefits. The Consultant shall not have any authority to assume or create any obligations, express or implied, on behalf of the Company and shall have no authority to represent the Company as agent, employee or in any other capacity that as herein provided. The Consultant does hereby indemnify and hold harmless the Company from and against any and all claims, liabilities, demands, losses or expenses incurred by the Company if (I) the Consultant fails to pay any applicable income and/or employment taxes (including interest or penalties of whatever nature), in any amount, relating to the Consultant’s rendering of consulting services to the Company, including any reasonable attorney’s fees or costs to the prevailing party to enforce this indemnity or (2) Consultant takes any action or fails to t:ake any action in accordance with the companies reasonable instructions under and/or in connection with this Agreement. The Consultant shall be responsible for obtaining any required workers’ compensation insurance coverage, if any, and agrees to indemnify, defend and hold the Company harmless of and from any and all claims arising out of any injury, disability or death of the Consultant unless due to the fault or negligence of Company.
   
5. NOTHIRD-PARTY RIGHTS. The parties warrant and represent that they are authorized to enter into this Agreement and that no third parties, other than the parties hereto, have any interest in any of theservices or the Warrant contemplated hereby.
   
6. ABSENCE OF WARRANTIES AND REPRESENTATION.S Each party hereto acknowledges that they have signed this Agreement without having relied upon or being induced by any agreement warranty or representation of fact or opinion of any person not expressly set forth herein. All representations and warranties of either party contained herein shall survive its signing and delivery.
   
7. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the law of the State of California.

 

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8. ATTORNEY’S FEES. In the event of any controversy, claim or dispute between the parties hereto, arising out of or in any manner relating to this Agreement, including an attempt to rescind or set aside, the prevailing party in any action brought to settle such controversy, claim or dispute shall be entitled to recover reasonable attorney’s fees and costs.
   
9. ARBITRATION. Any controversy between the parties regarding the construction or application of this Agreement any claim arising out of this Agreement or its breach, shall be submitted to arbitration in New York before one arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association, upon the written request of one party after service of that request on the other party. The cost of arbitration shall be borne by the losing party. The arbitrator is also authorized to award attorney’s fees to the prevailing party not to exceed $10,000.00.

 

11, VALIDITY. If any paragraph, sentence, term or provision hereof shall be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity enforceability of any other paragraph, sentence, term and provision hereof. To the extent required, any paragraph, sentence, term or provision of this Agreement may be modified by the parties hereto by written amendment to preserve its validity.
   
12. ON-DISCLOSURE OF TERMS. The terms of this Agreement shall be kept confidential, and no party, representative, attorney or family member shall reveal its contents to any third party except as required by law or as necessary to comply with law or preexisting contractual commitments.
   
13. ENTIRE AGREEMENT. This Agreement contains the entire understanding of the parties and cannot be altered or amended except by an amendment duly executed by all parties hereto. This Agreement shall be binding upon and inure to the benefit of the successors, assigns and personal representatives of the parties. The parties hereto hereby acknowledge that there have been and are no representations, warranties, covenants or undertakings by any party or person whatsoever other than those expressly set forth herein. Each and every party hereto hereby jointly and severally warrant(s), covenant(s), represent(s) and state(s) that, no party hereto nor any person whatsoever has/have made any representations, warranties, statements, and/or guarantees of any kind and/or nature whatsoever relating to and/or in COI111ection with any past, present and/or future/anticipated daily, weekly, monthly and/or annual gross income, net income, gross profits, net profits, gross receipts, net receip, ts valuations, expenses, referrals of patients, volume of patients, collectability, etc. regarding the subject matter of this Agreement and/or otherwise relating to any party hereto and none of any of the foregoing have been relied upon in any manner whatsoever by any party hereto. This Agreement otherwise contains all the terms, provisions, covenants and/or promises of any kind and/or nature whatsoever entered into by and between the parties hereto and/or any persons whatsoever concerning this Agreement and shall merge and supersede any and all prior and/or other tenns, agreements, provisions, covenants, and/or conditions, if any, not expressly set forth in this Agreement. Any and all other prior understandings, agreements, representations and/or warranties (express and/or implied, oral and/or written), if any, between any of the parties hereto and/or persons whatsoever concerning this Agreement are merged in, and superseded by, this Agreement and completely expresses the full agreement between the parties hereto and has been entered into only after full investigation, no party relying upon any statements, agreements, representations and/or warranties, oral and/or written, made by anyone that is not expressly set forth in this Agreement.

 

********Exhibit And Signature Page Follows********

 

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EXHIBIT A

 

DESCRIPTION OF COMMISSION CONSULTING SERVICES

 

The Consultant agrees, to the extent reasonably required in the conduct of its business with the Company, to place at the disposal of the Company, commencing the second quarter 2020 until the end of 2023 or unless terminated by either Party with 30 days written notice, its judgment and experience and to provide business development services to the Company including, but not limited, to, the following:

 

(i) review the Company’s strategic plan for CBO sales
(ii) analyze and assess alternatives for the marketing expansion program for CBD sales opportunities in various medical specialties
(iii) provide introductions to related professionals and potential customers regarding opioid addition alternatives.
(iv) assist the Company in presentation materials to possible customers.
(v) introductions for additional products within the CBD and durable medical device space.

 

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********Signature Page for Consulting Agreement********

 

IN WITNESS WHEREOF, the parties hereto have executed this Consulting Agreement effective as of the date first written above.

 

Can B Corp.

 

   
Marco Alfonsi, CEO  
   
Andrew Holtmeyer  
   
   
   
Consult Agr- Holtmeyer 040120  

 

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Exhibit 10.6

 

EMPLOYMENT AGREEMENT- LEBSOCK

 

This Employment Agreement (“Agreement”) is entered into as of the 11th day of March 2021 (“Effective Date”) by and between Can B Corp., a Florida corporation (the “Issuer”), Botanical Biotech LLC, a Nevada limited liability company (the “Company”) and Bradley Lebsock, a resident of CO (“Employee”) and collectively as the Parties (“Parties”). The Parties agree as follows:

 

I. Services Provided.

 

Company hereby appoints Employee to serve as its President (“Pres”) and Employee hereby accepts such appointment. Employee shall provide those services required of an officer of like title of a company of similar size and industry, under the applicable laws of the States in which the Company operates, the federal securities laws and other state and federal laws and regulations, as applicable. Employee shall report to Issuer’s CEO. Employee understands and agrees that travel may be necessary to accomplish his job responsibilities outlined herein. The principal place of Employee’s employment shall be Company’s principal executive office unless Employee is otherwise required to travel from time to time on Company business during the Employment term.

 

II. Nature of Relationship

 

The Employee is entitled to all of the rights and benefits along with the responsibilities and obligations of an employee. The Company will provide office equipment, supplies, and other facilities and services, suitable to Employee’s position and adequate for the performance of his duties. Subject to the exceptions set forth herein, Employee shall devote as required, his time, attention, best efforts, energy and skill to the business of Company during the term of his employment necessary to effectively and efficiently execute all job responsibilities set forth herein. Employee may devote time and attention to other activities that do not compete with the Issuer or Company or interfere with Employee’s obligations, duties and responsibilities to Company hereunder. For the purposes of this Agreement, the term “compete” shall mean business or professional activities, other than passive investments, for which Employee is compensated by an individual or entity other than Company or a parent, subsidiary, or affiliate of Company with the Company acknowledging an exception for Employee’s interest and ownership in a related family enterprise, L7 Ag, LLC and Botanix Equities LLC which Employee has a non-management interest. This Agreement shall not be interpreted to prohibit Employee from making passive personal investments or conducting private business affairs if those activities do not interfere or conflict with the services required under this Agreement. However, during the term of Employee’s employment, Employee shall not directly or indirectly acquire, hold, or retain any interest in any business competing with or similar in nature to the business of Company or Issuer. For clarification of responsibilities and opportunities presented to the Employee, the Employee shall provide the Issuer a “Right of First Refusal” whereby any opportunity, prospect, accretive business possibility or possible private or public company agreement or joint venture or participation in any form at any level within the hemp-based product and/or CBD space (“Project”) shall first be presented to Issuer, in writing, for a decision regarding any involvement or development Project. If Issuer does not respond or responds that it has no interest in pursuing the Project, then the Employee is free to develop the Project, provided it does not detract from fulfillment of his obligations under this Employment Agreement.

 

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III. Compensation

 

A. Base Salary. As compensation for Employee’s services, Employee shall receive one-hundred twenty thousand dollars ($120,000) (“Base Salary”). The Base Salary shall be paid according to the standard payroll procedures in effect at the Company. This Base Salary shall be reviewed and changed, as and if appropriate, in the discretion of the Managers, after the sooner of 180 from the Effective Date, or completion of the Issuer’s uplist to NASDAQ or other exchange.

 

B. Base Salary Increase. At each annual anniversary of the Agreement, the Base Salary shall be increased at the greater of three percent (3%), or as recommended by the Managers.

 

C. Incentive Bonus. Employee will be eligible to receive an annual cash and or stock bonus which will be determined by the Managers.

 

D. Benefits. During the Term, from the Effective Date through the date of termination of Employee’s engagement with the Company for any reason, Employee shall be entitled to participate in any welfare, health and life insurance and pension benefit and incentive programs as may be adopted from time to time by the Company on the same basis as that provided to similarly situated Employees or Employees of the Company generally. Without limiting the generality of the foregoing, Employee shall be entitled to the following benefits:

 

1. Vacation and Sick Pay. Employee shall be entitled to vacation time and paid days for illness accordance with the Company Employee Handbook policies.

 

2. Reimbursement for Business Expenses. During the Term, the Company shall reimburse Employee for all reasonable expenses incurred by Employee in performing Employee’s duties for the Company, on the same basis as similarly situated Employees of the Company generally and in accordance with the Company’s policies as in effect from time to time. This reimbursement shall include internet expenses, cell phone and similar direct business-related expenses.

 

E. Profit Split. As additional compensation for Employee’s services, Employee shall receive a distribution (“Distribution”) of a defined percentage of the EBITDA for the Company each calendar quarter according to a mutually agreed performance target (“Target”), as made an Exhibit to this Agreement. EBITDA is defined as the earnings before interest, depreciation, taxes, depreciation, and amortization and will be paid as reported by the Company’s accountant and as reviewed by the Company’s auditor. It will be accumulative on a quarter-to-quarter basis, that is, if one quarter has a negative EBITDA, that would be offset against the following quarter’s positive EBITDA distribution. The Employee has the option to accept the Distribution in either direct cash payment or shares of Issuer’s common stock, or any combination, at Employee’s option. Stock would be valued at the prior 10-day closing price and issued under SEC rule 144 restriction. Distribution Target Split is Defined as:

 

  a. If the Company achieves >25% of Target for the quarter, the Distribution split will be 90%/ 10% Company/ Employee,
  b. If >37.5% of Target 80% / 20% Company/ Employee
  c. If >50% of Target 70% / 30% Company/ Employee
  d. If >75% of Target 60%/ 40% Company / employee
  e. If 100% of Target 50%/ 50% Company / Employee
  f. If >125% of Target 40% / 60% Company/ Employee

 

All of the Distributions will be put into a Distribution Pool for distribution as agreed by the Managers of the Company.

 

F. Incentive Stock Option Plan. Employee shall receive a stock bonus in accordance with the Issuer’s Incentive Stock Option Plan (“ISOP”) in an amount of one hundred thousand dollars ($100,000) and valued at fair market value at the time of issuance. The other terms of such options shall be as approved by the Compensation Committee of the Issuer or its Board of Directors, as applicable, pursuant to an approved Award Notice and Award Agreement.

 

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IV. Indemnification and Insurance

 

The Company hereby fully agrees to hold harmless and indemnify Employee pursuant to the Indemnity Agreement attached as Exhibit A to this Agreement.

 

V. Term of Agreement

 

This Agreement shall be in effect from the Effective Date hereof and continue for an initial term of three (3) years (“Initial Term”). This Agreement shall be renewed for an additional three (3) year renewal term (“Renewal Term”) unless either party gives notice of its intent to not to renew the Agreement at least thirty (30) days prior to the expiration of the applicable Initial Term. Failure to renew this Agreement upon the expiration of the Initial Term shall not constitute a termination of this Agreement by either party. The Initial Term together with all applicable Renewal Terms is referred to herein as the “Term.”

 

VI. Employee Termination

 

  A. Right to Terminate. The Company may terminate Employee’s employment under this Agreement with or without Cause at any time, and Employee may resign under this Agreement with or without Good Reason at any time, by providing written notice to the other party. As used herein, “Cause” shall mean: (i) the plea of guilty or nolo contendere to, conviction for, or the commission of, a felony offense by Employee that is not in connection with Employee’s duties or services to the Company and which will be expected to have a material adverse impact on the Company; (ii) a material breach by Employee of this Agreement that is not cured within ten (10) days from written notice by the Company; (iii) a knowing and material violation by Employee of any Company or Issuer policy that is not cured within ten (10) days following notice by the Company, (iv) Employee’s failure to meet performance goals agreed to by the Employee and the Company’s Managers that is not cured within (10) days following notice from the Company, (v) Employee’s disparagement of the Company or Issuer or their officers, managers or directors, or (vi) Employee’s willful failure to perform or gross negligence in performing Employee’s duties owed to the Company (including as reasonably directed by the Managers), after ten (10) days written notice delivered to Employee by the Company, which notice specifies such failure or negligence and provides Employee an opportunity to cure within such ten (10) day period. As used herein, “Good Reason” shall mean: (i) a diminution in the Employee’s Base Salary of 10% or more; (ii) a material diminution in the Employee’s authority, duties or responsibilities; (iii) a material changes in the geographic location at which the Employee must perform services; (iii) any action or inaction that constitutes a material breach by the Company of this Agreement, or (iv) Employee is required to resign as a result of the Company’s breach with a third party.
     
  B. Termination for Cause or without Good Reason. Upon Employee’s (i) termination of employment by the Company for Cause prior to the expiration of the Term, or (ii) resignation without Good Reason prior to the expiration of the Term, this Agreement shall terminate without further obligation by the Company.
     
  C. Period to Cure Good Reason. For the Employee to be able to terminate his employment with the Company on account of Good Reason, except for Good Reason in subsection (iv) of its definition, he must provide notice of the occurrence of the event constituting Good Reason and his desire to terminate his employment with the Company on account of such within ninety (90) days following the initial existence of the condition constituting Good Reason, and the Company must have a period of thirty (30) days following receipt of such notice to cure the condition. If the Company does not cure the event constituting Good Reason within such thirty (30) day period, the Employee’s termination date shall be the day immediately following the end of such thirty (30) day period, unless the Company provides for an earlier termination date.
     
  D. Termination by the Employee with Good Reason or by the Company without Cause. Upon termination of Employee’s employment prior to the expiration of the Initial Term by the Company without Cause or by Employee for Good Reason then:

 

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i. The Company shall pay Employee if applicable, all Base Salary previously earned, amounts due under benefit plans and profit sharing plans, and reimbursement of business expenses accrued but unpaid through the date of termination, payable thirty (30) days following such termination, or such sooner time as required by law.
   
ii. Notwithstanding anything to the contrary contained herein, the Company’s obligation to pay and the Employee’s right to receive any severance pay under this Section or other remuneration due under this Agreement, including the right to exercise its vested options shall be conditioned upon Employee’s execution of the Company’s standard waiver and release agreement substantially in the form contained herewith as Exhibit B (“Release Agreement”). Should Employee fail to execute and return to the Company the Release Agreement within fourteen (14) days from the date of Employee’s termination without Cause, Employee shall forfeit all right to receive severance payments pursuant to this Section or to exercise his vested options.

 

  E. Termination upon Death. Employee’s employment hereunder shall terminate upon his death, in which event the Company shall pay to such person as the Employee shall designate in a written notice filed with the Company, or if no such person shall have been designated to his estate, all salary, amounts due under benefit plans and profit-sharing plans, vested shares and reimbursement of business expenses though the date of termination plus of the remainder of obligations consistent with VI B. ii above.
     
  F. Termination upon Disability. If as a result of a permanent mental or physical disability, Employee shall have been unable to perform his duties hereunder on a full-time basis for three (3) consecutive months and, within thirty (30) days after the Company notifies Employee in writing that it intends to replace him, (which notice can be given at the end of the second month during such three-month period), Employee shall not have returned to the complete performance of his duties on a full time basis, the employer shall be entitled to terminate Employee’s employment. For the purposes of this Agreement, “Disability” shall mean the Employee (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) receiving income replacement benefits for a period of not less than three (3) months under an accident or health plan covering employees of the Company. In addition, Employee shall, upon his Disability, have the right to terminate his employment with the Company. If such employment is terminated (whether by the Company or Employee) as a result of Employee’s Disability, then the Company shall pay to Employee all salary, amounts due under benefit plans and profit-sharing plans, and reimbursement of business expenses, through the date of termination plus the remaining obligations consistent with VI B. ii above.
     
  G. Vesting of Stock. On the date of termination for any reason, Employee shall only be entitled to the value of the shares of any class of stock vested on or before the date of termination of employment, if any shares have vested by that date, in accordance with the vesting schedule outlined in the applicable Award Notice and Award Agreement or other documentation between Employee and the Company governing the vesting of such shares. As of the date of termination, all vesting options will lapse with respect to all of Employee’s then-unvested shares of any class of stock. Notwithstanding anything to the contrary contained herein, should the Employee be terminated for Cause, then all options granted Employee, whether vested or unvested, shall be forfeited by Employee and shall terminate.
     
  H. Termination by acquisition or merger. In the event of a merger or acquisition involving the Company where this Agreement is terminated, the Company shall arrange to pay Employee according to Section VI(D) of this Agreement plus 6-months Base Salary.

 

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  I. Return of Materials. Upon (a) termination of this Agreement for any reason, or (b) the Company’s request at any time during the Term, the Employee agrees to (i) provide or return to the Company any and all Company property, including but not limited to any electronic equipment, keys, key cards, access cards, identification cards, security devices, employer credit cards, network access devices, computers, cell phones, smartphones, equipment, files, e-mail messages, thumb drives or other removable information storage devices, and data and all Company documents and materials belonging to the Company and stored in any fashion, including but not limited to those that constitute or contain any Confidential Information or work product, that are in the possession or control of Employee, whether they were provided to Employee by the Company or any of its business associates or created by Employee in connection with his employment with the Company; (ii) delete or destroy all copies of any such documents and materials not returned to the Company that remain in Employee’s possession or control, including those stored on any non-Company devices, networks, storage locations, and media in Employee’s possession or control, and provide written confirmation of such deletion or destruction to the Company; and (iii) not access or use or permit or assist others in accessing or using any facilities or information technology resources belonging to the Company, such as, without limitation, Team Drive/Google Drive or Dropbox, in any manner after such event.

 

VII. Proprietary Rights

 

A. Intellectual Property Ownership. The parties hereto agree that nothing contained in this Agreement shall grant Employee any right or title in or to any writing, works of authorship, technology, invention, discovery, technique, idea, concept, research, proposal, material, improvement, device, design, apparatus, practice, process, method, product, or other work product of any nature whatsoever, whether or not patentable or copyrightable (“Intellectual Property”) owned or licensed by the Company, and the Company shall remain the sole and exclusive owner or licensee, as applicable, of all such Intellectual Property.

 

B. Employee Inventions. The Employee shall promptly disclose in writing to the Company as set forth below complete information concerning each and every work of Intellectual Property made, developed, perfected, devised, conceived, produced, created or first reduced to practice by the Employee individually or jointly with others, during the Term during working hours with the Company or using the Company’s property, facilities or resources or which relate either directly or indirectly to the services or products of the Company developed or being developed by the Company which are known to the Employee (“Employee Inventions”). The Employee acknowledges and agrees that any and all of said Employee Inventions are the property of the Company and hereby assigns and agrees to assign to the Company any and all of his right, title and interest in and to any and all of such Employee Inventions. The Employee shall execute any documents requested by the Company (which shall be prepared at the Company’s expense), including but not limited to patent and copyright applications and registrations, and shall perform any and all further acts deemed necessary or desirable by the Company in order to confirm, exploit, or enforce the rights herein granted and assigned by the Employee to the Company. The provisions of this Article VIII shall not apply to any Employee Invention meeting each of the following conditions: (i) such Employee Invention was developed entirely on the Employee’s own time, (ii) such Employee Invention was made without the use of any Company equipment, supplies, facility or confidential information, (iii) such Employee Invention does not relate to any service or product of the Company in place or planned or to any research or development efforts of the Company during the Term which are known or should be known to the Employee, and (iv) such Employee Invention does not result from any work or service performed by the Employee on behalf of or for the Company. The Employee shall promptly disclose all Employee Inventions to the Managers and perform all actions reasonably requested by the Managers to establish and confirm ownership thereof by the Company.

 

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C. Work Made for Hire, Assignment. Employee acknowledges that, by reason of being employed by the Company, to the extent permitted by law, all Employee Inventions consisting of copyrightable subject matter is “work made for hire” as defined in 17 U.S.C. section 101 and such copyrights are therefore owned by the Company. To the extent that the foregoing does not apply, Employee hereby irrevocably assigns to the Company, for no additional consideration, Employee’s entire right, title, and interest in and to all Employee Inventions and Intellection Property rights therein, including the right to sure, counterclaim, and recover for all past, present, and future infringement, misappropriate, or dilution thereof, and all rights corresponding thereto throughout the world. Nothing contained in this Agreement shall be construed to reduce or limit the Company’s rights, title, or interest in any Employee Inventions or intellection property rights therein so as to be less in any respect than Company would have had in the absence of this Agreement.

 

D. Further Assurances; Power of Attorney. During and after his employment, Employee agrees to reasonably cooperate with the Company to (a) apply for, obtain, perfect, and transfer to Company the Employee Inventions as well as any and all intellectual property rights in the Employee Inventions in any jurisdiction in the world; and (b) maintain, protect, and enforce the same, including, without limitation, giving testimony and executing and delivering to the Company any and all applications, oaths, declarations, affidavits, waivers, assignments, and other documents and instruments as shall be requested by Company. Employee hereby irrevocably grants the Company power of attorney to execute and deliver any such documents on Employee’s behalf in his name and to do all other lawfully permitted acts to transfer the Employee Inventions to the Company and further the transfer, prosecution, issuance, and maintenance of all intellection property rights therein, to the full extent permitted by law, if Employee does not promptly cooperate with Company’s request (without limiting the rights Company shall have in such circumstances by operation of law). The power of attorney is coupled with an interest and shall not be affected by Employee’s subsequent incapacity.

 

VIII. Employee Representations and Warranties. Employee hereby represents and warrants to Issuer and Company as follows:

 

  A. As of the Effective Date, that Employee (i) has the necessary power and authority and the legal right to enter into this Agreement and perform Employee’s obligations hereunder, and (ii) has taken all necessary action on Employee’s part required to authorize the execution and delivery of this Agreement and the performance of Employee’s obligations hereunder. This Agreement has been duly executed and delivered on behalf of Employee, and constitutes a legal, valid, binding obligation of Employee and is enforceable against him in accordance with its terms subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights and judicial principles affecting the availability of specific performance and general principles of equity whether enforceability is considered a proceeding at law or equity.
     
  B. Employee represents and warrants that all services rendered in accordance with this Agreement shall meet the standards and quality expected by Company, as set forth in writing in the Company’s policies, so as to enhance the associated goodwill of the Company.
     
  C. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any applicable law, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Employee is subject, or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Employee is a party or by which it is bound or to which any of his assets are subject.
     
  D. Employee shall comply with all applicable laws, ordinances, rules, and regulations of the states and cities in which it is operating, including but not limited to, local fire codes, zoning regulations, and occupancy codes. Employee shall promptly provide to the Company copies of all communications to or from the any governmental entity that relate to noncompliance, or alleged noncompliance, with any laws or other government requirements.

 

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  E. Employee acknowledges and agrees that any and all securities issued pursuant to this Agreement (“Securities”) are characterized as “restricted securities” under applicable U.S. federal and state securities laws, including Rule 144 promulgated by the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended (the “Securities Act”), and that pursuant to these laws, Employee must hold the Securities indefinitely unless subsequently registered with the SEC and qualified by state authorities, or an exemption from such registration and qualification requirements is available. Neither the Issuer nor any other person is under any obligation to register the Securities under the Securities Act or otherwise. The Employee understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities. It is further understood that the stock certificates representing the Securities may bear one or more legends restricting the transfer of the Securities or as otherwise required by applicable law. Employee is acquiring the Securities for Employee’s own account for investment only and not with a view towards the public sale or distribution thereof and not with a view to or for sale in connection with any distribution thereof. Employee (i) understands that its investment in Securities involves a high degree of risk, (ii) is experienced in making investments of the kind described in this Agreement, (iii) is able to afford the entire loss of its investment in the Securities, and (v) has no need for liquidity in its investment in Securities. Employee has received and reviewed the Issuer’s governing documents including, but not limited to, its Articles of Incorporation, Bylaws and Shareholder Agreements, and hereby agrees to be bound thereto and abide by the provisions thereof. Employee has been furnished with all materials relating to the business, finances and operations of the Issuer and materials relating to the offer and sale of the Securities which have been requested by the Employee. Employee has been afforded the opportunity to ask questions of the Issuer and has received complete and satisfactory answers to any such inquiries. If desired, Employee has consulted its own advisors with respect to its proposed purchase of the Securities. Except as set forth herein, no representations or warranties have been made to Employee by the Issuer, or any officer, partner, agent, representative, employee or affiliate thereof and, in entering into this transaction, Employee is not relying upon any information, other than that contained herein. Employee did not learn of the Securities by way of general solicitation and was not solicited by any person or entity without a pre-existing relationship with Employee.
     
  F. The representations of this Article shall survive termination of this Agreement.

 

IX. Sole Agreement

 

This Agreement supersedes all prior or contemporaneous written or oral understandings or agreements, and may not be added to, modified, or waived, in whole or in part, except by a writing signed by the party against whom such addition, modification or waiver is sought to be asserted. Upon execution of this Agreement, Employee’s previous employment agreement with the Company is terminated and of no further force or effect.

 

X. Assignment

 

This Agreement and all of the provisions hereof shall be binding upon and insure to the benefit of the parties hereto and their respective successors and permitted assigns and, except as otherwise expressly provided herein, neither this Agreement, nor any of the rights, interests or obligations hereunder shall be assigned by either of the parties hereto without the prior written consent of the other party.

 

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XI. Notices

 

All notices or other communications required or permitted hereunder shall be in writing shall be deemed duly given (i) if by personal delivery, when so delivered, (ii) if mailed, three (3) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid and addressed to the intended recipient, (iii) if sent through an overnight delivery service in circumstances to which such service guarantees next day delivery, the following day, or (iv) when sent by facsimile with telephonic confirmation or electronic mail with confirmation of transmission by the transmitting equipment, the same day, in each case to the addresses, facsimile numbers, or electronic mail addresses designated in writing by each party hereto to the other party. Any party may change the address, facsimile number, or electronic mail address to which notices and other communications hereunder are to be delivered by giving the other party notice in the manner herein set forth.

 

XII. Survival of Obligations

 

Notwithstanding the expiration of termination of this Agreement, neither party hereto shall be released hereunder from any liability or obligation to the other which has already accrued as of the time of such expiration or termination or which thereafter might accrue in respect of any act or omission of such party prior to such expiration or termination.

 

XIII. Severability

 

The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. In the event any provision or term hereof is deemed to have exceeded applicable legal authority or shall be in conflict with applicable legal limitations, such provision shall be reformed and rewritten as necessary to achieve consistency and compliance with such applicable law.

 

XIV. Governing Laws

 

This Agreement will be construed in accordance with the laws of the state of New York, without resort to conflict of law principles.

 

XV. Attorneys’ Fees

 

If either party brings a claim or lawsuit against the other party to this Agreement to interpret or enforce any of the terms of this Agreement, the prevailing party shall, in addition to all other damages, be entitled to reasonable attorneys’ fees and costs, costs of witnesses, and costs of investigation from the non-prevailing party.

 

XVI. Waiver

 

Either party’s failure to enforce any right resulting from a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other or subsequent breach by the other party.

 

XVII. Force Majeure

 

If and to the extent that any party may be precluded by acts of God, authority of law, war, acts of terrorists, strikes, lockouts, casualties, pandemics, viruses or other causes beyond its reasonable control from performance hereunder, such performance (except for payment of amounts due hereunder) shall be excused to the extent that it is necessitated by such causes beginning on the date in which written notice of a party’s inability to perform is received by the other party at the respective addresses provided below. Such notice must be given at least thirty (30) days in advance of the scheduled performance date. Any delay in performance in excess of thirty (30) days beyond the scheduled performance date shall be considered an irreparable delay and the party whose performance is not impaired shall have the right to cancel performance.

 

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XVIII. Further Assurances

 

The parties hereby agree to execute and deliver such further and other documents and perform or cause to be performed such further acts and things as may be necessary or desirable to give full effect to this Agreement.

 

XIX. Interpretation

 

The division of this Agreement into articles and sections and the insertion of headings are for convenience of reference only and shall not affect the interpretation or construction of the Agreement or any provision hereof. Words importing the singular number only shall include the plural, and vice versa, words importing the masculine gender shall include the feminine gender and neuter gender, and vice versa, and words importing persons shall include a natural person, firm, trust, partnership, association, corporation, government board, agency or instrumentality.

 

XX. Counterparts

 

This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. The parties hereto confirm that any electronic copy of another party’s executed counterpart of this Agreement (or such party’s signature page thereof) shall be deemed to be an executed original thereof.

 

XXI. Arbitration; Equitable Remedies

 

To the fullest extent allowed by law, any controversy, claim or dispute between Employee and the Company or Issuer (and/or any of its owners, directors, managers, officers, employees, affiliates, or agents) relating to or arising out of Employee’s employment or the cessation of that employment will be submitted to final and binding arbitration in the County of Nassau, State of New York, for determination in accordance with the American Arbitration Association’s (“AAA”) National Rules for the Resolution of Employment Disputes, as the exclusive remedy for such controversy, claim or dispute. In any such arbitration, the parties may conduct discovery in accordance with the applicable rules of the arbitration forum, except that the arbitrator shall have the authority to order and permit discovery as the arbitrator may deem necessary and appropriate in accordance with applicable state or federal discovery statutes. The arbitrator shall issue a reasoned, written decision, and shall have full authority to award all remedies which would be available in court. The parties shall share the filing fees required for the arbitration, provided that Employee shall not be required to pay an amount in excess of the filing fees required by a federal or state court with jurisdiction. The Company shall pay the arbitrator’s fees and any AAA administrative expenses. The award of the arbitrator shall be final and binding upon the parties and may be entered as a judgment in any New York court of competent jurisdiction and the parties hereby consent to the exclusive jurisdiction of the courts of New York. Possible disputes covered by the above include (but are not limited to) unpaid wages, breach of contract, torts, violation of public policy, discrimination, harassment, or any other employment-related claims under laws including but not limited to, Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act, the Age Discrimination in Employment Act, and any other statutes or laws relating to an employee’s relationship with his/her employer, regardless of whether such dispute is initiated by the Employee, Issuer or the Company. Thus, this bilateral arbitration agreement applies to any and all claims that the Company or Issuer may have against an employee, including but not limited to, claims for misappropriation of company property, disclosure of proprietary information or trade secrets, interference with contract, libel, gross negligence, or any other claim for alleged wrongful conduct or breach of the duty of loyalty by an employee. However, notwithstanding anything to the contrary contained herein, in addition to any other remedies available to it at law or in equity, the Company, Issuer and Employee shall have their respective rights to seek and obtain injunctive relief (without the requirement of posting a bond or other form of security) with respect to any controversy, claim or dispute to the extent permitted by law. Claims for workers’ compensation benefits and unemployment insurance (or any other claims where mandatory arbitration is prohibited by law) are not covered by this arbitration agreement, and such claims may be presented by either Employee, Issuer or the Company to the appropriate court or government agency. BY AGREEING TO THIS BINDING ARBITRATION PROVISION, EMPLOYEE, ISSUER AND THE COMPANY GIVE UP ALL RIGHTS TO TRIAL BY JURY. This arbitration agreement is to be construed as broadly as is permissible under applicable law

 

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XXII. Confidentiality

 

  A. Obligation to Keep Confidential. Employee shall hold in strict confidence any and all Confidential Information he received or may receive regarding the Company, Issuer, their business plans, operations, Intellectual Property, and other trade secrets, and may not disclose such information to any person except as provided herein. The provisions of this Article XXIII shall survive termination of this Agreement.
     
  B. Definition. For purposes of this is Agreement, “Confidential Information” includes, but is not limited to, all information not generally known to the general public, in spoken, printed, electronic or any other form or medium, relating directly or indirectly to: business processes, practices, methods, policies, plans, publications, documents, operations, services, techniques, agreements, contracts, terms of agreements, transactions, potential transactions, negotiations, pending negotiations, know-how, trade secrets, supplier information, vendor information, financial information, results, accounting information, accounting records, legal information, marketing information, pricing information, credit information, payroll information, personnel information, supplier lists, vendor internal controls, customer information, manufacturing processes or its businesses or any existing or prospective customer, supplier, investor or other associated third party, or of any other person or entity that has entrusted information to Company or Issuer in confidence. Employee understands that the above list is not exhaustive, and that Confidential Information also includes other information that is marked or otherwise identified as confidential or proprietary, or that would otherwise appear to a reasonable person to be confidential or proprietary in the context and circumstances in which the information is known or used. Employee understands and agrees that Confidential Information includes information developed by him in the course of his employment by Company as if Company furnished the same Confidential Information to Employee in the first instance. Confidential Information shall not include information that is generally available to and known by the public at the time of disclosure to Employee; provided that, such disclosure is through no direct or indirect fault of Employee or person(s) acting on Employee’s behalf.
     
  C. Company Creation and Use of Confidential Information. Employee understands and acknowledges that each of Issuer and Company has invested, and continues to invest, substantial time, money, and specialized knowledge into developing its resources, creating a customer base, generating customer and potential customer lists, training its employees, and improving its offerings in the field of cannabis cultivation, manufacturing, distribution and sale. Employee understands and acknowledges that as a result these efforts, Company and Issuer has created, and continues to use and create Confidential Information. This Confidential Information provides Company and Issuer with a competitive advantage over others in the marketplace.
     
  D. Disclosure and Use Restrictions. The Employee agrees and covenants: (i) to treat all Confidential Information as strictly confidential; (ii) not to directly or indirectly disclose, publish, communicate, or make available Confidential Information, or allow it to be disclosed, published, communicated, or made available, in whole or part, to any entity or person whatsoever (including other employees of Company and Issuer) not having a need to know and authority to know and use the Confidential Information in connection with the business of Company or Issuer and, in any event, not to anyone outside of the direct employ of Company or Issuer except as required in the performance of Employee’s authorized employment duties to or with the prior consent of the Company or Issuer, as applicable, in each instance (and then, such disclosure shall be made only within the limits and to the extent of such duties or consent); and (iii) not to access or use any Confidential Information, and not to copy any documents, records, files, media, or resources containing any Confidential Information, or remove any such documents, records, files, media, or other resources from the premises or control of Company or Issuer, except as required in the performance of Employee’s authorized employment duties to Company or with the prior consent of the Company or Issuer, as applicable, in each instance (and then, such disclosure shall be made only within the limits and to the extent of such duties or consent). Nothing herein shall be construed to prevent disclosure of Confidential Information as may be required by applicable law or regulation, or pursuant to the valid order of a court of competent jurisdiction or an authorized government agency, provided that the disclosure does not exceed the extent of disclosure required by such law, regulation, or order. Employee shall promptly provide written notice of any such order to the Company or Issuer, as applicable.

 

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XXIII. Non-Disparagement

 

No party will disparage or otherwise publish or communicate derogatory statements or opinions about any other party or their respective affiliates, practices, businesses, personnel, to any person or entity, be it orally, in writing, or otherwise. For purposes of this Agreement, “derogatory” means a statement that detracts from one’s character, standing, or reputation. The provisions of this Section shall survive termination of this Agreement.

 

XXIV. No Solicitation

 

While Employee is an employee of the Company, and for a period of one (1) year after termination, Employee shall not, directly or indirectly, solicit, hire, recruit, attempt to hire or recruit, or induce the breach or termination of employment of any employee, contractor, or service provider of the Company or Issuer. Furthermore, for a period of one (1) year immediately following the termination of this Agreement for any reason, whether voluntary or involuntary, Employee shall, directly or indirectly, solicit any of the Company’s or Issuer’s customers or divert or attempt to divert from the Company or Issuer any business the Company or Issuer had enjoyed or solicited from its customers or potential customers prior to termination of Employee’s employment. This provision will survive termination of this Agreement.

 

*****Signature Page to Employment Agreement Follows*****

 

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IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed by their duly authorized officers, as of the date first written above and replaces any and all prior agreement whether in writing or orally.

 

CAN B CORP.

 

 

Marco Alfonsi, CEO

 

BOTANICAL BIOTECH, LLC

 

 

Stanley L. Teeple, Manager

 

EMPLOYEE

 

 

Bradley Lebsock

 

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EXHIBIT A

 

INDEMNITY AGREEMENT

 

This Indemnity Agreement (“Agreement”) is made and entered into this March 18, 2021, by and between Botanical Biotech LLC, a Nevada limited liability company (the “Company”), and the undersigned employee (“Employee”).

 

RECITALS

 

WHEREAS, Employee performs a valuable service to the Company in his capacity as the Company’s President (“Pres.”).

 

WHEREAS, the Company has adopted and Operating Agreement (the “OpAg”) providing for the indemnification of the managers, officers, Employees and other agents, including persons serving at the request of the Company in such capacities with other corporations or enterprises; and

 

WHEREAS, in order to induce Employee to continue to serve the Company, the Company has determined and agreed to enter into this Agreement with Employee.

 

NOW, THEREFORE, in consideration of Employee’s continued service after the date hereof, the parties hereto agree as follows:

 

AGREEMENT

 

1. Indemnity of Employee. The Company hereby agrees to hold harmless and indemnify Employee to the fullest extent authorized or permitted by the provisions of its OpAg and applicable law against any and all expenses (including attorneys’ fees), witness fees, damages, judgments, fines and amounts paid in settlement and any other amounts that Employee becomes legally obligated to pay because of any claim or claims made against or by him in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, arbitrational, administrative or investigative (including an action by or in the right of the Company) to which Employee is, was or at any time becomes a party, or is threatened to be made a party, by reason of the fact that Employee is, was or at any time becomes a manager, officer, Employee or other agent of Company, or is or was serving or at any time serves at the request of the Company as a manager, director, officer, Employee or other agent of another corporation, partnership, joint venture, trust, Employee benefit plan or other enterprise.

 

2. Limitations on Indemnity. No indemnity shall be paid by the Company:

 

(a) on account of any claim against Employee solely for an accounting of profits made from the purchase or sale by Employee of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state or local statutory law;

 

(b) on account of Employee’s conduct that is established by a final judgment as knowingly fraudulent or deliberately dishonest or that constituted willful misconduct;

 

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(c) on account of Employee’s conduct that is established by a final judgment as constituting a breach of Employee’s duty of loyalty to the Company or resulting in any personal profit or advantage to which Employee was not legally entitled;

 

(d) for which payment is actually made to Employee under a valid and collectible insurance policy or under a valid and enforceable indemnity clause, bylaw or agreement, except in respect of any excess beyond payment under such insurance, clause, bylaw or agreement;

 

(e) if indemnification is not lawful (and, in this respect, both the Company and Employee have been advised that the Securities and Exchange Commission believes that indemnification for liabilities arising under the federal securities laws is against public policy and is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for adjudication); or

 

(f) in connection with any proceeding (or part thereof) initiated by Employee, or any proceeding by Employee against the Company or its managers, officers, Employees or other agents, unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the managers of the Company, (iii) such indemnification is provided by the Company, in its sole discretion, pursuant to the powers vested in the Company under the Nevada Revised Statutes (“NRS”), or (iv) the proceeding is initiated pursuant to Section 9 hereof.

 

3. Continuation of Indemnity. All agreements and obligations of the Company contained herein shall continue during the period Employee is a managers, officer, Employee or other agent of the Company (or is or was serving at the request of the Company as a manager, director, officer, Employee or other agent of another corporation, partnership, joint venture, trust, Employee benefit plan or other enterprise) and shall continue thereafter so long as Employee shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal, arbitrational, administrative or investigative, by reason of the fact that Employee was serving in the capacity referred to herein.

 

4. Partial Indemnification. Employee shall be entitled under this Agreement to indemnification by the Company for a portion of the expenses (including attorneys’ fees), witness fees, damages, judgments, fines and amounts paid in settlement and any other amounts that Employee becomes legally obligated to pay in connection with any action, suit or proceeding referred to in Section 1 hereof even if not entitled hereunder to indemnification for the total amount thereof, and the Company shall indemnify Employee for the portion thereof to which Employee is entitled.

 

5. Notification and Defense of Claim. Not later than thirty (30) days after receipt by Employee of notice of the commencement of any action, suit or proceeding, Employee will, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission so to notify the Company will not relieve it from any liability which it may have to Employee otherwise than under this Agreement. With respect to any such action, suit or proceeding as to which Employee notifies the Company of the commencement thereof:

 

(a) the Company will be entitled to participate therein at its own expense;

 

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(b) except as otherwise provided below, the Company may, at its option and jointly with any other indemnifying party similarly notified and electing to assume such defense, assume the defense thereof, with counsel reasonably satisfactory to Employee. After notice from the Company to Employee of its election to assume the defense thereof, the Company will not be liable to Employee under this Agreement for any legal or other expenses subsequently incurred by Employee in connection with the defense thereof except for reasonable costs of investigation or otherwise as provided below. Employee shall have the right to employ separate counsel in such action, suit or proceeding but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Employee unless (i) the employment of counsel by Employee has been authorized by the Company, (ii) Employee shall have reasonably concluded, and so notified the Company, that there is an actual conflict of interest between the Company and Employee in the conduct of the defense of such action or (iii) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of Employee’s separate counsel shall be at the expense of the Company. The Company shall not be entitled to assume the defense of any action, suit or proceeding brought by or on behalf of the Company or as to which Employee shall have made the conclusion provided for in clause (ii) above; and

 

(c) the Company shall not be liable to indemnify Employee under this Agreement for any amounts paid in settlement of any action or claim affected without its written consent, which shall not be unreasonably withheld. The Company shall be permitted to settle any action except that it shall not settle any action or claim in any manner which would impose any penalty or limitation on Employee without Employee’s written consent, which may be given or withheld in Employee’s sole discretion.

 

6. Expenses. The Company shall advance, prior to the final disposition of any proceeding, promptly following request therefore, all expenses incurred by Employee in connection with such proceeding upon receipt of an undertaking by or on behalf of Employee to repay said amounts if it shall be determined ultimately that Employee is not entitled to be indemnified under the provisions of this Agreement, the OpAg, applicable law or otherwise.

 

7. Enforcement. Any right to indemnification or advances granted by this Agreement to Employee shall be enforceable by or on behalf of Employee in any court of competent jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within ninety (90) days of request therefore. Employee, in such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting his claim. It shall be a defense to any action for which a claim for indemnification is made under Section 1 hereof (other than an action brought to enforce a claim for expenses pursuant to Section 6 hereof, provided that the required undertaking has been tendered to the Company) that Employee is not entitled to indemnification because of the limitations set forth in Section 2 hereof. Neither the failure of the Company (including its managers or its members) to have made a determination prior to the commencement of such enforcement action that indemnification of Employee is proper in the circumstances, nor an actual determination by the Company (including its managers or its members) that such indemnification is improper shall be a defense to the action or create a presumption that Employee is not entitled to indemnification under this Agreement or otherwise.

 

8. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Employee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.

 

9. Non-Exclusivity of Rights. The rights conferred on Employee by this Agreement shall not be exclusive of any other right which Employee may have or hereafter acquire under any statute, provision of the Company’s Articles of Organization or OpAg, agreement, vote of members or managers, or otherwise, both as to action in his official capacity and as to action in another capacity while holding office.

 

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10. Survival of Rights.

 

(a) The rights conferred on Employee by this Agreement shall continue after Employee has ceased to be a manager, officer, Employee or other agent of the Company or to serve at the request of the Company as a manager, director, officer, Employee or other agent of another corporation, partnership, joint venture, trust, Employee benefit plan or other enterprise and shall inure to the benefit of Employee’s heirs, executors and administrators.

 

(b) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

11. Severability. Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any provision hereof shall be held to be invalid for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof. Furthermore, if this Agreement shall be invalidated in its entirety on any ground, then the Company shall nevertheless indemnify Employee to the fullest extent provided by the OpAg, the NRS or any other applicable law.

 

12. Governing Law. This Agreement shall be interpreted and enforced in accordance with the laws of the State of New York.

 

13. Amendment and Termination. No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto.

 

14. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute but one and the same Agreement. Only one such counterpart need be produced to evidence the existence of this Agreement.

 

15. Headings. The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof.

 

16. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) upon delivery if delivered by hand to the party to whom such communication was directed or (ii) upon the third business day after the date on which such communication was mailed if mailed by certified or registered mail with postage prepaid to the parties address of record, or to such other address as may have been furnished to Employee by the Company.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.

 

BOTANICAL BIOTECH LLC

 

 

Stanley L. Teeple, Manager

 

EMPLOYEE

 

 

Bradley Lebsock

 

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EXHIBIT B

 

RELEASE AGREEMENT

 

This Release Agreement (“Agreement”) is made effective in accordance with Section 4 below, by and between CAN B CORP. (“CANB”) and Botanical Biotech, LLC (“BB” and, collectively with CANB, the “Company”) on the one hand, and Bradley Lebsock (the “Employee”) on the other hand.

 

1. Employment Agreement. Employee understands and agrees that this Agreement is entered into in consideration for certain severance benefits and other promises made by the Company pursuant to the Employment Agreement that Employee executed with the Company (the “Employment Agreement”), and that Employee is not entitled to receive any severance benefits unless and until this Agreement has become effective and irrevocable pursuant to Section 4, below.

 

2. Release of Claims and Rights. Employee, on behalf of himself and all of his heirs, family members, executors, accountants, administrators, attorneys, agents, assigns, successors and representatives, fully and forever releases, acquits and discharges the Company and all of its affiliates, successors, predecessors, assigns, parents, subsidiaries, divisions (whether incorporated or unincorporated), and all of its and their past and present owners, directors, managers, officers, trustees, employees and agents (in their individual and representative capacities) (collectively, the “Released Parties”) from and for all manner of claims, actions, suits, charges, grievances and/or causes of action, in law or in equity, existing by reason of and/or based upon any fact or set of facts, known or unknown, existing from the beginning of time through the date Employee signs this Agreement, whether known or unknown, suspected or unsuspected. For illustration purposes, the released claims include, but are not limited to, all claims and actions for or related to breach of implied or express contract; promissory estoppel; conversion; invasion of privacy; intentional infliction of emotional distress; negligence; fraud; defamation; wrongful discharge; discrimination; harassment; public policy violation; retaliation; any other claim or cause of action Seaman may have under the Age Discrimination in Employment Act (“ADEA”), the Older Workers Benefit Protection Act (“OWBPA”), Title VII of the Civil Rights Act, the Family and Medical Leave Act, the Genetic Information Nondiscrimination Act, the Americans with Disabilities Act, the Equal Pay Act, the Employee Retirement Income Security Act, the Civil Rights Act of 1991, Section 1981 of U.S.C. Title 42, the Worker Adjustment and Retraining Notification Act, the Whistleblower Protection Act, the California Labor Code, the California Fair Employment and Housing Act (as amended), and any other federal, state, or local statute or law; and any claim or recovery for any type of damages, compensation, bonus, attorneys’ fees, costs, or other relief that is or may be available to Employee. Employee acknowledges and agrees that the release contained in this Section 2 is intended to and shall be construed broadly to release any and all claims which Employee may have against the Released Parties, including, but not limited to, relating to and/or arising out of Employee’s employment and/or the cessation of his employment with any of the Released Parties and/or otherwise. To the fullest extent permitted by law, Employee will not take any action that is contrary to the promises he has made in this Agreement.

 

3. Covenant Not to Sue; Exclusions.

 

(a) To the fullest extent permitted by law, Employee agrees not to file or initiate a lawsuit in any court or initiate an arbitration proceeding asserting any of the claims released pursuant to this Agreement. Employee further agrees that Employee will not permit himself to be a member of any class action and/or collective action in any court or in any arbitration proceeding seeking relief based on any claims released pursuant to this Agreement. Further, while nothing in this Agreement precludes Employee from filing a charge with a governmental or administrative agency or participating in any investigation, hearing, or proceeding of such agency, Employee agrees that (except as to possible whistleblower awards from the Securities and Exchange Commission), he will not be entitled to any personal relief or money damages arising out of such claims, whether pursued by him or any governmental agency, other person or group.

 

 

 

 

(b) Notwithstanding the foregoing, by signing this Agreement, Employee is not giving up: (i) any rights to vested benefits, such as pension or retirement benefits, the rights to which are governed by the terms of the applicable plan documents and award agreements; (ii) claims or rights that cannot be waived by operation of law, such as claims for unemployment compensation or workers’ compensation benefits; (iii) claims to enforce this Agreement; or (iv) any monetary award offered by the Securities and Exchange Commission pursuant to Section 21F of the Securities Exchange Act of 1934.

 

4. ADEA Notice. Employee acknowledges that he is waiving and releasing any claims he may have under the ADEA, the OWBPA and otherwise, and that this waiver and release is knowing and voluntary. Employee is advised to consult with an attorney who is not affiliated with any of the Released Parties before signing this Agreement. Employee has twenty-one (21) days from the date he receives this Agreement to consider this Agreement. Employee may knowingly and voluntarily waive all or part of this 21-day period by signing and returning this Agreement to the Company, per the notice provisions of the Employment Agreement, prior to the expiration of the 21-day period. In the event that this Agreement is signed and delivered, Employee has a period of seven (7) days from the signature date to revoke this Agreement. Any revocation shall be made in writing by Employee and delivered to the Company, per the notice provisions of the Employment Agreement, within the 7-day revocation period. This Agreement will become effective and enforceable only after the revocation period has expired, without any revocation having been communicated, and the day following the expiration of the revocation period will be the “Effective Date” of this Agreement.

 

5. Unknown Claims. It is the intent of the parties that this Agreement shall be effective as a full and final accord and satisfaction and release of all released claims, whether known or unknown, as set forth above. Employee expressly waives and releases any right or benefit which he may have under Section 1542 to the fullest extent that he may waive all such rights and benefits pertaining to the matters released in this Agreement. It is the intent of the parties, through this Agreement and with the advice of counsel, to fully, finally and forever settle and release all claims Employee may have against the Released Parties, whether known or unknown.

 

6. Confidentiality of Agreement. Except as may be required by law, Employee will not in any manner disclose or communicate the existence of or any part of this Agreement to any other person except his spouse, his accountant or financial advisor to the limited extent needed for that person to prepare Employee’s tax returns, and his attorney. If Employee is required by law to disclose any of the terms of this Agreement, he must immediately provide written notice of that fact to the Company, enclose a copy of the subpoena and any other documents describing the legal obligation, and cooperate with the Company in objecting to such request and/or seeking confidentiality protections.

 

7. Non-Admission of Liability. The parties wish to resolve all disputes amicably and without additional costs and expenses. Nothing in this Agreement shall be construed as an admission of liability by any party or any Released Parties.

 

8. Adequacy of Consideration. Employee acknowledges that the Company’s promises set forth throughout this Agreement and the severance pursuant to the Employment Agreement would not be provided unless Employee signed this Agreement and are each separate and adequate consideration for this Agreement, including Employee’s release of claims.

 

 

 

 

9. Non-Assistance. To the fullest extent permitted by law, Employee will not cooperate with, or assist in, any claim, charge, lawsuit, investigation or arbitration against any of the Released Parties, unless required to do so by a lawfully issued subpoena, by court order or as expressly provided by regulation or statute. If Employee is served with a subpoena or is required by court order or otherwise to testify or produce documents in any type of proceeding involving any of the Released Parties, he must immediately advise the Company of same and cooperate with the Company in objecting to such request and/or seeking confidentiality protections.

 

10. Binding Agreement; Assignment. Except as otherwise provided herein, this Agreement will be binding upon and inure to the benefit of the parties’ respective successors, permitted assigns and transferees, personal representatives, heirs and estates, as the case may be; provided, however, that Employee’s rights and obligations under this Agreement may not be assigned without the prior written consent of the Company.

 

11. Choice of Law; Attorneys’ Fees; Arbitration. This Agreement and the rights and obligations of the parties hereunder will be governed by, and construed and enforced in accordance with, the laws of the State of New York, excluding any such laws that direct the application of the laws of any other jurisdiction. The Released Parties are intended third party beneficiaries of Employee’s obligations under this Agreement. In any action in which any of the Released Parties seeks to enforce this Agreement, in addition to available legal and equitable damages, it will be entitled to recover from Employee its reasonable attorneys’ fees and costs associated with such action. Any and all disputes related to or arising out of this Agreement shall be subject to the mandatory arbitration provisions of the Employment Agreement as though expressly incorporated herein.

 

12. Return of Severance Benefits. In addition to any other legal and/or equitable remedies, if it is judicially determined that Employee has breached this Agreement or any other contractual or legal obligation Employee owes to any of the Released Parties, then the Company shall be entitled to suspend payment of the severance benefits set forth in the Employment Agreement and Employee will be required to repay all severance benefits as set forth in the Employment Agreement, provided that he may retain $5,000. The exercise and/or availability of such remedy will not affect the validity of the release and other obligations of Employee as set forth in this Agreement or otherwise, nor will they limit the other legal and/or equitable remedies otherwise available to any of the Released Parties.

 

13. Interpretation; Severability. This Agreement shall be enforceable to the fullest extent permitted by law. If any provision is held to be unenforceable, then such provision will be construed or revised in a manner so as to permit its enforceability to the fullest extent permitted by applicable law. If such provision cannot be reformed in that manner, such provision will be deemed to be severed from this Agreement, but every other provision of this Agreement will remain in full force and effect.

 

14. Section 409A. This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the final regulations issued thereunder (“Section 409A”), or an exemption under Section 409A and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under or in connection with the execution of this Agreement will be made in a manner that complies with Code Section 409A or an applicable exemption.

 

15. Entire Agreement. This Agreement reflects the entire agreement of the parties relative to the subject matter hereof, and supersedes all prior, contemporaneous, oral or written understandings, agreements, statements, representations or promises regarding the subject matter hereof. For the avoidance of doubt, this Agreement does not supersede any post-termination obligations of Employee under the Employment Agreement, or any restrictive covenant agreement between Employee or any other Released Party, including but not limited to the Restrictive Covenant Agreement between CANB, BB and Employee executed contemporaneously with the Employment Agreement. This Agreement may not be amended, modified, waived or terminated except in a writing signed by Employee, CANB and BB. Further, the waiver by a party of a breach of any provision of this Agreement by the other will not operate or be construed as a waiver of any subsequent breach of the same or other provision of this Agreement.

 

 

 

 

16. Employee’s Acknowledgment. Employee represents that he has fully read and understands the meaning and application of this Agreement and all exhibits thereto; that he is not relying on any representation, statement, and/or promise not set forth in this Agreement; that the Company and Released Parties have advised him/her to consult with independent legal counsel; and that Employee is signing this Agreement of his/her own free will.

 

The parties hereto confirm their agreement by the signatures shown below.

 

CAN B CORP.   EMPLOYEE
     
     
Marco Alfonsi, CEO   Bradley Lebsock
     
BOTANICAL BIOTECH, LLC    
     
     
Stanley L. Teeple, Manager    

 

 

 

 

Exhibit 10.7

 

CONSULTING AGREEMENT

 

This Consulting Agreement (this “Agreement”) is effective as of March 16, 2021 (the “Effective Date”), by and between Botanical Biotech LLC, a Nevada limited liability company (the “Company”), and Jordan Schlosser, an individual resident of Florida (the “Consultant”).

 

1. Services. The Company hereby retains Consultant and Consultant hereby agrees to render consulting services set forth in Exhibit A hereto, which is incorporated herein by this reference (Services”) to the Company for the term of this Agreement. The Consultant will not perform any Services for the Company except as authorized or requested by the Company. Consultant shall devote such time to the Services as necessary to complete the Services in a satisfactory and workmanlike manner in accordance with industry standards. Consultant shall, in performing Services contemplated by this contract, faithfully observe and comply with all federal, state, and local laws, ordinances and regulations, applicable to the Services. The Company shall provide Consultant with such equipment and supplies advisable for Consultant to provide the Services.

 

2. Term and Termination

 

a. This Agreement is effective as of the Effective Date and will terminate Three (3) Months from the Effective Date (the “Termination Date”), unless terminated earlier pursuant to subsection (b) below or extended by mutual consent of the Consultant and the Company.

 

b. This Agreement may be terminated (i) for any reason by the Company or Consultant at any time prior to the Termination Date by giving ten (10) days’ written notice of termination to the other party, (ii) by mutual written agreement of the parties, (iii) automatically by the Company upon the death or disability of Consultant, or (iv) by either party for a material breach of this Agreement by the other party that is not cured within five (5) days from written notice by the non-breaching party.

 

c. Termination of this Agreement shall not affect (i) the Company’s obligation to pay for Services previously rendered by the Consultant or expenses reasonably incurred by the Consultant for which the Consultant is entitled to reimbursement under Section 3 of this Agreement, unless the Company terminated this Agreement due to a material breach of Consultant, or (ii) the Consultant’s continuing obligations to the Company under this Agreement.

 

3. Compensation, Insurance and Expenses.

 

a. As full compensation for the Services to be rendered pursuant to this Agreement, the Company shall pay to Consultant the sum of Ten Thousand Dollars ($10,000.00) per month due and payable on the 1st and 15th day of each month.

 

b. The Consultant shall not be entitled to any benefits, insurance, or bonuses in relation to the Services.

 

 

 

 

c. The Company shall reimburse the Consultant for actual travel and other out-of-pocket expenses performed pursuant to the Company’s express prior written request, reasonably incurred up to a pre-approved amount, after submission of reasonably detailed invoices documenting such expenses. Consultant is responsible for all other travel and other out of pocket expenses incurred in connection with this agreement.

 

d. Consultant agrees that during the term of this Agreement, Consultant shall not render services similar to or competitive with the Services to be rendered to the Company hereunder.

 

4. Relationship of the Parties

 

a. Notwithstanding any provision of this Agreement to the contrary, the Consultant is and shall at all times be an independent contractor and not an employee, agent, partner, or joint venturer of the Company. The Consultant shall have no right under this Agreement, or as a result of its consulting services to the Company, to participate in any other employee, retirement, insurance or other benefit program of the Company, nor will the Company make any deductions from the Consultant’s compensation for taxes, the payment of which shall be solely the Consultant’s responsibility. The Company will not be responsible for any insurance contributions, including unemployment or disability, or obtaining worker’s compensation insurance on the Consultant’s behalf.

 

b. The Consultant shall pay, when and as due, any and all taxes incurred as a result of its compensation hereunder, including estimated taxes, and if requested by the Company in connection with any audit or other inquiry from a governmental authority or agency, provide the Company with proof of said payments. The Consultant further agrees to indemnify the Company and hold it harmless to the extent of any obligation imposed on the Company: (i) to pay withholding taxes or similar items; or (ii) resulting from the Consultant being determined not to be an independent contractor.

 

c. The Consultant represents and warrants that neither this Agreement nor the performance thereof will conflict with or violate any obligation of the Consultant or right of any third party.

 

5. Nondisclosure of Confidential Information

 

a. The Consultant recognizes and acknowledges that certain knowledge and information which he will acquire or develop relating to the business of the Company, including, without limitation, any financial information, business plans, product development plans, strategies, business forecasts, sales and merchandising materials, patent disclosures, patent applications, structures, models, techniques, know-how, trade secrets, processes, compositions, formulations, trade secrets, compounds and apparatus relating to the same and other proprietary information related to the current, future and proposed products and services of the Company (collectively, “Confidential Information”) are the valuable property of the Company.

 

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b. The Consultant covenants and agrees that, without the prior written consent of the Company, the Consultant will not use, disclose, divulge or publish any Confidential Information at any time during the term hereof or thereafter except as may be necessary to perform the Services; provided, however, that the Consultant shall not be obligated to treat as confidential, any Confidential Information that (i) was publicly known at the time of disclosure to the Consultant, (ii) became publicly known or available thereafter other than by means in violation of this Agreement or any other duty owed to the Company by the Consultant, or (iii) was lawfully disclosed to the Consultant by a third party. In the event a court or governmental agency legally compels Consultant to disclose Confidential Information, Consultant shall promptly inform the Company of the compelled disclosure (and in any event prior to any disclosure), so that the Company may seek a protective order or other remedy or waive compliance with this Agreement, or both. Consultant shall limit any compelled disclosure of Confidential Information to that legally required.

 

c. The Consultant agrees that any disclosure of Confidential Information will only be such as is reasonably necessary to the performance of the Services and will only be to its employee’s and assistants who are bound by written agreements with Consultant to maintain the Confidential Information in confidence.

 

d. Upon termination of this Agreement, the Consultant agrees to promptly deliver to the Company, all Confidential Information in its possession that is written or other tangible form (together with all copies or duplicates thereof, including computer files), and all other property, materials or equipment that belong to the Company, its customers, its prospects or its suppliers.

 

6. Intellectual Property

 

a. “Intellectual Property includes any and all new or useful art, discovery, improvement, technical development, or invention, whether or not patentable and all related know-how, designs, trademarks, formulae, processes, manufacturing techniques, trade secrets, ideas, artworks, software or other copyrightable or patentable work, that the Consultant, solely or jointly with others, makes, conceives or reduces to practice that resulted from the Consultant’s Services for the Company or use of the Company’s Confidential Information under this Agreement. “Work” means any and all Services under this Agreement. “Work Product(s)” means any and all materials provided pursuant to this Agreement, including all rights in copyrights, trade secrets, formulas, methods, specifications, know how, trademarks, patents, including but not limited to any research, databases created specifically for the Company, domain names and internet addresses, or other intellectual property rights pertaining thereto.

 

b. All rights, titles and interests in and to any Intellectual Property furnished to Consultant by the Company are and shall remain the property of the Company.

 

c. This Agreement is made with the intent that it is Work Made for Hire. The Work (including, without limitation, any works of authorship, documents, records, notes, inventions (whether or not reduced to practice), methods, materials, ideas, designs, models, concepts, techniques, discoveries, and improvements created, conceived or reduced to practice by Consultant in connection with Work or by use of or exposure to the Company’s Confidential Information has been specially ordered and commissioned by the Company, may be incorporated in existing the Company works as a compilation or collective work, and constitutes work made for hire for the Company under applicable copyright law to the extent it qualifies as such. Consultant agrees that the Company will own all copyrights, trademarks, trade secrets, and patents in the Work and that the Work is a “work made for hire” for all intellectual property purposes. All rights, titles and interests in and to the programs, systems, data, reports, audio and video materials, databases, or other materials used or produced by Consultant in the performance of the Services, including any modifications, enhancements, or derivative works thereof, shall remain or become the property of the Company.

 

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d. All rights, titles and interests in and to all deliverables hereunder and other Work Product shall be held by the Company, and all Work Product shall, to the extent possible, be considered works made by Consultant for the benefit of the Company. Consultant shall mark all Work Product with the Company’s copyright or other proprietary notices as directed by the Company and shall take all actions deemed necessary by the Company to protect the Company’s rights therein.

 

e. In the event that the Work Product does not constitute work made by Consultant for the benefit of the Company under applicable law, or in the event that Consultant otherwise retains any rights to any Work Product, Consultant agrees to assign, and upon creation thereof hereby automatically assigns, all rights, titles, and interests in and to such Work Product to the Company, without further consideration. Consultant agrees to execute any documents of assignment or registration of copyright, trademark, or patent requested by the Company respecting any and all Work Product. For the avoidance of doubt: (i) the assignment set forth above is in perpetuity and worldwide; and (ii) notwithstanding anything contained in any applicable law of any jurisdiction, the assigned rights will not revert to Consultant if not exercised at any time whatsoever.

 

f. Nothing in this Agreement shall restrict the Company from the use of any ideas, concepts, know-how, methods or techniques not fixed in a tangible medium during the Term (“Residual Subject Matter”) relating to the Work that it, individually or jointly, develops or discloses under this Agreement. The Company shall not be prevented from making use of know-how and principles learned nor experience gained of a non-proprietary and non-confidential nature.

 

g. Consultant shall perform his obligations under this Agreement in a manner that does not infringe, or constitute an infringement or misappropriation of, any patent, copyright, trademark, trade secret or other proprietary rights of any third party. Consultant shall indemnify and defend the Company against any claims (i) that all or any portion of Intellectual Property developed by Consultant infringe any United States or patent, copyright or trade secret; (ii) attributable to any act of Consultant in its creation, distribution or maintenance of any of Intellectual Property; or (iii) relating to third party licenses or other agreements between Consultant and any third party.

 

7. Miscellaneous

 

a. This Agreement shall be governed in all respects by the laws of the State of Florida, without regard to any provisions thereof relating to conflict of laws among different jurisdictions.

 

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b. If either party brings a claim or lawsuit against the other party to this Agreement to interpret or enforce any of the terms of this Agreement, the prevailing party shall, in addition to all other damages, be entitled to reasonable attorneys’ fees and costs, costs of witnesses, and costs of investigation from the non-prevailing party.

 

c. This Agreement is the entire agreement of the parties with respect to the Services to be provided by the Consultant and supersedes any prior agreements between the parties with respect to the subject matter of this Agreement. This Agreement may only be amended in writing by the Company and the Consultant and their respective permitted successors and assigns.

 

d. Either party’s failure to enforce any right resulting from a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other or subsequent breach by the other party.

 

e. All notices required or permitted to be given by one party to the other under this Agreement shall be sufficient if sent by either certified mail return receipt requested, nationally recognized courier or hand delivery to the parties at the respective addresses set forth below or to such other address as the party to receive the notice has designated by notice to the other party. All notices shall be effective (i) when delivered personally, (ii) when transmitted by telecopy, electronic or digital transmission with receipt confirmed, (iii) the business day when delivered by a nationally recognized courier, or (iv) upon receipt if sent by certified or registered mail.

 

  Company: Botanical Biotech LLC
    c/o Can B Corp.
    960 South Broadway
    Suite 120
    Hicksville, NY 11801
    Attn: Marco Alfonsi
     
  Consultant: Jordan Schlosser
     
     
     
     

 

f. If any of the provisions of this Agreement are found to be invalid under an applicable statute or rule of law, they are to be enforced to the maximum extent permitted by law and beyond such extent are to be deemed omitted from this Agreement, without affecting the validity of any other provision of this Agreement. The exchange of copies of this Agreement and of signature pages by facsimile transmission (whether directly from one facsimile device to another by means of a dial-up connection or whether mediated by the worldwide web), by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, or by combination of such means, shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.

 

5

 

 

g. This Agreement may be executed in counterparts, each of which will be deemed an original and all of which together shall constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission (whether directly from one facsimile device to another by means of a dial-up connection or whether mediated by the worldwide web), by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, or by combination of such means, shall constitute effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes. Signatures of the Parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.

 

h. During the term of this Agreement and for one (1) year thereafter its termination, Consultant will not induce, or attempt to induce, any employee or independent contractor of the Company to cease such employment or relationship to engage in, be employed by, perform services for, participate in the ownership, management, control or operation of, or otherwise be connected with, either directly or indirectly, any business other than the Company.

 

i. Each of the parties hereto shall from time to time at the request of the other party hereto, and without further consideration, execute and deliver to such other party such further instruments of assignment, transfer, conveyance and confirmation and take such other action as the other party may reasonably request in order to more effectively fulfill the purposes of this Agreement.

 

j. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Notwithstanding, neither party may assign this Agreement without the written consent of the other party.

 

Having understood and agreed to the foregoing, the Company and the Consultant have signed this Agreement as of the day and year written above.

 

Botanical Biotech LLC

 

By:     By:
Printed Name: Marco Alfonsi     Jordan Schlosser
Title: Authorized Representative      
      Address:  
         
       
         
      SSN:  

 

6

 

 

Exhibit A

 

DUTIES OF CONSULTANT

 

Consulting services, as requested by the Company and agreed to by Consultant, in the areas of:

 

  Extraction of CBD, CBN, CBG and other cannabinoids from hemp
     
  Infusion of the foregoing into various products such as, but not limited to, salves, tinctures, beverages, capsules, creams, gummies and powders
     
  Development and sale of delta 8 and other related hemp-based products
     
  Developing and nurturing Company relationships for potential expansion of product lines and revenue

 

As well as other related services to be requested by the Company.

 

 

 

Exhibit 10.11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.21

 

ASSET ACQUISITION AGREEMENT

 

Between

 

CanB Corp.,

 

Radical Tactical LLC,

 

And

 

Imbibe Health Solutions, LLC

 

 
 

 

TABLE OF CONTENTS

 

1. ACQUISITION OF THE ASSETS 4
  1.01. ACQUISITION OF THE ASSETS 4
  1.02. NO ASSUMPTION OF LIABILITIES FROM THE TRANSFEROR 4
  1.03. CONSIDERATION FOR THE ASSETS 4
  1.04. CLOSING 4
  1.05. TAX TREATMENT 4
       
2.   REPRESENTATIONS OF THE TRANSFEROR REGARDING THE ASSETS 5
       
3.   REPRESENTATIONS OF THE TRANSFEROR REGARDING THE TRANSFEROR 5
  3.01. ORGANIZATION 5
  3.02. AUTHORIZATION 6
  3.03. RESERVED 6
  3.04. ABSENCE OF UNDISCLOSED LIABILITIES 6
  3.05. LITIGATION 6
  3.06. INVENTORY 6
  3.07. INTANGIBLE PROPERTY 7
  3.08. LEASES 8
  3.09. REAL ESTATE 8
  3.10. SUBSIDIARIES 8
  3.11. RESERVED 8
  3.12. CONTRACTS AND COMMITMENTS 8
  3.13. COMPLIANCE WITH AGREEMENTS AND LAWS 9
  3.14. INTELLECUTAL PROPERTY WHICH RELATE TO ASSETS 9
  3.15. TRANSFEROR BENEFIT PLANS 12
  3.16. CUSTOMERS AND SUPPLIERS 12
  3.17. CONFLICTS OF INTEREST 12
  3.18. OPERATION OF THE BUSINESS 13
  3.19. EMPLOYEE RELATIONS 13
  3.20. FULL DISCLOSURE 13
  3.21. LEGEND 13
  3.22. SHARES 14
       
4. REPRESENTATIONS OF THE TRANSFEREREE AND ISSUER 14
  4.01. ORGANIZATION AND AUTHORITY 14
  4.02. CAPITALIZATION 14
  4.03. AUTHORIZATION 14
  4.04. LITIGATION 15
  4.05. BROKER’S FEE 15

 

i
 

 

5. ACCESS TO INFORMATION 15
       
6. CONDITIONS TO OBLIGATIONS OF THE TRANSFEREE 15
  6.01. CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR; COMPLIANCE WITH COVENANTS AND OBLIGATIONS 15
  6.02. PERFORMANCE BY THE TRANSFEROR 16
  6.03. Corporate Proceedings 16
  6.04. POST CLOSING OPERATIONS 16
  6.05. ADVERSE PROCEEDINGS 16
  6.06. CLOSING DELIVERIES 16
       
7. CONDITIONS TO OBLIGATIONS OF THE TRANSFEROR 17
  7.01. CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES OF THE TRANSFEREE; COMPLIANCE WITH COVENANTS AND OBLIGATIONS 17
  7.02. CORPORATE PROCEEDINGS 17
  7.03. CONSENTS 17
  7.04. ADVERSE PROCEEDINGS 17
       
8. INDEMNIFICATION 17
  8.01. GENERAL 17
  8.02. CLAIMS FOR INDEMNIFICATION 18
  8.03. DEFENSE BY THE INDEMNIFYING PARTY 19
  8.04. SURVIVAL OF REPRESENTATIONS; CLAIMS FOR INDEMNIFICATION 19
  8.05. SOLE REMEDY 20
       
9. RESTRICTIVE COVENANTS 20
  9.01. CONFIDENTIALITY 20
  9.02. NON-COMPETE 20
  9.03. ADDITIONAL TERMS 20
       
10. TERMINATION OF AGREEMENT 21
  10.01. TERMINATION BY AGREEMENT OF THE PARTIES 21
  10.02. TERMINATION BY REASON OF BREACH 21
       
11. NOTICES 21
     
12. SUCCESSORS AND ASSIGNS 22
     
13. ENTIRE AGREEMENT; AMENDMENTS; ATTACHMENTS 22
     
14. SEVERABILITY 22
     
15. EXPENSES 23
     
16. GOVERNING LAW/JURISDICTION 23
     
17. SECTION HEADINGS 23
     
18. COUNTERPARTS 23
     
19. CONSULTATION WITH INDEPENDENT COUNSEL 23

 

ii
 

 

Exhibits

 

Exhibit A - Purchased Assets
Exhibit B - Bill of Sale
Exhibit C - Inventory List

 

Schedules

 

3.07 - Intangible Property
3.12 - Contracts and Commitments
3.14 - Intellectual Property Contracts
3.14(ii) - Confidentiality Agreements
3.14(iii) - Noncompetition Agreements
3.5(b)(ii) - Assignment Agreements
3.14(b)(iii) - URL’s
3.14(c) - Trademarks
3.14(d) - Copyrights
3.16 -  Customers and Suppliers
4.02 - Capitalization of Transferee and Issuer

 

iii
 

 

ASSET ACQUISITION AGREEMENT

 

Agreement (the “Agreement”) made as of the ___th day of February, 2021 by and between, Can B Corp., a Florida corporation (the “Issuer”), Radical Tactical LLC, a Nevada limited liability company (the “Transferee,” a wholly owned subsidiary of the Issuer) and Imbibe Health Solutions, LLC, a Delaware limited liability company (the “Transferor”).

 

PRELIMINARY STATEMENT

 

The Transferee desires to acquire, and the Transferor desires to transfer certain of the Transferor’s assets including without limitation all of its operating intellectual property assets for the consideration in the transaction contemplated hereunder.

 

NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereby agree as follows:

 

1. ACQUISITION OF THE ASSETS

 

1.01. ACQUISITION OF THE ASSETS. Subject to and upon the terms and conditions of this Agreement, at the closing of the transactions contemplated by this Agreement (the “Closing”), Transferor shall sell, assign, convey and transfer to Transferee, Transferor’s entire right, title and interest in and to the assets as set forth Exhibit A (the “Purchased Assets”), together with all goodwill associated therewith, for use and registration by Transferor (collectively, the “Assets”), and the products held for sale by the Transferor which are used in the ordinary course of the Transferor’s business (the “Inventory”, and together with the Purchased Assets, the “Assets”).

 

1.02. NO ASSUMPTION OF LIABILITIES FROM THE TRANSFEROR. Upon and subject to the terms and conditions of this Agreement, the Transferee and Issuer shall assume no liabilities from the Transferor.

 

1.03. CONSIDERATION FOR THE ASSETS. In consideration for the sale and transfer of the Assets, and subject to the terms and conditions of this Agreement, the Issuer shall, on the Closing Date pay the gross consideration of Sixty Five Thousand Dollars ($65,000) in the form of shares of common stock of the Issuer (with standard restricted legend, the “Shares”) at a price per share equal to the average price of the common stock of Issuer during the ten consecutive trading days immediately preceding the Closing Date.

 

1.04. CLOSING. The Closing shall take place at the offices of Transferee, on a date and at a time to be determined, or at such other place, time or date (including by the exchange of facsimile and/or PDF signatures) as may be mutually agreed upon in writing by the parties (the “Closing Date”).

 

4
 

 

2. REPRESENTATIONS OF THE TRANSFEROR REGARDING THE ASSETS

 

The Transferor represents and warrants to the Transferee as follows:

 

(a) The Transferor has good and marketable title to the Assets, free and clear of any and all liens, charges, encumbrances or third-party rights whatsoever. If any such encumbrances exist at or prior to Closing they shall be released by such secured party at or prior to Closing. The use of the Assets is not subject to any Lien, and such use does not encroach on the property or rights of any Person.

 

(b) The Transferor has the full right, power and authority to enter into, and execute this Agreement and to transfer, convey and sell to the Transferee the Assets at the Closing. All corporate action of Transferor necessary for such execution and delivery and the performance hereof and thereof has been duly taken and, upon consummation of the purchase contemplated hereby, the Transferee will acquire from the Transferor good and marketable title to the Assets.

 

(c) The Transferor is not a party to, subject to or bound by any agreement (other than an agreement requiring certain notices and consents which have been given or obtained, as applicable) or any judgment, order, writ, prohibition, injunction or decree of any court or other governmental body which would prevent the execution or delivery of this Agreement by the Transferor or the transfer, conveyance and sale of the Assets or the assignment of the Assigned Liabilities to the Transferee pursuant to the terms hereof.

 

(d) No broker or finder is entitled to any brokerage or finder’s fee or other commissions in respect of such transactions based upon agreements, arrangements or understandings made by or on behalf of the Transferor.

 

(e) The Assets constitute all of the assets and services required for the continued operation of the Business by Transferor as operated by Transferor during the past 12 months. The Purchased Assets, taken as a whole, constitute all the properties and assets relating to or used or held for use in connection with the Business during the past 12 months (except for inventory sold, cash disposed of or retained, accounts receivable collected, prepaid expenses realized, Contracts fully performed, properties or assets replaced by equivalent or superior assets, in each case in the ordinary course of business). There are no assets or properties used in the operation of the Business that are owned by any Person other than Transferor that will not be licensed or leased to Transferee under valid, current license arrangements or leases.

 

3. REPRESENTATIONS OF THE TRANSFEROR REGARDING THE TRANSFEROR

 

The Transferor represents and warrants to the Transferee as follows:

 

3.01. ORGANIZATION. The Transferor is duly organized, validly existing and in good standing under the laws of the State of ________________, and has all requisite power and authority to own its properties, to carry on its business as now being conducted, to execute and deliver this Agreement and the agreements contemplated herein, and to consummate the transactions contemplated hereby and thereby.

5
 

 

3.02. AUTHORIZATION. The execution and delivery by the Transferor of this Agreement and the agreements provided for herein, and the consummation by the Transferor of all transactions contemplated hereunder and thereunder by the Transferor, have been duly authorized by all requisite company action. This Agreement has been duly executed by the Transferor. This Agreement and all other agreements and obligations entered into and undertaken in connection with the transactions contemplated hereby to which the Transferor is a party constitute the valid and legally binding obligations of the Transferor, enforceable against it in accordance with their respective terms. The execution, delivery and performance by the Transferor of this Agreement and the agreements provided for herein, and the consummation by the Transferor of the transactions contemplated hereby and thereby, will not, with or without the giving of notice or the passage of time or both, (a) to the Transferor’s actual knowledge, violate the provisions of any law, rule or regulation applicable to the Transferor; (b) (Reserved); (c) violate any judgment, decree, order or award of any court, governmental body or arbitrator; or (d) conflict with or result in the breach or termination of any term or provision of, or constitute a default under, or cause any acceleration under, or cause the creation of any lien, charge or encumbrance upon the properties or assets of the Transferor pursuant to, any indenture, mortgage, deed of trust, security agreement or other instrument or agreement to which the Transferor is a party or by which the Transferor or any of its properties is or may be bound.

 

3.03. RESERVED.

 

3.04. ABSENCE OF UNDISCLOSED LIABILITIES.

 

The Transferor retains any and all liability and/or obligation, secured or unsecured whether accrued, absolute, contingent, unasserted or otherwise, except as expressly set forth herein.

 

3.05. LITIGATION.

 

(a) there is no action, suit or proceeding to which the Transferor is a party (either as a plaintiff or defendant) pending or to the Transferor’s actual knowledge, threatened before any court or governmental agency, authority, body or arbitrator and, to the actual knowledge of the Transferor, there is no basis for any such action, suit or proceeding;

 

(b) neither the Transferor nor, to the actual knowledge of the Transferor, any officer, director or Transferor of the Transferor, has been permanently or temporarily enjoined by any order, judgment or decree of any court or any governmental agency, authority or body from engaging in or continuing any conduct or practice in connection with the business, assets, or properties of the Transferor; and

 

(c) to the Transferor’s actual knowledge, there is not in existence on the date hereof any order, judgment or decree of any court, tribunal or agency enjoining or requiring the Transferor to take any action of any kind with respect to its business, assets or properties.

 

3.06. INVENTORY.

 

Exhibit C attached hereto sets forth: (i) a true, correct and complete, in all material respects, list the Inventory owned by the Transferor as of the date hereof; Except as disclosed in Exhibit C the Transferor has good and marketable title to the Inventory, liens, leases, encumbrances, claims under bailment and storage agreements, equities, conditional sales contracts, security interests, charges and restrictions, except for liens, if any, for personal property taxes not due; and no officer or director, nor, to the actual knowledge of the Transferor, any member or Transferor of the Transferor, or any spouse, child or other relative or affiliate thereof, owns directly or indirectly, in whole or in part, any of the Inventory described in Exhibit C.

 

6
 

 

3.07. INTANGIBLE PROPERTY.

 

Schedule 3.07 attached hereto sets forth a true, correct and complete, in all material respects, list and, where appropriate, a description of, all Assets which constitute material items of intangible property owned by, or used or useful in connection with the business of, the Transferor, including, but not limited to, supplier and customer lists and related relationships, product formula and production processes, research and development and work in progress, trade secrets, know-how, any other confidential information of the Transferor, United States and foreign patents, trade names, trademarks, trade name and trademark registrations, copyrights and copyright registrations, and applications for any of the foregoing (the “Intangible Property”);transferred hereby. and a true, correct and complete list of all material licenses or similar agreements or arrangements to which the Transferor is a party, either as licensee or licensor, with respect to the Intangible Property. Except as otherwise disclosed in Schedule 3.07:

 

(a) the Transferor is the sole and exclusive owner of all right, title and interest in and to the Intangible Property and all designs, permits, labels and packages used on or in connection therewith.

 

(b) the Transferor has the right and authority to use, and the Transferee shall have the right to continue to use immediately after the Closing (in a manner consistent with current use), the Intangible Property in connection with the conduct of the Transferor’s business in the manner presently conducted, and to the actual knowledge of the Transferor, such use or continuing use does not and will not conflict with, infringe upon or violate any rights of any other person, corporation or entity;

 

(c) the Transferor has not received notice of, and does not have actual knowledge of any basis for, a pleading or threatened claim, interference action or other judicial or adversarial proceeding against the Transferor that any of the operations, activities, products, services or publications of the Transferor or any of its customers or distributors infringes or will infringe any patent, trademark, trade name, copyright, trade secret or other property right of a third party, or that it is illegally or otherwise using the trade secrets, formulae or property rights of others;

 

(d) there are no outstanding nor, to the actual knowledge of the Transferor, any threatened disputes or other disagreements with respect to any research and development in process or licenses or similar agreements or arrangements described in Schedule 3.07 or with respect to infringement by a third party of any of the Intangible Property;

 

(e) no officer or director of the Transferor nor, to the actual knowledge of the Transferor, any member or Transferor of the Transferor, or any spouse, child or other relative or affiliate thereof, owns directly or indirectly, in whole or in part, any of the Intangible Property; and

 

7
 

 

(f) the Transferor does not have any actual knowledge that any third party is infringing, or has threatened to infringe upon or otherwise violate, any of the Intangible Property in which the Transferor has ownership rights.

 

3.08. LEASES.

 

The Transferor is not the lessee of any leased property.

 

3.09. REAL ESTATE.

 

The Transferor does not own any real property or any interest in real property.

 

3.10. SUBSIDIARIES.

 

Transferor does not own, directly or indirectly, any interest or investment (whether equity or debt) in any Person (excluding natural persons).

 

3.11. RESERVED.

 

3.12. CONTRACTS AND COMMITMENTS.

 

(a) Schedule 3.12 attached hereto contains a true, complete and correct list of the following contracts, agreements, arrangements or other understandings, whether written or oral (collectively, the “Contracts”) which relate to the Assets being sold:

 

(i) all Contracts, agreements, commitments, purchase orders or other understandings or arrangements to which the Transferor or any of its property is bound which (A) involve payments or receipts by the Transferor of more than $5,000 in the case of any single contract, agreement, commitment, understanding or arrangement under which full performance (including payment) has not been rendered by all parties thereto or (B) under which the consequences of a default or termination would reasonably be expected to have a Material Adverse Effect;

 

(ii) all material agency, distributor, sales representative, franchise or similar agreements to which the Transferor is a party or by which the Transferor or any of its property is bound;

 

(iii) all Contracts imposing a non-competition or non-solicitation obligation on the Transferor; and

 

(iv) any other material agreements or contracts entered into by the Transferor, excluding all non-disclosure agreements between Transferor and Third Parties.

 

(b) Except as set forth on Schedule 3.12:

 

(i) each Contract is a valid and binding agreement of the Transferor, enforceable against the Transferor in accordance with its terms, and the Transferor does not have any actual knowledge that any Contract is not a valid and binding agreement of the other parties thereto, except where the failure to be a valid and binding Agreement would not reasonably be expected to result in a Material Adverse Effect.

 

8
 

 

(ii) the Transferor has fulfilled all material obligations required pursuant to the Contracts to have been performed by the Transferor, on its part prior to the date hereof, and the Transferor, has no reason to believe that the Transferor will not be able to fulfill, when due, all of its obligations under the Contracts which remain to be performed after the date hereof, except where the failure to fulfill all material obligations required pursuant the contract would not reasonably be expected to result in a Material Adverse Effect;

 

(iii) the Transferor is not in breach of or default under any Contract, and no event has occurred which with the passage of time or giving of notice or both would constitute such a default, result in a loss of rights or result in the creation of any lien, charge or encumbrance, thereunder or pursuant thereto, except for such breach, default or events that would not reasonably be expected to result in a Material Adverse Effect; and

 

(iv) to the actual knowledge of the Transferor, there is no existing breach or default by any other party to any Contract, and no event has occurred which with the passage of time or giving of notice or both would constitute a default by such other party, result in a loss of rights or result in the creation of any lien, charge or encumbrance thereunder or pursuant thereto, except for such breach, default or events that would not reasonably be expected to result in a Material Adverse Effect.

 

3.13. COMPLIANCE WITH AGREEMENTS AND LAWS.

 

To its actual knowledge, the Transferor has all requisite licenses, permits and certificates, including environmental, health and safety permits, from federal, state and local authorities necessary to conduct its business and own and operate its Assets (collectively, the “Permits”) other than as would not be reasonably be expected to have a Material Adverse Effect. To its actual knowledge, the Transferor is not in violation in any material respect of any law or regulation relating to its Assets. To the Transferor’s actual knowledge, the business of the Transferor as conducted since the date the business commenced operations has not violated, and on the date hereof does not violate, in any material respect, any federal, state, local or foreign laws, regulations or orders (including, but not limited to, any of the foregoing relating to employment discrimination, immigration, occupational safety, environmental protection, hazardous waste, conservation, or corrupt practices), the enforcement of which would have a Material Adverse Effect.

 

3.14 INTELLECTUAL PROPERTY WHICH RELATE TO THE ASSETS.

 

(a) Intellectual Property Contracts.

 

(i) Schedule 3.14 hereto contains a complete and accurate list and summary description, including any royalties paid or received by Transferor, of all effective Contracts relating to the Intellectual Property to which Transferor is a party or by which Transferor is bound, except for any license implied by the sale of a product and perpetual, paid-up royalty free and transferable license rights for ‘off-the-shelf’ third party application software or Software-as-a-Service that Transferor licenses for use in the Transferor’s business, in any individual case, under a license with a maximum payment obligation on the part of Transferor of less than $1,000 (the “Intellectual Property.”). There are no outstanding or, to the actual knowledge of the Transferor, threatened disputes or disagreements with respect to any such Contract. Except for any rights under written licenses or other written Contracts related to the Intellectual Property, no current or former employee of Transferor and no other Person owns or has any proprietary, financial or other interest, direct or indirect, in whole or in part, and including any right to royalties or other compensation, in any of the Intellectual Property, or in any application therefor.

 

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(ii) All key employees and consultants of Transferor who are involved in the design, review, evaluation or development of the Intellectual Property have executed a nondisclosure and assignment of inventions agreement (a “Confidentiality Agreement”), as listed on Schedule 3.14(ii).

 

(iii) None of the employees or consultants of Transferor is subject to any contractual or legal restrictions that might interfere with the use of his or her best efforts to promote the interests of the Transferor’s business. No employee of Transferor has entered into any Contract that restricts or limits in any way the scope or type of work in which the employee may be engaged or requires the employee to transfer, assign or disclose information concerning his or her work to anyone other than Transferor. Schedule 3.14(iii) hereto lists all currently effective Contracts between Transferor and a third party that imparts or that imparted an obligation of noncompetition, secrecy, confidentiality or non-disclosure upon Transferor or any third party. Except as described in Schedule 3.14(iii) hereto, Transferor has no reason to believe that Transferor or any employee thereof either is or was under any obligation of non-competition, secrecy, confidentiality or non-disclosure to any third party.

 

(iv) To the Knowledge of Transferor, no employee or consultant of Transferor (1) has used any other Persons’ Trade Secrets or other information that is confidential in the course of his or her work or (2) is, or is currently expected to be, in Default under any term of any Contract relating to the Intellectual Property, or any Confidentiality Agreement or any other Contract or any restrictive covenant relating to the Intellectual Property, or the development or exploitation thereof.

 

(b) Know-How Necessary for the Transferor’s Business.

 

(i) The Intellectual Property constitutes all of the Intellectual Property that has been used or relied upon in the operation of the Transferor’s business during the past 12 months and continues to be necessary for the operation of the business of the Transferor. Transferor is the owner of all right, title and interest in and to each item of the Intellectual Property, and has the right to use all of the Intellectual Property without payment to a third party.

 

(ii) Set forth in Schedule 3.14(b)(iii) hereto is a complete and correct list of all URL’s used in the operation of the Transferor’s business and a description of all of Transferor’s rights with respect thereto.

 

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(c) Trademarks which relate to the Assets

 

(i) Schedule 3.14(c) hereto contains a complete and accurate list and summary description of all Trademarks in which Transferor has an ownership interest. Transferor is the owner of all right, title and interest in and to each of the Trademarks.

 

(ii) All Trademarks that have been registered with the US Patent and Trademark Office are currently in compliance with all formal legal requirements (including the timely post-registration applications), are valid and enforceable, and are not subject to any maintenance fees or Taxes or actions falling due within 90 days after the Effective Date.

 

(iii) No Trademark has been or is, to the actual knowledge of the Transferor, now involved in any opposition, invalidation or cancellation and no such action is threatened with respect to any of the Trademarks.

 

(iv) To the actual knowledge of the Transferor, there is no potentially interfering trademark or trademark application of any third party.

 

(v) No Trademark is infringed or, to the actual knowledge of the Transferor, has been challenged or threatened in any way. Transferor does not infringe, nor has Transferor been alleged to infringe, any trade name, trademark or service mark of any third party.

 

(vi) All products and materials containing a Trademark bear the proper federal registration notice where permitted by Law.

 

(d) Copyrights which relate to the Assets.

 

(i) Schedule 3.14(d) hereto contains a complete and accurate list and summary description of all Copyrights which the Transferor has registered or for which an application to register is in process in which Transferor has an ownership interest. Transferor is the owner of all right, title and interest in and to each of its Copyrights, free and clear of any Lien.

 

(ii) All of the Copyrights have been registered and are currently in compliance with formal legal requirements, are valid and enforceable, and are not subject to any maintenance fees or Taxes or actions falling due within 90 days after the date of Closing.

 

(iii) No Copyright which the Transferor has registered or for which an application to register is in process has, to the Knowledge of Transferor, been infringed or has been challenged or threatened in any way. Transferor does not infringe, nor has Transferor been alleged to infringe, any copyright of any third party or a derivative work based on the work of at third party.

 

(iv) All works encompassed by the Copyrights have been marked with the proper copyright notice.

 

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(e) Trade Secrets, Formulas, Recipes, Customer Lists, Artwork, Social Media.

 

(i) With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate, and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory of any individual.

 

(ii) Transferor has taken all reasonable precautions to protect the secrecy, confidentiality and value of its Trade Secrets. Transferor has good title and an absolute right to use its Trade Secrets. Its Trade Secrets are not part of the public knowledge or literature, and have not been used, divulged, or appropriated either for the benefit of any Person (other than Transferor) or to the detriment of the Transferor’s business. No Trade Secret is subject to any adverse claim or has been challenged or threatened in any way.

 

(f) Totality of Intellectual Property Filings. Other than as set forth in Schedules 3.14 (such schedules are collectively hereinafter referred to as the “IP Schedules”) hereof includes all of the Intellectual Property owned or controlled by Transferor on or prior to the Closing Date with respect to the Assets used in the Transferor’s business during the previous 12 months. Other than as set forth in the IP Schedules hereof, there are no other United States or unpublished foreign filings owned or controlled by Transferor filed prior to the Effective Date, which claims pertain in any way to Transferor’s Intellectual Property, nor does Transferor have any present intention to make such filings.

 

(g) Products. Each product manufactured, sold or otherwise delivered by the Transferor, or that is included in the inventory that is part of the Assets (the “Products”) has been in conformity with all applicable contractual commitments and all express and implied warranties and has been tested for safety, and labeled with all required warnings, in accordance with all applicable Laws. There have been no product recalls or withdrawals by the Transferor or tampering incidents relating to any Products.

 

3.15 TRANSFEROR BENEFIT PLANS.

 

The Transferor does not have, and has never had, any employee benefit plans.

 

3.16 CUSTOMERS AND SUPPLIERS.

 

With respect to the Assets, Schedule 3.16 attached hereto sets forth a true, correct and complete list of (a) the name of each customer of the Transferor, and (b) the names of suppliers(by dollar volume) of the Transferor. Except as otherwise set forth on Schedule 3.16, the Transferor has good customer and supplier relations and none of the customers or suppliers of the Transferor has notified the Transferor that it intends to discontinue or materially diminish its relationship with the Transferor.

 

3.17 CONFLICTS OF INTEREST.

 

No officer, director nor, to the actual knowledge of the Transferor, any affiliate of any such person, now has or within the last three (3) years had, either directly or indirectly:

 

(a) an equity or debt interest in any corporation, partnership, joint venture, association, organization or other person or entity which furnishes or sells or during such period furnished or sold services or products to the Transferor or purchases or during such period purchased from the Transferor any goods or services, or otherwise did business with the Transferor during such period; or

 

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(b) a beneficial interest in any contract, commitment or agreement to which the Transferor was a party or under which any of them is or was obligated or bound or to which any of their respective properties may be or may have been subject, other than stock options and other contracts, commitments or agreements between the Transferor and such persons in their capacities as employees, officers or directors of the Transferor.

 

3.18 OPERATION OF THE BUSINESS.

 

The Business has been conducted only through Transferor and not through any other divisions or any direct or indirect subsidiary or Affiliate of Transferor, and (b) no part of the Business has been operated by any Person other than Transferor. No Person other than Transferor owns or possesses any assets or properties that have been used in the Business. Neither Transferor nor any Affiliate of Transferor, engages, directly or indirectly, in any business activities that are competitive with the Business.

 

3.19 EMPLOYEE RELATIONS.

 

The Transferor is not involved in any labor dispute nor, to the knowledge of the Transferor, is any such dispute threatened, for the nonpayment of wages, taxes or otherwise. The Transferor is not a party to a collective bargaining agreement, and the Transferor believes that relations with their employees are good.

 

3.20 FULL DISCLOSURE.

 

There are no intentionally materially misleading statements in any of the representations and warranties made by Transferor in this Agreement, the Exhibits or Schedules to this Agreement, or any certificates or correspondence.

 

3.21 LEGEND.

 

The Transferor acknowledges and agrees that the certificate (or certificates) representing the Shares, shall bear the following legend:

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS.”

 

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3.22 SHARES.

 

The Transferor is aware: (a) the Shares are restricted and there is a limited market in which to trade the Shares, (b) has had a chance to review the business and financials of the Issuer and has reviewed the filings made by the Issuer with the SEC, (c) has had the opportunity to consult with counsel as to receipt of the Shares, (d) is sophisticated and or has experience investing in shares of development stage companies like the Issuer, (e) the Transferor’s financial condition is such that the Transferor can afford to bear the economic risk of holding the Shares for an indefinite period of time and has adequate means for providing for the Transferor’s current needs and personal contingencies, (f) the Transferor can afford to suffer a complete loss of its investment in the Shares, (g) the Transferor understands and has taken cognizance of all risk factors related to the receipt of the Shares, (h) the Shares are being acquired by the Transferor for his or her own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the Securities Act, (i) the Transferor has no present intention of selling or otherwise distributing the Shares in violation of the Securities Act, and (j) at the time of this Agreement, the Transferor is sophisticated and or has experience investing in shares of development stage companies like the Company.

 

4. REPRESENTATIONS OF THE TRANSFEREE AND ISSUER

 

The Transferee and Issuer represents and warrants to the Transferor that:

 

4.01. ORGANIZATION AND AUTHORITY.

 

The Transferee and Issuer are both duly organized, validly existing and in good standing under the laws of the State of their respective formation, and have all requisite power and authority (corporate and other) to own its properties and to carry on its business as now being conducted. The Transferee and Issuer have full power to execute and deliver this Agreement and the agreements contemplated herein, and to consummate the transactions contemplated hereby and thereby.

 

4.02. CAPITALIZATION.

 

Attached hereto as Schedule 4.02 is the capitalization of the Transferee and Issuer.

 

4.03. AUTHORIZATION.

 

The execution and delivery of this Agreement by the Transferee and Issuer, and the agreements provided for herein, and the consummation by the Transferee and Issuer of the transactions contemplated hereby and thereby, have been duly authorized by all requisite corporate action. This Agreement and all such other agreements and written obligations entered into and undertaken in connection with the transactions contemplated hereby constitute the valid and legally binding obligations of the Transferee and Issuer, enforceable against the Transferee and Issuer in accordance with their respective terms. The execution, delivery and performance of this Agreement and the agreements provided for herein, and the consummation by the Transferee and Issuer of the transactions contemplated hereby and thereby, will not, with or without the giving of notice or the passage of time or both, (a) violate the provisions of any law, rule or regulation applicable to the Transferee and Issuer, (b) violate the provisions of the Transferee and Issuer’s formation documents, (c) violate any judgment, decree, order or award of any court, governmental body or arbitrator, or (d) conflict with or result in the breach or termination of any term or provision of, or constitute a default under, or cause any acceleration under, or cause the creation of any lien, charge or encumbrance upon the properties or assets of the Transferee and Issuer pursuant to, any indenture, mortgage, deed of trust or other agreement or instrument to which the Transferee and Issuer is a party or by which the Transferee and Issuer is or may be bound.

 

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4.04. LITIGATION.

 

There is no suit, claim, action or legal administrative, arbitration or order, proceeding or governmental investigation pending or, to the actual knowledge of the Transferee and Issuer, threatened, to which the Transferee and Issuer is a party.

 

4.05. BROKER’S FEE.

 

No broker or finder has acted for the Transferee and Issuer in connection with this agreement or the transactions contemplated hereby, and no broker or finder is entitled to any brokerage or finder’s fee or other commissions in respect of such transactions based upon agreements, arrangements or understandings made by or on behalf of the Transferee and Issuer.

 

5. ACCESS TO INFORMATION

 

From the date of this Agreement until the Closing Date, each party shall afford the officers, manager, attorneys, accountants and other authorized representatives of the other party reasonable access upon reasonable notice and during normal business hours to all management personnel, offices, properties, books and records, so that the examining party may have an opportunity to make such investigation as it shall desire to make of the management, business, properties and affairs of the non-examining party, and the examining party shall be permitted to make abstracts from, or copies of, all such books and records. The non-examining party shall furnish to the examining party such financial and operating data and other information as to the business of the non-examining party as the examining party shall reasonably request.

 

6. CONDITIONS TO OBLIGATIONS OF THE TRANSFEREE AND ISSUER

 

The obligations of the Transferee and Issuer under this Agreement are subject to the fulfillment, at the Closing Date, of the following conditions precedent, each of which may be waived in writing in the sole discretion of the Transferee and Issuer:

 

6.01. CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR; COMPLIANCE WITH COVENANTS AND OBLIGATIONS.

 

All representations and warranties of the Transferor shall be true and correct in all material respects on and as of the Closing Date as though such representations and warranties were made on and as of such date (except where such representations are made as of a specific date in which case such representations shall be true and correct as of such date), except for any changes permitted by the terms hereof or consented to in writing by the Transferee and Issuer. The Transferor shall have performed and complied with all terms, conditions, covenants, obligations, agreements and restrictions required by this Agreement to be performed or complied with by it prior to or at the Closing Date.

 

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6.02. PERFORMANCE BY THE TRANSFEROR.

 

At the Closing, the Transferor shall have delivered to the Transferee and Issuer a certificate signed by a duly authorized officer of the Transferor as to the Transferor’s compliance with Section 6.01 hereof.

 

6.03. Corporate Proceedings.

 

All consents required to be taken on the part of the Transferor to authorize or carry out this Agreement shall have been taken and the Transferor shall have delivered to the Transferee and Issuer a copy of the resolutions of its Managers and Members, authorizing the execution, delivery and performance of this Agreement and the transactions contemplated hereby.

 

6.04. POST CLOSING OPERATIONS.

 

Transferor acknowledges that it will not conduct operations of its business in the ordinary and usual course of business and consistent with past and current practices following the Closing.

 

6.05. ADVERSE PROCEEDINGS.

 

No action or proceeding by or before any court or other governmental body shall have been instituted or threatened by any governmental body or person whatsoever which shall seek to restrain, prohibit or invalidate the transactions contemplated by this Agreement or which might affect the right of the Transferor to transfer the Assets.

 

6.06. CLOSING DELIVERIES.

 

At the Closing:

 

(a) The Transferor shall deliver to the Transferee, or shall otherwise put the Transferee in sole and exclusive control of, all Assets free and clear all liens or encumbrances;

 

(b) each Party shall deliver to the other a certificate of the applicable secretary of the State as to the legal existence and good standing of such Party in such state within 30 days after Closing;

 

(c) each Party shall deliver to the other a certificate of an officer of the Party attesting to the authenticity and continuing validity of the charter documents delivered pursuant to this Agreement.

 

(d) Each Party shall deliver to the other resolutions approving the terms and transactions contemplated of this Agreement from the Party’s board directors or managers as applicable;

 

(e) the Transferor shall deliver to the Transferee a Bill of Sale, in substantially the form attached hereto as Exhibit B, duly executed by an authorized officer of the Transferor; and

 

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(f) the Transferor shall deliver to the Transferee a copy of a final Inventory list, determined in accordance with Section 1.03, and attached hereto as Exhibit C (the “Inventory List”), duly executed by an authorized officer of the Transferor.

 

7. CONDITIONS TO OBLIGATIONS OF THE TRANSFEROR

 

The obligations of the Transferor under this Agreement are subject to the fulfillment, at the Closing Date, of the following conditions precedent, each of which may be waived in writing in the sole discretion of the Transferor:

 

7.01. CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES OF THE TRANSFEREE; COMPLIANCE WITH COVENANTS AND OBLIGATIONS.

 

The representations and warranties of the Transferee in this Agreement shall be true on and as of the Closing Date as though such representations and warranties were made on and as of such date (except where such representations are made as of a specific date, in which case such representations shall be true and correct as of such date), except for any changes consented to in writing by the Transferor. The Transferee shall have performed and complied with all terms, conditions, covenants, obligations, agreements and restrictions required by this Agreement to be performed or complied with by it prior to or at the Closing Date.

 

7.02. CORPORATE PROCEEDINGS.

 

All corporate and other proceedings required to be taken on the part of the Transferee to authorize or carry out this Agreement shall have been taken.

 

7.03. CONSENTS.

 

The Transferee shall have received all requisite consents and approvals of all lenders, and other third parties whose consent or approval is required in order for the Transferee to consummate the transactions contemplated by this Agreement.

 

7.04. ADVERSE PROCEEDINGS.

 

No action or proceeding by or before any court or other governmental body shall have been instituted or threatened by any governmental body or person whatsoever which shall seek to restrain, prohibit or invalidate the transactions contemplated by this Agreement or which might reasonably be expected to adversely affect the obligation of the Transferee to pay the Consideration to the Transferor.

 

8. INDEMNIFICATION

 

8.01. GENERAL.

 

(a) By the Transferor. The Transferor shall indemnify and hold harmless the Transferee and Issuer, its directors, officers, employees and agents (the “Transferee Indemnitees”) from and against all actual claims, damages, losses, liabilities, costs and expenses including, without limitation, settlement costs and any reasonable legal, accounting or other expenses for investigating or defending any actions or threatened action (but expressly excluding indirect, incidental, exemplary, special, consequential or punitive damages (including, without limitation, diminution in value, loss of future revenue or income, or loss of business reputation or opportunity)) (collectively, the “Losses”) actually incurred by the Transferee Indemnitees in connection with each and all of the following:

 

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(i) any misrepresentation or breach of any representation or warranty made by the Transferor in this Agreement;

 

(ii) any breach of any covenant, agreement or obligation of the Transferor contained in this Agreement or any other agreement, instrument or document contemplated by this Agreement;

 

(iii) any liability of the Transferor; and

 

(iv) any claims made by third parties against the Transferor as a result of the transactions contemplated hereby, including but not limited to any labor/employment and tax related claims.

 

(b) By the Transferee. The Transferee shall indemnify and hold harmless the Transferor and Issuer, its stockholders, members, managers, directors, officers, employee and agents (the “Transferor Indemnitees”) from and against all Losses actually incurred by the Transferor Indemnitees in connection with each and all of the following:

 

(i) any misrepresentation or breach of any representation or warranty made by the Transferee in this Agreement;

 

(ii) any breach of any covenant, agreement or obligation of the Transferee contained in this Agreement or any other agreement, instrument or document contemplated by this Agreement; and

 

(iii) any claims, suits, actions, proceedings (formal and informal), investigations, judgments, deficiencies, damages, settlements, liabilities, losses, costs and legal and other expenses arising out of or based upon the use of the Assets after Closing.

 

8.02. CLAIMS FOR INDEMNIFICATION.

 

Whenever any claim shall arise for indemnification under this Section 8, the party seeking indemnification (the “Indemnified Party”), shall promptly notify the other party (the “Indemnifying Party”) in writing of the claim and, when known, the facts constituting the basis for such claim. In the event of any such claim for indemnification hereunder resulting from or in connection with any claim or legal proceedings by a third party, the notice shall specify, if known, the amount or an estimate of the amount of the liability arising therefrom. The Indemnified Party shall not settle or compromise any claim by a third party for which it is entitled to indemnification hereunder without the prior written consent, which shall not be unreasonably withheld or delayed, of the Indemnifying Party; provided, however, that if a suit shall have been instituted against the Indemnified Party and the Indemnifying Party shall not have taken control of such suit after notification thereof as provided in Section 8.03 of this Agreement, the Indemnified Party shall have the right to settle or compromise such claim upon giving prior written notice to the Indemnifying Party as provided in Section 8.03.

 

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8.03. DEFENSE BY THE INDEMNIFYING PARTY.

 

In connection with any claim which may give rise to indemnity hereunder resulting from or arising out of any claim or legal proceeding by a person other than the Indemnified Party, the Indemnifying Party, at its sole cost and expense, may, upon written notice to the Indemnified Party, assume the defense of any such claim or legal proceeding if the Indemnifying Party acknowledges to the Indemnified Party in writing the obligation of the Indemnifying Party to indemnify the Indemnified Party with respect to all elements of such claim. If the Indemnifying Party assumes the defense of any such claim or legal proceeding, the Indemnifying Party shall select counsel reasonably acceptable to the Indemnified Party to conduct the defense of such claims or legal proceedings and at the sole cost and expense of the Indemnifying Party shall take all steps necessary in the defense or settlement thereof. The Indemnifying Party shall not consent to a settlement of, or the entry of any judgment arising from, any such claim or legal proceeding, without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed) unless the settlement is only for cash and includes a full release of the Indemnifying Party. Without limitation, it shall not be deemed unreasonable to withhold consent to a settlement if equitable relief against the Indemnified Party is contemplated, awarded or stipulated, the Indemnified Party is required to make an admission of civil liability or to the commission of a crime, or money is required to be paid by the Indemnified Party. The Indemnified Party shall be entitled to participate in (but not control) the defense of any such action, with its own counsel and at its own expense. If the Indemnifying Party does not assume the defense of any such claim or litigation resulting therefrom within 30 days after the date such claim is made: (a) the Indemnified Party may defend against such claim or litigation in such manner as it may deem appropriate, including, but not limited to, settling such claim or litigation, after giving notice of the same to the Indemnifying Party, on such terms as the Indemnified Party may deem appropriate, and (b) the Indemnifying Party shall be entitled to participate in (but not control) the defense of such action, with its counsel and at its own expense. If the Indemnifying Party thereafter seeks to question the manner in which the Indemnified Party defended such third-party claim or the amount or nature of any such settlement, the Indemnifying Party shall have the burden to prove by a preponderance of the evidence that the Indemnified Party did not defend or settle such third party claim in a reasonably prudent manner.

 

8.04. SURVIVAL OF REPRESENTATIONS; CLAIMS FOR INDEMNIFICATION.

 

All representations, warranties and covenants made by the Transferor and the Transferee in this Agreement, or in any instrument or document furnished in connection with this Agreement or the transactions contemplated hereby, shall survive the Closing and the consummation of the transactions contemplated hereby for 12 months. Notwithstanding the foregoing, (a) the representations and warranties of the Transferor contained in Sections 2, 3.01, 3.02, and 3.03 and of the Transferee and Issuer contained in Sections 4.01, 4.02, and 4.03 shall survive the Closing and the consummation of the transactions contemplated hereby without limitation for the applicable statute of limitations, and (b) any valid claim that is properly asserted in writing pursuant to Section 8.01 and/or 8.02 prior to the expiration as provided in this Section 8.04 of the representation or warranty that is the basis for such claim shall survive until such claim is finally resolved and satisfied. Notwithstanding anything herein to the contrary, the covenants set forth herein at Section 7.01 hereof shall survive for an indefinite period of time unless otherwise set forth in such section.

 

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8.05. SOLE REMEDY.

 

Except as otherwise explicitly provided in this Agreement, any Exhibit or Schedule hereto, the parties agree that the sole and exclusive remedy of any party hereto with respect to this Agreement, the Exhibits or Schedules hereto and the transactions contemplated hereby or thereby shall be limited to the indemnification provisions set forth in this Section 8 and, in furtherance of the foregoing, each of the parties, hereby waives and releases the other parties hereto from, to the fullest extent permitted under any law, any and all rights, claims and causes of action such party may have against any other party hereto.

 

9. RESTRICTIVE COVENANTS

 

9.01. CONFIDENTIALITY.

 

The Transferor acknowledges that the Confidential Information (as defined below) is a valuable and unique asset and covenants that it will not disclose any such Confidential Information after Closing to any person for any reason whatsoever, unless such information is (a) within the public domain through no wrongful act of the Transferor, (b) has been rightfully received from a third party without restriction and without breach of this Agreement, (c) is required by law to be disclosed or is disclosed for purposes of defending claims related to the Transferor in a manner designed to protect the confidentiality of the Confidential Information, or (d) represents historical information reasonably required by a prospective purchaser of the Transferor. “Confidential Information” means information relating to the business of the Transferor that is not in the public domain or readily determinable by reference to publicly available sources and specifically including, without limitation, information and knowledge pertaining to products and services offered, innovations, ideas, plans, trade secrets, proprietary information, advertising, sales methods and systems, sales and profit figures, customer and client lists, and relationships with dealers, customers, and clients, suppliers and others who have business dealings with such parties.

 

9.02. NON-COMPETE.

 

The Transferor and the Manager of the Transferor (each a “Restricted Party” and collectedly the “Restricted Parties”) agree that for 12 months following the Closing Date(the “Non-Competition Period”) the Restricted Parties shall not, directly or indirectly, either for themselves or for any other person, partnership, corporation or company, participate in any business which competes with the Assets sold.

 

9.03. ADDITIONAL TERMS.

 

The Restricted Parties acknowledge that the restrictions contained in this Section 9 are reasonable and necessary to protect the legitimate interest of the Transferee, and that any violation will result in irreparable injury to the Transferee. The Restricted Parties agree that for the first 12 months following the Closing Date, the Transferee shall be entitled to seek injunctive or other equitable relief to prevent breaches of the provisions of this Section 9 and to enforce specifically the terms of this Section 9. In the event that any of the provisions of this Section 9 are adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable law in any jurisdiction, then such provision shall be deemed reformed in such jurisdiction to the maximum time, geographic, product or service, or other limitation permitted by applicable law. The covenants and limitations set forth in this Section 9 shall be binding upon the successors and assigns of the Transferor and Transferee, including any acquirer of all or substantially all the assets or business of the Transferor or Transferee.

 

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10. TERMINATION OF AGREEMENT

 

10.01. TERMINATION BY AGREEMENT OF THE PARTIES.

 

This Agreement may be terminated by the mutual written agreement of the parties hereto prior to the Closing Date. This Agreement shall automatically terminate if the Closing Date shall not occur on or March 1, 2021 provided that such date may be extended by the mutual written consent of the Transferor, Issuer and the Transferee. In the event of any such termination, the Transferee and Issuer shall have no further obligation or liability to the Transferor under this Agreement, and the Transferor shall have no further obligation or liability to the Transferee and Issuer under this Agreement.

 

10.02. TERMINATION BY REASON OF BREACH.

 

This Agreement may be terminated by the Transferor, if at any time prior to the Closing there shall occur a material breach of any of the representations, warranties or covenants of the Transferee or the failure by the Transferee to perform any condition or obligation hereunder, and may be terminated by the Transferee, if at any time prior to the Closing there shall occur a material breach of any of the representations, warranties or covenants of the Transferor or the failure of the Transferor to perform any condition or obligation hereunder. Written notice of any such termination must be delivered by the terminating party to the non-terminating party and non-terminating party shall have 30 days to cure said breach. If such breach shall remain uncured by such 30th day then this Agreement shall be deemed terminated.

 

11. NOTICES

 

All notices, requests, consents, instructions and other communications required or permitted to be given hereunder shall be in writing and sent by nationally-recognized, next-day delivery service or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed as set forth below or by facsimile transmission confirmed in writing by next-day delivery service or by E-mail; receipt shall be deemed to occur on the date of actual receipt if delivered by registered or certified mail, if sent by facsimile or E-mail six (6) hours from the time of transmission (provided such facsimile or E-mail is sent within two hours prior to the end of normal business hours on a business day or, if not, on the next business day) and confirmed in writing by next-day delivery service, or one (1) business day after it is sent by nationally-recognized, next-day delivery service.

 

  To the Transferee: Can B Corp.
    Attn: Stanley Teeple, CFO
    960 South Broadway, Suite 120
    Hicksville, NY 11803
     
    Attention:
    E-mail:

 

  With a copy (which shall not constitute notice)to:
    Jeffrey Stein, Esq.
    998C Old Country Road, #233
    Plainview, NY 11803

 

  To the Transferor:  
    To:

 

21
 

 

12. SUCCESSORS AND ASSIGNS

 

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Transferee, on the one hand, and the Transferor, on the other hand, may not assign their respective obligations hereunder without the prior written consent of the other party. Any assignment in contravention of this provision shall be void. No assignment shall release the Transferee or the Transferor from any obligation or liability under this Agreement. Notwithstanding the foregoing, Transferor may assign the Consideration or the right to receive the Consideration to its current members, or any of their affiliates at any time to be effective as of the Closing or following the Closing Date.

 

13. ENTIRE AGREEMENT; AMENDMENTS; ATTACHMENTS

 

(a) This Agreement, all Schedules and Exhibits hereto, and all agreements and instruments to be delivered by the parties pursuant hereto represent the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersede all prior oral and written and all contemporaneous oral negotiations, commitments and understandings between such parties. This agreement may only be modified or amended by a written instrument executed by the Transferee and the Transferor.

 

(b)       If the provisions of any Exhibit to this Agreement are inconsistent with the provisions of this Agreement, the provisions of the Agreement shall prevail. The Exhibits attached hereto are hereby incorporated as integral parts of this Agreement.

 

14. SEVERABILITY

 

Any provision of this Agreement which is invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement invalid, illegal or unenforceable in any other jurisdiction.

 

22
 

 

15. EXPENSES

 

Except as otherwise expressly provided herein, each party will pay all their respective fees and expenses (including, without limitation, legal and accounting fees and expenses) incurred by them in connection with the transactions contemplated hereby. The Transferor shall be responsible for payment of all sales or transfer taxes arising out of the conveyance of the Assets.

 

16. GOVERNING LAW/JURISDICTION

 

This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Each of the parties hereto (a) submits to the exclusive jurisdiction of any state or federal court sitting in the State of New York in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court, (c) waives any claim of inconvenient forum or other challenge to venue in such court, (d) agrees not to bring any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in any other court and (e) waives any right it may have to a trial by jury with respect to any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. Each party hereto agrees to accept service of any summons, complaint or other initial pleading made in the manner provided for the giving of notices in Section 11; provided, however, that nothing in this Section 16 shall affect the right of any party hereto to serve such summons, complaint or other initial pleading in any other manner permitted by Law.

 

17. SECTION HEADINGS

 

The section headings are for the convenience of the parties and in no way alter, modify, amend, limit, or restrict the contractual obligations of the parties.

 

18. COUNTERPARTS

 

This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall be one and the same document.

 

19. CONSULTATION WITH INDEPENDENT COUNSEL

 

The parties have had the opportunity to consult with their own legal counsel and other advisors, and are entering into this Agreement voluntarily and with a full understanding of the meaning and legal effects of each provision contained in this Agreement. In the event of any dispute regarding the interpretation of any provision of this Agreement, the parties agree that this Agreement and the provisions hereof shall not be construed against any one party as the drafter of this Agreement.

 

(Signature page on following page)

 

23
 

 

IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the ___ day of February, 2021.

 

 

TRANSFEREE: Can B Corp.
     
  By:  
  Name: Marco Alfonsi, CEO

 

 

TRANSFEREE: Radical Tactical LLC
     
  By:  
  Name: Marco Alfonsi, CEO

 

 

TRANSFEROR: Imbibe Health Solutions, LLC
   
  By:
  Name: Walter J. Hoelzel
  Title: Managing Partner

 

24

 

Exhibit 10.22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 21.1

 

List of Can B̅ Corp. Subsidiaries

 

Entity Name   State of Organization   ID Number
Duramed Inc.   Nevada   E0549052018-1

Duramed MI, LLC

(formerly DuramedNJ LLC)

  Nevada   E0250182019-7

Imbibe Wellness Solutions, LLC

(formerly Radical Tactical LLC)

  Nevada   E0221262019-2
Pure Health Products, LLC   New York   5031585

Pivt Labs, LLC

(formerly NY Hemp Depot LLC)

  Nevada   E0315972019-0
Green Grow Farms, Inc.   New York   5503424
Botanical Biotech LLC   Nevada   E12967242021-8

 

 

 

 

Exhibit 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Marco Alfonsi, certify that:

 

1. I have reviewed this Annual Report on Form 10-K of Can B Corp.

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  (c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  (d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: April 14, 2021 By: /s/ Marco Alfonsi
    Marco Alfonsi
   

Chief Executive Officer

(Principal Executive Officer)

 

 

 

Exhibit 31.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Stanley L. Teeple, certify that:

 

1. I have reviewed this Annual Report on Form 10-K of Can B Corp.

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  (c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  (d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 Dated: April 14, 2021 By: /s/ Stanley L. Teeple
    Stanley L. Teeple
   

Chief Financial Officer

(Principal Financial Officer)

 

 

 

Exhibit 32.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of Can B Corp. (the “Company”) on Form 10-K for the period ended December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Marco Alfonsi, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
     
  (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: April 14, 2021 By: /s/ Marco Alfonsi
    Marco Alfonsi
    Chief Executive Officer

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

 

Exhibit 32.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of Can B Corp. (the “Company”) on Form 10-K for the period ended December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stanley L. Teeple, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
     
  (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: April 14, 2021 By: /s/ Stanley L. Teeple
    Stanley L. Teeple
    Chief Financial Officer

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.