UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 8-K


CURRENT REPORT


Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934


January 14, 2019

Date of Report (Date of earliest event reported)


Canbiola, Inc.

(Exact name of registrant as specified in its charter)


Florida

 

333-208293

 

20-3624118

(State or other jurisdiction of incorporation)

 

(Commission File Number)

 

(IRS Employer Identification No.


960 South Broadway, Suite 120
Hicksville, NY

 

11801

(Address of principal executive offices)

 

(Zip Code)


Registrant’s telephone number, including area code 516-205-4751



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

¨

Written communications pursuant to Rule 425 under Securities Act (17 CFR 230.425)

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).


                                                                                                                Emerging growth company       X


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







Item 8.01 Other Events


On January 14, 2019, DuraMed, Inc. (“DuraMed”), a wholly-owned subsidiary of Canbiola, Inc. (the “Company” or “CANB”), entered into a Memorandum of Understanding (the “MOU”) with Sam International (“Sam”) and ZetrOZ Systems LLC (“ZetrOZ” and, collectively with Sam, the “Manufacturers”). Pursuant to the MOU, the Manufacturers granted DuraMed the exclusive right to distribute (the “Distribution License”) sam® Pro 2.0 (SA271) and sam® Gel Coupling Patches (UB-14-72) (collectively, the “Products”) within the United States for the Personal Injury Protection/No Fault Market during the term of the MOU. DuraMed agreed to purchase from the Manufactures on a monthly basis no fewer than the number of units of sam® Pro 2.0 (“Units”) indicated below (each, a “Monthly Minimum Order”):


Time Period

# of Units

January, 2019

100

February, 2019

110

March, 2019

120

April, 2019

130

May, 2019

140

June through

December, 2019

150

Year 2020

160

Year 2021

175


The price of each Unit will be $2,447. The exclusivity of the Distribution License granted to DuraMed under the MOU is dependent upon meeting the Monthly Minimum Orders. In addition, DuraMed was granted the right to distribute sam® Gel Capture Patches (UB-14-24). DuraMed will get rebates of 2%-3% based on the volume of Products sold by it.


The Manufacturers agreed to provide DuraMed with photos, logos, brochures, protocols, and other marketing materials for the Products and granted DuraMed a license to use the same in connection with promoting the Products.


The initial term of the MOU expires December 31, 2019 (the “Initial Term”). The agreement contemplated by the MOU will automatically renew for additional one-year terms at the end of each calendar year, provided the Monthly Minimum Orders are met. The MOU otherwise contains standard terms and conditions.


The foregoing discussion is for summary purposes only and is qualified in its entirety by the actual terms of the MOU, which is included herewith as an Exhibit.


The Licensors also provided DuraMed with a Manufacture’s Opinion Letter (the “Opinion Letter”) which includes a cost benefit analysis for the Products. Based on the information contained in the Opinion Letter, DuraMed anticipates renting the Units to patients at a rate of $59.42 per day for each Unit. The Opinion Letter has been included as an Exhibit hereto and is not binding on the Company, DuraMed or the Manufacturers and is meant for illustrative purposes only. The Opinion Letter shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.







Forward-Looking Statements


Statements contained in this current report that are not statements of historical fact are intended to be and are hereby identified as “forward-looking statements” for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. Generally, forward-looking statements include expressed expectations of future events and the assumptions on which the expressed expectations are based.  All forward-looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those projected.  The Company undertakes no obligation to update or revise this current report to reflect future developments except as otherwise required by the Securities Exchange Act of 1934.


Item 9.01. Financial Statements and Exhibits.


(d) Exhibits. The following exhibits are filed herewith.


Exhibit No.

 

Description

10.1

 

Memorandum of Understanding between DuraMed, Sam, and ZetrOZ

10.2

 

Manufacture’s Opinion Letter







SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 

Canbiola, Inc.

 

 

 

 

 

Date: January 30, 2019

By:

/s/ Marco Alfonsi ________

Marco Alfonsi, CEO

 

 

 

 







[EXHIBIT1012.GIF]

             

DURAMED INC.                                                                                                          January 10, 2019

960 South Broadway

Suite 120

Hicksville, NY 11801

Attn: Stan Teeple

Re:  sam ® Pro 2.0 Exclusivity in the United States PIP/No Fault market for 2019

The following is a Memorandum of Understanding between Sam International (CCRX), ZetrOZ Systems LLC, and Duramed Inc. (COMPANY) for the EXCLUSIVE distribution of sam® Pro 2.0 (SA271) in the United States for the PIP/No Fault Market, in accordance with the following terms and conditions:

1.

The exclusivity for COMPANY to distribute sam ® Pro 2.0 (SA271) and sam ® Gel Coupling Patches (UB-14-72) shall extend from January 2019 thru December 2019; provided the following minimum purchase quantities are met:

Calendar Month

sam ® Pro 2.0

Unit Order Volume

sam ® Pro 2.0 Unit Price (US$)

Jan 2019

100

$2,447

Feb 2019

110

$2,447

March 2019

120

$2,447

April 2019

130

$2,447

May 2019

140

$2,447

June 2019

150

$2,447

July 2019

150

$2,447

Aug 2019

150

$2,447

Sept 2019

150

$2,447

Oct 2019

150

$2,447

Nov 2019

150

$2,447

Dec 2019

150

$2,447

2019 Annual

1,650

 


2.

There are no minimum monthly order volumes for the packs of sam ® Gel Capture Patches (UB-14-24)

Bulk Pricing for sam ® Gel Capture Patches (UB-14-24): monthly Packs of Gel Capture Patches shall have the following discount price schedule on monthly orders/shipments:

·

1 – 299 Packs: US$ 107.50/Pack

·

300 - 599 Packs: US$ 103.50/Pack

·

600  & UP Packs: US$ 99.50/Pack

3.

Payments Terms to Sam International/CCRX are 100% at time of shipment (FOB: Trumbull, CT)








[EXHIBIT1014.GIF]


4.

Volume Rebate Schedule:                           

        Tiers                                                  Rebate %

·

$750,000 - $1,500,000

2%

·

$1,500,001 – uncapped

3%

·

Rebate to be paid annually from dollar specified based upon attainment of the purchase goals listed above.

·

Payment to be made by check by:

February 1, 2020

5.

ZetrOZ will provide and permit COMPANY to use all Product Marketing Material; including but not limited to Product Photos, Model Placement Photo Protocols, Logos, Brochures....to promote sam ® Pro 2.0

6.

This agreement will automatically renew at the end of each calendar year if minimum quantities are met.

7.

Monthly minimum orders after year one will be 160 per month in 2020 and 175 per month in 2021.

Agreed and accepted by mutual parties for Exclusivity in The United States PIP/No Fault market (less limited existing distributors); signatures below:


___________________________________ (Date)

 

President
Duramed Inc.



___________________________________

James M. Morton
President |

Sam International

Client Care Rx. Inc.



___________________________________

James S. Molinaro
Chief Commercial Officer

ZetrOZ Systems LLC


SAM INTERNATIONAL PO BOX 583 JAMISON PA. 18929 [P] 215.601.3158 [F] 855.640.1946



[EXHIBIT1022.GIF]



Manufacture’s Opinion Letter

Date:

August 2018

To:

sam® Distributors

From:

James S. Molinaro, Chief Commercial Officer

Re:

sam® Pro 2.0 Rentals - Consumable and Replacement Costs

For distributors who are renting the sam® Professional units through Insurance Claims; the following are our guidelines based upon our experience with renting the sam® device to multiple patients.

1.0

BASE UNIT COST and WARRANTY

1.1

Base sam® Pro 2.0 Unit Price to the Distributor (SA271): $2,822

1.2

Base Unit Includes: sam® Pro 2.0 Unit with Dual Applicator/Transducer and Charger

1.3

Warranty: 12-months or 9 Rentals on Applicators/Transducers from Date of Shipment from Factory

2.0

CONSUMABLE ITEMS; Including Damage and Loss

2.1

sam® Gel Capture Patches (UB-14-24): $120/Pack (24-pcs per Pack); 2-Pcs per Day

2.2

sam® Power Controller: replacement or loss after 4-rentals; $230/unit

2.3

sam® Applicator: WC patients accidentally throw the Applicators away with the Coupling Patch; our opinion is this will happen at least two-times during a 12-month rental usage; 2-Applicators per sam® Professional Unit: $295/Applicator

2. 4

sam® 2-Oz Tube of Gel (S1007-AC): issued with each Patient Rental; $6/Tube

2. 5

sam® Y-Adaptor (S1003-AC): WC patients accidentally break the Y-Cable when removing the Applicators; our opinion is this will happen two happen at least three during the 12-month usage; 2-Applicators per sam® Professional Unit: $45/Y-Adaptor

2.6

sam® Charger (S1005-AC): Typically, patients lose the Charger; would expect for this to happen at least twice per year; 2-Applicators per sam® Professional Unit: $75/Charge






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[EXHIBIT1022.GIF]




3.0

PATIENT DISPENSING, RETURNS and CLEANING COSTS

3.1

Delivery of sam® Professional Unit/Patches to Patient and Instructions of Use:

3.1.1

Travel Time (Nominal 30-miles RT): 30-miles x 0.575 = $17.25

3.1.2

Instruction of Use to Patient (30-60 minutes): $75 Labor Cost

3.2

sam® Unit Return; Shipping Box + Pre-paid Postage: $55/Patient Rental

3.3

Patient Follow-up Calls (2-weeks & 4-weeks): $75 Labor Cost

3.3

sam® Unit Inspection and Clean-up:

3.3.1

Cleaning Supplies/Swabs: $15/Patient Rental

3.1.2

Inspection, Clean-up and Re-Pack (30-60 minutes): $75 Labor Cost

4.0

PATIENT RENTALS DURING 18-MONTHS

4.1

Minimum Patient Rental: 36-days

4.2

PATIENT DISPENSING, RETURNS and CLEANING COSTS: 5-days/Rental

4.3

MAXIMUM PATIENT RENTAL DURING 12-MONTHS: 10 Rentals

5.0

PATIENT NON-RETURNS and DENIED CLAIMS

5.1

Patient Non-returns: Of the 10 Patients Renting the units it should be expected that at least 1-Patient will not return the sam® Pro 2.0 unit

5.2

Denied Claims or False Claim: Of the 10 Patients renting the units it should be expected that at least 1-Patient submits a “false claim” or the claim is denied

5.3

Net Rentals per sam® Professional unit: 8-Rentals










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[EXHIBIT1022.GIF]





6.0

SUMMARY RENTAL DISTRIBUTOR COSTS: 12-month Usage (8-Patient Rentals)

Description

Item Number

Qty.

Unit Price

Extended Price

sam® Pro 2.0

SA271

1

US$ 2,822.00

$ 2,822.00

sam® Gel Capture Patches PACKS (11-Rentals x 36-Days x 2 Patches/Day)

UB-14-12

24

US$ 120.00

$ 2,880.00

sam® Sport Controller

N/A

2

US$ 230.00

$ 460.00

sam® Sport Applicators

N/A

4

US$ 295.00

$ 1,080.00

sam® 2-Oz Tube of Gel

S1007-AC

8

US$ 6.00

$ 48.00

sam® Y-Adaptor

S1003-AC

2

US$ 90.00

$ 45.00

sam® Charger

S1005-AC

2

US$ 75.00

$ 150.00

sam® Delivery and Instruction for Use

--

8

US$ 92.25

$ 738.00

sam® Unit Return, Shipping Box/Pre-Pay

--

8

US$ 55.00

$440.00

sam® Inspection and Clean-up

--

8

US$ 92.25

$ 738.00

Patient Non-returns

SA271

1

US$ 2,822.00

$ 2,822.00

 

 

 

TOTAL

 


7.0

SUGGESTED MONTHLY RENTALS TO PATIENTS

7.1

Total Estimated Distributor Costs for 8-Patient Rentals: $ 12,223.00

7.2

Daily Cost per Patient : $12,223.00/8-Patients x 36-days = $ 42.44/Day

7 .3

Recommended Cost/Day Rental to Patient: (40% Mark-up) $ 59.42/Day










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