EDGAR 10-K Filing

Company CIK: 1509957
Filing Year: 2023
Filename: 1509957_10-K_2023_0001493152-23-012511.json

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ITEM 1. BUSINESS
Item 1. Business
Organization
We were 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., 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.
Around the first quarter of 2017, the Company began to transition into the health and wellness space, including the development, processing and sale of hemp derived products, and now operates three distinct divisions: retail sales, R&D and manufacturing, and durable medical devices. The Company also has a hemp cultivation division which is currently non-operational.
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. On March 13, 2022, the Company effectuated a 1 for 15 reverse split of its stock. The accompanying consolidated financial statements retroactively reflect these stock splits.
Business Divisions
The Company is in the business of promoting health and wellness through its development, manufacture and sale of products containing cannabinoids derived from hemp biomass and the licensing of durable medical devices.
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 recently begun extracting and processing cannabinol (“CBN”), cannabigerol (“CBG”), delta-10 and delta-8 for its products and for wholesale to third-parties looking to incorporate such compounds into their products. The Company has all of its hemp based raw materials to incorporate into products tested by a 3rd party independent laboratory. The Company aims to be the premier provider of the highest quality natural hemp cannabinoid 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.
I- Pure Health Products
Pure Health Products, LLC, a New York limited liability company (“PHP” or “Pure Health Products”) is the Company’s manufacturing arm. PHP manufactures all of the Company’s CBD products and also provides white label manufacturing and production services to third parties and performs research and development for the Company. Through PHP, the Company is able to control the manufacturing process of its products while reducing its production costs. Pasquale Ferro is the president of PHP.
In December, 2018, the Company acquired 100% of the membership interests in Pure Health Products, with which it then had and currently 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.
The Company currently has four in-house branded CBD products that are manufactured by PHP and sold to consumers, Canbiola™, Nu Wellness™, Seven Chakras™ and Pure Leaf Oil™.
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 PHP. 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 2022.
All finished products are stored for time- quality measurement, and each 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.
In the 4th quarter of 2022 PHP signed an agreement to produce Superfood drink mix products for its Imbibe Wellness Solutions LLC sister company under the Longevity Brand for Brooke Burke Body, Inc. (“BBB”) The agreement provides that PHP will manufacture, label, and ship to Forever Brands customers across the USA under a subscription program promoted by Forever Brands and BBB.
II- Hemp Operating Division
The Company’s hemp operating division performs R&D for the Company including for CBN, CBG, delta-8 and delta-10. It also produces industrial hemp and processes hemp biomass, isolate and isomers.
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.
Around August 12, 2021, the Company and CO Botanicals LLC, a Nevada limited liability company and wholly owned subsidiary of CANB (“COB”), acquired hemp processing assets from TWS Pharma, LLC, a Wisconsin limited liability company and L7 TWS Pharma, LLC, a Wisconsin limited liability company. COB operates out of Mead, CO.
Around August 13, 2021 the Company and TN Botanicals LLC, a Nevada limited liability company and wholly owned subsidiary of CANB (“TNB”), acquired assets from Music City Botanicals, LLC, a Wisconsin limited liability company (“MCB”) including certain equipment, inventory, and intellectual property. In late 2022 the assets from TN Botanicals LLC were moved into consolidated operations under CO Botanicals, LLC in Ft. Morgan, CO.
From its Miami lab, the Company processes hemp isolate into isomers such as CBN, CBG, delta-8 and delta-10. At its Tennessee location, the Company produces industrial hemp, processes hemp biomass to isolate, processes isolate to isomers such as CBN, CBG, delta-8 and delta-10, and performs research and development on cannabinoids such as such as CBN, CBG, delta-8, delta-10, CBD and CBDA. At its Colorado facilities, the Company produces industrial hemp and processes hemp biomass to isolate. The biomass and isolate processed by the Company may be produced by the Company or purchased from third parties. All of the Company’s end products contain .3% or less of THC (delta-9). In late 2022 the Company also closed its FL facility and moved the operating assets to Ft. Morgan, CO under the CO Botanicals, LLC operations.
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. The Company did not meet the monthly minimums as contemplated by the Sam MOU and as such is 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 fully developed its operations in Michigan.None of Duramed’s products are reimbursable under any federal program. Duramed has also expanded its product offerings to include certain back support braces which are sold to the doctor offices and through no-fault insurance programs.
IV- Green Grow Farms
Green Grow Farms, Inc., a New York corporation (“GGFI” or “Green Grow”) served as the Company’s hemp cultivation arm. 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 crude oil and isolate than to produce such 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- Imbibe Wellness Solutions
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 have been placed into the Company’s wholly owned subsidiary, Imbibe Wellness Solutions, LLC, a Nevada limited liability company (fka Radical Tactical LLC) (“Imbibe Wellness”), and 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. Imbibe Wellness has a Purchas Order and contract with Forever Brands LLC to produce Longevity Brand Superfood drink mix for Brooke Burke Body, Inc. utilizing sister company Pure Health Products , LLC as the production arm. The Superfood drink is plant-based, non-dairy, gluten free and is produced in a variety of flavors. Walter Hoelzel is the president of Imbibe Wellness.
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.
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.
Hemp biomass and its derivative products have 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 hemp biomass, 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
The Company employs, through its Pure Health Product LLC division 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.
The Company has not been granted any patents or trademarks by the USPTO or by any patent or trademark office of a foreign nation.
Employees
The Company, directly or through its subsidiaries, currently has 20 full-time employees.
Reports to Security Holders
Our common stock is registered under the Exchange Act and we are required to file current, quarterly and annual reports and other information with the SEC. You may read and copy any document that we file at the SEC’s public reference facilities at 100 F. Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-732-0330 for more information about its public reference facilities. Our SEC filings are available to you free of charge at the SEC’s web site at www.sec.gov. We are an electronic filer with the SEC and, as such, our information is available through the Internet site maintained by the SEC that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. This information may be found at www.sec.gov and posted on our website at www.canbcorp.com.
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 and other hemp derivative products under the Farm Bill must still be promulgated and are expected to impact the Company’s operations. As the industry and our product lines expand, it is uncertain what other statutory schemes and agencies will start to regulate our 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 and manufacture, as applicable, of hemp-based products, with some states allowing the sale of cannabinoid products, 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.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors
RISK FACTORS
Investing in our securities involves a high degree of risk. Before investing in our securities, you should carefully consider the risks and uncertainties described below, together with all of the other information in this prospectus, including our consolidated financial statements and related notes. If any of the following risks materialize, our business, financial condition, operating results and prospects could be materially and adversely affected. In that event, the price of our common stock could decline, and you could lose part or all of your investment.
Risks Related to our Common Stock
We are subject to the reporting requirements of federal securities laws, which is expensive.
We are a public reporting company in the United States and, accordingly, subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and other federal securities laws, and the compliance obligations of the Sarbanes-Oxley Act. The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders causes our expenses to be higher than they would be if we remained a privately-held company.
Our stock price may be volatile, which may result in losses to our stockholders.
The stock markets have experienced significant price and trading volume fluctuations, and the trading of our common stock has generally been very volatile and experienced sharp share-price and trading-volume changes. The trading price of our securities is likely to remain volatile and could fluctuate widely in response to many factors, including but not limited to the following, some of which are beyond our control:
● variations in our operating results;
● changes in expectations of our future financial performance, including financial estimates by securities analysts and investors;
● changes in operating and stock price performance of other companies in our industry;
● additions or departures of key personnel; and
● future sales of our common stock.
Domestic and international stock markets often experience significant price and volume fluctuations. These fluctuations, as well as general economic and political conditions unrelated to our performance, may adversely affect the price of our common stock.
In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.
Our common stock is thinly-traded, and in the future, may continue to be thinly-traded, and you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate such shares.
We cannot predict the extent to which an active public market for our common stock will develop or be sustained due to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained.
The market price for our common stock may be particularly volatile given that we are a relatively small company and have experienced losses from operations that could lead to wide fluctuations in our share price. You may be unable to sell your common stock at or above your purchase price if at all, which may result in substantial losses to you.
We do not anticipate paying any cash dividends.
We presently do not anticipate that we will pay any dividends on any of our common stock in the foreseeable future. The payment of dividends, if any, would be contingent upon our revenues and earnings, if any, capital requirements, and general financial condition. The payment of any dividends will be within the discretion of our Board of Directors (the “Board”). We presently intend to retain all earnings to implement our business plan; accordingly, we do not anticipate the declaration of any dividends in the foreseeable future.
Our common stock may be subject to penny stock rules, which may make it more difficult for our stockholders to sell their common stock.
Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the SEC. Penny stocks generally are equity securities with a price of less than $5.00 per share. The penny stock rules require a broker-dealer, prior to a purchase or sale of a penny stock not otherwise exempt from the rules, to deliver to the customer a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules.
We may need additional capital, and the sale of additional shares or other equity securities could result in additional dilution to our stockholders.
We may require additional capital for the development and commercialization of our products and may require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If our resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity securities could result in additional dilution to our stockholders. The incurrence of additional indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.
Certain of our executive officers, directors and large stockholders own a significant percentage of our outstanding capital stock. Our executive officers, directors, holders of 5% or more of our capital stock and their respective affiliates beneficially own shares representing more than a majority of the eligible votes of the Company. Accordingly, our directors and executive officers have significant influence over our affairs due to their substantial ownership coupled with their positions on our management team and have substantial voting power to approve matters requiring the approval of our stockholders. For example, these stockholders may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This concentration of ownership may prevent or discourage unsolicited acquisition proposals or offers for our common stock that some of our stockholders may believe is in their best interest.
If we are unable to implement and maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our reported financial information and the market price of our common stock may be negatively affected.
As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal control over financial reporting and provide a management report on the internal control over financial reporting. If we have a material weakness in our internal control over financial reporting, we may not detect errors on a timely basis and our consolidated financial statements may be materially misstated. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, our management will be unable to conclude that our internal control over financial reporting is effective. Moreover, when we are no longer a smaller reporting company, our independent registered public accounting firm will be required to issue an attestation report on the effectiveness of our internal control over financial reporting. Even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may conclude that there are material weaknesses with respect to our internal controls or the level at which our internal controls are documented, designed, implemented or reviewed.
If we are unable to conclude that our internal control over financial reporting is effective, or when we are no longer a smaller reporting company, if our auditors were to express an adverse opinion on the effectiveness of our internal control over financial reporting because we had one or more material weaknesses, investors could lose confidence in the accuracy and completeness of our financial disclosures, which could cause the price of our common stock to decline. Internal control deficiencies could also result in a restatement of our financial results in the future. We have concluded that are internal controls have not been sufficient; however, we have begun to take steps to remediate such insufficiencies. We have communicated to our accounting review firm and audit that we have accomplished the following: (i) we have transitioned each operating subsidiary to a separate bookkeeping system (QuickBooks) and input data at each operating location on a daily basis vs. previously batching data and inputting at corporate office. Corporate then verifies data prior to accepting, (ii) we have a QuickBooks trained person with who inputs data on a real-time basis but not allowed at subsidiary level to access or make certain changes, (iii) we have installed for the hemp division companies (Botanical Biotech (Miami), TN Botanicals (TN), Co botanicals (CO) daily tracking procedures whereby every ounce and pound of raw materials (biomass or crude) is tracked by lot number from input to processing through to finished product, (iv) our accounts receivable tracking system, which is essentially our Duramed Division receivables, is now tracking by medical device unit number, by doctor, by location, by insurance billing company, and we have a far more refined software track and billing system than we did prior quarters, (v) we have consolidate banking to a master account with our primary bank (Investors Bank) by subsidiary and only have one independent subsidiary bank in TN for TN Botanicals which is managed for balances through Investors Bank, (vi) we have instituted a new procedure for any payables which requires double signatures to release any funds for any reason, (vii) we have changed merchant accounts to a single user to better tie out to bank balances and accounts receivable, and (viii) Pure Health Products, LLC, our production facility in Lacey WA in mid-November just received NSF Certification (National Sanitation Foundation), the highest certification possible which now allows us to bid and product products for major national retailers but also has the highest certification and maintenance program in the food supplement industry. NSF uses a sophisticated MARKOV software system to track ever incoming product and package, manage the formulation process and makes appropriate adjustments to every material and unit down to the gram.
If securities or industry analysts do not publish research or reports about our business, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.
The trading market for our common stock could be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not currently have and may never obtain research coverage by industry or financial analysts. If no or few analysts commence coverage of us, the trading price of our stock would likely decrease. Even if we do obtain analyst coverage, if one or more of the analysts who cover us downgrade our stock, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
We may not register or qualify our securities with any state agency pursuant to blue sky regulations.
The holders of our shares of common stock and persons who desire to purchase them in the future should be aware that there may be significant state law restrictions upon the ability of investors to resell our shares. We currently do not intend to and may not be able to qualify securities for resale in states which require shares to be qualified before they can be resold by our shareholders.
We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. The Section 107 of the JOBS Act provides that we may elect to utilize the extended transition period for complying with new or revised accounting standards and such election is irrevocable if made. As such, we have made the election to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. Please refer to a discussion under “Risk Factors” of the effect on our financial statements of such election.
As an emerging growth company we are exempt from Section 404(b) of the Sarbanes Oxley Act. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company, we are also exempt from Section 14A (a) and (b) of the Exchange, which require the shareholder approval of executive compensation and golden parachutes.
We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
We could face significant penalties for our failure to comply with the terms of our outstanding convertible notes.
Our various convertible notes contain positive and negative covenants and customary events of default including requiring us in many cases to timely file SEC reports. In the event we fail to timely file our SEC reports in the future, or any other events of defaults occur under the notes, we could face significant penalties and/or liquidated damages and/or the conversion price of such notes could be adjusted downward significantly, all of which could have a material adverse effect on our results of operations and financial condition, or cause any investment in the Company to decline in value or become worthless.
The issuance and sale of common stock upon conversion of our convertible notes may depress the market price of our common stock.
If sequential conversions of the convertible notes and sales of such converted shares take place, the price of our common stock may decline, and as a result, the holders of the convertible notes will be entitled to receive an increasing number of shares in connection with conversions, which shares could then be sold in the market, triggering further price declines and conversions for even larger numbers of shares, to the detriment of our investors. The shares of common stock which the convertible notes are convertible into may be sold without restriction pursuant to Rule 144. As a result, the sale of these shares may adversely affect the market price, if any, of our common stock.
We have established preferred stock which can be designated by the Company’s Board of Directors without shareholder approval.
The Company has 5,000,000 shares of preferred stock authorized. The shares of preferred stock of the Company may be issued from time to time in one or more series, each of which shall have a distinctive designation or title as shall be determined by the board of directors of the Company prior to the issuance of any shares thereof. The preferred stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as adopted by the board of directors. Because the board of directors is able to designate the powers and preferences of the preferred stock without the vote of a majority of the Company’s shareholders, shareholders of the Company will have no control over what designations and preferences the Company’s preferred stock will have. The issuance of shares of preferred stock or the rights associated therewith, could cause substantial dilution to our existing shareholders. Additionally, the dilutive effect of any preferred stock which we may issue may be exacerbated given the fact that such preferred stock may have voting rights and/or other rights or preferences which could provide the preferred shareholders with substantial voting control over us and/or give those holders the power to prevent or cause a change in control, even if that change in control might benefit our shareholders. As a result, the issuance of shares of preferred stock may cause the value of our securities to decrease.
Risks Related to our Business
Since we have a limited operating history in our industry, it is difficult for potential investors to evaluate our business.
Our short operating history in our industry may hinder our ability to successfully meet our objectives and makes it difficult for potential investors to evaluate our business or prospective operations. As an early stage company, we are subject to all the risks inherent in the financing, expenditures, operations, complications and delays inherent in a new business. Accordingly, our business and success faces risks from uncertainties faced by developing companies in a competitive environment. There can be no assurance that our efforts will be successful or that we will ultimately be able to attain profitability.
We may not be able to raise capital when needed, if at all, which would force us to delay, reduce or eliminate our product development programs or commercialization efforts and could cause our business to fail.
We expect to need substantial additional funding to pursue additional product development and launch and commercialize our products. There are no assurances that future funding will be available on favorable terms or at all. If additional funding is not obtained, we may need to reduce, defer or cancel additional product development or overhead expenditures to the extent necessary. The failure to fund our operating and capital requirements could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts. Any of these events could significantly harm our business, financial condition and prospects.
Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.
Our historical financial statements have been prepared under the assumption that we will continue as a going concern. Our independent registered public accounting firm has expressed substantial doubt in our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to obtain additional equity financing or other capital, attain further operating efficiencies, reduce expenditures, and, ultimately, generate more revenue. The doubt regarding our potential ability to continue as a going concern may adversely affect our ability to obtain new financing on reasonable terms or at all. Additionally, if we are unable to continue as a going concern, our stockholders may lose some or all of their investment in the Company.
We depend heavily on key personnel, and turnover of key senior management could harm our business.
Our future business and results of operations depend in significant part upon the continued contributions of our senior management personnel. If we lose their services or if they fail to perform in their current positions, or if we are not able to attract and retain skilled personnel as needed, our business could suffer. Significant turnover in our senior management could significantly deplete our institutional knowledge held by our existing senior management team. We depend on the skills and abilities of these key personnel in managing the product acquisition, marketing and sales aspects of our business, any part of which could be harmed by turnover in the future. We do not have any key person insurance.
We expect to face intense competition, often from companies with greater resources and experience than we have.
The health and wellness and hemp derivative industries are highly competitive and subject to rapid change. The industry continues to expand and evolve as an increasing number of competitors and potential competitors enter the market. Many of these competitors and potential competitors have substantially greater financial, technological, managerial and research and development resources and experience than we have. Some of these competitors and potential competitors have more experience than we have in the development of hemp products, including validation procedures and regulatory matters. Moreover, some of these competitors may have patents or pending patent applications that our products infringe and for which we would need a license to become free to operate. In addition, our products compete with product offerings from large and well-established companies that have greater marketing and sales experience and capabilities than we or our collaboration partners have. If we are unable to compete successfully, we may be unable to grow and sustain our revenue.
We have substantial capital requirements that, if not met, may hinder our operations.
We anticipate that we will make substantial capital expenditures for research and product development work and acquisitions. If we cannot raise sufficient capital, we may have limited ability to expend the capital necessary to undertake or complete research and product development work and acquisitions. There can be no assurance that debt or equity financing will be available or sufficient to meet these requirements or for other corporate purposes, or if debt or equity financing is available, that it will be on terms acceptable to us. Moreover, future activities may require us to alter our capitalization significantly. Our inability to access sufficient capital for our operations could have a material adverse effect on our financial condition, results of operations or prospects.
Current global financial conditions have been characterized by increased volatility which could negatively impact our business, prospects, liquidity and financial condition.
Current global financial conditions and recent market events have been characterized by increased volatility and the resulting tightening of the credit and capital markets has reduced the amount of available liquidity and overall economic activity. We cannot guaranty that debt or equity financing, the ability to borrow funds or cash generated by operations will be available or sufficient to meet or satisfy our initiatives, objectives or requirements. Our inability to access sufficient amounts of capital on terms acceptable to us for our operations will negatively impact our business, prospects, liquidity and financial condition.
We will need to grow the size of our organization, and we may experience difficulties in managing any growth we may achieve.
As our development and commercialization plans and strategies develop, we expect to need additional research, development, managerial, operational, sales, marketing, financial, accounting, legal, and other resources. Future growth would impose significant added responsibilities on members of management. Our management may not be able to accommodate those added responsibilities, and our failure to do so could prevent us from effectively managing future growth, if any, and successfully growing our company.
We may expend our limited resources to pursue a particular product and may fail to capitalize on products that may be more profitable or for which there is a greater likelihood of success.
Because we have limited financial and managerial resources, we have focused our efforts on particular products. As a result, we may forego or delay pursuit of opportunities with other products that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Any failure to improperly assess potential products could result in missed opportunities and/or our focus on products with low market potential, which would harm our business and financial condition.
We engage in transactions with related parties and such transactions present possible conflicts of interest that could have an adverse effect on us.
We have entered, and may continue to enter, into transactions with related parties for financing, corporate, business development and operational services, as detailed herein. Such transactions may not have been entered into on an arm’s-length basis, and we may have achieved more or less favorable terms because such transactions were entered into with our related parties. We rely, and will continue to rely, on our related parties to maintain these services. If the pricing for these services changes, or if our related parties cease to provide these services, including by terminating agreements with us, we may be unable to obtain replacements for these services on the same terms without disruption to our business. This could have a material effect on our business, results of operations and financial condition.
Such conflicts could cause an individual in our management to seek to advance his or her economic interests or the economic interests of certain related parties above ours. Further, the appearance of conflicts of interest created by related party transactions could impair the confidence of our investors, which could have a material adverse effect on our liquidity, results of operations and financial condition.
Any inability to protect our intellectual property rights could reduce the value of our technologies and brands, which could adversely affect our financial condition, results of operations and business.
Our business is dependent upon our trademarks, trade secrets and other intellectual property rights. There is a risk of certain valuable trade secrets being exposed to potential misappropriation. The efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm our business or our ability to compete. There is a risk that we may have insufficient resources to counter adequately such misappropriation or infringement through negotiation or the use of legal remedies. It may not be practicable or cost effective for us to fully protect our intellectual property rights in some countries or jurisdictions. If we are unable to successfully identify and stop unauthorized use of our intellectual property, we could lose potential revenue and experience increased operational and enforcement costs, which could adversely affect our financial condition, results of operations and business.
Our potential for rapid growth and our entry into new markets make it difficult for us to evaluate our current and future business prospects, and we may be unable to effectively manage any growth associated with these new markets, which may increase the risk of your investment and could harm our business, financial condition, results of operations and cash flow.
Our entry into the rapidly growing CBD, CBN, CBG and delta-8 markets may place a significant strain on our resources and increase demands on our executive management, personnel and systems, and our operational, administrative and financial resources may be inadequate. We may also not be able to effectively manage any expanded operations, or achieve planned growth on a timely or profitable basis, particularly if the number of customers using our technology significantly increases or their demands and needs change as our business expands. If we are unable to manage expanded operations effectively, we may experience operating inefficiencies, the quality of our products and services could deteriorate, and our business and results of operations could be materially adversely affected.
If we are unable to develop and maintain our brand and reputation for our product offerings, our business and prospects could be materially harmed.
Our business and prospects depend, in part, on developing and then maintaining and strengthening our brands and reputation in the markets we serve. If problems with our products or technologies cause customers to experience operational disruption or failure or delays, our brand and reputation could be diminished. If we fail to develop, promote and maintain our brand and reputation successfully, our business and prospects could be materially harmed.
If we or any of our suppliers or third-parties on which we rely for the development, manufacturing, marketing, or sale of our products fails to comply with regulatory requirements applicable to the development, manufacturing, marketing, and sale of our product candidates, regulatory agencies may take action against us or them, which could significantly harm our business.
Our product candidates, along with the development process, the manufacturing processes, labeling, advertising, and promotional activities for these products, are subject to continual requirements and review by the FDA and state and foreign regulatory bodies. Regulatory authorities subject a marketed product, its manufacturer, and the manufacturing facilities to continual review and periodic inspections. We, our suppliers, third-parties on which we rely, and our and their respective contractors, suppliers and vendors, will be subject to ongoing regulatory requirements, including complying with regulations and laws regarding advertising, promotion and sales of products (including applicable anti-kickback, fraud and abuse and other health care laws and regulations), required submissions of safety and other post-market information and reports, registration requirements, Clinical Good Manufacturing Practices (cGMP) regulations (including requirements relating to quality control and quality assurance, as well as the corresponding maintenance of records and documentation), and the requirements regarding the distribution of samples to physicians and recordkeeping requirements. Regulatory agencies may change existing requirements or adopt new requirements or policies. We, our suppliers, third-parties on which we rely, and our and their respective contractors, suppliers, and vendors, may be slow to adapt or may not be able to adapt to these changes or new requirements.
Failure to comply with regulatory requirements may result in any of the following:
● restrictions on our product candidates or manufacturing processes;
● warning letters;
● withdrawal of the products from the market;
● voluntary or mandatory recall;
● fines;
● suspension or withdrawal of regulatory approvals;
● refusal to approve pending applications or supplements to approved applications that we submit;
● product seizure;
● injunctions; or
● imposition of civil or criminal penalties.
We could be subject to costly product liability claims related to our products.
Since most of our products are intended for human use, we face the risk that the use of our products may result in adverse side effects to people. We face even greater risks upon further commercialization of our products. An individual may bring a product liability claim against us alleging that one of our products causes, or is claimed to have caused, an injury or is found to be unsuitable for consumer use. Any product liability claim brought against us, with or without merit, could result in:
● the inability to commercialize our products;
● decreased demand for our products;
● regulatory investigations that could require costly recalls or product modifications;
● loss of revenue;
● substantial costs of litigation;
● liabilities that substantially exceed our product liability insurance, which we would then be required to pay ourselves;
● an increase in our product liability insurance rates or the inability to maintain insurance coverage in the future on acceptable terms, if at all;
● the diversion of management’s attention from our business; and
● damage to our reputation and the reputation of our products.
Product liability claims may subject us to the foregoing and other risks, which could have a material adverse effect on our business, results of operations, financial condition, and prospects.
The Company could be subject to enforcement action by the FDA and certain state regulatory agencies for its products containing CBD or THC compounds.
In 2018, the federal Farm Bill removed hemp as a Schedule I drug under the Controlled Substances Act and hemp may now be grown as a commodity crop, with restrictions; however, the 2018 Farm Bill did not specifically legalize CBD. Until Congress promulgates rules and regulations relating to hemp derived cannabinoids, the “legal” status of such, or the processes the Company may have to implement (and at what expense), are still unknowns. A similar paradigm exists under various state laws with which the Company will have to comply. Further, the FDA currently considers the addition of CBD to food products, cosmetics or supplements to be illegal and also prohibits the advertisement of CBD products with health claims. In addition, the FTC under the Federal Trade Commission Act (“FTC Act”) requires that product advertising is truthful, substantiated and non-misleading. We believe that our advertising meets these guidelines; however, the FTC may bring a challenge at any time to evaluate our compliance with the FTC Act.
Further, the FDA has recently increased its review of and enforcement against CBD companies for violations of the Federal Food, Drug, and Cosmetic Act (“FCDA”), particularly with respect to the sale of food products containing CBD, claiming that CBD can treat medical conditions in humans or animals, promoting CBD products as dietary supplements, and adding CBD to human and animal foods. Should the Company become subject to enforcement action by the FDA, it could be forced to spend significant sums defending against such enforcement, pay significant fines and ultimately could be forced to stop offering some or all of its CBD products, which would materially, negatively affect the Company’s business and shareholders’ investments. The FDA can also subject individuals to criminal penalties, including fines and imprisonment, for violating certain provisions of the FDCA related to CBD products. In addition, notwithstanding the intense pressure on FDA to fast-track the CBD approval process, it is likely that the approval process for use of CBD or other cannabinoids in foods, cosmetics or supplements will take years and possible that it could never occur at all.
Due to the controversy over the cannabis plant within the United States, we face challenges getting our products into stores and into the hands of the end user.
The Company intends to release products that contain CBD derived from hemp that are legal within the U.S. However, it is possible we may face scrutiny and run into issues getting our products into stores due to hesitation by stores to carry any product at all affiliated with the cannabis plant, as well as federal, state and local regulations that may restrict our ability to sell cannabinoid products.
The Company’s production of Delta-8 THC and Delta-10 THC could subject it to enforcement action by certain federal and state regulatory agencies.
Delta-8 THC and delta-10 THC are cannabis compounds that can cause effects similar to delta-9 THC, the main compound in cannabis that causes psychoactive effects. Delta-8 THC and delta-10 THC can be extracted from either hemp or marijuana, but all of the Company’s delta-8 products are made with hemp containing no more than 0.3% THC. Because of the 2018 Farm Bill, hemp can be legally grown and used for extractions all over the United States. Notwithstanding the foregoing, the legality of hemp-derived delta-8 THC and delta-10 THC is in a gray area and varies from state-to-state, with some states allowing, some not addressing specifically, and others banning due to similarity to delta-9 THC. Although the federal legality of delta-8 THC and delta-10 THC is still unclear, the FDA has recently issued Warning Letters to five companies for selling products labeled as containing delta-8 tetrahydrocannabinol, noting that delta-8 THC has psychoactive and intoxicating effects and may be dangerous to consumers. The Warning Letters were primarily targeted at companies marketing the compound as unapproved treatments for various medical conditions or for other therapeutic uses, without adequate directions for use, or the addition of delta-8 THC in foods. Should the Company become subject to enforcement action by federal or state agencies, it could be forced to spend significant sums defending against such enforcement and ultimately could be forced to stop offering some or all of its delta-8 THC and/or delta-10 THC products and/or be subject to other civil or criminal sanctions, which would materially, negatively affect the Company’s business and shareholders’ investments.
The novel coronavirus disease of 2019 (“COVID-19”) has had, and continues to have, broad impacts on multiple sectors of the global economy, making it difficult to predict the extent of its impact on our business.
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.
The full impact of the COVID-19 outbreak continues to evolve as of the date of this 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 foreseeable future. We have experienced negative impacts from COVID in the form of reduced sales, delayed operations, inability to effectuate certain business plans, supply chain issues and the like.
Our acquisitions may expose us to unknown liabilities.
Because we have acquired, and expect generally to acquire, all (or a majority of) the outstanding securities of certain of our acquisition targets, our investment in those companies are or will be subject to all of their liabilities other than their respective debts which we paid or will pay at the time of the acquisitions. If there are unknown liabilities or other obligations, our business could be materially affected. We may also experience issues relating to internal controls over financial reporting that could affect our ability to comply with the Sarbanes-Oxley Act, or that could affect our ability to comply with other applicable laws.
If we fail to comply with government laws and regulations it could have a materially adverse effect on our business.
Our industry is subject to extensive federal, state and local laws and regulations that are extremely complex and for which, in many instances, the industry does not have the benefit of significant regulatory or judicial interpretation. We exercise care in structuring our operations to comply in all material respects with applicable laws to the extent possible. We will also take such laws into account when planning future operations and acquisitions. The laws, rules and regulations described above are complex and subject to interpretation. In the event of a determination that we are in violation of such laws, rules or regulations, or if further changes in the regulatory framework occur, any such determination or changes could have a material adverse effect on our business. There can be no assurance however that we will not be found in noncompliance in any particular situation.
Any failure to comply with all applicable federal and state anti-kickback laws may result in fines and other liabilities, which may adversely affect the Company’s results of operations and reputation.
The federal anti-kickback statute (the “AKS”) applies to Medicare, Medicaid and other state and federal programs. AKS prohibits the solicitation, offer, payment or receipt of remuneration in return for referrals or the purchase, or in return for recommending or arranging for the referral or purchase, of goods, including drugs, covered by the federal health care programs. At present, the Company does not participate in any federal programs and its products are not reimbursed by Medicare, Medicaid or any other state or federal program. The AKS is a criminal statute with criminal penalties, as well as potential civil and administrative penalties. The AKS, however, provides several statutory exceptions and regulatory “safe harbors” for particular types of transactions. Many states have similar fraud and abuse laws and their own anti-kickback laws, some of which can apply to all payors, and not just governmental payors. While the Company believes that it is in material compliance with both federal and state AKS laws, the AKS laws present different levels of risks as to two of the Company’s lines of business: (1) sale of the Company’s medical foods, and (2) sale of the Company’s medical devices.
At present, the Company’s products are not reimbursable under any federal program. If, however, that changes in the future and it were determined that the Company was not in compliance with the AKS, the Company could be subject to liability, and its operations could be curtailed, which could have a material adverse effect on the Company’s business, financial condition and results of operations. Moreover, if the activities of its customers or other entity with which the Company has a business relationship were found to constitute a violation of the AKS and the Company, as a result of the provision of products or services to such customer or entity, were found to have knowingly participated in such activities, the Company could be subject to sanctions or liability under such laws, including civil and/or criminal penalties, as well as exclusion from government health programs. As a result of exclusion from government health programs, neither products nor services could be provided to any beneficiaries of any federal healthcare program.
We may not maintain sufficient insurance coverage for the risks associated with our business operations.
Risks associated with our business and operations include, but are not limited to, claims for wrongful acts committed by our officers, directors, and other representatives, the loss of intellectual property rights, the loss of key personnel, risks posed by natural disasters and risks of lawsuits from customers who are injured from or dissatisfied with our products. Any of these risks may result in significant losses. We cannot provide any assurance that our insurance coverage is sufficient to cover any losses that we may sustain, or that we will be able to successfully claim our losses under our insurance policies on a timely basis or at all. If we incur any loss not covered by our insurance policies, or the compensated amount is significantly less than our actual loss or is not timely paid, our business, financial condition and results of operations could be materially and adversely affected.
Our ability to service our indebtedness will depend on our ability to generate cash in the future.
Our ability to make payments on our indebtedness will depend on our ability to generate cash in the future. Our ability to generate cash is subject to general economic and market conditions and financial, competitive, legislative, regulatory and other factors that are beyond our control. Our business may not generate sufficient cash to fund our working capital requirements, capital expenditure, debt service and other liquidity needs, which could result in our inability to comply with financial and other covenants contained in our debt agreements, our being unable to repay or pay interest on our indebtedness, and our inability to fund our other liquidity needs. If we are unable to service our debt obligations, fund our other liquidity needs and maintain compliance with our financial and other covenants, we could be forced to curtail our operations, our creditors could accelerate our indebtedness and exercise other remedies and we could be required to pursue one or more alternative strategies, such as selling assets or refinancing or restructuring our indebtedness. However, such alternatives may not be feasible or adequate.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments
Not applicable.

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ITEM 2. PROPERTIES
Item 2. Properties
The Company does not currently own any real property. We do however lease office space in Hicksville, New York for $3,917 per month, out of which all subsidiaries other than PHP operate. The Company’s wholly-owned subsidiary, Pure Health Products, operates its manufacturing facility in Lacey, Washington with lease payments equal to $2,345 per month. The Company has leases for three (3) properties, as described below.
The Company leases an approximately 14,300 square foot building and related parcel located at 14320 Longs Peak Court, Mead, CO 80504 (the “LPC Property”) for base rent equal to $13,764 for the first year of the lease. Following the first year of the lease, on September 1 of each year, the base rent for the LPC Property will be increased by the greater of (i) 3%, or (ii) the difference between the Consumer Price Index for All Urban Consumers (as published by the Bureau of Labor Statistics) (“CPI”) for August 2021 compared to the CPI for August of the applicable year.
CO Botanicals, LLC (“COB”), a wholly-owned subsidiary of Can B̅ Corp. leases the real properties located at 17171 County Road 21, Fort Morgan, CO 80701 and 12555 Energy Road, Fort Morgan, CO 80701 (collectively, the “Fort Morgan Properties”) on a month-to-month basis. Base rent for the Fort Morgan Properties is $22,250 per month.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings
On April 28, 2021, the Company was served with a commercial legal action against the Company and certain officers by David Weissberg and Donna Marino, who are investors in the Company (collectively, the “Investors”). The complaint was filed in the Supreme Court of the State of New York, County of Nassau, Index No. 605191/2021. The complaint alleges four causes of action.
The first cause of action alleges that the Company breached Securities Purchase Agreements with the Investors by failing to assist the Investors in getting opinion letters to remove the restrictive legends from their shares, even though the Company made introductions and requests to the Company’s counsel, provided supporting documents for the Investor’s shares, and ultimately the opinion letters could not be rendered because the Investors failed to submit required documentation to counsel.
The second cause of action is similar to the first but related to alleged misrepresentations regarding removing the restrictive legends from shares that were issued for services rather than purchased.
The third cause of action alleges that the Company mislead the Investors to invest $500,000. The final cause of action alleges that officers of the Company made misrepresentations regarding the value of the Company’s stock, which caused David Weissberg to owe more in taxes than he was expecting.
We have consulted with attorneys and believe the Investors’ claims are meritless, factually inaccurate, and frivolous. We intend to vigorously defend ourselves against the aforementioned legal action and will likely bring counterclaims against the Investors.
Approximately November 24, 2021, a vendor of the Company filed amended suit against the Company in Florida, Case No. 2021 CA 001797, for monies allegedly owed and civil theft relating to such monies and related products and fraud in the inducement. We do not believe we owe such vendor any amount. The court has entered a default judgement against the Company for our failure to timely answer the complaint, which default has since been overturned. Subsequently the case has been set for interrogatories and document production which activities are being fulfilled.
On or about August 11, 2022, a Complaint was filed by Evexia Plus, LLC against Can B Corp. in a product payment trade dispute. Case Number 63-CV-2022-900692.00 in the Circuit Court of Tuscaloosa County, AL. On 1-26-2023 the court ordered a Summary Judgement in the amount of $336,924. The parties are trying to work out a payment schedule tied to production to satisfy the judgement.
Other than above, we are not aware of any pending or threatened legal proceedings in which we are involved.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures
Not applicable.

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is listed for quotation on OTC Market’s OTCQB® Venture Market under the symbol “CANB.” Our common stock began trading in April 2011. Trading in our common stock has historically lacked consistent volume, and the market price has been volatile.
Record Holders
As of April 10, 2023, there were 5,396,682 shares of common stock issued and outstanding and held by approximately 250 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*.
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.
* It has come to our attention that the Company’s transfer agent still shows 227,590 Series B Preferred shares as being held by RedDiamond Partners LLC (“RedDiamond”) due to an administrative oversight. Nonetheless, such shares were retired in exchange for 97,608 shares of common stock and rights to acquire an additional 35,667 shares of common stock issued to RedDiamond pursuant to an Exchange Agreement dated August 13, 2019.
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
On February 24, 2022, the Company converted 15 Shares of Series A Preferred Stock to 33,345 shares of common stock.
From January 1, 2022 through December 31, 2022 the Company issued an aggregate of 51,282 shares of Common Stock under a Reg A-1 registration and an additional 1,270,616 shares of common stock to various consultants for service.
From January 1, 2022 through December 31, 2022 the Company issued an aggregate of 204,209 shares of Common Stock under various asset acquisition agreements.
From January 1, 2022 through December 31, 2022 the Company issued an aggregate of 10,150 shares of Common Stock under various note and related interest conversion agreements.
From January 1, 2022 through December 31, 2022 the Company issued an aggregate of 18,227 shares of Common Stock resulting from the exercise of warrants.
With respect to the transactions noted above, each of the recipients of securities of the Company was an accredited investor, or is considered by the Company to be a “sophisticated person”, inasmuch as each of them has such knowledge and experience in financial and business matters that they are capable of evaluating the merits and risks of receiving securities of the Company. No solicitation was made and no underwriting discounts were given or paid in connection with these transactions. The Company believes that the issuance of its securities as described above was exempt from registration with the Securities and Exchange Commission pursuant to Section 4(a)(2) and/or Regulation D of the Securities Act of 1933.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. Selected Financial Data
Not required for smaller reporting companies.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
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.
The Company is in the business of promoting health and wellness through its development, manufacture and sale of products containing cannabinoids derived from hemp biomass and the licensing of durable medical devises. Can B̅’s products include oils, creams, moisturizers, isolate, gel caps, spa products, and concentrates and lifestyle products. Can B̅ develops its own line of proprietary products as well seeks synergistic value through acquisitions in the hemp industry. Can B̅ aims to be the premier provider of the highest quality hemp derived products on the market through sourcing the best raw material and offering a variety of products we believe will improve people’s lives in a variety of areas.
Results of Operations
Year Ended
December 31,
$ Change % Change
Revenues
Product sales $ 5,524,036 $ 4,156,281 $ 1,367,755 32.9 %
Service revenue 1,161,483 447,548 713,935 159.5 %
Total revenues 6,685,519 4,603,829 2,081,690 45.2 %
Cost of revenues 4,071,144 1,611,730 2,459,414 152.6 %
Gross profit 2,614,375 2,992,099 (377,724 ) -12.6 %
Operating expenses 16,782,522 13,258,106 3,524,416 26.6 %
Loss from operations (14,168,147 ) (10,266,007 ) (3,902,140 ) 38.0 %
Other (expense) income:
Other income - 2,991 (2,991 ) -100.0 %
Change in fair value of warrant liability 154,010 - 154,010 NA
Gain on debt extinguishment - 196,889 (196,889 ) -100.0 %
Interest expense (902,130 ) (2,102,193 ) 1,200,063 -57.1 %
Other expense (7,115 ) - (7,115 ) NA
Other expense (755,235 ) (1,902,313 ) 1,147,078 -60.3 %
Loss before provision for income taxes (14,923,382 ) (12,168,320 ) (2,755,062 ) 22.6 %
Provision for income taxes 1,075 (282 ) -26.2 %
Net loss $ (14,924,175 ) $ (12,169,395 ) $ (2,754,780 ) 22.6 %
Year Ended December 31, 2022 compared with Year Ended December 31, 2021:
Revenues increased $2,081,690 from $4,603,829 in 2021 to $6,685,519 in 2022. The increase largely due to an increase in the Company’s Duramed division of approximately $1,785,000 in fiscal 2022 compared to fiscal 2021 due to increased surgical procedures and healthcare services which enabled the Company to continue to grow within the ultrasound device sales associated with patient recovery.
Compensation expenses increased $2,201,970 from $4,997,155 in 2021 to $7,199,125 primarily related to an increase in non-cash stock based compensation expense.
Consulting and professional fees increased $1,447,262 from $3,968,744 in 2021 to $5,416,006 in 2022. The 2022 expense amount includes legal, accounting, and other consulting fees and services incurred during the year ending December 31, 2022. The increase was related to an increase in legal fees and increase in consulting fees related to expansion of our durable medical device offerings as well as additional consulting fees related to formulation and development consulting related to hemp product development and other product enhancements.
Depreciation of property and equipment increased $914,405 from $593,656 in 2021 to $1,408,061 in 2022 related to the acquisition of property and equipment via asset purchases.
Other operating expenses increased $1,721,365 from 2021 to 2022 which is mainly due to bad debt expense of $313,228 and a loss on disposal of assets of $929,417.
Net loss increased $2,754,780 from $12,169,395 in 2021 to $14,924,175 in 2022. The loss is related to additional incurred costs to jump start the Company’s operations within Miami and Tennessee during the first quarter of 2022 and a decrease in the Company’s gross margin due to unforeseen integration issues within the Company’s operations in Miami and Tennessee.
Liquidity and Capital Resources
As of December 31, 2022, the Company had cash and cash equivalents of $73,194 and negative working capital of $3,281,494. Cash and cash equivalents decreased $375,807 from $449,001 at December 31, 2021 to $73,194 at December 31, 2022. For the year ended December 31, 2022, $3,571,617 was provided by financing activities, and $3,947,424 was used in operating activities.
In March 2023, the Company completed the sale of a promissory note (the “Note”) in the principal amount of $1,823,529 and a warrant (the “Warrant”) to purchase 1,307,190 shares of Common Stock to an investor (the “Investor”) pursuant to a Securities Purchase Agreement dated as of February 27, 2023. The purchase price of the Note was $1,550,000, representing a 15% original issue discount. The Note is non-interest bearing, except in the case of the event of a default, in which case interest will accrue from the date of the default at a rate equal to the lower of 18% per annum or the maximum rate permitted by law.
The Note is payable in nine (9) monthly installments of $232,500 each, consisting of a $227,941 principal reduction payment and a $4,559 redemption fee, commencing on April 27, 2023. The Company’s obligations under the note are secured by a security interest in the Company’s deposit accounts and the deposit accounts of the Company’s subsidiaries. In addition, each the Company’s subsidiaries has agreed that if an event of default occurs under the Note, the subsidiary will pay to the Investor an amount equal to 10% of revenues received during the prior month from the sale of goods or services or collections of accounts receivable.
The Company may elect to pay all or a portion of a monthly installment due under the Note by converting such amount into shares of the Company’s common stock at a price of $4.00 per share, subject to adjustment in accordance with the terms of the Note. If the Company does not pay an installment when due it is deemed an election by the Company to convert the installment payment into common stock at a price equal to the lower of $4.00 per share or 90% of the lowest daily volume weighted average price of the common stock during the five trading days preceding the conversion date. The Investor may elect at any time to convert amounts payable under the Note into shares of the Company’s common stock at a conversion price of $4.00 per share, subject to adjustment in accordance with the terms of the Note.
Contemporaneous with the sale of the Note and Warrant to the Investor, Arena Special Opportunities Partners I, L.P. and Arena Special Opportunities Fund, L.P. (collectively, “Arena”), who hold promissory notes with an unpaid principal balance of approximately $3,877,000 which became due on April 30, 2022 (the “Arena Notes”), entered into a Forbearance Agreement with the Company pursuant to which they agreed to forbear from exercising remedies under the Arena Notes until December 31, 2024 provided that the Company does not default on its obligations under the Forbearance Agreement.
The Forbearance Agreement requires the Company and/or Company’s subsidiaries, Duramed, Inc. and Duramed MI, LLC (together the “Duramed Subsidiaries”) to remit to Arena on a monthly basis certain accounts receivable collected by the Company and/or the Duramed Subsidiaries until the total amount collected is $5,700,000. The Company and the Duramed Subsidiaries have assigned their rights to these receivables to Arena.
If Arena fully exercises warrants to purchase shares of the Company’s common stock that were previously issued to it, and the aggregate market value of the shares acquired is less than $1,500,000, the Company must pay to Arena an amount equal to such difference.
As a condition to the closing of the sale of the Note and Warrant to the Investor, certain terms of certain promissory notes previously issued by the Company were amended, including the following:
● the maturity date of a promissory note in the principal amount of $62,500 was extended from June 6, 2023 to September 1, 2023; provided, however, that the holder can require full payment if the Company completes an offering of its common stock that results in an uplisting of its common stock to a national securities exchange;
● in consideration of the Company repaying an aggregate of $200,000 under notes issued in March 2022, the holders of the notes agreed to extend the maturity dates of the notes until September 1, 2023 and reduce the percentage of the cash proceeds received by the Company from the issuance of equity or debt that the holders of the notes can require the Company to apply to the repayment of the notes from 50% to 33%;
● in consideration of an increase in the aggregate principal amount by $10,000 and an increase in the interest rate to 18% per annum, the holder of notes in the aggregate principal amount of $150,000 agreed to waive his right to require the Company to repay a $50,000 note upon the Company’s receipt of $1,500,000 of financing and extend maturity dates from November 18,2021 and January 22, 2023 to September 1, 2023;
● in consideration of the Company’s agreement to provide a product credit for future orders of $50,000, the holder of a promissory note in the principal amount of $150,000 agreed to extend the maturity date from August 10,2022 to September 1, 2023;
● the maturity date of a promissory note in the principal amount of $1,250,000 was extended from August 12, 2022 until the earlier of September 1, 2023 or the date that the Company completes an offering resulting in an uplisting of its common stock to the Nasdaq Capital Market;
● in consideration of the repayment of a total of $232,500 under the notes, the holders of promissory notes in the aggregate principal amount of $435,000 issued in October and November 2022 that bore interest at 18% per annum and were past due agreed to exchange the notes for new notes that mature on September 1, 2023 and bear interest at 15% per annum; and
● in consideration of an increase in the aggregate principal amount to $937,000, the holder of notes in the aggregate principal amount of $852,000 having maturity dates between August 24, 2022 and April 12, 2023 agreed to exchange the notes for a single note that matures on September 1, 2023.
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 2022 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.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
Not applicable.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data
Our Consolidated Financial Statements and Notes thereto, for the fiscal years ended December 31, 2021 and 2020 and the report of BF Borgers CPA PC, our independent registered public accounting firm, are set forth on pages through of this Annual Report.
Item Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
N/A
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, 2022 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, 2022, 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.
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, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not Applicable.
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 31, 2023 are as follows:
Name
Age
Position
Marco Alfonsi
CEO, Director and Chairman since June 15, 2017
Stanley L. Teeple
CFO, Secretary and Director since October 1, 2018
Frederick Alger Boyer, Jr.
Independent Director appointed October 9, 2019
Ronald A. Silver
Independent Director appointed October 9, 2019
James F. Murphy
Independent Director appointed October 9, 2019
Pasquale Ferro
President of Pure Health Products
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.
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.
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.
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.
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, 2022, the following Reporting Persons did not meet all applicable Section 16(a) filing requirements: (i) Stanley Teeple, (ii) Phil Scala and (iii) 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 fiscal years ended December 31, 2022 and 2021.
Name and principal position Year Salary Bonus Stock awards Option awards (5) Non-equity incentive plan comp. Non-qualified deferred comp. earnings All other comp. Total
Marco Alfonsi (1) $ 25,962 $ 0 $ 500,100 $ 100,000 $ 0 $ 0 $ 0 $ 626,062
$ 107,142 $ 0 $ 2,512,500 $ 100,000 $ 0 $ 0 $ 0 $ 2,719,642
Stanley L. Teeple (2) $ 25,962 $ 0 $ 500,100 $ 100,000 $ 0 $ 0 $ 0 $ 626,062
$ 90,000 $ 0 $ 2,512,500 $ 100,000 $ 0 $ 0 $ 0 $ 2,702,500
Pasquale Ferro (3) $ 25,962 $ 0 $ 500,100 $ 100,000 $ 0 $ 0 $ 0 $ 626,062
$ 98,654 $ 0 $ 2,512,500 $ 100,000 $ 0 $ 0 $ 0 $ 2,711,154
Phil Scala (4) $ 15,000 $ 0 $ 61,6740 $ 100,000 $ 0 $ 0 $ 0 $ 176,674
$ 52,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 52,000
(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. Actual salary compensation was paid for the 1st quarter of 2022 only.
(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. Actual salary compensation was paid for the 1st quarter of 2022 only.
(3) 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. Actual salary compensation was paid for the 1st quarter of 2022 only.
(4) On October 11, 2019, the Company executed an Executive Service Agreement (“Scala Agreement”) with Phil Scala. The Scala Agreement provided that Mr. Scala served as the Interim Chief Operating Officer for a term of 90 days. The Scala Agreement also provided 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 was to receive a i) base salary of fifty-two thousand dollars per year, ii) was eligible to receive cash and or stock bonuses, iii) 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. Actual salary compensation was paid for the 1st quarter of 2022 only. Mr. Scala resigned his position as an officer of the Company in March 2023.
As of December 31, 2022, 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 on December 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.
(5) The amounts reported in this column represent the grant date fair value of option awards granted during the years ended December 31, 2022 and 2021 in accordance with FASB ASC 718. The assumptions used in the calculation of these awards are discussed in Note 11 to the Consolidated Financial Statements included in this Report.
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, 2022.
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 $ 0 $ 100,020
$ 0 $ 0 $ 0 $ 0 $ 100,020
Director $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Ronald Silver $ 0 $ 100,020
$ 0 $ 0 $ 0 $ 0 $ 100,020
Director $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
James F. Murphy $ 0 $ 100,020
$ 0 $ 0 $ 0 $ 0 $ 100,020
Director $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
1) Each of the 3 non-interested independent directors was issued 20 Preferred C shares in 2022.
2) As of December 31, 2022, Directors Boyer, Silver and Murphy each owned 10,000 options to exercise and purchase stock at $.30 at any time until 2023.
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.
The table below summarizes all outstanding equity awards for officers, as of December 31, 2022.
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 10/21/2018 Stock Options $ 4.50 10/20/2023
Johnny Mack PhD - Ex COO 9/9/2019 Stock Options 1,778 $ 4.50 9/8/2024
Frederick A. Boyer - Director 10/15/2019 Stock Options $ 4.50 10/14/2024
Ronald Silver - Director 10/15/2019 Stock Options $ 4.50 10/14/2024
James F. Murphy - Director 10/15/2019 Stock Options $ 4.50 10/14/2024
Ronald Silver - Director 12/9/2020 Stock Options $ 7.50 12/9/2025
Stanley Teeple - CFO 12/29/2020 Stock Options 18,467 $ 5.42 12/29/2025
Pasquale Ferro - President 12/29/2020 Stock Options 18,467 $ 5.42 12/29/2025
Phil Scala - COO 12/29/2020 Stock Options 18,467 $ 5.42 12/29/2025
Marco Alfonsi - CEO 12/29/2020 Stock Options 18,467 $ 5.42 12/29/2025
Stanley Teeple - CFO 7/15/2021 Stock Options 19,608 $ 6.60 7/15/2026
Pasquale Ferro - President 7/15/2021 Stock Options 19,608 $ 6.60 7/15/2026
Marco Alfonsi - CEO 7/15/2021 Stock Options 19,608 $ 6.60 7/15/2026
Marco Alfonsi - CEO 4/26/2021 Stock Options 3,401 $ 7.50 4/26/2026
Marco Alfonsi - CEO 1/6/2022 Stock Options 19,753 $ 7.35 1/5/2027
Pasquale Ferro - President 1/6/2022 Stock Options 19,753 $ 7.35 1/5/2027
Phil Scala - COO 1/6/2022 Stock Options 19,753 $ 7.35 1/5/2027
Stanley Teeple - CFO 1/6/2022 Stock Options 19,753 $ 7.35 1/5/2027
Marco Alfonsi - CEO 8/28/2022 Stock Options 100,000 $ 3.00 8/27/2027
Pasquale Ferro - President 8/28/2022 Stock Options 100,000 $ 3.00 8/27/2027
Phil Scala - COO 8/28/2022 Stock Options 50,000 $ 3.00 8/27/2027
Stanley Teeple - CFO 8/28/2022 Stock Options 100,000 $ 3.00 8/27/2027
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth the ownership, as of April 10, 2023, of our common stock, Series C Preferred Stock and Series D Preferred Stock by (i) each person known by us to be the beneficial own of more than five (5%) percent of the applicable class; (ii) each of the Company’s executive officers and directors; and (iii) the Company’s directors and executive officers 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 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.
Shares Beneficially Owned(1)
As of April 10, 2023
Name and Address of Beneficial Owner(2): Common
Stock
Percent of Class(3) Series C
Preferred
Stock
Percent of Class(4) Series D Preferred
Stock
Percent of Class(5) Percent of Total Voting
Power
Marco Alfonsi, CEO and Director 1,000,512 (6) 16.6 % 27.3 % 1,250 31.3 % 18.3 %
Stanley L. Teeple, CFO and Director 981,946 (7) 16.3 % 27.3 % 1,250 31.3 % 18.1 %
Frederick A. Boyer, Director 8,668 (8) 0.16 % - - - - 0.09 %
Ronald Silver, Director 9,280 (9) 0.17 % - - - - 0.09 %
James F. Murphey, Director 8,668 (10) 0.16 % - - - - 0.09 %
All directors and executive officers as a group (5 persons) 2,009,074 30.1 % 10.4 % 2,500 62.5 % 36.7 %
Pasquale Ferro 990,884 (11) 16.4 % 27.3 % 1,250 31.3 % 16.8 %
Arena Special Opportunities Fund, L.P 592,976 (12) 9.9 % - - - - 5.7 %
Walleye Opportunities Master Fund LTD 592,976
(13) 9.9 %
5.7
%
(1) Shares of common stock subject to stock options, warrants or convertible securities currently exercisable or convertible, or exercisable or convertible within 60 days of April 10, 2023 are deemed to be outstanding for computing the percentage ownership of the person holding such options, warrants or convertible securities and the percentage ownership of any group of which the holder is a member, but are not deemed outstanding for computing the percentage ownership of any other person.
(2) Except as otherwise indicated, the address of each beneficial owner is c/o Can B Corp., 960 South Broadway, Suite 120, Hempstead, New York 11801.
(3) Based on 5,396,682 shares of common stock issued and outstanding as of April 10, 2023.
(4) Based on 1,100 shares of Series C Preferred Stock issued and outstanding as of April 10, 2023. Shares of Series C Preferred Stock entitle their holders to vote on an as converted basis (1,667 shares of common stock per share of Series C Preferred Stock).
(5) Based on 4,000 shares of Series D Preferred Stock issued and outstanding as of April 10, 2023. Holders of Series D Preferred Stock are entitled to 667 votes per share.
(6) Includes 142,672 shares of common stock issuable upon the exercise of options and 500,100 shares of common stock issuable upon the exercise of 300 shares of Series C Preferred Stock. Does not include 42,343 shares of common stock held by adult members of Mr. Alfonsi’s family.
(7) Includes 139,361 shares of common stock issuable upon the exercise of options and 500,100 shares of common stock issuable upon the exercise of 300 shares of Series C Preferred Stock.
(8) Includes 667 shares of common stock issuable upon the exercise of options.
(9)
Includes 1,500 shares of common stock issuable upon the exercise of options.
(10) Includes 667 shares of common stock issuable upon the exercise of options.
(11) Includes 139,361 shares of common stock issuable upon the exercise of options and 500,100 shares of common stock issuable upon exercise of 300 shares of Series C Preferred Stock.
(12)
Includes shares beneficially owned by the shareholder’s affiliates, Arena Investors, LP and Arena Special Opportunities Partners I, LP, and 542,391 shares issuable upon conversion of convertible securities and exercise of warrants that contain a 9.99% beneficial ownership limitation. The address of this shareholder is 405 Lexington Avenue, 59th Floor, New York, New York 10174.
(13) Includes 492,976 shares of common stock issuable upon conversion of convertible notes and exercise of warrants that contain a 9.99% beneficial ownership limitation. The address of this shareholder is 2800 Niagara Lane North, Plymouth Minnesota 55447.
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 2022 and 2021, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
● any of our directors or officers;
● any 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. As of December 31, 2022, the Company had accounts payable due to LIA of $5,000. For the twelve months ended December 31, 2022, the Company had expenses to LIA of $17,100.
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.
At December 31, 2022, the Company has amounts due to a director of the Company of approximately $295,245 which are expected to be repaid in the next twelve months.
Item 14. Principal Accounting Fees and Services
The following table sets forth fees billed to us by BF Borgers CPA PC, our independent registered public accounting firm during the fiscal years ended December 31, 2022 and December 31, 2021 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, 2022 December 31, 2021
Audit Fees $ 197,300 $ 103,312
Audited Related Fees $ 0 $ 0
Tax Fees $ 0 $ 0
All Other Fees $ 0 $ 0
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)
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)
10.1
Employment Agreement with Marco Alfonsi dated December 29, 2020(10)
10.2
Employment Agreement with Stanley L. Teeple dated December 29, 2020(10)
10.3
Employment Agreement with Pasquale Ferro dated December 29, 2020(10)
10.4
Employment Agreement with Phil Scala dated December 29, 2020(10)
10.5
Commission Agreement with Andrew Holtmeyer(10)
10.6
Employment Agreement with Bradley Lebsock(10)
10.7
Memorandum of Understanding with Sam International and ZetrOZ Systems LLC(3)
10.8
Can B̅ Corp. 2020 Incentive Stock Option Plan(8)
10.9
Arena Securities Purchase Agreement(10)
10.10
ASOF Original Issue Discount Senior Secured Convertible Promissory Note(10)
10.11
ASOF Warrant to Purchase Common Stock(10)
10.12
ASOP Original Issue Discount Senior Secured Convertible Promissory Note(10)
10.14
ASOP Warrant to Purchase Common Stock(10)
10.15
Arena Security Agreement(10)
10.16
Arena Intellectual Property Security Agreement(10)
10.17
Arena Registration Rights Agreement(10)
10.18
Arena Holding Escrow Agreement(10)
10.19
Arena Guaranty Agreement from Company Subsidiaries(10)
10.20
Amendment to 2020 ASOF Promissory Note(11)
10.21
Amendment to 2020 ASOP Promissory Note(11)
10.22
2021 Arena Securities Purchase Agreement(11)
10.23
2021 ASOF Original Issue Discount Senior Secured Convertible Promissory Note(11)
10.24
2021 ASOF Warrant to Purchase Common Stock(11)
10.25
2021 ASOP Original Issue Discount Senior Secured Convertible Promissory Note(11)
10.26
2021 ASOP Warrant to Purchase Common Stock(11)
10.27
2021 Arena Registration Rights Agreement(11)
10.28
2021 Addendum to Arena Security Agreement(11)
10.29
2021 Addendum to Arena Intellectual Property Security Agreement(11)
10.30
2021 Addendum to Arena Guaranty Agreement from Company Subsidiaries(11)
10.31
Asset Acquisition Agreement with Imbibe(10)
10.32
Equipment Acquisition Agreement with TWS(12)
10.33
Promissory Note to TWS(12)
10.34
Asset Purchase Agreement with MCB(12)
10.35
Commercial Lease with Makers Developments LLC(13)
10.36
Single-Tenant NNN Lease Agreement with CS2 Real Estate Holdings, LLC(13)
10.37
Commercial Lease with Red Road Business Park(13)
10.38
Asset Acquisition Agreement with various Sellers (Botanical Biotech)(10)
10.39
PrimeX Distribution Agreement
10.40
American Development Partners development agreement
10.41
Mast Hill Securities Purchase and Related Agreements(14)
10.42
Blue Lake Partners Securities Purchase and Related Agreements(14)
10.43
Fourth Man Securities Purchase and Related Agreements(16)
10.44
Extension and Amendment to Arena Transactional Documents(16)
10.45
Amended Placement Agent Agreement(18)
10.46
Alumni Capital Securities Purchase and Related Documents(19)
10.47
Arena Exchange Agreement(20)
10.48
Agreement with Forever Bradst(21)
10.49
Promissory Note Modification Agreement with TWS Pharma LLC
10.50
Walleye Securities Purchase Agreement
10.51
Walleye Promissory Note
10.52
Walleye Revenue Pledge and Security Agreement
10.53
Walleye Common Stock Purchase Warrant
10.54
Amendment to Walleye Common Stock Purchase Agreement
10.55
Walleye Registration Rights Agreement
10.56
Intercreditor Agreement among Can B Corp., Walleye and Arena
10.57
Arena Forbearance Agreement
10.58
Amendment No. 2 to Blue Lake Partners Promissory Note and Amendment to Securities Purchase Agreement, Consent and Waiver Agreement
10.59
Amendment No. 2 to Mast Hill Fund Promissory Note, Amendment to Securities Purchase Agreement, Consent and Waiver Agreement
10.60
Amendment No. 2 to Fourth Man Promissory Note, Amendment to Securities Purchase Agreement, Consent and Waiver Agreement
14.1
Code of Ethics(1)
21.1
List of Subsidiaries(10)
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
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
Cover Page Interactive Data File (embedded within the Inline XBRL document)
(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.
(10) Filed with the Annual Report on Form 10-K filed with the SEC on April 15, 2022 and incorporated herein by reference.
(11) Filed with the Quarterly Report on Form 10-Q filed with the SEC on May 21, 2021 and incorporated herein by reference.
(12) Filed with the Current Report on Form 8-K filed with the SEC on August 17, 2021 and incorporated herein by reference.
(13) Filed with the Current Report on Form 8-K filed with the SEC on September 1, 2021 and incorporated herein by reference.
(14) Filed with the Current Report on Form 8-K filed with the SEC on March 31, 2022 and incorporated herein by reference.
(15) Filed with the Form 10-K filed with the SEC on April 15, 2022 and incorporated herein by reference.
(16) Filed with the Current Report on Form 8-K filed with the SEC on April 29, 2022 and incorporated herein by reference.
(17) Filed with Form S-1/A filed with the SEC on February 14, 2022 and incorporated herein by reference.
(18) Filed with Form S-1/A filed with the SEC on May 25, 2022 and incorporated herein by reference.
(19) Filed with the Current Report on Form 8-K filed with the SEC on June 15, 2022 and incorporated herein by reference.
(20) Filed with Form S-1/A filed with the SEC on May 25, 2022 and incorporated herein by reference.
(21) Filed with the Current Report on Form 8-K filed with the SEC on July 25, 2022 and incorporated herein by reference.
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 17, 2023 By: /s/ Marco Alfonsi
Name: Marco Alfonsi
Title: Chief Executive Officer
(Principal Executive Officer and Principal Accounting Officer)
Date: April 17, 2023 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.
Signature
Title
Date
/s/ Marco Alfonsi
Chief Executive Officer, Director and Chairman
April 17, 2023
Marco Alfonsi
(Principal Executive Officer)
/s/ Stanley L. Teeple
Secretary, CFO and Director
April 17, 2023
Stanley L. Teeple
(Principal Financial and Accounting Officer)
/s/ Frederick Alger Boyer Jr.
Independent Director
April 17, 2023
Frederick Alger Boyer Jr.
/s/ Ron Silver
Independent Director
April 17, 2023
Ron Silver
/s/ James Murphy
Independent Director
April 17, 2023
James Murphy
Can B Corp. and Subsidiaries
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements.
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Can B Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Can B Corp. as of December 31, 2022 and 2021, the related statements of operations, stockholders' equity (deficit), and cash flows for the years then ended, 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, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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 audit. 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 audit 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 Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit 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 audit 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 audit provides a reasonable basis for our opinion.
Critical Audit Matter
Critical audit matters are 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 disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
We determined that there are no critical audit matters.
/S/ BF Borgers CPA PC (PCAOB ID 5041)
We have served as the Company’s auditor since 2021
Lakewood, CO
April 17, 2023
Can B̅ Corp. and Subsidiaries
Consolidated Balance Sheets
December 31, December 31,
Assets
Current assets:
Cash and cash equivalents $ 73,194 $ 449,001
Accounts receivable, less allowance for doubtful accounts of $985,028 and $547,241 at December 31, 2022 and 2021, respectively 6,586,210
3,646,677
Inventory 2,024,053 2,553,438
Prepaid expenses and other current assets 21,024 4,523
Total current assets 8,704,481 6,653,639
Other assets:
Deposits 165,787 165,787
Intangible assets, net 107,144 369,015
Property and equipment, net 5,432,357
7,052,926
Right of use assets, net 1,136,883 2,220,134
Other noncurrent assets 13,139 13,139
Total other assets 6,855,310 9,821,001
Total assets $ 15,559,791
$ 16,474,640
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 3,140,408 $ 1,163,284
Accrued expenses 181,700 2,407,528
Due to related party 295,243 218,273
Notes and loans payable, net 7,951,196 4,865,749
Warrant liabilities 203,043 -
Operating lease liability - current 652,172 808,223
Total current liabilities 12,423,762 9,463,057
Long-term liabilities:
Operating lease liability - noncurrent 438,104 1,392,068
Total long-term liabilities 438,104 1,392,068
Total liabilities $ 12,861,866 $ 10,855,125
Commitments and contingencies (Note 14) - -
Stockholders’ equity:
Preferred stock, authorized 5,000,000 shares:
Series A Preferred stock, no par value: 20 shares authorized, 5 shares and 20 shares issued and outstanding at December 31, 2022 and 2021, respectively 5,320,000 28,440,000
Series B Preferred stock, $0.001 par value: 500,000 shares authorized, 0 issued and outstanding - -
Series C Preferred stock, $0.001 par value: 2,000 shares authorized, 1,100 and 23 issued and outstanding at December 31, 2022 and 2021, respectfully 2,900,039 207,000
Series D Preferred stock, $0.001 par value: 4,000 shares authorized, 4,000 and 1,950 issued and outstanding at December 31, 2022 and 2021, respectfully
Preferred stock, value
Common stock, no par value; 1,500,000,000 shares authorized, 4,422,584 and 2,834,755 issued and outstanding at December 31, 2022 and 2021, respectively 79,614,986 49,676,847
Common stock issuable, no par value; 36,248 and 0 shares at December 31, 2022 and 2021, respectively 119,586 -
Treasury stock (572,678 ) (572,678 )
Additional paid-in capital 8,006,822 5,635,003
Accumulated deficit (92,690,834 ) (77,766,659 )
Total stockholders’ equity 2,697,925 5,619,515
Total liabilities and stockholders’ equity $ 15,559,791 $ 16,474,640
See notes to consolidated financial statements
Can B̅ Corp. and Subsidiaries
Consolidated Statement of Operations
Year Ended
December 31,
Revenues
Product sales $ 5,524,036 $ 4,156,281
Service revenue 1,161,483 447,548
Total revenues 6,685,519 4,603,829
Cost of revenues 4,071,144 1,611,730
Gross profit 2,614,375 2,992,099
Operating Expenses
Compensation 7,199,215
4,997,155
Consulting and professional fees 5,416,006
3,968,744
Rent and utilities 926,696
675,310
Other operating expenses 3,240,605
3,616,897
Total operating expenses 16,782,522
13,258,106
Loss from operations (14,168,147 ) (10,266,007 )
Other (expense) income:
Other income - 2,991
Change in fair value of warrant liability 154,010 -
Gain on debt extinguishment - 196,889
Interest expense (902,130 ) (2,102,193 )
Other expense (7,115 ) -
Other expense (755,235 ) (1,902,313 )
Loss before provision for income taxes (14,923,382 ) (12,168,320 )
Provision for income taxes 1,075
Net loss $ (14,924,175 ) $ (12,169,395 )
Loss per share - basic and diluted $ (4.18 ) $ (9.06 )
Weighted average shares outstanding - basic and diluted 3,570,087 1,343,219
See notes to consolidated financial statements
Can B̅ Corp. and Subsidiaries
Consolidated Statements of Stockholders’ Equity
Years ended December 31, 2022 and 2021
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Issuable Shares Amount Capital Deficit Total
Series A Series B Series C Series D
Common
Additional
Preferred Stock Preferred Stock Preferred Stock Preferred Stock Common Stock Stock Treasury Stock Paid-in Accumulated
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Issuable Shares Amount Capital Deficit Total
Balance, December 31, 2020 $ 28,440,000 - $ - $ 5,607,000 - $ - 369,639 $ 30,874,270 $ - 36,248 $ (572,678 ) $ 2,724,689 $ (65,597,264 ) $ 1,476,017
Issuance of preferred stock - - - - - - 1,950 - - - - - - -
Conversion of Series C Preferred stock to common stock - - - - (600 ) (5,400,000 ) - - 1,000,000 5,400,000 - - - - - -
Sale of common stock - - - - - - - - 814,336 6,555,453 - - - - - 6,555,453
Issuance of common stock in lieu of note repayments - - - - - - - - 77,017 537,748 - - - - - 537,748
Issuance of common stock for services rendered - - - - - - - - 157,115 2,657,048 - - - - - 2,657,048
Issuance of common stock for asset acquisitions - - - - - - - - 381,791 3,453,014 - - - - - 3,453,014
Issuance of common stock warrants and commitment shares in connection with convertible promissory note - - - - - - - - - - - - - 515,276 - 515,276
Issuance of common stock in lieu of interest payments - - - - - - - - 34,857 199,314 - - - - - 199,314
Stock-based compensation - - - - - - - - - - - - - 2,395,038 - 2,395,038
Net loss - - - - - - - - - - - - - - (12,169,395 ) (12,169,395 )
Balance, December 31, 2021 $ 28,440,000 $ - $ 207,000 1,950 $ 2 2,834,755 $ 49,676,847 $ - 36,248 $ (572,678 ) $ 5,635,003 $ (77,766,659 ) $ 5,619,515
Balance $ 28,440,000 $ - $ 207,000 1,950 $ 2 2,834,755 $ 49,676,847 $ - 36,248 $ (572,678 ) $ 5,635,003 $ (77,766,659 ) $ 5,619,515
Conversion of Series A Preferred stock to Common stock (15 ) (23,120,000 ) - - - - - - 33,345 23,120,000 - - - - - -
Issuance of preferred stock - - - - - - 2,050 - - - - - - -
Sale of common stock - - - - - - - - 51,282 500,000 - - - - - 500,000
Issuance of common stock in lieu of note interest repayments - - - - - - - - 10,150 73,078 - - - - - 73,078
Issuance of common stock for services rendered - - - - - - - - 1,270,616 4,370,256 119,586 - - - - 4,489,842
Issuance of common stock for equipment - - - - - - - - 13,704 98,666 - - - - - 98,666
Issuance of common stock for asset acquisition - - - - - - - - 190,505 1,767,498 - - - - - 1,767,498
Issuance of common stock resulting from the exercise of warrants - - - - - - - - 18,227 8,641 - - - - - 8,641
Stock-based compensation - - - - 1,077 2,693,039 - - - - - - - 2,371,819 - 5,064,858
Net loss - - - - - - - - - - - - - - (14,924,175 ) (14,924,175 )
Balance, December 31, 2022 $ 5,320,000 $ - 1,100 $ 2,900,039 4,000 $ 4 4,422,584 $ 79,614,986 $ 119,586 36,248 $ (572,678 ) $ 8,006,822 $ (92,690,834 ) $ 2,697,925
Balance $ 5,320,000 $ - 1,100 $ 2,900,039 4,000 $ 4 4,422,584 $ 79,614,986 $ 119,586 36,248 $ (572,678 ) $ 8,006,822 $ (92,690,834 ) $ 2,697,925
See notes to consolidated financial statements
Can B̅ Corp. and Subsidiaries
Consolidated Statements of Cash Flows
Year Ended
December 31,
Operating activities:
Net loss $ (14,924,175 ) $ (12,169,395 )
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation 5,064,860 2,395,038
Depreciation 1,408,061 493,656
Amortization of intangible assets 26,906 48,689
Amortization of original-issue-discounts 444,920 1,640,242
Bad debt expense 751,025
61,393
Impairment of intangible assets 252,462 -
Loss on sale of property and equipment 309,000 -
Change in fair value of warrant liability (154,010 ) -
Gain on debt extinguishment - (196,889 )
Stock-based interest expense 73,078 199,314
Stock-based consulting expense 4,489,842 2,657,048
Changes in operating assets and liabilities:
Accounts receivable (3,690,558 ) (1,705,006 )
Inventory 529,385 (2,208,484 )
Prepaid expenses (14,327 ) 8,476
Deposits - (144,500 )
Other noncurrent assets - 7,176
Operating lease right-of-use asset (26,764 ) (20,667 )
Accounts payable 1,988,699 1,009,644
Accrued expenses (475,828 ) 457,033
Net cash used in operating activities (3,947,424 ) (7,467,232 )
Investing activities:
Purchase of property and equipment - (538,763 )
Purchase of intangible assets - (177,530 )
Net cash used in investing activities - (716,293 )
Financing activities:
Net proceeds received from notes and loans payable 3,449,853 1,625,000
Proceeds from issuance of Series D Preferred Stock -
Proceeds from sale of common stock 500,000 6,555,453
Repayments of notes and loans payable (377,500 ) (224,000 )
Deferred financing costs (77,706 ) -
Amounts received from related parties, net 76,970 218,273
Net cash provided by financing activities 3,571,617 8,174,728
Decrease in cash and cash equivalents (375,807 ) (8,797 )
Cash and cash equivalents, beginning of period 449,001 457,798
Cash and cash equivalents, end of period $ 73,194 $ 449,001
Supplemental Cash Flow Information:
Income taxes paid $ 1,075 $ 1,075
Interest paid $ 83,147 $ 4,000
Non-cash Investing and Financing Activities:
Issuance of common stock in lieu of repayment of notes payable $ - $ 537,748
Issuance of common stock in asset acquisitions $ 1,767,498 $ 3,453,014
Assets acquired through common stock payable
$ 1,750,000
Assets acquired through issuance of promissory note
$ 1,250,000
Debt discount associated with warrant liability $ 357,049 $ -
Issuance of common stock resulting from the exercise of warrants $ 8,641 $ -
Issuance of common stock warrants and commitment shares in connection with convertible promissory note $ - $ 515,276
See notes to consolidated financial statements
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
Note 1 - Organization and Description of Business
Can B̅ Corp. was originally incorporated as WrapMail, Inc. (“WRAP”) in Florida on October 11, 2005. On May 15, 2017, WRAP changed its name to Canbiola, Inc. On January 16, 2020 Canbiola, Inc. changed its name to Can B̅ Corp. (the “Company”, “we”, “us”, “our”, “CANB”, “Can B̅” or “Registrant”).
The Company acquired 100% of the membership interests in Pure Health Products, LLC, a New York limited liability company (“PHP” or “Pure Health Products”) effective December 28, 2018. The Company runs it manufacturing operations through PHP and holds and sells several of its brands through PHP as well. The Company’s durable equipment products, such as sam® units with and without CBD infused pads, are marketed and sold through its wholly-owned subsidiaries, Duramed Inc. (incorporated on November 29, 2018) and Duramed MI LLC (fka DuramedNJ, LLC) (incorporated on May 29, 2019) (collectively, “Duramed”). Duramed began operating on or about February 1, 2019. Most of the Company’s consumer products include hemp derived cannabidiol (“CBD”); however, the Company has just recently begun extracting cannabinol (“CBN”) and cannabigerol (“CBG”) for wholesale to third-parties looking to incorporate such compounds into their products through its wholly owned subsidiaries, Botanical Biotech, LLC (incorporated March 10, 2021), TN Botanicals, LLC and CO Botanicals LLC (both incorporated in August 2021). These three subsidiaries have also begun synthesizing Delta-8 and Delta-10 from hemp. Delta-8 and Delta-10 can produce similar, though less potent, effects as delta-9 (commonly referred to as THC); however, the legality of hemp derived Delta-8 and Delta-10 are in a gray area and considered a potential loophole at this point due to the 2018 hemp bill. The Company’s other subsidiaries did not have operations during the year ended December 31, 2022.
The Company is in the business of promoting health and wellness through its development, manufacture and sale of products containing cannabinoids derived from hemp biomass and the licensing of durable medical devises. Can B̅’s products include oils, creams, moisturizers, isolate, gel caps, spa products, and concentrates and lifestyle products. Can B̅ develops its own line of proprietary products as well seeks synergistic value through acquisitions in the hemp industry. Can B̅ aims to be the premier provider of the highest quality hemp derived products on the market through sourcing the best raw material and offering a variety of products we believe will improve people’s lives in a variety of areas.
Note 2 - Going Concern
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, 2022, the Company had cash and cash equivalents of $73,194 and negative working capital of $3,281,494. For the years ended December 31, 2022 and 2021, the Company had incurred losses of $14,924,175 and $12,169,395, respectively. These factors raise substantial doubt as to the Company’s ability to continue as a going concern.
After careful consideration and analysis of the economics, supply chain, processing logistics, and management of manpower the Company decided to consolidate operations in its CO operations in Mead and Ft. Morgan. The company remains fully vertically integrated in legal hemp operations and sales with processing of hemp biomass and crude hemp oil into distillate, isolate, and ultimately into isomers. The Company moved all of its help processing equipment previously located in its Miami, FL operation under Botanical Biotech, LLC to its main hemp processing center in CO. The Company also terminated its lease with the Miami landlord. The Company moved all of the hemp processing equipment previously located in its McMinnville, TN operation under TN Botanicals, LLC to its main hemp processing center in CO.
As a result of these equipment moves, the Colorado operation will, once fully operational, improve operating efficiencies, increase management oversight, and be able to increase throughput by double verse the prior three independent operating facilities. Senior management of the Company will be on-site in CO during this consolidation period to ensure maximum efficiencies and continue operations during this rebuilding period. Immediate impact of the consolidation is elimination of duplicate lines, better coordination of customer orders, reduction in transportation charges, and manpower efficiencies with larger batch sizes and reduced personnel.
The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
Note 3 - Basis of Presentation and Summary of Significant Accounting Policies
Basis of presentation
The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
On February 8, 2022, the Company effected a 1-for-15 reverse stock split of the Company’s common stock, or the 2021 Reverse Stock Split. As a result of the 2021 Reverse Stock Split, every 15 shares of the Company’s pre-2021 Reverse Stock Split common stock were combined and reclassified into one share of the Company’s common stock.
Principles of Consolidation
The consolidated financial statements contained herein include the accounts of Can B Corp. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated.
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
Covid-19
Commencing in December 2019, the novel strain of coronavirus (“COVID-19”) began spreading throughout the world, including the first outbreak in the US in February 2020. On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. COVID-19 has disrupted and continues to significantly disrupt local, regional, and global economies and businesses. The
COVID-19 outbreak is disrupting supply chains and affecting production and sales across a range of industries. The extent of the impact of COVID-19 on the Company’s operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on the Company’s customers, employees and vendors, all of which are uncertain and cannot be predicted. At this point, the extent to which COVID-19 may impact the Company’s financial condition and/or results of operations is uncertain.
In response to COVID-19, the Company put into place certain restrictions, requirements and guidelines to protect the health of its employees and clients, including requiring that certain conditions be met before employees return to the Company’s offices. Also, to protect the health and safety of its employees, the Company’s daily execution has evolved into a largely virtual model. The Company plans to continue to monitor the current environment and may take further actions that may be required by federal, state or local authorities or that it determines to be in the interests of its employees, customers, and partners.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales (or revenues) and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that estimates made as of the date of the financial statements could change in the near term due to one or more future events. Accordingly, the actual results could differ significantly from those estimates. Significant accounting estimates reflected in the Company’s consolidated financial statements include, but are not limited to, revenue recognition, allowance for doubtful accounts, recognition and measurement of income tax assets, valuation of share-based compensation, and the valuation of net assets acquired.
Asset Acquisitions
When applicable, the Company accounts for the acquisition of a business in accordance with the accounting standards codification (“ASC”) guidance for business combinations, whereby the total purchase consideration transferred is allocated to the assets acquired and liabilities assumed, including amounts attributable to non-controlling interests, when applicable, based on their respective estimated fair values as of the date of acquisition. Goodwill represents the excess of purchase consideration transferred over the estimated fair value of the identifiable net assets acquired in a business combination.
Assigning estimated fair values to the net assets acquired requires the use of significant estimates, judgments, inputs, and assumptions regarding the fair value of the assets acquired and liabilities assumed. Estimated fair values of assets acquired and liabilities assumed are generally based on available historical information, independent valuations or appraisals, future expectations, and assumptions determined to be reasonable but are inherently uncertain with respect to future events, including economic conditions, competition, the useful life of the acquired assets, and other factors. The company may refine the estimated fair values of assets acquired and liabilities assumed, if necessary, over a period not to exceed one year from the date of acquisition by taking into consideration new information that, if known at the date of acquisition, would have affected the estimated fair values ascribed to the assets acquired and liabilities assumed. The judgments made in determining the estimated fair value assigned to assets acquired and liabilities assumed, as well as the estimated useful life and depreciation or amortization method of each asset, can materially impact the net earnings of the periods subsequent to the acquisition through depreciation and amortization, and in certain instances through impairment charges, if the asset becomes impaired in the future. During the measurement period, any purchase price allocation changes that impact the carrying value of goodwill affects any measurement of goodwill impairment taken during the measurement period, if applicable. If necessary, purchase price allocation revisions that occur outside of the measurement period are recorded within cost of sales or selling, general and administrative expense within the Consolidated Statements of Earnings depending on the nature of the adjustment.
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
When an acquisition does not meet the definition of a business combination because either: (i) substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset, or group of similar identified assets, or (ii) the acquired entity does not have an input and a substantive process that together significantly contribute to the ability to create outputs, the company accounts for the acquisition as an asset acquisition. In an asset acquisition, goodwill is not recognized, but rather, any excess purchase consideration over the fair value of the net assets acquired is allocated on a relative fair value basis to the identifiable net assets as of the acquisition date and any direct acquisition-related transaction costs are capitalized as part of the purchase consideration.
Revenue Recognition
The Company recognizes revenue in accordance with the Financial Accounting Standards Board (“FASB”) 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.
Service revenue consists of hemp processing services provided by the Company to other hemp related entities. Services revenues are recorded when services are rendered.
Freight billed to customers is included within sales on the consolidated statement of operations. The related freight charged to the Company is included within cost of revenues. Sales tax collected from customers is remitted to governmental authorities on a net basis.
Cost of Revenues
The cost of revenues is the total cost incurred to obtain a sale, the cost of the goods sold, and costs related to the processing of hem for outside parties. The Company’s policy is to recognize it in the same manner as, and in conjunction with, revenue recognition. Cost of revenues primarily consist of the costs directly attributable to revenue recognized and includes expenses related to the production, packaging and labeling of our CBD products and durable medical goods.
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
Cash, cash equivalents and restricted cash
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
Accounts receivables, net
Trade receivables arise from granting credit to customers in the normal course of business, are unsecured and are presented net of an allowance for doubtful accounts. The allowance is based on a number of factors, including the length of time the receivable is past due, the Company’s previous loss history, the customer’s current ability to pay, and the general condition of the economy and industry as a whole. Depending on the customer, payment is due between 30 and 60 days after the customer receives an invoice. Certain receivables related to durable medical devices can have collection periods of 18 to 24 months due to the inherent nature of no-fault insurance claims. The Company has taken this into consideration when assessing receivables related to durable medical devices. Other accounts that are more than 45 days past due are individually analyzed for collectability. When all collection efforts have been exhausted, the accounts are written off. Historically, the Company has not suffered significant losses with respect to its trade receivables.
Inventories
Inventories, which consist of purchased components for resale, are valued at the lower of average cost (which approximates the first-in, first-out method) and net realizable value. The Company reduces the carrying value of inventory for those items that are potentially excess, obsolete or slow-moving based on changes in customer demand, technology developments or other economic factors.
Long-lived assets
Property and equipment are recorded at cost and presented net of accumulated depreciation. Major additions and betterments are capitalized while maintenance and repairs, which do not improve or extend the life of the respective assets, are expensed. Property and equipment are depreciated on the straight-line basis over their estimated useful lives.
Definite-lived intangible assets arising from asset acquisitions include intellectual property, patents, trademarks, and certain hemp processing registrations. Definite-lived intangible assets are amortized over the estimated period during which the asset is expected to contribute directly or indirectly to future cash flows.
The Company reviews its long-lived assets for impairment whenever events or circumstances exist that indicate the carrying amount of an asset or asset group may not be recoverable. The recoverability of long-lived assets is measured by a comparison of the carrying amount of the asset or asset group to the future undiscounted cash flows expected to
be generated by that asset group. If the asset or asset group is considered to be impaired, an impairment loss would be recorded to adjust the carrying amounts to the estimated fair value. No such impairment was recorded during the periods covered by this report.
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
Leases
The Company determines if an arrangement is or contains a lease at contract inception. In arrangements that involve an identified asset, there is also judgment in evaluating if we have the right to direct the use of that asset.
The Company does not have any finance leases. Operating leases are recorded in our consolidated balance sheets. Right-of-use (“ROU”) assets and lease liabilities are measured at the lease commencement date based on the present value of the remaining lease payments over the lease term, determined using the discount rate for the lease at the commencement date. Because the rate implicit in our leases is not readily determinable, we use our incremental borrowing rate as the discount rate, which approximates the interest rate at which we could borrow on a collateralized basis with similar terms and payments and in similar economic environments. As of December 31, 2022, our leases had remaining lease terms of up to 3 years, some of which included options to extend the lease for up to 14 years and options to terminate the lease within 1 year. Optional periods to extend the lease, including by not exercising a termination option, are included in the lease term when it is reasonably certain that the option will be exercised. Operating lease expense is recognized on a straight-line basis over the lease term. We account for lease and non-lease components, principally common area maintenance for our facilities leases, as a single lease component.
In accordance with accounting requirements, leases with an initial term of 12 months or less are recorded on the balance sheet, with lease expense for these leases recognized on a straight-line basis over the lease term.
Income taxes
Income taxes are accounted for under the asset and liability method pursuant to ASC Topic 740, Income Taxes (ASC 740), whereby deferred tax assets and liabilities are recognized for the expected future consequences attributable to the differences between the financial statement carrying amounts and the tax basis of assets and liabilities. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period of the change. Further, deferred tax assets are recognized for the expected realization of available net operating loss and tax credit carryforwards. A valuation allowance is recorded on gross deferred tax assets when it is “more likely than not” that such asset will not be realized. When evaluating the realizability of deferred tax assets, all evidence, both positive and negative, is evaluated. Items considered in this analysis include the ability to carry back losses, the reversal of temporary differences, tax planning strategies, and expectations of future earnings. The Company reviews its deferred tax assets on a quarterly basis to determine if a valuation allowance is required based upon these factors. Changes in the Company’s assessment of the need for a valuation allowance could give rise to a change in such allowance, potentially resulting in additional expense or benefit in the period of change.
The Company’s income tax provision or benefit includes U.S. federal, state and local income taxes and is based on pre-tax income or loss. In determining the annual effective income tax rate, the Company analyzed various factors, including its annual earnings and taxing jurisdictions in which the earnings were generated, the impact of state and local income taxes, and its ability to use tax credits and net operating loss carryforwards.
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
Under ASC 740, the amount of tax benefit to be recognized is the amount of benefit that is “more likely than not” to be sustained upon examination. The Company analyzes its tax filing positions in all of the U.S. federal, state, local,
and foreign tax jurisdictions where it is required to file income tax returns, as well as for all open tax years in these jurisdictions. If, based on this analysis, the Company determines that uncertainties in tax positions exist, a liability is established in the consolidated financial statements. The Company recognizes accrued interest and penalties related to unrecognized tax positions in the provision for income taxes.
The Company’s income tax returns are subject to examination by federal and state authorities in accordance with prescribed statutes.
Stock-based compensation
The Company accounts for stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation (“ASC 718”), by recognizing compensation expense based upon the estimated fair value of the awards on the date of grant. The Company determines the estimated grant-date fair value of restricted shares using the closing price on the date of the grant and the grant-date fair value of stock options using the Black-Scholes-Merton model. In order to calculate the fair value of the options, certain assumptions are made regarding the components of the model, including risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to the valuation. The Company recognizes compensation costs ratably over the period of service using the straight-line method.
Due to the limited trading history of the Company’s common stock, estimated volatility was based on a peer group of public companies and took into consideration the increased short-term volatility in historical data due to COVID-19.
Net loss per common share
Pursuant to ASC Topic 260, Earnings Per Share, basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting periods, including vested but undelivered stock options.
Diluted net loss per share is based on the weighted average number of shares outstanding during the periods plus the effect, if any, of the potential exercise or conversion of securities, such as warrants and restricted stock units that would cause the issuance of additional shares of common stock. In computing the basic and diluted net loss per share applicable to common stockholders during the periods listed in the consolidated statements of operations, the weighted average number of shares are the same for both basic and diluted net loss per share due to the fact that when a net loss exists, dilutive shares are not included in the calculation as the impact is anti-dilutive. An anti-dilutive impact is an increase in earnings per share or a decrease in net loss per share that would result from the conversion, exercise, or issuance of certain contingent securities.
Concentration of business and credit risk
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. Cash held by the Company, in financial institutions, may exceed the federally insured limit of $250,000 at certain times. At December 31, 2021, cash balances held with a financial institution exceeded the federally insured limit. There were no cash and cash equivalents which exceeded federally insured limits as of December 31, 2022.
No customer accounted for more than 10% of sales or accounts receivable in each of the periods presented in the accompanying consolidated financial statements.
Fair value of financial instruments
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability.
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
ASC Topic 820, Fair Value Measurements and Disclosures provides a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows:
● Level 1 - inputs are based upon unadjusted quoted prices for identical assets or liabilities traded in active markets.
● Level 2 - inputs are based upon quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
● Level 3 - inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
Assets measured at fair value on a non-recurring basis include goodwill, and tangible and intangible assets. Such assets are reviewed annually for impairment indicators. If a triggering event has occurred, the assets are re-measured when the estimated fair value of the corresponding asset group is less than the carrying value. The fair value measurements, in such instances, are based on significant unobservable inputs (Level 3).
The carrying amounts of the Company’s financial instruments, which include accounts receivables, accounts payable and accrued expenses and debt at floating interest rates, approximate their fair values, principally due to their short-term nature, maturities or nature of interest rates.
Advertising and vendor considerations
Advertising costs are expensed as incurred.
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation.
Segment reporting
The Company operates as a single operating segment. The Chief Executive Officer, who is the chief operating decision maker, manages the Company as a single profit center in order to promote collaboration, provide comprehensive service offerings across the entire customer base, and provide incentives to employees based on the success of the organization as a whole. Although certain information regarding selected products or services is discussed for purposes of promoting an understanding of the Company’s business, the chief operating decision maker manages the Company and allocates resources at the consolidated level.
Recently Adopted Accounting Pronouncements
The Financial Accounting Standards Board (“FASB”) issued the following accounting pronouncement which became effective for the Company in 2021, and which did not have a material impact on its condensed consolidated financial statements:
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
In May 2021, the FASB issued ASU No. 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU No. 2021-04”), which provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. Under ASU 2021-04, an entity is required to treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option, that remains equity classified, as an exchange of the original instrument for a new instrument. ASU 2021-04 also provides guidance on the measurement of the effect of a modification or exchange and requires entities to recognize the effect of any such modification or exchange on the basis of the substance of the transaction.
ASU No. 2021-04 was effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Entities were required to apply the amendments prospectively to modifications or exchanges that occurred on or after the effective date. ASU No. 2021-04 was effective for the Company on January 1, 2022. The adoption did not materially impact the Company’s financial condition or results as the Company’s treatment of such modifications were already consistent with the guidance in ASU 2021-04.
Recently issued accounting standards
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of changes in equity, statements of operations and statements of cash flows.
Note 4 - Fair Value Measurements
The carrying value and fair value of the Company’s financial instruments are as follows:
SCHEDULE OF CARRYING VALUE AND FAIR VALUE
December 31, 2022 Level 1 Level 2 Level 3 Total
Liabilities
Warrant liabilities $ - $ - $ 203,043 $ 203,043
As of December 31, 2021
Level 1
Level 2
Level 3
Total
Liabilities
Warrant liabilities
$ -
$ -
$ -
$ -
The fair value of the warrants outstanding was estimated using the Black-Scholes model. The application of the Black-Scholes model requires the use of a number of inputs and significant assumptions including volatility. The following reflects the inputs and assumptions used:
SCHEDULE OF FAIR VALUE ASSUMPTIONS
As of December 31,
December 31,
Stock price $ 1.30 N/A
Exercise price $ 6.04 N/A
Remaining term (in years) 0.46 N/A
Volatility 159.00 % N/A
Risk-free rate 3.99 % N/A
Expected dividend yield - % -
The warrant liabilities will be remeasured at each reporting period with changes in fair value recorded in other income (expense), net on the consolidated statements of operations. The change in fair value of the warrant liabilities was as follows:
SCHEDULE OF CHANGE IN FAIR VALUE OF THE WARRANT LIABILITIES
Warrant liabilities
Estimated fair value at December 31, 2021 $ -
Issuance of warrant liabilities 357,053
Change in fair value (154,010 )
Estimated fair value at December 31, 2022 $ 203,043
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
Note 5 - Asset Acquisitions
Botanical Biotech Asset Acquisition
On March 11, 2021, Company entered into an Asset Acquisition Agreement, which was fully executed on March 17, 2021, with multiple sellers (each, a “Seller” and, collectively, the “Sellers”), pursuant to which the Sellers agreed to sell certain assets to Company, and to transfer such assets to Botanical Biotech, LLC, a newly-formed, wholly-owned subsidiary of the Company (“Transferee” or “BB”). The assets purchased (“BB Assets”) include certain materials and manufacturing equipment, marketing or promotional designs, brochures, advertisements, concepts, literature, books, media rights, rights against any other person or entity in respect of any of the foregoing and all other promotional properties, in each case primarily used, developed or acquired by the Sellers for use in connection with the ownership and operation of the BB Assets. In exchange for the BB Assets the Company will pay the Seller a maximum of $355,057, payable half in the form of cash or cash equivalent and half in the form of restricted shares of common stock of the Company (the “Shares”) at a price per Share equal to the average closing price of the common stock of the Company during the ten (10) consecutive trading days immediately preceding the closing. The Company has agreed to indemnify the Sellers for certain breaches of covenants, representations and warranties and for claims relating to the BB Assets following closing.
In conjunction with the BB asset acquisition, the Company entered into consulting agreements with two sellers to coordinate the new start-up. All consideration was related to the acquisition of equipment and supplies. No liabilities were acquired.
The Company and BB entered into an employment agreement with Lebsock dated March 11, 2021 (the “Lebsock Agreement”) pursuant to which Lebsock will serve as the President of BB for a term of three (3) years. The term of the Lebsock Agreement will automatically renew for an additional 3-year term unless other terminated by either party.
Lebsock will receive a base salary equal to $120,000 per year, subject to an annual increase of not less than 3% on each anniversary of the Lebsock Agreement during the term. The Company also agreed to issue a stock bonus to Lebsock in accordance with the Company’s Incentive Stock Option Plan (“ISOP”) in an amount of $100,000, and to pay Lebsock a defined percentage of the EBITDA for BB each calendar quarter (“Profit Split”) according to a mutually agreed performance target (“Target”). EBITDA is defined as the earnings before interest, depreciation, taxes, depreciation, and amortization and will be paid as reported by the Company’s accountant and as reviewed by the Company’s auditor. It will be accumulative on a quarter-to-quarter basis, meaning if one quarter has a negative EBITDA, it would be offset against the following quarter’s positive EBITDA distribution. Lebsock has the option to accept the Profit Split in either direct cash payment or Shares, or any combination, at Lebsock’s option. Shares would be valued at the prior 10-day closing price and issued under SEC Rule 144 restriction.
Effective March 16, 2021, BB entered into a Consulting Agreement (the “Schlosser Agreement”) with Schlosser pursuant to which Schlosser has agreed to provide consulting services to BB for a period of 3 months in exchange for compensation equal to $10,000 per month. Schlosser will also be entitled to reimbursement for certain work-related expenses. Pursuant to the Schlosser Agreement, Schlosser also agreed to assign to BB all inventions developed by Schlosser in connection with his services to BB. The Schlosser Agreement also contains certain non-compete and confidentiality provisions. Per the Acquisition Agreement, Schlosser was to receive an employment agreement similar to the Lebsock Agreement; however, BB and Schlosser elected to enter into the Schlosser Agreement instead.
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
CO Botanicals Asset Acquisition
On August 12, 2021, The Company and CO Botanicals LLC (“COB”), a newly-formed, wholly-owned subsidiary of the Company entered into an Equipment Acquisition Agreement (the “TWS Agreement”) with TWS Pharma, LLC,
(“TWS Pharma”) and L7 TWS Pharma, LLC (“L7 TWS” and, collectively with TWS Pharma, “TWS”). Pursuant to the TWS Agreement, COB agreed to purchase certain equipment and other assets from TWS (the “TWS Assets”) for a total purchase price equal to $5,316,774, with $1,250,000 payable via a 12-month promissory note issued by the Company to TWS Pharma with 6% simple interest and monthly payments of $100,000 due per month (the “TWS Note”), and $4,066,774 payable in shares of the Company’s common stock valued at $0.62 per share (the “TWS Shares”); provided, however, that $1,750,000 of the TWS Shares will be withheld in escrow for a period of ninety (90) days from the closing date, which will be deducted from the purchase price should the Company discover any defects or misrepresentations. The first $500,000 of payments of the TWS Note will be secured by 1,000,000 shares of the Company’s common stock to be held in escrow. During the year ending December 31, 2022, the $1,750,000 of shares held in escrow were released and issued.
TN Botanicals Asset Acquisition
On August 13, 2021 the Company and TN Botanicals LLC (“TNB”), a newly-formed, wholly-owned subsidiary of the Company, entered into an Asset Purchase Agreement (the “MCB Agreement”) with Music City Botanicals, LLC, pursuant to which TNB agreed to purchase certain equipment, other assets, and intellectual property from MCB (the “MCB Assets”) for a total purchase price equal to $1,394,324, with $498,259 payable in cash and $896,065 payable in shares of the Company’s common stock valued at $0.62 per share (the “MCB Shares”).
Imbibe Health Solutions Asset Acquisition
On February 22, 2021, Can B̅ Corp. (the “Company”) entered into a material definitive agreement (“Acquisition Agreement”) with Imbibe Health Solutions, LLC, a Delaware limited liability company (“Imbibe”), pursuant to which Imbibe agreed to sell certain of its assets to the Company. The assets to be purchased (“Assets”) include the intellectual property rights and other intangible assets relating to its branded products containing CBD. In exchange for the Assets, the Company has agreed to pay Imbibe $102,501 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. The transaction finalized and $102,502 worth of shares were issued on November 7, 2021 and the remaining balance of $17,498 of shares were issued during the year ended December 31, 2022.
Note 6 - Inventories
Inventories consist of hemp biomass that is received in bulk. The CBD biomass is initially processed by extraction into winterized crude oil. The winterized crude oil is then processed into distillate and then into CBD isolate. These three processes are continuous as raw materials are converted from biomass to isolate in back-to-back operations so work in process is just a matter of hours in the processing cycle from biomass to CBD isolate. The isolate is then sold at wholesale or further processed into isomers. Inventories consistent of the following:
Schedule of Inventories
December 31, December 31,
Raw materials $ 829,844 $ 818,042
Finished goods 1,194,209 1,735,396
Total $ 2,024,053 $ 2,553,438
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
Note 7 - Property and Equipment
Property and equipment consist of:
Schedule of Property and Equipment
December 31, December 31,
Furniture and fixtures $ 21,724 $ 21,727
Office equipment 12,378 12,378
Manufacturing equipment 6,766,208 7,018,522
Medical equipment 776,396 776,396
Leasehold improvements 26,902 26,902
Total 7,603,608 7,855,922
Accumulated depreciation (2,171,251 ) (802,996 )
Net $ 5,432,357 $ 7,052,926
Depreciation expense related to property and equipment was $1,408,061 and $493,656 for the years ending December 31, 2022 and 2021, respectively.
Note 8 -Intangible Assets
Intangible assets consist of:
Schedule of Intangible Assets
December 31, December 31,
Technology, IP and patents $ 119,998 $ 418,003
Total 119,998 418,003
Accumulated amortization (12,854 ) (48,998 )
Intangible assets, net $ 107,144 $ 369,015
Amortization expense, related to technology, IP, and patents was $26,906 and $48,689 for the years ended December 31, 2022 and 2021, respectively.
Amortization expense for each of the next five years ending and thereafter is estimated to be as follows:
Schedule of Estimated Amortization Expenses
Years ending December 31,
$ 12,000
12,000
12,000
12,000
12,000
Thereafter 47,144
Total $ 107,144
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
Note 9 - Notes and Loans Payable
Convertible Promissory Notes
In December 2020, the Company entered into a convertible promissory note (“ASOP Note I”) with Arena Special Opportunities Partners I, LP (“ASOP”). The principal balance of the note is $2,675,239 and it is to be utilized for working capital purposes. The note matures on January 31, 2022 and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and determined not to be considered a derivative and therefore has been recorded in liabilities as part of the convertible promissory note and not bifurcated. In addition, the ASOP convertible promissory note was issued with 228,419 common stock warrants. The common stock purchase warrants entitle the holder to purchase an aggregate of up to 228,419 shares of the Company’s common stock at an exercise price of $6.75 per share. The common stock purchase warrants issued to ASOP are considered derivatives, but satisfied the criteria for classification as equity instruments, and were bifurcated from the host contract - convertible promissory note and recorded in equity at their relative fair values with a corresponding debt discount recorded to ASOP Note I. The principal balance outstanding at December 31, 2022 was $2,400,997.
In December 2020, the Company entered into a convertible promissory note (“ASOF Note I”) with Arena Special Opportunities Fund, LP (“ASOF”). The principal balance of the note is $102,539 and it is to be utilized for working capital purposes. The note matures on January 31, 2022 and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and determined not to be considered a derivative and therefore has been recorded in liabilities as part of the convertible promissory note and not bifurcated. In addition, the ASOF convertible promissory note was issued with 8,755 common stock warrants. The common stock purchase warrants entitle the holder to purchase an aggregate of up to 8,755 shares of the Company’s common stock at an exercise price of $6.75 per share. The common stock purchase warrants issued to ASOF are considered derivatives, but satisfied the criteria for classification as equity instruments, and were bifurcated from the host contract - convertible promissory note and recorded in equity at their relative fair values with a corresponding debt discount recorded to ASOF Note I. The principal balance outstanding at December 31, 2022 was $87,773.
In May 2021, the Company entered into a convertible promissory note (“ASOP Note II”) with Arena Special Opportunities Partners I, LP. The principal balance of the note is $1,193,135 and it is to be utilized for working capital purposes. The note matures on January 31, 2022 and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and determined not to be considered a derivative and therefore has been recorded in liabilities as part of the convertible promissory note and not bifurcated. In addition, the ASOP convertible promissory note was issued with 101,978 common stock warrants. The common stock purchase warrants entitle the holder to purchase an aggregate of up to 101,978 shares of the Company’s common stock at an exercise price of $6.75 per share. The common stock purchase warrants issued to ASOP are considered derivatives, but satisfied the criteria for classification as equity instruments, and were bifurcated from the host contract - convertible promissory note and recorded in equity at their relative fair values with a corresponding debt discount recorded to ASOP Note II. The principal balance outstanding at December 31, 2022 was $1,073,250.
In May 2021, the Company entered into a convertible promissory note (“ASOF Note II”) with Arena Special Opportunities Fund, LP. The principal balance of the note is $306,865 and it is to be utilized for working capital purposes. The note matures on January 31, 2022 and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and determined not to be considered a derivative and therefore has been recorded in liabilities as part of the convertible promissory note and not bifurcated. In addition, the ASOP convertible promissory note was issued with 26,228 common stock warrants. The common stock purchase warrants entitle the holder to purchase an aggregate of up to 26,228 shares of the Company’s common stock at an exercise price of $6.75 per share. The common stock purchase warrants issued to ASOF are considered derivatives, but satisfied the criteria for classification as equity instruments, and were bifurcated from the host contract - convertible promissory note and recorded in equity at their relative fair values with a corresponding debt discount recorded to ASOF Note II. The principal balance outstanding at December 31, 2022 was $276,750.
The maturity dates for the above notes were extended to April 30, 2022 on April 14, 2022 in exchange for the Company’s promise to pay the holders $300,000. The holders agreed to allow the Company to extend the notes for two additional 30-day periods for $100,000 per extension. The holders also waived certain defaults under the notes. The Company has since elected to extend the maturity date to May 31, 2022 for the promise to pay an additional $100,000. The Company is currently in discussions regarding the further extension of the notes.
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
On January 1, 2022, the Company entered into a convertible promissory note (“Empire Note”) with Empire Properties, LLC (“Empire”). The principal balance of the note is $52,319 and it is to be utilized for working capital purposes. The note matured on December 31, 2022 or due on demand subsequently to any major funding received by the Company in excess of $5,000,000 and all principal, accrued and unpaid interest is due at maturity at a rate of 8% per annum. The conversion options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and determined not to be considered a derivative and therefore has been recorded in liabilities as part of the convertible promissory note and not bifurcated. The principal balance outstanding at December 31, 2022 was $52,319.
In February 2022, the Company entered into a convertible promissory note (“Tysadco Note”) with Tysadco Partners, LLC (“Tysadco”). The principal balance of the note is $450,000 and it is to be utilized for working capital purposes. The note matured on July 25, 2022 and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and determined not to be considered a derivative and therefore has been recorded in liabilities as part of the convertible promissory note and not bifurcated. The principal balance outstanding at December 31, 2022 was $450,000. This note has been extended an additional 6 months by mutual consent for the additional consideration of issuance of twenty thousand shares of common stock.
In March 2022, the Company entered into a convertible promissory note (“BL Note”) with Blue Lake Partners, LLC (“BL”). The principal balance of the note is $250,000 and it is to be utilized for working capital purposes. The note matured on March 22, 2023 and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and determined not to be considered a derivative and therefore has been recorded in liabilities as part of the convertible promissory note and not bifurcated. In addition, the BL Note was issued with 39,062 common stock warrants. The common stock purchase warrants entitle the holder to purchase an aggregate of up to 39,062 shares of the Company’s common stock at an exercise price of $6.40 per share. The common stock purchase warrants issued to BL are considered derivatives and did not satisfy the criteria for classification as equity instruments and were bifurcated from the host contract - convertible promissory note and recorded as a liability at fair value with a corresponding debt discount recorded to the BL Note with subsequent changes in fair values recognized in the consolidated statement of operations at each reporting date. The principal balance outstanding at December 31, 2022 was $250,000.
In March 2022, the Company entered into a convertible promissory note (“MH Note”) with Mast Hill Fund, LP (“MH”). The principal balance of the note is $350,000 and it is to be utilized for working capital purposes. The note matured on March 22, 2023 and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and determined not to be considered a derivative and therefore has been recorded in liabilities as part of the convertible promissory note and not bifurcated. In addition, the MH Note was issued with 39,062 common stock warrants. The common stock purchase warrants entitle the holder to purchase an aggregate of up to 39,062 shares of the Company’s common stock at an exercise price of $6.40 per share. The common stock purchase warrants issued to MH are considered derivatives and did not satisfy the criteria for classification as equity instruments and were bifurcated from the host contract - convertible promissory note and recorded as a liability at fair value with a corresponding debt discount recorded to the MH Note with subsequent changes in fair values recognized in the consolidated statement of operations at each reporting date. The principal balance outstanding at December 31, 2022 was $350,000.
In April 2022, the Company entered into a convertible promissory note (“FM Note”) with Fourth Man, LLC (“FM”). The principal balance of the note is $150,000 and it is to be utilized for working capital purposes. The note matures on April 22, 2023 and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and determined not to be considered derivatives and therefore have been recorded in liabilities as part of the convertible promissory note and not bifurcated. In addition, the FM Note was issued with 23,437 common stock warrants. The common stock purchase warrants entitle the holder to purchase an aggregate of up to 23,437 shares of the Company’s common stock at an exercise price of $6.40 per share. The common stock purchase warrants issued to FM are considered derivatives and did not satisfy the criteria for classification as equity instruments and were bifurcated from the host contract - convertible promissory note and recorded as a liability at fair value with a corresponding debt discount recorded to the FM Note with subsequent changes in fair values recognized in the consolidated statement of operations at each reporting date. The principal balance outstanding at December 31, 2022 was $150,000.
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
In June 2022, the Company entered into a convertible promissory note (“Alumni Note”) with Alumni Capital, LP (“Alumni”). The principal balance of the note is $62,500 and it is to be utilized for working capital purposes. The note matured on June 6, 2023 and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and determined not to be considered derivatives and therefore have been recorded in liabilities as part of the convertible promissory note and not bifurcated. In addition, the Alumni Note was issued with 9,766 common stock warrants. The common stock purchase warrants entitle the holder to purchase an aggregate of up to 9,766 shares of the Company’s common stock at an exercise price of $6.40 per share. The common stock purchase warrants issued to Alumni are considered derivatives and did not satisfy the criteria for classification as equity instruments and were bifurcated from the host contract - convertible promissory note and recorded as a liability at fair value with a corresponding debt discount recorded to the Alumni Note with subsequent changes in fair values recognized in the consolidated statement of operations at each reporting date. The principal balance outstanding at December 31, 2022 was $62,500.
In June 2022, the Company entered into a convertible promissory note (“Tysadco Note II”) with Tysadco Partners, LLC. The principal balance of the note is $75,000 and it is to be utilized for working capital purposes. The note matured on December 7, 2022 and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and determined not to be considered derivatives and therefore have been recorded in liabilities as part of the convertible promissory note and not bifurcated. The Tysadco Note II is convertible into common stock of the Company at any time prior to the maturity date at a conversion price of the lesser of $7.50 and 75% of the lowest daily volume weighted average price (“VWAP”) over the previous ten trading days prior to conversion. The principal balance outstanding at December 31, 2022 was $75,000.
In August 2022, the Company entered into a convertible promissory note (“WN”) with Walleye Opportunities Master Fund Ltd. (“WOMF”). The principal balance of the note is $385,000 and it is to be utilized for working capital purposes. The note matures on August 30, 2023 and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and determined not to be considered derivatives and therefore have been recorded in liabilities as part of the convertible promissory note and not bifurcated. In addition, the WN Note was issued with 71,296 common stock warrants. The common stock purchase warrants entitle the holder to purchase an aggregate of up to 71,296 shares of the Company’s common stock at an exercise price of $5.40 per share. The common stock purchase warrants issued to WOMF are considered derivatives and did not satisfy the criteria for classification as equity instruments and were bifurcated from the host contract - convertible promissory note and recorded as a liability at fair value with a corresponding debt discount recorded to the WN with subsequent changes in fair values recognized in the consolidated statement of operations at each reporting date. The principal balance outstanding at December 31, 2022 was $385,000.
In August 2022, the Company entered into a convertible promissory note (“Tysadco Note III”) with Tysadco. The principal balance of the note is $110,000 and it is to be utilized for working capital purposes. The note matured on February 12, 2023 and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and determined not to be considered a derivative and therefore has been recorded in liabilities as part of the convertible promissory note and not bifurcated. The principal balance outstanding at December 31, 2022 was $110,000.
In September 2022, the Company entered into a convertible promissory note (“Tysadco Note IV”) with Tysadco. The principal balance of the note is $65,000 and it is to be utilized for working capital purposes. The note matured on March 19, 2023, and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and determined not to be considered a derivative and therefore has been recorded in liabilities as part of the convertible promissory note and not bifurcated. The principal balance outstanding at December 31, 2022 was $65,000.
In October 2022, the Company entered into a convertible promissory note (“Tysadco Note V”) with Tysadco. The principal balance of the note is $50,000 and it is to be utilized for working capital purposes. The note matured on March 19, 2023, and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The conversion options contained in the convertible promissory note were evaluated for derivative accounting under ASC 815, Derivatives and Hedging, and determined not to be considered a derivative and therefore has been recorded in liabilities as part of the convertible promissory note and not bifurcated. The principal balance outstanding at December 31, 2022 was $50,000.
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
TWS Note
On August 12, 2021, pursuant to an Equipment Acquisition Agreement, the Company entered into a twelve-month promissory note of $1,250,000 with payments of $100,000 per month and interest at 6% (See Note 5). As of December 31, 2022, the total amount outstanding was $1,050,000.
Other Loans
On November 18, 2021, the Company entered into a $100,000 unsecured promissory note agreement with a lender. The promissory note accrues interest at a rate of 10% per annum and is due within twelve months or due on demand subsequently to any major funding received by the Company in excess of $3,000,000. As of December 31, 2022 the total amount outstanding was $100,000.
During the year ended December 31, 2022, the Company entered into various agreements relating to the sales of future receivables for an aggregate purchase amount of approximately $450,000. The aggregate principal amounts are payable in weekly installments ranging from $2,917 through $453 until such time the obligations are fully satisfied. As of December 31, 2022, the total amounts outstanding were approximately $65,000.
On February 11, 2022, the Company entered into a $175,000 unsecured promissory note agreement with a lender. The promissory note accrues interest at a rate of 16% per annum and is due within six months or due on demand subsequently to any major funding received by the Company in excess of $2,000,000. As of December 31, 2022 the total amount outstanding was $175,000.
On August 18, 2022, the Company entered into a $250,000 unsecured promissory note agreement with a lender. The promissory note accrues interest at a rate of 16% per annum and is due within three months or due on demand subsequently to any major funding received by the Company in excess of $1,000,000. As of December 31, 2022 the total amount outstanding was $250,000.
On October 14, 2022, the Company entered into a $115,000 unsecured promissory note agreement with a lender. The promissory note accrues interest at a rate of 18% per annum and was due on October 31, 2022. As of December 31, 2022 the total amount outstanding was $115,000.
On October 14, 2022, the Company entered into a $230,000 unsecured promissory note agreement with a lender. The promissory note accrues interest at a rate of 18% per annum and was due on October 31, 2022. As of December 31, 2022 the total amount outstanding was $230,000.
On November 17, 2022, the Company entered into a $200,000 unsecured promissory note agreement with a lender. The promissory note accrues interest at a rate of 18% per annum and was due on December 17, 2022. As of December 31, 2022 the total amount outstanding was $200,000.
Note 10 - Stockholders’ Equity
Preferred Stock
Each share of Series A Preferred Stock is convertible into 218 shares of CANB common stock and is entitled to 4,444 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. During the year ended December 31, 2022, the Company converted 15 shares of Series A preferred stock to 33,345 shares of common stock.
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.
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
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 1,667 shares of common stock. The shares of Series C Preferred Stock have voting rights as if fully converted. During the year ended December 31, 2022 the Company issued 1,077 shares of Series C preferred stock.
Each share of Series D Preferred Stock has 667 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 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 667 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. During the year ended December 31, 2022 the Company issued 2,050 shares of Series D preferred stock.
Common Stock
For the year ended December 31, 2022, the Company issued an aggregate of 51,282 shares of Common Stock under its Offering Statement on Form 1-A (File No. 024-11233) (the “Regulation A Offering”).
In addition, for the year ended December 31, 2022, the Company issued an aggregate of 190,505, 13,704, 1,270,616, 18,227, and 10,150 of Common Stock for asset acquisitions, property and equipment, services rendered, exercise of warrants, and in lieu of interest repayments, respectively.
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
Note 11 - Stock Options
The Company has an employee share option plan, which is shareholder-approved, permits the grant of share options and shares to its employees. The Company believes that such awards better align the interests of its employees with those of its shareholders. Option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Share awards generally vest over five years.
The fair value of each option award is estimated on the date of grant using a lattice-based option valuation model that uses the assumptions noted in the following table. Because lattice-based option valuation models incorporate ranges of assumptions for inputs, those ranges are disclosed. Expected volatilities are based on implied volatilities from traded options on the Company’s stock, historical volatility of the Company’s stock, and other factors. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding; the range given below results from certain groups of employees exhibiting different behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions
December 31,
December 31,
Per share fair value at grant date $ 3.51 $ 8.02
Risk free interest rate 3.00 1.02
Expected volatility 226 % 201 %
Dividend yield 0 % 0 %
Expected life in years
A summary of stock options activity for the year ended December 31, 2022 and 2021 is as follows:
Summary of Stock Options Activity
Option Shares Weighted
Average
Exercise Price
Weighted
Average Remaining Contractual Life (Years)
Outstanding, January 1, 2021 79,147
$ 5.37
3.92
Granted 298,507
$ 6.30
4.61
Outstanding, December 31, 2021
377,654 $ 6.11 3.97
Granted 679,012 $ 2.86 4.02
Exercised - - -
Forfeited - - -
Expired - - -
Outstanding and exercisable, December 31, 2022 1,056,666 $ 4.02 3.82
At December 31, 2022 all stock options are no intrinsic value.
As of December 31, 2022, there was no unrecognized compensation cost related to nonvested stock-based compensation arrangements granted under the share option plan. The Company recognized $2,371,819 of stock-based compensation expense during the year ended December 31, 2022.
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
Note 12 - Income Taxes
The provision for income taxes consisted of the following:
Schedule of Provision For Income Taxes
December 31, December 31,
State franchise tax $ 793 $ 1,075
The Company’s effective income tax rate differs from the federal statutory rate primarily as a result of certain expenses being deductible for financial reporting purposes that are not deductible for tax purposes, the existence of research and development tax credits, operating loss carryforwards, and adjustments to previously recorded deferred tax assets and liabilities due to the enactment of the Tax Cuts and Jobs Act in 2017.
The difference in the provision for income taxes and the amount computed by applying the statutory federal income tax rates consists of the following:
Schedule of Provisions for (Benefits from) Income Taxes
December 31, December 31,
Expected income tax benefit $ (3,042,141 ) $ (2,034,215 )
State franchise tax 1,075
Non-deductible stock-based compensation 942,867 252,205
Non-deductible stock-based interest 15,346 41,856
Increase in deferred income tax assets valuation allowance 2,083,928 1,740,154
Provision for income taxes $ 793 $ 1,075
Principal components of the Company’s deferred tax assets as of December 31, 2022 and December 31, 2021 were as follows:
Schedule of Deferred Income Tax Assets
December 31, December 31,
Net operating loss carryforward $ (5,755,437 ) $ (3,671,509 )
Valuation allowance 5,755,437 3,671,509
Net $ - $ -
At December 31, 2022, the Company had net operating loss carryforwards of approximately $27,407,000 that begin to expire in 2025.
The Company files a federal income tax return and separate income tax returns in various states. For federal and certain states, the 2019 through 2022 tax years remain open for examination by the tax authorities under the normal three-year statute of limitations.
The Company assesses available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant component of objective negative evidence identified during management’s evaluation was the cumulative loss incurred over the three-year period ended December 31, 2022. Such objective evidence limits the ability to consider other subjective evidence, such as our forecasts of future taxable income and tax planning strategies. On the basis of this evaluation as of December 31, 2022 and 2021, the Company recognized a full valuation allowance against its net deferred tax assets, pursuant to ASC 740, as of December 31, 2022. Based on the Company’s evaluation, it was determined that no uncertain tax positions existed as of December 31, 2022 or December 31, 2021.
Note 13 - Related Party Transactions
For the years ended December 31, 2022 and 2021, the Company paid fees to a service provider that is a relative of a director for professional services in the amount of $17,100 and $28,100, respectively.
At December 31, 2022, the Company has amounts due to directors of the Company of approximately $295,243 which are expected to be repaid in the next twelve months.
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2022 and 2021
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, they are to receive a i) base salary of fifteen thousand dollars ($15,000.00) per month, ii) is eligible to receive cash and or stock bonuses, iii) shall receive a stock bonus in accordance with the Company’s Incentive Stock Option Plan (“ISOP”) in an amount of one-hundred thousand dollars ($100,000) per year of the Agreement, iv) 200 shares of the Company’s Series C Preferred stock, v) usual and customary benefits including expense reimbursement, health and life insurance plan reimbursements and allowances. Phil Scala. Interim COO also received a similar agreement with a base compensation of fifty-two thousand annually, $100,000 in ISO, and 20 Preferred C shares.
Consulting Agreements
On July 15, 2020, we engaged an advisor to provide consulting services under an Investor Relations and Advisory Agreement (the “Advisory Agreement”). Pursuant to the Advisory Agreement, we agreed to pay the Consulting Firm a restricted common stock monthly fee of $5,000 per month for the initial 3 months., $6,250 per month for months 4-6., $7,500 per month for month 7 and after. At CANB’s option, the monthly fee may be payable in part or in whole in cash. Monthly Fee, such amount shall be paid via issuance of restricted common shares of the Company. The shares are to be issued in the name of Tysadco Partners. The number of common shares earned each month shall be calculated and issued on a quarterly basis prior to each 90-day period and based on the value at the closing price on the last day of the preceding period. All common shares earned by the Consultant pursuant to this Agreement shall be issued by CANB on a quarterly basis.
Lease Agreements
The Company leases office space in numerous medical facilities offices under month-to-month agreements. The Company determines if a contract contains a lease at inception. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date of the lease based on the present value of lease payments over the lease term. The Company uses the incremental borrowing rate to determine the present value of lease payments, as the implicit rate is not readily determinable. The ROU asset also includes any lease payments made. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Rent expense for the years ended December 31, 2022 and 2021 was $768,829 and $614,779, respectively.
At December 31, 2022, the total future minimum lease payments were as follows:
Schedule of Future Maturities of Lease Liabilities
$ 740,852
469,818
Total future minimum lease payments $ 1,210,670
Less: Interest (120,394
)
Total present value of lease liabilities $ 1,090,276
As of December 31, 2022, the Company had a weighted average remaining lease term of 1.3 years and a weighted average discount rate of 8.92%.
Note 15 - Subsequent Events
Issuance of OID Note and Warrant
On March 2, 2023, the Company completed the sale of a promissory note (the “Note”) in the principal amount of $1,823,529 to an investor (the “Investor”) pursuant to a Securities Purchase Agreement dated as of February 27, 2023. The purchase price of the Note was $1,550,000, representing a 15% original issue discount. The Note is non-interest bearing, except in the case of the event of a default, in which case interest will accrue from the date of the default at a rate equal to the lower of 18% per annum or the maximum rate permitted by law.
The Note is payable in nine (9) monthly installments of $232,500 each, consisting of a $227,941 principal reduction payment and a $4,559 redemption fee, commencing on April 27, 2023. The Company’s obligations under the note are secured by a security interest in the Company’s deposit accounts and the deposit accounts of the Company’s subsidiaries. In addition, each the Company’s subsidiaries has agreed that if an event of default occurs under the Note, the subsidiary will pay to the Investor an amount equal to 10% of revenues received during the prior month from the sale of goods or services or collections of accounts receivable.
The Note requires the Company to use reasonable commercial efforts to complete an offering which will result in an uplisting of its common stock to a national securities exchange within a reasonable time following the issuance of the Note. The Note contains certain negative covenants, including a prohibition on the incurrence of debt that is senior or pari passu to the indebtedness represented by the Note, the creation of liens on the Company’s assets, the payment of dividends and other distributions on the Company’s common stock, the repurchase of the Company’s common stock, the sale of a significant portion of the Company’s assets and the repayment of indebtedness other than existing indebtedness.
The Company may elect to pay all or a portion of a monthly installment due under the Note by converting such amount into shares of the Company’s common stock at a price of $4.00 per share, subject to adjustment in accordance with the terms of the Note. If the Company does not pay an installment when due it is deemed an election by the Company to convert the installment payment into common stock at a price equal to the lower of $4.00 per share or 90% of the lowest daily volume weighted average price of the common stock during the five trading days preceding the conversion date. The Investor may elect at any time to convert amounts payable under the Note into shares of the Company’s common stock at a conversion price of $4.00 per share, subject to adjustment in accordance with the terms of the Note.
If the Company receives cash proceeds from any source, including payments from customers or from the issuance of equity or debt, the Investor can require the Company to apply 100% of such proceeds to the repayment of the Note.
If the Company completes a placement of securities, the Investor will have the right to accept such new securities in lieu of the Note and Warrant. For so long as the Note is outstanding, if the Company issues a security or amends the terms of a security issued before the issue date of the Note, and the Investor believes that terms of the new or amended security are more favorable to the holder than the terms provided to the Investor, the Investor may require that such terms become part of Investor’s transaction documents with the Company.
In the event of a default under the Note, the Company shall be required to pay the Investor an amount equal to the amount determined by multiplying the principal amount then outstanding plus default interest by 135%, plus costs of collection. The Investor may elect to accept payment of any such amount in cash and/or shares of the Company’s common stock, valued for this purpose at the lower of the conversion price then in effect or a 60% discount to the lowest volume weighted average price of the common stock during the five trading days preceding the conversion date.
The Investor has been granted a right of first refusal to participate in future financing transactions conducted by the Company.
As additional consideration for the purchase of the Note, the Company issued the Investor a warrant (the “Warrant”) to purchase 1,307,190 shares of the Company’s common stock at an exercise price equal to 90% of the lowest volume weighted average price of the common stock during the five trading days preceding the date of exercise. The Warrant contains a cashless exercise provision and is exercisable at any time during the period beginning on August 27, 2023 and ending on August 27, 2028. In addition, a warrant issued by the Company to the Investor in August 2022 was amended to change the exercise price of the warrant from $5.40 per share to the lower of $5.40 per share or the lowest volume weighted average price of the common stock during the five trading days preceding its exercise.
The Company has entered into a Registration Rights Agreement with the Investor pursuant to which the Company has agreed to file a registration statement with the Securities and Exchange Commission by April 13, 2023 to register the shares of common stock issuable upon the conversion of the Note and the exercise of the Warrant for public resale. If the Company fails to file the registration statement by April 13, 2023 or have the registration statement declared effective by the deadlines set forth in the Registration Rights Agreement, the Company will be required to make a payment of 2% of the amount then owed under the Note for each 30 day period after the applicable deadline that the Company does not file the registration statement or the registration statement is not declared. The Investor has also been granted piggyback registration rights with respect to the shares of common stock issuable upon the conversion of the Note and the exercise of the Warrant. Each of the Note and Warrant grants full ratchet anti-dilution protection to the Investor in the event that the Company issues common stock or rights to purchase common stock at a price less than the conversion or exercise price then in effect.
Each of the Note and Warrant contains provisions pursuant to which the Investor has agreed not to effect a conversion of the Note or exercise of the Warrant if the conversion or exercise would result in the Investor becoming the beneficial owner of more than 9.99% of the Company’s outstanding common stock.
Forbearance and Amendment of Outstanding Notes.
Contemporaneous with the sale of the Note and Warrant to the Investor, Arena Special Opportunities Partners I, L.P. and Arena Special Opportunities Fund, L.P. (collectively, “Arena”), who hold promissory notes with an unpaid principal balance of approximately $3,877,000 which became due on April 30, 2022 (the “Arena Notes”), entered into a Forbearance Agreement with the Company pursuant to which they agreed to forbear from exercising remedies under the Arena Notes until December 31, 2024 provided that the Company does not default on its obligations under the Forbearance Agreement.
The Forbearance Agreement requires the Company and/or Company’s subsidiaries, Duramed, Inc. and Duramed MI, LLC (together the “Duramed Subsidiaries”) to remit to Arena on a monthly basis certain accounts receivable collected by the Company and/or the Duramed Subsidiaries until the total amount collected is $5,700,000. The Company and the Duramed Subsidiaries have assigned their rights to these receivables to Arena.
If Arena fully exercises warrants to purchase shares of the Company’s common stock that were previously issued to it, and the aggregate market value of the shares acquired is less than $1,500,000, the Company must pay to Arena an amount equal to such difference.
As a condition to the closing of the sale of the Note and Warrant to the Investor, certain terms of certain promissory notes previously issued by the Company were amended, including the following:
● the maturity date of a promissory note in the principal amount of $62,500 was extended from June 6, 2023 to September 1, 2023; provided, however, that the holder can require full payment if the Company completes an offering of its common stock that results in an uplisting of its common stock to a national securities exchange;
● in consideration of the Company repaying an aggregate of $200,000 under notes issued in March 2022, the holders of the notes agreed to extend the maturity dates of the notes until September 1, 2023 and reduce the percentage of the cash proceeds received by the Company from the issuance of equity or debt that the holders of the notes can require the Company to apply to the repayment of the notes from 50% to 33%;
● in consideration of an increase in the aggregate principal amount by $10,000 and an increase in the interest rate to 18% per annum, the holder of notes in the aggregate principal amount of $150,000 agreed to waive his right to require the Company to repay a $50,000 note upon the Company’s receipt of $1,500,000 of financing and extend maturity dates from November 18,2021 and January 22,2023 to September 1, 2023;
● in consideration of the Company’s agreement to provide a product credit for future orders of $50,000, the holder of a promissory note in the principal amount of $150,000 agreed to extend the maturity date from August 10,2022 to September 1, 2023;
● the maturity date of a promissory note in the principal amount of $1,250,000 was extended from August 12, 2022 until the earlier of September 1, 2023 or the date that the Company completes an offering resulting in an uplisting of its common stock to the Nasdaq Capital Market;
● in consideration of the repayment of a total of $232,500 under the notes, the holders of promissory notes in the aggregate principal amount of $435,000 issued in October and November 2022 that bore interest at 18% per annum and were past due agreed to exchange the notes for new notes that mature on September 1, 2023 and bear interest at 15% per annum; and
● in consideration of an increase in the aggregate principal amount to $937,000, the holder of notes in the aggregate principal amount of $852,000 having maturity dates between August 24, 2022 and April 12, 2023 agreed to exchange the notes for a single note that matures on September 1, 2023.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

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ITEM 9A. CONTROLS AND PROCEDURES
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, 2022 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, 2022, 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.
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, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information
None.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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 31, 2023 are as follows:
Name
Age
Position
Marco Alfonsi
CEO, Director and Chairman since June 15, 2017
Stanley L. Teeple
CFO, Secretary and Director since October 1, 2018
Frederick Alger Boyer, Jr.
Independent Director appointed October 9, 2019
Ronald A. Silver
Independent Director appointed October 9, 2019
James F. Murphy
Independent Director appointed October 9, 2019
Pasquale Ferro
President of Pure Health Products
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.
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.
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.
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.
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, 2022, the following Reporting Persons did not meet all applicable Section 16(a) filing requirements: (i) Stanley Teeple, (ii) Phil Scala and (iii) Marco Alfonsi. Otherwise, we believe that the Reporting Persons met such filing requirements.

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ITEM 11. EXECUTIVE COMPENSATION
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 fiscal years ended December 31, 2022 and 2021.
Name and principal position Year Salary Bonus Stock awards Option awards (5) Non-equity incentive plan comp. Non-qualified deferred comp. earnings All other comp. Total
Marco Alfonsi (1) $ 25,962 $ 0 $ 500,100 $ 100,000 $ 0 $ 0 $ 0 $ 626,062
$ 107,142 $ 0 $ 2,512,500 $ 100,000 $ 0 $ 0 $ 0 $ 2,719,642
Stanley L. Teeple (2) $ 25,962 $ 0 $ 500,100 $ 100,000 $ 0 $ 0 $ 0 $ 626,062
$ 90,000 $ 0 $ 2,512,500 $ 100,000 $ 0 $ 0 $ 0 $ 2,702,500
Pasquale Ferro (3) $ 25,962 $ 0 $ 500,100 $ 100,000 $ 0 $ 0 $ 0 $ 626,062
$ 98,654 $ 0 $ 2,512,500 $ 100,000 $ 0 $ 0 $ 0 $ 2,711,154
Phil Scala (4) $ 15,000 $ 0 $ 61,6740 $ 100,000 $ 0 $ 0 $ 0 $ 176,674
$ 52,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 52,000
(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. Actual salary compensation was paid for the 1st quarter of 2022 only.
(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. Actual salary compensation was paid for the 1st quarter of 2022 only.
(3) 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. Actual salary compensation was paid for the 1st quarter of 2022 only.
(4) On October 11, 2019, the Company executed an Executive Service Agreement (“Scala Agreement”) with Phil Scala. The Scala Agreement provided that Mr. Scala served as the Interim Chief Operating Officer for a term of 90 days. The Scala Agreement also provided 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 was to receive a i) base salary of fifty-two thousand dollars per year, ii) was eligible to receive cash and or stock bonuses, iii) 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. Actual salary compensation was paid for the 1st quarter of 2022 only. Mr. Scala resigned his position as an officer of the Company in March 2023.
As of December 31, 2022, 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 on December 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.
(5) The amounts reported in this column represent the grant date fair value of option awards granted during the years ended December 31, 2022 and 2021 in accordance with FASB ASC 718. The assumptions used in the calculation of these awards are discussed in Note 11 to the Consolidated Financial Statements included in this Report.
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, 2022.
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 $ 0 $ 100,020
$ 0 $ 0 $ 0 $ 0 $ 100,020
Director $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Ronald Silver $ 0 $ 100,020
$ 0 $ 0 $ 0 $ 0 $ 100,020
Director $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
James F. Murphy $ 0 $ 100,020
$ 0 $ 0 $ 0 $ 0 $ 100,020
Director $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
1) Each of the 3 non-interested independent directors was issued 20 Preferred C shares in 2022.
2) As of December 31, 2022, Directors Boyer, Silver and Murphy each owned 10,000 options to exercise and purchase stock at $.30 at any time until 2023.
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.
The table below summarizes all outstanding equity awards for officers, as of December 31, 2022.
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 10/21/2018 Stock Options $ 4.50 10/20/2023
Johnny Mack PhD - Ex COO 9/9/2019 Stock Options 1,778 $ 4.50 9/8/2024
Frederick A. Boyer - Director 10/15/2019 Stock Options $ 4.50 10/14/2024
Ronald Silver - Director 10/15/2019 Stock Options $ 4.50 10/14/2024
James F. Murphy - Director 10/15/2019 Stock Options $ 4.50 10/14/2024
Ronald Silver - Director 12/9/2020 Stock Options $ 7.50 12/9/2025
Stanley Teeple - CFO 12/29/2020 Stock Options 18,467 $ 5.42 12/29/2025
Pasquale Ferro - President 12/29/2020 Stock Options 18,467 $ 5.42 12/29/2025
Phil Scala - COO 12/29/2020 Stock Options 18,467 $ 5.42 12/29/2025
Marco Alfonsi - CEO 12/29/2020 Stock Options 18,467 $ 5.42 12/29/2025
Stanley Teeple - CFO 7/15/2021 Stock Options 19,608 $ 6.60 7/15/2026
Pasquale Ferro - President 7/15/2021 Stock Options 19,608 $ 6.60 7/15/2026
Marco Alfonsi - CEO 7/15/2021 Stock Options 19,608 $ 6.60 7/15/2026
Marco Alfonsi - CEO 4/26/2021 Stock Options 3,401 $ 7.50 4/26/2026
Marco Alfonsi - CEO 1/6/2022 Stock Options 19,753 $ 7.35 1/5/2027
Pasquale Ferro - President 1/6/2022 Stock Options 19,753 $ 7.35 1/5/2027
Phil Scala - COO 1/6/2022 Stock Options 19,753 $ 7.35 1/5/2027
Stanley Teeple - CFO 1/6/2022 Stock Options 19,753 $ 7.35 1/5/2027
Marco Alfonsi - CEO 8/28/2022 Stock Options 100,000 $ 3.00 8/27/2027
Pasquale Ferro - President 8/28/2022 Stock Options 100,000 $ 3.00 8/27/2027
Phil Scala - COO 8/28/2022 Stock Options 50,000 $ 3.00 8/27/2027
Stanley Teeple - CFO 8/28/2022 Stock Options 100,000 $ 3.00 8/27/2027

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth the ownership, as of April 10, 2023, of our common stock, Series C Preferred Stock and Series D Preferred Stock by (i) each person known by us to be the beneficial own of more than five (5%) percent of the applicable class; (ii) each of the Company’s executive officers and directors; and (iii) the Company’s directors and executive officers 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 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.
Shares Beneficially Owned(1)
As of April 10, 2023
Name and Address of Beneficial Owner(2): Common
Stock
Percent of Class(3) Series C
Preferred
Stock
Percent of Class(4) Series D Preferred
Stock
Percent of Class(5) Percent of Total Voting
Power
Marco Alfonsi, CEO and Director 1,000,512 (6) 16.6 % 27.3 % 1,250 31.3 % 18.3 %
Stanley L. Teeple, CFO and Director 981,946 (7) 16.3 % 27.3 % 1,250 31.3 % 18.1 %
Frederick A. Boyer, Director 8,668 (8) 0.16 % - - - - 0.09 %
Ronald Silver, Director 9,280 (9) 0.17 % - - - - 0.09 %
James F. Murphey, Director 8,668 (10) 0.16 % - - - - 0.09 %
All directors and executive officers as a group (5 persons) 2,009,074 30.1 % 10.4 % 2,500 62.5 % 36.7 %
Pasquale Ferro 990,884 (11) 16.4 % 27.3 % 1,250 31.3 % 16.8 %
Arena Special Opportunities Fund, L.P 592,976 (12) 9.9 % - - - - 5.7 %
Walleye Opportunities Master Fund LTD 592,976
(13) 9.9 %
5.7
%
(1) Shares of common stock subject to stock options, warrants or convertible securities currently exercisable or convertible, or exercisable or convertible within 60 days of April 10, 2023 are deemed to be outstanding for computing the percentage ownership of the person holding such options, warrants or convertible securities and the percentage ownership of any group of which the holder is a member, but are not deemed outstanding for computing the percentage ownership of any other person.
(2) Except as otherwise indicated, the address of each beneficial owner is c/o Can B Corp., 960 South Broadway, Suite 120, Hempstead, New York 11801.
(3) Based on 5,396,682 shares of common stock issued and outstanding as of April 10, 2023.
(4) Based on 1,100 shares of Series C Preferred Stock issued and outstanding as of April 10, 2023. Shares of Series C Preferred Stock entitle their holders to vote on an as converted basis (1,667 shares of common stock per share of Series C Preferred Stock).
(5) Based on 4,000 shares of Series D Preferred Stock issued and outstanding as of April 10, 2023. Holders of Series D Preferred Stock are entitled to 667 votes per share.
(6) Includes 142,672 shares of common stock issuable upon the exercise of options and 500,100 shares of common stock issuable upon the exercise of 300 shares of Series C Preferred Stock. Does not include 42,343 shares of common stock held by adult members of Mr. Alfonsi’s family.
(7) Includes 139,361 shares of common stock issuable upon the exercise of options and 500,100 shares of common stock issuable upon the exercise of 300 shares of Series C Preferred Stock.
(8) Includes 667 shares of common stock issuable upon the exercise of options.
(9)
Includes 1,500 shares of common stock issuable upon the exercise of options.
(10) Includes 667 shares of common stock issuable upon the exercise of options.
(11) Includes 139,361 shares of common stock issuable upon the exercise of options and 500,100 shares of common stock issuable upon exercise of 300 shares of Series C Preferred Stock.
(12)
Includes shares beneficially owned by the shareholder’s affiliates, Arena Investors, LP and Arena Special Opportunities Partners I, LP, and 542,391 shares issuable upon conversion of convertible securities and exercise of warrants that contain a 9.99% beneficial ownership limitation. The address of this shareholder is 405 Lexington Avenue, 59th Floor, New York, New York 10174.
(13) Includes 492,976 shares of common stock issuable upon conversion of convertible notes and exercise of warrants that contain a 9.99% beneficial ownership limitation. The address of this shareholder is 2800 Niagara Lane North, Plymouth Minnesota 55447.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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 2022 and 2021, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
● any of our directors or officers;
● any 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. As of December 31, 2022, the Company had accounts payable due to LIA of $5,000. For the twelve months ended December 31, 2022, the Company had expenses to LIA of $17,100.
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.
At December 31, 2022, the Company has amounts due to a director of the Company of approximately $295,245 which are expected to be repaid in the next twelve months.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accounting Fees and Services
The following table sets forth fees billed to us by BF Borgers CPA PC, our independent registered public accounting firm during the fiscal years ended December 31, 2022 and December 31, 2021 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, 2022 December 31, 2021
Audit Fees $ 197,300 $ 103,312
Audited Related Fees $ 0 $ 0
Tax Fees $ 0 $ 0
All Other Fees $ 0 $ 0
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
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)
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)
10.1
Employment Agreement with Marco Alfonsi dated December 29, 2020(10)
10.2
Employment Agreement with Stanley L. Teeple dated December 29, 2020(10)
10.3
Employment Agreement with Pasquale Ferro dated December 29, 2020(10)
10.4
Employment Agreement with Phil Scala dated December 29, 2020(10)
10.5
Commission Agreement with Andrew Holtmeyer(10)
10.6
Employment Agreement with Bradley Lebsock(10)
10.7
Memorandum of Understanding with Sam International and ZetrOZ Systems LLC(3)
10.8
Can B̅ Corp. 2020 Incentive Stock Option Plan(8)
10.9
Arena Securities Purchase Agreement(10)
10.10
ASOF Original Issue Discount Senior Secured Convertible Promissory Note(10)
10.11
ASOF Warrant to Purchase Common Stock(10)
10.12
ASOP Original Issue Discount Senior Secured Convertible Promissory Note(10)
10.14
ASOP Warrant to Purchase Common Stock(10)
10.15
Arena Security Agreement(10)
10.16
Arena Intellectual Property Security Agreement(10)
10.17
Arena Registration Rights Agreement(10)
10.18
Arena Holding Escrow Agreement(10)
10.19
Arena Guaranty Agreement from Company Subsidiaries(10)
10.20
Amendment to 2020 ASOF Promissory Note(11)
10.21
Amendment to 2020 ASOP Promissory Note(11)
10.22
2021 Arena Securities Purchase Agreement(11)
10.23
2021 ASOF Original Issue Discount Senior Secured Convertible Promissory Note(11)
10.24
2021 ASOF Warrant to Purchase Common Stock(11)
10.25
2021 ASOP Original Issue Discount Senior Secured Convertible Promissory Note(11)
10.26
2021 ASOP Warrant to Purchase Common Stock(11)
10.27
2021 Arena Registration Rights Agreement(11)
10.28
2021 Addendum to Arena Security Agreement(11)
10.29
2021 Addendum to Arena Intellectual Property Security Agreement(11)
10.30
2021 Addendum to Arena Guaranty Agreement from Company Subsidiaries(11)
10.31
Asset Acquisition Agreement with Imbibe(10)
10.32
Equipment Acquisition Agreement with TWS(12)
10.33
Promissory Note to TWS(12)
10.34
Asset Purchase Agreement with MCB(12)
10.35
Commercial Lease with Makers Developments LLC(13)
10.36
Single-Tenant NNN Lease Agreement with CS2 Real Estate Holdings, LLC(13)
10.37
Commercial Lease with Red Road Business Park(13)
10.38
Asset Acquisition Agreement with various Sellers (Botanical Biotech)(10)
10.39
PrimeX Distribution Agreement
10.40
American Development Partners development agreement
10.41
Mast Hill Securities Purchase and Related Agreements(14)
10.42
Blue Lake Partners Securities Purchase and Related Agreements(14)
10.43
Fourth Man Securities Purchase and Related Agreements(16)
10.44
Extension and Amendment to Arena Transactional Documents(16)
10.45
Amended Placement Agent Agreement(18)
10.46
Alumni Capital Securities Purchase and Related Documents(19)
10.47
Arena Exchange Agreement(20)
10.48
Agreement with Forever Bradst(21)
10.49
Promissory Note Modification Agreement with TWS Pharma LLC
10.50
Walleye Securities Purchase Agreement
10.51
Walleye Promissory Note
10.52
Walleye Revenue Pledge and Security Agreement
10.53
Walleye Common Stock Purchase Warrant
10.54
Amendment to Walleye Common Stock Purchase Agreement
10.55
Walleye Registration Rights Agreement
10.56
Intercreditor Agreement among Can B Corp., Walleye and Arena
10.57
Arena Forbearance Agreement
10.58
Amendment No. 2 to Blue Lake Partners Promissory Note and Amendment to Securities Purchase Agreement, Consent and Waiver Agreement
10.59
Amendment No. 2 to Mast Hill Fund Promissory Note, Amendment to Securities Purchase Agreement, Consent and Waiver Agreement
10.60
Amendment No. 2 to Fourth Man Promissory Note, Amendment to Securities Purchase Agreement, Consent and Waiver Agreement
14.1
Code of Ethics(1)
21.1
List of Subsidiaries(10)
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
101.INS
Inline XBRL Instance Document
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Inline XBRL Taxonomy Extension Schema
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Inline XBRL Taxonomy Extension Calculation
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Inline XBRL Taxonomy Extension Definition
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Inline XBRL Taxonomy Extension Labels
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Inline XBRL Taxonomy Extension Presentation
Cover Page Interactive Data File (embedded within the Inline XBRL document)
(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.
(10) Filed with the Annual Report on Form 10-K filed with the SEC on April 15, 2022 and incorporated herein by reference.
(11) Filed with the Quarterly Report on Form 10-Q filed with the SEC on May 21, 2021 and incorporated herein by reference.
(12) Filed with the Current Report on Form 8-K filed with the SEC on August 17, 2021 and incorporated herein by reference.
(13) Filed with the Current Report on Form 8-K filed with the SEC on September 1, 2021 and incorporated herein by reference.
(14) Filed with the Current Report on Form 8-K filed with the SEC on March 31, 2022 and incorporated herein by reference.
(15) Filed with the Form 10-K filed with the SEC on April 15, 2022 and incorporated herein by reference.
(16) Filed with the Current Report on Form 8-K filed with the SEC on April 29, 2022 and incorporated herein by reference.
(17) Filed with Form S-1/A filed with the SEC on February 14, 2022 and incorporated herein by reference.
(18) Filed with Form S-1/A filed with the SEC on May 25, 2022 and incorporated herein by reference.
(19) Filed with the Current Report on Form 8-K filed with the SEC on June 15, 2022 and incorporated herein by reference.
(20) Filed with Form S-1/A filed with the SEC on May 25, 2022 and incorporated herein by reference.
(21) Filed with the Current Report on Form 8-K filed with the SEC on July 25, 2022 and incorporated herein by reference.