UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
For the transition period from __________ to __________
COMMISSION
FILE NUMBER:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal, if changed since last report)
Securities Registered Pursuant to Section 12(b) of the Act:
| Tile of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | CANB | N/A |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging Growth Company | |||
| (Do not check if smaller reporting company) |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒
The number of shares of the registrant’s only class of common stock issued and outstanding as of November 14, 2023 is .
Can B Corp.
FORM 10-Q
June 30, 2023
TABLE OF CONTENTS
| 2 |
PART 1 – FINANCIAL INFORMATION
Item 1. Financial Statements
Can B̅ Corp. and Subsidiaries
Consolidated Balance Sheets
| (Unaudited) | ||||||||
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable,
less allowance for doubtful accounts of $ | ||||||||
| Inventory | ||||||||
| Note receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Other assets: | ||||||||
| Deposits | ||||||||
| Intangible assets, net | ||||||||
| Property and equipment, net | ||||||||
| Right of use assets, net | ||||||||
| Other noncurrent assets | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Due to related party | ||||||||
| Notes and loans payable, net | ||||||||
| Warrant liabilities | ||||||||
| Operating lease liability - current | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Notes and loans payable, net | ||||||||
| Operating lease liability - noncurrent | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| Commitments and contingencies (Note 14) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, authorized shares: | ||||||||
| Series A Preferred stock,
| ||||||||
| Series B Preferred stock, $ par value: shares authorized, issued and outstanding | ||||||||
| Series C Preferred stock, $ par value: shares authorized, shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | ||||||||
| Series D Preferred stock, $ par value: shares authorized, shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | ||||||||
| Common stock, | ||||||||
| Common stock issuable,
| ||||||||
| Treasury stock | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See notes to consolidated financial statements
| 3 |
Can B̅ Corp. and Subsidiaries
Consolidated Statement of Operations
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues | ||||||||||||||||
| Product sales | $ | $ | $ | $ | ||||||||||||
| Service revenue | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | ( | ) | ( | ) | ||||||||||||
| Operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Other income | ||||||||||||||||
| Change in fair value of warrant liability | ||||||||||||||||
| Gain on debt extinguishment | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Other income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per share - basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average shares outstanding - basic and diluted | ||||||||||||||||
See notes to consolidated financial statements
| 4 |
Can B̅ Corp. and Subsidiaries
Consolidated Statement of Stockholders’ Equity
Three Months Ended September 30, 2023 and 2022
| Series
A Preferred Stock | Series
B Preferred Stock | Series
C Preferred Stock | Series
D Preferred Stock | Common Stock | Common
Stock | Treasury
Stock | Additional
Paid-in | Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Issuable | Shares | Amount | Capital | Deficit | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended June 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, July 1, 2023 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for services rendered | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for purchase of inventory | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for legal settlement | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in lieu note repayments | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for wages and salaries | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in lieu of interest payments | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended September 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, July 1, 2022 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of preferred stock | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for services rendered | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock resulting from exercise of warrants | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
See notes to consolidated financial statements
| 5 |
Nine Months Ended September 30, 2023 and 2022
| Series A | Series B | Series C | Series D | Common | Treasury | Additional | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Stock | Stock | Paid-in | Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Issuable | Shares | Amount | Capital | Deficit | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Nine months ended September 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2023 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for services rendered | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for purchase of equipment | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrants issued in connection with the issuance of convertible note | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for for wages and salaries | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for purchase of inventory | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in lieu of interest payments | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock or legal settlement | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in lieu of note repayments | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Nine months ended September 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2022 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of Series A Preferred stock to Common stock | ( | ) | ( | ) | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of preferred stock | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sale of common stock | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in lieu of note interest repayments | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for services rendered | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for equipment | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for asset acquisition | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock resulting from the exercise of warrants | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
See notes to consolidated financial statements
| 6 |
Can B̅ Corp. and Subsidiaries
Consolidated Statement of Cash Flows
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2023 | 2022 | |||||||
| Operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation | ||||||||
| Stock-based wages and salaries | ||||||||
| Depreciation | ||||||||
| Amortization of intangible assets | ||||||||
| Amortization of original-issue-discounts | ||||||||
| Bad debt expense | ||||||||
| Impairment of intangible assets | ||||||||
| Loss on sale of property and equipment | ||||||||
| Cancellation of debt | ( | ) | ||||||
| Change in fair value of warrant liability | ( | ) | ( | ) | ||||
| Stock-based interest expense | ||||||||
| Stock-based consulting expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventory | ||||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Operating lease right-of-use asset | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Deposits paid | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Financing activities: | ||||||||
| Net proceeds received from notes and loans payable | ||||||||
| Proceeds from sale of common stock | ||||||||
| Repayments of notes and loans payable | ( | ) | ( | ) | ||||
| Deferred financing costs | ( | ) | ( | ) | ||||
| Amounts received from/repaid to related parties, net | ||||||||
| Net cash provided by financing activities | ||||||||
| Decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental Cash Flow Information: | ||||||||
| Income taxes paid | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
| Non-cash Investing and Financing Activities: | ||||||||
| Issuance of common stock in lieu of repayment of notes payable | $ | $ | ||||||
| Issuance of common stock in asset acquisitions | $ | $ | ||||||
| Issuance of common stock for property and equipment | $ | $ | ||||||
| Debt discount associated with warrant liability | $ | $ | ||||||
| Conversion of Series A Preferred stock to common stock | $ | $ | ||||||
| Issuance of common stock resulting from exercise of warrants | $ | $ | ||||||
| Issuance of common stock warrants in connection with convertible promissory note | $ | $ | ||||||
See notes to consolidated financial statements
| 7 |
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 2023
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 is in a gray area and considered a potential loophole at this point due to the 2018 hemp bill. The Company formed Nascent Pharma, LLC in July 2023 to acquire and exploit certain patents. The Company has a 67% interest in Nascent Pharma, LLC. 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 devices. 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
condensed 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 September 30, 2023, the Company had cash and cash equivalents
of $
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 compared to the prior three independent operating facilities. The Company expects to have the consolidated operation fully operational by the end of fiscal 2023. 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 Financial Statement Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and with the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these interim consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of the management of the Company, as defined below, these unaudited consolidated financial statements include all adjustments necessary to present fairly the information set forth therein. Results for interim periods are not necessarily indicative of results to be expected for a full year.
The consolidated balance sheet information as of December 31, 2022 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K”). The interim consolidated financial statements contained herein should be read in conjunction with the 2022 Form 10-K.
| 8 |
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 2023
Principles of Consolidation
The unaudited 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.
Use of Estimates
The preparation of financial statements and related disclosures 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 as of the date of the financial statements and the reported amounts of revenues and expenses in those financial statements. Certain significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, inventory, goodwill, intangible assets and other long-lived assets, income taxes and deferred taxes. Descriptions of these policies are discussed in the Company’s 2022 Form 10-K. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and adjusts when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.
Significant Accounting Policies
The Company’s significant accounting policies are described in “Note 3: Summary of Significant Accounting Policies” of our 2022 Form 10-K.
| 9 |
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 2023
Segment reporting
As
of September 30, 2023, the Company reports operating results and financial data in
Reclassifications
Certain amounts in the prior year consolidated financial statements have been reclassified to conform to the current year presentation. These reclassification adjustments had no effect on the Company’s previously reported net loss.
Note 4 – Fair Value Measurements
The carrying value and fair value of the Company’s financial instruments are as follows:
| September 30, 2023 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Liabilities | ||||||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||
| As of December 31, 2022 | 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:
| As of | September 30, 2023 | December 31, 2022 | ||||||
| Stock price | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
| Remaining term (in years) | ||||||||
| Volatility | % | % | ||||||
| Risk-free rate | % | % | ||||||
| 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:
| Warrant liabilities | ||||
| Estimated fair value at December 31, 2021 | $ | |||
| Issuance of warrant liabilities | ||||
| Change in fair value | ( | ) | ||
| Estimated fair value at September 30, 2022 | $ | |||
| Estimated fair value at December 31, 2022 | $ | |||
| Change in fair value | ( | ) | ||
| Estimated fair value at September 30, 2023 | $ |
| 10 |
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 2023
Note 5 – Inventories
Inventories consist of:
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| Total | $ | $ | ||||||
Note 6 – Property and Equipment
Property and equipment consist of:
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Furniture and fixtures | $ | $ | ||||||
| Office equipment | ||||||||
| Manufacturing equipment | ||||||||
| Medical equipment | ||||||||
| Leasehold improvements | ||||||||
| Total | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Net | $ | $ | ||||||
Depreciation
expense related to property and equipment was $
Note 7 – Intangible Assets
Intangible assets consist of:
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Technology, IP and patents | $ | $ | ||||||
| Total | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Amortization
expense was $
| 11 |
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 2023
Amortization expense for the balance of 2023, and for each of the next five years and thereafter is estimated to be as follows:
| three months ended December 31, 2023 | $ | |||
| Fiscal year 2024 | ||||
| Fiscal year 2025 | ||||
| Fiscal year 2026 | ||||
| Fiscal year 2027 | ||||
| Thereafter | ||||
| $ |
Note 8 – 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 original principal amount of the note was $
In
December 2020, the Company entered into a convertible promissory note (“ASOF Note I”) with Arena Special Opportunities Fund,
LP (“ASOF”). The original principal amount of the note was $
In
May 2021, the Company entered into a convertible promissory note (“ASOP Note II”) with Arena Special Opportunities Partners
I, LP. The original principal amount of the note was $
In
May 2021, the Company entered into a convertible promissory note (“ASOF Note II”) with Arena Special Opportunities Fund,
LP. The original principal amount of the note was $
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 $
| 12 |
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 2023
On
January 1, 2022, the Company entered into a convertible promissory note (“Empire Note”) with Empire Properties, LLC (“Empire”).
The original principal amount of the note was $
In
March 2022, the Company entered into a convertible promissory note (“BL Note”) with Blue Lake Partners, LLC (“BL”).
The original principal amount of the note was $
In
March 2022, the Company entered into a convertible promissory note (“MH Note”) with Mast Hill Fund, LP (“MH”).
The original principal amount of the note was $
In
April 2022, the Company entered into a convertible promissory note (“FM Note”) with Fourth Man, LLC (“FM”). The
original principal amount of the note was $
| 13 |
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 2023
In
June 2022, the Company entered into a convertible promissory note (“Alumni Note”) with Alumni Capital, LP (“Alumni”).
The original principal amount of the note was $
In
August 2022, the Company entered into a convertible promissory note (“WN”) with Walleye Opportunities Master Fund Ltd. (“WOMF”).
The original principal amount of the note was $
In
January 2023 the Company entered into a convertible promissory note (“Tysadco Note VI”) with Tysadco Partners, LLC (“Tysadco”).
The original principal amount of the note was $
On
March 2, 2023, the Company completed the sale of a promissory note (the “Note”) in the principal amount of $
The
Note is payable in nine (9) monthly installments of $
| 14 |
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 2023
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 $
If the Company receives cash proceeds from any source, including payments from customers or from the issuance of equity or debt, WOMF can require the Company to apply 100% of such proceeds to the repayment of the Note.
If the Company completes a placement of securities, WOMF 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 WOMF believes that terms of the new or amended security are more favorable to the holder than the terms provided to WOMF, WOMF may require that such terms become part of WOMF’s transaction documents with the Company.
In
the event of a default under the Note, the Company shall be required to pay WOMF an amount equal to the amount determined by multiplying
the principal amount then outstanding plus default interest by
WOMF 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 WOMF a warrant (the “Warrant”) to purchase
shares of the Company’s common stock at an exercise price equal to
The Company has entered into a Registration Rights Agreement with WOMF pursuant to which the Company has agreed to file a registration statement with the Securities and Exchange Commission to register the shares of common stock issuable upon the conversion of the Note and the exercise of the Warrant for public resale. The Company filed the registration statement on May 12, 2023 and it was declared effective on May 22, 2023. WOMF 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 WOMF 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.
In
May 2023, the Company issued a promissory note to WOMF in the principal amount of $
| 15 |
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 2023
Forbearance and Amendment of Outstanding Notes.
Contemporaneous
with the sale of the Note and Warrant to WOMF, ASOP and ASOF (collectively, “Arena”), who hold promissory notes with an unpaid
principal balance of approximately $
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 $
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 $
As a condition to the closing of the sale of the Note and Warrant to the WOMF, certain terms of certain promissory notes previously issued by the Company were amended, including the following:
| ● | in
consideration of an increase in the aggregate principal amount by $ | |
| ● | in
consideration of the Company’s agreement to provide a product credit for future orders of $ | |
| ● | the
maturity date of a promissory note in the principal amount of $ | |
| ● | in
consideration of the repayment of a total of $ |
TWS Note
On
August 12, 2021, pursuant to an Equipment Acquisition Agreement, the Company entered into a twelve-month promissory note of $
Other Loans
On
November 18, 2021, the Company entered into a $
| 16 |
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 2023
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 $
On
February 11, 2022, the Company entered into a $
On
August 18, 2022, the Company entered into a $
On
October 14, 2022, the Company entered into a $
On
October 14, 2022, the Company entered into a $
On
November 17, 2022, the Company entered into a $
Note 9 – Stockholders’ Equity
Preferred Stock
| 17 |
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 2023
Each share of Series C Preferred Stock has preference to payment of dividends, if and when declared by the Company, compared to shares of the Company’s common stock. Each Preferred Series C share is convertible into shares of common stock. The shares of Series C Preferred Stock have voting rights as if fully converted.
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 shares of a new Series D Preferred Stock with
a par value of $ each. All Series D Preferred Shares rank senior to all shares of Common Stock of the Company with respect to liquidation
preferences and rank pari passu to all current and future series of preferred stock, unless otherwise stated in the certificate
of designation for such preferred stock.
| 18 |
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 2023
| Option Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | ||||||||||
| Outstanding, January 1, 2023 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | - | |||||||||||
| Forfeited | - | |||||||||||
| Expired | - | |||||||||||
| Outstanding, September 30, 2023 | $ | |||||||||||
Stock-based compensation expense related to stock options during the nine months ended September 30, 2023 and 2022 was $ and $, respectively.
Note 11 – Income Taxes
The Company’s income tax provisions for the three and nine months ended September 30, 2023 and 2022 reflect the Company’s estimates of the effective rates expected to be applicable for the respective full years, adjusted for any discrete events, which are recorded in the period that they occur. These estimates are reevaluated each quarter based on the Company’s estimated tax expense for the full year. The estimated effective tax rate includes the impact of valuation allowances in various jurisdictions.
Note 12 – Related Party Transactions
For
the nine months ended September 30, 2022, the Company incurred fees to a service provider that is a relative of a director for professional
services in the amount of $
Note 13 – Commitments and Contingencies
Lease Agreements
The Company leases office space in numerous medical facilities offices under month-to-month agreements.
Rent
expense for the nine months ended September 30, 2023 and 2022 was $
At September 30, 2023, the future minimum lease payments under non-cancellable operating leases were:
| three months ended December 31, 2023 | $ | |||
| Fiscal year 2024 | ||||
| $ |
Note 14 – Subsequent Events
The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the condensed consolidated financial statements are issued and as of that date. There were no subsequent events that required adjustment or disclosure in the consolidated financial statements except as follows:
On
October 27, 2023, the Company completed the sale of a promissory note (the “Initial Note”) in the principal amount of $
| 19 |
Can B̅ Corp. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 2023
WOMF may elect to convert the principal amount of the Initial Note and default interest, if any, subject to adjustment at a price equal
to
WOMF and/or investors introduced by WOMF may purchase up to an additional $
In
the event of a default under a Note, the Company shall be required to pay the holder of the Note an amount equal to the amount determined
by multiplying the principal amount of the Note then outstanding plus default interest by
WOMF has been granted a right of first refusal to participate in future financing transactions conducted by the Company.
The
Company has entered into a Registration Rights Agreement with WOMF pursuant to which the Company has agreed to file a registration statement
with the Securities and Exchange Commission by December 11, 2023 to register for public resale the shares of common stock issuable upon
the conversion of the Note and a consolidated note issued to WOMF in the principal amount of $
The
Initial Note contains and the New Notes will contain a provision which provides that the holder will not be converted if the conversion
would result in the holder becoming the beneficial owner of more than
In July 2023, the Company moved its Pure Health Products operations from Lacey, Washington to Colorado.
In November 2023, the Company’s wholly owned subsidiary, Pure Health Products, LLC, ceased manufacturing the Brook Burke Body, Inc. (“BBB”) Longevity Superfood drink mix product for shipment to Forever Brands’ customers due to the termination of the agreement between BBB and Forever Brands.
| 20 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 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 Duramed NJ, 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) and TN Botanicals LLC and CO Botanicals LLC (both incorporated in August 2021). The three subsidiaries have also begun synthesizing Delta-8 and Delta-10 from hemp. Delta-8 can produce similar, though less potent, effects as delta-9 (commonly referred to as THC); however, the legality of hemp derived delta-8 is in a gray area.
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.
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. The Company expects to have the consolidated operation fully operational by the end of fiscal 2022. 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 include the accounts of CANB and its operational wholly owned subsidiaries.
Results of Operations
Three months ended September 30, 2023 compared to three months ended September 30, 2022.
Revenues decreased $2,469,167 in 2023. The decrease is due to the normalization of sales activity with 2022 positively impacted by the wind down of restrictions related to the Covid-19 Pandemic surrounding elective surgeries, enabling an increase in the usage of the Company’s Duramed product lines and ultrasound device associated with patient recovery.
Cost of product sales increased $206,467 in 2023 due to the decrease in sales as noted above offset by certain inventory adjustments.
Operating expenses decreased $5,925,389 and net loss improved by $2,728,599 in 2023 as a result of decrease in revenue offset by a consulting fees, rent and other operating expenses.
Nine months ended September 30, 2023 compared to nine months ended September 30, 2022.
Revenues decreased $4,240,591 in 2023. The decrease is due to the normalization of sales activity with 2022 positively impacted by the wind down of restrictions related to the Covid-19 Pandemic surrounding elective surgeries, enabling an increase in the usage of the Company’s Duramed product lines and ultrasound device associated with patient recovery.
Cost of product sales decreased $555,678 in 2023 due to the decrease in sales as noted above.
Operating expenses decreased $8,428,770 and net loss improved by $4,093,332 in 2023 as a result of decrease in revenue offset by a consulting fees, rent and other operating expenses.
| 21 |
Liquidity and Capital Resources
At September 30, 2023, the Company had cash and cash equivalents of $31,318 and negative working capital of $5,195,758. Cash and cash equivalents decreased $41,876. For the nine months ended September 30, 2023, $1,499,057 was provided by financing activities, $1,455,933 was used in operating activities, and $85,000 was used in investing activities.
The Company currently has no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.
We have no off-balance sheet arrangements.
As of September 30, 2023 the Company had $2.8 million aggregate principal amount of notes that are past due and an $6.5 million aggregate principal amount of notes becoming due between October 1, 2023 and December 31, 2023. The Company plans to seek additional extensions of these notes or refinance the indebtedness. No assurance can be given that the Company will be successful in obtaining extensions or refinancing the indebtedness.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
ITEM 4. CONTROLS AND PROCEDURES
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As of September 30, 2023, our principal executive officer and principal financial officer conducted an evaluation regarding the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act). Based upon the evaluation of these controls and procedures, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report.
(B) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting in our fiscal quarter for the period September 30, 2023 covered by this Quarterly Report on Form 10-Q, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
PART II- OTHER INFORMATION
ITEM 1. 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.
On or about 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.
In March 2023, the holder of a note in the principal amount of $250,000 instituted a collection action against the Company in the Circuit Court of the 11th Judicial District in and for Miami-Dade County, Florida. seeking payment of the principal amount and accrued interest. The note has been acquired by WOMF and the suit has been dismissed.
| 22 |
Other than above, we are not aware of any pending or threatened legal proceedings in which we are involved.
ITEM 1A. RISK FACTORS
During the three months ended September 30, 2023, there have been no material changes to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on April 17, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
In July 2023, the Company issued 675,000 shares of common stock in payment of the purchase price of hemp biomass. The Company relied upon the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), in connection with this transaction.
In July 2023, the Company issued 400,000 shares of common stock in connection with a forbearance arrangement reached with a creditor. The Company relied upon the exemption provided by Section 4(2) of the Securities Act in connection with this transaction.
During the three months ended September 30, 2023, the Company issued 4,723,686 shares of common stock upon the conversion of convertible notes. The Company relied upon the exemption provided by Section 3(a)(9) of the Securities Act of 1933 in connection with these issuances.
During the three months ended September 30, 2023, the Company issued 45,835 shares of common stock in connection with the resolution of a dispute between two third parties. The Company relied upon the exemption provided by Section 4(2) of the Securities Act, in connection with this transaction.
In September 2023, the Company issued 384,616 shares of common stock in satisfaction of amounts owed under outstanding invoices. The Company relied upon the exemption provided by Section 4(2) of the Securities Act in connection with this transaction.
In September 2023, the Company issued 5,043,286 shares of common stock in exchange for the cancellation of certain promissory notes. The Company relied upon the exemption provided by Section 4(2) of the Securities Act in connection with this transaction.
In September 2023, the Company issued 962,077 shares of common stock in settlement of outstanding invoices. The Company relied upon the exemption provided by Section 4(2) of the Securities Act, in connection with this transaction.
In September 2023, the Company issued 464,409 shares of common stock in partial payment of an outstanding loan. The Company relied upon the exemption provided by Section 4(2) of the Securities Act, in connection with this transaction.
In September 2023, the Company issued 25,719 shares of common stock upon the cashless exercise of a warrant. The Company relied upon the exemption provided by Section 3(a)(9) of the Securities Act of 1933in connection with this transaction.
During the three months ended September 30, 2023, the Company issued 657,867 shares of common stock to consultants for services rendered. The Company relied upon the exemption provided by Section 4(2) of the Securities Act, in connection with these transactions.
During the three months ended September 30, 2023, the Company issued options to purchase a total of 11,166,665 shares of common stock at an exercise price of $.12 per share to employees, officer, directors and consultants. The Company relied upon the exemption provided Section 4(2) of the Securities Act in connection with these issuances.
In September 2023 the Company issued 6,940,118 shares of common stock to officers of the Company in payment of accrued compensation. The Company relied upon the exemption provided by Section 4(2) of the Securities Act, in connection with these transactions.
| 23 |
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
In September 2023, Arena Special Opportunities Partners I, LP and Arena Special Opportunities Fund, LP provided notice to the Company that it is in default of certain terms of their Forbearance Agreement with the Company dated as of February 27, 2023 and thus have right to accelerate the payment of the Company’s obligations under the $3.8 million aggregate principal of notes held by them.
As of September 30, 2023, notes payable in the aggregate principal amount of $2.8 million were past due.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following exhibits are filed with this offering circular:
| 24 |
| 25 |
| (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 June 30, 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. |
| (22) | Filed with the Annual Report on Form 10-K filed with the SEC on April 17, 2023 and incorporated herein by reference. |
| (23) | Filed with the Quarterly Report on Form 10-Q filed with the SEC on May 22, 2023 and incorporated herein by reference. |
| (24) | Filed with the Current Report on Form 8-K filed with the SEC on November 3, 2023 and incorporated herein by reference. |
| 26 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Can B Corp. | ||
| Date: November 20, 2023 | By: | /s/ Marco Alfonsi |
| Marco Alfonsi, | ||
| Chief Executive Officer | ||
| Date: November 20, 2023 | By: | /s/ Stanley L. Teeple |
| Stanley L. Teeple, | ||
| Chief Financial Officer | ||
| 27 |
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Marco Alfonsi, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Can B Corp.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; | |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; | |
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
| a) | all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
| Dated: November 20, 2023 | By: | /s/ Marco Alfonsi |
| Marco Alfonsi, | ||
| Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Stanley L. Teeple, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Can B Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; | |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; | |
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
| a) | all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
| Dated: November 20, 2023 | By: | /s/ Stanley L. Teeple |
| Stanley L. Teeple, | ||
| Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Can B Corp. (the “Company”) on Form 10-Q for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Marco Alfonsi, Chief Executive Officer of the Company, certifies, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: November 20, 2023 | By: | /s/ Marco Alfonsi |
| Marco Alfonsi | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Can B Corp. (the “Company”) on Form 10-Q for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Marco Alfonsi, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: November 20, 2023 | By: | /s/ Stanley L. Teeple |
| Stanley L. Teeple, | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Consolidated Statement of Operations - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Revenues | ||||
| Total revenues | $ 418,957 | $ 2,888,124 | $ 1,778,855 | $ 6,019,446 |
| Cost of revenues | 1,235,647 | 1,029,180 | 2,694,649 | 3,250,327 |
| Gross profit | (816,690) | 1,858,944 | (915,794) | 2,769,119 |
| Operating expenses | 2,761,523 | 8,686,912 | 5,918,933 | 14,347,703 |
| Loss from operations | (3,578,213) | (6,827,968) | (6,834,727) | (11,578,584) |
| Other income (expense): | ||||
| Other income | 9 | |||
| Change in fair value of warrant liability | 103,951 | 180,468 | 218,039 | |
| Gain on debt extinguishment | ||||
| Interest expense | (585,417) | (165,993) | (1,335,799) | (659,394) |
| Other income (expense) | (1,747) | (3,975) | 68,227 | (4,820) |
| Other income (expense) | (587,164) | (66,008) | (1,087,104) | (446,175) |
| Loss before provision for income taxes | (4,165,377) | (6,893,976) | (7,921,831) | (12,024,759) |
| Provision for income taxes | 9,596 | |||
| Net loss | $ (4,165,377) | $ (6,893,976) | $ (7,931,427) | $ (12,024,759) |
| Loss per share - basic | $ (0.36) | $ (1.98) | $ (1.08) | $ (3.56) |
| Loss per share - dIluted | $ (0.36) | $ (1.98) | $ (1.08) | $ (3.56) |
| Weighted average shares outstanding - basic | 11,589,937 | 3,488,903 | 7,358,006 | 3,378,577 |
| Weighted average shares outstanding - diluted | 11,589,937 | 3,488,903 | 7,358,006 | 3,378,577 |
| Product [Member] | ||||
| Revenues | ||||
| Total revenues | $ 196,082 | $ 2,629,636 | $ 1,259,972 | $ 4,855,293 |
| Service [Member] | ||||
| Revenues | ||||
| Total revenues | $ 222,875 | $ 258,488 | $ 518,883 | $ 1,164,153 |
Organization and Description of Business |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Accounting Policies [Abstract] | |
| Organization and Description of Business | 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 is in a gray area and considered a potential loophole at this point due to the 2018 hemp bill. The Company formed Nascent Pharma, LLC in July 2023 to acquire and exploit certain patents. The Company has a 67% interest in Nascent Pharma, LLC. 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 devices. 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.
|
Going Concern |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Going Concern | Note 2 – Going Concern
The condensed 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 September 30, 2023, the Company had cash and cash equivalents of $31,318 and negative working capital of $5,195,758. For the nine months ended September 30, 2023 and 2022, the Company had incurred losses of $7,931,427 and $12,024,759, 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 compared to the prior three independent operating facilities. The Company expects to have the consolidated operation fully operational by the end of fiscal 2023. 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.
|
Basis of Presentation and Summary of Significant Accounting Policies |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation and Summary of Significant Accounting Policies | Note 3 – Basis of Presentation and Summary of Significant Accounting Policies
Basis of Financial Statement Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and with the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these interim consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of the management of the Company, as defined below, these unaudited consolidated financial statements include all adjustments necessary to present fairly the information set forth therein. Results for interim periods are not necessarily indicative of results to be expected for a full year.
The consolidated balance sheet information as of December 31, 2022 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K”). The interim consolidated financial statements contained herein should be read in conjunction with the 2022 Form 10-K.
Can B̅ Corp. and Subsidiaries Notes to Consolidated Financial Statements September 30, 2023
Principles of Consolidation
The unaudited 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.
Use of Estimates
The preparation of financial statements and related disclosures 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 as of the date of the financial statements and the reported amounts of revenues and expenses in those financial statements. Certain significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, inventory, goodwill, intangible assets and other long-lived assets, income taxes and deferred taxes. Descriptions of these policies are discussed in the Company’s 2022 Form 10-K. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and adjusts when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.
Significant Accounting Policies
The Company’s significant accounting policies are described in “Note 3: Summary of Significant Accounting Policies” of our 2022 Form 10-K.
Can B̅ Corp. and Subsidiaries Notes to Consolidated Financial Statements September 30, 2023
Segment reporting
As of September 30, 2023, the Company reports operating results and financial data in one operating and reportable 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.
Reclassifications
Certain amounts in the prior year consolidated financial statements have been reclassified to conform to the current year presentation. These reclassification adjustments had no effect on the Company’s previously reported net loss.
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Fair Value Measurements |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements | Note 4 – Fair Value Measurements
The carrying value and fair value of the Company’s financial instruments are as follows:
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:
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:
Can B̅ Corp. and Subsidiaries Notes to Consolidated Financial Statements September 30, 2023
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Inventories |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Inventories | Note 5 – Inventories
Inventories consist of:
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Property and Equipment |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment | Note 6 – Property and Equipment
Property and equipment consist of:
Depreciation expense related to property and equipment was $1,040,915 and $1,061,549 for the nine months ended September 30, 2023 and 2022, respectively.
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Intangible Assets |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible Assets | Note 7 – Intangible Assets
Intangible assets consist of:
Amortization expense was $9,000 and $23,906 for the nine months ended September 30, 2023 and 2022, respectively.
Can B̅ Corp. and Subsidiaries Notes to Consolidated Financial Statements June 30, 2023
Amortization expense for the balance of 2023, and for each of the next five years and thereafter is estimated to be as follows:
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Notes and Loans Payable |
9 Months Ended | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||
| Notes and Loans Payable | Note 8 – 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 original principal amount of the note was $2,675,239 and the proceeds are to be utilized for working capital purposes. The note matured 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 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 $ 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 September 30, 2023 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 original principal amount of the note was $102,539 and the proceeds are to be utilized for working capital purposes. The note matured 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 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 September 30, 2023 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 original principal amount of the note was $1,193,135 and the proceeds are to be utilized for working capital purposes. The note matured 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 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 September 30, 2023 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 original principal amount of the note was $306,865 and the proceeds are to be utilized for working capital purposes. The note matured 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 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 September 30, 2023 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 subsequently elected to extend the maturity date to May 31, 2022 for the promise to pay an additional $100,000. As discussed below under “Forbearance and Amendment of Outstanding Notes,” ASOP and ASOF have agreed to forbear from exercising remedies under the notes until December 31, 2023 provided that the Company does not default on its obligations under the Forbearance Agreement.
Can B̅ Corp. and Subsidiaries Notes to Consolidated Financial Statements September 30, 2023
On January 1, 2022, the Company entered into a convertible promissory note (“Empire Note”) with Empire Properties, LLC (“Empire”). The original principal amount of the note was $52,319 and the proceeds are to be utilized for working capital purposes. The note matured on December 31, 2022 or due on demand subsequent 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 September 30, 2023 was $52,319.
In March 2022, the Company entered into a convertible promissory note (“BL Note”) with Blue Lake Partners, LLC (“BL”). The original principal amount of the note was $250,000 and the proceeds are to be utilized for working capital purposes. The note had an original maturity date of 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 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 initial exercise price of $6.40 per share (subject to adjustment upon the occurrence of certain events, including the issuance of lower priced securities). 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. Effective February 27, 2023, in consideration of the Company repaying an aggregate of $66,667 under the BL Note, BL agreed to extend the maturity date of the BL Note until September 1, 2023 and reduce the percentage of the cash proceeds received by the Company from the issuance of equity or debt that BL can require the Company to apply to the repayment of the BL Note from 50% to 33%. The principal balance outstanding at September 30, 2023 was $102,623 and the BL Note is past due.
In March 2022, the Company entered into a convertible promissory note (“MH Note”) with Mast Hill Fund, LP (“MH”). The original principal amount of the note was $350,000 and the proceeds are to be utilized for working capital purposes. The note had an original maturity date of 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 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 initial exercise price of $6.40 per share (subject to adjustment upon the occurrence of certain events, including the issuance of lower priced securities). 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. Effective February 27, 2023, in consideration of the Company repaying an aggregate of $93,333 under the MH Note, MH agreed to extend the maturity date of the MH Note until September 1, 2023 and reduce the percentage of the cash proceeds received by the Company from the issuance of equity or debt that MH can require the Company to apply to the repayment of the MH Note from 50% to 33%. The principal balance outstanding at September 30, 2023 was $256,667 and the MH Note is past due.
In April 2022, the Company entered into a convertible promissory note (“FM Note”) with Fourth Man, LLC (“FM”). The original principal amount of the note was $150,000 and the proceeds are to be utilized for working capital purposes. The note had an original maturity date of 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 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 initial exercise price of $6.40 per share (subject to adjustment upon the occurrence of certain events, including the issuance of lower priced securities). 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. Effective February 27, 2023, in consideration of the Company repaying an aggregate of $40,000 under the FM Note, FM agreed to extend the maturity date of the FM Note until September 1, 2023 and reduce the percentage of the cash proceeds received by the Company from the issuance of equity or debt that FM can require the Company to apply to the repayment of the FM Note from 50% to 33%. On June 30th, 2023 the Company entered into a Settlement and Mutual Release Agreement to extinguish the $110,000 principal outstanding on the FM Note. As of September 30, 2023 the FM Note had been satisfied in full.
Can B̅ Corp. and Subsidiaries Notes to Consolidated Financial Statements September 30, 2023
In June 2022, the Company entered into a convertible promissory note (“Alumni Note”) with Alumni Capital, LP (“Alumni”). The original principal amount of the note was $62,500 and the proceeds are to be utilized for working capital purposes. The note had an original maturity date of June 6, 2023 which was extended until September 1, 2023 effective February 27, 2023. All principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. The holder can require the full payment of the note if the Company completes an offering of its common stock that results in an uplisting of its common stock to a national securities exchange. 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 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 September 30, 2023 was $62,500.
In August 2022, the Company entered into a convertible promissory note (“WN”) with Walleye Opportunities Master Fund Ltd. (“WOMF”). The original principal amount of the note was $385,000 and the proceeds are to be utilized for working capital purposes. The note originally matured 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 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 September 30, 2023 was $385,000.
In January 2023 the Company entered into a convertible promissory note (“Tysadco Note VI”) with Tysadco Partners, LLC (“Tysadco”). The original principal amount of the note was $100,000 and the proceeds are to be utilized for working capital purposes. The note had a maturity date of April 12, 2023, and all principal, accrued and unpaid interest is due at maturity at a rate of 12% per annum. Effective January 31, 2023, Tysadco agreed to exchange the Tysdaco Note VI and other notes held by Tysdaco in the aggregate principal amount of $752,000 having maturity dates between August 24, 2022 and March 19, 2023 for a single note that matured on September 1, 2023. Contemporaneous with this exchange, Tysadco assigned the combined note to ClearThink Capital Partners, LLC and the Company issued shares of common stock to ClearThink Capital Partners, LLC. The conversion options contained in the combined 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 principal balance of the combined note at September 30, 2023 was $1,007,500 and the combined note is past due.
On March 2, 2023, the Company completed the sale of a promissory note (the “Note”) in the principal amount of $1,823,529 to WOMF 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 WOMF an amount equal to 10% of revenues received during the prior month from the sale of goods or services or collections of accounts receivable.
Can B̅ Corp. and Subsidiaries Notes to Consolidated Financial Statements September 30, 2023
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. As of September 30, 2023, the adjusted conversion price was $.0772. 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. WOMF has the right to determine the timing of any such conversion. WOMF 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. The Company did not pay the installments due under the Note on April 27, 2023, May 1, 2023, June 1, 2023, July 1, 2023, August 1, 2023 and September 1, 2023 in cash. As a result, these installment payments will be converted into common stock at such time as WOMF elects to effect the conversions.
If the Company receives cash proceeds from any source, including payments from customers or from the issuance of equity or debt, WOMF can require the Company to apply 100% of such proceeds to the repayment of the Note.
If the Company completes a placement of securities, WOMF 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 WOMF believes that terms of the new or amended security are more favorable to the holder than the terms provided to WOMF, WOMF may require that such terms become part of WOMF’s transaction documents with the Company.
In the event of a default under the Note, the Company shall be required to pay WOMF an amount equal to the amount determined by multiplying the principal amount then outstanding plus default interest by 135%, plus costs of collection. WOMF 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.
WOMF 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 WOMF a warrant (the “Warrant”) to purchase 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 WOMF 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 WOMF pursuant to which the Company has agreed to file a registration statement with the Securities and Exchange Commission to register the shares of common stock issuable upon the conversion of the Note and the exercise of the Warrant for public resale. The Company filed the registration statement on May 12, 2023 and it was declared effective on May 22, 2023. WOMF 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 WOMF 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.
In May 2023, the Company issued a promissory note to WOMF in the principal amount of $437,500. The purchase price of the note was $350,000, representing a 20% original issue discount. The note is non-interest bearing except in the event of a default, in which case interest will accrue at a rate of 40% per annum in the event of a payment default and 18% per annum in the event of other defaults. The note becomes due on October 15, 2023. The principal balance outstanding at September 30, 2023 was $256,893.
Can B̅ Corp. and Subsidiaries Notes to Consolidated Financial Statements September 30, 2023
Forbearance and Amendment of Outstanding Notes.
Contemporaneous with the sale of the Note and Warrant to WOMF, ASOP and ASOF (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. In September 2023, Arena notified the Company that it was in default of certain obligations under the Forbearance Agreement but did not declare an acceleration of the indebtedness.
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. After the amount collected is $5,700,000, additional collections of these receivables are shared equally between the Company and Arena. 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 WOMF, certain terms of certain promissory notes previously issued by the Company were amended, including the following:
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%. As of September 30, 2023, the total amount outstanding was $1,460,948 and the note is past due.
Other Loans
On November 18, 2021, the Company entered into a $100,000 unsecured promissory note agreement with a lender. The promissory note accrued interest at a rate of 10% per annum and was due within twelve months of issuance or due on demand subsequent to any major funding received by the Company in excess of $3,000,000. As of September 30, 2023 there was no principal outstanding.
Can B̅ Corp. and Subsidiaries Notes to Consolidated Financial Statements September 30, 2023
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 September 30, 2023, the total amounts outstanding were approximately $95,000.
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 September 30, 2023 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 September 30, 2023 the note has been satisfied in full.
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 June 30, 2023 the total amount outstanding was $65,000.
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 September 30, 2023 no principal was outstanding.
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 September 30, 2023 the total amount outstanding was $125,000.
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Stockholders’ Equity |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Equity [Abstract] | |
| Stockholders’ Equity | Note 9 – Stockholders’ Equity
Preferred Stock
Each share of Series A Preferred Stock is convertible into 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.
Can B̅ Corp. and Subsidiaries Notes to Consolidated Financial Statements September 30, 2023
Each share of Series B Preferred Stock has the first preference to dividends, distributions and payments upon liquidation, dissolution and winding-up of the Company, and is entitled to an accrued cumulative but not compounding dividend at the rate of 5% per annum whether or not declared. After six months of the issuance date, such share and any accrued but unpaid dividends can be converted into common stock at the conversion price which is the lower of (i) $0.0101; or (ii) the lower of the dollar volume weighted average price of CANB common stock on the trading day prior to the conversion day or the dollar volume weighted average price of CANB common stock on the conversion day. The shares of Series B Preferred Stock have no voting rights.
Each share of Series C Preferred Stock has preference to payment of dividends, if and when declared by the Company, compared to shares of the Company’s common stock. Each Preferred Series C share is convertible into shares of common stock. The shares of Series C Preferred Stock have voting rights as if fully converted.
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 shares of a new Series D Preferred Stock with a par value of $ each. All Series D Preferred Shares rank senior to all shares of Common Stock of the Company with respect to liquidation preferences and 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 has 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.
Can B̅ Corp. and Subsidiaries Notes to Consolidated Financial Statements September 30, 2023
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Stock Options |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Options |
Stock-based compensation expense related to stock options during the nine months ended September 30, 2023 and 2022 was $ and $, respectively.
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Income Taxes |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Note 11 – Income Taxes
The Company’s income tax provisions for the three and nine months ended September 30, 2023 and 2022 reflect the Company’s estimates of the effective rates expected to be applicable for the respective full years, adjusted for any discrete events, which are recorded in the period that they occur. These estimates are reevaluated each quarter based on the Company’s estimated tax expense for the full year. The estimated effective tax rate includes the impact of valuation allowances in various jurisdictions.
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Related Party Transactions |
9 Months Ended |
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Sep. 30, 2023 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | Note 12 – Related Party Transactions
For the nine months ended September 30, 2022, the Company incurred fees to a service provider that is a relative of a director for professional services in the amount of $13,100.
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Commitments and Contingencies |
9 Months Ended | |||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||
| Commitments and Contingencies | Note 13 – Commitments and Contingencies
Lease Agreements
The Company leases office space in numerous medical facilities offices under month-to-month agreements.
Rent expense for the nine months ended September 30, 2023 and 2022 was $292,873 and $595,104, respectively.
At September 30, 2023, the future minimum lease payments under non-cancellable operating leases were:
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Subsequent Events |
9 Months Ended |
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Sep. 30, 2023 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | Note 14 – Subsequent Events
The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the condensed consolidated financial statements are issued and as of that date. There were no subsequent events that required adjustment or disclosure in the consolidated financial statements except as follows:
On October 27, 2023, the Company completed the sale of a promissory note (the “Initial Note”) in the principal amount of $156,250 to WOMF pursuant to a Securities Purchase Agreement between the Company and the WOMF (the “Stock Purchase Agreement”). The purchase price of the Note was $125,000, representing a 20% original issue discount. The Initial 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 Initial Note becomes due on October 27, 2024.
Can B̅ Corp. and Subsidiaries Notes to Consolidated Financial Statements September 30, 2023
WOMF may elect to convert the principal amount of the Initial Note and default interest, if any, subject to adjustment at a price equal to 90% of the lowest daily volume weighted average price of the common stock during the fifteen trading days preceding the conversion date.
WOMF and/or investors introduced by WOMF may purchase up to an additional $1,693,750 aggregate principal amount of notes having terms substantially similar to the Initial Note (the “New Notes” and collectively with the Initial Note, the “Notes”). In addition to the principal and interest payment obligations under the Notes, the Company has agreed to pay and/or cause its newly formed 70% owned subsidiary, Nascent Pharma, LLC (“Nascent”,) to pay WOMF fifteen percent (15%) of all amounts that would otherwise be distributable to the Company by Nascent until WOMF receives distributions in the aggregate amount that equal the sum of (a) 200% of the purchase price of notes previously issued by the Company to WOMF plus (b) 200% of the principal amount of certain notes previously issued by the Company and acquired by WOMF from a third party plus (c) 100% of the purchase price of Notes purchased pursuant to the Stock Purchase Agreement; provided, however, if WOMF and/or other investors purchase $1,875,000 aggregate principal amount of Notes pursuant to the Stock Purchase Agreement, the obligation to pay 100% of the purchase price of the Notes shall be increased to 200% of the purchase price of such Notes. The amounts distributable by Nascent to the Company, if any, will represent the proceeds of Nascent’s enforcement of certain patents it is seeking to acquire. Nascent has not yet acquired such patents and no assurance can be given that it will be able to complete such acquisition. Under the terms of the Stock Purchase Agreement, the purchase of New Notes by WOMF and/or investors introduced by WOMF is subject to, among other things, Nascent’s acquisition of the patents. If Nascent does not complete the acquisition of the patents, the Company does not expect that any New Notes will be purchased and the Company will have no obligation to pay additional consideration to WOMF.
In the event of a default under a Note, the Company shall be required to pay the holder of the Note an amount equal to the amount determined by multiplying the principal amount of the Note then outstanding plus default interest by 135%, plus costs of collection. WOMF 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.
WOMF has been granted a right of first refusal to participate in future financing transactions conducted by the Company.
The Company has entered into a Registration Rights Agreement with WOMF pursuant to which the Company has agreed to file a registration statement with the Securities and Exchange Commission by December 11, 2023 to register for public resale the shares of common stock issuable upon the conversion of the Note and a consolidated note issued to WOMF in the principal amount of $1,354,210 (the “Consolidated Note”) which combined certain notes held by WOMF into a single Note. If the Company fails to file the registration statement by December 11, 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 and the Consolidated 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 effective. WOMF has also been granted piggyback registration rights with respect to the shares of common stock issuable upon the conversion of the Notes it acquires and the Consolidated Note. Each of the Initial Note and Consolidated Note grants full ratchet anti-dilution protection to WOMF 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.
The Initial Note contains and the New Notes will contain a provision which provides that the holder will not be converted if the conversion would result in the holder becoming the beneficial owner of more than 9.99% of the Company’s outstanding common stock.
In July 2023, the Company moved its Pure Health Products operations from Lacey, Washington to Colorado.
In November 2023, the Company’s wholly owned subsidiary, Pure Health Products, LLC, ceased manufacturing the Brook Burke Body, Inc. (“BBB”) Longevity Superfood drink mix product for shipment to Forever Brands’ customers due to the termination of the agreement between BBB and Forever Brands. |
Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2023 | |
| Accounting Policies [Abstract] | |
| Basis of Financial Statement Presentation | Basis of Financial Statement Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and with the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these interim consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of the management of the Company, as defined below, these unaudited consolidated financial statements include all adjustments necessary to present fairly the information set forth therein. Results for interim periods are not necessarily indicative of results to be expected for a full year.
The consolidated balance sheet information as of December 31, 2022 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K”). The interim consolidated financial statements contained herein should be read in conjunction with the 2022 Form 10-K.
Can B̅ Corp. and Subsidiaries Notes to Consolidated Financial Statements September 30, 2023
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| Principles of Consolidation | Principles of Consolidation
The unaudited 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.
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| Use of Estimates | Use of Estimates
The preparation of financial statements and related disclosures 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 as of the date of the financial statements and the reported amounts of revenues and expenses in those financial statements. Certain significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, inventory, goodwill, intangible assets and other long-lived assets, income taxes and deferred taxes. Descriptions of these policies are discussed in the Company’s 2022 Form 10-K. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and adjusts when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.
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| Significant Accounting Policies | Significant Accounting Policies
The Company’s significant accounting policies are described in “Note 3: Summary of Significant Accounting Policies” of our 2022 Form 10-K.
Can B̅ Corp. and Subsidiaries Notes to Consolidated Financial Statements September 30, 2023
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| Segment reporting | Segment reporting
As of September 30, 2023, the Company reports operating results and financial data in one operating and reportable 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.
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| Reclassifications | Reclassifications
Certain amounts in the prior year consolidated financial statements have been reclassified to conform to the current year presentation. These reclassification adjustments had no effect on the Company’s previously reported net loss. |
Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Carrying Value and Fair Value | The carrying value and fair value of the Company’s financial instruments are as follows:
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| Schedule of Fair Value Assumptions |
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| Schedule of Changes in Fair Value of the Warrant Liabilities |
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Inventories (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Inventories |
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Property and Equipment (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Property And Equipment | Property and equipment consist of:
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Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Intangible Assets | Intangible assets consist of:
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| Schedule of Estimated Amortization Expenses | Amortization expense for the balance of 2023, and for each of the next five years and thereafter is estimated to be as follows:
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Stock Options (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Stock Option Activity |
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Commitments and Contingencies (Tables) |
9 Months Ended | |||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||
| Schedule of Future maturities of Lease Liabilities | At September 30, 2023, the future minimum lease payments under non-cancellable operating leases were:
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Going Concern (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
| Cash and cash equivalents | $ 31,318 | $ 31,318 | $ 73,194 | ||
| Working capital | 5,195,758 | 5,195,758 | |||
| Net loss | $ 4,165,377 | $ 6,893,976 | $ 7,931,427 | $ 12,024,759 | |
Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) |
9 Months Ended |
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Sep. 30, 2023
Segment
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| Accounting Policies [Abstract] | |
| Number of operating segments | 1 |
| Number of reportable segments | 1 |
Schedule of Carrying Value and Fair Value (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
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| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
| Warrant liabilities | $ 22,575 | $ 203,043 | $ 130,373 | |
| Fair Value, Inputs, Level 1 [Member] | ||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
| Warrant liabilities | ||||
| Fair Value, Inputs, Level 2 [Member] | ||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
| Warrant liabilities | ||||
| Fair Value, Inputs, Level 3 [Member] | ||||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
| Warrant liabilities | $ 22,575 | $ 203,043 |
Schedule of Changes in Fair Value of the Warrant Liabilities (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
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| Fair Value Disclosures [Abstract] | ||||
| Estimated fair value, beginning | $ 203,043 | |||
| Issuance of warrant liabilities | 357,053 | |||
| Change in fair value | $ (103,951) | (180,468) | (218,039) | |
| Estimated fair value, ending | $ 22,575 | $ 130,373 | $ 22,575 | $ 130,373 |
Schedule of Inventories (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Raw materials | $ 447,206 | $ 829,844 |
| Finished goods | 512,500 | 1,194,209 |
| Total | $ 959,706 | $ 2,024,053 |
Schedule of Property And Equipment (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Property, Plant and Equipment [Abstract] | ||
| Furniture and fixtures | $ 21,724 | $ 21,724 |
| Office equipment | 12,378 | 12,378 |
| Manufacturing equipment | 6,828,083 | 6,766,208 |
| Medical equipment | 776,396 | 776,396 |
| Leasehold improvements | 26,902 | 26,902 |
| Total | 7,665,483 | 7,603,608 |
| Accumulated depreciation | (3,212,166) | (2,171,251) |
| Net | $ 4,453,317 | $ 5,432,357 |
Property and Equipment (Details Narrative) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
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| Property, Plant and Equipment [Abstract] | ||
| Depreciation | $ 1,040,915 | $ 1,061,549 |
Schedule of Intangible Assets (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Technology, IP and patents | $ 119,998 | $ 119,998 |
| Total | 119,998 | 119,998 |
| Accumulated amortization | (21,854) | (12,854) |
| Intangible Assets,Net | $ 98,144 | $ 107,144 |
Schedule of Estimated Amortization Expenses (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| three months ended December 31, 2023 | $ 3,000 | |
| Fiscal year 2024 | 12,000 | |
| Fiscal year 2025 | 12,000 | |
| Fiscal year 2026 | 12,000 | |
| Fiscal year 2027 | 12,000 | |
| Thereafter | 47,144 | |
| Intangible Assets,Net | $ 98,144 | $ 107,144 |
Intangible Assets (Details Narrative) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
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| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Amortization expense | $ 9,000 | $ 23,906 |
Stockholders’ Equity (Details Narrative) - $ / shares |
9 Months Ended | |||
|---|---|---|---|---|
Feb. 08, 2021 |
Sep. 30, 2023 |
Dec. 31, 2022 |
Mar. 27, 2021 |
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| Class of Stock [Line Items] | ||||
| Preferred stock shares authorized | 5,000,000 | 5,000,000 | ||
| Series A Preferred Stock [Member] | ||||
| Class of Stock [Line Items] | ||||
| Preferred stock voting rights | Each share of Series A Preferred Stock is convertible into | |||
| Preferred Stock, share | 218 | |||
| Preferred stock shares authorized | 20 | 20 | ||
| Series B Preferred Stock [Member] | ||||
| Class of Stock [Line Items] | ||||
| Preferred stock voting rights | The shares of Series B Preferred Stock have no voting rights. | |||
| Dividend, description | 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 | |||
| Preferred stock shares authorized | 500,000 | 500,000 | ||
| Preferred stock par or stated value per share | $ 0.001 | $ 0.001 | ||
| Series C Preferred Stock [Member] | ||||
| Class of Stock [Line Items] | ||||
| Convertible preferred stock, shares issued upon conversion | 1,667 | |||
| Preferred stock shares authorized | 2,000 | 2,000 | ||
| Preferred stock par or stated value per share | $ 0.001 | $ 0.001 | ||
| Series D Preferred Stock [Member] | ||||
| Class of Stock [Line Items] | ||||
| Preferred stock voting rights | Each Series D Preferred Share has 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”). | |||
| Preferred stock shares authorized | 4,000 | 4,000 | 4,000 | |
| Preferred stock par or stated value per share | $ 0.001 | $ 0.001 | $ 0.001 |
Summary of Stock Option Activity (Details) - $ / shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
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| Share-Based Payment Arrangement [Abstract] | ||
| Option shares, outstanding beginning | 1,056,666 | |
| Weighted average exercise price, exercisable beginning | $ 4.02 | |
| Weighted average remaining contractual life years, exercisable ending | 3 years 10 months 20 days | 3 years 6 months 29 days |
| Option shares, granted | 11,166,655 | |
| Weighted average exercise price, granted | $ 0.12 | |
| Weighted average remaining contractual life years, outstanding granted | 4 years 10 months 17 days | |
| Option shares, exercised | ||
| Weighted average exercise price, exercised | ||
| Option shares, forfeited | ||
| Weighted average exercise price, forfeited | ||
| Option shares, expired | ||
| Weighted average exercise price, expired | ||
| Option shares, outstanding ending | 12,223,331 | |
| Weighted average exercise price, exercisable ending | $ 3.08 | $ 4.02 |
Stock Options (Details Narrative) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
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| Share-Based Payment Arrangement [Abstract] | ||
| Share based compensation | $ 1,451,665 | $ 2,371,819 |
Related Party Transactions (Details Narrative) |
9 Months Ended |
|---|---|
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Sep. 30, 2022
USD ($)
| |
| Director [Member] | |
| Related Party Transaction [Line Items] | |
| Professional fees | $ 13,100 |
Schedule of Future maturities of Lease Liabilities (Details) |
Sep. 30, 2023
USD ($)
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|---|---|
| Commitments and Contingencies Disclosure [Abstract] | |
| three months ended December 31, 2023 | $ 185,557 |
| Fiscal year 2024 | 469,818 |
| Total future Lease Payment | $ 655,375 |
Commitments and Contingencies (Details Narrative) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
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| Commitments and Contingencies Disclosure [Abstract] | ||
| Rent expense | $ 292,873 | $ 595,104 |
Subsequent Events (Details Narrative) - USD ($) |
Oct. 27, 2023 |
Mar. 02, 2023 |
Sep. 30, 2023 |
|---|---|---|---|
| Subsequent Event [Line Items] | |||
| Principal amount | $ 95,000 | ||
| Investor [Member] | |||
| Subsequent Event [Line Items] | |||
| Debt instrument convertible percentage | 60.00% | ||
| Debt instrument interest rate stated percentage | 135.00% | ||
| Subsequent Event [Member] | |||
| Subsequent Event [Line Items] | |||
| Principal amount | $ 1,354,210 | ||
| Percentage of outstanding common stock | 9.99% | ||
| Stock Purchase Agreement [Member] | Subsequent Event [Member] | |||
| Subsequent Event [Line Items] | |||
| Principal amount | $ 1,875,000 | ||
| Debt instrument description | In addition to the principal and interest payment obligations under the Notes, the Company has agreed to pay and/or cause its newly formed 70% owned subsidiary, Nascent Pharma, LLC (“Nascent”,) to pay WOMF fifteen percent (15%) of all amounts that would otherwise be distributable to the Company by Nascent until WOMF receives distributions in the aggregate amount that equal the sum of (a) 200% of the purchase price of notes previously issued by the Company to WOMF plus (b) 200% of the principal amount of certain notes previously issued by the Company and acquired by WOMF from a third party plus (c) 100% of the purchase price of Notes purchased pursuant to the Stock Purchase Agreement; provided, however, if WOMF and/or other investors purchase $1,875,000 aggregate principal amount of Notes pursuant to the Stock Purchase Agreement, the obligation to pay 100% of the purchase price of the Notes shall be increased to 200% of the purchase price of such Notes. | ||
| Initial Note [Member] | Stock Purchase Agreement [Member] | Subsequent Event [Member] | |||
| Subsequent Event [Line Items] | |||
| Principal amount | $ 156,250 | ||
| Debt instrument purchase amount | $ 125,000 | ||
| Original debt, interest rate | 20.00% | ||
| Debt instrument convertible percentage | 60.00% | ||
| Debt instrument interest rate stated percentage | 135.00% | ||
| Initial Note [Member] | Stock Purchase Agreement [Member] | Subsequent Event [Member] | Common Stock [Member] | |||
| Subsequent Event [Line Items] | |||
| Debt instrument convertible percentage | 90.00% | ||
| Initial Note [Member] | Stock Purchase Agreement [Member] | Subsequent Event [Member] | Maximum [Member] | |||
| Subsequent Event [Line Items] | |||
| Debt instrument interest rate percentage | 18.00% | ||
| Notes [Member] | Subsequent Event [Member] | Investor [Member] | |||
| Subsequent Event [Line Items] | |||
| Principal amount | $ 1,693,750 | ||
| Consolidated Note [Member] | Subsequent Event [Member] | |||
| Subsequent Event [Line Items] | |||
| Debt instrument periodic payment | the Company will be required to make a payment of 2% of the amount then owed under the Note and the Consolidated 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 effective. |