Can B? 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 B? 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
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) 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 B?'s
products include oils, creams, moisturizers, isolate, gel caps, spa products,
and concentrates and lifestyle products. Can B? develops its own line of
proprietary products as well seeks synergistic value through acquisitions in the
hemp industry. Can B? 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, 2022 compared to three months ended September
30, 2021.
Revenues increased $977,752 from $1,910,372 in 2021 to $2,888,124 in 2022. The
increase is due to 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. Additionally, due to asset acquisitions in 2021, the Company's
Music City Botanical and Botanical Biotech brands related to an increase of
sales compared to 2021 of approximately $1,454,000.
Cost of product sales increased $488,294 from $540,886 in 2021 to $1,029,180 in
2022 due to the increase in sales caused by increase in operations and 2021
acquisitions.
Operating expenses increased $4,793,227 from $3,893,685 in 2021 to $8,686,912
and net loss increased 3,661,360 from $3,232,616 in 2021 to $6,893,976 in 2022
as a direct result in non-cash stock-based compensation expense during the third
quarter of 2022 amounting to approximately $4,500,000.
Nine months ended September 30, 2022 compared to nine months ended September 30,
2021.
Revenues increased 2,500,062 from $2,355,231 in 2021 to $6,019,446 in 2022. The
increase is due to 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. Additionally, due to asset acquisitions in 2021, the Company's
Music City Botanical and Botanical Biotech brands related to an increase of
sales compared to 2021 of $2,200,000.
Cost of product sales increased $2,374,034 from $876,293 in 2021 to $3,250,327
in 2022 due to the increase in sales caused by increase in operations and 2021
acquisitions.
Operating expenses increased $5,702,341 from $8,645,362 in 2021 to $14,347,703
and Net loss increased 3,872,272 from $8,152,487 in 2021 to $12,024,759 in 2022
as a direct result in non-cash stock-based compensation expense during the third
quarter of 2022 amounting to approximately $5,050,000.
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Liquidity and Capital Resources
At September 30, 2022, the Company had cash and cash equivalents of $34,471 and
negative working capital of $2,205,209. Cash and cash equivalents decreased
$414,530 from $449,001 at December 31, 2021 to $34,471 at September 30, 2022.
For the nine months ended September 30, 2022, $3,006,424 was provided by
financing activities, $3,420,954 was used in operating activities, and $0 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.
Trend Information
The novel coronavirus disease of 2019 ("COVID-19") outbreak has affected the
Company's operations as set forth above. The full impact of the COVID-19
outbreak continues to evolve. As such, it is uncertain as to the full magnitude
that the pandemic will have on our financial condition, liquidity, and future
results of operations. Management is actively monitoring the impact of the
global situation on our financial condition, liquidity, operations, suppliers,
industry, and workforce. Given the daily evolution of the COVID-19 outbreak and
the global responses to curb its spread, we are not able to estimate the effects
of the COVID-19 outbreak on our results of operations, financial condition, or
liquidity for the foreseeable future. Presently, our Duramed operations are at
80% of pre-COVID operational level. Our expectation that as business open, and
in particular medical offices, that our recovery will progress in sync with the
speed of the business openings and expect to be back to pre-COVID operational
level by fiscal year 2023. Sales of CBD and related products continue to
moderately recover and we expect to be back at pre-COVID levels by fiscal year
2023.
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