Can B CORP 10-Q Filing

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• 0001493152-24-033083.txt ( ) — 19832KB
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- FINANCIAL INFORMATION

PART I. - FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements Condensed Consolidated Balance Sheets (unaudited) – June 30, 2024 and December 31, 2023 3 Condensed Consolidated Statements of Operations (unaudited) – Three and Six Months Ended June 30, 2024 and 2023 4 Condensed Consolidated Statement of Stockholders' Equity (Deficit) (unaudited) Three and Six Months Ended June 30, 2024 and 2023 5 Condensed Consolidated Statements of Cash Flows (unaudited) – Six Months Ended June 30, 2024 and 2023 7 Condensed Notes to Unaudited Consolidated Financial Statements. 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations. 21 Item 3

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk. 22 Item 4

Controls and Procedures

Controls and Procedures. 22

- OTHER INFORMATION

PART II - OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 22 Item A.

Risk Factors

Risk Factors 23 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 23 Item 3. Defaults Upon Senior Securities 23 Item 4. Mine Safety Disclosures 23 Item 5. Other Information 24 Item 6. Exhibits 24 2 PART 1 – FINANCIAL INFORMATION Item 1. Financial Statements Can B Corp. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) June 30, December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ - $ 34,006 Accounts receivable, less allowance for doubtful accounts of $ 2,882,228 and $ 2,818,395 , respectively 3,404,908 3,723,344 Inventory 563,370 1,619,542 Prepaid expenses and other current assets 10,062 4,137 Total current assets 3,978,340 5,381,029 Other assets: Deposits 239,285 235,418 Intangible assets, net - 95,144 Property and equipment, net 619,907 4,106,283 Right of use assets, net 65,771 295,151 Other noncurrent assets 16,626 13,139 Total other assets 941,589 4,745,135 Total assets $ 4,919,929 $ 10,126,164 Liabilities and Stockholders' Equity (Deficit) Current liabilities: Accounts payable $ 2,614,157 $ 1,997,643 Due to related party 448,850 357,243 Notes and loans payable, net 7,982,587 8,811,596 Warrant liabilities - 1,766 Operating lease liability - current 65,771 254,391 Total current liabilities 11,111,365 11,422,639 Total liabilities 11,111,365 11,422,639 Commitments and contingencies (Note 12) - - Stockholders' equity (deficit): Preferred stock, authorized 5,000,000 shares: Series A Preferred stock, no par value: 20 shares authorized, 5 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 5,320,000 5,320,000 Series C Preferred stock, $ 0.001 par value: 2,000 shares authorized, 1,100 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 2,900,039 2,900,039 Series D Preferred stock, $ 0.001 par value: 4,000 share

notes to consolidated financial statements

notes to consolidated financial statements 3 Can B Corp. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) 2024 2023 2024 2023 Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 Revenues Product sales $ - $ 255,142 $ - $ 1,063,890 Service revenue 272,287 165,451 641,383 296,008 Total revenues 272,287 420,593 641,383 1,359,898 Cost of revenues 665,471 934,425 1,858,632 1,459,002 Gross profit ( 393,184 ) ( 513,832 ) ( 1,217,249 ) ( 99,104 ) Selling, general and administrative 1,173,836 1,307,780 2,861,894 3,157,410 Loss on sale of assets - - 3,142,769 - Total operating expenses 1,173,836 1,307,780 6,004,663 3,157,410 Loss from operations ( 1,567,020 ) ( 1,821,612 ) ( 7,221,912 ) ( 3,256,514 ) Other income (expense): Change in fair value of warrant liability 1,766 101,050 1,766 180,468 Interest expense ( 463,366 ) ( 416,415 ) ( 969,548 ) ( 750,382 ) Other income (expense) ( 3 ) 109,964 ( 98 ) 69,974 Other income (expense) ( 461,603 ) ( 205,401 ) ( 967,880 ) ( 499,940 ) Loss before provision for income taxes ( 2,028,623 ) ( 2,027,013 ) ( 8,189,792 ) ( 3,756,454 ) Provision for income taxes - - - 9,596 Net loss $ ( 2,028,623 ) $ ( 2,027,013 ) $ ( 8,189,792 ) $ ( 3,766,050 ) Loss per share - basic and diluted $ ( 0.04 ) $ ( 0.37 ) $ ( 0.18 ) $ ( 0.72 ) Weighted average shares outstanding - basic and diluted 54,631,753 5,553,317 45,984,283 5,227,618 See

notes to consolidated financial statements

notes to consolidated financial statements 4 Can B Corp. and Subsidiaries Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) Three Months Ended June 30, 2024 and 2023 Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Issuable Shares Amount Capital Deficit Total 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 Balance, April 1, 2024 5 $ 5,320,000 - $ - 1,100 $ 2,900,039 4,000 $ 4 44,798,583 $ 84,000,265 $ 119,586 36,248 $ ( 572,678 ) $ 11,559,910 $ ( 108,641,867 ) $ ( 5,314,741 ) Issuance of common stock for payables - - - - - - - - 5,749,398 487,428 - - - - - 487,428 Issuance of common stock for contract settlement - - - - - - - - 4,825,000 579,000 - - - - - 579,000 Issuance of common stock in lieu of interest payments - - - - - - - - 3,500,000 82,500 - - - - - 82,500 Issuance of common stock with note extension - - - - - - - - 3,000,000 3,000 - - - - - 3,000 Net loss - - - - - - - - - - - - - ( 2,028,623 ) ( 2,028,623 ) Balance, June 30, 2024 5 $ 5,320,000 - $ - 1,100 $ 2,900,039 4,000 $ 4 61,872,981 $ 85,152,193 $ 119,586 36,248 $ ( 572,678 ) $ 11,559,910 $ ( 110,670,490 ) $ ( 6,191,436 ) Balance, April 1, 2023 5 $ 5,320,000 - $ - 1,100 $ 2,900,039 4,000 $ 4 5,360,434 $ 80,172,548 $ 119,586 36,248 $ ( 572,678 ) $ 8,944,609 $ ( 94,429,872 ) $ 2,454,236 Issuance of common stock for services rendered - - - - - - - - 150,000 74,250 - - - - - 74,250 Issuance of common stock for purchase of equipment - - - - - - - - 125,000 46,875 - - - - - 46,875 Sale of

notes to consolidated financial statements

notes to consolidated financial statements 6 Can B Corp. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) 2024 2023 Six Months Ended June 30, 2024 2023 Operating activities: Net loss $ ( 8,189,792 ) $ ( 3,766,050 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Stock-based compensation 1,163,636 - Depreciation 343,607 692,691 Amortization of intangible assets - 6,000 Amortization of original-issue-discounts 343,428 378,547 Contract settlement 579,000 - Impairment of intangible assets 95,144 - Loss on sale of property and equipment 3,142,769 - Bad debt expense 63,433 61,124 Cancellation of debt - ( 110,000 ) Change in fair value of warrant liability ( 1,766 ) ( 180,468 ) Stock-based interest expense 97,003 42,543 Stock-based consulting expense - 595,807 Changes in operating assets and liabilities: Accounts receivable 255,003 ( 194,061 ) Inventory 1,056,172 470,251 Prepaid expenses ( 5,925 ) ( 8,114 ) Operating lease right-of-use asset 40,760 142 Other non-current assets ( 3,487 ) - Accounts payable 1,106,943 538,492 Accrued expenses - 223,789 Net cash provided by (used in) operating activities 85,928 ( 1,249,307 ) Investing activities: Purchase of property and equipment - ( 15,000 ) Deposits paid ( 3,867 ) ( 70,000 ) Net cash used in investing activities ( 3,867 ) ( 85,000 ) Financing activities: Net proceeds received from notes and loans payable 150,000 2,140,000 Repayments of notes and loans payable ( 357,674 ) ( 621,443 ) Deferred financing costs - ( 178,000 ) Amounts received from/repaid to related parties, net 91,607 44,000 Net cash (used in) provided by financing activities ( 116,067 ) 1,384,557 (Decrease)/Increase in cash and cash equivalents ( 34,006 ) 50,251 Cash and cash equivalents, beginning of period 34,006 73,194 Cash and cash equival

notes to consolidated financial statements

notes to consolidated financial statements 7 Can B Corp. and Subsidiaries Condensed Notes to Unaudited Consolidated Financial Statements June 30, 2024 Note 1 – Organization and Description of Business 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", "we", "us", "our", "CANB", "Can B" 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 its 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 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") are available online. Additional hemp derived isolate is available for wholesale to third-parties looking to incorporate such compounds into their products through the Company's wholly owned subsidiary CO Botanicals LLC (incorporated in August 2021). In February of 2024, Can B Corp's 67 % owned subsidiary, Nascent Pharma, LLC, acquired certain Patents using liquid formulations containing cannabinoids which are used in such products as vape cartridges, edibles, pills, gummies, tinctures, oils, concentrates and more. Prior to June 2024 , the Company was 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 inclu

financial statements contained herein should be read in conjunction with the 2023 Form 10-K

financial statements contained herein should be read in conjunction with the 2023 Form 10-K. Principles of Consolidation The unaudited condensed 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, intangible assets and other long-lived assets, income taxes and deferred taxes. Descriptions of these policies are discussed in the Company's 2023 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 Significant Accounting Policies The Company's significant accounting policies are described in "Note 3: Summary of Significant Accounting Policies" of our 2023 Form 10-K. 9 Can B Corp. and Subsidiaries Notes to Consolidated Financial Statements June 30, 2024 Segment reporting As of June 30, 2024, the Company reports operating results and financial data in one operatin

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