Can B Corp Announces First Quarter 2020 Results Increased Quarterly Revenue, Outpacing Expense Increases Demonstrating Scalability and Leverage of the Business Gross Margin of 79%
I am pleased to report that we are off to an exceptional start in 2020 and our business model is demonstrating its scalability and leverage.
HICKSVILLE, NY, May 26, 2020 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE – Can B Corp. (OTCQB: CANB) (“Can B” or the “Company”), a diversified health and wellness company, announced today operating and financial results for the first quarter ended March 31, 2020.
“I am pleased to report that we are off to an exceptional start in 2020 and our business model is demonstrating its scalability and leverage. For the first time since our inception, our revenue growth has outpaced the increase in operating expenses. Combined with our 79% gross margin, we are operating at our most efficient rate ever. We expect continued growth of the business and our goal is no less than profitability,” stated Marco Alfonsi, Can B’s Chief Executive Officer.
Mr. Alfonsi continued, “On the corporate front, our name change to Can B Corp. better reflects our position as a Health & Wellness company providing the highest quality cannabidiol (CBD) products as well as traditional wellness products. On the capital markets side, our aggressive restructuring measures have greatly improved our visibility and capabilities to access more favorable sources of capital. Our outstanding share count is just over 3 million shares with a 1.4 million share public float which is attractive to potential investors. The additional capital would allow us to execute on our future growth strategies.”
Mr. Alfonsi concluded, “Our diversified product line has us well-positioned to continue to increase market penetration. We have a multi-channel distribution strategy for the LifeGuard™ line of products bolstered by an exclusive license agreement. We also have new products in development from our R&D group at Pure Health Products in Lacey, WA, and recently acquired Green Grow Farms, a licensed hemp grow and cultivation operation in New York. As we continue to follow through on our initiatives in 2020 it is our hope that our shareholders are equally excited to see our continued growth come to fruition.”
Key Business Highlights for Q1 2020:
- Changed corporate name to Can B Corp.
- Restructured share structure to reflect 3 million I/O & 1.4 million Float
- Signed Exclusive License Agreement with LifeGuard Brands for topicals
- Shipped a major white label CBD program with a multi-unit retail chain
- Closed 100% Green Grow Farms acquisition
Key Financial Highlights for Q1 2020:
- Revenues increased by about 10% to $569,707
- Gross margin of nearly 79%
- Operating loss decreased by about 5% to $1,111,993, and included $591,841 in non-cash stock-based compensation and amortization of intangibles
- Adjusted operating loss of $520,152
Business Updates:
In January, Can B signed an exclusive License Agreement with Lifeguard Licensing Corp. for the use of the well-known LifeGuard brand name and logo for a host of skincare and wellness products that will include CBD and non-CBD formulations. This includes topicals, beverages, and ingestible products as well as a full line of sunscreens, lip balms, replenish supplements, and lifestyle water. We have completed the 3D Design of the unique packaging of our “Skin Preserver” Sun Block line, as well as our Lip Balm line. The products are planned to launch in a value-add package with the unique and identifiable LifeGuard rescue buoy with lanyard rope. The Company is now moving forward to molds and manufacturing, and, with a soon to be contracted manufacturer, we will be moving quickly for the production of our initial SPF30 and SPF50 lines, as well an after-sun moisturizer. We’re currently working to finalize a manufacturer for our lip balm and lifestyle water line. Initial product renderings may be viewed at www.shoplifeguard.com. At this point due to the uncertainty of beach openings and permissible outdoor gatherings, we are targeting a limited launch in Florida and other southern states, and will have nationwide availability online. This is planned to be followed by a national retail launch in 2021.
In December 2019, the Company closed the previously announced agreement for an all-stock transaction to acquire 51 % of Green Grow Farms Inc. and acquired 100% in March. Green Grow Farms Inc is licensed by New York State to grow hemp under the Hemp Research Pilot Program; it grows industrial hemp for grain, flower, and CBD. Green Grow Farms has successfully grown and harvested 6 acres on two farms in Calverton, NY this year, yielding in excess of 12,000 pounds of dried biomass. The current New York inventory consists of Suver Haze and Sweetened varieties with CBD content ranging from 13% to 16%.
Pure Health Products LLC (“PHP”), a wholly-owned subsidiary of Can B Corp located in Lacey, Washington, is an innovator in the formulation and manufacturing of hemp-derived CBD products containing no or only trace amounts of THC. PHP’s formulation and manufacturing directly serve our full line of products including tinctures, salves, and gels, as well as a private label service for independent consumer brands. The Company is pleased to announce it has experienced limited interruption during this challenging COVID-19 pandemic. Although several Company customers have experienced business shutdowns during the last few weeks, we are pleased to announce many have resumed business via online ordering and/or initiating new direct shipment orders. Additionally, the Company has recently installed new state-of-the-art, high-speed, automatic bottling and capping equipment and new bulk processing equipment for the production of the Can B Superfood line, which is now available at www.CanBSuperFood.com. This line allows for full in-house formulation and production for our high-quality Superfoods. We are also pleased to announce that with our new equipment installations, Phase One of upgrading the manufacturing capacity to triple the current capacity is complete. Phase Two is well underway. Phase Two will allow the PHP facility to become GMP compliant and pave the way for an anticipated growth as the country evolves from this COVID-19 pandemic crisis. Phase Two will also encompass the planned vertical integration of PHP as we have just received our second batch of pure isolate from our very own hemp production, Green Grow Farms, which will sustain our production and sales for the months to come.
Financial Results for the Three Months Ended March 31, 2020:
Revenue for the three months ended March 31, 2020 was $569,707, an increase of $52,547, or roughly 10%, compared to $517,160 for the three months ended March 31, 2019. This increase was mainly attributable due to the growth of CBD products and durable equipment sales.
Gross profit for the three months ended March 31, 2020 was $448,158, an increase of $193,551, or roughly 76%, compared to $254,607 for the three months ended March 31, 2019. The resulting gross margin was 78.7% for the three months ended March 31, 2020, compared to 49.2% for the three months ended March 31, 2019. Absolute gross profit and gross margin increased due to the growth of product sales and outreach into additional market segments such as wholesale and private label opportunities.
Operating expenses for the three months ended March 31, 2020 were $1,560,151, an increase of $133,476, or roughly 9%, compared to $1,426,675 for the three months ended March 31, 2019. Of note, the revenue increase of 10% was greater than the operating expense increase of 9%, starting to demonstrate the scalability and operating leverage of the business. Operating expenses for the three months ended March 31, 2020, included non-cash expenses resulting from stock-based compensation for employees and consultants of $461,875 and amortization of intangible assets of $129,966, compared to $830,196 and $2,194 for the three months ended March 31, 2019.
Operating loss for the three months ended March 31, 2020 was $1,111,993, a decrease of $60,075, or roughly 5%, compared to $1,172,068 for the three months ended March 31, 2019.
Adjusted operating loss for the three months ended March 31, 2020, was $520,152, an increase of $180,474, or roughly 53%, compared to $339,678 for the three months ended March 31, 2019. Adjusted operating loss does not include non-cash stock-based compensation and amortization of intangible assets.
Net loss for the three months ended March 31, 2020 was $1,134,107, a decrease of $38,407, or roughly 3%, compared to $1,172,514 for the three months ended March 31, 2019. The resulting EPS loss for the three months ended March 31, 2020 was a ($0.33), as compared to an EPS loss of ($0.48) for the three months ended March 31, 2019.
About Can B Corp.
Can B Corp. (OTCQB: CANB) is a Health & Wellness company providing the highest quality cannabidiol (CBD) products under the brands of Canbiola, Seven Chakras, Nu Wellness, Pure Leaf Oil and Duramed. Can B utilizes multi-channel distribution to reach consumers, including medical facilities, doctor offices, and online and direct retailers. Can B is also an exclusive partner of the LifeGuard™ Licensing Brand in developing a line of consumer products. The Company is also launching Super Foods, a line of nutritional supplements. Can B Corp. owns and operates an R&D and production facility in Lacey, WA and Green Grow Farms, a licensed hemp grower and cultivator in New York. To learn more about Can B Corp. and our comprehensive line of high quality CBD products, please visit: Canbiola.com and www.CanBCorp.com, follow Can B Corp on Instagram and Facebook or visit one of the 1,000+ retail outlets that carry Can B Corp. products.
For more information about Can B Corp., please visit: CanBCorp.com
Forward-Looking Statements
Forward-looking statements and risks and uncertainties discussed in this letter contain forward-looking statements. The words "anticipate," "believe," "estimate," "may," "intend," "expect," and similar expressions identify such forward-looking statements. Expected, actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements contained herein. Forward-looking statements are subject to a number of risks and uncertainties, including but not limited to, risks and uncertainties associated with, among other things, the impact of economic, competitive, and other factors affecting our operations, markets, products, and performance. The matters discussed herein should not be construed in any way, shape or manner of our future financial condition or stock price.
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