Nascent Pharma Holdings, Inc.

What they do

Historically, Can B Corp developed, manufactured, and sold hemp-derived cannabinoid products (oils, creams, isolates, gel caps, spa products) and licensed durable medical devices through its Duramed subsidiary. In June 2024, the company discontinued hemp operations following an asset auction of its hemp division. Its remaining operations include collecting Duramed receivables and pursuing the commercialization of cannabis patents acquired by its 67%-owned subsidiary, Nascent Pharma, LLC.

Revenue drivers

• Hemp-derived product sales — Historically the main revenue source, including oils, creams, isolates, and gel caps. Product sales were $1.34M in 2023, down 75.8% from $5.52M in 2022, and the division is now discontinued.
• Service revenue — Generates service revenue, likely from licensing or other arrangements. Service revenue was $819,627 in 2023, down 29.4% from $1.16M in 2022.
• Durable medical equipment (Duramed) — Duramed, a wholly owned subsidiary, provides durable medical devices. Revenues have been adversely impacted due to reduced support from the hemp division and reduced staff.
• Cannabis patent licensing (Nascent) — Nascent owns composition of matter and use patents for liquid cannabis formulations. The company plans to license and develop these patents, though no revenue has been generated yet.

Recent performance

For the nine months ended September 30, 2024, revenue decreased $1,122,203 compared to the prior year period, largely due to the decision to discontinue hemp operations. Operating expenses increased $2,518,143, including $1,163,636 in stock compensation and a loss on sale of property and equipment. Quarterly revenue fell from $376,889 in Q4 2023 to $15,269 in Q3 2024. At September 30, 2024, the company had cash of $7,879 and negative working capital of $10,049,951. For the nine months, operating activities provided $95,026, but investing and financing used $10,337 and $110,816, respectively.

Strategy

Management stated its primary focus is on protecting and commercializing the cannabis patents acquired by Nascent, including licensing and development. The company also plans to continue collecting Duramed receivables and reestablish production of the Longevity Brand Superfood drink mix for Brooke Burke Body, Inc. Hemp operations are no longer pursued, and the company is dissolving Prosperity Systems. The company intends to continue hemp and durable medical equipment operations for the near term, but with reduced scale.

Risks

• Going concern and liquidity risk — The company has cash of only $7,879 and negative working capital of $10,049,951, with no agreements to obtain bank loans or lines of credit.
• Patent valuation may not materialize — The independent valuation of the patents at $122,000,000 is not guaranteed to provide any revenue stream or match the value.
• Discontinued hemp operations — The hemp division's assets were auctioned in March 2024, and the company ceased hemp operations entirely in June 2024, eliminating a major historical revenue source.
• Revenue decline and reduced operations — Revenue has declined sharply, with Q3 2024 revenue of only $15,269, and Duramed is operating with reduced staff, further impacting sales.

Outlook

Management expects to focus on commercializing the cannabis patents and collecting Duramed receivables, but has not provided specific revenue or profit guidance. The company is evaluating the impact of new accounting standards and continues to operate with reduced staff and resources. The company's ability to continue as a going concern is questionable given its negative equity of $9.8 million and liquidity constraints.