UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(Amendment No. 1)
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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) | (IRS Employer Identification No.) |
(Address of Principal Executive Office) | (ZIP Code) |
(
(Registrant’s telephone number, including area code)
CHINA INFRASTRUCTURE CONSTRUCTION CORP.
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
N/A | N/A | 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 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 such files). ☒
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 |
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
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of May 9, 2025:
shares of common stock, without par value.
Explanatory Note
This Amendment No. 1 to the Quarterly Report on Form 10-Q of Cannabis Bioscience International Holdings, Inc. for the quarter ended February 28, 2025, originally filed on April 22, 2025 (the “Original Filing”), is filed (i) to update the cover page to show the number of shares of common stock currently outstanding, (ii) to correct errors in the financial statements and the notes thereto, as well asin Management’s Discussion and Analysis of Financial Condition and Results of Operations and (iii) to file the XBRL documents that were to be filed by amendment to the Original Filing.
Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this Form 10-Q/A contains new certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
This Amendment No. 1 should be read in conjunction with the Original Filing.
Except as described above, no other changes have been made to the Original Filing.
CANNABIS BIOSCIENCE INTERNATIONAL HOLDINGS, INC.
QUARTERLY REPORT ON FORM 10-Q
for the Quarterly Period Ended February 28, 2025
TABLE OF CONTENTS
Page | |||
PART I - FINANCIAL INFORMATION | |||
Item 1. | Financial Statements | 3 | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 19 | |
Item 4. | Controls and Procedures | 20 | |
PART II - OTHER INFORMATION | |||
Item 1. | Legal Proceedings | 21 | |
Item 1A. | Risk Factors | 21 | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 21 | |
Item 3. | Defaults upon Senior Securities | 21 | |
Item 4. | Mine Safety Disclosures | 21 | |
Item 5. | Other Information | 21 | |
Item 6. | Exhibits | 22 | |
SIGNATURES | 23 |
3 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
CANNABIS BIOSCIENCE INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
February 28, 2025 | May 31, 2024 | |||||||
(Unaudited) | (Audited) | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Accounts receivable | ||||||||
Other current assets | ||||||||
TOTAL CURRENT ASSETS | ||||||||
Right-of-use asset | ||||||||
TOTAL ASSETS | $ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued expenses | $ | $ | ||||||
Bank overdraft | ||||||||
Related party payables | ||||||||
Short-term loans (net of amortization of loan fees) | ||||||||
SBA loan – current | ||||||||
Derivative liabilities | ||||||||
Lease liabilities – current | ||||||||
TOTAL CURRENT LIABILITIES | ||||||||
LONG-TERM LIABILITIES | ||||||||
Notes payable | ||||||||
SBA loan | ||||||||
Lease liabilities | ||||||||
TOTAL LONG-TERM LIABILITIES | ||||||||
TOTAL LIABILITIES | ||||||||
STOCKHOLDERS’ DEFICIENCY | ||||||||
Preferred stock: | shares, without par value, authorized, of which shares have been designated Series A Convertible Preferred Stock and shares have been designated Series B Preferred Stock ( and shares outstanding at February 28, 2025, and May 31, 2024, respectively||||||||
Common stock, without par value: | shares authorized; and shares issued and outstanding at February 28, 2025, and May 31, 2024, respectively.||||||||
Additional paid-in capital | ||||||||
Accumulated deficiency | ( | ) | ( | ) | ||||
TOTAL STOCKHOLDERS’ DEFICIENCY | ( | ) | ( | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | $ | $ |
The accompanying notes are an integral part of these consolidated financial statements.
4 |
CANNABIS BIOSCIENCE INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended | Nine months ended | |||||||||||||||
February 28, 2025 | February 29, 2024 | February 28, 2025 | February 29, 2024 | |||||||||||||
Revenues | $ | $ | $ | $ | ||||||||||||
Cost of revenues | ||||||||||||||||
Gross profit | ( | ) | ||||||||||||||
Cost and expenses | ||||||||||||||||
General and administrative | ||||||||||||||||
Contract labor | ||||||||||||||||
Professional fees | ||||||||||||||||
Officer compensation | ||||||||||||||||
Rent and lease | ||||||||||||||||
Travel | ||||||||||||||||
Total operating expenses | ||||||||||||||||
Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Other income (expense) | ||||||||||||||||
Amortization of note discount | ( | ) | ( | ) | ||||||||||||
Forgiveness of debt | ||||||||||||||||
Change in value of derivative liabilities | ( | ) | ( | ) | ||||||||||||
Interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Total other income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Average common stock outstanding | ||||||||||||||||
Average earnings (loss) per share | $ | ) | $ | ) | $ | ) | $ | ) |
The accompanying notes are an integral part of these consolidated financial statements.
5 |
CANNABIS BIOSCIENCE INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended | ||||||||
February 28, 2025 | February 29, 2024 | |||||||
OPERATING ACTIVITIES | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Adjustments to reconcile net loss: | ||||||||
Adjustment for issuance of common stock for services | ||||||||
Amortization of right-of-use-asset and liability | ( | ) | ||||||
Amortization of debt discount | ||||||||
Loss on valuation of convertible notes | ||||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | ( | ) | ||||||
Bank overdraft | ( | ) | ||||||
Accounts payable and accrued expenses | ( | ) | ||||||
Deferred revenue | ( | ) | ||||||
Lease liability | ( | ) | ||||||
NET CASH USED IN OPERATIONS | ( | ) | ( | ) | ||||
FINANCING ACTIVITIES | ||||||||
Proceeds from issuance of common stock | ||||||||
Proceeds from (repayments of) short-term loans | ( | ) | ||||||
Proceeds from shareholder loans | ||||||||
Repayments of SBA loan | ( | ) | ||||||
Repayment of related party loan | ( | ) | ||||||
Proceeds from related party loan | ||||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
NET DECREASE IN CASH | ( | ) | ( | ) | ||||
CASH AT BEGINNING OF PERIOD | ||||||||
CASH AT END OF PERIOD | $ | $ | ||||||
Supplemental disclosure of cash flow information | ||||||||
Cash paid for interest | $ | $ | ||||||
Cash paid for taxes | $ | $ |
The accompanying notes are an integral part of these consolidated financial statements.
6 |
CANNABIS BIOSCIENCE INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY
(Unaudited)
Series A Convertible Preferred Stock | Series B Convertible Preferred Stock | Common Stock | Additional Paid-In | Accumulated | ||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Capital | Deficiency | Total | |||||||||||||||||||||||||
Balance - May 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
Issuance of common stock for services | – | – | ||||||||||||||||||||||||||||||
Net loss for the quarter | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||
Balance - August 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
Return of common stocks issued for services | – | – | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
Net loss for the quarter | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||
Balance – November 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
Sales of common stock for cash | – | – | ||||||||||||||||||||||||||||||
Net loss for the quarter | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||
Balance – February 28, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) |
Series A Convertible Preferred Stock | Series B Convertible Preferred Stock | Common Stock | Additional Paid-In | Accumulated | ||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Capital | Deficiency | Total | |||||||||||||||||||||||||
Balance - May 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
Sales of common stock for cash | – | – | ||||||||||||||||||||||||||||||
Rescission of share sale | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||
Net loss for the quarter | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||
Balance - August 31, 2023 | $ | $ | $ | $ | ( | $ | ( | ) | ||||||||||||||||||||||||
Net loss for the quarter | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||
Balance – November 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
Issuance of common stocks for service | – | – | ||||||||||||||||||||||||||||||
Net loss for the quarter | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||
Balance – February 29, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) |
The accompanying notes are an integral part of these consolidated financial statements.
7 |
CANNABIS BIOSCIENCE INTERNATIONAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2025
(Unaudited)
Note 1 – Organization and Business
Organization and Operations
Cannabis Bioscience International Holdings, Inc., a Colorado corporation (the “Company”), was formed on February 28, 2003, as a limited liability company under the name Fidelity Aircraft Partners LLC. On December 16, 2009, it converted to a corporation under the name Fidelity Aviation Corporation, and on August 24, 2009, it changed its name to China Infrastructure Construction Corp. On February 28, 2018, the Company changed its name to Hippocrates Direct Healthcare, Inc.; on July 4, 2018, it resumed the name China Infrastructure Construction Corp. On December 6, 2022, it changed its name to its present name. The Company provides educational systems focused on medical cannabis in cities throughout the United States and six countries in Latin America. The Company provides services to third parties in therapeutic areas of clinical trials and conducts clinical trials relating to cannabinoids for its own account. The Company has one non-operating subsidiary, Alpha Fertility and Sleep Center, LLC, a Texas limited liability company, through which it conducted its sleep center business until April 30, 2023.
Note 2 – Summary of Significant Accounting Policies
Accounting Principles
The accompanying unaudited consolidated financial statements have been prepared by management using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial statements and with the instructions to Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, they do not contain all of the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company at February 28, 2025, and the results of operations and cash flows for the periods presented. The results of operations for the nine months ended February 28, 2025, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements and related notes thereto for the year ended May 31, 2025.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Making estimates requires management to exercise significant judgment. Certain of these estimates could be affected by external conditions, including those unique to the Company’s businesses, and general economic conditions. These external conditions could affect the Company’s estimates that could cause actual results to differ materially from its estimates. Actual results could differ from those estimates. The Company re-evaluates all of its accounting estimates at least quarterly based on these conditions and records adjustments when necessary. Significant estimates relied upon in preparing these statements include revenue recognition, accounts receivable reserves, accrued expenses, share-based compensation and the recoverability of the Company’s net deferred tax assets and any related valuation allowance.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
8 |
Reclassification
Certain amounts in the prior consolidated financial statements have been reclassified to conform to the presentation of the current period financial statements. These reclassifications had no impact on the results of operations, changes in equity, or cash flows.
Cash and Cash Equivalents
Cash equivalents are short-term, highly liquid investments that are readily convertible to cash with original maturities of three months or less at the date acquired. The Company had investment securities that were deemed cash equivalents at February 28, 2025, and May 31, 2024, respectively.
Accounts Receivable
Included in accounts receivable on the balance
sheets are amounts primarily related to customers. The Company estimates losses on receivables based on known troubled accounts and historical
experience of losses incurred. Receivables are considered impaired and written off when it is probable that all contractual payments due
will not be collected in accordance with the terms of the related agreement. Based on experience and the judgment of management, there
was
Revenue Recognition
The Company follows the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), as amended. This standard requires a company to recognize revenues when it transfers goods or services to customers in an amount that reflects the consideration that it expects to receive for them.
Under ASU No. 2014-09, the Company recognizes revenue when a customer obtains control of promised goods or services, or when they are shipped to a customer, in an amount that reflects the consideration that it expects to receive in exchange for them. The Company recognizes revenues following the five-step model prescribed under ASU No. 2014-09: (a) it identifies a contract with a customer; (b) it identifies the performance obligations in the contract; (c) it determines the transaction price; (d) it allocates the transaction price to the performance obligations in the contract; and (e) it recognizes revenues when (or as) it satisfies its performance obligation.
The Company generates revenue from multiple streams, namely, clinical trials, consulting fees, seminars and merchandise sales. Revenues from product sales are recognized when a customer obtains control of the Company’s product, which occurs at a point in time or over time, typically upon shipment to the customer or when services are fulfilled and the customer receives benefit from such services. Revenue is deferred and a liability is established to the extent that the Company receives payments from customers in advance of goods being shipped or services being rendered.
The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset in which it would have been recognized is one year or less or the amount is immaterial.
A performance obligation is a contractual promise to transfer a distinct product or service to a customer and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Each contract has a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. Revenue from contracts that satisfy the criteria for overtime recognition is recognized as the work progresses. The majority of the Company’s revenue is derived from services provided to customers and is typically executed over a period of between 1 and 12 months, based on evaluation of when these services are rendered. Contracts will continue to be recognized over time because of the continuous transfer of control to the customer as services are rendered to customers. Payments made by customers in advance of services being rendered are recorded as deferred revenue.
9 |
Our significant payment terms for customer contracts vary based on the revenue stream. Contracts for clinical trials typically provide for progress payments based on the number of patients seen, with final payments generally due within 30 days upon completion of work or the termination of the contract. Revenue is recognized when all performance obligations under the terms of a contract are satisfied. The Company requires advance payments from its consulting customers and these payments are recorded as contract liabilities on the consolidated balance sheet until service is performed and revenue is recognized. These advance payments are not treated as a financing component based on the guidance in ASC 606-10-32-196-16 and -17, whereby the timing of when services are provided is at the discretion of the customers or a substantial amount of the consideration promised by the customer is variable and not in the control of the customer or the Company. There is no significant financing component to any of the Company’s contracts.
Contracts for educational services require non-refundable payment in advance and are recorded as revenue when received.
There is no significant financing component to any contracts.
Contract Modifications
Contracts for the Company’s clinical trial business are subject to modification. These modifications may create new, or change existing, enforceable rights and obligations of the parties thereto. Modifications are generally effected pursuant to an amendment or addendum to the original contract. A contract modification is accounted for as a new contract if it reflects an increase in scope that is regarded as distinct from the original contract and is priced in line with the standalone price for the related services. If a contract modification is not considered a new contract, the modification is combined with the original contract and the impact on revenue recognition will depend on whether the remaining services are distinct from the original contract. If they are distinct from those in the original contract, all remaining performance obligations will be accounted for on a prospective basis, with unrecognized consideration allocated to the remaining performance obligations. If the remaining goods or services are not distinct, the modification will be treated as if it were a part of the existing contract and the effect that the contract modification has on the transaction price and the measure of progress toward satisfaction of the performance obligations are recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) at the date of the contract modification on a cumulative catch-up basis.
Remaining Performance Obligations
The Company follows ASC 606, which requires the
allocation of the transaction price to the remaining performance obligations of a contract and applies a practical expedient allowing
it not to disclose the amount of the transaction price allocated to the remaining performance obligations for contracts with an original
expected duration of one year or less. At February 28, 2025, and May 31, 2024, the Company had
ASC 718, “Compensation – Stock Compensation,” prescribes accounting and reporting standards for all share-based payment transactions. In June 2018, FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns accounting for share-based payments issued to non-employees to that of employees under the existing guidance of Topic 718, with certain exceptions. This update supersedes previous guidance for share-based payments to non-employees under Subtopic 505-50, Equity – Equity-Based Payments to Non-Employees. This guidance became effective for the Company on January 1, 2019. Based on its completed analysis, the Company has determined that adopting this guidance will not have a material impact on its financial statements. The Company follows FASB guidance related to equity-based payments, which requires that equity-based compensation be accounted for using a fair value method and recognized as expense in the accompanying statements of operations. Equity-based compensation expense will be recognized as compensation expense.
Leases
The Company has adopted ASU 2016-02, Leases (Topic 842), along with related clarifications and improvements, under which lessees are required to recognize a lease liability, which represents the discounted obligation to make future minimum lease payments and a corresponding right-of-use asset on the balance sheet for most leases. The guidance retains the historical accounting for lessors and does not make significant changes to the recognition, measurement, and presentation of expenses and cash flows by a lessee. Enhanced disclosures are also required to give financial statement users the ability to assess the amount, timing and uncertainty of cash flows arising from leases.
10 |
Cash Flows
The Company follows ASU 2016-18, “Statement of Cash Flows (Topic 230),” requiring that the statement of cash flows explain the change in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The provisions of this guidance are to be applied using a retrospective approach, which requires the application of the guidance for all periods presented.
Fair Value Measurements
The Company has adopted ASC Topic 820, Fair Value Measurements, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair-value measurements.
The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, is carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of the Company’s short- and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features, such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.
ASC Topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic 820 also establishes a fair-value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC Topic 820 describes three levels of inputs that may be used to measure fair value:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Quoted prices for similar assets and liabilities in active markets or inputs that are observable.
Level 3: Inputs that are unobservable (for example, cash flow modeling inputs based on assumptions).
Income Taxes
The Company accounts for income taxes in accordance with Accounting Standards Codification No. 740, “Income Taxes” (“ASC 740”). This codification prescribes the use of the asset and liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and for carryforward tax losses. Deferred taxes are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value if it is more likely than not that some portion or all of the deferred tax asset will not be realized.
Deferred tax liabilities and assets are classified as current or noncurrent based on the classification of the related asset or liability for financial reporting or according to the expected reversal dates of the specific temporary differences, if not related to an asset or liability for financial reporting.
The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740, which provides guidance as to the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in its financial statements, under which a company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
The tax benefits recognized in financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Accordingly, the Company would report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company elects to recognize interest and penalties, if any, related to unrecognized tax benefits in tax expense.
11 |
The Company computes basic earnings per share amounts in accordance with Accounting Standards Codification Topic 260, “Earnings per Share.” Basic earnings per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the reporting period. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. At February 28, 2025, and May 31, 2024, the Company had
dilutive securities.
Derivative Liability
The Company analyzes the conversion feature of Convertible Notes for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging. ASC 815-15 requires that the conversion features be bifurcated and separately accounted for as an embedded derivative contained in the Company’s convertible debt. The embedded derivative is carried on the balance sheet at fair value. Any unrealized change in fair value, as determined at each measurement period, is recorded as a component of the income statement and the associated carrying amount on the balance sheet is adjusted by the change. The Company values the embedded derivative using the Black-Scholes pricing model.
Recently Issued Accounting Standards
The Company does not believe there are any other recently issued, but not yet effective, accounting standards that would have a significant impact on the Company’s financial position or results of operations.
Note 3 – Going Concern
The accompanying consolidated financial statements
have been prepared in conformity with U.S. GAAP, which contemplate the Company’s continuation as a going concern in accordance with
ASC 240-40-50. The Company’s history of recurring losses, negative working capital and negative cash flows from operating activities
raises substantial doubt about its ability to continue as a going concern. The Company has not generated any profits since its inception,
and its current cash balances will not meet its working capital needs. During the nine months ended February 28, 2025, the Company had
a net loss from operations of $
The ability of the Company to continue as a going concern depends on the successful execution of its operating plan, which includes expanding its operations and raising either debt or equity financing. There is no assurance that the Company will be able to expand its operations or obtain such financing on satisfactory terms or at all. If the Company is unsuccessful in these endeavors, it may be required to curtail or cease its operations.
The accompanying financial statements do not include any adjustments related to the recoverability or classification of asset carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
Note 4 – Debt
EIDL Loans
In May 2020, the Company received $
In June 2020, the Company received proceeds of
$
The Company’s EIDL loans were recorded in the balance sheet as follows:
February 28, 2025 (Unaudited) | May 31, 2024 (Audited) | |||||||
SBA (EIDL) current portion | $ | $ | ||||||
SBA (EIDL) noncurrent portion | ||||||||
Total EIDL loans | $ | $ |
12 |
Short-Term Loans
The Company has entered into loans under which it borrowed money and financing agreements under which it sold receivables to third parties. In accordance with ASC 470, the financing agreements are treated as loans encumbering the receivables of the Company in the event of default and are accounted for as indebtedness, such that payments are allocated to principal and interest expense as they are made. These transactions are as follows:
· In May 2022, the Company entered into a financing agreement with an unrelated party for a loan of $
·
In January 2023, the Company entered into a financing agreement with an unrelated party for a loan of $
·
In April 2023, the Company entered into a financing agreement with an unrelated party for a loan of $
·
On August 8, 2022, the Company entered into a financing agreement (the “AF Agreement”) with an unrelated party for a loan
of $
· On
June 29, 2022, the Company borrowed $
· On August 3, 2022, the Company borrowed $
·
On November 7, 2024, the Company made a promissory note in the principal amount of $
Note 5 – Right-of-Use Assets and Lease Liabilities
The Company leases real property from unrelated parties under leases that are classified as operating leases. The right-of-use assets for operating leases are included in right-of-use assets on the balance sheets, with the corresponding lease liability in liabilities. Lease expense is recognized on a straight-line basis over the lease term. Renewals and terminations are included in the calculation of right-of-use assets and lease liabilities when they are considered reasonably certain to be exercised. When the implicit rate is unknown, the incremental borrowing rate, based on the commencement date, is used in determining the present value of lease payments.
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The following amounts related to leases were recorded in the balance sheets:
February 28, 2025 (Unaudited) | May 31, 2024 (Audited) | |||||||
Right-of-use asset | $ | $ | ||||||
Less: accumulated amortization | ( | ) | ( | ) | ||||
Right-of-use asset, net | $ | $ | ||||||
Lease liabilities – current | $ | $ | ||||||
Lease liabilities – noncurrent | ||||||||
Operating lease liabilities | $ | $ |
The Company reimburses related parties for an office space operating lease under a month-to-month arrangement, payable at the discretion of management. See Note 10.
The Company’s total operating lease expense
was $
Note 6 -- Revenue
Most of the Company’s revenue is generated by the performance of services to customers and recognized at a point in time based on the evaluation of when the customer obtains control of the products. Revenue is recognized when all performance obligations under the terms of a contract are satisfied, net of certain taxes. Revenue is recorded when customer acceptance is received and all performance obligations have been satisfied. Sales of goods typically do not include multiple products and/or service elements.
The table below summarizes the Company’s disaggregated revenue information:
Three Months Ended | Nine Months Ended | |||||||||||||||
February 28, 2025 | February 29, 2024 | February 28, 2025 | February 29, 2024 | |||||||||||||
Clinical trials | $ | $ | $ | $ | ||||||||||||
Consulting Fees | ||||||||||||||||
Seminar fees | ||||||||||||||||
Merchandise | ||||||||||||||||
Total revenue | $ | $ | $ | $ |
Cost of revenues consists primarily of
third-party costs associated with patient stipends. For the nine months ended February 28, 2025, and February 29, 2024, cost of
revenues totaled $
Note 7 – Stockholders’ Deficiency
The Company is authorized to issue
Preferred Stock
The Company has designated
shares of preferred stock as Series A Convertible Preferred Stock (the “Series A Stock”). Until July 20, 2022, each share had a par value of $ ; on that date, the Company amended its articles of incorporation to provide that each such share has par value. Under this amendment, (i) Series A Stock is entitled to receive dividends on the shares of common stock into which such shares are convertible, (ii) has the voting power of the number of shares of common stock into which such shares are convertible, (iii) is redeemable at the option of the Company for a redemption price equal to the number of shares of Common Stock into which the redeemed shares are convertible and (iv) are senior to the common stock and junior to the Series B Convertible Preferred Stock described below. At February 28, 2025, and May 31, 2024, there were shares of Series A Stock issued and outstanding.
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On July 20, 2022, the Company designated a series of preferred stock, named Series B Preferred Convertible Preferred Stock, comprising
shares (“Series B Preferred”). The shares of this series have par value, are not entitled to dividends, have no liquidation rights, are not redeemable, are not convertible, have 60% of the Company’s voting power and rank senior to the common stock and Series A Convertible Preferred Stock. The preferred shares were issued in exchange for common stock to an existing common shareholder, who is a related party. The Company has deemed the value of the preferred and common shares to be the same, resulting in no change to additional paid-in capital.
Common Stock
During the three months ended February 28, 2025,
the Company issued to a related party (i)
At February 28, 2025, and May 31, 2024, there were respectively
and shares of common stock issued and outstanding.
On July 20, 2022, the Company adopted its 2022 Equity Incentive Plan, which provides for the grant of incentive and non-statutory stock options, stock appreciation rights, restricted stock, unrestricted stock, restricted stock units and performance awards to directors, officers, employees and consultants, as determined by the Board, as plan administrator. The Company will recognize as share-based compensation expense all share-based payments to employees over the requisite service period (generally the vesting period) in its consolidated statements of operations based on the fair values of the awards that are issued.
Note 9 – Income Taxes
The Company provides for income taxes under ASC 740. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
On December 22, 2017, the 2017 Tax Cuts and Jobs
Act (the “Tax Act”) was enacted into law, making significant changes to the Code. These changes included a federal corporate
tax rate decrease from
Due to changes in ownership provisions of the
income tax laws of the United States of America, net operating loss carryforwards of approximately $
Income taxes for 2017 to 2025 remain subject to examination by the Internal Revenue Service.
Note 10 – Commitments and Contingencies
The Company leases premises of approximately 4,500
square feet located at 6201 Bonhomme Road, Suites 460S and 466S, Houston, Texas. The lease provided for base rent of $
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Two of the Company’s officers leased 1,400
square feet in Houston, Texas, at 1625 Main St., Houston, Texas, under a lease the term of which commenced on March 15, 2023, and expired
on
Note 11 – Related Party Transactions
See Note 8 – Stockholders’ Deficiency – Common Stock for information about the issuance of shares of common stock to a related party.
See Note 10 for information respecting the lease of real property to the Company by one of its officers.
On April 26, 2024, the Company made a promissory
note in the principal amount of $
During the nine months ended February 28, 2025,
and the year ended May 31, 2024, the Company received cash advances from related parties of and $
The balance of related party liabilities owed
to certain shareholders totaled $
Note 12 – Off-Balance-Sheet Arrangements
The Company has no off-balance sheet arrangements.
Note 13 – Concentration of Risk
The Company had three customers that provided
Note 14 – Subsequent Events
Management has evaluated all other subsequent events when these consolidated financial statements were issued and has determined that none of them requires disclosure herein.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE COMPANY’S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS, THE NOTES THERETO AND THE OTHER FINANCIAL INFORMATION APPEARING IN THIS REPORT.
Introduction
The financial data discussed below are derived from the unaudited consolidated financial statements of the Company as of February 28. 2025, which were prepared and presented in accordance with United States generally accepted accounting principles for interim financial statements. These financial data are only a summary and should be read in conjunction with the unaudited financial statements and related notes contained herein, which more fully present the Company’s financial condition and operations as at that date and with its audited financial statements and notes thereto contained in its Annual Report on Form 10-K for the year ended May 31, 2024, filed with the SEC on August 16, 2024. Further, the Company urges caution regarding the forward-looking statements which are contained in this report because they involve risks, uncertainties and other factors affecting its operations, market growth, service, products and licenses that may cause the Company’s actual results and achievements, whether expressed or implied, to differ materially from the expectations the Company describes in its forward-looking statements.
General Statement of Business
The Company, headquartered in Houston, Texas, conducts clinical trials for Sponsors and CROs and as a Sponsor through Alpha Research Institute and cannabis-related education in classrooms, seminars and online through Pharmacology University.
Going Concern
As indicated in Note 3 of the notes to the audited consolidated financial statements for the year ended May 31, 2024, and the report thereon of the Company’s independent auditing firm, there is substantial doubt as to the ability of the Company to continue as a going concern. The Company has incurred recurring losses and recurring negative cash flow from operating activities and has an accumulated deficiency, and its ability to continue as a going concern depends on the successful execution of its operating plan, which includes the increasing sales of existing services and introducing new services, as well as raising either debt or equity financing.
The Company needs substantial additional capital to fund its business, including the completion of its business plan and repayment of its debts. No assurance can be given that any additional capital can be obtained or, if obtained, will be adequate to meet its needs, and the Company may need to take measures to remain a going concern. If adequate capital cannot be obtained on a timely basis and satisfactory terms, the Company’s operations could be materially negatively impacted, or it could be forced to terminate its operations.
Results of Operations
Comparison of the Three Months Ended February 28, 2025, and February 29, 2024
The following table sets forth information from the statements of operations for the three months ended February 28, 2025, and February 29, 2024.
Three Months Ended | ||||||||
February 28, 2025 | February 29, 2024 | |||||||
Revenues | $ | 14,931 | $ | 36,411 | ||||
Cost of revenues | 19,396 | 11,809 | ||||||
Gross profit (loss) | (4,465 | ) | 24,602 | |||||
Total operating expense | 124,769 | 184,573 | ||||||
Operating loss | (141,344 | ) | (159,971 | ) | ||||
Amortization of note discount | (13,138 | ) | (24,338 | ) | ||||
Non-operating expense: | ||||||||
Interest | (22,473 | ) | (49,221 | ) | ||||
Change in value of derivative liabilities | (16,398 | ) | – | |||||
Net loss | $ | (181,243 | ) | $ | (209,192 | ) |
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Revenues
Revenues were $14,931 and $36,411 for the three months ended February 28, 2025, and February 29, 2024, respectively. The decrease was primarily due to a $14,680 decrease in revenues from clinical trials.
Cost of Revenues
Cost of revenues for the three months ended February 28, 2025, and February 29, 2024, were $19,396 and $11,809, respectively. The difference was primarily due to an increase of $7,587 in cost of revenues in clinical trials.
Total Operating Expense
The following table sets forth total operating expenses for the three months ended February 28, 2025, and February 29, 2024:
Three Months Ended | ||||||||
February 28, 2025 | February 29, 2024 | |||||||
General and administrative | $ | 50,172 | $ | 25,289 | ||||
Contract labor | 45,362 | 38,344 | ||||||
Professional fees | 9,730 | 95,074 | ||||||
Officer compensation | 6,000 | 8,000 | ||||||
Rent and lease | 13,270 | 17,488 | ||||||
Travel | 215 | 378 | ||||||
Total operating expenses | $ | 124,769 | $ | 184,573 |
Total operating expenses were $124,769 and $184,573 for the three months ended February 28, 2025, and February 29, 2024, respectively. The decrease is attributable to reductions of $85,344 in professional fees, offset by increases of $24,883 and $7,038 in general and administrative and contract labor, respectively.
Operating Loss
Operating loss decreased from $159,971 for the quarter ended February 29, 2024, to $129,234 for the three months ended February 28, 2025, due to the decrease in total operating expenses described above.
Other Expense
For the three months ended February 28, 2025, the Company recorded amortization of note discount of $13,138 for the three months ended February 28, 2025, compared with $0 for the three months ended February 29, 2024, interest of $22,473 for the three months ended February 28, 2025, compared with $49,221 for the three months ended February 29, 2024, and change in value of derivative liabilities of $16,398 for the three months ended February 28, 2025, compared with $0 for the three months ended February 29, 2024.
Net Loss
Net loss for the three months ended February 28, 2025, was $181,243 versus $209,192 for the three months ended February 29, 2024, for the reasons described above.
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Comparison of the Nine Months Ended February 28, 2025, and February 29, 2024
The following table sets forth information from the statements of operations for the nine months ended February 28, 2025, and February 29, 2024.
Nine Months Ended | ||||||||
February 28, 2025 | February 29, 2024 | |||||||
Revenues | $ | 268,066 | $ | 172,979 | ||||
Cost of revenues | 35,561 | 35,721 | ||||||
Gross profit | 232,505 | 137,258 | ||||||
Total operating expense | 518,970 | 593,764 | ||||||
Operating loss | (286,465 | ) | (456,506 | ) | ||||
Non-operating income (expense): | ||||||||
Amortization of note discount | (24,338 | ) | – | |||||
Forgiveness of debt | 23,638 | – | ||||||
Interest | (33,513 | ) | (58,904 | ) | ||||
Change in value of derivative liabilities | (16,398 | ) | ||||||
(50,611 | ) | (58,904 | ) | |||||
Net loss | $ | (337,076 | ) | $ | (515,410 | ) |
Revenues
Revenues were $268,066 and $172,979 for the nine months ended February 28, 2025, and February 29, 2024, respectively. The increase was primarily due to an increase of $95,087 in revenue from clinical trials.
Cost of Revenues
Cost of revenues for the nine months ended February 28, 2025, and February 29, 2024, were $35,561 and $35,721, respectively.
Total Operating Expense
The following table sets forth total operating expenses for the nine months ended February 29, 2024, and November 30, 2022:
Nine Months Ended November 30, | ||||||||
2025 | 2024 | |||||||
General and administrative | $ | 151,596 | $ | 114,012 | ||||
Contract labor | 145,551 | 173,725 | ||||||
Professional fees | 153,412 | 202,496 | ||||||
Officer compensation | 18,000 | 32,000 | ||||||
Rent | 49,957 | 69,652 | ||||||
Travel | 454 | 1,879 | ||||||
Total operating expenses | $ | 518,970 | $ | 593,764 |
Total operating expenses were $518,970 and $593,764 for the nine months ended February 28, 2025, and February 29, 2024, respectively. The decrease was primarily attributable to reductions of $28,174 and $43,084 in contract labor and professional, respectively, offset by an increase of $37,584 in general and administrative.
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Operating Loss
Operating loss decreased from $456,506 for the nine months ended February 29, 2024, to $286,465 for the nine months ended February 28, 2025, primarily due to an increase of $158,746 in revenue from clinical trials and a decrease in operating expense from professional fees of $49,084.
Other Income (Expense)
For the nine months ended February 28, 2025, and February 29, 2024, interest was $33,513 and $58,904, respectively. During the nine months ended February 28, 2025, the Company recorded income of $23,638 from the forgiveness of a loan and an expense from amortization of note discount of $$24,338. Additionally, the Company incurred a change in value of derivative liabilities of $16,398. As a result, other income (expense) for the nine months ended February 28, 2025, and February 29, 2024, were losses of $50,611 and $58,904, respectively.
Net Loss
Net loss for the nine months ended February 28, 2025, was $337,076 versus $515,410 for the nine months ended February 29, 2024, for the reasons described above.
Changes in Financial Condition and Results of Operations
At February 28, 2025, the Company had $548 in cash and cash equivalents and accounts receivable of $2,640, negative working capital of $966,272 and no commitments for capital expenditures. At May 31, 2024, the Company had $755 in cash and cash equivalents and accounts receivable of $20,139, negative working capital of $860,416 and no commitments for capital expenditures. The Company had cash and cash equivalents of $177 on the date of this Report.
During the nine months ended February 28, 2025, the Company had net cash used in operations of $185,315, while during the nine months ended February 29, 2024, the Company had net cash used in operations of $304,943. During the nine months ended February 28, 2025, the Company had net cash provided by financing activities of $185,108, while during the nine months ended February 29, 2024, the Company had net cash provided by financing activities of $296,824.
Off-Balance-Sheet Arrangements
The Company has no off-balance-sheet arrangements.
Recent Accounting Pronouncements
Refer to Note 2 of the accompanying financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and accordingly is not required to provide information under this item.
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The Company’s management has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of February 28, 2025. Based on this evaluation, the principal executive officer and the principal accounting officer concluded that these disclosure controls and procedures were not effective as of such date, at a reasonable level of assurance, in ensuring that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is: (i) accumulated and communicated to management (including its principal executive officer and principal accounting officer) in a timely manner and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Changes in Internal Control Over Financial Reporting
There were no changes in internal control over financial reporting during the three months ended February 28, 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
The Company is a smaller reporting company as defined by Rule 12b-2 promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”) and accordingly is not required to provide information under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Unregistered Sales of Equity Securities
During the three months that ended February 28, 2025, the Company issued (i) 125,000,000 shares of Common Stock to an officer of the Company as compensation for his services in such capacity during the year ended May 31, 2024, and (ii) 1,000 shares of Series B Preferred Stock to an officer and director of the Company in consideration of services to be rendered in raising capital. These issuances were made in reliance upon the exemptions from registration afforded by Sections 4(a)(2) and/or 4(d) of the Securities Act of 1933 and/or Rule 506(b) or (c) promulgated thereunder.
Use of Proceeds
On December 5, 2023, the Company’s Registration Statement on Form S-1 was declared effective. The Company registered 6,250,000,000 shares of Common Stock for sale for its account, in addition to 3,837,154,885 shares of Common Stock that may be sold by certain selling stockholders. As of the date of the date of this report, the Company has sold no shares and accordingly has received no proceeds of the offering.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Insider Trading Arrangements and Related Disclosure
During the three months ended February 28, 2025,
none of our directors or officers
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Item 6. Exhibits.
Exhibit Number |
Title | ||
31 | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer and Principal Accounting Officer* | ||
32 | Section 1350 Certification of Principal Executive Officer and Principal Accounting Officer* | ||
101.INS* | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | ||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | ||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | ||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||
104** | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
____________
* Filed herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amended report to be signed on its behalf by the undersigned thereunto duly authorized.
CANNABIS BIOSCIENCE INTERNATIONAL HOLDINGS, INC. | ||
Date: May 9, 2025 | By: | /s/ Dante Picazo |
Dante Picazo Principal Executive Officer and Principal Accounting Officer |
24 |