Cannabis Bioscience International Holdings, Inc. 10-Q

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 29, 2024, 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 Registration Statement on Form S-1 (File No. 333-267038), which was declared effective on December 5, 2023. 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, 2023, 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 deficit, and its ability to continue as a going concern depends on the successful execution of its operating plan, which includes the resumption of services that were interrupted by the COVID-19 pandemic, 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 curtail or terminate its operations. 17 Impact of the Covid-19 Pandemic The COVID-19 pandemic has adversely impacted the Company and its financial results in different ways, depending on the particular business operation, as follows: Pharmacology University Business . The Company encountered quarantines, restrictions on gatherings and other governmental regulations that precluded classroom education, as well as restrictions on travel that reduced consulting activities. The Company reduced the impact of the pandemic by developing online educational programs and transitioning its workforce to a remote working environment without reducing its workforce. Revenue from this operation was increased from $18,323 in the year ended May 31, 2019 (unaudited), to $44,799 and $38,440 in the years ended May 31, 2020, and May 31, 2021, respectively; revenue for the year ended May 31, 2022, was $18,341 and for May 31, 2023, was $42,655. Revenues of this business for the three months and nine months ended February 29, 2024, were $810 and $22,979, respectively, compared with revenues for the three months and nine months ended February 28, 2023, of $8,256 and $39,921, respectively. Clinical Trials . Quarantines, restrictions on gatherings and other governmental regulations, amplified by potential patients’ fears of contracting COVID-19 at the Company’s clinics, negatively affected clinical trials. In addition, these clinics were subject to closure if cases of the virus were detected. Revenue from this operation changed from $165,666 in the year ended May 31, 2019 (unaudited), to $84,979 and $706,008 in the years ended May 31, 2020, and May 31, 2021, respectively; revenue for the year ended May 31, 2022, was $196,637; revenue for the year ended May 31, 2023, was $266,280. Revenues of this business for the three months and nine months ended February 29, 2024, were $35,601 and $150,568, respectively, compared with revenues for the three months and nine months ended February 29, 2024, of $41,746 and $230,242, respectively. Name Change The Company believes that it may have been negatively impacted by the association of the pandemic with the People’s Republic of China because “China” appeared in its former corporate name. Although the Company has no operations in or any relationship with China, the Company believes that potential investors may have been deterred from considering the Company because of concerns related to that country. For this reason, and because the Company’s corporate name does not reflect its activities, it changed its name to Cannabis Bioscience International Holdings, Inc. on December 6, 2022. Results of Operations Comparison of the Three Months Ended February 29, 2024, and February 28, 2023 The following table sets forth information from the statements of operations for the three months ended February 29, 2024, and February 28, 2023. Three Months Ended February 29, 2024 February 28, 2023 Revenues $ 36,411 $ 51,252 Cost of revenues 11,809 24,120 Gross profit 24,602 27,132 Total operating expenses 184,573 312,000 Operating loss (159,971 (284,868 ) Non-operating income (expense): Interest (49,221 ) (39,789 ) Other income – – Net loss $ (209,192 ) $ (324,657 ) 18 Revenues Revenues were $36,411 and $51,002 for the three months ended February 29, 2024, and February 28, 2023, respectively. The decrease was primarily due to a $6,145 decrease in revenues from clinical trials and decreases of $6,56 and $3,007 in revenues from sales of products and seminars fees, respectively. Cost of Revenues Cost of revenues for the three months ended February 29, 2024, and February 28, 2023, were $11,809 and $24,120, respectively. The difference was primarily due to a $56,415 reduction in cost of revenues for clinical trials. Total Operating Expenses The following table sets forth total operating expenses for the three months ended February 29, 2024, and February 28, 2023: Three Months Ended February 29, 2024 February 28, 2023 General and administrative $ 25,289 $ 48,498 Contract labor 38,344 165,603 Professional fees 95,074 65,623 Officer compensation 8,000 10,736 Rent 17,488 19,768 Travel 378 1,772 Total operating expenses $ 184,573 $ 312,000 Total operating expenses were $184,573 and $312,000 for the three months ended February 29, 2024, and February 28, 2023, respectively. The decrease is attributable to reductions of $127,259 and $23,209 in contract labor and general and administrative, respectively, offset by an increase of $29,451 in professional fees. The increase was caused by financial fees and expenses related to loans amounting to $62,345. A significant portion of professional fees was incurred in connection with issuance of 100,000,000 common stock in exchange of service. Operating Loss Operating loss decreased from $284,866 for the three months ended February 28, 2023, to $159,971 for the three months ended February 29, 2024, due to the decrease in operating expenses described above. Other Income (Expense) For the three months ended February 29, 2024, and February 28, 2023, interest was $49,221 and $39,789, respectively. 19 Net Loss Net loss for the three months ended February 29, 2024, was $209,192, versus $324,655 for the three months ended February 28, 2023, for the reasons described above. Comparison of the Nine Months Ended February 29, 2024, and February 28, 2023 The following table sets forth information from the statements of operations for the nine months ended February 29, 2024, and February 28, 2023. Nine Months Ended February 29, 2024 February 28, 2023 Revenues $ 172,979 $ 270,413 Cost of revenues 35,721 77,443 Gross profit 137,258 192,970 Total operating expenses (593,764 ) 901,443 ) Operating loss (456,506 ) (708,473 ) Non-operating income (expense): – Interest (58,904 ) (89,767 ) Other income – 41,666 Net loss $ (515,410 ) $ (756,574 ) Revenues Revenues were $172,979 and $270,413 for the nine months ended February 29, 2024, and February 28, 2023, respectively. The decrease was primarily due to decreases in revenues of $79,924 and $19,315 from clinical trials and seminars, respectively, offset by an increase of $16,667 in consulting fees. Cost of Revenues Cost of revenues for the nine months ended February 29, 2024, and February 28, 2023, were $35,721 and $77,443, respectively. The difference was primarily due to a $31,182 reduction in cost of revenues for clinical trials. Total Operating Expenses The following table sets forth total operating expenses for the nine months ended February 29, 2024, and February 28, 2023: Nine Months Ended February 29, 2024 February 28, 2023 General and administrative $ 114,012 $ 102,005 Contract labor 173,725 528,610 Professional fees 202,496 173,767 Officer compensation 32,000 36,235 Rent 69,652 55,915 Travel 1,878 4,911 Total operating expenses $ 593,764 $ 901,443 20 Operating Loss Operating loss decreased from $708,473 for the nine months ended February 28, 2023, to $456,506 for the nine months ended February 29, 2024, primarily due to a decrease of $354,885 in contract labor. Other Income (Expense) For the nine months ended February 29, 2024, and February 28, 2023, interest was $58,904 and $89,767, respectively. During the nine months ended February 29, 2024, the Company recorded income of $41,666 from forgiveness of a loan. As a result, other income (expense) for the nine months ended February 29, 2024, and February 28, 2023, showed losses of $58,904 and $48,101, respectively. Net Loss The net loss for the nine months ended February 28, 2023, was $756,574, versus $515,410 for the for the nine months ended February 29, 2024, for the reasons described above. Changes in Financial Condition and Results of Operations At February 29, 2024, the Company had $794 in cash and cash equivalents and accounts receivable of $17,041, negative working capital of $736,767 and no commitments for capital expenditures. At May 31, 2023, the Company had $8,913 in cash and cash equivalents and accounts receivable of $10,549, negative working capital of $366,085 and no commitments for capital expenditures. The Company had cash and cash equivalents of $794 on the date of this Report. During the nine months ended February 29, 2024, and February 28, 2023, the Company had net cash used in operations of $304,943 and $711,516, respectively, and net cash provided by financing activities of $296,824 and $704,189, respectively. During the years ended May 31, 2023, and May 31, 2022, the Company had net cash used in operations of $898,367 and $870,704, respectively, and net cash provided by financing activities of $875,298 and $861,364, respectively. The Company had accumulated deficits of $5,198,146 at February 29, 2024, and $4,682,736 at May 31, 2023. The Company’s ability to conduct its operations and to meet its financial obligations has been materially and substantially impacted by its inability to raise capital by sales of its common stock and by borrowing. Impact of the COVID-19 Pandemic As indicated elsewhere in this report, the Company was materially and adversely impacted by the COVID-19 pandemic. With the lifting of the restrictions imposed in response to the pandemic, the Company has resumed normal operations. 21 Off-Balance-Sheet Arran g ements 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.