Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The financial information discussed below is
derived from the Company’s audited consolidated financial statements at May 31, 2024, which were prepared and presented in accordance
with generally accepted accounting principles (“GAAP”). This financial information is only a summary and should be read in
conjunction with the audited financial statements and related notes contained herein, which more fully present the Company’s financial
condition and results of operations at that date. The results set forth in these consolidated financial statements are not necessarily
indicative of the Company’s future performance. This item and other parts of this report contain forward-looking statements that
involve risks and uncertainties. Actual results may differ significantly from the results discussed in forward-looking statements.
Information about the Company
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. For detailed information about the Company and its operations, see “Business.”
The Company’s fiscal year begins on June
1 in each year and ends on May 31 in the following year.
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 deficit, and its ability to continue as a going concern
depends on the successful execution of its operating plan, which includes 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.
13
Impact of the COVID-19 Pandemic
The COVID-19 pandemic 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, for May 31, 2023, was $42,655 and for the year
ended May 31, 2024, was $36,335.
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, for the year
ended May 31, 2023, was $266,280 and for the year ended May 31, 2024, was $213,865.
The Company believes that, although the COVID-19
pandemic adversely affected the Company’s operations and, especially with respect to its Pharmacology University business, and caused
the Company to change the way in which it operates today, it is no longer affected by the pandemic.
Change of Corporate Name
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 did not reflect its activities, it changed its name to Cannabis Bioscience International Holdings, Inc. on December 6,
2022.
Overview
The Company provides educational systems focused
on medical cannabis in the United States and Latin America, as well as worldwide through online education and services in therapeutic
areas of clinical trials. The Company’s operating units and their activities were:
·
Alpha Research Institute – Clinical trials and medical research.
·
Pharmacology University: – Education, consulting, digital publishing, marketing, and franchising related to medical cannabis.
The Company operated a Sleep Center, which diagnosed
sleep-related disorders. Its operations were terminated on April 30, 2023.
For further information concerning the Company
and its business, see “Business.”
14
Results of Operations
Comparison of the Year Ended May 31,
2024, and the Year Ended May 31, 2023
The following table sets forth information from
the consolidated statements of operations for the years ended May 31, 2024, and May 31, 2023.
Year Ended May 31,
2024
2023
Revenues
$ 248,841
$ 316,825
Cost of revenues
45,599
93,450
Gross profit
203,242
223,375
Total operating expenses
689,382
1,206,746
Operating loss
(486,140 )
(983,371 )
Non-operating income (expense):
Note discount expense
(11,000 )
–
Forgiveness of debt
–
41,765
Interest
(154,206 )
(90,973 )
Net loss
$ (651,345 )
$ (1,032,579 )
Revenues
Revenues were $248,841 and $316,825 for the years
ended May 31, 2024, and May 31, 2023, respectively, primarily due to a decrease of $52,415 in revenues from clinical trial contracts,
which were $266,280 in the earlier period and $213,865 in the later. Revenues from cannabis-related educational classes and seminars were
$6,335 for the year ended May 31, 2024, as compared with $42,655 for the year ended May 31, 2023, because the Company conducted fewer
classes and seminars in the year ended May 31, 2024. Consulting fees were $28,641 for the year ended May 31, 2024, versus $8,333
for the year ended May 31, 2023.
Operating Expenses
Operating expenses for the years ended May 31,
2024, and May 31, 2023, consisted of the following:
Years Ended May 31,
2024
2023
General and administrative
$ 123,759
$ 177,110
Contract labor
205,984
659,651
Professional fees
232,844
245,691
Officer compensation
38,000
45,735
Rent
86,730
71,942
Travel
2,065
6,617
Total operating expenses
$ 639,382
$ 1,206,746
The decrease in contract labor was due to a substantial
reduction in staff to write, translate, and produce audiobooks, e-books, and online videos. Professional fees decreased by $7,735 because
the Company’s legal and accounting costs decreased after the Company’s registration statement became effective on December
6, 2023. Officer compensation decreased because an officer left the Company and was not replaced.
Rent increased by $14,788 because rent for the Company’s premises increased when the lease was renewed.
15
Operating Loss
For the reasons set forth above, operating loss
decreased from $983,371 in the year ended May 31, 2023, to $486,140 in the year ended May 31, 2024.
Interest
Interest was $90,973 in the year ended May 31,
2023, and $154,206 in the year ended May 31, 2024.
Other Income
In the year ended May 31, 2023, the Company recorded
other income of $41,675 from the forgiveness of PPP loans.
Net Loss
Net loss for the year ended May 31, 2024, was
$631,345, compared with a net loss of $1,032,579 for the year ended May 31, 2023, for the reasons set forth above in relation to loss
from operations and the effect of other income received in these years.
Liquidity and Capital Resources
At May 31, 2024, the Company had $755 in cash
and cash equivalents, accounts receivable of $20,139, negative working capital of $860,416 and no commitments for capital expenditures.
At May 31, 2023, the Company had $8,913 in cash and cash equivalents, accounts receivable of $10,549, negative working capital of $366,085
and no commitments for capital expenditures. The Company had cash in the amount of $1,028 on September 10, 2024.
During the years ended May 31, 2024, and May
31, 2023, the Company had net cash used in operations of $479,382 and $898,367, respectively, and net cash provided by financing activities
of $471,224 and $875,298, respectively. The Company had accumulated deficits of $5,334,081 at May 31, 2024, and $4,682,736 at May 31,
2023.
Delays in payments by Sponsors and CROs that have
affected, and if they were to recur, could affect, the Company’s cash flows.
Since June 1, 2022, the Company has raised capital
as follows:
·
In the years ended May 31, 2024, and the year ended May 31, 2023, the Company received $70,000 and $801,956, respectively, from sales of Common Stock to private investors.
·
In the years ended May 31, 2024, and May 31, 2023, the Company received
loans of $428,201 (of which $398,041 was a related-party loan) and $73,332, respectively.
16
The Company has offered 6,250,000,000 shares of
Common Stock to the public at an offering price of $0.0008 per share (the “Offering”). If the Offering had been fully sold,
the Company would have raised new capital of $5,000,000. However, as of the date of this Report, no shares have been sold and the Company
believes that it will not be able to sell any of these shares until the market price for its Common Stock exceeds the public offering
price of the Offering for a substantial period. As a result, the Company believes that it will be able to raise equity capital only through
the sale of shares of Common Stock in private transactions at discounts from the market price for Common Stock, which may be substantial.
The Company believes that, for the time being, it will not be able to attain the goals described under “Business Plan” in
the prospectus for the public offering and that it will need to obtain funding for the $2,425,000 required to attain these goals and its
estimated that other capital needs of $2,000.000 (including operating costs of $600,000, legal/accounting costs of $400,000, overhead
of $800,000 and a reserve for contingencies of $200,000 for the next two years) through revenue from operations, profits, private sales
of its equity securities, loans or a public offering at a lower offering price that for the Offering.
There is no assurance that such funding will be
available on acceptable terms or at all or that the Company will attain profitability. If the Company cannot raise sufficient funds when
required or on acceptable terms, it may have to reduce its operations significantly or discontinue them entirely. To the extent that funds
are raised by issuing equity securities or securities that are convertible into the Company’s equity securities, its stockholders
may experience significant dilution. If the Company is successful in raising funds for its business plan and in carrying it out, it expects
to become profitable in the year ending May 31, 2025, and beyond.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Smaller Growth Company
We are a smaller reporting company as defined
in Item 10(f)(1) of Regulation S-K. As such, we may take advantage of certain of the scaled disclosures available to smaller reporting
companies as long as (i) the market value of our voting and non-voting common stock held by non-affiliates is less than $250 million measured
on the last business day of our second fiscal quarter or (ii) our annual revenue is less than $100 million during the most recently completed
fiscal year and the market value of our voting and non-voting common stock held by non-affiliates is less than $700 million measured on
the last business day of our second fiscal quarter. As a smaller reporting company, we may choose to present only the two most recent
fiscal years of audited financial statements in our Annual Report on Form 10-K and have reduced disclosure obligations regarding executive
compensation; and, as long as we remain a smaller reporting company with less than $100 million in annual revenue, we will not be required
to obtain an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
Climate Change
The Company’s business, financial condition,
and results of operations have not been materially impacted by federal and state legislation and regulation and international accords
regarding climate change, but it cannot predict how they may be impacted in the future. The Company has had no material past capital expenditures
for climate-related projects and, unless there are regulatory changes, does not expect to incur them in the future.
Long-Term Obligations
The Company has no long-term obligation that it
expects to have a material impact on its liquidity or capital resources.