Cannabis Bioscience International Holdings, Inc. 10-Q/A

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 November 30, 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 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 deficit, and its ability to continue as a going concern depends on the successful execution of its operating plan, increasing sales of existing services and introducing new products and 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. 19 Results of Operations Comparison of the Three Months Ended November 30, 2023, and November 30, 2022 The following table sets forth information from the statements of operations for the three months ended November 30, 2023, and November 30, 2022. Three Months Ended November 30, 2024 2023 Revenues $ 74,248 $ 63,748 Cost of revenues 7,803 15,092 Gross profit 66,445 48,656 Total operating expenses 126,072 143,168 ) Operating loss (59,627 ) (94,512 ) Non-operating expense: Interest (8,701 ) (29,916 ) Note discount (11,200 ) – Net loss $ (79,528 ) $ (124,428 ) Revenues Revenues were $74,248 and $63,748 for the three months ended November 30, 2024, and November 30, 2023, respectively. The increase was primarily due to a $10,500 increase in revenues from clinical trials sales. Cost of Revenues Cost of revenues for the three months ended November 30, 2024, and November 30, 2023, were $7,803 and $15,092, respectively. The difference was primarily due to a reduction in cost of revenues in clinical trials. Total Operating Expenses The following table sets forth total operating expenses for the three months ended November 30, 2024, and November 30, 2023: Three Months Ended November 30, 2024 2023 General and administrative $ 40,128 $ 8,407 Contract labor 54,296 46,326 Professional fees 7,112 45,028 Officer compensation 6,000 12,000 Rent 18,439 31,210 Travel 97 197 Total operating expenses $ 126,072 $ 143,168 Total operating expenses were $126,072 and $143,168 for the three months ended November 30, 2024, and November 30, 2023, respectively. The decrease is attributable to reductions of $37,916, $6,000 and $12,771 in professional fees, officer compensation and rent and lease, respectively, offset by an increase of $31,721 in general and administrative. 20 Operating Loss Operating income/loss increased from a loss of $94,512 for the quarter ended November 30, 2023 to a loss of $59,627 for the three months ended November 30, 2024, primarily due to an increase of revenue from clinical trial of $10,500 and a decrease in total operating expenses of $17,096. Other Income For the three months ended November 30, 2024, and November 30, 2023, interest was $8,701 and $29,916, respectively, while the note discount expense was $11,200 for the three months ended November 30, 2024. Net Loss Net income for the three months ended November 30, 2024 was $79,528 versus the net loss of $124,428 for the three months ended November 30, 2023, for the reasons described above. Comparison of the Six Months Ended November 30, 2024, and November 30, 2023 The following table sets forth information from the statements of operations for the six months ended November 30, 2024, and November 30, 2023. Six Months Ended November 30, 2024 2023 Revenues $ 253,135 $ 136,569 Cost of revenues 16,165 23,912 Gross profit 236,970 112,656 Total operating expenses 394,201 380,839 Operating loss (157,231 ) (268,182 ) Non-operating income (expense): Interest (11,040 ) (38,035 ) Forgiveness of debt 23,638 – Note discount (11,200 ) – Net loss $ (155,833 ) $ (306,217 ) Revenues Revenues were $253,135 and $136,569 for the six months ended November 30, 2024, and November 30, 2023, respectively. The increase was primarily due to increase in clinical trial and consulting fees amounting to $137,199 and $16,667, respectively. 21 Cost of Revenues Cost of revenues for the six months ended November 30, 2024, and November 30, 2023, were $16,165 and $23,912, respectively. The difference was primarily due to a $7,747 decrease in cost of revenues for clinical trials. Total Operating Expenses The following table sets forth total operating expenses for the six months ended November 30, 2023, and November 30, 2022: Six Months Ended November 30, 2024 2023 General and administrative $ 101,424 $ 53,376 Contract labor 100,169 141,980 Professional fees 143,682 107,422 Officer compensation 12,000 24,000 Rent 36,687 52,163 Travel 239 1,898 Total operating expenses $ 394,201 $ 380,839 Total operating expenses were $394,201 and $380,839 for the six months ended November 30, 2024, and November 30, 2023, respectively. The decrease was primarily attributable to reductions of $41,811, $15,476 and $12,000 in contract labor, rent and lease, and officer compensation, respectively, offset by an increase of $48,048 in general and administrative.. Operating Loss Operating loss decreased from $268,182 for the six months ended November 30, 2023, to $157,231 for the six months ended November 30, 2024, primarily due to increase in revenue from clinical trial amounting to $137,199 and decrease in operating expense from contract labor of $41,811. Other Income (Expense) For the six months ended November 30, 2024, and November 30, 2023, interest was $11,040 and $38,035, respectively. During the six months ended November 30, 2024, the Company recorded income of $23,638 from forgiveness of a loan and an expense from note discount amounting to $11,200. As a result, other income (expense) for the six months ended November 30, 2024, and November 30, 2023, showed income of $1,398 and loss of $38,035, respectively. Net Loss The net loss for the six months ended November 30, 2024, was $155,833, versus $306,217 for the six months ended November 30, 2023, for the reasons described above. 22 Changes in Financial Condition and Results of Operations At November 30, 2024, the Company had $1,002 in cash and cash equivalents and accounts receivable of $13,819, negative working capital of $857,255 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 a balance of cash and cash equivalents of $1,002 on the date of this Report. During the six months ended November 30, 2024, the Company had net cash used in operations of $102,503, while during the quarter ended November 30, 2023, the Company had net cash used in operations of $295,867. On the other hand, during the six months ended November 30, 2024, the Company had net cash provided in financing of $102,750, while during the quarter ended November 30, 2023, the Company had net cash provided in financing of $287,290. 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 $5,273,234 at November 30, 2024, and $5,334,081 at May 31, 2024. 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.