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 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 ) 17 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.   18 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.   19 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 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.   20