Cannabis Bioscience International Holdings, Inc. 10-K

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, 2025, 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, cannabis-related education in classrooms, seminars and online through Pharmacology University and sales of CBD products. 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, 2025, 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 and repay 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. 16 Overview The Company provides educational systems focused on medical cannabis in the United States and Latin America, as well as worldwide through online education, services in therapeutic areas of clinical trials and CBD products. 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. · CBD Business – Sales of CBD products. For further information concerning the Company and its business, see “ Business .” Results of Operations Comparison of the Year Ended May 31, 2025, and the Year Ended May 31, 2024 The following table sets forth information from the consolidated statements of operations for the years ended May 31, 2025, and May 31, 2024. Year Ended May 31, 2025 2024 Revenues $ 303,022 $ 248,841 Cost of revenues 40,106 45,599 Gross profit 262,916 203,242 Total operating expenses 684,281 689,382 Operating loss (421,365 ) (486,140 ) Non-operating income (expense): Amortization of discount (44,154 ) – Note discount – (11,000 ) Forgiveness of debt 23,638 – Change in fair value of derivative liabilities 29,323 – Interest (136,262 ) (154,206 ) Net loss $ (548,820 ) $ (651,345 ) Revenues Revenues were $303,022 and $248,841 for the years ended May 31, 2025, and May 31, 2024, respectively, primarily due to an increase of $87,866 in revenues from clinical trial contracts, which were $213,865 in the earlier period and $301,731 in the later. Revenues from cannabis-related educational classes and seminars were $1,291 for the year ended May 31, 2025, as compared with $6,335 for the year ended May 31, 2024, because the Company conducted fewer classes and seminars in the year ended May 31, 2024. Consulting fees were $0 for the year ended May 31, 2025, versus $28,641 for the year ended May 31, 2024. 17 Operating Expenses Operating expenses for the years ended May 31, 2025, and May 31, 2024, consisted of the following: Years Ended May 31, 2025 2024 General and administrative $ 101,906 $ 123,759 Contract labor 175,420 205,984 Professional fees 317,137 232,844 Officer compensation 24,000 38,000 Rent 65,301 86,730 Travel 517 2,065 Total operating expenses $ 684,281 $ 689,382 Officer compensation decreased because an officer died. Rent was reduced by $21,429 because a lease terminated and the Company entered into a new lease for a smaller area and rent. Operating Loss For the reasons set forth above, operating loss decreased from $486,140 in the year ended May 31, 2024, to $421,365 in the year ended May 31, 2025. Interest Interest was $136,262 in the year ended May 31, 2025, and $154,206 in the year ended May 31, 2024. Other Income On May 13, 2024, the Company agreed to settle $38,638 owing under a financing agreement in consideration of a payment of $15,000, which the Company made on June 12, 2024. Under ASC 470-50-40, the $23,638 difference between the fair value of the extinguished debt and the fair value of the payment has been treated as gain. Net Loss Net loss for the year ended May 31, 2024, was $651,345, compared with a net loss of $548,820 for the year ended May 31, 2025, for the reasons set forth above. Liquidity and Capital Resources At May 31, 2025, the Company had $12,952 in cash and cash equivalents, accounts receivable of $6,380, negative working capital of $916,878 and no commitments for capital expenditures. At May 31, 2024, the Company had $755 in cash and cash equivalents, accounts receivable of $20,139, negative working capital of $860,417 and no commitments for capital expenditures. The Company had cash in the amount of $228 on September 10, 2025. During the years ended May 31, 2025, and May 31, 2024, the Company had net cash used in operations of $329,627 and $479,382, respectively, and net cash provided by financing activities of $341,824 and $471,224, respectively. The Company had accumulated deficits of $5,882,901 at May 31, 2025, and $5,334,081 at May 31, 2024. Since June 1, 2023, the Company has raised capital as follows: · In the years ended May 31, 2025, and the year ended May 31, 2024, the Company received $244,250 and $70,000, respectively, from sales of Common Stock to private investors. · In the years ended May 31, 2025, and May 31, 2024, the Company received loans of $120,907 (of which $105,187 was related-party loans) and $428,201 (of which $398,041 was related-party loans), respectively. 18 In the year ended May 31, 2024, the Company has offered 6,250,000,000 shares of Common Stock to the public at an offering price of $0.0008 per share. If this offering had been fully sold, the Company would have raised new capital of $5,000,000. However, no shares were sold. The Company does not intend to conduct a public offering of Common Stock until the market price for its Common Stock increases substantially. Thus, 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 it will need to obtain funding of $2,000,000 for its capital requirements to fully fund its business for the next two years and provide a reserve for contingencies of $500,000 through revenue from operations, profits, private sales of its equity securities or loans. 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 businessand in carrying it out, it expects to become profitable in the year ending May 31, 2026, and beyond. The Company believes, but cannot assure, that sales of VitaCookies and fees for classes and seminars relating to Law HB 46 may result in substantial revenue and profits. Financial Outlook The Company has not generated significant revenues and has never been profitable. However, it believes that its growing portfolio of CBD products and intellectual property indicate that the Company is on the right track. The Company believes that the imminent introduction of VitaCookies will generate additional revenue and enable it to become profitable in the current fiscal year, provided that it is able to keep its expenses near current levels. The Company pays some of its officers and directors in shares of Common Stock and expects to continue doing so for the foreseeable future. While paying these officers and directors in shares conserves cash, which is important in light of the Company’s limited capital, GAAP requires that the value of these shares be presented as an operating expense, thereby reducing operating income. The Company hopes that in the future, it will increase revenue and profits by the introduction of state-of-the-art nanotechnology products, including nanoemulsion-based delivery systems, which improve solubility, stability, targeted delivery and the overall bioavailability of therapeutic compounds. 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. 19 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.