10-K: Cannabis Bioscience International Holdings Reports 10-K Filing, Cites Ongoing Financial Challenges

Cannabis Bioscience International Holdings' latest 10-K filing reveals a net loss of $651,345 for the fiscal year ending May 31, 2024, and highlights the company's ongoing efforts to navigate financial difficulties and expand its operations.

Summary

• Cannabis Bioscience International Holdings, Inc. reported a net loss of $651,345 for the fiscal year ending May 31, 2024, compared to a net loss of $1,032,579 the previous year.
• The company's revenue decreased to $248,841 in 2024 from $316,825 in 2023, primarily due to a decline in clinical trial revenues.
• Operating expenses decreased from $1,206,746 in 2023 to $689,382 in 2024, mainly due to reduced contract labor costs.
• The company's cash and cash equivalents were $755 as of May 31, 2024, with a negative working capital of $860,416.
• There is substantial doubt about the company's ability to continue as a going concern, as it has incurred recurring losses and negative cash flow from operations.
• The company is focusing on expanding its online education business and is seeking additional funding through private sales of equity securities, loans, or a public offering at a lower price.
• The company has depended on a few customers of Alpha Research Business for substantial portions of its revenue.
• The company has offered 6,250,000,000 shares of Common Stock to the public at an offering price of $0.0008 per share, but no shares have been sold as of the date of the report.

Sentiment

Score: 3

Explanation: The document presents a concerning financial picture with significant losses, declining revenue, and a going concern warning. While there are some positive aspects like cost-cutting and expansion into online education, the overall sentiment is negative due to the company's precarious financial situation and reliance on external funding.

Positives

• Operating expenses decreased significantly, indicating cost-cutting measures.
• The company is actively seeking new contracts for its clinical trials business.
• The company is expanding its online education business, which may provide a more stable revenue stream.
• The company has a large amount of digital educational content available in multiple languages.

Negatives

• The company experienced a significant net loss for the fiscal year.
• Revenues decreased compared to the previous year.
• The company has very low cash reserves and a substantial negative working capital.
• The company's independent auditor has expressed substantial doubt about the company's ability to continue as a going concern.
• The company is heavily reliant on a few customers for a large portion of its revenue.
• The company has not sold any shares in its public offering.

Risks

• The company's ability to continue as a going concern is uncertain due to recurring losses and negative cash flow.
• The company's reliance on a few customers for a large portion of its revenue poses a risk if those relationships are disrupted.
• The company may not be able to raise sufficient capital to fund its business plan.
• The company's public offering has not been successful, limiting its ability to raise equity capital.
• The company faces competition in the cannabis education and clinical trials markets.
• Delays in payments by Sponsors and CROs could affect the company's cash flows.

Future Outlook

The company expects to become profitable in the year ending May 31, 2025, and beyond if it is successful in raising funds for its business plan and carrying it out. 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.

Management Comments

• The Company believes that it may have been negatively impacted by the association of the pandemic with the Peoples Republic of China because China appeared in its former corporate name.
• The Company believes that due to the COVID-19 pandemic, which resulted in the closing of classroom and seminar education, as well as convenience, demand for its courses is trending towards online education and away from classrooms and seminars.
• The Company believes that the amount and scope of its digital products exceed those offered by any of its competitors in cannabis-related education.

Industry Context

The cannabis industry is experiencing rapid growth and change, with increasing legalization and demand for both medical and recreational cannabis. The company's focus on education and research aligns with the industry's need for skilled professionals and scientific understanding of cannabis and its derivatives. The company is also attempting to capitalize on the growing market for CBD products.

Comparison to Industry Standards

• The company's financial performance is significantly below that of established cannabis companies, many of which are reporting substantial revenue growth and profitability.
• Compared to companies like Curaleaf, Trulieve, and Green Thumb Industries, which have revenues in the hundreds of millions or billions, Cannabis Bioscience International Holdings' revenue of $248,841 is very low.
• The company's negative working capital and going concern warning are not typical of larger, more established cannabis companies.
• The company's focus on education and research is a niche area within the cannabis industry, and it is difficult to compare its performance directly to companies focused on cultivation, processing, or retail.
• The company's reliance on a few customers for a large portion of its revenue is a significant risk, unlike larger companies with diversified customer bases.

Management Changes

Corporate Governance

Related Party Transactions

• Two of the Company's officers leased 1,400 square feet in Houston, Texas, at 1625 Main St., Houston, Texas, under a lease the term of which commenced on March 15, 2023, and expired on September 14, 2023, at a rent of $3,168 per month; these officers have made a portion of these premises available to the Company for use as office space, for which the Company pays them $2,817 per month.
• These officers entered into a new lease for these premises, which commenced on September 15, 2023, and will expire on September 14, 2024, at a rent of $3,164 per month, and they made a portion of these premises available to the Company for use as office space, for which the Company is paying them $2,817 per month.
• On April 26, 2024, the Company made a promissory note in the principal amount of $291,451 in favor of a related party.
• During the year ended May 31, 2023, the Company received cash advances from related parties of $101,335 for use as working capital.
• On August 11, 2024, the Board authorized the issuance of 125,000,000 shares of Common Stock to a related party on May 31, 2025, May 31, 2026, May 31, 2027, and May 31, 2028, in compensation for such services as an officer of the Company during the years then ended, if he is serving as treasurer on those dates.
• On August 11, 2024, the Board authorized the issuance of 125,000,000 shares of Common Stock to a related party as compensation for his services as an officer of the Company for the year ended May 31, 2024, and the issuance of like amounts on May 31, 2025, May 31, 2026, and May 31, 2027, in compensation for such services during the years then ended, if he is serving as treasurer on those dates.
• On August 12, 2024, the Company amended its amended and restated articles of incorporation to increase the number of shares designated Series A Preferred Stock from 1,000 to 2,000 and on August 11, 2024, the Board authorized the issuance of the 1,000 shares created by the amendment to a related party and the shares were issued by operation of law.
• On September 3, 2024, one of the Company's officers entered into a new lease for the apartment at 1625 Main St., Houston, Texas. The term of the lease begins on September 15, 2024, and ends on August 14, 2025. The officer intends to make a portion of these premises available to the Company for use as office space, for which the Company will pay him $2,817 per month.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and the potential for dilution.
• Employees and contractors may be affected by potential cost-cutting measures or changes in the company's operations.
• Customers of the company's educational services may experience changes in the availability or format of courses.
• Suppliers and creditors may face increased risk of non-payment due to the company's financial difficulties.

Next Steps

• The company intends to expand its online education business.
• The company plans to conduct clinical trials of hemp-derived CBD medical products.
• The company will seek additional funding through private sales of equity securities, loans, or a public offering at a lower price.
• The company will attempt to resume teaching in classrooms and public forums.

Key Dates

Keywords

cannabis, clinical trials, education, financial results, revenue, net loss, operating expenses, going concern, capital raise, CBD, hemp, online courses