10-K: Cannabis Bioscience Narrows Loss, Eyes CBD Market Growth

Cannabis Bioscience International Holdings, Inc. reported a reduced net loss for fiscal year 2025, driven by increased clinical trial revenue, while facing significant going concern doubts and a need for substantial capital.

Summary

• Reported a net loss of $548,820 for the fiscal year ended May 31, 2025, an improvement from $651,345 in the prior year.
• Revenues increased to $303,022 in 2025 from $248,841 in 2024, primarily due to an $87,866 increase in clinical trial revenues.
• Operating loss decreased to $421,365 in 2025 from $486,140 in 2024.
• Cash and cash equivalents significantly increased to $12,952 at May 31, 2025, from $755 at May 31, 2024.
• The company has a negative working capital of $916,878 and an accumulated deficit of $5,882,901 as of May 31, 2025, raising substantial doubt about its ability to continue as a going concern.
• Plans to launch VitaCookies, a line of CBD-infused functional wellness edibles, initially in Texas.
• Holds 10 utility patent applications and 12 U.S. trademarks, along with over 100 medical formulations.
• Identified material weaknesses in internal control over financial reporting, including difficulty accounting for complex transactions, lack of documented processes, and insufficient Board oversight due to no independent directors or audit committee.

Sentiment

Score: 3

Explanation: While the company showed some improvement in reducing its net and operating losses and increasing revenue from clinical trials, it faces severe financial distress with a substantial accumulated deficit, negative working capital, and significant going concern doubts. Its inability to raise capital through a public offering and reliance on discounted private sales, coupled with material weaknesses in internal controls and related-party debt, indicate a very high-risk profile. The positive outlook on new products and industry growth is overshadowed by fundamental financial instability.

Positives

• Net loss decreased by 15.7% to $548,820 in fiscal year 2025 from $651,345 in fiscal year 2024.
• Total revenues increased by 21.8% to $303,022 in fiscal year 2025 from $248,841 in fiscal year 2024, driven by clinical trial contracts.
• Clinical trial revenues increased by $87,866 to $301,731 in fiscal year 2025.
• Cash and cash equivalents increased substantially to $12,952 at May 31, 2025, from $755 at May 31, 2024.
• Operating loss decreased to $421,365 in fiscal year 2025 from $486,140 in fiscal year 2024.
• Successfully settled a $38,638 financing agreement for $15,000, resulting in a $23,638 gain from debt forgiveness.
• Filed 10 utility patent applications and holds 12 U.S. trademarks, indicating a focus on intellectual property.
• Actively participating in public policy discourse, including the DEA's 2024 hearing on marijuana rescheduling.
• Texas Law HB 46 expands the Texas Compassionate Use Act, potentially increasing demand for the company's educational and CBD products.

Negatives

• Continues to incur recurring losses and negative cash flow from operating activities, with a net loss of $548,820 in fiscal year 2025.
• Has a significant accumulated deficit of $5,882,901 as of May 31, 2025.
• Working capital deficit worsened to $916,878 at May 31, 2025, from $860,417 at May 31, 2024.
• Substantial doubt exists about the company's ability to continue as a going concern.
• High revenue concentration, with two customers providing 91% of gross revenue in fiscal year 2025.
• Revenues from cannabis-related educational classes and seminars decreased to $1,291 in 2025 from $6,335 in 2024.
• Consulting fees dropped to $0 in 2025 from $28,641 in 2024.
• Failed to sell any shares in a public offering of 6.25 billion shares at $0.0008 per share, which could have raised $5 million.
• Expects to raise equity capital only through private transactions at substantial discounts from market price.
• Officer compensation decreased because an officer died.
• Several short-term loans are in default or arrears, including a $55,422 loan from May 2022 and a $16,871 loan from October 2019.
• Identified material weaknesses in internal control over financial reporting, including difficulty accounting for complex transactions, lack of documented processes, and insufficient Board oversight.
• All directors are employed as officers, meaning none are independent.

Risks

• **Going Concern**: Substantial doubt about the ability to continue as a going concern due to recurring losses, negative working capital, and negative cash flow from operations.
• **Capital Funding**: Inability to obtain additional capital on a timely basis and satisfactory terms could materially negatively impact operations or force termination.
• **Federal Illegality of Cannabis**: Despite state-level legalization, cannabis remains a Schedule I controlled substance under federal law, posing legal and enforcement risks.
• **Regulatory Changes**: The cannabis industry is rapidly changing, and future changes in laws and regulations, including FDA oversight of CBD products, could adversely affect the business.
• **Competition**: Operates in a highly competitive environment with companies having significantly larger financial resources.
• **Revenue Concentration**: Dependence on a few customers for a substantial portion of revenue creates significant risk if these relationships are lost.
• **Intellectual Property Protection**: No assurance that patent applications will result in issued patents, or that existing IP can be effectively protected.
• **Market Acceptance of New Products**: The success of new CBD products like VitaCookies depends on consumer acceptance and regulatory environment.
• **Internal Control Weaknesses**: Material weaknesses in internal control over financial reporting could lead to material misstatements and affect financial reliability.
• **Dilution**: Future capital raises through equity issuance will likely result in significant dilution for existing stockholders.
• **Officer Retention**: Inability to provide competitive compensation to executive officers and key personnel could lead to their departure.

Future Outlook

The company expects to become profitable in the fiscal year ending May 31, 2026, driven by the imminent introduction of VitaCookies and increased fees from classes and seminars related to Texas Law HB 46, provided expenses remain near current levels. It also hopes to increase revenue and profits in the future through the introduction of state-of-the-art nanotechnology products, including nanoemulsion-based delivery systems.

Management Comments

• The Company believes that the growing cannabis industry in the United States and abroad offers a significant market opportunity for its Pharmacology University Business, as persons involved in the industry need the educational and other services that it furnishes.
• The Company believes that the anticipated growth of the cannabis industry, propelled in significant part by the increasing legalization of cannabis, offers the Company opportunities to expand.
• The Company believes that the amount and scope of its digital products exceed those offered by any of its competitors in cannabis-related education.
• The Company believes that it can develop and test CBD products.
• The Company 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 believes that his salary [for Mr. Picazo] is substantially lower than he could earn in an equivalent position at another company and that he has elected to receive his salary and remain with the Company because of his equity position in the Company, his belief in the prospects of the Company and intangible reasons of which the Company may not be aware.

Industry Context

The company operates within a rapidly growing and evolving cannabis industry, both recreational and medical, with the U.S. market projected to reach $44-45 billion in 2025 and up to $87 billion by 2035. The global medical cannabis market is also expanding significantly, with forecasts of $108.7 billion by 2034. Ongoing legalization efforts and increasing demand for cannabis research, supported by the DEA, create opportunities. However, federal illegality of cannabis remains a significant challenge, particularly for interstate commerce of CBD food products. The company's focus on education, clinical trials, and CBD product development aligns with the industry's need for skilled professionals, scientific validation, and diverse product offerings, especially in states like Texas where medical cannabis laws are expanding.

Comparison to Industry Standards

• NA The filing does not provide specific comparisons to comparable companies, projects, or results within the industry. It mentions general industry growth figures but no direct benchmarks for its own performance against competitors.

Management Changes

Corporate Governance

Legal Proceedings

• No litigation and no awareness of any threatened litigation.

Related Party Transactions

• On May 1, 2025, the company issued a promissory note (the Jones Note) for $340,855 to John Jones (director and treasurer) and Barbara Kamienski, bearing 2.5% interest per annum, repayable in monthly installments of $8,521.
• Under the Jones Agreement (July 26, 2024), John Jones made a $37,500 payment on a separate financing agreement, and in return, the company agreed to issue him 125,000,000 shares of Common Stock annually for his services as treasurer and 100,000,000 shares annually for his services as a director, for four years starting May 31, 2025.
• John Jones also agreed to make efforts to raise $250,000 in equity for the company during a one-year period, in consideration of 1,000 shares of Series B Preferred Stock.
• The Headway Loan (see Note 4) was guaranteed by a related party.
• On August 3, 2022, the company borrowed $15,000 from a related party (undocumented, 42.5% interest), which is believed to be in default or written off by the lender, with an outstanding balance of $16,465 at May 31, 2025.
• Received cash advances from Dante Picazo (CEO) of $33,518 in 2025 and $1,184 in 2024, with balances of $47,188 and $101,483 owed to Mr. Picazo and Henry Levinski's estate, respectively, at May 31, 2025.
• Reimburses Dante Picazo $2,817 per month for a portion of his leased apartment used as office space.
• Related party liabilities owed to certain shareholders totaled $623,474 at May 31, 2025.
• Related party receivables owed by certain shareholders totaled $9,155 at May 31, 2025.

Stakeholder Impact

• **Shareholders**: Face significant dilution risk from future equity raises at substantial discounts. The stock price is very low ($0.0005 per share), and the company's going concern risk poses a threat to investment value.
• **Employees/Management**: Executive officers are compensated partly with shares to conserve cash, indicating financial strain. The company's ability to retain skilled personnel is at risk due to non-competitive compensation.
• **Creditors**: Several loans are in default or arrears, indicating a risk of non-payment. The company's overall financial health raises concerns about its ability to service debt.
• **Customers (Clinical Trials)**: High revenue concentration from two customers means the loss of one could severely impact the Alpha Research Business.
• **Customers (Education/CBD)**: Potential for new revenue streams from VitaCookies and HB 46 education, but success depends on market acceptance and regulatory environment.

Next Steps

• Launch VitaCookies CBD product line in Texas.
• Conduct seminars, courses, and training programs to support professionals in understanding the new Texas Law HB 46, with the first seminar planned for November 1, 2025, at UTHealth Houston.
• Expand in-person educational programs and continue developing online courses in multiple languages.
• Continue research on the efficacy of CBD-based products, including studies on endocannabinoid system physiology, cancer prevention, irritable bowel syndrome, migraine, anxiety, and fibromyalgia.
• Conduct clinical trials through Alpha Research Institute or independent entities for new CBD products.
• Seek intellectual property protection (patents and trademarks) for successful products.
• Obtain $2,500,000 in funding to cover capital requirements and contingencies for the next two years.
• Address material weaknesses in internal control over financial reporting.
• Introduce state-of-the-art nanotechnology products, including nanoemulsion-based delivery systems, in the future.

Key Dates

Recommendation

The company faces severe financial challenges, including recurring losses, a substantial accumulated deficit, negative working capital, and an explicit "substantial doubt" about its ability to continue as a going concern from its auditor. Its attempts to raise capital through a public offering failed, and it anticipates future equity raises will be at significant discounts, leading to substantial shareholder dilution. The high concentration of revenue from a few customers, coupled with material weaknesses in internal controls and a board lacking independent oversight, further exacerbates its precarious position. While there are plans for new CBD products and growth in clinical trials, the fundamental financial instability and high operational risks make this a highly speculative and risky investment.

Keywords

Cannabis Bioscience International Holdings, CBIH, 10-K, SEC filing, cannabis research, CBD products, clinical trials, Pharmacology University, Alpha Research Institute, VitaCookies, medical cannabis, hemp, financial performance, going concern, intellectual property, patent applications, Texas Compassionate Use Act, HB 46, financial reporting, corporate governance, related party transactions, capital raise, biotechnology, pharmaceuticals, wellness edibles