ITEM 1. BUSINESS.
Company History
Our business office and
mailing address is 24328 Vermont Avenue, Suite 300, Harbor City, California 90710. Our telephone number is (310) 891-1959. We were
organized in the State of Nevada on April 24, 2008 under the name Planet Resources, Corp. The Company’s initial business
model was the re-processing of mine tailings from previous mining operations. To date we have not generated any revenues because
we were not successful in implementing our business plan. Various alternatives were considered to ensure the viability and solvency
of the Company; however, the Company went dormant from April 30, 2011 to June, 2018, and in Case Number A-14-720990-C, Nevada's
8th Judicial District appointed Robert Stevens as Receiver for the Company on August 20, 2015. Subsequent to Mr. Stevens being
released as the court-appointed receiver in July, 2018, the Company embarked on a new business plan. The Company plans to exploit
licenses that it acquires in the bio-pharmacy (Bio-Pharm) field, specifically in the cell-extraction sector. Such products are
usually currently focused on medical products for pain relief and insomnia. A growing emphasis is being placed on more serious
medical issues, such epilepsy, eye disease, as well as various nerve and vital organ disorders. Also, there is a national imperative
to replace the widespread use (and mis-use) of opioids to treat many common ailments. The plans to test the licensed processes
in a scientific laboratory setting, prove-up the efficiencies of the extraction process, determine the market value of the process
and then license the process for cash consideration and royalty payments.
The Company is entering
into a License Agreement (the “License Agreement”) with Cell Science Holding, Ltd. (“CSH”). Pursuant to
the proposed License Agreement, we will be granted by CSH, a North American exclusive license to certain patents and intellectual
property and associated technical information with respect to the production of phytocannabinoids for use in medical treatments.
In addition to being the
Chairman of the Company’s board of directors, Tom Emmitt is the Company’s Chief Executive Officer and Secretary. We
currently have three employees and utilize the services of various contract personnel from time to time.
Emerging Growth Company Status
We are an "emerging
growth company", as defined in the Jumpstart our Business Startups Act of 2012 (“JOBS Act”), and we may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited
to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously
approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If
some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock
and our stock price may be more volatile.
Section 107 of the JOBS
Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section
7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth
company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We have elected not to opt out of the transition period pursuant to Section 107(b).
We could remain an “emerging
growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual
gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2
under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million
as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more
than $1 billion in non-convertible debt during the preceding three-year period.
Notwithstanding the above,
we are also currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed
issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less
than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that
we are still considered a “smaller reporting company”, at such time are we cease being an “emerging growth company”,
the disclosure we will be required to provide in our SEC filings will increase, but will still be less than it would be if we were
not considered either an “emerging growth company” or a “smaller reporting company”. Specifically, similar
to “emerging growth companies”, “smaller reporting companies” are able to provide simplified executive
compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring
that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over
financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things,
only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings
due to our status as an “emerging growth company” or “smaller reporting company” may make it harder for
investors to analyze our results of operations and financial prospects.
Business
Following the dormant period
from April 30, 2011 to June, 2018, the Company has embarked on a new business plan. To date, our efforts have been devoted primarily
to start-up and development activities, which include: (i) developing our business plan; (ii) finalizing and acquisition of intellectual
property under the License Agreement; (iii) identification and development of a portfolio of products covered under the License
Agreement; (iv) identifying distribution networks in our target markets; and (v) identifying and creating the marketing resources
for our target markets.
The Company management’s
business plan is to investigate the strategic acquisition of cell extraction related licenses developed by others that can be developed
into processes to be licensed to large companies for sale to the public. Such acquisitions would be for Company stock, through
private equity financing or the formation of limited partnerships with outside investors.
One key to the process
is the construction of bioreactor laboratories. This process allows bio-engineers to control the process to mature and guide the
development of cells with engineered constructs. Bioreactors are culture systems that have been designed to alter basic physiological
phenomena, such as: cell survival along with tissue structure, organization, mechanical properties and function. Bioreactors also
ensure cell survival through adequate delivery of essential nutrients throughout the three-dimensional tissue engineered construct.
Bioreactors can also guide tissue structure, organization, and ultimately function through the application of chemical and mechanical
stimuli.
The general efficiencies
of cell extraction are that the process can reduce the active ingredient from the host organic substance to assure purity levels
and concentrations as opposed to the waste in cultivation and shipping of whole natural sources with the attendant shipping, storage,
waste and shelf-life of organic products. The Company does not plan to manufacture, distribute or directly market such products
since there are companies that are well-established to do so. Thus, the Company plans to only be burdened with research and development
costs without attendant operational expenses of bringing products to the marketplace.
The product development
sequence would generally involve:
• Contingent acquisition
of a process license
• Third-party laboratory
verification of process
• Legal research
into patent protection
• Patent filing
• Sample test in
an R&D “limited run”
-percent concentration
-costs
• Bioreactor laboratory
planning
-Lease –
plans, permits, regulatory compliance, utilities
-Staffing –
consultants, engineers, legal, handling staff, shipping/packing, distribution
-Installation
of bioreactors
-Culture growth
cycle
-Cultivation
cycle
-Centrifuge/drying
equipment
-Initial product
harvest
-Laboratory testing
• To Market
-Develop “take
away” contract
-License to formulate
initial cost and royalties
-Distribution
plan
The Company’s near-term
plan is focused on producing powdered products for medical and recreational markets via cell growth technology in multiple bioreactor
facilities.
Cell growth in research
and commercial bioreactor labs has achieved efficacy over in recent years in terms of operational viability. While the technology
works, the economics for certain applications, outside of a science experiment, have not proven to be economically feasible.
Company management believes
is commercially viable is growing highly valued, and relatively difficult to find in nature, certain plant or animal cells that
are utilized in medicine and food additive products to add viability to the host product. A cost to grow targeted cells of $200
to $2,000 per pound is economically viable when you are selling the product by the gram or for extremely high multiples.
The Company plans to utilize
trade secret processes, patent-pending and patented products, and scale-up commercially sized bioreactor labs to enable growth
of a predictable harvested cell product with reliable qualities and quantities in the product at lower costs per pound to deliver
than any current market alternative.
Market
According to the Brightfield
Group, the global medical cannabis market is expected to grow from its current 7.7 billion dollars to 31.4 billion by 2021. The
US market currently drives 90 percent of global cannabis sales, but with Canada and other western nations reassessing medical cannabis,
the US percentage of the market share is expected to decrease to below 60%. Decreased government regulation, and the lack of political
will to enforce federal cannabis laws also plays an important role in the growth and expansion of the cannabis industry as a whole.
We believe that Bakhu Holdings Corp. has the relationships, experience, resources and services to be successful in the medical
cannabis industry and provide net shareholder value.
Competition
The medical cannabis industry
in the United States is highly competitive. We face competition from other dispensary’s and other medical cannabis providers.
Due to the small number of states where cannabis is legal, and limited licensing opportunities creates a significant barrier to
entry in the medical cannabis market. We compete with a variety of companies, many of which have substantially greater technical,
financial, marketing and other resources than we do, allowing them to compete more effectively than we can.
The industry in which we
compete is highly competitive, with much larger and better capitalized organizations providing medical cannabis products. We do
not have the resources to compete with these larger organizations and the range of products and services offered by them. Our ability
to compete effectively will depend primarily on the level of training of our staff, the utilization of technology and equipment
and the ability to provide quality products and services.
Employees
As of July 31, 2018, we
had three employees, although we intend to hire additional personnel as we grow and develop our business. National unemployment
rates remain low relative to historical averages, and there exists a significant amount of competition for skilled personnel in
the medical cannabis industry. Nevertheless, we expect to be able to attract and retain such additional employees as are necessary,
commensurate with the anticipated future expansion of our business. Further, we expect to continue to use consultants, contract
labor, attorneys and accountants as necessary.
Available Information
Bakhu Holdings Corp. is
subject to the information requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith files quarterly
and annual reports, as well as other information with the Securities and Exchange Commission (“Commission”) under File
No. 333-153574. Such reports and other information filed with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates, and at various regional
and district offices maintained by the Commission throughout the United States. Information
about the operation of the Commission’s
public reference facilities may be obtained by calling the Commission at 1-800-SEC-0330. The Commission also maintains a website
at
http://www.sec.gov
that contains reports and other information regarding the Company and other registrants that file
electronic reports and information with the Commission.