|
ITEM 1.
|
FINANCIAL STATEMENTS
|
BAKHU HOLDINGS, CORP.
|
Consolidated Balance Sheets
|
|
ASSETS
|
|
|
|
|
|
|
|
April 30,
|
|
July 31,
|
|
|
2020
|
|
2019
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
510
|
|
|
$
|
1,633
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
510
|
|
|
|
1,633
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
510
|
|
|
$
|
1,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
10,889
|
|
|
$
|
5,208
|
|
Accrued interest
|
|
|
9,563
|
|
|
|
—
|
|
Short term borrowings - related parties
|
|
|
—
|
|
|
|
147,513
|
|
Notes payable - related parties
|
|
|
299,278
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
319,730
|
|
|
|
152,721
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
319,730
|
|
|
|
152,721
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value; 50,000,000 shares authorized,
|
|
|
|
|
|
|
|
|
4 and 4 shares issued and outstanding, respectively
|
|
|
—
|
|
|
|
—
|
|
Common stock, $0.001 par value; 500,000,000 shares authorized,
|
|
|
|
|
|
|
|
|
300,000,000 and 288,938,184 shares issued and outstanding,
|
|
|
|
|
|
|
|
|
respectively
|
|
|
300,000
|
|
|
|
288,938
|
|
Additional paid-in capital
|
|
|
14,720,015
|
|
|
|
14,177,986
|
|
Accumulated deficit
|
|
|
(15,339,235
|
)
|
|
|
(14,618,012
|
)
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity (Deficit)
|
|
|
(319,220
|
)
|
|
|
(151,088
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
|
|
$
|
510
|
|
|
$
|
1,633
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
financial statements.
BAKHU HOLDINGS, CORP.
|
Consolidated Statements of Operations
|
(Unaudited)
|
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
|
|
April 30,
|
|
April 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
NET REVENUES
|
|
$-
|
|
$-
|
|
$-
|
|
$-
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting fees
|
|
|
554,277
|
|
|
|
10,509,175
|
|
|
|
560,362
|
|
|
|
10,592,330
|
|
Professional fees
|
|
|
49,770
|
|
|
|
—
|
|
|
|
131,805
|
|
|
|
38,530
|
|
Selling, general and administrative
|
|
|
2,788
|
|
|
|
845
|
|
|
|
17,413
|
|
|
|
1,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
|
|
606,835
|
|
|
|
10,510,020
|
|
|
|
709,580
|
|
|
|
10,632,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
|
(606,835
|
)
|
|
|
(10,510,020
|
)
|
|
|
(709,580
|
)
|
|
|
(10,632,048
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(6,175
|
)
|
|
|
—
|
|
|
|
(11,643
|
)
|
|
|
(668
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Income (Expenses)
|
|
|
(6,175
|
)
|
|
|
—
|
|
|
|
(11,643
|
)
|
|
|
(668
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME TAXES
|
|
|
(613,010
|
)
|
|
|
(10,510,020
|
)
|
|
|
(721,223
|
)
|
|
|
(10,632,716
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME TAXES
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$
|
(613,010
|
)
|
|
$
|
(10,510,020
|
)
|
|
$
|
(721,223
|
)
|
|
$
|
(10,632,716
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC NET LOSS PER SHARE
|
|
$
|
(0.00
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.08
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES OUTSTANDING
|
|
|
295,329,455
|
|
|
|
250,713,465
|
|
|
|
291,037,507
|
|
|
|
130,220,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
financial statements.
BAKHU HOLDINGS, CORP.
|
Consolidated Statements of Stockholders' Equity (Deficit)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended April 30, 2020
|
|
|
|
|
|
|
Additional
|
|
|
|
Total
|
|
|
Preferred Stock
|
|
Common Stock
|
|
Paid-In
|
|
Accumulated
|
|
Stockholders'
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2019
|
|
|
4
|
|
|
|
—
|
|
|
|
288,938,184
|
|
|
|
288,938
|
|
|
|
14,177,986
|
|
|
|
(14,618,012
|
)
|
|
|
(151,088
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the three months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(34,732
|
)
|
|
|
(34,732
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October 31, 2019
|
|
|
4
|
|
|
|
—
|
|
|
|
288,938,184
|
|
|
|
288,938
|
|
|
|
14,177,986
|
|
|
|
(14,652,744
|
)
|
|
|
(185,820
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the three months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31, 2020
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(73,481
|
)
|
|
|
(73,481
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 31, 2020
|
|
|
4
|
|
|
|
—
|
|
|
|
288,938,184
|
|
|
|
288,938
|
|
|
|
14,177,986
|
|
|
|
(14,726,225
|
)
|
|
|
(259,301
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for consulting fees
|
|
|
—
|
|
|
|
—
|
|
|
|
11,061,816
|
|
|
|
11,062
|
|
|
|
542,029
|
|
|
|
—
|
|
|
|
553,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the three months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2020
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(613,010
|
)
|
|
|
(613,010
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 30, 2020
|
|
|
4
|
|
|
$
|
—
|
|
|
|
300,000,000
|
|
|
$
|
300,000
|
|
|
$
|
14,720,015
|
|
|
$
|
(15,339,235
|
)
|
|
$
|
(319,220
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended April 30, 2019
|
|
|
|
|
|
|
Additional
|
|
|
|
Total
|
|
|
Preferred Stock
|
|
Common Stock
|
|
Paid-In
|
|
Accumulated
|
|
Stockholders'
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
71,938,184
|
|
|
|
71,938
|
|
|
|
3,884,787
|
|
|
|
(3,966,118
|
)
|
|
|
(9,393
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the three months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31, 2018
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(122,336
|
)
|
|
|
(122,336
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October 31, 2018
|
|
|
4
|
|
|
|
—
|
|
|
|
71,938,184
|
|
|
|
71,938
|
|
|
|
3,884,787
|
|
|
|
(4,088,454
|
)
|
|
|
(131,729
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the three months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(360
|
)
|
|
|
(360
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 31, 2019
|
|
|
4
|
|
|
|
—
|
|
|
|
71,938,184
|
|
|
|
71,938
|
|
|
|
3,884,787
|
|
|
|
(4,088,814
|
)
|
|
|
(132,089
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for the conversion of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
7,000,000
|
|
|
|
7,000
|
|
|
|
3,199
|
|
|
|
—
|
|
|
|
10,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for consulting fees
|
|
|
—
|
|
|
|
—
|
|
|
|
210,000,000
|
|
|
|
210,000
|
|
|
|
10,290,000
|
|
|
|
—
|
|
|
|
10,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the three months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(10,510,020
|
)
|
|
|
(10,510,020
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 30, 2019
|
|
|
4
|
|
|
$
|
—
|
|
|
|
288,938,184
|
|
|
$
|
288,938
|
|
|
$
|
14,177,986
|
|
|
$
|
(14,598,834
|
)
|
|
$
|
(131,910
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
financial statements.
BAKHU HOLDINGS, CORP.
|
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
|
|
|
|
|
For the Nine Months Ended
|
|
|
April 30,
|
|
|
2020
|
|
2019
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(721,223
|
)
|
|
$
|
(10,632,716
|
)
|
Adjustments to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
used by operating activities:
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
553,091
|
|
|
|
10,500,000
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
5,681
|
|
|
|
(10,145
|
)
|
Accrued liabilities
|
|
|
9,563
|
|
|
|
668
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used by Operating Activities
|
|
|
(152,888
|
)
|
|
|
(142,193
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from short term borrowings - related parties
|
|
|
—
|
|
|
|
133,263
|
|
Proceeds from notes payable - related parties
|
|
|
170,081
|
|
|
|
—
|
|
Payments on notes payable - related parties
|
|
|
(18,316
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
|
151,765
|
|
|
|
133,263
|
|
|
|
|
|
|
|
|
|
|
DECREASE IN CASH AND CASH EQUIVALENTS
|
|
|
(1,123
|
)
|
|
|
(8,930
|
)
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
|
1,633
|
|
|
|
13,138
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
510
|
|
|
$
|
4,208
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Payments For:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
—
|
|
|
$
|
—
|
|
Income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Non-cash financing activity:
|
|
|
|
|
|
|
|
|
Issuance of notes payable - related parties to replace short
|
|
|
|
|
|
|
|
|
term borrowings - related parties
|
|
$
|
147,513
|
|
|
$
|
—
|
|
Common stock issued for the conversion of debt
|
|
$
|
—
|
|
|
$
|
10,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
financial statements.
BAKHU HOLDINGS CORP.
Notes to Financial Statements
April 30, 2020
(Unaudited)
NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS
The Company was incorporated under the laws of the State of Nevada,
on April 24, 2008 under the name Planet Resources, Corp. In May 2009, the Company also began to look for other types of business
to pursue that would benefit the shareholders. In order to pursue businesses that may not be in the mining industry the name of
the Company was changed with the approval of the Directors and Shareholders to Bakhu Holdings, Corp. on May 4, 2009 (“Bakhu,
or the “Company”).
The Company has not generated any revenue to date and consequently
its operations are subject to all risks inherent in the establishment of a new business enterprise. For the period from inception,
April 24, 2008 through April 30, 2020 the Company has accumulated losses of $15,339,235.
On August 9, 2019, the Company formed Cell Science CBD International,
Inc., a California corporation as a wholly owned subsidiary. On November 26, 2019, the name of the subsidiary was changed to CBD
Biotech, Inc., (“CBD”). On January 5, 2020, the Company entered into a Sublicense Agreement with CBD wherein the Company
granted a sublicense of the Licensed Science as it relates to the production and manufacturing of cannabis and their byproducts
which have measurable tetrahydrocannabinol (THC) concentration potency less than 3% on a dry weight basis. CBD had no active operations
as of April 30, 2020.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles in the United States of America and are presented in US dollars.
Going Concern
The financial statements have been prepared on a going concern basis
which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for
the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $15,339,235 as of
April 30, 2020 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s
ability to continue as a going concern.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity
of three months or less at the time of issuance to be cash equivalents.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Foreign Currency Translation
The Company’s functional currency and its reporting currency
is the United States dollar.
Financial Instruments
The carrying value of the Company’s financial instruments
approximates their fair value because of the short maturity of these instruments.
BAKHU HOLDINGS CORP.
Notes to Financial Statements
April 30, 2020
(Unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Stock-based Compensation
Stock-based compensation is accounted for at fair value in accordance
with ASC 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.
Income Taxes
Income taxes are accounted for under the assets and liability method.
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and
tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which
those temporary differences are expected to be recovered or settled.
Basic and Diluted Net Loss per Share
The Company computes net loss per share in accordance with ASC 105,
“Earnings per Share.” ASC 105 requires presentation of both basic and diluted earnings per share (EPS) on the face
of the income statement.
Basic EPS is computed by dividing net loss available to common shareholders
(numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all
potentially dilutive common shares outstanding during the period. Diluted EPS excludes all potentially dilutive shares if their
effect is anti-dilutive.
Professional fees
Substantially all professional fees presented in the financial statements
represent accounting fees, audit fees and legal fees associated with the filing of reports with the Securities and Exchange Commission.
Also included in professional fees are fees paid to the stock transfer agent. The fees are expensed as incurred.
Fiscal Periods
The Company’s fiscal year end is July 31.
Recently Issued Accounting Pronouncements
We have reviewed accounting pronouncements issued during the past
two years and have adopted any that are applicable to the Company. We have determined that none had a material impact on our financial
position, results of operations, or cash flows for the periods presented in this report.
NOTE 3 - PREFERRED AND COMMON STOCK
On August 8, 2018, the Board of Directors of the Company approved
the amendment and restatement of the Company’s Articles of Incorporation. The purpose of the amendment and restatement of
the Articles of Incorporation was to:
|
(i)
|
Increase the number of authorized shares of Common Stock to 500,000,000;
|
|
(ii)
|
Increase the number of authorized shares of Preferred Stock to 50,000,000;
|
|
(iii)
|
Grant the Board of Directors the rights to designate classes of preferred stock, and to define the powers, preferences, rights, and restrictions thereof;
|
The preferred and common stock has a par value of $0.001 per share.
On August 8, 2018, the Company issued 4 shares of Series A Preferred
Stock to the Company’s controlling shareholder, The OZ Corporation, a California corporation.
BAKHU HOLDINGS CORP.
Notes to Financial Statements
April 30, 2020
(Unaudited)
On December 20, 2018, the Company entered into a License
Agreement with Cell Science Holding, Ltd. (CSH”). Pursuant to the License Agreement, the Company is being granted an exclusive
license by CSH with respect to certain patents and intellectual property for the production of phytocannabinoids for use in
medical treatments and in exchange for 210,000,000 shares of common stock of the Company. On February 14, 2019, the stock was
issued and recorded as consulting fees valued at $10,500,000.
On April 7, 2019, the Company issued 7,000,000 shares of common
stock for the conversion of convertible notes payable and accrued interest in the amount of $10,199.
On March 9, 2020, the Company issued
11,061,816 restricted shares of Common Stock to the OZ Corporation, in consideration of ongoing consulting and advisory services
provided to the Company, on terms as previously agreed to the Company and the OZ Corporation. The securities were issued pursuant
to an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933. The OZ Corporation is intimately acquainted
with the Company’s business plan and proposed activities at the time of issuance and possessed information on the Company
necessary to make an informed investment decision. The estimated fair value of the stock was $553,091 and has been expensed and
included in “Consulting fees” in the three and six months ended April 30, 2020.
NOTE 4 - INCOME TAXES
As of April 30, 2020, the Company had net operating loss carry forwards
that may be available to reduce future years’ taxable income through 2030. Future tax benefits which may arise as a result
of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur
and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
NOTE 5 - RELATED PARTY TRANSACTIONS
At various times, the Company’s Receiver extended short term
financing to the Company at an interest rate of 15%. Due to the nature of the Receiver’s business, sometimes the accrued
interest due to the Receiver is not reimbursed. As of July 31, 2019, and July 31, 2018 the Company’s Receiver had extended
$-0- and $8,829, respectively, in short term borrowings to the Company. These borrowings were incurred to help the Company pay
for certain expenses associated with the Company’s Receivership status. During the three months ended April 30, 2019, the
principal amount of $8,829 and accrued interest of $1,370 was replaced by convertible promissory notes and immediately converted
into 7,000,000 shares of common stock.
NOTE 6 - NOTES PAYABLE
On August 1, 2019, the Company executed a promissory note in favor
of Company’s controlling shareholder, The OZ Corporation, to evidence monies loan to the Company from December 26, 2018 through
July 31, 2019 in the amount of $147,513, and to evidence any additional amounts that may be loaned to the Company thereafter. Pursuant
to the terms of the promissory note, the principal and unpaid accrued simple interest at the rate of 6.0% per annum shall be due
and payable on or before December 31, 2019. The promissory note also provides that the Company may extend the maturity date for
an additional 12 months, until December 31, 2020, by paying an extension fee of 1.00% of the outstanding principal loan balance,
which may at the lenders’ option be advanced and added to the then outstanding principal balance. The extension fee amounted
to $2,081 which has been added to the outstanding principal balance and recorded as interest expense during the nine months ended
April 30. 2020. The principal amount of the promissory note shall be increased by the amount of any additional advances of funds
made by The OZ Corporation to the Company, from time to time, from the date of such advance. Under the terms of the promissory
note, The OZ Corporation, at its option may, at any time, convert all or any portion of the then unpaid principal balance and any
unpaid accrued interest into shares of the Company’s common stock. The number of shares of common stock to be issued upon
such conversion shall be equal to the quotient obtained by dividing (i) the then unpaid principal balance and any unpaid accrued
interest of the promissory note being converted by (ii) 80% of the average closing price of the common stock of the Company, for
the ninety (90) trading days before the conversion date, rounded up to the nearest whole share. During the nine months ended April
30, 2020, the company received proceeds of $170,081 and made payments of $18,316 against the principal balance of the note. The
principal balance and accrued interest due on the note were $299,278 and $9,563, respectively as of April 30, 2020.
The Company did not assign any value to the conversion feature of
the Note because the 80% of the common stock of the Company had a negative book value of as of April 30, 2020 and continues to
have a negative book value. Furthermore, the company has not generated any revenue to date.
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
The following discussion contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934
relating to future events or our future performance. Although management believes that the assumptions made and expectations reflected
in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to
be correct or that actual results will not be different from expectations expressed in this report.
The following discussion of our financial
condition and results of operations should be read in conjunction with the financial statements and related notes to the financial
statements included elsewhere in this periodic report. Some of the statements under “Management’s Discussion
and Analysis,” “Business Overview” and elsewhere herein may include forward-looking statements which reflect
our current views with respect to future events and financial performance. These statements include forward-looking statements
both with respect to us specifically and the industry in general. Statements which include the words “expect,” “intend,”
“plan,” “believe,” “project,” “anticipate,” “will,” and similar statements
of a future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise.
All forward-looking statements address such
matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results
to differ materially from those indicated in these statements. We undertake no obligation to publicly update or review any forward-looking
statements, whether as a result of new information, future developments or otherwise.
If one or more of these or other risks or
uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what
we projected. Any forward-looking statements you read herein reflect our current views with respect to future events and are subject
to these and other risks, uncertainties and assumptions relating to our written and oral forward-looking statements attributable
to us or individuals acting on our behalf and such statements are expressly qualified in their entirety by this paragraph.
Business Overview
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 misuse)
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.
On December 20, 2018, the Company entered into
a License Agreement (the “License Agreement”) with Cell Science Holding, Ltd. (“CSH”). Pursuant to the
License Agreement, the Company was granted and holds an exclusive license to certain patents and intellectual property and associated
technical information (the “Licensed Science”) with respect to the production of phytocannabinoids for use in medical
treatments, within the Territory. The Territory includes any and all countries in the continent of North American, defined as the
United States of America, Canada, Mexico, all countries in the Caribbean Sea and all countries north of the Panama/Columbia boarder
(including the entire nation of Panama). In consideration of the grant of the License Agreement, the Company issued 210,000,000
shares of the Company’s common stock to CSH. These shares were issued in February 2019.
On December 31, 2019, the Company, as Licensee
and CHS, as Licensor, entered into an Amended and Restated Patent and Technology License Agreement (the “Restated License”)
restating the original License Agreement entered into on December 20, 2018, as it relates to (i) the production, manufacturing
and sale of cannabis and byproducts thereof where permitted, (ii) Cannabis-related research, teaching and education for both medical
and other purposes, and (iii) all medical uses and applications of Cannabis, within the Territory.
General and administrative expenses have been
comprised of administrative wages and benefits; occupancy and office expenses; outside legal, accounting and other professional
fees; travel and other miscellaneous office and administrative expenses. Selling and marketing expenses include selling/marketing
wages and benefits, advertising and promotional expenses, as well as travel and other miscellaneous related expenses.
Because we have incurred losses, income tax
expenses are immaterial. No tax benefits have been booked related to operating loss carryforwards, given our uncertainty of being
able to utilize such loss carryforwards in future years. We anticipate incurring additional losses during the coming year.
Results of Operations
Following is management’s discussion of
the relevant items affecting results of operations for the three and nine months ended April 30, 2020 and 2019.
Revenues. The Company generated no net
revenues during the three and nine months ended April 30, 2020 and 2019. We expect revenues to increase as we continue to pursue
funding through investment and the application for lines of credit with financial institutions.
Consulting
Fees. Consulting fees were $554,277 and $10,509,175 for the three months ended April 30, 2020 and 2019, respectively.
Consulting fees were $560,362 and $10,592,330 for the nine months ended April 30, 2020 and 2019, respectively. During the three
months ended April 30, 2020, the Company issued 11,061,816 restricted shares of Common Stock to the OZ Corporation, in consideration
of ongoing consulting and advisory services provided to the Company. The estimated fair value of the stock was $553,091 and has
been expensed and included in consulting fees in the three and nine months ended April 30, 2020. On December 20, 2018, the Company
entered into a License Agreement with Cell Science, Ltd. (CSH”). Pursuant to the License Agreement, the Company is being
granted an exclusive license by CSH with respect to certain patents and intellectual property for the production of phytocannabinoids
for use in medical treatments and in exchange for 210,000,000 shares of common stock of the Company. On February 14, 2019, the
stock was issued and recorded as consulting fees valued at $10,500,000.
Professional Fees. Professional
fees were $49,770 and $-0- for the three months ended April 30, 2020 and 2019, respectively. Professional fees were $131,805 and
$38,530 for the nine months ended April 30, 2020 and 2019, respectively. The Company expects professional fees to increase in the
future due to the fees associated with the Company filings with the Securities and Exchange Commission.
Selling, General and Administrative Expenses.
Selling, general and administrative expenses were $2,788 and $845 for the three months ended April 30, 2020 and 2019, respectively.
Selling, general and administrative expenses were $17,413 and $1,188 for the nine months ended April 30, 2020 and 2019, respectively.
The Company expects SG&A expenses will increase commensurate with an increase in our operations and as a result of the License
Agreement with Cell Science Holding.
Other Income (Expenses). The Company
had net other expenses of $6,175 and $-0- for the three months ended April 30, 2020 and 2019, respectively. The Company had net
other expenses of $11,643 and $668 for the nine months ended April 30, 2020 and 2019, respectively. Other expenses incurred were
comprised of interest expenses related to notes payable of the Company.
Net Loss. The Company had a net
loss of $613,010 for the three months ended April 30, 2020 compared to $10,510,020 for the three months ended April 30, 2019. The
Company had a net loss of $721,223 for the nine months ended April 30, 2020 compared to $10,632,716 for the nine months ended April
30, 2019. The decrease in net loss was mainly due to the higher expenses incurred during the nine months ended April 30, 2019 associated
with the License Agreement.
Liquidity and Capital Resources
As of April 30, 2020, our primary source of
liquidity consisted of $510 in cash and cash equivalents. Since inception, we have financed our operations through a combination
of short and long-term loans, and through the private placement of our common stock.
We do not believe that the Company’s current
capital resources will be sufficient to fund its operating activity and other capital resource demands during the next year. Our
ability to continue as a going concern is contingent upon our ability to obtain capital through the sale of equity or issuance
of debt, and ultimately attaining profitable operations. We expect that any financing we receive will be similar to what we have
heretofore received over the previous two years to enable us to operate, which financing consists of long-term loans at negotiated
rates of interest. We cannot assure you that we will be able to successfully complete any of these activities.
We are presently seeking additional debt and
equity financing to provide sufficient funds for payment of obligations incurred and to fund our ongoing business plan. We expect
to generate revenue pursuant to our new business plan. We cannot assure you, however, that any such financings will be available
or will otherwise be made on terms acceptable to us, or that our present shareholders might suffer substantial dilution as a result.
For the nine months ended April 30, 2020, cash
decreased $1,123 from $1,633 at July 31, 2019 to $510 at April 30, 2020.
Net cash used in operating activities was $152,888
during the nine months ended April 30, 2020, with a net loss of $721,223, which was offset by stock-based compensation of $553,091,
an increase in accounts payable of $5,681 and an increase in accrued liabilities of $9,563.
During the nine months ended April 30, 2020,
the Company had no net cash flows from investing activities.
During the nine months ended April 30, 2020,
the Company had $151,765 in net cash provided by financing activities which consisted of proceeds from notes payable – related
parties in the amount of $170,081, and payments on notes payable – related parties in the amount of $18,316.
Critical Accounting Pronouncements
Our financial statements and related public
financial information are based on the application of generally accepted accounting principles in the United States (“GAAP”).
GAAP requires the use of estimates, assumptions, judgments, and subjective interpretations of accounting principles that have an
impact on the assets, liabilities, revenues, and expense amounts reported. These estimates can also affect supplemental information
contained in our external disclosures including information regarding contingencies, risk, and financial condition. We believe
our use
of estimates and underlying accounting assumptions adhere to
GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under
different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial
statements.
Our significant accounting policies are summarized
in Note 2 of our financial statements included in our July 31, 2019 Form 10-K. While all these significant accounting policies
impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to
be critical are those policies that have the most significant impact on our financial statements and require management to use
a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given
current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause
a material effect on our results of operations, financial position or liquidity for the periods presented in this report.
Recent Accounting Pronouncements
See Note 2 in the Notes to the Financial Statements.
We have reviewed accounting pronouncements issued during the past two years and have adopted any that are applicable to the Company.
We have determined that none had a material impact on our financial position, results of operations, or cash flows for the periods
presented in this report.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements,
financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities”
(“SPE”s).