UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended April 30, 2021
☐ TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from ____________ to ____________
Commission File Number: 000-55994
THC THERAPEUTICS, INC.
|
(Exact name of
registrant as specified in its charter)
|
Nevada
|
|
26-0164981
|
(State or other
jurisdiction of incorporation)
|
|
(IRS Employer
Identification Number)
|
11700 W Charleston Blvd. #73
Las Vegas, NV 89135
(Address of principal executive offices)
(833)-420-8428
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None.
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
Not applicable
|
|
|
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). ☒
Yes ☐ No
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and
smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☒
|
Smaller reporting company
|
☒
|
|
Emerging growth company
|
☐
|
If
an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). ☐
Yes ☒ No
As
of June 11, 2021, the Company had 25,381,564 shares of common stock
outstanding.
THC
THERAPEUTICS INC.
INDEX
|
|
|
Page
|
|
PART I. FINANCIAL
INFORMATION
|
|
|
|
|
|
|
|
|
Item 1.
|
Financial Statements
|
|
|
|
|
Consolidated
Balance Sheets at April 30, 2021 (unaudited), and July 31,
2020
|
|
3
|
|
|
Consolidated
Statement of Operations for the three months ended April 30, 2021,
and April 30, 2020 (unaudited)
|
|
4
|
|
|
Consolidated
Statement of Stockholders’ Equity (deficit) for the three months
and nine months ended April 30, 2021, and April 30, 2020
(unaudited)
|
|
5
|
|
|
Consolidated
Statement of Cash Flows for the nine months ended April 30, 2021,
and April 30, 2020 (unaudited)
|
|
7
|
|
|
Notes to
Financial Statements (unaudited)
|
|
8
|
|
Item 2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
19
|
|
Item 3.
|
Quantitative and
Qualitative Disclosures about Market Risks
|
|
27
|
|
Item 4.
|
Controls and
Procedures
|
|
27
|
|
|
|
|
|
|
PART II.
OTHER INFORMATION
|
|
|
|
|
|
|
|
|
Item 1.
|
Legal
Proceedings
|
|
28
|
|
Item
1A.
|
Risk
Factors
|
|
28
|
|
Item 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
|
28
|
|
Item 3.
|
Defaults Upon
Senior Securities
|
|
29
|
|
Item 4.
|
Mine Safety
Disclosures
|
|
29
|
|
Item 5.
|
Other
Information
|
|
29
|
|
Item 6.
|
Exhibits
|
|
30
|
|
|
|
|
|
|
SIGNATURES
|
|
31
|
|
THC THERAPEUTICS
INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
April
30,
2021
|
|
|
July
31,
2020
|
|
ASSETS
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash
|
|
$ |
40,895 |
|
|
$ |
43,239 |
|
Prepaid expenses
|
|
|
18,300 |
|
|
|
- |
|
Total current assets
|
|
|
59,195 |
|
|
|
43,239 |
|
|
|
|
|
|
|
|
|
|
Physical silver assets
|
|
|
152,785 |
|
|
|
- |
|
Fixed assets, net
|
|
|
12,496 |
|
|
|
21,446 |
|
Intangible assets, net
|
|
|
17,367 |
|
|
|
20,661 |
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
241,843 |
|
|
|
85,346 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
$ |
703,026 |
|
|
$ |
499,249 |
|
Accrued liabilities due to
related parties
|
|
|
17,131 |
|
|
|
8,474 |
|
Advances from related
parties
|
|
|
104,935 |
|
|
|
83,660 |
|
Convertible notes payable,
net
|
|
|
386,719 |
|
|
|
305,110 |
|
Convertible notes payable-
related party, net
|
|
|
199,726 |
|
|
|
124,931 |
|
Derivative liability
|
|
|
689,727 |
|
|
|
842,573 |
|
Total current liabilities
|
|
|
2,101,264 |
|
|
|
1,863,997 |
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,101,264 |
|
|
|
1,863,997 |
|
|
|
|
|
|
|
|
|
|
Stockholders' deficit
|
|
|
|
|
|
|
|
|
Common stock; $0.001 par value;
500,000,000 shares authorized; 24,177,860 and 21,461,784 shares
issued and outstanding as of April 30, 2021 and July 31, 2020,
respectively
|
|
|
24,178 |
|
|
|
21,462 |
|
Preferred stock; $0.001 par
value; 10,000,000 shares authorized; 218,000 and 218,000 series A
and B shares issued and outstanding as of April 30, 2021 and
July 31, 2020, respectively
|
|
|
|
|
|
|
|
|
Preferred A stock; $0.001 par
value; 3,000,000 shares authorized; 218,000 and 218,000 shares
issued and outstanding as of April 30, 2021 and July 31, 2020,
respectively
|
|
|
218 |
|
|
|
218 |
|
Preferred B stock; $0.001 par
value; 16,500 shares authorized; 0 and 0 shares issued and
outstanding as of April 30, 2021 and July 31, 2020,
respectively
|
|
|
- |
|
|
|
- |
|
Stock payable
|
|
|
836,752 |
|
|
|
221,700 |
|
Stock receivable
|
|
|
(6,902,000 |
) |
|
|
(6,902,000 |
) |
Additional paid-in capital
|
|
|
39,608,401 |
|
|
|
39,506,284 |
|
Accumulated deficit
|
|
|
(35,426,970 |
) |
|
|
(34,626,315 |
) |
Total stockholders' deficit
|
|
|
(1,859,421 |
) |
|
|
(1,778,651 |
) |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders'
deficit
|
|
$ |
241,843 |
|
|
$ |
85,346 |
|
The accompanying notes are an integral part of these financial
statements.
THC THERAPEUTICS
INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
|
|
For the Three
Months Ended
|
|
|
For the Nine
Months Ended
|
|
|
|
April
30,
2021
|
|
|
April
30,
2020
|
|
|
April
30,
2021
|
|
|
April
30,
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees
|
|
|
23,385 |
|
|
|
76,183 |
|
|
|
132,906 |
|
|
|
275,272 |
|
Consulting fees
|
|
|
17,978 |
|
|
|
332,059 |
|
|
|
161,530 |
|
|
|
498,563 |
|
Salaries and wages
|
|
|
46,937 |
|
|
|
48,937 |
|
|
|
149,038 |
|
|
|
142,812 |
|
General and administrative
|
|
|
77,216 |
|
|
|
49,854 |
|
|
|
155,746 |
|
|
|
145,640 |
|
Depreciation and
amortization
|
|
|
3,992 |
|
|
|
4,038 |
|
|
|
12,244 |
|
|
|
15,988 |
|
Total operating expenses
|
|
|
169,508 |
|
|
|
511,071 |
|
|
|
611,464 |
|
|
|
1,078,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(169,508 |
) |
|
|
(511,071 |
) |
|
|
(611,464 |
) |
|
|
(1,078,275 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on derivative
liability
|
|
|
(85,873 |
) |
|
|
(452,897 |
) |
|
|
110,013 |
|
|
|
(673,148 |
) |
Loss on settlement of debt
|
|
|
- |
|
|
|
(165,000 |
) |
|
|
- |
|
|
|
(165,000 |
) |
Interest expense
|
|
|
(95,399 |
) |
|
|
(131,095 |
) |
|
|
(299,204 |
) |
|
|
(356,152 |
) |
Total other income (expense)
|
|
|
(181,272 |
) |
|
|
(748,992 |
) |
|
|
(189,191 |
) |
|
|
(1,194,300 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(350,780 |
) |
|
$ |
(1,260,063 |
) |
|
$ |
(800,655 |
) |
|
$ |
(2,272,575 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per common share
|
|
$ |
(0.01 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.15 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares
outstanding
|
|
|
24,177,860 |
|
|
|
14,690,164 |
|
|
|
23,200,766 |
|
|
|
14,818,198 |
|
The accompanying notes are an integral part of these financial
statements.
THC THERAPEUTICS
INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT
(Unaudited)
For the Nine
Months Ended April 30, 2021
|
|
|
|
Preferred
A
Stock
|
|
|
Preferred
B
Stock
|
|
|
Common
Stock
|
|
|
Additional
Paid-in
|
|
|
Stock
|
|
|
Stock
|
|
|
Accumulated
|
|
|
Total
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Payable
|
|
|
Receivable
|
|
|
Deficit
|
|
|
Deficit
|
|
Balance, July 31, 2020
|
|
|
218,000 |
|
|
|
218 |
|
|
|
- |
|
|
|
- |
|
|
|
21,461,784 |
|
|
|
21,462 |
|
|
|
39,506,284 |
|
|
|
221,700 |
|
|
|
(6,902,000 |
) |
|
|
(34,626,315 |
) |
|
|
(1,778,651 |
) |
Shares issued for conversion of convertible
debt
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
718,908 |
|
|
|
719 |
|
|
|
21,281 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
22,000 |
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(90,050 |
) |
|
|
(90,050 |
) |
Balance, October 31,
2020
|
|
|
218,000 |
|
|
|
218 |
|
|
|
- |
|
|
|
- |
|
|
|
22,180,692 |
|
|
|
22,181 |
|
|
|
39,527,565 |
|
|
|
221,700 |
|
|
|
(6,902,000 |
) |
|
|
(34,716,365 |
) |
|
|
(1,846,701 |
) |
Shares and warrants issued for services
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
108,552 |
|
|
|
- |
|
|
|
- |
|
|
|
108,552 |
|
Cash received for stock
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
297,500 |
|
|
|
- |
|
|
|
- |
|
|
|
297,500 |
|
Shares issued for conversion of convertible
debt
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,997,168 |
|
|
|
1,997 |
|
|
|
38,003 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
40,000 |
|
Derivative liability written off to
additional paid in capital
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
42,833 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
42,833 |
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(359,825 |
) |
|
|
(359,825 |
) |
Balance, January 31,
2021
|
|
|
218,000 |
|
|
|
218 |
|
|
|
- |
|
|
|
- |
|
|
|
24,177,860 |
|
|
|
24,178 |
|
|
|
39,608,401 |
|
|
|
627,752 |
|
|
|
(6,902,000 |
) |
|
|
(35,076,190 |
) |
|
|
(1,717,641 |
) |
Cash received for stock
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
209,000 |
|
|
|
- |
|
|
|
- |
|
|
|
209,000 |
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(350,780 |
) |
|
|
(350,780 |
) |
Balance, April 30, 2021
|
|
|
218,000 |
|
|
|
218 |
|
|
|
- |
|
|
|
- |
|
|
|
24,177,860 |
|
|
|
24,178 |
|
|
|
39,608,401 |
|
|
|
836,752 |
|
|
|
(6,902,000 |
) |
|
|
(35,426,970 |
) |
|
|
(1,859,421 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine
Months Ended April 30, 2020
|
|
|
|
Preferred
A
Stock
|
|
|
Preferred
B
Stock
|
|
|
Common
Stock
|
|
|
Additional
Paid-in
|
|
|
Stock
|
|
|
Stock
|
|
|
Accumulated
|
|
|
Total
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Payable
|
|
|
Receivable
|
|
|
Deficit
|
|
|
Deficit
|
|
Balance, July 31, 2019
|
|
|
217,000 |
|
|
|
217 |
|
|
|
- |
|
|
|
- |
|
|
|
14,434,098 |
|
|
|
14,434 |
|
|
|
38,421,610 |
|
|
|
417,469 |
|
|
|
(6,902,000 |
) |
|
|
(32,701,136 |
) |
|
|
(749,406 |
) |
Shares and warrants issued for services
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
107,661 |
|
|
|
108 |
|
|
|
298,712 |
|
|
|
(296,561 |
) |
|
|
- |
|
|
|
- |
|
|
|
2,259 |
|
Conversion of preferred to common Stock
|
|
|
(1,000 |
) |
|
|
(1 |
) |
|
|
- |
|
|
|
- |
|
|
|
250,000 |
|
|
|
250 |
|
|
|
(232 |
) |
|
|
(17 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Shares issued for conversion of convertible
debt
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
26,080 |
|
|
|
26 |
|
|
|
69,438 |
|
|
|
(59,432 |
) |
|
|
- |
|
|
|
- |
|
|
|
10,032 |
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(145,473 |
) |
|
|
(145,473 |
) |
Balance, October 31,
2019
|
|
|
216,000 |
|
|
|
216 |
|
|
|
- |
|
|
|
- |
|
|
|
14,817,839 |
|
|
|
14,818 |
|
|
|
38,789,528 |
|
|
|
61,459 |
|
|
|
(6,902,000 |
) |
|
|
(32,846,609 |
) |
|
|
(882,588 |
) |
Shares and warrants for services
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
110,241 |
|
|
|
- |
|
|
|
- |
|
|
|
110,241 |
|
Rescission of equity grant
|
|
|
(13,000 |
) |
|
|
(13 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
13 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Shares issued for conversion of convertible
debt
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
204,940 |
|
|
|
205 |
|
|
|
39,995 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
40,200 |
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(867,039 |
) |
|
|
(867,039 |
) |
Balance, January 31,
2020
|
|
|
203,000 |
|
|
|
203 |
|
|
|
- |
|
|
|
- |
|
|
|
15,022,779 |
|
|
|
15,023 |
|
|
|
38,829,536 |
|
|
|
171,700 |
|
|
|
(6,902,000 |
) |
|
|
(33,713,648 |
) |
|
|
(1,599,186 |
) |
Shares and warrants for services
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
500,000 |
|
|
|
500 |
|
|
|
39,500 |
|
|
|
20,000 |
|
|
|
- |
|
|
|
- |
|
|
|
60,000 |
|
Issue of warrants in accordance with
antidilution provisions
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
265,935 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
265,935 |
|
Shares issued for warrant exercise
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,225,000 |
|
|
|
1,225 |
|
|
|
(1,225 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Shares issued to settle account payable
|
|
|
15,000 |
|
|
|
15 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
239,985 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
240,000 |
|
Shares issued for conversion of convertible
debt
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,225,887 |
|
|
|
2,226 |
|
|
|
86,542 |
|
|
|
30,000 |
|
|
|
- |
|
|
|
- |
|
|
|
118,768 |
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,260,063 |
) |
|
|
(1,260,063 |
) |
Balance, April 30, 2020
|
|
|
218,000 |
|
|
|
218 |
|
|
|
- |
|
|
|
- |
|
|
|
18,973,666 |
|
|
|
18,974 |
|
|
|
39,460,273 |
|
|
|
221,700 |
|
|
|
(6,902,000 |
) |
|
|
(34,973,711 |
) |
|
|
(2,174,546 |
) |
The accompanying notes are an integral part of these financial
statements.
THC THERAPEUTICS
INC.
CONSOLIDATED STATEMENT OF CASHFLOWS
(Unaudited)
|
|
For the Nine
Months Ended
|
|
|
|
April
30,
2021
|
|
|
April
30,
2020
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
Net loss
|
|
$ |
(800,655 |
) |
|
$ |
(2,272,575 |
) |
Adjustments to reconcile net loss to net cash
used by operating activities:
|
|
|
|
|
|
|
|
|
Loss on change in derivative
liabilities
|
|
|
(110,013 |
) |
|
|
660,968 |
|
Amortization of debt
discount
|
|
|
243,404 |
|
|
|
310,091 |
|
Stock based compensation
|
|
|
108,552 |
|
|
|
438,435 |
|
Depreciation and
amortization
|
|
|
12,244 |
|
|
|
15,988 |
|
Loss on settlement of accounts
payable
|
|
|
- |
|
|
|
165,000 |
|
Changes in operating assets and
liabilities
|
|
|
|
|
|
|
|
|
Increase (decrease) in prepaid
assets
|
|
|
(18,300 |
) |
|
|
140,250 |
|
Increase (decrease) in accounts
payable
|
|
|
203,777 |
|
|
|
401,738 |
|
Increase (decrease) in accounts
payable related party
|
|
|
8,657 |
|
|
|
(210,090 |
) |
Net cash used in operating
activities
|
|
|
(352,334 |
) |
|
|
(350,195 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows from investing
|
|
|
|
|
|
|
|
|
Purchase of silver
|
|
|
(152,785 |
) |
|
|
(168,453 |
) |
Net cash used in investing
activities
|
|
|
(152,785 |
) |
|
|
(168,453 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows provided by Financing
Activities
|
|
|
|
|
|
|
|
|
Proceeds from related party
advances
|
|
|
82,587 |
|
|
|
24,930 |
|
Payments on related party
advances
|
|
|
(61,312 |
) |
|
|
(57,452 |
) |
Proceeds from sale of common
stock
|
|
|
506,500 |
|
|
|
- |
|
Proceeds from convertible notes
payable
|
|
|
- |
|
|
|
288,014 |
|
Repayments of convertible notes
payable
|
|
|
(25,000 |
) |
|
|
(37,500 |
) |
Net cash provided by financing
activities
|
|
|
502,775 |
|
|
|
217,992 |
|
|
|
|
|
|
|
|
|
|
Net decrease in Cash
|
|
|
(2,344 |
) |
|
|
(300,656 |
) |
|
|
|
|
|
|
|
|
|
Beginning cash balance
|
|
|
43,239 |
|
|
|
317,551 |
|
|
|
|
|
|
|
|
|
|
Ending cash balance
|
|
$ |
40,895 |
|
|
$ |
16,895 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow
information
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$ |
- |
|
|
$ |
- |
|
Cash paid for tax
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTARY DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Derivative Liability written off to
additional paid in capital
|
|
$ |
42,833 |
|
|
$ |
- |
|
Shares issued for the conversion of debt
|
|
$ |
62,000 |
|
|
$ |
- |
|
The accompanying notes are an integral part of these financial
statements.
THC
THERAPEUTICS, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. DESCRIPTION OF BUSINESS AND HISTORY
Description of business – THC Therapeutics, Inc. (referred
to as the “Company”) is focused developing its patented product,
the dHydronator®, a sanitizing herb dryer. The main function of the
dHydronator is to greatly accelerate the drying time of a herb
while sanitizing it. The dHydronator can be used to dry a variety
of herbs, but it has been specifically tested for use with
cannabis, and it can reduce the drying time for cannabis from 10-14
days to less than 14 hours.
History – The Company was incorporated in the State of
Nevada on May 1, 2007, as Fairytale Ventures, Inc., and later
changed its name to Aviation Surveillance Systems, Inc. and
Harmonic Energy, Inc. On January 23, 2017, the Company changed its
name to THC Therapeutics, Inc.
On May 30, 2017, the Company formed Genesis Float Spa LLC, a
wholly-owned subsidiary, to market its float spa assets purchased
for wellness centers. The Company’s health spa plans are part of
the Company’s strategic focus on revenue generation and creating
shareholder value.
On January 17, 2018, the Company changed its name to Millennium
Blockchain Inc.
On September 28, 2018, the Company changed its name back to THC
Therapeutics, Inc.
THC Therapeutics, Inc., together with its subsidiaries, shall
herein be collectively referred to as the “Company.”
2. BASIS OF PRESENTATION AND GOING CONCERN
Basis of Presentation and Principles of Consolidation – The
accompanying unaudited interim financial statements of the Company
have been prepared in accordance with accounting principles
generally accepted in the United States of America and should be
read in conjunction with the audited financial statements and notes
thereto contained in the Company’s most recent Annual Audited
Financial Statements. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary
for a fair presentation of financial position and the results of
operations for the interim period presented have been reflected
herein. The results of operations for the interim period are not
necessarily indicative of the results to be expected for the full
year. Notes to the financial statements which would substantially
duplicate the disclosures contained in the audited financial
statements for the most recent Annual Audited Financial Statements
have been omitted.
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated.
Going Concern – The accompanying consolidated financial
statements have been prepared in accordance with accounting
principles generally accepted in the United States of America on a
going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities and commitments in the normal
course of business.
Management evaluated all relevant conditions and events that are
reasonably known or reasonably knowable, in the aggregate, as of
the date the consolidated financial statements are issued and
determined that substantial doubt exists about the Company’s
ability to continue as a going concern. The Company’s ability to
continue as a going concern is dependent on the Company’s ability
to generate revenues and raise capital. The Company has not
generated sufficient revenues to provide sufficient cash flows to
enable the Company to finance its operations internally. As of
April 30, 2021, the Company had $40,895 cash on hand. At April 30,
2021 the Company has an accumulated deficit of $35,426,970. For the
nine months ended April 30, 2021 the Company had a net loss of
$800,655, and net cash used in operations of $352,334. These
factors raise substantial doubt about the Company’s ability to
continue as a going concern within one year from the date of
filing.
Over the next twelve months management plans to use borrowings and
security sales to mitigate the effects of cash flow deficits;
however, no assurance can be given that debt or equity financing,
if and when required, will be available. The financial statements
do not include any adjustments relating to the recoverability and
classification of recorded assets and classification of liabilities
that might be necessary should the Company be unable to continue
existence.
3. SUMMARY OF SIGNIFICANT POLICIES
Use of Estimates
The preparation of consolidated financial statements in conformity
with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
consolidated financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates. Significant estimates include
estimates used to review the Company’s goodwill, impairments and
estimations of long-lived assets, revenue recognition on percentage
of completion type contracts, allowances for uncollectible
accounts, inventory valuation, and the valuations of non-cash
capital stock issuances. The Company bases its estimates on
historical experience and on various other assumptions that are
believed to be reasonable in the circumstances, the results of
which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under
different assumptions or conditions.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers
all highly liquid investments and short-term instruments with
original maturities of three months or less to be cash equivalents.
There were $40,895 and $43,239 in cash and no cash equivalents as
of April 30, 2021 and July 31, 2020, respectively.
Concentration Risk
At times throughout the year, the Company may maintain cash
balances in certain bank accounts in excess of FDIC limits. As of
April 30, 2021 , the cash balance in excess of the FDIC limits was
$0. The Company has not experienced any losses in such accounts and
believes it is not exposed to any significant credit risk in these
accounts.
Revenue Recognition
We recognize revenue in accordance with generally accepted
accounting principles as outlined in the Financial Accounting
Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”)
606, Revenue From Contracts with Customers, which requires that
five steps be followed in evaluating revenue recognition: (i)
identify the contract with the customer; (ii) identity the
performance obligations in the contract; (iii) determine the
transaction price; (iv) allocate the transaction price; and (v)
recognize revenue when or as the entity satisfied a performance
obligation.
The company has made an accounting policy election to exclude from
the measurement of the transaction price all taxes assessed by
governmental authorities that are collected by the company from its
customers (sales and use taxes, value added taxes, some excise
taxes).
Revenues from the sale of products are recognized when title to the
products are transferred to the customer and only when no further
contingencies or material performance obligations are warranted,
and thereby have earned the right to receive reasonably assured
payments for products sold and delivered.
Fair Value of Financial Instruments
The carrying amounts reflected in the balance sheets for cash,
accounts payable and accrued expenses approximate the respective
fair values due to the short maturities of these items.
As required by the Fair Value Measurements and Disclosures Topic of
the FASB ASC, fair value is measured based on a three-tier fair
value hierarchy, which prioritizes the inputs used in measuring
fair value as follows: (Level 1) observable inputs such as quoted
prices in active markets; (Level 2) inputs, other than the quoted
prices in active markets, that are observable either directly or
indirectly; and (Level 3) unobservable inputs in which there is
little or no market data, which require the reporting entity to
develop its own assumptions.
The three levels of the fair value hierarchy are described
below:
Level 1: Unadjusted quoted prices in active markets that are
accessible at the measurement date for identical, unrestricted
assets or liabilities;
Level 2: Quoted prices in markets that are not active, or inputs
that are observable, either directly or indirectly, for
substantially the full term of the asset or liability;
Level 3: Prices or valuation techniques that require inputs that
are both significant to the fair value measurement and unobservable
(supported by little or no market activity).
Financial assets and liabilities measured at fair value on a
recurring basis are summarized below as of April 30, 2021:
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Physical Silver
Assets
|
|
$ |
152,785 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Financial
Instruments
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
689,727 |
|
|
$ |
689,727 |
|
As of April 30, 2021, the Company’s stock price was $0.28,
risk-free discount rate of 0.01% and volatility of 234.84%.
The following tables provides a summary of the changes in fair
value, including net transfers in and/or out, of the derivative
financial instruments, measured at fair value on a recurring basis
using significant unobservable inputs for the three months ended
April 30, 2021:
|
|
Amount
|
|
Balance January 31, 2021
|
|
$ |
603,854 |
|
Derivative reclassed to additional paid in
capital
|
|
|
- |
|
Change in fair market value of derivative
liabilities
|
|
|
85,873 |
|
Balance April 30, 2021
|
|
$ |
689,727 |
|
fair value, including net transfers in and/or out, of the
derivative financial instruments, measured at fair value on a
recurring basis using significant unobservable inputs for the nine
months ended April 30, 2021.
|
|
Amount
|
|
Balance July 31, 2020
|
|
$ |
842,573 |
|
Derivative reclassed to additional paid in
capital
|
|
|
(42,833 |
) |
Change in fair market value of derivative
liabilities
|
|
|
(110,013 |
) |
Balance April 30, 2021
|
|
$ |
689,727 |
|
Financial assets and liabilities measured at fair value on a
recurring basis are summarized below as of July 31, 2020:
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Total
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Financial Instruments
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
842,573 |
|
|
$ |
842,573 |
|
As of July 31, 2020, the Company’s stock price was $0.07, risk-free
discount rate of 0.11% and volatility of 240.18%.
Goodwill and Intangible Assets
The Company follows Financial Accounting Standard Board’s (FASB)
Codification Topic 350-10 (“ASC 350-10”), “Intangibles –
Goodwill and Other.” According to this statement, goodwill and
intangible assets with indefinite lives are no longer subject to
amortization, but rather an annual assessment of impairment by
applying a fair-value based test. Fair value for goodwill is based
on discounted cash flows, market multiples and/or appraised values
as appropriate. Under ASC 350-10, the carrying value of assets are
calculated at the lowest level for which there are identifiable
cash flows.
Long-Lived Assets
In accordance with the Financial Accounting Standards Board
(“FASB”) Accounts Standard Codification (ASC) ASC 360-10,
“Property, Plant and Equipment,” the carrying value of intangible
assets and other long-lived assets is reviewed on a regular basis
for the existence of facts or circumstances that may suggest
impairment. The Company recognizes impairment when the sum of the
expected undiscounted future cash flows is less than the carrying
amount of the asset. Impairment losses, if any, are measured as the
excess of the carrying amount of the asset over its estimated fair
value. During the three months ending April 30, 2021 and 2020 the
Company recorded an impairment expense of $0 and $0,
respectively.
Income Taxes
The Company accounts for its income taxes in accordance with FASB
Codification Topic ASC 740-10, “Income Taxes”, which
requires recognition of deferred tax assets and liabilities for
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and tax credit
carry-forwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
Stock-Based Compensation
The Company follows the guidelines in FASB Codification Topic ASC
718-10 “Compensation-Stock Compensation”, which requires
the measurement and recognition of compensation expense for all
share-based payment awards made to employees and directors
including employee stock options and employee stock purchases
related to an Employee Stock Purchase Plan based on the estimated
fair values.
Earnings (Loss) Per Share
The Company reports earnings (loss) per share in accordance with
FASB Codification Topic ASC 260-10 “Earnings Per Share.”
Basic earnings (loss) per share is computed by dividing income
(loss) available to common shareholders by the weighted average
number of common shares available. Diluted earnings (loss) per
share is computed similar to basic earnings (loss) per share except
that the denominator is increased to include the number of
additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional
common shares were dilutive. Diluted earnings (loss) per share has
not been presented since the effect of the assumed exercise of
options and warrants to purchase common shares (common stock
equivalents) would have an anti-dilutive effect.
Advertising Costs
The Company’s policy regarding advertising is to expense
advertising when incurred. The Company incurred advertising
expenses of $27,833 and $53,093 during the nine months ended April
30, 2021 and 2020, respectively.
4. PHYSICAL SILVER ASSETS
During the nine months ending April 2021, the Company purchased
silver bars and coins for $152,785. We determine the fair value of
our silver on a nonrecurring basis in accordance with ASC 820,
Fair Value Measurement, based on quoted prices on the
active exchange(s) that we have determined is its principal market
for silver (Level 1 inputs). We perform an analysis each quarter to
identify whether events or changes in circumstances, principally
decreases in the quoted prices on active exchanges, indicate that
it is more likely than not that our silver assets are impaired. In
determining if an impairment has occurred, we consider the lowest
market price of silver quoted on the active exchange since
acquiring the silver. If the then current carrying value of a
silver exceeds the fair value so determined, an impairment loss has
occurred with respect to those silver assets in the amount equal to
the difference between their carrying values and the price
determined.
5. FIXED ASSETS
Fixed assets consist of the following as of April 30, 2021 and July
31, 2020:
|
|
April
30,
2021
|
|
|
July
31,
2020
|
|
dHydronator
prototype
|
|
$ |
27,100 |
|
|
$ |
27,100 |
|
Float Spa and
associated equipment
|
|
|
60,000 |
|
|
|
60,000 |
|
Office furniture and
equipment
|
|
|
532 |
|
|
|
532 |
|
Less: accumulated
depreciation
|
|
|
(75,136 |
) |
|
|
(66,186 |
) |
Fixed assets, net
|
|
$ |
12,496 |
|
|
$ |
21,446 |
|
Depreciation expense for the three and nine months ended April 30,
2021 was $3,992 and $8,950, respectively. Depreciation expense for
the three and nine months ended April 30, 2020, was $2,951 and
$12,681, respectively.
6. INTANGIBLE ASSETS
Intangible assets consist of the following as of April 30, 2021 and
July 31, 2020:
|
|
April
30,
2021
|
|
|
July
31,
2020
|
|
Patents and patents
pending
|
|
$ |
19,699 |
|
|
$ |
19,699 |
|
Trademarks
|
|
|
1,275 |
|
|
|
1,275 |
|
Website and domain
names
|
|
|
15,098 |
|
|
|
15,098 |
|
Less: accumulated
depreciation
|
|
|
(18,705 |
) |
|
|
(15,411 |
) |
Intangible assets,
net
|
|
$ |
17,367 |
|
|
$ |
20,661 |
|
Amortization expense for the three and nine months ended April 30,
2021, was $1,074 and $3,294, respectively.
Amortization expense for the three and nine months ended April 30,
2020, was $1,087 and $3,307, respectively.
7. RELATED PARTY TRANSACTIONS
ADVANCES FROM RELATED PARTIES
Our Chief Executive Officer and Harvey Romanek, father of our Chief
Executive Officer, previously agreed to advance funds to the
Company from time to time to support the ongoing operations of the
Company. Advances are due within ten days of demand and bear
interest at 5% annually.
Advances from related parties consist of the following as of April
30, 2021:
|
|
Principal as
of
|
|
|
Three Months
ending
April 30,
2021
|
|
|
Principal as
of
|
|
|
Accrued
interest
balance
As
of
|
|
|
|
July
31,
2020
|
|
|
Funds
advanced
|
|
|
Funds
repaid
|
|
|
April
30,
2021
|
|
|
April
30,
2021
|
|
B. Romanek, President
and CEO
|
|
$ |
13,267 |
|
|
$ |
90,521 |
|
|
$ |
(69,246 |
) |
|
$ |
34,542 |
|
|
$ |
6,076 |
|
Shareholder Relative of
our President and CEO
|
|
|
70,393 |
|
|
|
- |
|
|
|
- |
|
|
|
70,393 |
|
|
|
11,055 |
|
TOTAL
|
|
$ |
83,660 |
|
|
$ |
90,521 |
|
|
$ |
(69,246 |
) |
|
$ |
104,935 |
|
|
$ |
17,131 |
|
On November 1, 2017, we entered into an employment agreement with
Brandon Romanek, our Chief Executive Officer. In accordance with
this agreement, Mr. Romanek provides services to the Company in
exchange for $78,000 per year plus vacation and bonuses as approved
annually by the board of directors, as well as reimbursement of
expenses incurred. On February 1, 2019, we amended the employment
agreement with Brandon Romanek, our Chief Executive Officer. In
accordance with this agreement, Mr. Romanek provides services to
the Company in exchange for $178,000 per year plus vacation and
bonuses as approved annually by the board of directors, as well as
reimbursement of expenses incurred.
During the nine months ending April 30, 2021, the Company accrued
$46,937 due to Mr. Romanek related to this agreement. As of April
30, 2021, Mr. Romanek has allowed the Company to defer a total of
$438,498 in compensation earned to date related to his employment
agreements.
On June 15, 2019, the Company entered
into an employment agreement with Joshua Halford, a business
development analyst for the Company, under the agreement Mr.
Halford earns (i) $3,000 in compensation every other week, payable
at the Company’s election in cash or in the form of common stock
registered with the SEC on Form S-8 with a 50% bonus for stock
issuances made in lieu of cash payments at the time of issuance
(for example, if the Company filed a registration statement on Form
S-8 in the future, the Company could elect to pay Mr. Halford the
$3,000 biweekly payment by issuing Mr. Halford $4,500 of S-8
registered Company common stock at the then-current common stock
price instead of making a $3,000 cash payment to Mr. Halford), and
(ii) 10% sales commissions. On February 18, 2020 the employment
agreement was amended to $1,000 in compensation every other week to
be paid in cash. During the nine months ended April 30, 2021
Mr. Halford earned $16,000.
CONVERTIBLE NOTES PAYABLE RELATED PARTY
On May 1, 2019, we entered into a convertible promissory note
pursuant to which we borrowed $200,000 from Harvey Romanek, the
father of the Company’s Chief Executive Officer, Brandon Romanek.
Interest under the convertible promissory note is 10% per annum,
and the principal and all accrued but unpaid interest is due on May
1, 2021. The note is convertible six months after the issuance date
at the noteholder’s option into shares of our common stock at a
Variable Conversion Price of 65% multiplied by the lowest Trading
Price for the Common Stock during the ten (10) Trading Day period
ending on the last complete Trading Day prior to the Conversion
Date.
The Company recorded a debt discount in the amount of $200,000 in
connection with the original issuance discount, offering costs and
initial valuation of the derivative liability related to the
embedded conversion option of the Note to be amortized utilizing
the effective interest method of accretion over the term of the
Note. The aggregate debt discount has been accreted and charged to
interest expenses as a financing expense in the amount of $74,795
during the nine months April 30, 2021.
Further, the Company recognized a derivative liability of $387,232
and an initial loss of $187,232 based on the Black-Scholes pricing
model.
As of January 31, 2020, convertible notes due to related parties
net of unamortized debt discounts of $274, was $199,726.
The Company accounts for the fair value of the conversion features
of its convertible debt in accordance with ASC Topic No. 815-15
“Derivatives and Hedging; Embedded Derivatives” (“Topic No.
815-15”). Topic No. 815-15 requires the Company to bifurcate and
separately account for the conversion features as an embedded
derivative contained in the Company’s convertible debt. The Company
is required to carry the embedded derivative on its balance sheet
at fair value and account for any unrealized change in fair value
as a component of results of operations. The Company values the
embedded derivatives using the Black-Scholes pricing model.
The Black-Scholes model, adopted by management as an appropriate
financial model, utilized the following inputs to value the
derivative liabilities at the date of issuance of the convertible
note through April 30, 2021:
Risk free interest
rate
|
|
0.07% - 0.13
|
%
|
Expected term
(years)
|
|
0.24 - 0.49
|
|
Expected volatility
|
|
236% - 283
|
|
Expected dividends
|
|
|
0 |
% |
8. CONVERTIBLE NOTES PAYABLE
Convertible Notes Payable at consists of the following:
|
|
April
30,
|
|
|
July
31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
On April 4, 2019, we
entered into a master convertible promissory note pursuant to which
we may borrow up to $250,000 in $50,000 tranches.
On April 19, 2019, we
borrowed the first tranche of $50,000, net of debt issuance costs
and investor legal fees of $7,000, resulting in the Company
receiving $43,000.
On June 19, 2019, we
borrowed the second tranche of $50,000, net of debt issuance costs
and investor legal fees of $7,000, resulting in the Company
receiving $43,000.
On January 27, 2020, we
borrowed the third tranche of $35,000, net of debt issuance costs
and investor legal fees of $7,000, resulting in the Company
receiving $30,500.
On January 31, 2019,
the lender converted $9,532 of principle and $500 of fees into
16,500 shares of common stock.
On December 12, 2020,
the lender converted $9,700 of principle and $500 of fees into
34,000 shares of common stock.
On February 10, 2020,
the lender converted $10,156 of principle and $500 of fees into
120,000 shares of common stock.
On March 24, 2020, the
lender converted $7,628 of principle and $500 of fees into 160,000
shares of common stock.
On April 13, 2020, the
lender converted $7,900 of principle and $500 of fees into 300,000
shares of common stock.
On April 28, 2020, the
lender converted $5,084 of principle, $500 of fees, and $5,000 of
interest into 588,000 shares of common stock.
On May 26, 2020, the
lender converted $13,000 of principle, and $500 of fees into
750,000 shares of common stock.
Interest under the
convertible promissory note is 10% per annum, and the principal and
all accrued but unpaid interest is due on April 4, 2020. The
note is convertible at any date after the issuance date at the
noteholder’s option into shares of our common stock at a variable
conversion price equal to the lesser of (i) the lowest Trading
Price during the previous twenty-five (25) Trading Day period
ending on the latest complete Trading Day prior to the date of this
Note or (ii) Variable Conversion Price of 60% multiplied by the
lowest Trading Price for the Common Stock during the twenty-five
(25) Trading Day period ending on the last complete Trading Day
prior to the Conversion Date.
The Company recorded
debt discounts in the amount of $135,000 in connection with the
original issuance discount, offering costs and initial valuation of
the derivative liability related to the embedded conversion option
of each tranche of the Note to be amortized utilizing the effective
interest method of accretion over the term of each tranche of the
Note. The aggregate debt discount has been accreted and charged to
interest expenses as a financing expense in the amount of $17,270
during the nine months ended April 30, 2021.
Further, the Company
recognized a derivative liability of $465,748 and an initial loss
of $335,248 based on the Black-Scholes pricing model. During the
three months ended January 31, 2020, the Company recorded a gain on
derivative liability of $41,851.
|
|
|
72,000 |
|
|
|
72,000 |
|
Unamortized debt
discount
|
|
|
- |
|
|
|
(17,260 |
) |
Total, net of
unamortized discount
|
|
|
72,000 |
|
|
|
54,740 |
|
|
|
|
|
|
|
|
|
|
On June 20, 2019, we
entered into a convertible promissory note pursuant to which we
borrowed $291,108, net of an Original Issue Discount (“OID”) of
$36,108 and investor legal expenses of $5,000 resulting in the
Company receiving $250,000.
On January 31, 2019,
the lender converted $30,000 of principle into 170,940 shares of
common stock.
On March 27, 2020, the
lender converted $30,000 of principle into 267,016 shares of common
stock.
On April 23, 2020, the
lender converted $21,000 of principle into 210,108 shares of common
stock.
On April 23, 2020, the
lender converted $30,000 of principle into 1,129,816 shares of
common stock
On May 28, 2020, the
lender converted $35,000 of principle into 1,318,118 shares of
common stock
Interest under the
convertible promissory note is 8% per annum, and the principal and
all accrued but unpaid interest is due on June 20, 2020. The note
is convertible at any date after the issuance date at the
noteholder’s option into shares of our common stock at a conversion
price equal to $8.80 (the “Lender Conversion Price”). Additionally,
after 6 months from the date the Company receives note funding, the
noteholder has the right to demand whole or partial redemption of
amounts owed to the noteholder under the note. Payments of
redemption amounts by the Company to the noteholder can be made in
cash or by converting the redemption amount into shares common
stock of the Company, with such conversions occurring at the lower
of (i) the Lender Conversion Price, or (ii) a price equal to the
65% of the two lowest Closing Trade Prices during the ten (10)
Trading Day period immediately preceding the measurement date.
The Company recorded a
debt discount in the amount of $182,499 in connection with the
original issuance discount, offering costs and initial valuation of
the derivative liability related to the embedded conversion option
of the Note to be amortized utilizing the effective interest method
of accretion over the term of the Note. The aggregate debt discount
has been accreted and charged to interest expenses as a financing
expense in the amount of $0 during the nine months ended April 30,
2021.
Further, the Company
recognized a derivative liability of $141,391 and an initial loss
of $0 based on the Black-Scholes pricing model.
|
|
|
145,108 |
|
|
|
145,108 |
|
Unamortized debt discount
|
|
|
-
|
|
|
|
-
|
|
Total, net of unamortized discount
|
|
|
145,108
|
|
|
|
145,108
|
|
On February 20, 2020,
we entered into a convertible promissory note pursuant to which we
borrowed $135,680, net of an Original Issue Discount (“OID”) of
$7,680 and investor legal expenses of $2,500 resulting in the
Company receiving $125,500.
On September 2, 2020,
the lender converted $10,000 of principle into 242,718 shares of
common stock
On September 30, 2020,
the lender converted $12,000 of principle into 476,190 shares of
common stock
On November 14, 2020,
the lender converted $20,000 of principle into 938,967 shares of
common stock.
On December 1, 2020,
the lender converted $20,000 of principle into 1,058,201 shares of
common stock.
The fair value of the
derivative liability associated with the conversions for the nine
months ended April 30, 2021 on the date of settlement of $16,244
was recorded to additional paid in capital.
Interest under the
convertible promissory note is 10% per annum, and the principal and
all accrued but unpaid interest is due on August 15, 2021. The note
is convertible at any date after the issuance date at the
noteholder’s option into shares of our common stock at a conversion
price equal to 71% of the average of the 2 lowest trading prices of
the common stock during the 10 completed trading days prior to
conversion date.
The Company recorded a
debt discount in the amount of $135,680 in connection with the
original issuance discount, offering costs and initial valuation of
the derivative liability related to the embedded conversion option
of the Note to be amortized utilizing the effective interest method
of accretion over the term of the Note. The aggregate debt discount
has been accreted and charged to interest expenses as a financing
expense in the amount of $22,778 during the nine months ended April
30, 2021.
Further, the Company
recognized a derivative liability of $192,236 and an initial loss
of $64,236 based on the Black-Scholes pricing model.
|
|
|
73,680 |
|
|
|
135,680 |
|
Unamortized debt
discount
|
|
|
(26,493 |
) |
|
|
(94,085 |
) |
Total, net of
unamortized discount
|
|
|
47,187 |
|
|
|
41,595 |
|
On March 26, 2020, we
entered into a convertible promissory note pursuant to which we
borrowed $3,000, net of legal expenses of $3,000 resulting in the
Company receiving $0.
Interest under the
convertible promissory note is 0% per annum, and the principal and
all accrued but unpaid interest is due on March 26, 2021. The note
is convertible at any date after the issuance date at the
noteholder’s option into shares of our common stock at a conversion
price equal to the average of the closing trading prices of the
common stock during the 3 completed trading days prior to
conversion date.
The Company recorded a
debt discount in the amount of $3,000 in connection with the
original issuance discount, offering costs and initial valuation of
the derivative liability related to the embedded conversion option
of the Note to be amortized utilizing the effective interest method
of accretion over the term of the Note. The aggregate debt discount
has been accreted and charged to interest expenses as a financing
expense in the amount of $1,956.16 during the nine months ended
April 30, 2021.
Further, the Company
recognized a derivative liability of $1,500 and an initial loss of
$1,500 based on the Black-Scholes pricing model.
|
|
|
3,000 |
|
|
|
3,000 |
|
Unamortized debt
discount
|
|
(-)
|
|
|
|
(1,956 |
) |
Total, net of
unamortized discount
|
|
|
3,000 |
|
|
|
1,044 |
|
On May 1, 2020, we
entered into a convertible promissory note pursuant to which we
borrowed $100,000, net of consulting expenses of $100,000 resulting
in the Company receiving $0. During the nine months ended April 30,
2021, the Company made cash payments of $25,000.
Interest under the
convertible promissory note is 10% per annum, and the principal and
all accrued but unpaid interest is due on May 1, 2021. The note is
convertible at any date after the effective date at the
noteholder’s option into shares of our common stock at a conversion
price equal to 65% of the average of the three lowest closing
prices in the 10 trading days prior to the conversion.
The Company recorded a
debt discount in the amount of $64,888 in connection with the
original issuance discount, offering costs and initial valuation of
the derivative liability related to the embedded conversion option
of the Note to be amortized utilizing the effective interest method
of accretion over the term of the Note. The aggregate debt discount
has been accreted and charged to interest expenses as a financing
expense in the amount of $32,523 during the nine months ended April
30, 2021.
Further, the Company
recognized a derivative liability of $64,888 based on the
Black-Scholes pricing model.
|
|
|
75,000 |
|
|
|
100,000 |
|
Unamortized debt
discount
|
|
|
(177 |
) |
|
|
(48,710 |
) |
Total, net of
unamortized discount
|
|
|
74,823 |
|
|
|
51,290 |
|
On May 7, 2020, we
entered into a convertible promissory note pursuant to which we
borrowed $66,780, net of an Original Issue Discount (“OID”) of
$3,780 and investor legal expenses of $3,000 resulting in the
Company receiving $60,000.
Interest under the
convertible promissory note is 10% per annum, and the principal and
all accrued but unpaid interest is due on October 29, 2021. The
note is convertible at any date after the issuance date at the
noteholder’s option into shares of our common stock at a conversion
price equal to 71% of the average of the 2 lowest trading prices of
the common stock during the 10 completed trading days prior to
conversion date.
The Company recorded a
debt discount in the amount of $66,780 in connection with the
original issuance discount, offering costs and initial valuation of
the derivative liability related to the embedded conversion option
of the Note to be amortized utilizing the effective interest method
of accretion over the term of the Note. The aggregate debt discount
has been accreted and charged to interest expenses as a financing
expense in the amount of $22,422 during the nine months ended April
30, 2021.
Further, the Company
recognized a derivative liability of $138,172 and an initial loss
of $75,172 based on the Black-Scholes pricing model.
|
|
|
66,780 |
|
|
|
66,780 |
|
Unamortized debt
discount
|
|
|
(22,179 |
) |
|
|
(55,447 |
) |
|
|
|
44,601 |
|
|
|
11,333 |
|
Total, net of
unamortized discount
|
|
$ |
386,719 |
|
|
$ |
305,110 |
|
The Company accounts for the fair value of the conversion features
of its convertible debt in accordance with ASC Topic No. 815-15
“Derivatives and Hedging; Embedded Derivatives” (“Topic No.
815-15”). Topic No. 815-15 requires the Company to bifurcate and
separately account for the conversion features as an embedded
derivative contained in the Company’s convertible debt. The Company
is required to carry the embedded derivative on its balance sheet
at fair value and account for any unrealized change in fair value
as a component of results of operations. The Company values the
embedded derivatives using the Black-Scholes pricing model.
The Black-Scholes model, adopted by management as an appropriate
financial model, utilized the following inputs to value the
derivative liabilities at the date of issuance of the convertible
note through April 30, 2021:
Risk free interest
rate
|
|
0.07% - 0.13
|
%
|
Expected term
(years)
|
|
0.24 - 0.49
|
|
Expected volatility
|
|
236% - 283
|
|
Expected dividends
|
|
|
0 |
% |
9. STOCK WARRANTS
The following is a summary of warrant activity during the nine
months ended April 30, 2021.
|
|
Number
of
Shares
|
|
|
Weighted Average
Exercise Price
|
|
Balance, July 31, 2020
|
|
|
922,129 |
|
|
$ |
16.73 |
|
Warrants granted and assumed
|
|
|
- |
|
|
|
- |
|
Warrants expired
|
|
|
(56,750 |
) |
|
|
(.05 |
) |
Warrants canceled
|
|
|
- |
|
|
|
- |
|
Warrants exercised
|
|
|
- |
|
|
|
- |
|
Balance outstanding and exercisable, April
30, 2021
|
|
|
865,379 |
|
|
$ |
16.21 |
|
The following is a summary of warrant activity during the nine
months ended April 30, 2020:
|
|
Number
of
Shares
|
|
|
Weighted Average
Exercise Price
|
|
Balance, July 31, 2019
|
|
|
1,506,250 |
|
|
$ |
10.34 |
|
Warrants granted and assumed
|
|
|
1,531,311 |
|
|
|
0.088 |
|
Warrants expired
|
|
|
- |
|
|
|
- |
|
Warrants canceled
|
|
|
- |
|
|
|
- |
|
Warrants exercised
|
|
|
(1,247,190 |
) |
|
|
0.088 |
|
Balance outstanding and exercisable, April
30, 2020
|
|
|
1,790,371 |
|
|
$ |
8.72 |
|
10. SHAREHOLDERS’ DEFICIT
Overview
The Company’s authorized capital stock consists of 500,000,000
shares of $0.001 par value common stock and 10,000,000 shares of
$0.001 par value preferred stock.
As of April 30, 2021 and July 31, 2020, the Company had 24,177,860
and 21,461,784 shares of common stock issued and outstanding,
respectively.
As of April 30, 2021 and July 31, 2020, the Company had 218,000 and
218,000 shares of Series A Preferred Stock issued and outstanding,
respectively.
As of April 30, 2021 and July 31, 2020, the Company had 0 and 0
shares of Series B Preferred Stock issued and outstanding,
respectively.
Series A Preferred Stock
On January 24, 2017, pursuant to Article III of our Articles of
Incorporation, the Company designated a class of preferred stock,
the “Series A Preferred Stock,” consisting of three million
(3,000,000) shares, par value $0.001.
Under the Certificate of Designation, holders of the Series A
Preferred Stock are entitled at their option to convert their
preferred shares into common stock at a conversion rate of one
hundred (100) shares of common stock for every one (1) share of
Series A Preferred Stock. The holders are further entitled to vote
together with the holders of the Company’s common stock on all
matters submitted to shareholders at a rate of one hundred (100)
votes for each share held. The holders are entitled to equal rights
with our common stockholders as it relates to liquidation
preference.
Series B Preferred Stock
On May 12, 2017, pursuant to Article III of our Articles of
Incorporation, the Company designated a class of preferred stock,
the “Series B Preferred Stock,” consisting of up to one hundred
twenty thousand (120,000) shares, par value $0.001. On June 5,
2017, the Company amended the designation to increase the number of
shares of Series B Preferred Stock to one hundred sixty-five
thousand (165,000) shares, par value $0.001.
Under the Certificate of Designation, as amended, holders of Series
B Preferred Stock are entitled to a liquidation preference on the
stated value of $10.00 per share. The shares carry a mandatory
conversion provision, and all shares of Series B Preferred Stock
will be redeemed by the Company one year from issuance, at a
variable conversion rate equal to the stated price of $10.00
divided by the prior day’s closing price as quoted on OTC Markets.
Holders of Series B Preferred Stock are not entitled to any voting
or dividend rights.
As of April 30, 2021, all shares of Series B Preferred Stock
eligible for mandatory conversion have been converted into common
stock.
Issuances of Common and Preferred Stock for the nine months
ended April 30, 2020
On September 2, 2020, a convertible note holder converted $10,000
in principal and fees into 242,718 shares of common stock at a
conversion price of $0.0412 per share.
On September 30, 2020, a convertible note holder converted $12,000
in principal and fees into 476,190 shares of common stock at a
conversion price of $0.0252 per share.
During the nine months ended April 30, 2021, 720,000 shares were to
be issued for services valued at $108,552. As of April 30, 2021,
the shares were not issued, and the value was included in stock
payable.
During the nine months ended April 30, 2021, the Company issued
1,997,168 shares of common stock valued at $40,000 for the
conversion of certain convertible notes.
During the nine months ended April 30, 2021, the Company received
$506,500 for the issuance of 8,530,002 shares of common stock. As
of April 30, 2021, the shares were not issued, and the value was
included in stock payable.
11. SUBSEQUENT EVENTS
On June 3, 2021 a convertible note holder converted $19,500 in
principal into 1,203,704 shares of common stock at a conversion
price of $0.0162 per share.
Item 2.
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
This Quarterly Report on Form 10-Q contains forward-looking
statements within the meaning of Rule 175 of the Securities Act of
1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as
amended, that involve substantial risks and uncertainties. These
forward-looking statements are not historical facts, but rather are
based on current expectations, estimates and projections about our
industry, our beliefs and our assumptions. Words such as
“anticipate,” “expects,” “intends,” “plans,” “believes,” “seeks”
and “estimates” and variations of these words and similar
expressions are intended to identify forward-looking statements.
These statements are not guarantees of future performance and are
subject to risks, uncertainties and other factors, some of which
are beyond our control and difficult to predict and could cause
actual results to differ materially from those expressed or
forecasted in the forward-looking statements. You should not place
undue reliance on these forward-looking statements, which apply
only as of the date of this Form 10-K. Investors should carefully
consider all of such risks before making an investment decision
with respect to the Company’s stock. The following discussion and
analysis should be read in conjunction with our consolidated
financial statements and summary of selected financial data for THC
Therapeutics, Inc. Such discussion represents only the best present
assessment from our Management.
Overview
THC Therapeutics, Inc. (the “Company”), was incorporated in the
State of Nevada on May 1, 2007, as Fairytale Ventures, Inc., and
later changed its name to Aviation Surveillance Systems, Inc. and
Harmonic Energy, Inc. On January 23, 2017, the Company changed its
name to THC Therapeutics, Inc. THC Therapeutics, Inc., together
with its subsidiaries, is collectively referred to herein as the
“Company,” and “THC Therapeutics.”
The Company is focused on developing a sanitizing herb dryer, the
dHydronator®, which has been specifically designed for the drying
and sanitizing (i.e., reducing the bacterial count) of freshly
harvested cannabis, and other herbs, flowers, and tea leaves.
Corporate History
THC Therapeutics, Inc., was incorporated in the State of Nevada on
May 1, 2007, as Fairytale Ventures, Inc., and later changed its
name to Aviation Surveillance Systems, Inc. and Harmonic Energy,
Inc. On January 23, 2017, the Company changed its name to THC
Therapeutics, Inc. On May 30, 2017, the Company formed Genesis
Float Spa LLC, a wholly-owned subsidiary, to market its float spa
assets purchased for wellness centers. On January 17, 2018, the
Company changed its name to Millennium BlockChain Inc. On September
28, 2018, the Company changed its name back to THC Therapeutics,
Inc.
The Company’s fiscal year end is July 31st, its
telephone number is (702) 602-8422, and the address of its
principal executive office is 11700 W Charleston Blvd. #73, Las
Vegas, Nevada, 89135.
Description of Business
The Company is focused on operations in the wellness industry. The
Company is developing a sanitizing herb dryer, the dHydronator®,
with multiple design, function, and usage patents. This innovative,
laboratory-proven product is specifically designed for the drying
and sanitizing (i.e., reducing the bacterial count by using
ultraviolet light) of freshly harvested cannabis, and other herbs,
flowers, and tea leaves. The dHydronator® can reduce moisture
content of cannabis to 10-15% in only 10-14 hours. Traditional
herbal drying times can take up to two weeks. Additionally, after
the Company has launched the dHydronator®, and depending on
available funding, the Company intends to establish a float spa
facility that will allow each guest to customize their wellness
experience, at their own pace, based on their individual needs.
Wellness Operations
THC Therapeutics is focused on the wellness industry, with plans to
develop a patented herb dryer as well as an innovative float spa
facility in Las Vegas, Nevada, or southern California.
The Company is developing a sanitizing herb dryer, the
dHydronator®, with multiple design, function, and usage patents.
This innovative, laboratory-proven1 product is
specifically designed for the drying and sanitizing (i.e., reducing
the bacterial count by using ultraviolet light) of freshly
harvested cannabis, and other herbs, flowers, and tea leaves. The
dHydronator® can reduce moisture content of cannabis to 10-15% in
only 10-14 hours. Traditional herbal drying times can take up to
two weeks. The dHydronator® can also significantly reduce the
bacterial count of the cannabis during the drying process, but it
will not eliminate all bacteria from the cannabis or other plant
materials.
The Company has a functioning prototype of the dHydronator® similar
in design to that shown below, which is now protected by a patent
with the United States Patent and Trademark Office (see “Patent,
Trademark, License & Franchise Restrictions and Contractual
Obligations & Concessions” below), and once the Company has
sufficient funds available, the Company plans to source parts for
serial manufacturing and negotiate and secure serial manufacturing
and assembly. The Company also plans to hire sales and marketing
staff as funds are available.

1 Tests were conducted in 2016-2017 by independent
cannabis-testing labs: first by CannLabs on the first-generation
dHydronator® prototype, and later by Digipath Labs on the
second-generation prototype. Optimal cannabis moisture content is
8-12%. The initial testing by CannLabs showed that (i) moisture
content across five wet cannabis samples was reduced to an average
moisture content of 13.81% with a standard deviation of 4.04% after
12 hours of drying, and 8.86% with a standard deviation of 2.25%
after 16 hours of drying, and (ii) after autoclaving cannabis
flowers to ensure sterility and then spiking multiple samples with
100 CFU of E. Coli and Salmonella bacteria and Aspergillus niger
mold, testing for the presence of the bacteria and mold by both
quantitative polymerase chain reaction (qPCR) and traditional
plating methods, which testing concluded that the dHydronator®
prototype eliminated or reduced the bacteria and mold
contamination, but did not quantify the results. The subsequent
testing by Digipath Labs on the second-generation prototype covered
multiple strains and independent tests to confirm the prior
findings. The strains tested were Lucy Diamond, Cotton Candy, Blue
Dream, Kings Cut, Pot of Gold and Diablo. The optimal drying time
was determined to be 10-14 hours in the first test. The Company’s
proprietary sanitizing technology brought the failing TAC (total
aerobic count) from over 300,000 CFU/g down to 78,000 CFU/g
(anything less than 100,000 CFU/g is considered “passing”) in the
second test. In the third test, after drying 14 hours and 15.5
hours in the dHydronator® and using the Company’s proprietary
sanitizing technology for a longer period than required, the
moisture content had been reduced from 80% (at 0 hours) to 10.89%
(at 14 hours) and 8.83% (at 15.5 hours), the THCA% had been reduced
from 21.2% (at 0 hours) to 17.26% (at 14 hours) and 18.26% (at 15.5
hours), and the TAC had been reduced from 210,000 CFU/g (at 0
hours) to 1,500 CFU/g (at 14 hours) and 500 CFU/g (at 15.5 hours).
In the fourth experiment, after 12 hours and 15.5 hours of drying
in the dHydronator® and using the proprietary sanitizing technology
for a longer period than required, the moisture content had reduced
from 80% to 12.00% (at 12 hours) and 7.44% (at 15.5 hours), the
THCA% had been reduced from 21.2% to 20.08% (at 12 hours) and
19.43% (at 15.5 hours), and the TAC had been reduced from 190,000
CFU/g to 51,000 CFU/g (at 12 hours) and 2,300 CFU/g (at 15.5
hours). After 14 hours of drying, the moisture content had been
reduced to 8.15%, the THCA% had been reduced to 19.82%, and the TAC
had been reduced to 21,000 CFU/g. In the fifth test, prior moisture
and THCA% results were tested, but this time using the Company’s
proprietary sanitizing technology for a much shorter time period,
using two samples of a different cannabis strain, and testing the
expanded cannabinoid profile data of each sample, and after 12
hours of drying two different samples, moisture content for the two
samples decreased from 74% and 74% to 9.17% and 9.90%,
respectively, and THCA% increased from 14.45% and 14.94% before
drying to 16.81% and 17.2%, respectively, after 12 hours of drying.
Test six was a test of the same strain as test five but using a
different lot of plant material, and moisture content decreased
from 81% to 11.5% after 12 hours of drying, while TCHA% increased
from 21.28% to 22.6% after 12 hours of drying. The seventh through
ninth tests confirmed prior results.
More specifically, once we have at least $2,000,000 in in available
cash flow or funds from other operations and if we receive the
patent, we intend to engage in further development efforts as
follows: (i) finalizing case design, with an estimated tooling
expense of approximately $300,000-$500,000; manufacturing
pre-production units for field testing and presentation to
potential partners and distributors, with an estimated expense of
$250,000; (iii) hiring a subject-matter expert and consultants or
employees in the home herb garden and legal cannabis marketplace to
manage the development and sales of herb dryer, with an estimated
expense of $400,000 for 12 months; (iv) engaging in further
detailed laboratory of our herb drying with respect to cannabis
plants and home herb garden plants, with an estimated expense of
$50,000 to $100,000 for 12 months; (v) establishing a relationship
with a market research and/or marketing company to explore creative
strategies, advertising concepts, and consumer opinion, explore
applications of our intellectual property in the existing wholesale
and retail distribution channels for home herb, garden products and
legal cannabis markets, and determine the best path for sales,
distribution and licensing of our intellectual property, with an
estimated expense of $1,000,000 for 12 months.
Additionally, on May 12, 2017, the Company entered into an asset
purchase agreement with a third party under which it acquired four
(4) float spa units and associated equipment. With the acquisition
of these assets, the Company intends to establish a float spa
facility that will allow each guest to customize their wellness
experience, at their own pace, based on their individual needs.
Once we have approximately $500,000-$1,000,000 in available cash
flow or funds from other operations, and after the launch of our
dHydronator® sanitizing herb dryer, we plan to capitalize on our
spa assets purchased in 2017 by (i) leasing a 2,500 to 5,000 square
foot facility in Nevada or California, to be built out as needed
(and with the size of the facility dependent on available capital);
(ii) obtaining necessary licenses and permits, (iii) purchasing
inventory, equipment, furnishings and supplies, including
inventory, fixtures, furnishings and equipment for an oxygen bar
and a Kampuchea, juice and tea Bar, refrigeration and storage
equipment, point of sale computers and tablets, digital monitors,
signage and display materials, and other suppliers; (iv) hiring spa
management personnel including a manager, assistant manager and two
spa attendants; (v) hiring marketing and sales consultants, and
(vi) launching a marketing campaign to include internet lead
services, Groupon and social networking.
Competition
There are a number of commercial herb dryers sold by competitors,
including Yofumo Technologies, which are already commercially
available, and which have significant market share. As to our float
spa plans, we believe True Rest Float Spa, which has over 20 spa
locations across the country, is our primary national competitor,
and there are numerous locally owned float spas throughout the
country that would considered competitors with our spa operations.
There is no assurance that we will be able to compete effectively
with any of these competitors.
Market Opportunity
The Company’s herb dryer, the dHydronator®, safely lowers moisture
content and sanitizes without harm to the integrity of the plant.
Our test results have been proven to dry cannabis in less than 14
hours verses up to 14 days using traditional drying methods. Test
results indicate the removal of many surface germs and bacteria
including powder mold, dust mites and spider mites from herbs,
plants, the surface of glass or ceramic herbal tea accessories, and
any other object that fits safely in the drying chamber. Therefore,
we believe that our product will be attractive to the cannabis and
home herb and garden product markets.
With regard to floatation therapy, the sensory deprivation consumer
typically ranges in age from eighteen to eighty. Floatation therapy
is a service that is unisex in its appeal and attracts many. As
many consumers seek natural alternative therapies for the relief
from pain, stress and sleep disorders that affect a significant
percentage of the population, we believe that our planned
floatation therapy spa facilities will be attractive to these
consumers.
Marketing Strategy
We plan to attend regional cannabis-related trade shows and offer
field testing to legal cannabis growers and suppliers in the United
States and Canada initially, and throughout the world once the
technology has been adopted in the regional market. We also plan to
establish a relationship with a market research and marketing
company to explore creative strategies, advertising concepts,
consumer opinion, existing distribution and sales channels and
potential licensing of our intellectual property, to determine the
best path for sales and distribution. We also intend to hire
subject matter expert consultants or employees in the legal
cannabis and home herb marketplace to manage the development and
sales of our products. Once our marketing experts identify an
herbal or commercial agriculture niche or venue to enter or
solicit, we will market to distributors and retailers via trade
shows and direct contact.
With regard to our spa plans, we intend to launch internet, Groupon
and social networking campaigns offering coupons and membership
plans for floatation therapy, and our planned oxygen bar and
Kampuchea, juice and tea bar. We plan to invite local TV and Radio
personalities to tour our facilities, and we plan to offer local
healthcare and rehabilitation service providers and non-competitive
spa owners and managers a private tour of our spa facilities.
Customers
Due to the nature of its business and its focus on development of
its patent-pending herb dryer, the Company does not currently have
any customers.
Patent, Trademark, License & Franchise Restrictions and
Contractual Obligations & Concessions
The Company has acquired the exclusive intellectual property rights
to the dHydronator® sanitizing plant dryer with improved convection
flow from the Company’s CEO and Director, Brandon Romanek. Mr.
Romanek’s father irrevocably assigned those intellectual property
rights to Mr. Romanek in 2016. A trademark application for the mark
“dHyrdonator” has been filed (serial no. 86874611), and a patent
application was filed with the United States Patent and Trademark
Office (“USPTO”), docket number 5503.101 (application nos.
15/467,722 and 62/312,327), for 20 separate herb dryer design,
function, and usage patents. On or about July 20, 2018, the
Company’s patent counsel received a Notification of Allowance from
the USPTO, notifying the Company that the USPTO would be allowing
all 20 claims, and on or about November 20, 2018, the USPTO granted
the final patent (patent no. 10,132,56), the Company was
subsequently notified of the patent grant, and the patent has been
recorded with the USPTO as being assigned to the Company.
Governmental Regulations
We will be governed by government laws and regulations governing
spas. We do not believe the dHydronator® will be subject to
regulation by the U.S. Food and Drug Administration or any other
government agency (other than pursuant to general laws governing
truth in advertising or similar laws under the purview of the
Federal Trade Commission). We believe that we are currently in
compliance with all laws which govern our operations and have no
current liabilities thereunder. Our intent is to maintain strict
compliance with all relevant laws, rules and regulations.
Employees
As of April 30, 2021, the Company had two employees.
Reports to Security Holders
The Company intends to furnish its stockholders with annual reports
containing consolidated financial statements audited by its
independent registered public accounting firm and to make available
quarterly reports containing unaudited consolidated financial
statements for each of the first three quarters of each year. The
Company files Quarterly Reports on Form 10-Q, Annual Reports on
Form 10-K and Current Reports on Form 8-K with the Securities and
Exchange Commission in order to meet its timely and continuous
disclosure requirements. The Company may also file additional
documents with the Commission if those documents become necessary
in the course of its operations.
The public may read and copy any materials that the Company files
with the SEC at the SEC’s Public Reference Room at 100 F Street,
NE, Washington, D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet site that contains
reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. The site
address is www.sec.gov.
Available Information
All reports of the Company filed with the SEC are available free of
charge through the SEC’s website at www.sec.gov. In addition, the
public may read and copy materials filed by the Company at the
SEC’s Public Reference Room located at 100 F Street, N.E.,
Washington, D.C. 20549. The public may also obtain additional
information on the operation of the Public Reference Room by
calling the Commission at 1-800-SEC-0330.
Results of Operations
The following discussion and analysis of our financial condition
and results of operations should be read in conjunction with the
financial statements and notes thereto for the three months ended
April 30, 2021, and related management discussion herein.
Our financial statements are stated in U.S. Dollars and are
prepared in accordance with generally accepted accounting
principles of the United States (“GAAP”).
Going Concern Qualification
Several conditions and events cast substantial doubt about the
Company’s ability to continue as a going concern. The Company has
incurred cumulative net losses of $34,716,365 since its inception
and requires capital for its contemplated operational and marketing
activities to take place. The Company’s ability to raise additional
capital through the future issuances of common stock is unknown.
The obtainment of additional financing, the successful development
of the Company’s contemplated plan of operations, and its
transition, ultimately, to the attainment of profitable operations
are necessary for the Company to continue operations. The ability
to successfully resolve these factors raise substantial doubt about
the Company’s ability to continue as a going concern.
For the Three Months Ended April 30, 2021 and
2020:
Our operating results for the three months ended April 30, 2021 and
2020, and the changes between those periods for the respective
items are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
April
30,
|
|
|
Change
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Amount
|
|
|
Percentage
|
|
Operating loss
|
|
|
$ |
(169,508 |
) |
|
$ |
(511,071 |
) |
|
$ |
(341,563 |
) |
|
(67
|
%) |
Other expense
|
|
|
$ |
(181,272 |
) |
|
$ |
(748,992 |
) |
|
$ |
567,720 |
|
|
(76
|
%) |
Net loss
|
|
|
$ |
(350,780 |
) |
|
$ |
(1,260,063 |
) |
|
$ |
909,283 |
|
|
(58
|
%) |
Revenues
We did not earn any revenues during the three months ending April
30, 2021 and 2020, respectively. We do not anticipate earning
significant revenues until such time that we have fully developed
our business strategy and launched sales of our dHydronator®
product.
Operating Income (Loss)
Our loss from operations decreased to $909,283 during the three
months ending April 30, 2021, from an operating loss of $31,260,063
in the comparative period ending April 30, 2020. The following
table presents operating expenses for the three-month periods
ending April 30, 2021 and 2020:
|
|
Three months
ended
|
|
|
|
|
|
|
|
|
|
April 30,
|
|
|
Change
|
|
|
|
2021
|
|
|
2020
|
|
|
Amount
|
|
|
Percentage
|
|
Professional fees
|
|
$ |
23,385 |
|
|
$ |
76,183 |
|
|
$ |
(52,798 |
) |
|
|
(69 |
)% |
Consulting fees
|
|
|
17,978 |
|
|
|
332,059 |
|
|
|
(314,081 |
) |
|
(95
|
%)
|
Salaries and wages
|
|
|
46,937 |
|
|
|
48,937 |
|
|
|
(2,000 |
) |
|
(4
|
%)
|
General and
administrative expenses
|
|
|
77,216 |
|
|
|
49,854 |
|
|
|
27,362 |
|
|
|
55 |
% |
Depreciation and
amortization
|
|
|
3,992 |
|
|
|
4,038 |
|
|
|
(46 |
) |
|
|
(1 |
)% |
Total operating
expenses
|
|
$ |
169,508 |
|
|
$ |
511,071 |
|
|
$ |
(341,563 |
) |
|
|
(67 |
)% |
We realized a decrease of $52,798 in professional fees during the
three months ended April 30, 2021, as compared to the three months
ended April 30, 2020, primarily due to a decrease in stock-based
compensation. We realized a decrease of $314,081 in consulting fees
during the three months ended April 30, 2021, as compared to the
same period in the prior fiscal year, primarily due to an decrease
in consulting services. We realized an increase of $27,362 in
general and administrative expenses during the three months ended
April 30, 2021, as compared to the same period in the prior fiscal
year, primarily due to an increase in travel costs.
We realized a decrease of $46 in depreciation expenses during the
three months ended April 30, 2021, as compared to the same period
in the prior fiscal year, due to a decrease in depreciable
assets.
Other Income (Expense)
The following table presents other income and expenses for the
three months ended April 30, 2021 and 2020:
|
|
Three months
ended
|
|
|
|
|
|
|
|
|
|
April 30,
|
|
|
Change
|
|
|
|
2021
|
|
|
2020
|
|
|
Amount
|
|
|
Percentage
|
|
Gain/(loss) on change
in derivative liability
|
|
$ |
(85,873 |
) |
|
$ |
(452,897 |
) |
|
$ |
(367,024 |
) |
|
|
(81 |
%)
|
Loss on settlement of
debt
|
|
|
- |
|
|
|
(165,000 |
) |
|
|
(165,000 |
) |
|
|
100 |
% |
Interest Expense
|
|
|
(95,399 |
) |
|
|
(131,095 |
) |
|
|
(35,969 |
) |
|
|
(76 |
%)
|
Total other income
(expense)
|
|
$ |
(181,272 |
) |
|
$ |
(748,992 |
) |
|
$ |
(567,720 |
) |
|
|
76 |
%
|
Gain on change in derivative liability decreased by $367,024 during
the three months ended April 30, 2021, as compared to the same
period in the prior fiscal year, due to change in derivative
liabilities caused by fluctuations in the price of our common stock
between reporting periods. Loss on settlement of debt decreased
from the previous year as a result of no debt settlements occurring
during the current period. Interest expense decreased by 35,696
during the three months ended April 30, 2021, as compared to the
same period in the prior fiscal year, due to a conversion of
principal amounts of convertible notes to common stock.
Net loss
Net loss decreased to $350,780 during the three months
ended April 30, 2021, from a net loss of $1,260,063 in the same
period in the prior fiscal year due to the factors discussed
above.
Results of Operations for the nine months ended April
30, 2021, compared with the nine months ended April
30, 2020
Our operating results for the nine months ended April 30, 2021
and 2020, and the changes between those periods for the respective
items are summarized as follows:
|
|
Nine Months
Ended
|
|
|
|
|
|
|
April
30,
|
|
|
Change
|
|
|
|
2021
|
|
|
2020
|
|
|
Amount
|
|
|
Percentage
|
|
Operating loss
|
|
$ |
(611,464 |
) |
|
$ |
(1,078,275 |
) |
|
$ |
(466,811 |
) |
|
|
(43 |
%) |
Other expenses
|
|
$ |
(189,191 |
) |
|
$ |
(1,194,300 |
) |
|
$ |
(1,005,109 |
) |
|
|
(84 |
%) |
Net loss
|
|
$ |
(800,655 |
) |
|
$ |
(2,272,575 |
) |
|
$ |
(1,471,920 |
) |
|
|
(65 |
%) |
Revenue
We did not earn any revenues during the nine months ended April 30,
2021 and 2020, respectively. We do not anticipate earning
significant revenues until such time that we have fully developed
our business strategy and launched sales of our dHydronator®
product.
Operating Loss
Our loss from operations decreased to $441,956 during the nine
months ended April 30, 2021, compared to an operating loss of
$567,204 in the comparative period in the prior fiscal year. The
following table presents operating expenses for the nine-month
periods ended April 30, 2021 and 2020:
|
|
Nine months
Ended
|
|
|
|
|
|
|
April 30,
|
|
|
Change
|
|
|
|
2021
|
|
|
2020
|
|
|
Amount
|
|
|
Percentage
|
|
Professional fees
|
|
$ |
132,906 |
|
|
$ |
275,272 |
|
|
$ |
(142,366 |
) |
|
|
(52 |
%) |
Consulting fees
|
|
|
161,530 |
|
|
|
498,563 |
|
|
|
(337,033 |
) |
|
|
(68 |
%) |
Salaries and wages
|
|
|
149,038 |
|
|
|
142,812 |
|
|
|
6,226 |
|
|
|
4 |
% |
General and administrative
|
|
|
155,746 |
|
|
|
145,640 |
|
|
|
10,106 |
|
|
|
7 |
% |
Depreciation and amortization
|
|
|
12,244 |
|
|
|
15,988 |
|
|
|
(3,744 |
) |
|
|
(23 |
%) |
Total operating expenses
|
|
$ |
611,464 |
|
|
$ |
1,078,275 |
|
|
$ |
(466,811 |
) |
|
|
(43 |
%) |
We realized a decrease of $142,336 in professional fees during the
nine months ended April 30, 2021, as compared to the nine months
ended April 30, 2020, primarily due to a decrease in stock-based
compensation. We realized a decrease of $337,033 in consulting fees
during the three months ended April 30, 2021, as compared to the
same period in the prior fiscal year, primarily due to a decrease
in consulting services. We realized a decrease of $10,106 in
general and administrative expenses during the nine months ended
April 30, 2021, as compared to the same period the prior fiscal
year, primarily due to a decrease in travel costs. We realized a
decrease of $3,744 in depreciation expenses during the three months
ended April 30, 2021, as compared to the same period in the prior
fiscal year, due to a decrease in depreciable assets.
Other Income (Expense)
The following table presents other income and expenses for the nine
months ended April 30, 2021 and 2020:
|
|
Nine months
ended
|
|
|
|
|
|
|
|
|
|
April 30,
|
|
|
Change
|
|
|
|
2021
|
|
|
2020
|
|
|
Amount
|
|
|
Percentage
|
|
Gain/(loss) on change in derivative
liability
|
|
$ |
110,013 |
|
|
$ |
(673,148 |
) |
|
$ |
783,161 |
|
|
|
116 |
% |
Loss on settlement of debt
|
|
|
- |
|
|
|
(165,000 |
) |
|
|
165,000 |
|
|
100%
|
|
Interest Expense
|
|
|
(299,204 |
) |
|
|
(356,152 |
) |
|
|
56,948 |
|
|
|
(16 |
%) |
Total other income (expense)
|
|
$ |
(189,191 |
) |
|
$ |
(1,194,300 |
) |
|
$ |
1,005,109 |
|
|
|
(116 |
%) |
Loss on change in derivative liability decreased by $783,161 during
the nine months ended April 30, 2021, as compared to the same
period in 2019, due to the change in derivative liabilities caused
by fluctuations in the price of our common stock between reporting
periods. Loss on settlement of debt decreased from the previous
year as a result of no debt settlements occurring during the
current period. Interest expense decreased by $56,948 during the
nine months ended April 30, 2021, as compared to the same period in
2020, due to a conversion of principal amounts of convertible notes
to common stock.
Net Income loss
Net loss decreased to $189,191 during the nine months ended April
30, 2021, from a net loss of $1,194,300 in the same period
2020.
Liquidity and Capital Resources
Based upon our current financial condition, we do not have
sufficient cash to operate our business at the current level for
the next twelve months. We intend to fund operations through sales
of our herb dryer and debt and/or equity financing arrangements,
which may be insufficient to fund expenditures or other cash
requirements. We plan to seek additional financing in a private
equity offering to secure funding for operations. There can be no
assurance that we will be successful in raising additional funding.
If we are not able to secure additional funding, the implementation
of our business plan will be impaired. There can be no assurance
that such additional financing will be available to us on
acceptable terms or at all.
Working Capital
The following table presents our working capital position as of
April 30, 2021, and July 31, 2020:
|
|
April 30,
|
|
|
July
31,
|
|
|
|
2021
|
|
|
2020
|
|
Cash and cash
equivalents
|
|
$ |
40,895 |
|
|
$ |
43,239 |
|
Prepaid expenses
|
|
|
18,300 |
|
|
|
- |
|
Current assets
|
|
$ |
59,195 |
|
|
$ |
43,239 |
|
Current liabilities
|
|
|
2,101,264 |
|
|
|
1,863,997 |
|
Working capital
|
|
$ |
(2,042,069 |
) |
|
$ |
(1,820,758 |
) |
The change in working capital during the nine months ended April
30, 2021, was primarily due to an increase an increase in current
liabilities due to an increase in borrowing from related party
parties as well as an increase in accounts payable.
Cash Flow
We fund our operations with cash received from advances from
officer’s and related parties, debt, and issuances of equity.
The following tables presents our cash flow for the three months
ended April 30, 2021 and 2020:
|
|
Three months
ended
|
|
|
|
April
30,
|
|
|
|
2021
|
|
|
2020
|
|
Cash Flows Used in
Operating Activities
|
|
$ |
(352,334 |
) |
|
$ |
(350,195 |
) |
Cash Flows Used in
Investing Activities
|
|
|
(152,785 |
) |
|
|
(168,453 |
) |
Cash Flows Provided by
Financing Activities
|
|
|
502,775 |
|
|
|
217,992 |
|
Net increase (decrease)
in Cash During Period
|
|
$ |
(2,344 |
) |
|
$ |
(300,656 |
) |
Cash Flows from Operating Activities
We did not generate positive cash flows from operating activities
for the three months ended April 30, 2021.
For the nine months ended April 30, 2021, net cash flows used in
operating activities consisted of a net loss of $800,655, reduced
by depreciation of $12,244, amortization of debt discounts of
$243,404, and stock-based compensation of $108,552, offset by a
gain on change in derivative liabilities of $110,013 and increased
by a net increase in change of operating assets and liabilities of
$194,134. For the nine months ended April 30, 2020, net cash flows
used in operating activities consisted of a net loss of $2,272,575,
reduced by depreciation of $15,988, amortization of debt discounts
of $310,091, stock-based compensation of $438,435, and a loss on
change in derivative liabilities of $660,968 and a loss on
settlement of debt of $165,000, and increased by a net increase in
change of operating assets and liabilities of $331,898.
Cash Flows from Investing Activities
For the nine months ended April 30, 2021, consisted of purchases of
silver in the amount of $152,785. For the three months ended April
30, 2020, net cashflows used in investing activities consisted of
purchases of other assets of $168,453.
Cash Flows from Financing Activities
For the nine months ended April 30, 2021, we received $82,587 from
loans from related parties, and used $61,312 for net repayments on
related party loans; we also received $506,500 from the sale of
common stock and made a $25,000 payment on a convertible loan. For
the three months ended April 30, 2020, we received $288,014 from
convertible notes payable and spent $37,500 on repayments, we
received $24,930 from loans from related parties and used $57,452
for net repayments on related party debts.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that
have or are reasonably likely to have a current or future effect on
the Company’s financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to
investors.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
Not
Applicable.
ITEM 4.
CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
The Securities and Exchange Commission defines the term “disclosure
controls and procedures” to mean the company’s controls and other
procedures of an issuer that are designed to ensure that
information required to be disclosed in the reports that it files
or submits under the Securities Exchange Act of 1934 (the “Exchange
Act”) is recorded, processed, summarized and reported, within the
time periods specified in the Securities and Exchange Commission’s
rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that
information required to be disclosed by an issuer in the reports
that it files or submits under the Securities Exchange Act of 1934
is accumulated and communicated to the issuer’s management,
including its principal executive and principal financial officers,
or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure. The Company
maintains such a simple system of controls and procedures in an
effort to ensure that all information which it is required to
disclose in the reports it files under the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported within the
time periods specified under the SEC’s rules and forms and that
information required to be disclosed is accumulated and
communicated to principal executive and principal financial
officers to allow timely decisions regarding disclosure.
As of the end of the period covered by this report, we carried out
an evaluation, under the supervision and with the participation of
our chief executive officer and chief financial officer, of the
effectiveness of the design and operation of our disclosure
controls and procedures. Based on this evaluation, our chief
executive officer and chief financial officer concluded that our
disclosure controls and procedures were not effective to provide
reasonable assurance of achieving the objectives of timely alerting
them to material information required to be included in our
periodic SEC reports and of ensuring that such information is
recorded, processed, summarized and reported with the time periods
specified. Our chief executive officer and chief financial officer
also concluded that our disclosure controls and procedures were not
effective as of the end of the period covered by this report to
provide reasonable assurance of the achievement of these
objectives.
Changes in Internal Control over Financial
Reporting
There were no changes in the Company’s internal control over
financial reporting identified in connection with the evaluation
required by paragraph (d) of Rule 13a-15 or 15d-15 of the Exchange
Act that occurred during the quarter ended April 30, 2021, that
have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial
reporting.
PART II -
OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS.
The Company is not a party to any significant pending legal
proceedings other than as disclosed below, and no other such
proceedings are known to be contemplated. No director, officer or
affiliate of the Company, and no owner of record or beneficial
owner of more than 5.0% of the securities of the Company, or any
associate of any such director, officer or security holder is a
party adverse to the Company or has a material interest adverse to
the Company in reference to pending litigation.
On or about December 18, 2020, Power Up Lending Group, Ltd. (“Power
Up”) filed suit against the Company, the Company’s executive
officers, and the Company’s transfer agent (Case Index No.
614700/2020, Supreme Court of the State of New York for Nassau
County, Power Up Lending Group, Ltd. v. THC Therapeutics, Inc.,
Parker Mitchell, Transhare Corporation, and Brandon Romanek),
alleging that the Company’s convertible promissory notes issued to
Power Up are in default as a result of the Company’s alleged
failure to honor the conversion terms of the notes along with
related claims, and seeking monetary damages in excess of $280,920
(representing 200% of the outstanding note balances) and equitable
relief to force the Company to honor Power Up’s conversion of note
amounts into Company common stock. The Company and its officers
answered the complaint and filed counterclaims against Power Up
alleging that Power Up is an unregistered securities dealer acting
in violation of the registration provisions of the Securities
Exchange Act of 1934, and that Power Up’s notes are usurious and
unenforceable as a matter of law. The court issued a temporary
order forcing the Company and its transfer agent to honor Power
Up’s conversions and prohibiting the Company and its transfer agent
from issuing any shares to any parties other than Power Up (the
“Power Up Order”), which the Company appealed, and such appeal was
denied.
ITEM
1A. RISK FACTORS.
Not
applicable.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.
On February 2, 2021, the Company received $22,000 from an investor
for the issuance of 293,334 shares of common stock. As of April 30,
2021, the shares had not been issued by the Company’s transfer
agent because of the Power Up Order described above, and the value
was included in stock payable.
On February 2, 2021, the Company received $35,000 from an investor
for the issuance of 466,667 shares of common stock. As of April 30,
2021, the shares had not been issued by the Company’s transfer
agent because of the Power Up Order described above, and the value
was included in stock payable.
On February 8, 2021, the Company received $40,000 from an investor
for the issuance of 533,333 shares of common stock. As of April 30,
2021, the shares had not been issued by the Company’s transfer
agent because of the Power Up Order described above, and the value
was included in stock payable.
On February 10, 2021, the Company received $17,000 from an investor
for the issuance of 170,000 shares of common stock. As of April 30,
2021, the shares had not been issued by the Company’s transfer
agent because of the Power Up Order described above, and the value
was included in stock payable.
On February 10, 2021, the Company received $25,000 from an investor
for the issuance of 333,334 shares of common stock. As of April 30,
2021, the shares had not been issued by the Company’s transfer
agent because of the Power Up Order described above, and the value
was included in stock payable.
On February 11, 2021, the Company received $5,000 from an investor
for the issuance of 50,000 shares of common stock. As of April 30,
2021, the shares had not been issued by the Company’s transfer
agent because of the Power Up Order described above, and the value
was included in stock payable.
On February 11, 2021, the Company received $20,000 from an investor
for the issuance of 200,000 shares of common stock. As of April 30,
2021, the shares had not been issued by the Company’s transfer
agent because of the Power Up Order described above, and the value
was included in stock payable.
On February 16, 2021, the Company received $20,000 from an investor
for the issuance of 200,000 shares of common stock. As of April 30,
2021, the shares had not been issued by the Company’s transfer
agent because of the Power Up Order described above, and the value
was included in stock payable.
On February 17, 2021, the Company received $25,000 from an investor
for the issuance of 333,334 shares of common stock. As of April 30,
2021, the shares had not been issued by the Company’s transfer
agent because of the Power Up Order described above, and the value
was included in stock payable.
The shares described above were sold pursuant to the exemption from
registration provided by Section 4(a)(2) of the Securities Act of
1933, as amended, and/or Rule 506(b) promulgated thereunder, as
there was no general solicitation to the investors, and the
transactions did not involve a public offering.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4.
MINE SAFETY DISCLOSURES.
None.
ITEM 5.
OTHER INFORMATION.
None.
ITEM 6.
EXHIBITS.
Exhibit
|
|
Description
|
|
|
|
3.1
|
|
Bylaws (incorporated by reference to Registration Statement on Form
10 filed on October 19, 2018; File No. 000-55994; Exhibit 3.1
thereto)
|
|
|
|
3.2
|
|
Articles of Incorporation filed May 1, 2007 (incorporated by
reference to Registration Statement on Form 10 filed on October 19,
2018; File No. 000-55994; Exhibit 3.2 thereto)
|
|
|
|
3.3
|
|
Articles of Amendment filed January 23, 2017 (incorporated by
reference to Registration Statement on Form 10 filed on October 19,
2018; File No. 000-55994; Exhibit 3.3 thereto)
|
|
|
|
3.4
|
|
Articles of Amendment filed January 17, 2018 (incorporated by
reference to Registration Statement on Form 10 filed on October 19,
2018; File No. 000-55994; Exhibit 3.4 thereto)
|
|
|
|
3.5
|
|
Certificate of Designation for Series A Preferred Stock filed
January 24, 2017 (incorporated by reference to Registration
Statement on Form 10 filed on October 19, 2018; File No. 000-55994;
Exhibit 3.5 thereto)
|
|
|
|
3.6
|
|
Certificate of Designation for Series B Preferred Stock May 12,
2017 (incorporated by reference to Registration Statement on Form
10 filed on October 19, 2018; File No. 000-55994; Exhibit 3.6
thereto)
|
|
|
|
3.7
|
|
Amended Certificate of Designation for Series B Preferred Stock
filed June 5, 2017 (incorporated by reference to Registration
Statement on Form 10 filed on October 19, 2018; File No. 000-55994;
Exhibit 3.7 thereto)
|
|
|
|
3.8
|
|
Articles of Amendment filed September 28, 2018 (incorporated by
reference to Registration Statement on Form 10 filed on October 19,
2018; File No. 000-55994; Exhibit 3.8 thereto)
|
|
|
|
10.1
|
|
Asset Purchase Agreement with Brandon Romanek dated January 20,
2017 (incorporated by reference to Registration Statement on Form
10 filed on October 19, 2018; File No. 000-55994; Exhibit 10.1
thereto)
|
|
|
|
10.2
|
|
Patent Assignment by and between Harvey Romanek and Brandon Romanek
dated November 7, 2016 (incorporated by reference to Registration
Statement on Form 10/A filed on October 4, 2019; File No.
000-55994; Exhibit 10.2 thereto)
|
|
|
|
10.3
|
|
Patent Assignment Confirmation and Release by Brandon Romanek
(incorporated by reference to Registration Statement on Form 10/A
filed on October 4, 2019; File No. 000-55994; Exhibit 10.3
thereto)
|
|
|
|
10.4
|
|
Patent Assignment Confirmation and Release by Harvey Romanek
(incorporated by reference to Registration Statement on Form 10/A
filed on October 4, 2019; File No. 000-55994; Exhibit 10.4
thereto)
|
|
|
|
10.5
|
|
Asset Purchase Agreement with Urban Oasis Float Center, LLC dated
June 1, 2017 (incorporated by reference to Registration Statement
on Form 10/A filed on April 8, 2019; File No. 000-55994; Exhibit
10.2 thereto)
|
____________
* Filed herewith.
** XBRL (Extensible Business Reporting Language) information is
furnished and not filed or a part of a registration statement or
prospectus for purposes of Sections 11 or 12 of the Securities Act
of 1933, as amended, is deemed not filed for purposes of Section 18
of the Securities Exchange Act of 1934, as amended, and otherwise
is not subject to liability under these sections.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
|
THC THERAPEUTICS, INC.
|
|
|
|
|
|
Date: June 21, 2021 |
By: |
/s/ Brandon
Romanek |
|
|
|
Brandon Romanek
|
|
|
|
President
|
|
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