Quarterly Report (10-q)

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, 2020

☐ 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)

(702) 602-8422

(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 and post 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	⌧
(Do not check if a 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 18, 2020, the Company had 21,461,784 shares of common stock outstanding.

THC THERAPEUTICS INC.

INDEX

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements
	Consolidated Balance Sheets at April 30, 2020 (unaudited), and July 31, 2019	3
	Consolidated Statement of Operations for the three and nine months ended April 30, 2020, and April 30, 2019 (unaudited)	4
	Consolidated Statement of Stockholders’ Equity (deficit) for the nine months ended April 30, 2020, and April 30, 2019 (unaudited)	5
	Consolidated Statement of Cash Flows for the nine months ended April 30, 2020, and April 30, 2019 (unaudited)	6
	Notes to Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risks	28
Item 4.	Controls and Procedures	28

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	30

SIGNATURES		31

Table of Contents

THC THERAPEUTICS INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	April 30, 2020			July 31, 2019
ASSETS
Current assets
Cash	$	16,895		$	317,551
Prepaid Expenses		-			140,250
Total current assets		16,895			457,801

Investments		168,453			-
Fixed Assets, net		24,462			37,143
Intangible Assets, net		21,771			25,078

Total assets		231,581			520,022

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued liabilities	$	465,473		$	158,735
Accrued liabilities due to related parties		7,566			217,656
Advances from related parties		80,697			104,219
Notes payable		79,833			-
Convertible Notes payable, net		226,919			152,895
Convertible Notes payable- Related party, net		99,726			24,658
Derivative liability		1,445,913			611,265
Total current liabilities		2,406,127			1,269,428

Total liabilities		2,406,127			1,269,428

Stockholders' equity (deficit)
Common stock; $0.001 par value; 500,000,000 shares authorized; 18,973,666 and 14,434,098 shares issued and outstanding as of April 30, 2020 and July 31, 2019, respectively		18,974			14,434
Preferred stock; $0.001 par value; 10,000,000 shares authorized; 218,000 and 217,000 series A and B shares issued and outstanding as of April 30, 2020 and July 31, 2019, respectively		-			-
Preferred A stock; $0.001 par value; 3,000,000 shares authorized; 218,000 and 217,000 shares issued and outstanding as of April 30, 2020 and July 31, 2019, respectively		218			217
Preferred B stock; $0.001 par value; 16,500 shares authorized; 0 and0 shares issued and outstanding as of April 30, 2020 and July 31, 2019, respectively		-			-
Stock payable		221,700			417,469
Stock receivable		(6,902,000	)		(6,902,000	)
Additional paid-in capital		39,460,273			38,421,610
Accumulated deficit		(34,973,711	)		(32,701,136	)
Total stockholders' equity (deficit)		(2,174,546	)		(749,406	)

Total liabilities and stockholders' equity (deficit)	$	231,581		$	520,022

The accompanying notes are an integral part of these financial statements.

Table of Contents

THC THERAPEUTICS INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	April 30, 2020			April 30, 2019			April 30, 2020			April 30, 2019

Revenues	$	-		$	-		$	-		$	-

Cost of revenues		-			-			-			-

Gross profit		-			-			-			-

Operating expenses
Professional fees		76,183			35,424			275,272			90,836
Consulting fees		332,059			18,579,500			498,563			19,093,383
Payroll expense		48,937			46,937			142,812			88,074
General and administrative expenses		49,854			25,009			145,640			76,667
Impairment expense		-			-			-			2,429,981
Depreciation and amortization		4,038			6,232			15,988			19,116
Total operating expenses		511,071			18,693,102			1,078,275			21,798,057

Loss from operations		(511,071	)		(18,693,102	)		(1,078,275	)		(21,798,057	)

Other income (expense)
Gain/(loss) on derivative liability		(452,897	)		(3,237,594	)		(673,148	)		(4,051,115	)
Gain/(loss) on settlement of debts		(165,000	)		-			(165,000	)		(37,500	)
Interest Expense		(131,095	)		(200,393	)		(356,152	)		(226,694	)
Total other income (expense)		(748,992	)		(3,437,987	)		(1,194,300	)		(4,315,309	)

Net income (loss)	$	(1,260,063	)	$	(22,131,089	)	$	(2,272,575	)	$	(26,113,366	)

Basic income (loss) per common share	$	(0.09	)	$	(1.69	)	$	(0.15	)	$	(2.00	)

Basic weighted average common shares outstanding		14,690,164			13,074,816			14,818,198			13,039,598

The accompanying notes are an integral part of these financial statements.

Table of Contents

THC THERAPEUTICS INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT

(Unaudited)

For the Nine Months Ended April 30, 2019

	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, 2018		206,000		206		16,500		17		13,004,740		13,004		11,128,690		190,245			-		(9,394,072	)		1,938,090
Shares for services		1,000		1		-		-		-		-		314,799		35,000			-		-			349,800
Imputed interest		-		-		-		-		-		-		607		-			-		-			607
Net loss		-		-		-		-		-		-		-		-			-		(438,856	)		(438,856	)
Balance, October 31, 2018		207,000		207		16,500		17		13,004,740		13,004		11,444,096		225,245			-		(9,832,928	)		1,849,641
Shares for services		-		-		-		-		25,000		26		65,131		98,748			-		-			163,905
Shares and issued for stock payable		-		-		-		-		77,450		77		125,736		(125,813	)		-		-			-
Shares issued to settle debt		-		-		-		-		-		-		-		49,620			-		-			49,620
Imputed interest		-		-		-		-		-		-		607		-			-		-			607
Net loss		-		-		-		-		-		-		-		-			-		(3,543,421	)		(3,543,421	)
Balance, January 31, 2019		207,000		207		16,500		17		13,107,190		13,107		11,635,570		247,800			-		(13,376,349	)		(1,479,648	)
Shares for services		13,000		13		-		-		260,000		260		18,649,227		(70,000	)		-		-			18,579,500
Settlement of derivative liabilities		-		-		-		-		304,042		304		4,092,719		-			-		-			4,093,023
Shares issued to settle debt		-		-		-		-		99,800		100		49,520		(49,620	)		-		-			-
Imputed interest		-		-		-		-		-		-		589		-			-		-			589
Net loss		-		-		-		-		-		-		-		-			-		(22,131,089	)		(22,131,089	)
Balance, April 30, 2019		220,000		220		16,500		17		13,771,032		13,771		34,427,625		128,180			-		(35,507,438	)		(937,625	)

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 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
Issuance of warrants		-			-			-		-		-		-		265,935			-			-			-			265,935
Shares issued for warrant exercise		-			-			-		-		1,225,000		1,225		(1,225	)		-			-			-			-
Shares issued to settle debt		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.

Table of Contents

THC THERAPEUTICS INC.

CONSOLIDATED STATEMENT OF CASHFLOWS

(Unaudited)

	For the Nine Months Ended
	April 30, 2020			April 30, 2019
Cash Flows from Operating Activities
Net loss	$	(2,272,575	)	$	(26,113,366	)
Adjustments to reconcile net loss to net cash used by operating activities:
Loss on change in derivative liabilities		673,148			3,591,477
Initial loss on derivative liabilities		(12,180	)		459,638
Amortization of debt discount		310,091			154,932
Increase in note due to penalties		-			30,907
Impairment expense		-			2,429,981
Stock based compensation		438,435			19,093,205
Depreciation and amortization		15,988			19,116
Imputed interest		-			1,803
Loss on settlement of debts		165,000			37,500
Changes in operating assets and liabilities
Increase (decrease) in prepaid assets		140,250			-
Increase (decrease) in accounts payable		401,738			26,378
Increase (decrease) in accounts payable related party		(210,090	)		155,965
Net cash from operating activities		(350,195	)		(112,464	)

Cash Flows from investing
Purchase of intangible assets		-			(1,195	)
Increase in short-term investments		(168,453	)		-
Net cash used in investing activities		(168,453	)		(1,195	)

Cash Flows from Financing Activities
Proceeds from related party debts		24,930			89,504
Payments on related party debts		(57,452	)		(106,717	)
Proceeds of convertible loans, net		-			177,500
Proceeds from loans		288,014			-
Payments on loans		(37,500	)		(17,253	)
Net cash from financing activities		217,992			143,034

Net increase (decrease) in Cash		(300,656	)		29,375

Beginning cash balance		317,551			2,969

Ending cash balance	$	16,895		$	32,344

Supplemental disclosure of cash flow information
Cash paid for interest	$	-		$	-
Cash paid for tax	$	-		$	-

The accompanying notes are an integral part of these financial statements.

Table of Contents

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 – The Company has incurred losses for the past several years while developing infrastructure and its intellectual property. As of April 30, 2020, the Company had a working capital deficit of approximately $2,389,232. In response to these conditions, the Company plans to raise additional capital through the sale of debt and equity securities.

Going Concern – The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred cumulative net losses of $34,973,711 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. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

3. SUMMARY OF SIGNIFICANT POLICIES

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.

Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated.

Table of Contents

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 are $16,895 and $317,551 in cash and no cash equivalents as of April 30, 2020 and July 31, 2019, 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, 2020, 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.

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).

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).

Product Sales – 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.

Table of Contents

Costs of Revenue – Costs of revenue includes raw materials, component parts, and shipping supplies. Shipping and handling costs is not a significant portion of the cost of revenue.

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 nine months ending April 30, 2020 and 2019 the Company recorded an impairment expense of $0 and $2,429,981, respectively.

Segment Reporting – Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method to allocate resources and assess performance. The Company currently has one reportable segment for financial reporting purposes, which represents the Company's core business.

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.

Stock based compensation expense recognized under ASC 718-10 for the nine months ended April 30, 2020 and 2019, totaled $438,434 and $19,093,205, respectively.

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 $53,093 and $26,383 during the nine months ended April 30, 2020 and 2019, respectively.

Recently Issued Accounting Pronouncements –

The Company has evaluated all recent accounting pronouncements and believes that none of them will have a material effect on the Company's financial position, results of operations or cash flows.

Table of Contents

4. FIXED ASSETS

Fixed assets consist of the following as of April 30, 2020 and July 31, 2019:

	April 30, 2020			July 31, 2019
dHydronator prototype	$	27,100		$	27,100
Float Spa and associated equipment		60,000			60,000
Office furniture and equipment		532			532
Less: accumulated depreciation		(63,170	)		(50,489	)
Fixed assets, net	$	24,462		$	37,143

Depreciation expense for the nine months ended April 30, 2020 and 2019, was $12,681 and $15,882, respectively.

5. INTANGIBLE ASSETS

Intangible assets consist of the following as of April 30, 2020 and July 31, 2019:

	April 30, 2020			July 31, 2019
Patents and patents pending	$	19,699		$	19,699
Trademarks		1,275			1,275
Website and domain names		15,098			15,098
Less: accumulated depreciation		(14,301	)		(10,994	)
Intangible assets, net	$	21,771		$	25,078

Amortization expense for the nine months ended April 30, 2020 and 2019, was $3,307 and $3,294 respectively.

6. 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 (10) days of demand and bear interest at 5% annually.

Advances from related parties consist of the following as of April 30, 2020:

	Principal as of		Nine Months ending April 30, 2020					Principal as of		Accrued interest balance As of
	July 31, 2019		Funds advanced		Funds repaid			April 30, 2020		April 30, 2020
B. Romanek, President and CEO	$	33,825	$	51,576	$	(75,097	)	$	10,304	$	31
Shareholder Relative of our President and CEO		70,393		-		-			70,393		7,535
TOTAL	$	104,219	$	51,576	$	(75,097	)	$	80,697	$	7,566

Table of Contents

7. RELATED PARTY TRANSACTIONS

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, 2020, the Company accrued $140,812 due to Mr. Romanek related to this agreement. As of April 30, 2020, Mr. Romanek has allowed the Company to defer a total of $300,748 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, 2020 Mr. Halford earned $42,000.

8. SECURED NOTES PAYABLE

Notes Payable at consists of the following:

	April 30,		July 31,
	2020		2019
On October 29, 2019, the Company issued a $70,000 promissory note; the note carries an interest rate of 6.9% and is due in 180 days from the issuance date.
During the quarter ended April 30, 2020 the Company made cash payments totaling $37,500 on the outstanding principal balance of the loan.		32,500		-
The note is secured by the Company’s short-term investments in silver.
On December 11, 2019, the Company issued a $7,000 promissory note; the note carries an interest rate of 6.9% and is due in 180 days from the issuance date.		7,000		-
The note is secured by the Company’s short-term investments in silver.
On December 20, 2019, the Company issued a $7,000 promissory note; the note carries an interest rate of 6.9% and is due in 180 days from the issuance date.		32,333		-
The note is secured by the Company’s short-term investments in silver.
On December 20, 2019, the Company issued a $7,000 promissory note; the note carries an interest rate of 6.9% and is due in 180 days from the issuance date.		8,000		-
The note is secured by the Company’s short-term investments in silver.

Total		79,833		-

Table of Contents

9. CONVERTIBLE NOTES PAYABLE

Convertible Notes Payable at consists of the following:

	April 30,			July 31,
	2020			2019

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 October 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. 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 $78,918 during the nine months ended April 30, 2020. 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 nine months ended, April 30, 2020, the Company recorded a gain on derivative liability of $117,195.		85,000			100,000
Unamortized debt discount		(32,794	)		(76,713	)
Total, net of unamortized discount		52,206			23,287

Table of Contents

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 October 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 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 $137,000 during the nine months ended April 30, 2020 Further, the Company recognized a derivative liability of $141,391 and an initial loss of $0 based on the Black-Scholes pricing model. During the nine months ended, April 30, 2020, the Company recorded a loss on derivative liability of $82,472.		180,108			291,108
Unamortized debt discount		(24,500	)		(161,500	)
Total, net of unamortized discount		155,608			129,608
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. 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 $18,817 during the nine months ended April 30, 2020 Further, the Company recognized a derivative liability of $192,236 and an initial loss of $64,236 based on the Black-Scholes pricing model. During the nine months ended, April 30, 2020, the Company recorded a loss on derivative liability of $251,254.		135,680			-
Unamortized debt discount		(116,863	)		-
Total, net of unamortized discount		18,817			-
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 $288 during the nine months ended April 30, 2020 Further, the Company recognized a derivative liability of $1,500 and an initial loss of $1,500 based on the Black-Scholes pricing model. During the nine months ended, April 30, 2020, the Company recorded a gain on derivative liability of $56.		3,000			-
Unamortized debt discount		(2,712	)		-
Total, net of unamortized discount		288			-
Total, net of unamortized discount	$	226,919		$	152,895

Table of Contents

10. 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 $75,068 during the nine months ended April 30, 2020.

Further, the Company recognized a derivative liability of $387,232 and an initial loss of $187,232 based on the Black-Scholes pricing model. During the nine months ended April 30, 2020, the Company also recorded a loss on derivative liability of $311,348.

As of April 30, 2020, convertible notes due to related parties net of unamortized debt discounts of $100,274, was $99,726.

11. DERIVATIVE LIABILITY

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 following table presents a summary of the Company’s derivative liabilities associated with its convertible notes as of April 30, 2020:

	Amount
Balance July 31, 2019	$	611,265
Debt discount originated from derivative liabilities		161,500
Initial loss recorded		147,106
Adjustment to derivative liability due to debt settlement		(420,591	)
Change in fair market value of derivative liabilities		946,633
Balance April 30, 2020	$	1,445,913

Table of Contents

The Black-Scholes model utilized the following inputs to value the derivative liabilities at the date of issuance of the convertible note and at the date of issuance and April 30, 2020:

Fair value assumptions – derivative notes:	Date of issuance		April 30, 2020
Risk free interest rate		.10-20%		1.45-1.54%
Expected term (years)		1.00-0.134		0.145-0.99
Expected volatility		236.46%-458.59%		254.68%
Expected dividends		0		0

12. STOCK WARRANTS

The following is a summary of warrant activity during the nine months ended April 30, 2020 and 2019:

	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 rescinded or canceled		-			-
Warrants exercised		(1,247,190	)		0.088

Balance, April 30, 2020		1,790,371		$	8.72

During the nine months ended April 30, 2020 the Company issued an additional 1,531,311 warrants to a warrant holder in accordance with antidilution provisions. The warrants carried a strike price of $0.088. The Company recorded an expense of 265,934 as a result of the antidilution warrants granted.

1,790,371 of the warrants outstanding as of April 30, 2020 were exercisable.

Table of Contents

13. 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, 2020, and July 31, 2019, the Company had 18,973,666 and 14,434,098 shares of common stock issued and outstanding, respectively.

As of April 30, 2020, and July 31, 2019, the Company had 218,000 and 217,000 shares of Series A Preferred Stock issued and outstanding, respectively.

As of April 30, 2020, and July 31, 2019, the Company had 0 and 0 shares of Series B Preferred Stock issued and outstanding, respectively.

The Company also has 1,219,816 shares payable in relation to prior agreements which were valued based upon their respective agreement dates at $221,700.

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.

Issuances of Common and Preferred Stock for the nine months ended April 30, 2019

On August 27, 2018, the Company agreed to issue 1,000 shares of the Company's Series A Preferred Stock to a legal consultant for services rendered in the quarter ending October 31, 2018. The shares were deemed fully earned at the date of grant. In accordance with ASC 820, the Company valued the shares issued based upon the unadjusted quoted prices of its common stock on the execution date of the agreement to which the preferred stock issued as consideration are convertible and determined the value to be $3.148 per common share or $314.80 per preferred share or $314,800.

On September 28, 2018, the Company agreed to issue 50,000 shares of common stock to a financial consultant for accounting services rendered during the quarter ending October 31, 2018. The shares were fair valued at $35,000 at the date of grant. The shares vested immediately upon issuance.

On November 28, 2018, the Company agreed to issue 25,000 shares of common stock to a health care consultant for services rendered as the Company’s medical director during the quarter ended January 31, 2019. The shares were fair valued at $26,225 at the date of grant. The shares vested immediately upon issuance. As of July 31, 2019, the shares had not yet been issued and have been recorded as stock payable.

On November 29, 2018, the Company agreed to issue 15,000 shares of common stock and 20,000 warrants to purchase shares of the Company’s common stock at a price of $5.00 for a period of two years to a new business advisory consultant for convention management consulting services rendered during the quarter ended January 31, 2019. The shares and warrants were fair valued at $35,089 at the date of grant. The shares vested immediately upon issuance. 12,500 shares were issued, and 2,500 shares remain payable to the Consultant and are recorded as stock payable as of July 31, 2019.

Table of Contents

On November 29, 2018, the Company agreed to issue 12,500 shares of common stock and 20,000 warrants to purchase shares of the Company’s common stock at a price of $5.00 for a period of two years to a new business advisory consultant for research and development services rendered during the quarter ended January 31, 2019. The shares and warrants were fair valued at $32,567 at the date of grant. The shares vested immediately upon issuance.

On January 4, 2019, the Company and a lender agreed to settle a $10,747 promissory note and associated accrued interest of $1,373. The Company agreed to issue 99,880 shares of the Company’s common stock. In return for the consideration the lender agreed to release the Company from all amounts owed. 80 shares have not been issued and have been recorded as stock payable as of July 31, 2019.

On January 29, 2019, the Company agreed to issue 100,000 shares of common stock to a new business advisory consultant for business development services rendered in the quarter ending January 31, 2019. The shares were fair valued at $70,000 at the date of grant. The shares vested immediately upon issuance.

On February 14, 2019, the Company issued 60,000 shares of common stock to a new investor relations advisory firm for services rendered during February 2019. The shares were fair valued at $78,000 at the date of grant. The shares vested immediately upon issuance.

On March 14, 2019, the Company issued 50,000 shares of common stock to the same investor relations advisory firm for services rendered during March 2019. The shares were fair valued at $339,000 at the date of grant. The shares vested immediately upon issuance.

On April 14, 2019, the Company issued 50,000 shares of common stock to the same investor relations advisory firm for services rendered during April 2019. The shares were fair valued at $547,500 at the date of grant. The shares vested immediately upon issuance.

On April 25, 2019, a lender elected to convert principal and accrued interest of $150,000 and $5,474, respectively into 304,042 shares of the Company’s common stock in accordance with the rights under their convertible promissory note dated January 4, 2019.

On April 25, 2019, Fiorenzo “Enzo” Villani was appointed a member of the Company’s Board of Directors. The Company issued 13,000 shares of the Company’s Series A Preferred Stock to Mr. Villani in consideration of his appointment as a member of the Company’s Board of Directors. The shares were deemed fully earned at the date of grant. In accordance with ASC 820, the Company valued the shares issued based upon the unadjusted quoted prices of its common stock on the execution date of the agreement to which the preferred stock issued as consideration are convertible and determined the value to be $13.55 per common share or $1,355 per preferred share or $17,615,000.

On or about December 23, 2019, the Company rescinded its agreement dated April 25, 2019, with Fiorenzo “Enzo” Villani, a member of the Company’s Board of Directors. The Company rescinded the issuance of 13,000 shares of the Company’s Series A Preferred Stock to Mr. Villani in consideration of his appointment as a member of the Company’s Board of Directors. As a result of the rescission, the 13,000 shares of Series A Preferred Stock was returned to the Company and cancelled.

Issuances of Common and Preferred Stock for the nine months ended April 30, 2020

On October 1, 2019, the Company issued a total of 267,241 shares of common stock to settle $358,269 in a stock payable.

On September 10, 2019, a shareholder converted 1,000 shares of Series A Preferred Stock into 100,000 shares of common stock.

On October 9, 2019, the Company agreed to issue 50,000 shares of common stock to a financial consultant for accounting services. The shares were fair valued at $112,500 at the date of grant. The shares vested immediately upon issuance.

Table of Contents

On October 18, 2019, a convertible note holder converted $10,032 in principal and fees into 16,500 shares of common stock at a conversion price of $0.608 per share.

On December 9, 2019, the Company agreed to issue 25,000 shares of common stock to a consultant for services. The shares were fair valued at $20,000 at the date of grant. The shares have not been issued and are recorded as stock payable as of April 30, 2020.

On December 12, 2019, a convertible note holder converted $10,200 in principal and fees into 34,000 shares of common stock at a conversion price of $0.30 per share.

On January 1, 2020, a convertible note holder converted $30,000 in principal into 170,940 shares of common stock at a conversion price of $0.1755 per share.

On February 12, 2020, a convertible note holder converted $10,656 in principal and fees into 120,000 shares of common stock at a conversion price of $0.0888 per share.

On March 26, 2020, a convertible note holder converted $8,128 in principal and fees into 160,000 shares of common stock at a conversion price of $0.0508 per share.

On March 27, 2020 the Company issued 375,000 shares in a cashless warrant exercise.

On March 30, 2020 a convertible note holder converted $30,000 in principal and fees into 267,016 shares of common stock at a conversion price of $0.112353 per share.

On April 3, 2020, the Company agreed to issue 500,000 shares of common stock to a consultant for services. The shares were fair valued at $40,000 at the date of grant. The shares vested immediately upon issuance.

On April 14, 2020 the Company issued 425,000 shares in a cashless warrant exercise.

On April 13, 2020 a convertible note holder converted $8,400 in principal and fees into 300,000 shares of common stock at a conversion price of $0.028 per share.

On April 23, 2020 a convertible note holder converted $21,000 in principal and fees into 790,871 shares of common stock at a conversion price of $0.026553 per share.

On April 23, 2020 a convertible note holder converted $30,000 in principal and fees into 1,129,816 shares of common stock at a conversion price of $0.026553 per share. As of April 30, 2020 the shares were not issued and recorded as stock payable.

On April 29, 2020 the Company issued 425,000 shares in a cashless warrant exercise.

On April 28, 2020 a convertible note holder converted $10,584 in principal and fees into 588,000 shares of common stock at a conversion price of $0.018 per share

On March 26, 2020 the Company issued 15,00 shares of Series A preferred stock valued at $240,000 to settle unpaid legal fees totaling approximately $75,000. The Company recorded a loss on settlement of debt of $165,000 in connection with the issuance.

Table of Contents

14. SUBSEQUENT EVENTS

In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to April 30, 2020, to the date these financial statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial statements other the events disclosed below.

Issuance of convertible promissory notes

On April 29, 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 financing fees of $3,000, resulting in the Company receiving $60,000. The funding under the note was received on until May 7, 2020. 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 180 days following the issuance date at the noteholder’s option into shares of our common stock at a conversion price equal to the 71% of the lowest Closing Trade Price during the fifteen (15) Trading Day period immediately preceding the measurement date.

On May 1, 2020 we entered into a $100,000 convertible promissory note pursuant with a consultant as prepayment of $100,000 of consulting services to be provided over the next six-months. Interest under the note is 10% per annum, and the principal and all accrued but unpaid interest is due on February 1, 2021. The note is convertible immediately upon issuance 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 ten (10) trading days prior to the conversion.

Conversion of convertible debt

On May 26, 2020, one of the Company’s lenders converted $13,500 of principle and fees into 750,000 shares of common stock.

On May 28, 2020, one of the Company’s lenders converted $35,000 of principle and fees into 1,318,118 shares of common stock.

Table of Contents

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. 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, 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 31^st, 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.

Effective November 20, 2017, the Company entered into a Joint Venture Agreement with ADVFN plc of the United Kingdom (“ADVFN”) to create a joint venture entity, MJAC InvestorsHub International Conferences Limited, to be owned 50/50 by the Company and ADVFN. Effective April 1, 2018, we and ADVFN terminated the joint venture agreement.

Previously, the Company had also been focused on seeking partnerships and investments in the blockchain technology industry, and making strategic investments in the equity of target companies and their tokens. In September of 2018, the Company assessed the current regulatory environment regarding cryptocurrencies and other digital assets, as well as the progress of the Company’s 20 separate patent claims for the Company’s sanitizing herb dryer, and the Company determined that it would refocus its efforts on developing the Company’s dHydronator sanitizing herb dryer.

Table of Contents

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.

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.

Table of Contents

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.

Table of Contents

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

The Company currently has three employees: our founder, CEO and director, Brandon Romanek, and two other 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 and nine months ended April 30, 2020, 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”).

Table of Contents

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 $34,973,711 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.

Results of Operations for the three months ended April 30, 2020, compared with the three months ended April 30, 2019

Our operating results for the three months ended April 30, 2020 and 2019, and the changes between those periods for the respective items are summarized as follows:

	Three Months Ended April 30,						Change
	2020			2019			Amount			Percentage
Operating income (loss)	$	(511,071	)	$	(18,693,102	)	$	18,182,031			97	%
Other income (expense)	$	(748,992	)	$	(3,437,987	)	$	(2,688,995	)		78	%
Net income (loss)	$	(1,260,063	)	$	(22,131,089	)	$	20,871,026			94	%

Revenue

We did not earn any revenues during the three months ended April 30, 2020 and 2019, respectively. We do not anticipate earning significant revenues until such time that we have fully developed our investment strategy and launched sales of our dHydronator® product.

Operating Income (Loss)

Our loss from operations decreased by $18,183,031 during the three months ended April 30, 2020, compared to an operating loss of $18,693,102 in the same period in 2019. The following table presents operating expenses for the three-month periods in 2020 and 2019:

	Three months ended April 30,				Change
	2020		2019		Amount			Percentage
Professional fees	$	76,183	$	35,424	$	40,759			115	%
Consulting fees		332,059		18,579,500		(18,247,441	)		98	%
Payroll expense		48,937		46,937		(2,000	)		(4	)%
General and administrative expenses		49,853		25,009		(24,844	)		(99	)%
Impairment expense		-		-		-			0	%
Depreciation and amortization		4,038		6,232		2,194			35	%
Total operating expenses	$	511,071	$	18,693,102	$	18,182,031			97	%

We realized a decrease of $18,247,441 in consulting fees during the three months ended April 30, 2020, as compared to the same period in 2019, primarily due to a decrease in stock-based compensation. We realized an increase of $40,759 in professional fees during the three months ended April 30, 2020, as compared to the same period in 2019, primarily due to an increase in professionals working to develop our products. We realized an increase of $24,844 in general and administrative expenses during the three months ended April 30, 2020 as compared to the same period in 2019, primarily due to an increase in marketing expenses incurred.

Table of Contents

Other Income (Expense)

The following table presents other income and expenses for the three months ended April 30, 2020 and 2019:

	Three months ended April 30,						Change
	2020			2019			Amount			Percentage
Gain/(loss) on change in derivative liability	$	(452,897	)	$	(3,237,594	)	$	2,784,697			(86	)%
Gain/(loss) on settlement of debts		(165,000	)		-			(165,000	)		100	%
Interest Expense		(131,095	)		(200,393	)		69298	)		(35	)%
Total other income (expense)	$	(748,992	)	$	(3,437,987	)	$	2,688,995			(78	)%

Loss on change in derivative liability decreased by $2,784,697 during the three months ended April 30, 2020, 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. Interest expense decreased by $69,298 during the three months ended April 30, 2020, as compared to the same period in 2019, due to decreased related debt and financing costs in the current period.

Net Income (loss)

Net loss decreased to $1,260,063 during the three months ended April 30, 2020, from a net loss of $(22,131,089) in the same period in 2019.

Results of Operations for the nine months ended April 30, 2020, compared with the nine months ended April 30, 2019

Our operating results for the nine months ended April 30, 2020 and 2019, and the changes between those periods for the respective items are summarized as follows:

	Nine Months Ended April 30,						Change
	2020			2019			Amount			Percentage
Operating income (loss)	$	(1,078,275	)	$	(21,798,057	)	$	(20,719,782	)		95	%
Other income (expense)	$	(1,194,300	)	$	(4,315,309	)	$	(3,121,009	)		72	%
Net income (loss)	$	(2,272,575	)	$	(26,113,366	)	$	(23,840,791	)		91	%

Revenue

We did not earn any revenues during the nine months ended April 30, 2020 and 2019, respectively. We do not anticipate earning significant revenues until such time that we have fully developed our investment strategy and launched sales of our dHydronator® product.

Operating Income (Loss)

Table of Contents

Our loss from operations decreased by $20,719,782 during the nine months ended April 30, 2020, compared to an operating loss of $21,798,057 in the same period in 2019. The following table presents operating expenses for the nine-month periods in 2020 and 2019:

	Nine Months Ended April 30,				Change
	2020		2019		Amount			Percentage
Professional fees	$	275,272	$	90,836	$	184,436			203	%
Consulting fees		498,563		19,093,383		(18,594,820	)		(97	)%
Payroll expense		142,812		88,074		54,738			62	%
General and administrative expenses		145,640		76,667		68,973			90	%
Impairment expense		-		2,429,981		(2,429,981	)		100	%
Depreciation and amortization		15,988		19,116		(3,128	)		(16	)%
Total operating expenses	$	1,078,275	$	21,798,057	$	(20,719,782	)		95	%

We realized a decrease of $18,594,820 in consulting fees during the nine months ended April 30, 2020, as compared to the same period in 2019, primarily due to a decrease in stock-based compensation. We realized an increase of $68,973 in general and administrative expenses during the nine months ended April 30, 2020, as compared to the same period in 2019, primarily due to an increase in online marketing expenses. We realized an increase of $184,436 in professional fees during the nine months ended April 30, 2020, as compared to the same period in 2019, primarily due to an increase in professionals working to develop our products. We realized a decrease of $2,429,981 in impairment expense during the nine months ended April 30, 2020, as compared to the same period in 2019, as no events occurred that would trigger an impairment in the current period.

Other Income (Expense)

The following table presents other income and expenses for the nine months ended April 30, 2020 and 2019:

	Nine months ended April 30,						Change
	2020			2019			Amount			Percentage
Gain/(loss) on change in derivative liability	$	(673,148	)	$	(4,051,115	)	$	3,377,967			(83	)%
Gain/(loss) on settlement of debts		(165,000	)		(37,500	)		(127,500	)		340	%
Interest Expense		(356,152	)		(226,694	)		(129,458	)		(57	)%
Total other income (expense)	$	(1,194,300	)	$	(4,315,309	)	$	3,121,009			(72	)%

Gain on change in derivative liability decreased by $3,377,967 during the nine months ended April 30, 2020, 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. Interest expense increased by $129,458 during the nine months ended April 30, 2020, as compared to the same period in 2019, due to an increase in loans, and convertible notes.

Net Income (loss)

Net loss decreased to $(2,272,575) during the nine months ended April 30, 2020, from a net loss of $(26,113,366) in the same period 2019.

Table of Contents

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, 2020, and July 31, 2019:

	April 30,			July 31,			Change
	2020			2019			Amount			Percentage
Cash and cash equivalents	$	16,895		$	317,551		$	(300,656	)		(95	)%

Current assets	$	16,895		$	520,022		$	(288,441	)		(55	)%
Current liabilities		2,406,127			1,269,428			1,136,699			90	%
Working capital	$	(2,389,232	)	$	(811,627	)	$	(1577,605	)		194	%

The change in working capital during the nine months ended April 30, 2020, was primarily due to a decrease in current assets of $288,441 and an increase in current liabilities of $1,136,699. Current assets decreased due to a decrease in cash and cash equivalents as of April 30, 2020. Current liabilities increased due to an increase in borrowing, which resulted in convertible notes payable, net of $226,919, notes payable of $79,833, advances from related parties of $80,697, convertible notes payable – related party, net of $99,726, derivative liability of $1,445,913, as compared to convertible notes payable, net of $152,895, advances from related parties of $104,219, convertible notes payable – related party, net of $24,658, derivative liability of $611,265 as of July 31, 2019. Cash decreased as of April 30, 2020, by $300,656 to $16,895, primarily caused by payments related to related party accounts payable, investments and other operating expenses.

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 nine months ended April 30, 2020 and 2019:

	Nine months ended April 30,						Change 2020
	2020			2019			Versus 2019
Cash Flows Used in Operating Activities	$	(350,195	)	$	(112,464	)	$	(237,731	)
Cash Flows Used in Investing Activities		(168,453	)		(1,195	)		(167,258	)
Cash Flows Provided by Financing Activities		217,992			143,034			74,958
Net increase (decrease) in Cash During Period	$	(300,656	)	$	29,375		$	(330,031	)

Table of Contents

Cash Flows from Operating Activities

We did not generate positive cash flows from operating activities for the nine months ended April 30, 2020.

For the nine months ended April 30, 2020, net cash flows used in operating activities consisted of a net loss of $2,272,575, offset by depreciation of $15,988, stock-based compensation of $438,435, debt discount amortization of $310,091 and by a loss on change in derivative liabilities of $660,968, a loss on settlement of debts of $165,000 and net increase in change of operating assets and liabilities of $331,898. For the nine months ended April 30, 2019, net cash flows used in operating activities consisted of a net loss of $26,113,366, reduced by depreciation of $19,116, debt discount amortization of $154,932, penalty based debt increase of $30,907, stock-based compensation of $19,093,205, impairment expense of $2,429,981, a loss on change in derivative liabilities of $4,051,115, loss on settlement of debts of $37,500, decrease in imputed interest of $1803, and increased by a net increase in change of operating assets and liabilities of $182,343.

Cash Flows from Investing Activities

For the nine months ended April 30, 2020, net cashflows used in investing activities consisted of purchases of short-term investments of $168,453. For the nine months ended April 30, 2019, net cashflows used in investing activities consisted of purchases of fixed assets of $1,195.

Cash Flows from Financing Activities

For the nine months ended April 30, 2020, we received $288,014 from loans, we received $24,930 from loans from related party and used $37,500 on repayment of loans and $57,452 for net repayments on related party debts. For the nine months ended April 30, 2019, we received $89,504 from loans from related party, $177,500 from convertible loans, and used $106,717 for net repayments on related party debts and $17,253 for net repayments on notes payable.

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, 2020, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Table of Contents

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 August 19, 2019, the Company received a demand for payment from Regal Consulting, LLC (“Regal”), and on January 23, 2020, Regal filed an action against the Company in the Eighth Judicial District Court, Clark County, Nevada, Case No. A-20-809041, alleging breach of the Company’s consulting agreement with Regal. The parties are negotiating a potential settlement. On or about April 3, 2020, the Company and Regal settled the matter, and the case has now been dismissed with prejudice.

ITEM 1A. RISK FACTORS.

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On February 12, 2020, a convertible note holder converted $10,656 in principal and fees into 120,000 shares of common stock at a conversion price of $0.0888 per share.

On March 26, 2020, a convertible note holder converted $8,128 in principal and fees into 160,000 shares of common stock at a conversion price of $0.0508 per share.

On March 27, 2020, the Company issued 375,000 shares in a cashless warrant exercise of the warrant held by a former convertible note holder.

On March 30, 2020, a convertible note holder converted $30,000 in principal and fees into 267,016 shares of common stock at a conversion price of $0.112353 per share.

On April 14, 2020, the Company issued 425,000 shares in a cashless warrant exercise of the warrant held by a former convertible note holder.

On April 13, 2020, a convertible note holder converted $8,400 in principal and fees into 300,000 shares of common stock at a conversion price of $0.028 per share.

On April 23, 2020, a convertible note holder converted $21,000 in principal and fees into 790,871 shares of common stock at a conversion price of $0.026553 per share.

On April 23, 2020, a convertible note holder converted $30,000 in principal and fees into 1,129,816 shares of common stock at a conversion price of $0.026553 per share. As of April 30, 2020, the shares were not issued and recorded as stock payable.

On April 29, 2020, the Company issued 425,000 shares in a cashless warrant exercise of the warrant held by a former convertible note holder.

On April 28, 2020, a convertible note holder converted $10,584 in principal and fees into 588,000 shares of common stock at a conversion price of $0.018 per share

On March 26, 2020, the Company issued 15,000 shares of Series A Preferred Stock valued at $240,000 to settle unpaid legal fees totaling approximately $75,000. The Company recorded a loss on settlement of debt of $165,000 in connection with the issuance.

The shares issued in conversion of convertible notes and upon warrant exercise were issued pursuant to the exemption from registration relying on Section 3(a)(9) of the Securities Act of 1933 as the shares were issued in exchange for other securities of the Company held by each lender, there was no additional consideration for the exchanges, and there was no remuneration for the solicitation of the exchanges. The other shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, as there was no general solicitation and the transactions did not involve a public offering.

Table of Contents

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

Number		Description

3.1		Bylaws (incorporated by reference to our Registration Statement on Form 10 filed on October 19, 2018)

3.2		Articles of Incorporation filed May 1, 2007 (incorporated by reference to our Registration Statement on Form 10 filed on October 19, 2018)

3.3		Articles of Amendment filed January 23, 2017 (incorporated by reference to our Registration Statement on Form 10 filed on October 19, 2018)

3.4		Articles of Amendment filed January 17, 2018 (incorporated by reference to our Registration Statement on Form 10 filed on October 19, 2018)

3.5		Certificate of Designation for Series A Preferred Stock filed January 24, 2017 (incorporated by reference to our Registration Statement on Form 10 filed on October 19, 2018)

3.6		Certificate of Designation for Series B Preferred Stock May 12, 2017 (incorporated by reference to our Registration Statement on Form 10 filed on October 19, 2018)

3.7		Amended Certificate of Designation for Series B Preferred Stock filed June 5, 2017 (incorporated by reference to our Registration Statement on Form 10 filed on October 19, 2018)

3.8		Articles of Amendment filed September 28, 2018 (incorporated by reference to our Registration Statement on Form 10 filed on October 19, 2018)

21.		Subsidiaries (incorporated by reference to our Registration Statement on Form 10 filed on October 19, 2018)

31.1*		Certification of CEO required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of CFO required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63

32.2*		Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63

101.INS**		XBRL Instance Document

101.SCH**		XBRL Taxonomy Extension Schema Document

101.CAL**		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**		XBRL Taxonomy Extension Label Linkbase Document

101.PRE**		XBRL Taxonomy Extension Presentation Linkbase Document

____________

* 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.

Table of Contents

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 22, 2020	By:	/s/ Brandon Romanek
		Brandon Romanek
		CEO

THC Therapeutics (CE) (USOTC:THCT)
Historical Stock Chart
Von Okt 2024 bis Nov 2024

Click Here for more THC Therapeutics (CE) Charts.

THC Therapeutics (CE) (USOTC:THCT)
Historical Stock Chart
Von Nov 2023 bis Nov 2024

Marktdaten

News

Werkzeuge

Märkte

Entdecken

Hot Features

Follow Feed

Optionen-Flow

Watchlist

THCT THC Therapeutics Inc (CE)

News Thc Therapeutics, Inc.

Kürzlich von Ihnen besucht

Unternehmen

Geschäft

Popular

App herunterladen

Trends

Toplisten

Marktdaten

News

Werkzeuge

Märkte

Entdecken

Hot Features

Follow Feed

Optionen-Flow

Watchlist

THCT THC Therapeutics Inc (CE)

News Thc Therapeutics, Inc.

Kürzlich von Ihnen besucht

Unternehmen

Geschäft

Popular

App herunterladen

BLACK FRIDAY

Sparen Sie bis zu 60%* für Euronext Level 2

1 Jahr 40%, 2 Jahre 50% und *3 Jahre 60%