The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act relating to future events or our future performance. The following discussion should be read in conjunction with our consolidated financial statements and notes to our financial statements included elsewhere in this report. This discussion contains forward-looking statements that relate to future events or our future performance. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, we cannot assure that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.





Business Overview

Since December 2018, we have focused on testing and commercializing cannabis plant cell-extraction and replication technologies under a technology license granted by Cell Science. This licensed technology uses plant cell-extraction and replication technology and related proprietary equipment, processes, and medium formulations in a commercially-sized bioreactor laboratory to produce, manufacture, and sell plant-based cannabis products-sometimes referred in the industry as cannabinoids-exclusively in North and Central America and the Caribbean for medical, food additive, and recreational uses.

During our fiscal year ended July 31, 2021, we collaborated with Cell Science, through Dr. Peter Whitten, the principal inventor of the technology and an affiliate of both Cell Science and us, to demonstrate application of the technology. In a July 2021 amendment to our license agreement with Cell Science, we altered the testing requirements and accepted the results then achieved, which required us to issue a one-year note for a one-time payment of $3.5 million, subject to specified setoffs, to obtain a fully paid license. In January 2022, we agreed to accept assignment of all rights under the lease for the facility in which the laboratory is located and all rights in all laboratory equipment and related assets used in the Efficacy Demonstration testing process in lieu of any reduction to the one-time payment note. See below and Item 13. Certain Relationships and Related Transactions, and Director Independence.


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We now propose to undertake additional work to determining the limits of the technology, maximize production efficiency, and reduce production costs, which we believe will enhance our commercialization efforts. Subject to successfully completing our ongoing work, we intend to seek to commercialize the licensed technology through joint ventures strategic partners, sublicenses, and other arrangements that may enable us to take advantage of the technical, regulatory relationships and experience, and financial resources of experienced cannabinoid production firms. We intend to authorize these third parties to incorporate the technology into production facilities they fund, build, and operate to produce medical, food additive, and recreational cannabis-related products in compliance with applicable state and federal law. We will need additional financing from external sources to begin these efforts.

During the last three fiscal years, we have not generated revenue and have devoted our limited management, technical, and financial resources to pay general and administrative expenses in order to position us to be able to commercially exploit the licensed technology after completion of the efficacy testing required to demonstrate its commercial viability, organize our corporate structure, and seek substantial amounts of additional capital required to implement our business plan.

We need additional external capital to continue operations.





Results of Operations

Years Ended July 31, 2021 and 2020

Revenues. We had no revenues during the years ended July 31, 2021 and 2020.

Consulting Fees. Consulting fees were $3,158,208 and $700,583 for the years ended July 31, 2021 and 2020, respectively, an increase of $2,457,625, or 351%, as we substantially increased ur activities in anticipation of successful demonstration of the efficacy of our licensed technology. During the year ended July 31, 2021, the Company issued 1,200,000 stock options and recognized stock-based compensation of $2,844,982 as we continued to rely on equity incentives for employees and consultants in the face of limited cash resources. As of July 31, 2021, there was $437,690 of total unrecognized stock-based compensation that is expected to be recognized over the 1-year vesting period.

Professional Fees. Professional fees were $535,361 and $281,044 for the years ended July 31, 2021 and 2020, respectively, an increase of $254,317, or 91%. Increases in professional fees period over the period resulted from our increased activities and our corresponding periodic reporting obligations under federal securities laws, and we expect this will continue.

Selling, General, and Administrative Expenses. Selling, general, and administrative expenses were $1,394,524 and $108,222 for the years ended July 31, 2021 and 2020, respectively, an increase of $1,286,302, or 1,189%. The increase period over the period is attributable to increasing activities and laboratory expenses, including costs under our office sharing agreement, license fees, insurance, equipment, staff and other related laboratory related costs, which we expect will continue.

Other Income (Expenses). We had net other expenses of $67,647 and $16,817 for the years ended July 31, 2021 and 2020, respectively, an increase of $50,830, or 302%. Other expenses incurred were comprised of interest expenses related to our notes payable to related parties. The increase in interest expenses is a result of the increase in loans and notes payable due to related parties which increased by a principal amount of $1,720,218 from July 31, 2020 to July 31, 2021. We used these borrowed funds for operating expenses.

Net Loss. We had a net loss of $5,155,740 for the year ended July 31, 2021, compared to $1,106,666 for the year ended July 31, 2020, an increase of $4,049,074, or 366%. The increase in net loss was mainly due to the increased expenses as discussed above.

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Liquidity and Capital Resources





As of July 31, 2021

As of July 31, 2021, we had cash of $46,929, compared to $19,754 as of July 31, 2020. We continue to consume working capital in the pursuit of our business plan using proceeds from loans or sales of our equity.

For the year ended July 31, 2021, cash increased by $27,175, from $19,754 on July 31, 2020 to $46,929 on July 31, 2021.

Net cash used in operating activities was $1,794,330 during the year ended July 31, 2021, with a net loss of $5,155,740, which was offset by stock-based compensation of $2,844,983, an increase in accounts payable of $449,176, and an increase in accrued liabilities of $67,251.

During the year ended July 31, 2021, we had no net cash flows from investing activities.

During the year ended July 31, 2021, financing activities provided $1,821,505 in net cash, which consisted of $265,000 in proceeds from the sale of common stock, stock and $1,720,218 in proceeds from notes payable issued to related parties, which were reduced by $163,713 paid to related parties to reduce outstanding indebtedness.





Future Capital Requirements

Our current capital resources from our private sale of common stock after July 31, 2021, will not be sufficient to fund our planned laboratory activities, continue our planned efforts to seek to commercial out licensed technology, and meet other financial requirements during the next 12 months. Our ability to continue as a going concern is contingent upon our ability to obtain capital through the sale of equity or issuance of debt and, ultimately, to attain profitable operations. We expect that we will continue to rely on debt and equity financing from external sources, including related parties. We cannot assure that we will be able to successfully complete any of these activities.

We are presently seeking debt and equity financing to fund the $3.5 million One-time Payment to Cell Science due January 2023. We cannot assure, however, that any such financings will be available, or will otherwise be made on terms acceptable, to us. Any transaction involving the issuance of common stock, or securities convertible into common stock, would result in dilution, possibly substantial, to our existing security holders. In addition, as of July 31, 2021, we owed OZ Corporation about $2,012,770 for related-party advances and accrued interest.

We estimate that we will require approximately $8.5 million in external capital to fund our activities during the next 12 months. This consists of $1.1 million and $1.4 million during the next twelve months for our planned laboratory work to improve and customize our licensed processes. The actual amount of work completed will depend on the amount of capital available for those expenditures. Reductions in available capital would correspondingly delay and disrupt laboratory plans and, in turn, the commencement of our commercialization program that we anticipate will lead to recurring revenue. In addition to the above, we expect that operating capital for planned regular, non-laboratory corporate operations with require between approximately $5.8 million and $6.2 million during the next 12 months. Less available capital will require us to implement cost-cutting measures and may delay planned activities.

To fund the above requirements, we are currently seeking between $12.0 and $15.0 million through the sale of common stock or convertible debt. We have received $1,420,000 from the sale of common stock following July 31, 2021. We have no commitments or agreements to complete the offering.

We may also seek additional debt and equity financing to fund payment of additional trade and other obligations incurred and costs of implementing our business plan. Our ability to attract debt financing will be substantially impaired by our current lack of both revenues and a robust, viable trading market for our common stock. Accordingly, any debt financing will likely be convertible to common stock, at the lender's option, at prices discounted to our stock trading price at the time of conversion, which could dilute the interests of existing stockholders. We cannot assure that any such financings will be available, or can be completed on terms acceptable,


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to us. Any transaction involving the issuance of preferred or common stock, or securities convertible into common stock, would result in dilution, possibly substantial, to our current security holders.

Management's Plan to Continue as a Going Concern

Our independent registered public accounting firm's report contains an explanatory paragraph which has expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing. In order to continue as a going concern, we will need, among other things, additional capital resources. Management's plans to obtain capital from the sale of our securities and short-term borrowings from stockholders or related parties when needed. However, management cannot provide any assurance that we will be successful in accomplishing any of our plans. Our ability to continue as a going concern is dependent upon our ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Pronouncements

Our financial statements and related public financial information are based on the application of generally accepted accounting principles in the United States ("GAAP"). GAAP requires the use of estimates, assumptions, judgments, and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues, and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures, including information regarding contingencies, risk, and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor estimates made during the preparation of our financial statements.

Financial Reporting Release No. 60, published by the SEC, recommends that all companies include a discussion of critical accounting policies used in the preparation of their financial statements.

While all these accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those that have the most substantial impact on our financial statements and require management to use a greater degree of judgment and estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause a material effect on our results of operations, financial position, or liquidity for the periods presented in our annual report.





Cash and Cash Equivalents

Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition.





Revenue Recognition

Revenue is recognized upon delivery of goods when the sales price is fixed or determinable and collectability is reasonably assured. Revenue is not recognized until persuasive evidence of an arrangement exists.





Stock-Based Compensation

We account for stock-based compensation under Accounting Standards Codification Topic 718, "Compensation-Stock Compensation," using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity


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exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments.





Advertising

Advertising costs that are not material for the periods presented are expensed as incurred.

Basic and Fully Diluted Net Loss per Share

Basic net loss per common share is based on the weighted average number of shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted average number of common shares plus dilutive common share equivalents outstanding during the period. There are no common stock equivalents as of July 31, 2021 and 2020, and for the periods presented.

Recent Accounting Pronouncements

We have evaluated recent accounting pronouncements and believe that none of them will have a material effect on our financial statements.

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