RESULTS OF OPERATIONS
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
We were organized in Nevada on April 24, 2008, under the name Planet Resources,
Corp., to reprocess mine tailings from previous mining operations. We were not
successful in implementing this business plan. Various alternatives were
considered to ensure our viability and solvency, but we had no activities
between April 2011 and June 2018. In order to revive our company, a receiver was
appointed in a Nevada state court proceeding in August 2015. On May 15, 2018, we
privately sold 335,000 shares of restricted common stock, which constituted
about 56% of our issued common stock, at $1.00 per share to OZ Corporation,
which appointed new management and directors. We were released from receivership
in July 2018.
Following the above change in control, we embarked on a new business plan to
license and commercialize cell-extraction and replication technologies,
primarily for medical products for pain relief and insomnia.
Following the above change in control, we embarked on a new business plan to
license and commercialize cell-extraction and replication technologies,
primarily for medical products for pain relief and insomnia. These efforts lead
to our Amended Restated License for cell-extraction and replication technology
and related proprietary equipment, processes, and medium formulations to be used
in a commercially-sized bioreactor laboratory to produce, manufacture, and sell
cannabis-related byproducts-sometimes referred in the industry as
cannabinoids-exclusively in North and Central America and the Caribbean for
medical, food additive, and recreational uses. In consideration of the grant of
this license, we agreed to issue 210,000,000 shares of our common stock to Cell
Science.
Since entering into the Amended Restated License, 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.
Results of Operations
Following is management's discussion of the relevant items affecting results of
operations for the three and six months ended January 31, 2021 and 2020.
Revenues. We generated no net revenues during the three and six months ended
January 31, 2021 and 2020. We do not expect to generate revenues until the
Efficacy Demonstration is successfully completed and we launch our proposed
sublicensing program.
Consulting Fees. Consulting fees were $786,898 and $3,414 for the three months
ended January 31, 2021 and 2020, respectively. Consulting fees were $1,721,002
and $6,085 for the six months ended January 31, 2021 and 2020, respectively.
During the six months ended January 31, 2021, we issued 1,200,000 stock
options. We recognized stock-based compensation of $1,531,914 for the six
months ended January 31, 2021. As of January 31, 2021, there was $1,750,759 of
total unrecognized stock-based compensation that is expected to be recognized
over the 1-year vesting period. Other consulting fees incurred during the six
months ended January 31, 2021 were associated with the Amended Restated License
with Cell Science as described above.
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Professional Fees. Professional fees were $101,817 and $53,372 for the three
months ended January 31, 2021 and 2020, respectively. Professional fees were
$237,348 and $82,035 for the six months ended January 31, 2021 and 2020,
respectively. Legal fees have increased due to the Amended Restated License
with Cell Science as described above.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $287,061 and $13,652 for the three months ended
January 31, 2021 and 2020, respectively. Selling, general and administrative
expenses were $492,604 and $14,625 for the six months ended January 31, 2021 and
2020, respectively. The increase in SG&A expenses is a result of an increase in
our operations and increased laboratory expenses as a result of the Amended
Restated License with Cell Science.
Other Income (Expenses). We had net other expenses of $13,935 and $3,043 for the
three months ended January 31, 2021 and 2020, respectively. We had net other
expenses of $20,525 and $5,468 for the six months ended January 31, 2021 and
2020, respectively. Other expenses incurred were comprised of interest expenses
related to our notes payable to related parties.
Net Loss. We had a net loss of $1,189,711 for the three months ended January 31,
2021 compared to $73,481 for the three months ended January 31, 2020. We had a
net loss of $2,471,479 for the six months ended January 31, 2021 compared to
$108,213 for the six months ended January 31, 2020. The increase in net loss was
mainly due to the stock options issued during the period and higher expenses
incurred during the six months ended January 31, 2021 associated with the
Amended Restated License.
Liquidity And Capital Resources
As of January 31, 2021, our primary source of liquidity consisted of $6,187 in
cash and cash equivalents. Since inception, we have financed our operations
through a combination of short and long-term loans, and through the private
placement of our common stock.
We do not believe that the Company's current capital resources will be
sufficient to fund its operating activity and other capital resource demands
during the next year. Our ability to continue as a going concern is contingent
upon our ability to obtain capital through the sale of equity or issuance of
debt, and ultimately attaining profitable operations. We expect that any
financing we receive will be similar to what we have heretofore received over
the previous two years to enable us to operate, which financing consists of
short-term loans from related parties at negotiated rates of interest. We cannot
assure you that we will be able to successfully complete any of these
activities.
We are presently seeking additional debt and equity financing to provide
sufficient funds for payment of obligations incurred and to fund our ongoing
business plan. We expect to generate revenue pursuant to our new business plan.
We cannot assure you, however, that any such financings will be available or
will otherwise be made on terms acceptable to us, or that our present
shareholders might suffer substantial dilution as a result.
For the six months ended January 31, 2021, cash decreased $13,567 from $19,754
at July 31, 2020 to $6,187 at January 31, 2021.
Net cash used in operating activities was $795,586 during the six months ended
January 31, 2021, with a net loss of $2,471,479, stock-based compensation of
$1,531,914, an increase in accounts payable of $123,601 and an increase in
accrued liabilities of $20,378.
During the six months ended January 31, 2021, we had no net cash flows from
investing activities.
During the six months ended January 31, 2021, we had $782,019 in net cash
provided by financing activities which consisted of proceeds from notes payable
- related parties in the of $784,019 which was offset by payments on notes
payable - related parties of $2,000.
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Critical Accounting Pronouncements
Our financial statements and related public financial information are based on
the application of generally accepted accounting principles in the United States
("GAAP"). GAAP requires the use of estimates, assumptions, judgments and
subjective interpretations of accounting principles that have an impact on the
assets, liabilities, revenues and expense amounts reported. These estimates can
also affect supplemental information contained in our external disclosures
including information regarding contingencies, risk and financial condition. We
believe our use of estimates and underlying accounting assumptions adhere to
GAAP and are consistently and conservatively applied. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ materially
from these estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our financial
statements.
Our significant accounting policies are summarized in Note 2 of our financial
statements included in our July 31, 2020 Form 10-K. While all of these
significant accounting policies impact our financial condition and results of
operations, we view certain of these policies as critical. Policies determined
to be critical are those policies that have the most significant impact on our
financial statements and require management to use a greater degree of judgment
and estimates. Actual results may differ from those estimates. Our management
believes that given current facts and circumstances, it is unlikely that
applying any other reasonable judgments or estimate methodologies would cause a
material effect on our results of operations, financial position or liquidity
for the periods presented in this report.
Recent Accounting Pronouncements
See Note 2 in the Notes to the Financial Statements. We have reviewed accounting
pronouncements issued during the past two years and have adopted any that are
applicable to the Company. We have determined that none had a material impact on
our financial position, results of operations, or cash flows for the periods
presented in this report.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, financings, or other
relationships with unconsolidated entities or other persons, also known as
"special purpose entities" ("SPE"s).
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