This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6
of the Securities Act of 1934, as amended, that involve substantial risks and
uncertainties. These forward-looking statements are not historical facts, but
rather are based on current expectations, estimates and projections about our
industry, our beliefs and our assumptions. Words such as "anticipate,"
"expects," "intends," "plans," "believes," "seeks" and "estimates" and
variations of these words and similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of future
performance and are subject to risks, uncertainties and other factors, some of
which are beyond our control and difficult to predict and could cause actual
results to differ materially from those expressed or forecasted in the
forward-looking statements. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this Form 10-K.
Investors should carefully consider all of such risks before making an
investment decision with respect to the Company's stock. The following
discussion and analysis should be read in conjunction with our consolidated
financial statements and summary of selected financial data for THC
Therapeutics, Inc. Such discussion represents only the best present assessment
from our Management.
Overview
THC Therapeutics, Inc. (the "Company"), was incorporated in the State of Nevada
on May 1, 2007, as Fairytale Ventures, Inc., and later changed its name to
Aviation Surveillance Systems, Inc. and Harmonic Energy, Inc. On January 23,
2017, the Company changed its name to THC Therapeutics, Inc. THC Therapeutics,
Inc., together with its subsidiaries, is collectively referred to herein as the
"Company," and "THC Therapeutics."
The Company is focused on developing a sanitizing herb dryer, the dHydronator®,
which has been specifically designed for the drying and sanitizing (i.e.,
reducing the bacterial count) of freshly harvested cannabis, and other herbs,
flowers, and tea leaves.
Corporate History
THC Therapeutics, Inc., was incorporated in the State of Nevada on May 1, 2007,
as Fairytale Ventures, Inc., and later changed its name to Aviation Surveillance
Systems, Inc. and Harmonic Energy, Inc. On January 23, 2017, the Company changed
its name to THC Therapeutics, Inc. On May 30, 2017, the Company formed Genesis
Float Spa LLC, a wholly-owned subsidiary, to market its float spa assets
purchased for wellness centers. On January 17, 2018, the Company changed its
name to Millennium BlockChain Inc. On September 28, 2018, the Company changed
its name back to THC Therapeutics, Inc.
The Company's fiscal year end is July 31st, its telephone number is (702)
602-8422, and the address of its principal executive office is 11700 W
Charleston Blvd. #73, Las Vegas, Nevada, 89135.
Description of Business
The Company is focused on operations in the wellness industry. The Company is
developing a sanitizing herb dryer, the dHydronator®, with multiple design,
function, and usage patents. This innovative, laboratory-proven product is
specifically designed for the drying and sanitizing (i.e., reducing the
bacterial count by using ultraviolet light) of freshly harvested cannabis, and
other herbs, flowers, and tea leaves. The dHydronator® can reduce moisture
content of cannabis to 10-15% in only 10-14 hours. Traditional herbal drying
times can take up to two weeks. Additionally, after the Company has launched the
dHydronator®, and depending on available funding, the Company intends to
establish a float spa facility that will allow each guest to customize their
wellness experience, at their own pace, based on their individual needs.
Wellness Operations
THC Therapeutics is focused on the wellness industry, with plans to develop a
patented herb dryer as well as an innovative float spa facility in Las Vegas,
Nevada, or southern California.
The Company is developing a sanitizing herb dryer, the dHydronator®, with
multiple design, function, and usage patents. This innovative,
laboratory-proven1 product is specifically designed for the drying and
sanitizing (i.e., reducing the bacterial count by using ultraviolet light) of
freshly harvested cannabis, and other herbs, flowers, and tea leaves. The
dHydronator® can reduce moisture content of cannabis to 10-15% in only 10-14
hours. Traditional herbal drying times can take up to two weeks. The
dHydronator® can also significantly reduce the bacterial count of the cannabis
during the drying process, but it will not eliminate all bacteria from the
cannabis or other plant materials.
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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.
[[Image Removed]]
1 Tests were conducted in 2016-2017 by independent cannabis-testing labs: first
by CannLabs on the first-generation dHydronator® prototype, and later by
Digipath Labs on the second-generation prototype. Optimal cannabis moisture
content is 8-12%. The initial testing by CannLabs showed that (i) moisture
content across five wet cannabis samples was reduced to an average moisture
content of 13.81% with a standard deviation of 4.04% after 12 hours of drying,
and 8.86% with a standard deviation of 2.25% after 16 hours of drying, and (ii)
after autoclaving cannabis flowers to ensure sterility and then spiking multiple
samples with 100 CFU of E. Coli and Salmonella bacteria and Aspergillus niger
mold, testing for the presence of the bacteria and mold by both quantitative
polymerase chain reaction (qPCR) and traditional plating methods, which testing
concluded that the dHydronator® prototype eliminated or reduced the bacteria and
mold contamination, but did not quantify the results. The subsequent testing by
Digipath Labs on the second-generation prototype covered multiple strains and
independent tests to confirm the prior findings. The strains tested were Lucy
Diamond, Cotton Candy, Blue Dream, Kings Cut, Pot of Gold and Diablo. The
optimal drying time was determined to be 10-14 hours in the first test. The
Company's proprietary sanitizing technology brought the failing TAC (total
aerobic count) from over 300,000 CFU/g down to 78,000 CFU/g (anything less than
100,000 CFU/g is considered "passing") in the second test. In the third test,
after drying 14 hours and 15.5 hours in the dHydronator® and using the Company's
proprietary sanitizing technology for a longer period than required, the
moisture content had been reduced from 80% (at 0 hours) to 10.89% (at 14 hours)
and 8.83% (at 15.5 hours), the THCA% had been reduced from 21.2% (at 0 hours) to
17.26% (at 14 hours) and 18.26% (at 15.5 hours), and the TAC had been reduced
from 210,000 CFU/g (at 0 hours) to 1,500 CFU/g (at 14 hours) and 500 CFU/g (at
15.5 hours). In the fourth experiment, after 12 hours and 15.5 hours of drying
in the dHydronator® and using the proprietary sanitizing technology for a longer
period than required, the moisture content had reduced from 80% to 12.00% (at 12
hours) and 7.44% (at 15.5 hours), the THCA% had been reduced from 21.2% to
20.08% (at 12 hours) and 19.43% (at 15.5 hours), and the TAC had been reduced
from 190,000 CFU/g to 51,000 CFU/g (at 12 hours) and 2,300 CFU/g (at 15.5
hours). After 14 hours of drying, the moisture content had been reduced to
8.15%, the THCA% had been reduced to 19.82%, and the TAC had been reduced to
21,000 CFU/g. In the fifth test, prior moisture and THCA% results were tested,
but this time using the Company's proprietary sanitizing technology for a much
shorter time period, using two samples of a different cannabis strain, and
testing the expanded cannabinoid profile data of each sample, and after 12 hours
of drying two different samples, moisture content for the two samples decreased
from 74% and 74% to 9.17% and 9.90%, respectively, and THCA% increased from
14.45% and 14.94% before drying to 16.81% and 17.2%, respectively, after 12
hours of drying. Test six was a test of the same strain as test five but using a
different lot of plant material, and moisture content decreased from 81% to
11.5% after 12 hours of drying, while TCHA% increased from 21.28% to 22.6% after
12 hours of drying. The seventh through ninth tests confirmed prior results.
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More specifically, once we have at least $2,000,000 in in available cash flow or
funds from other operations and if we receive the patent, we intend to engage in
further development efforts as follows: (i) finalizing case design, with an
estimated tooling expense of approximately $300,000-$500,000; manufacturing
pre-production units for field testing and presentation to potential partners
and distributors, with an estimated expense of $250,000; (iii) hiring a
subject-matter expert and consultants or employees in the home herb garden and
legal cannabis marketplace to manage the development and sales of herb dryer,
with an estimated expense of $400,000 for 12 months; (iv) engaging in further
detailed laboratory of our herb drying with respect to cannabis plants and home
herb garden plants, with an estimated expense of $50,000 to $100,000 for 12
months; (v) establishing a relationship with a market research and/or marketing
company to explore creative strategies, advertising concepts, and consumer
opinion, explore applications of our intellectual property in the existing
wholesale and retail distribution channels for home herb, garden products and
legal cannabis markets, and determine the best path for sales, distribution and
licensing of our intellectual property, with an estimated expense of $1,000,000
for 12 months.
Additionally, on May 12, 2017, the Company entered into an asset purchase
agreement with a third party under which it acquired four (4) float spa units
and associated equipment. With the acquisition of these assets, the Company
intends to establish a float spa facility that will allow each guest to
customize their wellness experience, at their own pace, based on their
individual needs. Once we have approximately $500,000-$1,000,000 in available
cash flow or funds from other operations, and after the launch of our
dHydronator® sanitizing herb dryer, we plan to capitalize on our spa assets
purchased in 2017 by (i) leasing a 2,500 to 5,000 square foot facility in Nevada
or California, to be built out as needed (and with the size of the facility
dependent on available capital); (ii) obtaining necessary licenses and permits,
(iii) purchasing inventory, equipment, furnishings and supplies, including
inventory, fixtures, furnishings and equipment for an oxygen bar and a
Kampuchea, juice and tea Bar, refrigeration and storage equipment, point of sale
computers and tablets, digital monitors, signage and display materials, and
other suppliers; (iv) hiring spa management personnel including a manager,
assistant manager and two spa attendants; (v) hiring marketing and sales
consultants, and (vi) launching a marketing campaign to include internet lead
services, Groupon and social networking.
Competition
There are a number of commercial herb dryers sold by competitors, including
Yofumo Technologies, which are already commercially available, and which have
significant market share. As to our float spa plans, we believe True Rest Float
Spa, which has over 20 spa locations across the country, is our primary national
competitor, and there are numerous locally owned float spas throughout the
country that would considered competitors with our spa operations. There is no
assurance that we will be able to compete effectively with any of these
competitors.
Market Opportunity
The Company's herb dryer, the dHydronator®, safely lowers moisture content and
sanitizes without harm to the integrity of the plant. Our test results have been
proven to dry cannabis in less than 14 hours verses up to 14 days using
traditional drying methods. Test results indicate the removal of many surface
germs and bacteria including powder mold, dust mites and spider mites from
herbs, plants, the surface of glass or ceramic herbal tea accessories, and any
other object that fits safely in the drying chamber. Therefore, we believe that
our product will be attractive to the cannabis and home herb and garden product
markets.
With regard to floatation therapy, the sensory deprivation consumer typically
ranges in age from eighteen to eighty. Floatation therapy is a service that is
unisex in its appeal and attracts many. As many consumers seek natural
alternative therapies for the relief from pain, stress and sleep disorders that
affect a significant percentage of the population, we believe that our planned
floatation therapy spa facilities will be attractive to these consumers.
Marketing Strategy
We plan to attend regional cannabis-related trade shows and offer field testing
to legal cannabis growers and suppliers in the United States and Canada
initially, and throughout the world once the technology has been adopted in the
regional market. We also plan to establish a relationship with a market research
and marketing company to explore creative strategies, advertising concepts,
consumer opinion, existing distribution and sales channels and potential
licensing of our intellectual property, to determine the best path for sales and
distribution. We also intend to hire subject matter expert consultants or
employees in the legal cannabis and home herb marketplace to manage the
development and sales of our products. Once our marketing experts identify an
herbal or commercial agriculture niche or venue to enter or solicit, we will
market to distributors and retailers via trade shows and direct contact.
With regard to our spa plans, we intend to launch internet, Groupon and social
networking campaigns offering coupons and membership plans for floatation
therapy, and our planned oxygen bar and Kampuchea, juice and tea bar. We plan to
invite local TV and Radio personalities to tour our facilities, and we plan to
offer local healthcare and rehabilitation service providers and non-competitive
spa owners and managers a private tour of our spa facilities.
Customers
Due to the nature of its business and its focus on development of its
patent-pending herb dryer, the Company does not currently have any customers.
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Patent, Trademark, License & Franchise Restrictions and Contractual Obligations
& Concessions
The Company has acquired the exclusive intellectual property rights to the
dHydronator® sanitizing plant dryer with improved convection flow from the
Company's CEO and Director, Brandon Romanek. Mr. Romanek's father irrevocably
assigned those intellectual property rights to Mr. Romanek in 2016. A trademark
application for the mark "dHyrdonator" has been filed (serial no. 86874611), and
a patent application was filed with the United States Patent and Trademark
Office ("USPTO"), docket number 5503.101 (application nos. 15/467,722 and
62/312,327), for 20 separate herb dryer design, function, and usage patents. On
or about July 20, 2018, the Company's patent counsel received a Notification of
Allowance from the USPTO, notifying the Company that the USPTO would be allowing
all 20 claims, and on or about November 20, 2018, the USPTO granted the final
patent (patent no. 10,132,56), the Company was subsequently notified of the
patent grant, and the patent has been recorded with the USPTO as being assigned
to the Company.
Governmental Regulations
We will be governed by government laws and regulations governing spas. We do not
believe the dHydronator® will be subject to regulation by the U.S. Food and Drug
Administration or any other government agency (other than pursuant to general
laws governing truth in advertising or similar laws under the purview of the
Federal Trade Commission). We believe that we are currently in compliance with
all laws which govern our operations and have no current liabilities thereunder.
Our intent is to maintain strict compliance with all relevant laws, rules and
regulations.
Employees
As of January 31, 2021, the Company had three employees.
Reports to Security Holders
The Company intends to furnish its stockholders with annual reports containing
consolidated financial statements audited by its independent registered public
accounting firm and to make available quarterly reports containing unaudited
consolidated financial statements for each of the first three quarters of each
year. The Company files Quarterly Reports on Form 10-Q, Annual Reports on Form
10-K and Current Reports on Form 8-K with the Securities and Exchange Commission
in order to meet its timely and continuous disclosure requirements. The Company
may also file additional documents with the Commission if those documents become
necessary in the course of its operations.
The public may read and copy any materials that the Company files with the SEC
at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549.
The public may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. The site address is
www.sec.gov.
Available Information
All reports of the Company filed with the SEC are available free of charge
through the SEC's website at www.sec.gov. In addition, the public may read and
copy materials filed by the Company at the SEC's Public Reference Room located
at 100 F Street, N.E., Washington, D.C. 20549. The public may also obtain
additional information on the operation of the Public Reference Room by calling
the Commission at 1-800-SEC-0330.
Results of Operations
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the financial statements and notes
thereto for the three months ended January 31, 2021, and related management
discussion herein.
Our financial statements are stated in U.S. Dollars and are prepared in
accordance with generally accepted accounting principles of the United States
("GAAP").
Going Concern Qualification
Several conditions and events cast substantial doubt about the Company's ability
to continue as a going concern. The Company has incurred cumulative net losses
of $34,716,365 since its inception and requires capital for its contemplated
operational and marketing activities to take place. The Company's ability to
raise additional capital through the future issuances of common stock is
unknown. The obtainment of additional financing, the successful development of
the Company's contemplated plan of operations, and its transition, ultimately,
to the attainment of profitable operations are necessary for the Company to
continue operations. The ability to successfully resolve these factors raise
substantial doubt about the Company's ability to continue as a going concern.
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For the Three Months Ended January 31, 2021 and 2020:
Our operating results for the three months ended January 31, 2021 and 2020, and
the changes between those periods for the respective items are summarized as
follows:
Three months ended
January 31, Change
2021 2020 Amount Percentage
Operating loss $ (327,909 ) $ (394,947 ) $ (67,038 ) (17 %)
Other expense $ (31,916 ) $ (472,092 ) $ (440,176 ) (93 %)
Net loss $ (359,825 ) $ (867,039 ) $ (507,214 ) (58 %)
Revenues
We did not earn any revenues during the three months ending January 31, 2021 and
2020, respectively. We do not anticipate earning significant revenues until such
time that we have fully developed our business strategy and launched sales of
our dHydronator® product.
Operating Income (Loss)
Our loss from operations decreased to $327,909 during the three months ending
January 31, 2021, from an operating loss of $394,947 in the comparative period
ending January 31, 2020. The following table presents operating expenses for the
three-month periods ending January 31, 2021 and 2020:
Three months ended
January 31, Change
2021 2020 Amount Percentage
Professional fees $ 89,218 $ 180,802 $ (91,584 ) (51 )%
Consulting fees 136,552 129,616 6,936 5 %
Payroll expense 55,1647 46,938 8,226 18 %
General and administrative expenses 42,849 32,083 10,766 34 %
Depreciation and amortization 4,126 5,508 (1,382 ) (25 )%
Total operating expenses $ 327,909 $ 394,947 $ (67,038 ) (17 )%
We realized a decrease of $91,584 in professional fees during the three months
ended January 31, 2021, as compared to the three months ended January 31, 2020,
primarily due to a decrease in stock-based compensation. We realized an increase
of $6,936 in consulting fees during the three months ended January 31, 2021, as
compared to the same period in the prior fiscal year, primarily due to an
increase in purchased consulting services. We realized an increase of $10,766 in
general and administrative expenses during the three months ended January 31,
2021, as compared to the same period in the prior fiscal year, primarily due to
an increase in travel costs.
We realized a decrease of $1,382 in depreciation expenses during the three
months ended January 31, 2021, as compared to the same period in the prior
fiscal year, due to a decrease in depreciable assets.
Other Income (Expense)
The following table presents other income and expenses for the three months
ended January 31, 2021 and 2020:
Three months ended
January 31, Change
2021 2020 Amount Percentage
Gain/(loss) on change in derivative
liability $ 58,081 $ (359,258 ) $ (417,339 ) 116 %
Interest Expense (89,997 ) (112,834 ) (22,837 ) 20 %
Total other income (expense) $ (31,916 ) $ (472,176 ) $ (440,176 93 %
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Gain on change in derivative liability decreased by $417,339 during the three
months ended January 31, 2021, as compared to the same period in the prior
fiscal year, due to change in derivative liabilities caused by fluctuations in
the price of our common stock between reporting periods. Interest expense
decreased by 22,837 during the three months ended January 31, 2021, as compared
to the same period in the prior fiscal year, due to a conversion of principal
amounts of convertible notes to common stock.
Net Income (loss)
Net loss decreased to $359,825 during the three months ended January 31, 2021,
from a net loss of $867,039 in the same period in the prior fiscal year.
Results of Operations for the six months ended January 31, 2021, compared with
the six months ended January 31, 2012
Our operating results for the six months ended January 31, 2020 and 2019, and
the changes between those periods for the respective items are summarized as
follows:
Six Months Ended
January 31, Change
2021 2020 Amount Percentage
Operating loss $ (441,956 ) $ (567,204 ) $ (125,248 ) 116 %
Other expenses $ (7,919 ) $ (445,308 ) $ (21,252 ) 93 %
Net loss $ (449,875 ) $ (1,012,512 ) $ (437,389 ) 65 %
Revenue
We did not earn any revenues during the six months ended January 31, 2020 and
2019, respectively. We do not anticipate earning significant revenues until such
time that we have fully developed our business strategy and launched sales of
our dHydronator® product.
Operating Income (Loss)
Our loss from operations decreased to $441,956 during the six months ended
January 31, 2020, compared to an operating loss of $567,204 in the comparative
period in the prior fiscal year. The following table presents operating expenses
for the six-month periods ended January 31, 2021 and 2020:
Six Months Ended
January 31, Change
2021 2020 Amount Percentage
Professional fees $ 109,521 $ 199,089 $ (89,568 ) (50 %)
Consulting fees 143,552 165,504 (22,952 ) (18 %)
Payroll expense 102,101 93,875 8,226 18 %
General and administrative (54
expenses 75,530 95,786 (17,256 ) %)
Depreciation and amortization 8,252 11,950 (3,698 ) (67 %)
Total operating expenses $ 441,956 $ 567,204 $ (125,248 ) (32 %)
We realized a decrease of $89,568 in professional fees during the six months
ended January 31, 2021, as compared to the six months ended January 31, 2020,
primarily due to a decrease in stock-based compensation. We realized a decrease
of $22,952 in consulting fees during the three months ended January 31, 2021, as
compared to the same period in the prior fiscal year, primarily due to a
decrease in purchased consulting services. We realized a decrease of $17,256 in
general and administrative expenses during the six months ended January 31,
2021, as compared to the same period the prior fiscal year, primarily due to a
decrease in travel costs.
We realized a decrease of $3,698 in depreciation expenses during the three
months ended January 31, 2021, as compared to the same period in the prior
fiscal year, due to a decrease in depreciable assets.
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Other Income (Expense)
The following table presents other income and expenses for the six months ended
January 31, 2021 and 2020:
Six months ended
January 31, Change
2021 2020 Amount Percentage
Gain/(loss) on change in
derivative liability $ 195,886 $ (220,251 ) $ (416,137 ) 116 %
Interest Expense (203,805 ) (225,057 ) (21,252 ) 19 %
Total other income (expense) $ (7,919 ) $ (445,308 ) $ (437,389 ) 93 %
Loss on change in derivative liability decreased by $416,137 during the six
months ended January 31, 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 $21,252
during the six months ended January 31, 2020, as compared to the same period in
2019, due to a conversion of principal amounts of convertible notes to common
stock.
Net Income (loss)
Net loss decreased to $449,875 during the six months ended January 31, 2021,
from a net loss of $1,012,512 in the same period 2020.
Liquidity and Capital Resources
Based upon our current financial condition, we do not have sufficient cash to
operate our business at the current level for the next twelve months. We intend
to fund operations through sales of our herb dryer and debt and/or equity
financing arrangements, which may be insufficient to fund expenditures or other
cash requirements. We plan to seek additional financing in a private equity
offering to secure funding for operations. There can be no assurance that we
will be successful in raising additional funding. If we are not able to secure
additional funding, the implementation of our business plan will be impaired.
There can be no assurance that such additional financing will be available to us
on acceptable terms or at all.
Working Capital
The following table presents our working capital position as of January 31,
2021, and July 31, 2020:
January 31, July 31, Change
2021 2020 Amount Percentage
Cash and cash equivalents $ 150,272 $ 43,239 $ 107,033 248 %
Prepaid expenses 12,927 - 12,927 100 %
Current assets $ 163,239 $ 43,239 $ 120,000 278 %
Current liabilities 1,914,735 1,863,997 50,738 3 %
Working capital $ (1,751,496 ) $ (1,820,758 ) $ (69,262 ) 4 %
The change in working capital during the three months ended January 31, 2021,
was primarily due to an increase in current assets of $120,000 and an increase
in current liabilities of $50,738. Current assets increased due to an increase
in cash resulting from debt and equity financing as of January 31, 2021. Current
liabilities increased due to an increase in borrowing, which resulted in
convertible notes payable, net of $337,615, advances from related parties of
$154,356, convertible notes payable - related party, net of $175,342, and
derivative liability of $603,854, as compared to convertible notes payable, net
of $305,110, advances from related parties of $83,660, convertible notes payable
- related party, net of $124,931, and derivative liability of $842,573 as of
July 31, 2020. Cash increased as of January 31, 2021, by $107,033 to $150,242,
primarily caused by proceeds from the sale of common stock during the three and
six months ending January 31, 2021.
Cash Flow
We fund our operations with cash received from advances from officer's and
related parties, debt, and issuances of equity.
The following tables presents our cash flow for the three months ended January
31, 2021 and 2020:
Three months ended
January 31,
2021 2020
Cash Flows Used in Operating Activities $ (236,163 ) $ (237,960 )
Cash Flows Used in Investing Activities
- (168,453 )
Cash Flows Provided by Financing Activities 343,196 118,507
Net increase (decrease) in Cash During Period $ 107,033 $ (287,906 )
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Cash Flows from Operating Activities
We did not generate positive cash flows from operating activities for the three
months ended January 31, 2021.
For the six months ended January 31, 2021, net cash flows used in operating
activities consisted of a net loss of $449,875, reduced by depreciation of
$8,252, amortization of debt discounts of $169,916, and stock-based compensation
of $108,552, offset by a gain on change in derivative liabilities of $195,886
and increased by a net increase in change of operating assets and liabilities of
$122,878. For the six months ended January 31, 2020, net cash flows used in
operating activities consisted of a net loss of $1,012,512, reduced by
depreciation of $11,950, amortization of debt discounts of $193,110, stock-based
compensation of $251,625, and a loss on change in derivative liabilities of
$215,751, and increased by a net increase in change of operating assets and
liabilities of $102,116.
Cash Flows from Investing Activities
For the six months ended January 31, 2021, no cashflows were used in investing
activities. For the three months ended January 31, 2020, net cashflows used in
investing activities consisted of purchases of other assets of $168,453.
Cash Flows from Financing Activities
For the six months ended January 31, 2021, we received $82,587 from loans from
related parties, and used $11,891 for net repayments on related party loans; we
also received $297,500 from the sale of common stock and made a $25,000 payment
on a convertible loan. For the three months ended January 31, 2020, we received
$152,333 from notes payable, we received $20,565 from loans from related parties
and used $54,391 for net repayments on related party debts.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on the Company's financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that are
material to investors.
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THC THERAPEUTICS, INC. 