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 October 31, 2023

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____________ to ____________

 

Commission File Number: 000-55994

THC Therapeutics, Inc.

(Exact name of registrant as specified in its charter) 

 

Nevada

 

26-0164981

(State or other jurisdiction of incorporation)

 

(IRS Employer Identification Number)

 

11700 W Charleston Blvd. #73

Las Vegas, NV 89135

(Address of principal executive offices)

 

(833)-420-8428

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: None.

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Not applicable

 

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☐ Yes ☒ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☐ Yes ☒ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated Filer

Smaller reporting company

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐ 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No

 

As of July 23, 2024, the Company had 32,746,149 shares of common stock outstanding.

 

 

 

 

THC THERAPEUTICS INC.

INDEX

 

 

 

 

Page

 

PART I. FINANCIAL INFORMATION

 

3

 

 

 

 

 

Item 1.

Financial Statements

 

3

 

 

Consolidated Balance Sheets at October 31, 2023 (unaudited), and July 31, 2023

 

3

 

 

Consolidated Statement of Operations for the three months ended October 31, 2023 and  2022 (unaudited)

 

4

 

 

Consolidated Statement of Stockholders’ Equity (deficit) for the three months ended October 31, 2023 and 2022 (unaudited)

 

5

 

 

Consolidated Statement of Cash Flows for the three months ended October 31, 2023 and 2022 (unaudited)

 

6

 

 

Notes to Financial Statements (unaudited)

 

7

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

15

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risks

 

18

 

Item 4.

Controls and Procedures

 

19

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

20

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

20

 

Item 1A.

Risk Factors

 

20

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

20

 

Item 3.

Defaults Upon Senior Securities

 

20

 

Item 4.

Mine Safety Disclosures

 

20

 

Item 5.

Other Information

 

20

 

Item 6.

Exhibits

 

21

 

 

 

 

 

 

SIGNATURES

 

23

 

 

 
2

Table of Contents

  

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

 THC THERAPEUTICS INC.

CONSOLIDATED BALANCE SHEETS

 

ASSETS

 

October 31,

2023 *(Unaudited)

 

 

July 31,

2023

 

Current assets

 

 

 

 

 

 

Cash

 

$10

 

 

$10

 

Prepaid expenses

 

 

-

 

 

 

970

 

Inventory

 

 

-

 

 

 

-

 

Total current assets

 

 

10

 

 

 

980

 

 

 

 

 

 

 

 

 

 

Intangible assets, net

 

 

11,659

 

 

 

12,010

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

11,669

 

 

 

12,990

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$2,008,793

 

 

$1,936,637

 

Accrued expenses - related party

 

 

6,032

 

 

 

5,180

 

Advances from related parties

 

 

59,917

 

 

 

59,648

 

Notes payable, net

 

 

25,000

 

 

 

25,000

 

Convertible notes payable

 

 

576,028

 

 

 

576,028

 

Convertible notes payable- related party

 

 

130,761

 

 

 

130,761

 

Derivative liability

 

 

477,456

 

 

 

489,569

 

Total current liabilities

 

 

3,283,987

 

 

 

3,222,823

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

3,283,987

 

 

 

3,222,823

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (See note 10)

 

 

100,000

 

 

 

100,000

 

 

 

 

 

 

 

 

 

 

Stockholders' deficit

 

 

 

 

 

 

 

 

Preferred stock; $0.001 par value; 10,000,000 shares authorized; 226,300 and 226,300 series A and B and C shares issued and outstanding as of October 31, 2023 and July 31, 2023, respectively

 

 

 

 

 

 

 

 

Preferred A stock; $0.001 par value; 3,000,000 shares authorized; 226,000 and 226,000 shares issued and outstanding as of  October 31, 2023 and July 31, 2023, respectively

 

 

226

 

 

 

226

 

Preferred B stock; $0.001 par value; 16,500 shares authorized; 0 and 0 shares issued and outstanding as of October 31, 2023 and July 31, 2023, respectively

 

 

-

 

 

 

-

 

Preferred C stock; $0.001 par value; 10,000 shares authorized; 300 and 300 shares issued and outstanding as of October 31, 2023 and July 31, 2023, respectively

 

 

-

 

 

 

-

 

Common stock; $0.001 par value; 500,000,000 shares authorized; 32,746,149 and 32,746,149 shares issued and outstanding as of October 31, 2023 and July 31, 2023, respectively

 

 

32,746

 

 

 

32,746

 

Stock payable

 

 

752,228

 

 

 

752,228

 

Stock receivable

 

 

(6,902,000 )

 

 

(6,902,000 )

Additional paid-in capital

 

 

41,230,912

 

 

 

41,230,912

 

Accumulated deficit

 

 

(38,486,430 )

 

 

(38,423,945 )

Total stockholders' deficit

 

 

(3,372,318 )

 

 

(3,309,833 )

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' deficit

 

$11,669

 

 

$12,990

 

 

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

 

 
3

Table of Contents

 

THC THERAPEUTICS INC.

 CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

 

 

 

 For the Three Months Ended

 

 

 

October 31,

2023

 

 

October 31,

2022

 

 

 

 

 

 

 

 

Revenues

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

Professional fees

 

 

6,960

 

 

 

52,832

 

Consulting fees

 

 

-

 

 

 

-

 

Salaries and wages

 

 

46,937

 

 

 

46,937

 

General and administrative

 

 

1,321

 

 

 

7,793

 

Total operating expenses

 

 

55,218

 

 

 

107,562

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(55,218 )

 

 

(107,562 )

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

Gain (loss) on derivative liability

 

 

12,113

 

 

 

(2,008,933 )

Gain on settlement of debt

 

 

-

 

 

 

2,310

 

Interest expense

 

 

(19,380 )

 

 

(20,117 )

Total other expense

 

 

(7,267 )

 

 

(2,026,740 )

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$(62,485 )

 

$(2,134,302 )

 

 

 

 

 

 

 

 

 

Basic loss per common share

 

$0.00

 

 

$(0.06 )

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

32,746,149

 

 

 

32,865,868

 

 

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

 

 
4

Table of Contents

 

THC THERAPEUTICS INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT

(Unaudited)

 

 

 

Preferred A Stock

 

 

Preferred B Stock

 

 

Preferred C Stock

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Stock

 

 

Stock

 

 

Accumulated

 

 

Total Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Payable

 

 

Receivable

 

 

Deficit

 

 

Deficit

 

Balance, July 31, 2023

 

 

226,000

 

 

 

226

 

 

 

-

 

 

 

-

 

 

 

300

 

 

 

-

 

 

 

32,746,149

 

 

 

32,746

 

 

 

41,230,912

 

 

 

752,228

 

 

 

(6,902,000)

 

 

(38,423,945)

 

 

(3,309,833)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(62,485)

 

 

(62,485)

Balance, October 31, 2023

 

 

226,000

 

 

 

226

 

 

 

-

 

 

 

-

 

 

 

300

 

 

 

-

 

 

 

32,746,149

 

 

 

32,746

 

 

 

41,230,912

 

 

 

752,228

 

 

 

(6,902,000)

 

 

(38,486,430)

 

 

(3,372,318)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

Balance, July 31, 2022

 

 

226,000

 

 

 

226

 

 

 

-

 

 

 

-

 

 

 

300

 

 

 

-

 

 

 

32,491,671

 

 

 

32,492

 

 

 

41,173,946

 

 

 

622,278

 

 

 

(6,902,000)

 

 

(38,036,909)

 

 

(3,109,967)

Shares issued for services

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

700,000

 

 

 

700

 

 

 

20,580

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

21,280

 

Shares cancelled

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(445,522)

 

 

(446)

 

 

446

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,134,302)

 

 

(2,134,302)

Balance, October 31, 2022

 

 

226,000

 

 

 

226

 

 

 

-

 

 

 

-

 

 

 

300

 

 

 

-

 

 

 

32,746,149

 

 

 

32,746

 

 

 

41,194,972

 

 

 

622,278

 

 

 

(6,902,000)

 

 

(40,171,211)

 

 

(5,222,989)

 

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

 

 
5

Table of Contents

 

THC THERAPEUTICS INC.  

CONSOLIDATED STATEMENT OF CASHFLOWS

(Unaudited)

 

 

 

 For the Three Months Ended

 

 

 

October 31,

2023

 

 

October 31,

2022

 

Cash Flows from Operating Activities

 

 

 

 

 

 

Net loss

 

$(62,485 )

 

$(2,134,302 )

Adjustments to reconcile net loss to net cash used by operating activities:

 

 

 

 

 

 

 

 

Loss (gain) on change in derivative liabilities

 

 

(12,113 )

 

 

2,008,933

 

Amortization of debt discount

 

 

-

 

 

 

-

 

Stock based compensation

 

 

-

 

 

 

21,280

 

Gain on settlement of debt

 

 

-

 

 

 

(2,310

Depreciation and amortization

 

 

351

 

 

 

351

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

(Increase) decrease in inventory

 

 

-

 

 

 

1,651

 

(Increase) decrease in prepaid assets

 

 

970

 

 

 

(970 )

Increase in accounts payable

 

 

72,156

 

 

 

82,781

 

Increase in accounts payable related party

 

 

852

 

 

 

1,101

 

Net cash used in operating activities

 

 

(269 )

 

 

(21,485 )

 

 

 

 

 

 

 

 

 

Cash Flows from investing

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Cash Flows provided by Financing Activities

 

 

 

 

 

 

 

 

Proceeds from related party advances

 

 

269

 

 

 

33,451

 

Payments on related party advances

 

 

-

 

 

 

(8,437 )

Net cash provided by financing activities

 

 

269

 

 

 

25,014

 

 

 

 

 

 

 

 

 

 

Net decrease in Cash

 

 

-

 

 

 

3,529

 

 

 

 

 

 

 

 

 

 

Beginning cash balance

 

 

10

 

 

 

32

 

 

 

 

 

 

 

 

 

 

Ending cash balance

 

$10

 

 

$3,561

 

 

 

 

 

 

 

 

 

 

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.

 

 
6

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 an herb while sanitizing it. The dHydronator can be used to dry a variety of herbs, but it has been specifically tested for use with cannabis, and it can reduce the drying time for cannabis from 10-14 days to less than 14 hours.

 

History – The Company was incorporated in the State of Nevada on May 1, 2007, as Fairytale Ventures, Inc., and later changed its name to Aviation Surveillance Systems, Inc. and Harmonic Energy, Inc. On January 23, 2017, the Company changed its name to THC Therapeutics, Inc.

 

On May 30, 2017, the Company formed Genesis Float Spa LLC, a wholly-owned subsidiary, to market its float spa assets purchased for wellness centers. The Company’s health spa plans are part of the Company’s strategic focus on revenue generation and creating shareholder value.

 

On January 17, 2018, the Company changed its name to Millennium Blockchain Inc.

 

On September 28, 2018, the Company changed its name back to THC Therapeutics, Inc.

 

THC Therapeutics, Inc., together with its subsidiaries, shall herein be collectively referred to as the “Company.”

 

2. BASIS OF PRESENTATION AND GOING CONCERN

 

Basis of Presentation and Principles of Consolidation – The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Audited Financial Statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent Annual Audited Financial Statements have been omitted.

 

Going Concern – The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Management evaluated all relevant conditions and events that are reasonably known or reasonably knowable, in the aggregate, as of the date the consolidated financial statements are issued and determined that substantial doubt exists about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on the Company’s ability to generate revenues and raise capital. The Company has not generated sufficient revenues to provide sufficient cash flows to enable the Company to finance its operations internally. As of October 31, 2023, the Company has an accumulated deficit of $38,486,430. For the three months ended October 31, 2023, the Company had a net loss of $62,485, and net cash used in operations of $269. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date of filing.

 

Over the next twelve months management plans to use borrowings and security sales to mitigate the effects of cash flow deficits; however, no assurance can be given that debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue existence.

 

3. SUMMARY OF SIGNIFICANT POLICIES

 

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimates used to review the Company’s goodwill, impairments and estimations of long-lived assets, revenue recognition on percentage of completion type contracts, allowances for uncollectible accounts, inventory valuation, and the valuations of non-cash capital stock issuances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

 
7

Table of Contents

 

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 six months or less to be cash equivalents. There were $10 and $10 in cash and no cash equivalents as of October 31, 2023 and July 31, 2023, 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 October 31, 2022, the cash balance in excess of the FDIC limits was $0. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in these accounts.

 

Revenue Recognition

We recognize revenue in accordance with generally accepted accounting principles as outlined in the Financial Accounting Standard Board's (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue From Contracts with Customers, which requires that five steps be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation.

 

The company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by governmental authorities that are collected by the company from its customers (sales and use taxes, value added taxes, some excise taxes).

 

Revenues from the sale of products are recognized when title to the products are transferred to the customer and only when no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive reasonably assured payments for products sold and delivered.

 

Fair Value of Financial Instruments

The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items.

 

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The six levels of the fair value hierarchy are described below:

 

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

 

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

 

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of October 31, 2023:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

$-

 

 

$-

 

 

$-

 

 

$-

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Financial Instruments

 

$-

 

 

$-

 

 

$477,456

 

 

$477,456

 

 

As of October 31, 2022, the Company’s stock price was $0.0003, risk-free discount rate of 5.56% and volatility of 485.23%.

 

 
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Table of Contents

 

The following tables provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs for the three months ended October 31, 2023:

 

 

 

Amount

 

Balance July 31, 2023

 

$489,569

 

Derivative reclassed to additional paid in capital

 

 

-

 

Change in fair market value of derivative liabilities

 

 

(12,113)

Balance October 31, 2023

 

$477,456

 

 

Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of July 31, 2023:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Financial Instruments

 

$-

 

 

$-

 

 

$489,569

 

 

$489,569

 

 

As of July 31, 2023, the Company’s stock price was $0.003, risk-free discount rate of 5.48% and volatility of 486.12%.

 

Goodwill and Intangible Assets

The Company follows Financial Accounting Standard Board’s (FASB) Codification Topic 350-10 (“ASC 350-10”), “Intangibles – Goodwill and Other.” According to this statement, goodwill and intangible assets with indefinite lives are no longer subject to amortization, but rather an annual assessment of impairment by applying a fair-value based test. Fair value for goodwill is based on discounted cash flows, market multiples and/or appraised values as appropriate. Under ASC 350-10, the carrying value of assets are calculated at the lowest level for which there are identifiable cash flows.

 

Long-Lived Assets 

In accordance with the Financial Accounting Standards Board ("FASB") Accounts Standard Codification (ASC) ASC 360-10, "Property, Plant and Equipment," the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. During the three months ending October 31, 2023 and 2022 the Company recorded an impairment expense of $0 and $0, respectively.

 

Income Taxes

The Company accounts for its income taxes in accordance with FASB Codification Topic ASC 740-10, “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

Stock-Based Compensation

The Company follows the guidelines in FASB Codification Topic ASC 718-10 “Compensation-Stock Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to an Employee Stock Purchase Plan based on the estimated fair values.

 

Earnings (Loss) Per Share

The Company reports earnings (loss) per share in accordance with FASB Codification Topic ASC 260-10 “Earnings Per Share.” Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share have 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 $0 and $842 during the three months ended October 31, 2023 and 2022, respectively.

 

 
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4. INTANGIBLE ASSETS

 

Intangible assets consist of the following as of October 31, 2023 and July 31, 2023:

 

 

 

October 31,

2023

 

 

July 31,

2023

 

Patents and patents pending

 

$19,699

 

 

$19,699

 

Trademarks

 

 

1,275

 

 

 

1,275

 

Website and domain names

 

 

15,098

 

 

 

15,098

 

Less: accumulated depreciation

 

 

(24,413 )

 

 

(24,062 )

Intangible assets, net

 

$11,659

 

 

$12,010

 

 

Amortization expense for the three months ended October 31, 2023 and 2022, was $351 and $351 respectively.

 

5. RELATED PARTY TRANSACTIONS

 

ADVANCES FROM RELATED PARTIES

 

Advances from related parties consist of the following as of October 31, 2023:

 

 

 

Principal as of

 

 

Three months ending

October 31, 2023

 

 

Principal as of

 

 

Accrued

interest balance

As of

 

 

 

July 31,

2022

 

 

Funds

advanced

 

 

Funds

repaid

 

 

October 31,

2023

 

 

October 31,

2023

 

B. Romanek, President and CEO

 

$59,648

 

 

$269

 

 

$

 -

 

 

$59,917

 

 

$6,032

 

Shareholder Relative of our President and CEO

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

TOTAL

 

$59,648

 

 

$269

 

 

$-

 

 

$59,917

 

 

$6,032

 

 

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 three months ending October 31, 2023 and 2022, the Company accrued $46,937 due to Mr. Romanek related to this agreement. As of October 31, 2023, Mr. Romanek has allowed the Company to defer a total of $874,433 in compensation earned to date related to his employment agreements.

 

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. 

 

Further, the Company recognized a derivative liability of $387,232 and an initial loss of $187,232 based on the Black-Scholes pricing model.  As of October 31, 2023, the balance of the note was $130,761.

 

 
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Convertible Notes Payable at consists of the following:

 

 

 

October 31,

 

 

July 31,

 

 

 

2023

 

 

2023

 

 

 

 

 

 

 

 

 

On April 4, 2019, we entered into a master convertible promissory note pursuant to which we may borrow up to $250,000 in $50,000 tranches.

 

On April 19, 2019, we borrowed the first tranche of $50,000, net of debt issuance costs and investor legal fees of $7,000, resulting in the Company receiving $43,000.

 

On June 19, 2019, we borrowed the second tranche of $50,000, net of debt issuance costs and investor legal fees of $7,000, resulting in the Company receiving $43,000.

 

On January 27, 2020, we borrowed the third tranche of $35,000, net of debt issuance costs and investor legal fees of $7,000, resulting in the Company receiving $30,500.

 

On January   31, 2019, the lender converted $9,532 of principle and $500 of fees into 16,500 shares of common stock.

 

On December 12, 2020, the lender converted $9,700 of principle and $500 of fees into 34,000 shares of common stock.

 

On February 10, 2020, the lender converted $10,156 of principle and $500 of fees into 120,000 shares of common stock.

 

On March 24, 2020, the lender converted $7,628 of principle and $500 of fees into 160,000 shares of common stock.

 

On April 13, 2020, the lender converted $7,900 of principle and $500 of fees into 300,000 shares of common stock.

 

On April 28, 2020, the lender converted $5,084 of principle, $500 of fees, and $5,000 of interest into 588,000 shares of common stock.

 

On May 26, 2020, the lender converted $13,000 of principle, and $500 of fees into 750,000 shares of common stock.

 

Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on April 4, 2020. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a variable conversion price equal to the lesser of (i) the lowest Trading Price during the previous twenty-five (25) Trading Day period ending on the latest complete Trading Day prior to the date of this Note or (ii) Variable Conversion Price of 60% multiplied by the lowest Trading Price for the Common Stock during the twenty-five (25) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. 

 

The Company recorded debt discounts in the amount of $135,000 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of each tranche of the Note to be amortized utilizing the effective interest method of accretion over the term of each tranche of the Note. The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $0 during the year ended July 31, 2023.

 

Further, the Company recognized a derivative liability of $465,748 and an initial loss of $335,248 based on the Black-Scholes pricing model.

 

 

 

 

72,000

 

 

 

72,000

 

Unamortized debt discount

 

 

-

 

 

-

 

Total, net of unamortized discount

 

 

72,000

 

 

 

72,000

 

 

 
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On June 20, 2019, we entered into a convertible promissory note pursuant to which we borrowed $291,108, net of an Original Issue Discount (“OID”) of $36,108 and investor legal expenses of $5,000 resulting in the Company receiving $250,000. 

 

On January   31, 2019, the lender converted $30,000 of principle into 170,940 shares of common stock.

 

On March 27, 2020, the lender converted $30,000 of principle into 267,016 shares of common stock.

 

On April 23, 2020, the lender converted $21,000 of principle into 210,108 shares of common stock.

 

On April 23, 2020, the lender converted $30,000 of principle into 1,129,816 shares of common stock

 

On May 28, 2020, the lender converted $35,000 of principle into 1,318,118 shares of common stock

 

Interest under the convertible promissory note is 8% per annum, and the principal and all accrued but unpaid interest is due on June 20, 2020. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a conversion price equal to $8.80 (the “Lender Conversion Price”). Additionally, after 6 months from the date the Company receives note funding, the noteholder has the right to demand whole or partial redemption of amounts owed to the noteholder under the note. Payments of redemption amounts by the Company to the noteholder can be made in cash or by converting the redemption amount into shares common stock of the Company, with such conversions occurring at the lower of (i) the Lender Conversion Price, or (ii) a price equal to the 65% of the two lowest Closing Trade Prices during the ten (10) Trading Day period immediately preceding the measurement date.

 

The Company recorded a debt discount in the amount of $182,499 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. .

 

Further, the Company recognized a derivative liability of $141,391 and an initial loss of $0 based on the Black-Scholes pricing model.

 

 

 

145,108

 

 

 

145,108

 

Unamortized debt discount

 

 

-

 

 

-

 

Total, net of unamortized discount

 

 

145,108

 

 

 

145,108

 

On February 20, 2020, we entered into a convertible promissory note pursuant to which we borrowed $135,680, net of an Original Issue Discount (“OID”) of $7,680 and investor legal expenses of $2,500 resulting in the Company receiving $125,500. 

 

On September 2, 2020, the lender converted $10,000 of principle into 242,718 shares of common stock

 

On September 30, 2020, the lender converted $12,000 of principle into 476,190 shares of common stock

 

On November 14, 2020, the lender converted $20,000 of principle into 938,967 shares of common stock.

 

On December 1, 2020, the lender converted $20,000 of principle into 1,058,201 shares of common stock.

 

The fair value of the derivative liability associated with the conversions for the year ended July 31, 2021 on the date of settlement of $16,244 was recorded to additional paid in capital.

 

Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on August 15, 2021. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a conversion price equal to 71% of the average of the 2 lowest trading prices of the common stock during the 10 completed trading days prior to conversion date.

 

The Company recorded a debt discount in the amount of $135,680 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. 

 

Further, the Company recognized a derivative liability of $192,236 and an initial loss of $64,236 based on the Black-Scholes pricing model.

 

 

 

 

 

 

 

147,360

 

 

 

147,360

 

Unamortized debt discount

-

-

Total, net of unamortized discount

 

 

147,360

 

 

 

147,360

 

 

 
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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 $0 during the year ended July 31, 2023.

 

Further, the Company recognized a derivative liability of $1,500 and an initial loss of $1,500 based on the Black-Scholes pricing model.

 

 

 

 

3,000

 

 

 

3,000

 

Unamortized debt discount

 

 

-

 

 

 

-

 

Total, net of unamortized discount

 

 

3,000

 

 

 

3,000

 

On May 1, 2020, we entered into a convertible promissory note pursuant to which we borrowed $100,000, net of consulting expenses of $100,000 resulting in the Company receiving $0. During the year ended July 31, 2021, the Company made cash payments of $25,000.

Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on May 1, 2021. The note is convertible at any date after the effective date at the noteholder’s option into shares of our common stock at a conversion price equal to 65% of the average of the six lowest closing prices in the 10 trading days prior to the conversion.

The Company recorded a debt discount in the amount of $64,888 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note.  The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $0 during the year ended July 31, 2023.

 

Further, the Company recognized a derivative liability of $64,888 based on the Black-Scholes pricing model.

 

 

 

 

75,000

 

 

 

75,000

 

Unamortized debt discount

 

 

-

 

 

 

-

 

Total, net of unamortized discount

 

 

75,000

 

 

 

75,000

 

 

On May 7, 2020, we entered into a convertible promissory note pursuant to which we borrowed $66,780, net of an Original Issue Discount (“OID”) of $3,780 and investor legal expenses of $3,000 resulting in the Company receiving $60,000. 

 

Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on October 29, 2021. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a conversion price equal to 71% of the average of the 2 lowest trading prices of the common stock during the 10 completed trading days prior to conversion date.

 

The Company recorded a debt discount in the amount of $66,780 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note.  The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $0 during the year ended July 31, 2023.

 

Further, the Company recognized a derivative liability of $138,172 and an initial loss of $134,237 based on the Black-Scholes pricing model.

 

 

133,560

 

 

 

133,560

 

Unamortized debt discount

 

 

-

 

 

 

-

 

Total, net of unamortized discount

 

 

133,560

 

 

 

133,560

 

Total notes payable, net of unamortized discount

 

$

576,028

 

 

$

576,028

 

 

 
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6. COMMITMENTS AND CONTINGENCIES

 

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us, other than as set forth herein.

 

In the fall of 2021, one of the Company’s former directors and current Company business consultant, Joshua Halford, made a demand for payment of funds due to Mr. Halford under a consulting agreement, Mr. Halford and the Company have since resolved the matter, and Mr. Halford is still providing consulting and technical design services to the Company in connection with the Company’s dHyrdonator herb dryer product redesign.

 

7. STOCK OPTIONS

 

The following is a summary of option activity during the three months ended October 31, 2023.

 

 

 

Number of Options

 

 

Weighted Average Exercise Price

 

Balance, July 31, 2023

 

 

3,000,000

 

 

$0.09

 

Options granted and assumed

 

 

-

 

 

 

-

 

Options expired

 

 

-

 

 

 

-

 

Options canceled

 

 

-

 

 

 

-

 

Options exercised

 

 

-

 

 

 

-

 

Balance outstanding and exercisable, October 31, 2023

 

 

3,000,000

 

 

$0.09

 

 

8. SHAREHOLDERS’ DEFICIT

 

Overview

 

As of October 31, 2023 and July 31, 2023, the Company had 32,746,149 and 32,746,149 shares of common stock issued and outstanding, respectively.

 

As of October 31, 2023 and July 31, 2023, the Company had 226,000 and 226,000 shares of Series A Preferred Stock issued and outstanding, respectively.

 

As of October 31, 2023 and July 31, 2023, the Company had 0 and 0 shares of Series B Preferred Stock issued and outstanding, respectively.

 

As of October 31, 2023 and July 31, 2023, the Company had 300 and 300 shares of Series C Preferred Stock issued and outstanding, respectively.

 

9. SUBSEQUENT EVENTS

 

On January 31, 2024, the Company and Iliad entered into a Settlement Agreement and Mutual Release to fully settle all disputes related to the Case and the Arbitration.

 

On November 17, 2023, the Company sold 56 shares of Series C Preferred Stock for $48,920, net of $5,080 in offering cost. 

 

On March 13, 2024, the Company sold 56 shares of Series C Preferred Stock for $48,920, net of $5,080 in offering cost. 

 

 
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended, that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our industry, our beliefs and our assumptions. Words such as “anticipate,” “expects,” “intends,” “plans,” “believes,” “seeks” and “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Form 10-K. Investors should carefully consider all of such risks before making an investment decision with respect to the Company’s stock. The following discussion and analysis should be read in conjunction with our consolidated financial statements and summary of selected financial data for THC Therapeutics, Inc. Such discussion represents only the best present assessment from our Management.

 

Overview

 

THC Therapeutics, Inc. (the “Company”), was incorporated in the State of Nevada on May 1, 2007, as Fairytale Ventures, Inc., and later changed its name to Aviation Surveillance Systems, Inc. and Harmonic Energy, Inc. On January 23, 2017, the Company changed its name to THC Therapeutics, Inc. THC Therapeutics, Inc., together with its subsidiaries, is collectively referred to herein as the “Company,” and “THC Therapeutics.”

 

The Company is focused on developing a sanitizing herb dryer, the dHydronator®, which has been specifically designed for the drying and sanitizing (i.e., reducing the bacterial count) of freshly harvested cannabis, and other herbs, flowers, and tea leaves.

 

Corporate History

 

THC Therapeutics, Inc., was incorporated in the State of Nevada on May 1, 2007, as Fairytale Ventures, Inc., and later changed its name to Aviation Surveillance Systems, Inc. and Harmonic Energy, Inc. On January 23, 2017, the Company changed its name to THC Therapeutics, Inc. On 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.

 

Wellness Operations

 

THC Therapeutics is focused on the wellness industry, with plans to develop a patented herb dryer.

 

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.

 

 
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Tests were conducted in 2016-2017 by independent cannabis-testing labs: first by CannLabs on the first-generation dHydronator® prototype, and later by Digipath Labs on the second-generation prototype. Optimal cannabis moisture content is 8-12%. The initial testing by CannLabs showed that (i) moisture content across five wet cannabis samples was reduced to an average moisture content of 13.81% with a standard deviation of 4.04% after 12 hours of drying, and 8.86% with a standard deviation of 2.25% after 16 hours of drying, and (ii) after autoclaving cannabis flowers to ensure sterility and then spiking multiple samples with 100 CFU of E. Coli and Salmonella bacteria and Aspergillus niger mold, testing for the presence of the bacteria and mold by both quantitative polymerase chain reaction (qPCR) and traditional plating methods, which testing concluded that the dHydronator® prototype eliminated or reduced the bacteria and mold contamination, but did not quantify the results. The subsequent testing by Digipath Labs on the second-generation prototype covered multiple strains and independent tests to confirm the prior findings. The strains tested were Lucy Diamond, Cotton Candy, Blue Dream, Kings Cut, Pot of Gold and Diablo. The optimal drying time was determined to be 10-14 hours in the first test. The Company’s proprietary sanitizing technology brought the failing TAC (total aerobic count) from over 300,000 CFU/g down to 78,000 CFU/g (anything less than 100,000 CFU/g is considered “passing”) in the second test. In the third test, after drying 14 hours and 15.5 hours in the dHydronator® and using the Company’s proprietary sanitizing technology for a longer period than required, the moisture content had been reduced from 80% (at 0 hours) to 10.89% (at 14 hours) and 8.83% (at 15.5 hours), the THCA% had been reduced from 21.2% (at 0 hours) to 17.26% (at 14 hours) and 18.26% (at 15.5 hours), and the TAC had been reduced from 210,000 CFU/g (at 0 hours) to 1,500 CFU/g (at 14 hours) and 500 CFU/g (at 15.5 hours). In the fourth experiment, after 12 hours and 15.5 hours of drying in the dHydronator® and using the proprietary sanitizing technology for a longer period than required, the moisture content had reduced from 80% to 12.00% (at 12 hours) and 7.44% (at 15.5 hours), the THCA% had been reduced from 21.2% to 20.08% (at 12 hours) and 19.43% (at 15.5 hours), and the TAC had been reduced from 190,000 CFU/g to 51,000 CFU/g (at 12 hours) and 2,300 CFU/g (at 15.5 hours). After 14 hours of drying, the moisture content had been reduced to 8.15%, the THCA% had been reduced to 19.82%, and the TAC had been reduced to 21,000 CFU/g. In the fifth test, prior moisture and THCA% results were tested, but this time using the Company’s proprietary sanitizing technology for a much shorter time period, using two samples of a different cannabis strain, and testing the expanded cannabinoid profile data of each sample, and after 12 hours of drying two different samples, moisture content for the two samples decreased from 74% and 74% to 9.17% and 9.90%, respectively, and THCA% increased from 14.45% and 14.94% before drying to 16.81% and 17.2%, respectively, after 12 hours of drying. Test six was a test of the same strain as test five but using a different lot of plant material, and moisture content decreased from 81% to 11.5% after 12 hours of drying, while TCHA% increased from 21.28% to 22.6% after 12 hours of drying. The seventh through ninth tests confirmed prior results.

 

More specifically, once we have at least $2,000,000 in in available cash flow or funds from other operations and if we receive the patent, we intend to engage in further development efforts as follows: (i) finalizing case design, with an estimated tooling expense of approximately $300,000-$500,000; manufacturing pre-production units for field testing and presentation to potential partners and distributors, with an estimated expense of $250,000; (iii) hiring a subject-matter expert and consultants or employees in the home herb garden and legal cannabis marketplace to manage the development and sales of herb dryer, with an estimated expense of $400,000 for 12 months; (iv) engaging in further detailed laboratory of our herb drying with respect to cannabis plants and home herb garden plants, with an estimated expense of $50,000 to $100,000 for 12 months; (v) establishing a relationship with a market research and/or marketing company to explore creative strategies, advertising concepts, and consumer opinion, explore applications of our intellectual property in the existing wholesale and retail distribution channels for home herb, garden products and legal cannabis markets, and determine the best path for sales, distribution and licensing of our intellectual property, with an estimated expense of $1,000,000 for 12 months.

 

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. 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.

 

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.

 

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.

 

 
16

Table of Contents

 

Governmental Regulations

 

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 October 31, 2023, the Company has 1 employee

 

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 October 31, 2023, 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 $38,486,430 since its inception and requires capital for its contemplated operational and marketing activities to take place. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

For the Three Months Ended October 31, 2023 and 2022:

 

Our operating results for the three months ended October 31, 2023 and 2022, and the changes between those periods for the respective items are summarized as follows:

 

 

 

Three months ended

 

 

 

 

 

 

 

October 31,

 

 

Change

 

 

 

2023

 

 

2022

 

 

Amount

 

 

Percentage

 

Operating loss

 

$(55,218)

 

$(107,562)

 

$52,344

 

 

(49

%)

Other income

 

$12,113

 

 

$(2,008,933)

 

$2,072,418

 

 

(103

%)

Net income (loss)

 

$

(62,485

)

 

$

(2,134,302

)

 

$2,071,817

 

 

(97

%)

 

 
17

Table of Contents

 

Revenues

 

We did not earn any revenues during the three months ending October 31, 2023 and 2022, 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 $55,218 during the three months ending October 31, 2023, from an operating loss of $107,562 in the comparative period ending October 31, 2022. The following table presents operating expenses for the three-month periods ending October 31, 2023 and 2022:

 

 

 

Three months ended 

 

 

 

 

 

 

 

October 31, 

 

 

Change

 

 

 

2023

 

 

2022

 

 

Amount

 

 

Percentage

 

Professional fees

 

$6,960

 

 

$52,832

 

 

$(45,872 )

 

(87

%)

Consulting fees

 

 

-

 

 

 

-

 

 

 

-

 

 

 

0%

Salaries and wages

 

 

46,937

 

 

 

46,937

 

 

 

-

 

 

 

0%

General and administrative expenses

 

 

1,321

 

 

 

7,793

 

 

 

(6,472 )

 

(83

%)

Total operating expenses

 

$55,218

 

 

$107,562

 

 

$(52,344 )

 

(49

%)

 

We realized a decrease of $0 in consulting fees during the three months ended October 31, 2023, as compared to the same period in the prior fiscal year, primarily due to a no change in consulting services. We realized a decrease of $6,472 in general and administrative expenses during the three months ended October 31, 2023, as compared to the same period in the prior fiscal year, primarily due to a decrease in travel and rent costs.

 

Other Income (Expense)

 

The following table presents other income and expenses for the three months ended October 31, 2023 and 2022:

 

 

 

Three months ended

 

 

 

 

 

 

 

October 31,

 

 

Change

 

 

 

2023

 

 

2022

 

 

Amount

 

 

Percentage

 

Gain/(loss) on change in derivative liability

 

$12,113

 

 

$(2,008,933)

 

$2,021,046

 

 

 

(101 )%

Interest Expense

 

 

(19,380)

 

 

(20,117)

 

 

737

 

 

 

(4 )%

Total other income (expense)

 

$(7,267)

 

$(2,026,740)

 

$2,019,473

 

 

 

(100 )%

 

Gain on change in derivative liability increased by $2,021,046 during the three months ended October 31, 2023, 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 $737 during the three months ended October 31, 2023, as compared to the same period in the prior fiscal year, due to related party debt settled with physical silver assets.

 

Net loss

 

Net loss decreased to ($62,485) during the three months ended October 31, 2023, from a net loss of ($2,026,740) in the same period in the prior fiscal year due to the factors discussed above.

 

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.

 

 
18

Table of Contents

 

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 October 31, 2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 
19

Table of Contents

  

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us, other than as set forth herein.

 

On or about January 5, 2021, another Company lender, Iliad Research and Trading, L.P. (“Iliad”), sent a demand letter to the Company regarding the Company’s alleged default under its promissory note issued to Iliad. The Company retained litigation counsel in Nevada and responded, and Iliad sued the Company in the fall of 2021 in Utah, where Iliad is domiciled (case no. 210000342 filed in the Third Judicial Court of Salt Lake City, Utah). In December of 2021, the Company was improperly served, Iliad subsequently received a default judgment, and the Company then filed a motion to set aside the judgment, which motion was granted by the court on or about May 9, 2022. The Company intends to vigorously defend the action, and on or about May 31, 2022, removed the case to United States District Court for the District of Utah (case no. 2:22-cv-00367-DAO). The Company subsequently filed a motion to stay arbitration as demanded by Iliad and filed an Answer and Counterclaim against Iliad. The case was later remanded back to Utah state court, and the judge ordered the matter to be arbitrated. In 2023, the parties agreed to have Paul Moxley arbitrate the dispute. In the arbitration, the Company is both defending against Iliad’s claims and pursuing counterclaims against Iliad. The matter was previously scheduled for trial in February 2024, but the parties are in the process of identifying new 2024 trial dates. The Company also filed a renewed motion to stay arbitration, which is pending in Utah state court.

 

ITEM 1A. RISK FACTORS.

 

Not applicable.

 

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

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

None.

 

ITEM 5. OTHER INFORMATION.

 

None.

 

 
20

Table of Contents

 

ITEM 6. EXHIBITS.

 

Exhibit

 

Description

 

 

 

3.1

 

Bylaws (incorporated by reference to Registration Statement on Form 10 filed on October 19, 2018; File No. 000-55994; Exhibit 3.1 thereto)

 

 

 

3.2

 

Articles of Incorporation filed May 1, 2007 (incorporated by reference to Registration Statement on Form 10 filed on October 19, 2018; File No. 000-55994; Exhibit 3.2 thereto)

 

 

 

3.3

 

Articles of Amendment filed January 23, 2017 (incorporated by reference to Registration Statement on Form 10 filed on October 19, 2018; File No. 000-55994; Exhibit 3.3 thereto)

 

 

 

3.4

 

Articles of Amendment filed January 17, 2018 (incorporated by reference to Registration Statement on Form 10 filed on October 19, 2018; File No. 000-55994; Exhibit 3.4 thereto)

 

 

 

3.5

 

Certificate of Designation for Series A Preferred Stock filed January 24, 2017 (incorporated by reference to Registration Statement on Form 10 filed on October 19, 2018; File No. 000-55994; Exhibit 3.5 thereto)

 

 

 

3.6

 

Certificate of Designation for Series B Preferred Stock May 12, 2017 (incorporated by reference to Registration Statement on Form 10 filed on October 19, 2018; File No. 000-55994; Exhibit 3.6 thereto)

 

 

 

3.7

 

Amended Certificate of Designation for Series B Preferred Stock filed June 5, 2017 (incorporated by reference to Registration Statement on Form 10 filed on October 19, 2018; File No. 000-55994; Exhibit 3.7 thereto)

 

 

 

3.8

 

Articles of Amendment filed September 28, 2018 (incorporated by reference to Registration Statement on Form 10 filed on October 19, 2018; File No. 000-55994; Exhibit 3.8 thereto)

 

 

 

10.1

 

Asset Purchase Agreement with Brandon Romanek dated January 20, 2017 (incorporated by reference to Registration Statement on Form 10 filed on October 19, 2018; File No. 000-55994; Exhibit 10.1 thereto)

 

 

 

10.2

 

Patent Assignment by and between Harvey Romanek and Brandon Romanek dated November 7, 2016 (incorporated by reference to Registration Statement on Form 10/A filed on October 4, 2019; File No. 000-55994; Exhibit 10.2 thereto)

 

 

 

10.3

 

Patent Assignment Confirmation and Release by Brandon Romanek (incorporated by reference to Registration Statement on Form 10/A filed on October 4, 2019; File No. 000-55994; Exhibit 10.3 thereto)

 

 

 

10.4

 

Patent Assignment Confirmation and Release by Harvey Romanek (incorporated by reference to Registration Statement on Form 10/A filed on October 4, 2019; File No. 000-55994; Exhibit 10.4 thereto)

 

 
21

Table of Contents

 

10.6

 

Amended Employment Agreement with Brandon Romanek February 1, 2019 (incorporated by reference to Form 10/A filed on August 22, 2019, File No. 000-55994; Exhibit 10.4 thereto)

 

 

 

10.7

 

Employment Agreement with Joshua Halford dated June 15, 2019 (incorporated by reference to Registration Statement on Form 10/A filed on July 8, 2019; File No. 000-55994; Exhibit 10.5 thereto)

 

 

 

21

 

Subsidiaries (incorporated by reference to Registration Statement on Form 10 filed on October 19, 2018; File No. 000-55994; Exhibit 21 thereto)

 

 

 

31.1*

 

Certification of Principal Executive Officer and Principal Accounting Officer 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 Principal Executive Officer and Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63

 

 

 

101.INS**

 

Inline XBRL Instance Document

 

 

 

101.SCH**

 

Inline XBRL Taxonomy Extension Schema Document

 

 

 

101.CAL**

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

 

 

 

101.DEF**

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

 

 

 

101.LAB**

 

Inline XBRL Taxonomy Extension Label Linkbase Document

 

 

 

101.PRE**

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

 

 

 

104

 

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 ____________ 

*  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.

 

 
22

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: August 9, 2024

By:

/s/ Scott Cox

 

 

 

Scott Cox

 

 

 

Interim Chief Executive Officer

 

 

 
23

 

nullnullv3.24.2.u1
Cover - shares
3 Months Ended
Oct. 31, 2023
Jul. 23, 2024
Cover [Abstract]    
Entity Registrant Name THC Therapeutics, Inc.  
Entity Central Index Key 0001404935  
Document Type 10-Q  
Amendment Flag false  
Current Fiscal Year End Date --07-31  
Entity Small Business true  
Entity Shell Company false  
Entity Emerging Growth Company false  
Entity Current Reporting Status No  
Document Period End Date Oct. 31, 2023  
Entity Filer Category Non-accelerated Filer  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2024  
Entity Common Stock Shares Outstanding   32,746,149
Entity File Number 000-55994  
Entity Incorporation State Country Code NV  
Entity Tax Identification Number 26-0164981  
Entity Address Address Line 1 11700 W Charleston Blvd. #73  
Entity Address City Or Town Las Vegas  
Entity Address State Or Province NV  
Entity Address Postal Zip Code 89135  
City Area Code 833  
Local Phone Number 420-8428  
Document Quarterly Report true  
Document Transition Report false  
Entity Interactive Data Current No  
v3.24.2.u1
CONSOLIDATED BALANCE SHEETS - USD ($)
Oct. 31, 2023
Jul. 31, 2023
Current assets    
Cash $ 10 $ 10
Prepaid expenses 0 970
Inventory 0 0
Total current assets 10 980
Intangible assets, net 11,659 12,010
Total assets 11,669 12,990
Current liabilities    
Accounts payable and accrued liabilities 2,008,793 1,936,637
Accrued expenses - related party 6,032 5,180
Advances from related parties 59,917 59,648
Notes payable, net 25,000 25,000
Convertible notes payable 576,028 576,028
Convertible notes payable- related party 130,761 130,761
Derivative liability 477,456 489,569
Total current liabilities 3,283,987 3,222,823
Total liabilities 3,283,987 3,222,823
Commitments and Contingencies (See note 10) 100,000 100,000
Stockholders' deficit    
Common stock; $0.001 par value; 500,000,000 shares authorized; 32,746,149 and 32,746,149 shares issued and outstanding as of October 31, 2023 and July 31, 2023, respectively 32,746 32,746
Stock payable 752,228 752,228
Stock receivable (6,902,000) (6,902,000)
Additional paid-in capital 41,230,912 41,230,912
Accumulated deficit (38,486,430) (38,423,945)
Total stockholders' deficit (3,372,318) (3,309,833)
Total liabilities and stockholders' deficit 11,669 12,990
Series A Preferred Stock [Member]    
Stockholders' deficit    
Preferred stock, value 226 226
Series B Preferred Stock [Member]    
Stockholders' deficit    
Preferred stock, value 0 0
Series C Preferred Stock [Member]    
Stockholders' deficit    
Preferred stock, value $ 0 $ 0
v3.24.2.u1
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Oct. 31, 2023
Jul. 31, 2023
Common Stock, Shares Par Value $ 0.001 $ 0.001
Common Stock, Shares Authorized 500,000,000 500,000,000
Common Stock, Shares Issued 32,746,149 32,746,149
Common Stock, Shares Outstanding 32,746,149 32,746,149
Preferred Stock, Par Value $ 0.001 $ 0.001
Preferred Stock, Shares Authorized 10,000,000 10,000,000
Preferred Stock, Shares Issued 226,300 226,300
Preferred Stock, Shares Outstanding 226,300 226,300
Series A Preferred Stock [Member]    
Preferred Stock, Par Value $ 0.001 $ 0.001
Preferred Stock, Shares Authorized 3,000,000 30,000,000
Preferred Stock, Shares Issued 226,000 226,000
Preferred Stock, Shares Outstanding 226,000 226,000
Series B Preferred Stock [Member]    
Preferred Stock, Par Value $ 0.001 $ 0.001
Preferred Stock, Shares Authorized 16,500 16,500
Preferred Stock, Shares Issued 0 0
Preferred Stock, Shares Outstanding 0 0
Series C Preferred Stock [Member]    
Preferred Stock, Par Value $ 0.001 $ 0.001
Preferred Stock, Shares Authorized 10,000 10,000
Preferred Stock, Shares Issued 300 300
Preferred Stock, Shares Outstanding 300 300
v3.24.2.u1
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended
Oct. 31, 2023
Oct. 31, 2022
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)    
Revenues $ 0 $ 0
Cost of revenues 0 0
Gross profit 0 0
Operating expenses    
Professional fees 6,960 52,832
Consulting fees 0 0
Salaries and wages 46,937 46,937
General and administrative 1,321 7,793
Total operating expenses 55,218 107,562
Loss from operations (55,218) (107,562)
Other income (expense)    
Gain (loss) on derivative liability 12,113 (2,008,933)
Gain on settlement of debt 0 2,310
Interest expense (19,380) (20,117)
Total other expense (7,267) (2,026,740)
Net income (loss) $ (62,485) $ (2,134,302)
Basic loss per common share $ 0.00 $ (0.06)
Basic weighted average common shares outstanding 32,746,149 32,865,868
v3.24.2.u1
CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT (Unaudited) - USD ($)
Total
Preferred A Stocks [Member]
Preferred B Stock [Member]
Preferred C Stock [Member]
Common Stock [Member]
Additional Paid-In Capital [Member]
Stock Payable [Member]
Stock Receivable [Member]
Retained Earnings (Accumulated Deficit) [Member]
Balance, shares at Jul. 31, 2022   226,000   300 32,491,671        
Balance, amount at Jul. 31, 2022 $ (3,109,967) $ 226 $ 0 $ 0 $ 32,492 $ 41,173,946 $ 622,278 $ (6,902,000) $ (38,036,909)
Shares issued for services, shares         700,000        
Shares issued for services, amount 21,280 0 0 0 $ 700 20,580 0 0 0
Shares cancelled, shares         (445,522)        
Shares cancelled, amount 0 0 0 0 $ (446) 446 0 0 0
Net loss (2,134,302) $ 0 0 $ 0 $ 0 0 0 0 (2,134,302)
Balance, shares at Oct. 31, 2022   226,000   300 32,746,149        
Balance, amount at Oct. 31, 2022 (5,222,989) $ 226 0 $ 0 $ 32,746 41,194,972 622,278 (6,902,000) (40,171,211)
Balance, shares at Jul. 31, 2023   226,000   300 32,746,149        
Balance, amount at Jul. 31, 2023 (3,309,833) $ 226 0 $ 0 $ 32,746 41,230,912 752,228 (6,902,000) (38,423,945)
Net loss (62,485) $ 0 0 $ 0 $ 0 0 0 0 (62,485)
Balance, shares at Oct. 31, 2023   226,000   300 32,746,149        
Balance, amount at Oct. 31, 2023 $ (3,372,318) $ 226 $ 0 $ 0 $ 32,746 $ 41,230,912 $ 752,228 $ (6,902,000) $ (38,486,430)
v3.24.2.u1
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) - USD ($)
3 Months Ended
Oct. 31, 2023
Oct. 31, 2022
Cash Flows from Operating Activities    
Net loss $ (62,485) $ (2,134,302)
Adjustments to reconcile net loss to net cash used by operating activities:    
Loss (gain) on change in derivative liabilities (12,113) 2,008,933
Amortization of debt discount 0 0
Stock based compensation 0 21,280
Gain on settlement of debt 0 (2,310)
Depreciation and amortization 351 351
Changes in operating assets and liabilities    
(Increase) decrease in inventory 0 1,651
(Increase) decrease in prepaid assets 970 (970)
Increase in accounts payable 72,156 82,781
Increase in accounts payable related party 852 1,101
Net cash used in operating activities (269) (21,485)
Cash Flows from investing    
Net cash used in investing activities 0 0
Cash Flows provided by Financing Activities    
Proceeds from related party advances 269 33,451
Payments on related party advances 0 (8,437)
Net cash provided by financing activities 269 25,014
Net decrease in Cash 0 3,529
Beginning cash balance 10 32
Ending cash balance 10 3,561
Supplemental disclosure of cash flow information    
Cash paid for interest 0 0
Cash paid for tax $ 0 $ 0
v3.24.2.u1
DESCRIPTION OF BUSINESS AND HISTORY
3 Months Ended
Oct. 31, 2023
DESCRIPTION OF BUSINESS AND HISTORY  
DESCRIPTION OF BUSINESS AND HISTORY

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 an 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.”

v3.24.2.u1
BASIS OF PRESENTATION AND GOING CONCERN
3 Months Ended
Oct. 31, 2023
BASIS OF PRESENTATION AND GOING CONCERN  
BASIS OF PRESENTATION AND GOING CONCERN

2. BASIS OF PRESENTATION AND GOING CONCERN

 

Basis of Presentation and Principles of Consolidation – The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Audited Financial Statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent Annual Audited Financial Statements have been omitted.

 

Going Concern – The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Management evaluated all relevant conditions and events that are reasonably known or reasonably knowable, in the aggregate, as of the date the consolidated financial statements are issued and determined that substantial doubt exists about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on the Company’s ability to generate revenues and raise capital. The Company has not generated sufficient revenues to provide sufficient cash flows to enable the Company to finance its operations internally. As of October 31, 2023, the Company has an accumulated deficit of $38,486,430. For the three months ended October 31, 2023, the Company had a net loss of $62,485, and net cash used in operations of $269. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date of filing.

 

Over the next twelve months management plans to use borrowings and security sales to mitigate the effects of cash flow deficits; however, no assurance can be given that debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue existence.

v3.24.2.u1
SUMMARY OF SIGNIFICANT POLICIES
3 Months Ended
Oct. 31, 2023
SUMMARY OF SIGNIFICANT POLICIES  
SUMMARY OF SIGNIFICANT POLICIES

3. SUMMARY OF SIGNIFICANT POLICIES

 

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimates used to review the Company’s goodwill, impairments and estimations of long-lived assets, revenue recognition on percentage of completion type contracts, allowances for uncollectible accounts, inventory valuation, and the valuations of non-cash capital stock issuances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term instruments with original maturities of six months or less to be cash equivalents. There were $10 and $10 in cash and no cash equivalents as of October 31, 2023 and July 31, 2023, 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 October 31, 2022, the cash balance in excess of the FDIC limits was $0. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in these accounts.

 

Revenue Recognition

We recognize revenue in accordance with generally accepted accounting principles as outlined in the Financial Accounting Standard Board's (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue From Contracts with Customers, which requires that five steps be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation.

 

The company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by governmental authorities that are collected by the company from its customers (sales and use taxes, value added taxes, some excise taxes).

 

Revenues from the sale of products are recognized when title to the products are transferred to the customer and only when no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive reasonably assured payments for products sold and delivered.

 

Fair Value of Financial Instruments

The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items.

 

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The six levels of the fair value hierarchy are described below:

 

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

 

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

 

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of October 31, 2023:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

$-

 

 

$-

 

 

$-

 

 

$-

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Financial Instruments

 

$-

 

 

$-

 

 

$477,456

 

 

$477,456

 

 

As of October 31, 2022, the Company’s stock price was $0.0003, risk-free discount rate of 5.56% and volatility of 485.23%.

The following tables provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs for the three months ended October 31, 2023:

 

 

 

Amount

 

Balance July 31, 2023

 

$489,569

 

Derivative reclassed to additional paid in capital

 

 

-

 

Change in fair market value of derivative liabilities

 

 

(12,113)

Balance October 31, 2023

 

$477,456

 

 

Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of July 31, 2023:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Financial Instruments

 

$-

 

 

$-

 

 

$489,569

 

 

$489,569

 

 

As of July 31, 2023, the Company’s stock price was $0.003, risk-free discount rate of 5.48% and volatility of 486.12%.

 

Goodwill and Intangible Assets

The Company follows Financial Accounting Standard Board’s (FASB) Codification Topic 350-10 (“ASC 350-10”), “Intangibles – Goodwill and Other.” According to this statement, goodwill and intangible assets with indefinite lives are no longer subject to amortization, but rather an annual assessment of impairment by applying a fair-value based test. Fair value for goodwill is based on discounted cash flows, market multiples and/or appraised values as appropriate. Under ASC 350-10, the carrying value of assets are calculated at the lowest level for which there are identifiable cash flows.

 

Long-Lived Assets 

In accordance with the Financial Accounting Standards Board ("FASB") Accounts Standard Codification (ASC) ASC 360-10, "Property, Plant and Equipment," the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. During the three months ending October 31, 2023 and 2022 the Company recorded an impairment expense of $0 and $0, respectively.

 

Income Taxes

The Company accounts for its income taxes in accordance with FASB Codification Topic ASC 740-10, “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

Stock-Based Compensation

The Company follows the guidelines in FASB Codification Topic ASC 718-10 “Compensation-Stock Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to an Employee Stock Purchase Plan based on the estimated fair values.

 

Earnings (Loss) Per Share

The Company reports earnings (loss) per share in accordance with FASB Codification Topic ASC 260-10 “Earnings Per Share.” Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share have 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 $0 and $842 during the three months ended October 31, 2023 and 2022, respectively.

v3.24.2.u1
INTANGIBLE ASSETS
3 Months Ended
Oct. 31, 2023
INTANGIBLE ASSETS  
INTANGIBLE ASSETS

4. INTANGIBLE ASSETS

 

Intangible assets consist of the following as of October 31, 2023 and July 31, 2023:

 

 

 

October 31,

2023

 

 

July 31,

2023

 

Patents and patents pending

 

$19,699

 

 

$19,699

 

Trademarks

 

 

1,275

 

 

 

1,275

 

Website and domain names

 

 

15,098

 

 

 

15,098

 

Less: accumulated depreciation

 

 

(24,413 )

 

 

(24,062 )

Intangible assets, net

 

$11,659

 

 

$12,010

 

 

Amortization expense for the three months ended October 31, 2023 and 2022, was $351 and $351 respectively.

v3.24.2.u1
RELATED PARTY TRANSACTIONS
3 Months Ended
Oct. 31, 2023
RELATED PARTY TRANSACTIONS  
RELATED PARTY TRANSACTIONS

5. RELATED PARTY TRANSACTIONS

 

ADVANCES FROM RELATED PARTIES

 

Advances from related parties consist of the following as of October 31, 2023:

 

 

 

Principal as of

 

 

Three months ending

October 31, 2023

 

 

Principal as of

 

 

Accrued

interest balance

As of

 

 

 

July 31,

2022

 

 

Funds

advanced

 

 

Funds

repaid

 

 

October 31,

2023

 

 

October 31,

2023

 

B. Romanek, President and CEO

 

$59,648

 

 

$269

 

 

$

 -

 

 

$59,917

 

 

$6,032

 

Shareholder Relative of our President and CEO

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

TOTAL

 

$59,648

 

 

$269

 

 

$-

 

 

$59,917

 

 

$6,032

 

 

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 three months ending October 31, 2023 and 2022, the Company accrued $46,937 due to Mr. Romanek related to this agreement. As of October 31, 2023, Mr. Romanek has allowed the Company to defer a total of $874,433 in compensation earned to date related to his employment agreements.

 

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. 

 

Further, the Company recognized a derivative liability of $387,232 and an initial loss of $187,232 based on the Black-Scholes pricing model.  As of October 31, 2023, the balance of the note was $130,761.

Convertible Notes Payable at consists of the following:

 

 

 

October 31,

 

 

July 31,

 

 

 

2023

 

 

2023

 

 

 

 

 

 

 

 

 

On April 4, 2019, we entered into a master convertible promissory note pursuant to which we may borrow up to $250,000 in $50,000 tranches.

 

On April 19, 2019, we borrowed the first tranche of $50,000, net of debt issuance costs and investor legal fees of $7,000, resulting in the Company receiving $43,000.

 

On June 19, 2019, we borrowed the second tranche of $50,000, net of debt issuance costs and investor legal fees of $7,000, resulting in the Company receiving $43,000.

 

On January 27, 2020, we borrowed the third tranche of $35,000, net of debt issuance costs and investor legal fees of $7,000, resulting in the Company receiving $30,500.

 

On January   31, 2019, the lender converted $9,532 of principle and $500 of fees into 16,500 shares of common stock.

 

On December 12, 2020, the lender converted $9,700 of principle and $500 of fees into 34,000 shares of common stock.

 

On February 10, 2020, the lender converted $10,156 of principle and $500 of fees into 120,000 shares of common stock.

 

On March 24, 2020, the lender converted $7,628 of principle and $500 of fees into 160,000 shares of common stock.

 

On April 13, 2020, the lender converted $7,900 of principle and $500 of fees into 300,000 shares of common stock.

 

On April 28, 2020, the lender converted $5,084 of principle, $500 of fees, and $5,000 of interest into 588,000 shares of common stock.

 

On May 26, 2020, the lender converted $13,000 of principle, and $500 of fees into 750,000 shares of common stock.

 

Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on April 4, 2020. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a variable conversion price equal to the lesser of (i) the lowest Trading Price during the previous twenty-five (25) Trading Day period ending on the latest complete Trading Day prior to the date of this Note or (ii) Variable Conversion Price of 60% multiplied by the lowest Trading Price for the Common Stock during the twenty-five (25) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. 

 

The Company recorded debt discounts in the amount of $135,000 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of each tranche of the Note to be amortized utilizing the effective interest method of accretion over the term of each tranche of the Note. The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $0 during the year ended July 31, 2023.

 

Further, the Company recognized a derivative liability of $465,748 and an initial loss of $335,248 based on the Black-Scholes pricing model.

 

 

 

 

72,000

 

 

 

72,000

 

Unamortized debt discount

 

 

-

 

 

-

 

Total, net of unamortized discount

 

 

72,000

 

 

 

72,000

 

 

On June 20, 2019, we entered into a convertible promissory note pursuant to which we borrowed $291,108, net of an Original Issue Discount (“OID”) of $36,108 and investor legal expenses of $5,000 resulting in the Company receiving $250,000. 

 

On January   31, 2019, the lender converted $30,000 of principle into 170,940 shares of common stock.

 

On March 27, 2020, the lender converted $30,000 of principle into 267,016 shares of common stock.

 

On April 23, 2020, the lender converted $21,000 of principle into 210,108 shares of common stock.

 

On April 23, 2020, the lender converted $30,000 of principle into 1,129,816 shares of common stock

 

On May 28, 2020, the lender converted $35,000 of principle into 1,318,118 shares of common stock

 

Interest under the convertible promissory note is 8% per annum, and the principal and all accrued but unpaid interest is due on June 20, 2020. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a conversion price equal to $8.80 (the “Lender Conversion Price”). Additionally, after 6 months from the date the Company receives note funding, the noteholder has the right to demand whole or partial redemption of amounts owed to the noteholder under the note. Payments of redemption amounts by the Company to the noteholder can be made in cash or by converting the redemption amount into shares common stock of the Company, with such conversions occurring at the lower of (i) the Lender Conversion Price, or (ii) a price equal to the 65% of the two lowest Closing Trade Prices during the ten (10) Trading Day period immediately preceding the measurement date.

 

The Company recorded a debt discount in the amount of $182,499 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. .

 

Further, the Company recognized a derivative liability of $141,391 and an initial loss of $0 based on the Black-Scholes pricing model.

 

 

 

145,108

 

 

 

145,108

 

Unamortized debt discount

 

 

-

 

 

-

 

Total, net of unamortized discount

 

 

145,108

 

 

 

145,108

 

On February 20, 2020, we entered into a convertible promissory note pursuant to which we borrowed $135,680, net of an Original Issue Discount (“OID”) of $7,680 and investor legal expenses of $2,500 resulting in the Company receiving $125,500. 

 

On September 2, 2020, the lender converted $10,000 of principle into 242,718 shares of common stock

 

On September 30, 2020, the lender converted $12,000 of principle into 476,190 shares of common stock

 

On November 14, 2020, the lender converted $20,000 of principle into 938,967 shares of common stock.

 

On December 1, 2020, the lender converted $20,000 of principle into 1,058,201 shares of common stock.

 

The fair value of the derivative liability associated with the conversions for the year ended July 31, 2021 on the date of settlement of $16,244 was recorded to additional paid in capital.

 

Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on August 15, 2021. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a conversion price equal to 71% of the average of the 2 lowest trading prices of the common stock during the 10 completed trading days prior to conversion date.

 

The Company recorded a debt discount in the amount of $135,680 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. 

 

Further, the Company recognized a derivative liability of $192,236 and an initial loss of $64,236 based on the Black-Scholes pricing model.

 

 

 

 

 

 

 

147,360

 

 

 

147,360

 

Unamortized debt discount

-

-

Total, net of unamortized discount

 

 

147,360

 

 

 

147,360

 

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 $0 during the year ended July 31, 2023.

 

Further, the Company recognized a derivative liability of $1,500 and an initial loss of $1,500 based on the Black-Scholes pricing model.

 

 

 

 

3,000

 

 

 

3,000

 

Unamortized debt discount

 

 

-

 

 

 

-

 

Total, net of unamortized discount

 

 

3,000

 

 

 

3,000

 

On May 1, 2020, we entered into a convertible promissory note pursuant to which we borrowed $100,000, net of consulting expenses of $100,000 resulting in the Company receiving $0. During the year ended July 31, 2021, the Company made cash payments of $25,000.

Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on May 1, 2021. The note is convertible at any date after the effective date at the noteholder’s option into shares of our common stock at a conversion price equal to 65% of the average of the six lowest closing prices in the 10 trading days prior to the conversion.

The Company recorded a debt discount in the amount of $64,888 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note.  The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $0 during the year ended July 31, 2023.

 

Further, the Company recognized a derivative liability of $64,888 based on the Black-Scholes pricing model.

 

 

 

 

75,000

 

 

 

75,000

 

Unamortized debt discount

 

 

-

 

 

 

-

 

Total, net of unamortized discount

 

 

75,000

 

 

 

75,000

 

 

On May 7, 2020, we entered into a convertible promissory note pursuant to which we borrowed $66,780, net of an Original Issue Discount (“OID”) of $3,780 and investor legal expenses of $3,000 resulting in the Company receiving $60,000. 

 

Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on October 29, 2021. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a conversion price equal to 71% of the average of the 2 lowest trading prices of the common stock during the 10 completed trading days prior to conversion date.

 

The Company recorded a debt discount in the amount of $66,780 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note.  The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $0 during the year ended July 31, 2023.

 

Further, the Company recognized a derivative liability of $138,172 and an initial loss of $134,237 based on the Black-Scholes pricing model.

 

 

133,560

 

 

 

133,560

 

Unamortized debt discount

 

 

-

 

 

 

-

 

Total, net of unamortized discount

 

 

133,560

 

 

 

133,560

 

Total notes payable, net of unamortized discount

 

$

576,028

 

 

$

576,028

 

v3.24.2.u1
COMMITMENTS AND CONTINGENCIES
3 Months Ended
Oct. 31, 2023
COMMITMENTS AND CONTINGENCIES  
COMMITMENTS AND CONTINGENCIES

6. COMMITMENTS AND CONTINGENCIES

 

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us, other than as set forth herein.

 

In the fall of 2021, one of the Company’s former directors and current Company business consultant, Joshua Halford, made a demand for payment of funds due to Mr. Halford under a consulting agreement, Mr. Halford and the Company have since resolved the matter, and Mr. Halford is still providing consulting and technical design services to the Company in connection with the Company’s dHyrdonator herb dryer product redesign.

v3.24.2.u1
STOCK OPTIONS
3 Months Ended
Oct. 31, 2023
STOCK OPTIONS  
STOCK OPTIONS

7. STOCK OPTIONS

 

The following is a summary of option activity during the three months ended October 31, 2023.

 

 

 

Number of Options

 

 

Weighted Average Exercise Price

 

Balance, July 31, 2023

 

 

3,000,000

 

 

$0.09

 

Options granted and assumed

 

 

-

 

 

 

-

 

Options expired

 

 

-

 

 

 

-

 

Options canceled

 

 

-

 

 

 

-

 

Options exercised

 

 

-

 

 

 

-

 

Balance outstanding and exercisable, October 31, 2023

 

 

3,000,000

 

 

$0.09

 

v3.24.2.u1
SHAREHOLDERS DEFICIT
3 Months Ended
Oct. 31, 2023
SHAREHOLDERS DEFICIT  
SHAREHOLDERS' DEFICIT

8. SHAREHOLDERS’ DEFICIT

 

Overview

 

As of October 31, 2023 and July 31, 2023, the Company had 32,746,149 and 32,746,149 shares of common stock issued and outstanding, respectively.

 

As of October 31, 2023 and July 31, 2023, the Company had 226,000 and 226,000 shares of Series A Preferred Stock issued and outstanding, respectively.

 

As of October 31, 2023 and July 31, 2023, the Company had 0 and 0 shares of Series B Preferred Stock issued and outstanding, respectively.

 

As of October 31, 2023 and July 31, 2023, the Company had 300 and 300 shares of Series C Preferred Stock issued and outstanding, respectively.

v3.24.2.u1
SUBSEQUENT EVENTS
3 Months Ended
Oct. 31, 2023
SUBSEQUENT EVENTS  
SUBSEQUENT EVENTS

9. SUBSEQUENT EVENTS

 

On January 31, 2024, the Company and Iliad entered into a Settlement Agreement and Mutual Release to fully settle all disputes related to the Case and the Arbitration.

 

On November 17, 2023, the Company sold 56 shares of Series C Preferred Stock for $48,920, net of $5,080 in offering cost. 

 

On March 13, 2024, the Company sold 56 shares of Series C Preferred Stock for $48,920, net of $5,080 in offering cost. 

v3.24.2.u1
SUMMARY OF SIGNIFICANT POLICIES (Policies)
3 Months Ended
Oct. 31, 2023
SUMMARY OF SIGNIFICANT POLICIES  
Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimates used to review the Company’s goodwill, impairments and estimations of long-lived assets, revenue recognition on percentage of completion type contracts, allowances for uncollectible accounts, inventory valuation, and the valuations of non-cash capital stock issuances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term instruments with original maturities of six months or less to be cash equivalents. There were $10 and $10 in cash and no cash equivalents as of October 31, 2023 and July 31, 2023, 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 October 31, 2022, the cash balance in excess of the FDIC limits was $0. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in these accounts.

Revenue Recognition

We recognize revenue in accordance with generally accepted accounting principles as outlined in the Financial Accounting Standard Board's (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue From Contracts with Customers, which requires that five steps be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation.

 

The company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by governmental authorities that are collected by the company from its customers (sales and use taxes, value added taxes, some excise taxes).

 

Revenues from the sale of products are recognized when title to the products are transferred to the customer and only when no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive reasonably assured payments for products sold and delivered.

Fair Value of Financial Instruments

The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items.

 

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The six levels of the fair value hierarchy are described below:

 

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

 

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

 

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of October 31, 2023:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

$-

 

 

$-

 

 

$-

 

 

$-

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Financial Instruments

 

$-

 

 

$-

 

 

$477,456

 

 

$477,456

 

 

As of October 31, 2022, the Company’s stock price was $0.0003, risk-free discount rate of 5.56% and volatility of 485.23%.

The following tables provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs for the three months ended October 31, 2023:

 

 

 

Amount

 

Balance July 31, 2023

 

$489,569

 

Derivative reclassed to additional paid in capital

 

 

-

 

Change in fair market value of derivative liabilities

 

 

(12,113)

Balance October 31, 2023

 

$477,456

 

 

Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of July 31, 2023:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Financial Instruments

 

$-

 

 

$-

 

 

$489,569

 

 

$489,569

 

 

As of July 31, 2023, the Company’s stock price was $0.003, risk-free discount rate of 5.48% and volatility of 486.12%.

Goodwill and Intangible Assets

The Company follows Financial Accounting Standard Board’s (FASB) Codification Topic 350-10 (“ASC 350-10”), “Intangibles – Goodwill and Other.” According to this statement, goodwill and intangible assets with indefinite lives are no longer subject to amortization, but rather an annual assessment of impairment by applying a fair-value based test. Fair value for goodwill is based on discounted cash flows, market multiples and/or appraised values as appropriate. Under ASC 350-10, the carrying value of assets are calculated at the lowest level for which there are identifiable cash flows.

Long-Lived Assets

In accordance with the Financial Accounting Standards Board ("FASB") Accounts Standard Codification (ASC) ASC 360-10, "Property, Plant and Equipment," the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. During the three months ending October 31, 2023 and 2022 the Company recorded an impairment expense of $0 and $0, respectively.

Income Taxes

The Company accounts for its income taxes in accordance with FASB Codification Topic ASC 740-10, “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Stock-Based Compensation

The Company follows the guidelines in FASB Codification Topic ASC 718-10 “Compensation-Stock Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to an Employee Stock Purchase Plan based on the estimated fair values.

Earnings (Loss) Per Share

The Company reports earnings (loss) per share in accordance with FASB Codification Topic ASC 260-10 “Earnings Per Share.” Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share have 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 $0 and $842 during the three months ended October 31, 2023 and 2022, respectively.

v3.24.2.u1
SUMMARY OF SIGNIFICANT POLICIES (Table)
3 Months Ended
Oct. 31, 2023
SUMMARY OF SIGNIFICANT POLICIES  
Schedule of Fair value of Assets and Liabilities

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

$-

 

 

$-

 

 

$-

 

 

$-

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Financial Instruments

 

$-

 

 

$-

 

 

$477,456

 

 

$477,456

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Financial Instruments

 

$-

 

 

$-

 

 

$489,569

 

 

$489,569

 

Fair Value Assets And Liabilities Measured On Recurring Basis

 

 

Amount

 

Balance July 31, 2023

 

$489,569

 

Derivative reclassed to additional paid in capital

 

 

-

 

Change in fair market value of derivative liabilities

 

 

(12,113)

Balance October 31, 2023

 

$477,456

 

v3.24.2.u1
INTANGIBLE ASSETS (Tables)
3 Months Ended
Oct. 31, 2023
INTANGIBLE ASSETS  
Schedule of Intangible assets

 

 

October 31,

2023

 

 

July 31,

2023

 

Patents and patents pending

 

$19,699

 

 

$19,699

 

Trademarks

 

 

1,275

 

 

 

1,275

 

Website and domain names

 

 

15,098

 

 

 

15,098

 

Less: accumulated depreciation

 

 

(24,413 )

 

 

(24,062 )

Intangible assets, net

 

$11,659

 

 

$12,010

 

v3.24.2.u1
RELATED PARTY TRANSACTIONS (Tables)
3 Months Ended
Oct. 31, 2023
RELATED PARTY TRANSACTIONS  
Schedule Of Advances From Related Affiliate

 

 

Principal as of

 

 

Three months ending

October 31, 2023

 

 

Principal as of

 

 

Accrued

interest balance

As of

 

 

 

July 31,

2022

 

 

Funds

advanced

 

 

Funds

repaid

 

 

October 31,

2023

 

 

October 31,

2023

 

B. Romanek, President and CEO

 

$59,648

 

 

$269

 

 

$

 -

 

 

$59,917

 

 

$6,032

 

Shareholder Relative of our President and CEO

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

TOTAL

 

$59,648

 

 

$269

 

 

$-

 

 

$59,917

 

 

$6,032

 

Schedule Of Convertible Notes Payable

 

 

October 31,

 

 

July 31,

 

 

 

2023

 

 

2023

 

 

 

 

 

 

 

 

 

On April 4, 2019, we entered into a master convertible promissory note pursuant to which we may borrow up to $250,000 in $50,000 tranches.

 

On April 19, 2019, we borrowed the first tranche of $50,000, net of debt issuance costs and investor legal fees of $7,000, resulting in the Company receiving $43,000.

 

On June 19, 2019, we borrowed the second tranche of $50,000, net of debt issuance costs and investor legal fees of $7,000, resulting in the Company receiving $43,000.

 

On January 27, 2020, we borrowed the third tranche of $35,000, net of debt issuance costs and investor legal fees of $7,000, resulting in the Company receiving $30,500.

 

On January   31, 2019, the lender converted $9,532 of principle and $500 of fees into 16,500 shares of common stock.

 

On December 12, 2020, the lender converted $9,700 of principle and $500 of fees into 34,000 shares of common stock.

 

On February 10, 2020, the lender converted $10,156 of principle and $500 of fees into 120,000 shares of common stock.

 

On March 24, 2020, the lender converted $7,628 of principle and $500 of fees into 160,000 shares of common stock.

 

On April 13, 2020, the lender converted $7,900 of principle and $500 of fees into 300,000 shares of common stock.

 

On April 28, 2020, the lender converted $5,084 of principle, $500 of fees, and $5,000 of interest into 588,000 shares of common stock.

 

On May 26, 2020, the lender converted $13,000 of principle, and $500 of fees into 750,000 shares of common stock.

 

Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on April 4, 2020. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a variable conversion price equal to the lesser of (i) the lowest Trading Price during the previous twenty-five (25) Trading Day period ending on the latest complete Trading Day prior to the date of this Note or (ii) Variable Conversion Price of 60% multiplied by the lowest Trading Price for the Common Stock during the twenty-five (25) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. 

 

The Company recorded debt discounts in the amount of $135,000 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of each tranche of the Note to be amortized utilizing the effective interest method of accretion over the term of each tranche of the Note. The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $0 during the year ended July 31, 2023.

 

Further, the Company recognized a derivative liability of $465,748 and an initial loss of $335,248 based on the Black-Scholes pricing model.

 

 

 

 

72,000

 

 

 

72,000

 

Unamortized debt discount

 

 

-

 

 

-

 

Total, net of unamortized discount

 

 

72,000

 

 

 

72,000

 

 

On June 20, 2019, we entered into a convertible promissory note pursuant to which we borrowed $291,108, net of an Original Issue Discount (“OID”) of $36,108 and investor legal expenses of $5,000 resulting in the Company receiving $250,000. 

 

On January   31, 2019, the lender converted $30,000 of principle into 170,940 shares of common stock.

 

On March 27, 2020, the lender converted $30,000 of principle into 267,016 shares of common stock.

 

On April 23, 2020, the lender converted $21,000 of principle into 210,108 shares of common stock.

 

On April 23, 2020, the lender converted $30,000 of principle into 1,129,816 shares of common stock

 

On May 28, 2020, the lender converted $35,000 of principle into 1,318,118 shares of common stock

 

Interest under the convertible promissory note is 8% per annum, and the principal and all accrued but unpaid interest is due on June 20, 2020. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a conversion price equal to $8.80 (the “Lender Conversion Price”). Additionally, after 6 months from the date the Company receives note funding, the noteholder has the right to demand whole or partial redemption of amounts owed to the noteholder under the note. Payments of redemption amounts by the Company to the noteholder can be made in cash or by converting the redemption amount into shares common stock of the Company, with such conversions occurring at the lower of (i) the Lender Conversion Price, or (ii) a price equal to the 65% of the two lowest Closing Trade Prices during the ten (10) Trading Day period immediately preceding the measurement date.

 

The Company recorded a debt discount in the amount of $182,499 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. .

 

Further, the Company recognized a derivative liability of $141,391 and an initial loss of $0 based on the Black-Scholes pricing model.

 

 

 

145,108

 

 

 

145,108

 

Unamortized debt discount

 

 

-

 

 

-

 

Total, net of unamortized discount

 

 

145,108

 

 

 

145,108

 

On February 20, 2020, we entered into a convertible promissory note pursuant to which we borrowed $135,680, net of an Original Issue Discount (“OID”) of $7,680 and investor legal expenses of $2,500 resulting in the Company receiving $125,500. 

 

On September 2, 2020, the lender converted $10,000 of principle into 242,718 shares of common stock

 

On September 30, 2020, the lender converted $12,000 of principle into 476,190 shares of common stock

 

On November 14, 2020, the lender converted $20,000 of principle into 938,967 shares of common stock.

 

On December 1, 2020, the lender converted $20,000 of principle into 1,058,201 shares of common stock.

 

The fair value of the derivative liability associated with the conversions for the year ended July 31, 2021 on the date of settlement of $16,244 was recorded to additional paid in capital.

 

Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on August 15, 2021. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a conversion price equal to 71% of the average of the 2 lowest trading prices of the common stock during the 10 completed trading days prior to conversion date.

 

The Company recorded a debt discount in the amount of $135,680 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note. 

 

Further, the Company recognized a derivative liability of $192,236 and an initial loss of $64,236 based on the Black-Scholes pricing model.

 

 

 

 

 

 

 

147,360

 

 

 

147,360

 

Unamortized debt discount

-

-

Total, net of unamortized discount

 

 

147,360

 

 

 

147,360

 

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 $0 during the year ended July 31, 2023.

 

Further, the Company recognized a derivative liability of $1,500 and an initial loss of $1,500 based on the Black-Scholes pricing model.

 

 

 

 

3,000

 

 

 

3,000

 

Unamortized debt discount

 

 

-

 

 

 

-

 

Total, net of unamortized discount

 

 

3,000

 

 

 

3,000

 

On May 1, 2020, we entered into a convertible promissory note pursuant to which we borrowed $100,000, net of consulting expenses of $100,000 resulting in the Company receiving $0. During the year ended July 31, 2021, the Company made cash payments of $25,000.

Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on May 1, 2021. The note is convertible at any date after the effective date at the noteholder’s option into shares of our common stock at a conversion price equal to 65% of the average of the six lowest closing prices in the 10 trading days prior to the conversion.

The Company recorded a debt discount in the amount of $64,888 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note.  The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $0 during the year ended July 31, 2023.

 

Further, the Company recognized a derivative liability of $64,888 based on the Black-Scholes pricing model.

 

 

 

 

75,000

 

 

 

75,000

 

Unamortized debt discount

 

 

-

 

 

 

-

 

Total, net of unamortized discount

 

 

75,000

 

 

 

75,000

 

 

On May 7, 2020, we entered into a convertible promissory note pursuant to which we borrowed $66,780, net of an Original Issue Discount (“OID”) of $3,780 and investor legal expenses of $3,000 resulting in the Company receiving $60,000. 

 

Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on October 29, 2021. The note is convertible at any date after the issuance date at the noteholder’s option into shares of our common stock at a conversion price equal to 71% of the average of the 2 lowest trading prices of the common stock during the 10 completed trading days prior to conversion date.

 

The Company recorded a debt discount in the amount of $66,780 in connection with the original issuance discount, offering costs and initial valuation of the derivative liability related to the embedded conversion option of the Note to be amortized utilizing the effective interest method of accretion over the term of the Note.  The aggregate debt discount has been accreted and charged to interest expenses as a financing expense in the amount of $0 during the year ended July 31, 2023.

 

Further, the Company recognized a derivative liability of $138,172 and an initial loss of $134,237 based on the Black-Scholes pricing model.

 

 

133,560

 

 

 

133,560

 

Unamortized debt discount

 

 

-

 

 

 

-

 

Total, net of unamortized discount

 

 

133,560

 

 

 

133,560

 

Total notes payable, net of unamortized discount

 

$

576,028

 

 

$

576,028

 

v3.24.2.u1
STOCK OPTIONS (Tables)
3 Months Ended
Oct. 31, 2023
STOCK OPTIONS  
Schedule of summary of option activity

 

 

Number of Options

 

 

Weighted Average Exercise Price

 

Balance, July 31, 2023

 

 

3,000,000

 

 

$0.09

 

Options granted and assumed

 

 

-

 

 

 

-

 

Options expired

 

 

-

 

 

 

-

 

Options canceled

 

 

-

 

 

 

-

 

Options exercised

 

 

-

 

 

 

-

 

Balance outstanding and exercisable, October 31, 2023

 

 

3,000,000

 

 

$0.09

 

v3.24.2.u1
BASIS OF PRESENTATION AND GOING CONCERN (Details Narrative) - USD ($)
3 Months Ended
Oct. 31, 2023
Oct. 31, 2022
Jul. 31, 2023
BASIS OF PRESENTATION AND GOING CONCERN      
Accumulated deficit $ (38,486,430)   $ (38,423,945)
Net loss (62,485) $ (2,134,302)  
Net cash used in operating activities $ (269) $ (21,485)  
v3.24.2.u1
SUMMARY OF SIGNIFICANT POLICIES (Details ) - USD ($)
Oct. 31, 2023
Jul. 31, 2023
Assets $ 0  
Derivative Financial Instruments 477,456 $ 489,569
Level 1 [Member]    
Assets 0  
Derivative Financial Instruments 0 0
Level 2 [Member]    
Assets 0  
Derivative Financial Instruments 0 0
Level 3 [Member]    
Assets 0  
Derivative Financial Instruments $ 477,456 $ 489,569
v3.24.2.u1
SUMMARY OF SIGNIFICANT POLICIES (Details 1)
3 Months Ended
Oct. 31, 2023
USD ($)
SUMMARY OF SIGNIFICANT POLICIES  
Beginning Balance $ 489,569
Derivative reclassed to additional paid in capital 0
Change in fair market value of derivative liabilities (12,113)
Balance Ending $ 477,456
v3.24.2.u1
SUMMARY OF SIGNIFICANT POLICIES (Details Narrative) - USD ($)
3 Months Ended
Oct. 31, 2023
Oct. 31, 2022
Jul. 31, 2023
Jul. 31, 2022
SUMMARY OF SIGNIFICANT POLICIES        
Cash and Cash Equivalents $ 10 $ 3,561 $ 10 $ 32
Volatility   485.23% 486.12%  
Cash in excess of FDIC limit   $ 0    
Risk-free discount rate   5.56% 5.48%  
Stock Price   $ 0.0003 $ 0.003  
Impairment expense 0 $ 0    
Advertising expenses $ 0 $ 842    
v3.24.2.u1
INTANGIBLE ASSETS (Details) - USD ($)
Oct. 31, 2023
Jul. 31, 2023
Less: accumulated depreciation $ 24,413 $ 24,062
Intangible Assets, net 11,659 12,010
Patents and Patents Pending [Member]    
Intangible Assets, gross 19,699 19,699
Trademarks [Member]    
Intangible Assets, gross 1,275 1,275
Website And Domain Names [Member]    
Intangible Assets, gross $ 15,098 $ 15,098
v3.24.2.u1
INTANGIBLE ASSETS (Details Narrative) - USD ($)
3 Months Ended
Oct. 31, 2023
Oct. 31, 2022
INTANGIBLE ASSETS    
Amortization expense $ 351 $ 351
v3.24.2.u1
RELATED PARTY TRANSACTIONS (Details) - USD ($)
Oct. 31, 2023
Jul. 31, 2022
Principal [Member]    
B. Romanek, President and CEO $ 59,917 $ 59,648
Shareholder Relative of our President and CEO 0 0
TOTAL 59,917 $ 59,648
Funds Advance [Member]    
B. Romanek, President and CEO 269  
Shareholder Relative of our President and CEO 0  
TOTAL 269  
Funds Repaid [Member]    
B. Romanek, President and CEO 0  
Shareholder Relative of our President and CEO 0  
TOTAL 0  
Accrued Interest [Member]    
B. Romanek, President and CEO 6,032  
Shareholder Relative of our President and CEO 0  
TOTAL $ 6,032  
v3.24.2.u1
RELATED PARTY TRANSACTIONS (Details 1) - USD ($)
Oct. 31, 2023
Jul. 31, 2023
Convertible Notes Payable, Net $ 576,028 $ 576,028
Convertible Promissory Note One [Member]    
Convertible Notes Payable Current 72,000 72,000
Unamortized Debt Discount 0 0
Total, Net Of Unamortized Discount 72,000 72,000
Convertible Promissory Note Two [Member]    
Convertible Notes Payable Current 145,108 145,108
Unamortized Debt Discount 0 0
Total, Net Of Unamortized Discount 145,108 145,108
Convertible Promissory Note Three [Member]    
Convertible Notes Payable Current 147,360 147,360
Unamortized Debt Discount 0 0
Total, Net Of Unamortized Discount 147,360 147,360
Convertible Promissory Note Four [Member]    
Convertible Notes Payable Current 3,000 3,000
Unamortized Debt Discount 0 0
Total, Net Of Unamortized Discount 3,000 3,000
Convertible Promissory Note Five [Member]    
Convertible Notes Payable Current 75,000 75,000
Unamortized Debt Discount 0 0
Total, Net Of Unamortized Discount 75,000 75,000
Convertible Promissory Note Six [Member]    
Convertible Notes Payable Current 133,560 133,560
Unamortized Debt Discount 0 0
Total, Net Of Unamortized Discount $ 133,560 $ 133,560
v3.24.2.u1
RELATED PARTY TRANSACTIONS (Details Narrative)
3 Months Ended
Oct. 31, 2023
USD ($)
integer
Oct. 31, 2022
USD ($)
Balance of note $ 130,761  
Professional Fees 6,960 $ 52,832
Black Scholes Option Pricing Model [Member]    
Initial loss 187,232  
Recognized derivative liability $ 387,232  
May 1 2019 [Member]    
Advances From Related Parties Bear Interest Rate 10.00%  
Convertible Promissory Note $ 200,000  
Variable conversion rate 65.00%  
Due date May 01, 2021  
Advances due within, days | integer 10  
Debt discount $ 200,000  
November 1,2017 [Member] | Chief Executive Officer [Member]    
Professional Fees 78,000  
February 1,2019 [Member] | Chief Executive Officer [Member]    
Professional Fees 178,000  
Mr.Romanek Member | July 31,2022 [Member]    
Due to related party 46,937 $ 46,937
Deferred Compensation $ 874,433  
v3.24.2.u1
STOCK OPTIONS (Details) - Stock Option [Member]
3 Months Ended
Oct. 31, 2023
$ / shares
shares
Outstanding, Beginning Balance | shares 3,000,000
Options granted and assumed | shares 0
Options expired | shares 0
Options canceled | shares 0
Options exercised | shares 0
Outstanding, Ending Balance | shares 3,000,000
Weighted Average Exercise Price, Beginning Balance | $ / shares $ 0.09
Weighted Average Exercise Price, Options Granted And Assumed | $ / shares 0
Weighted Average Exercise Price, Options Expired | $ / shares 0
Weighted Average Exercise Price, Options Canceled | $ / shares 0
Weighted Average Exercise Price, Options Exercised | $ / shares 0
Weighted Average Exercise Price, Ending Balance | $ / shares $ 0.09
v3.24.2.u1
SHAREHOLDERS DEFICIT (Details Narrative) - shares
Oct. 31, 2023
Jul. 31, 2023
Common Stock, Shares Issued 32,746,149 32,746,149
Common stock, share Outstanding 32,746,149 32,746,149
Preferred Stock, Shares Issued 226,300 226,300
Preferred Stock, Shares Outstanding 226,300 226,300
Series A Preferred Stock [Member]    
Preferred Stock, Shares Issued 226,000 226,000
Preferred Stock, Shares Outstanding 226,000 226,000
Series B Preferred Stock [Member]    
Preferred Stock, Shares Issued 0 0
Preferred Stock, Shares Outstanding 0 0
Series C Preferred Stock [Member]    
Preferred Stock, Shares Issued 300 300
Preferred Stock, Shares Outstanding 300 300
Common Stocks [Member]    
Common Stock, Shares Issued 32,746,149 32,746,149
Common stock, share Outstanding 32,746,149 3,274,619
v3.24.2.u1
SUBSEQUENT EVENTS (Details Narrative) - Series C Preferred Stock [Member] - Subsequent Event [Member] - USD ($)
1 Months Ended
Mar. 13, 2024
Nov. 17, 2023
Number of share sold 56 56
Prooceed from sale of preferred stock $ 48,920 $ 48,920
Offering cost $ 5,080 $ 5,080

THC Therapeutics (CE) (USOTC:THCT)
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