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 June 30, 2023

or

☐     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

000-56090

(Commission File Number)

PHARMAGREEN BIOTECH INC.

(Exact name of registrant as specified in its charter)

Nevada	92-1737808
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2987 Blackbear Court, Coquitlam, British Columbia	V3E 3A2
(Address of principal executive offices)	(Zip Code)

702-803-9404

(Registrant’s telephone number, including area code)

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

Securities registered pursuant to section 12(g) of the Act: Common Stock

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 such 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	☐	Non-accelerated Filer	☒
Accelerated filer	☐	Smaller reporting company	☒
		Emerging Growth	☐

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes     ☐ No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 14, 2023, we had 501,460,969 shares of common stock issued and outstanding.

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION		3
Item 1.	Financial Statements.	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	23
Item 4.	Controls and Procedures.	23
PART II—OTHER INFORMATION		24
Item 1.	Legal Proceedings.	24
Item 1A.	Risk Factors.	25
Item 2.	Unregistered Sales of Securities and Use of Proceeds.	25
Item 3.	Defaults Upon Senior Securities.	25
Item 4.	Mine Safety Disclosure.	25
Item 5.	Other Information.	25
Item 6.	Exhibits.	26
SIGNATURES		28

2

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PHARMAGREEN BIOTECH INC.

Condensed Consolidated Financial Statements

For the Nine Months Ended June 30, 2023

(Expressed in U.S. Dollars)

(Unaudited)

3

PHARMAGREEN BIOTECH INC.

Condensed Consolidated Balance Sheets

(Expressed in U.S. dollars)

	June 30, 2023			September 30, 2022
	$			$
	(Unaudited)
Assets
Current assets
Cash		5,315			8,016
Amounts receivable		606			383
Inventory (Note 3)		9,247			-
Prepaid expenses and deposits (Note 14(d))		36,295			200,572
Total current assets		51,463			208,971
Promissory note receivable (Note 4)		88,850			-
Total assets		140,313			208,971
Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable and accrued liabilities (Notes 5 and 9)		837,390			724,876
Advances from Alliance Growers Corp. (Note 14(a))		56,604			54,847
Loans payable (Note 6)		129,266			99,077
Convertible notes – current portion, net of unamortized discount of $nil and $15,780, respectively (Note 7)		150,605			120,038
Derivative liabilities (Notes 7 and 8)		215,649			271,394
Due to related parties (Note 9)		782,231			641,915
Total current liabilities		2,171,745			1,912,147
Convertible notes, net of unamortized discount of $nil and $nil, respectively (Note 7)		27,068			-
Loans payable (Note 6)		-			29,252
Loans payable to related parties (Note 9)		92,535			90,221
Total liabilities		2,291,348			2,031,620
Stockholders’ deficit
Preferred stock Authorized: 1,000,000 shares, $0.001 par value; 10,000 shares issued and outstanding (Note 11)		10			10
Common stock Authorized: 2,000,000,000 shares, $0.001 par value; 463,960,969 and 442,260,969 shares issued and outstanding, respectively (Note 10)		463,961			442,261
Common stock issuable		-			1,130
Additional paid-in capital (Note 10)		10,348,527			10,261,777
Accumulated other comprehensive income		48,334			93,753
Accumulated deficit		(12,965,156	)		(12,574,895	)
Total Pharmagreen Biotech Inc. stockholders’ deficit		(2,104,324	)		(1,775,964	)
Non-controlling interest		(46,711	)		(46,685	)
Total stockholders’ deficit		(2,151,035	)		(1,822,649	)
Total liabilities and stockholders’ deficit		140,313			208,971

(The accompanying notes are an integral part of these unaudited condensed consolidated financial statements)

4

PHARMAGREEN BIOTECH INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Expressed in U.S. dollars)

(Unaudited)

	Three months ended June 30, 2023 $			Three months ended June 30,  2022 $			Nine months ended  June 30, 2023 $			Nine months ended  June 30, 2022 $
Revenue		597			-			1,560			-
Cost of sales		389			-			1,374			-
Gross profit		208			-			186			-
Expenses
Advertising and promotion		16,576			-			29,232			-
Consulting fees (Note 9 and 14)		51,472			198,081			275,505			761,972
Foreign exchange gain (loss)		3,540			12,310			(24	)		9,229
General and administrative		(3,264	)		16,345			28,918			64,462
Professional fees		12,010			10,186			44,369			53,760
Salaries and wages		1,859			4,296			5,513			14,315
Total expenses		82,193			241,218			383,513			903,738
Net loss before other income (expenses)		(81,985	)		(241,218	)		(383,327	)		(903,738	)
Other income (expense)
Accretion of discount on convertible notes (Note 7)		(11,904	)		(6,156	)		(65,280	)		(10,848	)
Interest and finance costs (Note 6 and 7)		(8,220	)		(10,757	)		(24,660	)		(30,919	)
Gain (loss) on change in fair value of derivative liabilities (Note 8)		(66,738	)		510,066			77,064			180,423
Gain on settlement of convertible note		5,916			-			5,916			-
Total other income (expense)		(80,946	)		493,153			(6,960	)		138,656
Net income (loss)		(162,931	)		251,935			(390,287	)		(765,082	)
Less: net loss attributable to non-controlling interest		26			-			26			-
Net income (loss) attributable to Pharmagreen Biotech Inc.		(162,905	)		251,935			(390,261	)		(765,082	)
Comprehensive income (loss)
Foreign currency translation gain (loss)		(30,880	)		40,885			(45,419	)		20,952
Comprehensive income (loss) attributable to Pharmagreen Biotech Inc.		(193,785	)		292,820			(435,680	)		(744,130	)
Basic and diluted (loss) earnings per share attributable to Pharmagreen Biotech Inc. stockholders		(0.00	)		0.00			(0.00	)		(0.00	)
Weighted average number of shares outstanding used in the calculation of net earnings (loss) per share attributable to Pharmagreen Biotech Inc.
Basic		445,095,035			406,566,324			452,930,932			395,041,232
Diluted		445,095,035			613,471,911			452,930,932			395,041,232

(The accompanying notes are an integral part of these unaudited condensed consolidated financial statements)

5

PHARMAGREEN BIOTECH INC.

Condensed Consolidated Statements of Stockholders’ Deficit

(Expressed in U.S. dollars)

(Unaudited)

	Preferred stock				Common stock				Common stock issuable			Additional paid-in capital		Accumulated other comprehensive income (loss)			Accumulated deficit			Non -controlling interest			Total stockholders’ deficit
	shares		Amount		shares		Amount		Amount			Amount		Amount			Amount			Amount			Amount
Balance, September 30, 2021		10,000		10		381,171,269		381,171		-			9,680,572		(8,378	)		(11,699,417	)		(46,658	)		(1,692,700	)
Issuance of shares for cash, net of issuance costs		-		-		4,000,000		4,000		-			88,000		-			-			-			92,000
Foreign currency translation loss		-		-		-		-		-			-		(2,463	)		-			-			(2,463	)
Net income for the period		-		-		-		-		-			-		-			18,724			-			18,724
Balance, December 31, 2021		10,000		10		385,171,269		385,171		-			9,768,572		(10,841	)		(11,680,693	)		(46,658	)		(1,584,439	)
Issuance of shares for cash		-		-		1,450,000		1,450		-			25,050		-			-			-			26,500
Issuance of shares for services		-		-		10,600,000		10,600		-			198,100		-			-			-			208,700
Foreign currency translation loss		-		-		-		-		-			-		(17,470	)		-			-			(17,470	)
Net loss for the period		-		-		-		-		-			-		-			(1,035,741	)		-			(1,035,741	)
Balance, March 31, 2022		10,000		10		397,221,269		397,221		-			9,991,722		(28,311	)		(12,716,434	)		(46,658	)		(2,402,450	)
Issuance of common stock for services		-		-		7,000,000		7,000		-			77,700		-			-			-			84,700
Issuance of shares for cash		-		-		20,200,000		20,200		-			48,300		-			-			-			68,500
Common stock issuable for services		-		-		-		-		18,692			-		-			-			-			18,692
Foreign currency translation gain		-		-		-		-		-			-		40,885			-			-			40,885
Net income for the period		-		-		-		-		-			-		-			251,935			-			251,935
Balance, June 30, 2022		10,000		10		424,421,269		424,421		18,692			10,117,722		12,574			(12,464,499	)		(46,658	)		(1,937,738	)
Balance, September 30, 2022		10,000		10		442,260,969		442,261		1,130			10,261,777		93,753			(12,574,895	)		(46,685	)		(1,822,649	)
Issuance of common stock for services		-		-		12,500,000		12,500		(1,130	)		65,000		-			-			-			76,370
Foreign currency translation loss		-		-		-		-		-			-		(12,105	)		-			-			(12,105	)
Net loss for the period		-		-		-		-		-			-		-			(39,374	)		-			(39,374	)
Balance, December 31, 2022		10,000		10		454,760,969		454,761		-			10,326,777		81,648			(12,614,269	)		(46,685	)		(1,797,758	)
Foreign currency translation loss		-		-		-		-		-			-		(2,434	)		-			-			(2,434	)
Net loss for the period		-		-		-		-		-			-		-			(187,982	)		-			(187,982	)
Balance, March 31, 2023		10,000		10		454,760,969		454,761		-			10,326,777		79,214			(12,802,251	)		(46,685	)		(1,988,174	)
Issuance of common stock pursuant to the conversion of convertible notes		-		-		9,200,000		9,200		-			21,750		-			-			-			30,950
Foreign currency translation loss		-		-		-		-		-			-		(30,880	)		-			-			(30,880	)
Net loss for the period		-		-		-		-		-			-		-			(162,905	)		(26	)		(162,931	)
Balance, June 30, 2023		10,000		10		463,960,969		463,961		-			10,348,527		48,334			(12,965,156	)		(46,711	)		(2,151,035	)

(The accompanying notes are an integral part of these unaudited condensed consolidated financial statements)

6

PHARMAGREEN BIOTECH INC.

Condensed Consolidated Statements of Cash Flows

(Expressed in U.S. dollars)

(Unaudited)

	Nine months ended June 30, 2023			Nine months ended June 30, 2022
OPERATING ACTIVITIES
Net loss		(390,287	)		(765,082	)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of discount on convertible notes		65,280			10,848
Gain on change in fair value of derivative liabilities		(77,064	)		(180,423	)
Common stock issued or issuable for services		76,370			312,092
Financing fees		540			-
Gain on settlement of convertible note		(5,916	)		-
Changes in non-cash operating assets and liabilities:
Amounts receivable		(223	)		(26	)
Prepaid expenses and deposits		75,427			180,899
Inventory		(9,247	)		-
Accounts payable and accrued liabilities		112,514			71,850
Due to related parties		106,354			35,533
Net cash used in operating activities		(46,252	)		(334,309	)
FINANCING ACTIVITIES
Proceeds from issuance of convertible note		50,000			30,000
Proceeds from issuance of units		-			75,000
Proceeds from issuance of shares		-			112,000
Proceeds from loans from related party		33,962			111,554
Repayment of loans from related parties		-			(14,846	)
Net cash provided by financing activities		83,962			313,708
Effect of foreign exchange rate changes on cash		(40,411	)		19,563
Change in cash		(2,701	)		(1,038	)
Cash, beginning of period		8,016			25,300
Cash, end of period		5,315			24,262
Non-cash investing and financing:
Common shares issued for settlement of convertible notes and accrued interest		30,950			-
Derivative liability upon issuance of convertible notes		-			15,011
Supplemental disclosures:
Interest paid		-			-
Income taxes paid		-			-

(The accompanying notes are an integral part of these unaudited condensed consolidated financial statements)

7

PHARMAGREEN BIOTECH INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

(Expressed in U.S. dollars)

(Unaudited)

1.           Nature of Business and Continuance of Operations 

Pharmagreen Biotech Inc. (“the Company”) was incorporated under the laws of the State of Nevada, U.S. on November 26, 2007, under the name Azure International, Inc. On October 30, 2008, and effective as of the same date, the Company filed Articles of Merger (“Articles”) with the Secretary of State of the State of Nevada, to effect a merger by and between Air Transport Group Holdings, Inc., a Nevada corporation and Azure International, Inc. As a result of the merger, the Company changed its name to Air Transport Group Holdings, Inc. The Company was previously in the business of providing technical advisory and appraisals to the aircraft and aviation business as well as providing sourcing for aircraft leases and parts. Pursuant to a Share Exchange Agreement with WFS Pharmagreen Inc. (“WFS”) on May 2, 2018, the Company changed its name to Pharmagreen Biotech Inc. and changed its principal business to the production of starter plantlets for the North American high CBD hemp and medical cannabis industries through the application of the proprietary plant tissue culture in vitro process called “Chibafreen”. This proprietary process may produce plantlets that will be genetically identical and free of pests and disease free with consistent and certifiable constituent properties. In 2022, the cannabis market in California and other states entered into a regression stage with the prices of the sun grown raw materials dropping below production costs including diminished demand for the sun grown material.  Focusing on immediate revenues since Q2 2023, the Company has transitioned into a nutraceutical company formulating products from blends of therapeutic plants and fungi for sale.  

Going Concern  

These condensed consolidated financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at June 30, 2023, the Company has earned insignificant revenues from operations, has a working capital deficit of $2,120,282, and has an accumulated deficit of $12,965,156. During the nine months ended June 30, 2023, the Company incurred a net loss of $390,261 and used cash flows for operations of $46,252. Furthermore, the Company has defaulted on other convertible notes.  These factors raise substantial doubt upon the Company’s ability to continue as a going concern. These consolidated financial statements do not reflect any adjustments that may be necessary if the Company is unable to continue as a going concern.     

2.           Significant Accounting Policies 

(a)          Interim Financial Statements 

These unaudited condensed consolidated financial statements as of and for the three and nine month periods ended June 30, 2023, have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) and the interim reporting rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. These condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. 

8

PHARMAGREEN BIOTECH INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

(Expressed in U.S. dollars)

(Unaudited)

2.           Significant Accounting Policies (continued)  

(b)          Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with US GAAP and are expressed in U.S. dollars. These condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, WFS Pharmagreen Inc. (“WFS”), and its dormant 89.7% owned subsidiary 1155097 BC Ltd. (“115BC”), companies incorporated in British Columbia, Canada. All inter-company accounts and transactions have been eliminated. The Company’s fiscal year-end is September 30.

(c)          Use of Estimates and Judgments

The preparation of these condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the equity component of convertible notes, fair value of derivative liabilities, fair value of stock-based payments, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

The Company applies judgment in the application of the going concern assumption which requires management to take into account all available information about the future, which is at least, but not limited to 12 months from the end of the reporting period.

(d)          Derivative Liabilities

The Company reviews the terms of convertible debt issuances to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense.

9

PHARMAGREEN BIOTECH INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

(Expressed in U.S. dollars)

(Unaudited)

2.           Significant Accounting Policies (continued)  

(d)          Derivative Liabilities (continued) 

The Company has adopted a sequencing approach to allocating its authorized and unissued shares when the number of such shares is insufficient to satisfy all convertible instruments or option type contracts that may be settled in shares. Specifically, the Company allocates it authorized and unissued shares based on the inception date of each instrument, with shares allocated first to those instruments with the earliest inception dates. Instruments with later inception dates for which no shares remain to be allocated are reclassified to asset or liability. 

(e)          Revenue Recognition

The Company generates revenues from its proprietary blend of therapeutic plants and fungi, a nutraceutical wellness product.   

The Company accounts for its revenue transactions under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). In accordance with ASC Topic 606, the Company recognizes revenues when its customers obtain control of its product for an amount that reflects the consideration it expects to receive from its customers in exchange for that product. To determine revenue recognition for contracts that are determined to be in scope of ASC Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when such performance obligation is satisfied.  

The transaction price is based on the consideration that the Company expects to receive in exchange for its products and includes the fixed per-unit price of the product and variable consideration in the form of trade credits, vouchers, and rebates. The per-unit price is based on the Company’s established wholesale acquisition cost less a contractually agreed upon distributor discount with the customer. 

(f)          Loss Per Share 

The Company computes loss per share in accordance with ASC 260, Earnings per Share which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at June 30, 2023, there were 484,408,281 (September 30, 2022 – 218,657,662) potentially dilutive shares outstanding. 

(g)          Recently Adopted Accounting Pronouncements 

The Company has implemented all new accounting pronouncements that are in effect and that may impact its condensed consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. 

10

PHARMAGREEN BIOTECH INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

(Expressed in U.S. dollars)

(Unaudited)

3.	Inventory
	Inventory consisted of finished goods held at held with third party distributors. At June 30, 2023, the carrying value of inventory was $9,247.

4.

Promissory Note Receivable

On February 5, 2023, the Company terminated the Memorandum of Understanding (“MOU”) described in Note 13.  The advance of $88,850 was converted into a note bearing no interest until September 30, 2025.  The Company determines the allowance for credit loss (“ACL”) for loans receivable based on past loan loss experience, known and inherent risks, adverse situations that may affect the borrower’s ability to repay (including the timing of future payment), and economic conditions. The process is inherently subject to significant change as it required material estimates. As at June 30, 2023, and September 30, 2022, the Company had $88,850 and $nil, respectively, of loan receivable and no related ACL recorded, respectively.

5.	Accounts Payable and Accrued Liabilities
	Accounts payable and accrued liabilities consists of the following:

	June 30, 2023 $		September 30, 2022 $
Accounts payable		697,110		644,970
Accrued interest payable		140,280		79,906
		837,390		724,876

6. Loans Payable

(a)

On November 22, 2019, the Company entered into a promissory note with an unrelated party for $40,000 in connection with an equity purchase agreement. The promissory note is unsecured, was due on November 30, 2020, and bears interest on the unpaid principal balance at a rate of 10% per annum. At June 30, 2023, the Company has recorded accrued interest payable of $14,399 (September 30, 2022 - $11,408) and the promissory note is in default. Refer to Note 14(b).

(b)

On April 22, 2020, the Company received a loan for Cdn$40,000 from the Government of Canada under the Canada Emergency Business Account program (“CEBA”). As at June 30, 2023, the balance owing is $30,189 (Cdn$40,000) (September 30, 2022 - $29,252 (Cdn$40,000)). These funds are interest free until December 31, 2023, at which time the remaining balance will convert to a 2-year term loan at an interest rate of 5% per annum. If the Company repays the loan prior to December 31, 2023, there will be loan forgiveness of 25% of the principal balance repaid, up to a maximum of Cdn$10,000.

11

PHARMAGREEN BIOTECH INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

(Expressed in U.S. dollars)

(Unaudited)

6. Loans Payable (continued)

(c) On January 14, 2020, the Company entered into a convertible note with an unrelated party for $78,000, of which $3,000 was paid for financing costs, resulting in net proceeds to the Company of $75,000. The note was due on January 14, 2021, and bears interest on the unpaid principal balance at a rate of 12% per annum, which increases to 15% per annum upon default of the note. On August 2, 2022, the lender was ordered to surrender all common stock of the Company for cancellation, and surrender conversion rights for all remaining convertible notes pursuant to a judgement filed by the SEC with the United States District Court, Southern District of New York against the lender. As a result, the Company received and cancelled 660,300 shares of common stock and the conversion rights embedded in the convertible note was relinquished. As a result, the convertible note of $59,077 was reclassified from a convertible note payable to loans payable and its derivative liability of $163,760 was derecognized. In addition, the derecognition of the default penalty of $53,007 that was previously recognized and the fair value of the 660,300 shares of common stock of $4,606 were recognized as a recovery of default penalties during the year ended September 30, 2022.   As at June 30, 2023, the principal balance owing is $59,077 (September 30, 2022 - $59,077) and the Company has recorded interest payable of $28,952 (September 30, 2022 - $23,664).

7. Convertible Notes

(a) On April 4, 2018, the amount of $32,485 owed to related parties was converted to Series A convertible notes, which are unsecured, non-interest bearing, and due on April 4, 2023. On April 4, 2023, an agreement was signed to extend the maturity date of these notes to April 4, 2028. These notes are convertible in whole or in part, at any time until maturity, to common shares of the Company at $0.0001 per share. The Company evaluated the convertible notes for a beneficial conversion feature in accordance with ASC 470-20 Debt with Conversion and Other Options. The Company determined that the conversion price was below the closing stock price on the commitment date, and the convertible notes contained a beneficial conversion feature. The Company recognized the intrinsic value of the embedded beneficial conversion feature of $32,485 as additional paid-in capital and reduced the carrying value of the convertible note to $nil. The carrying value will be accreted over the term of the convertible notes up to their face value of $32,485.   During the year ended September 30, 2020, the Company issued 18,525,000 shares of common stock upon the conversion of $1,853 of Series A convertible notes. Upon conversion, the Company immediately recognized the related remaining debt discount of $1,670 as accretion expense.   As of June 30, 2023, the carrying value of the convertible notes was $27,068 (September 30, 2022 - $17,799) and had an unamortized discount of $nil (September 30, 2022 - $9,269). During the nine months ended June 30, 2023, the Company recorded accretion expense of $9,269 (2022 - $6,642).

12

PHARMAGREEN BIOTECH INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

(Expressed in U.S. dollars)

(Unaudited)

7. Convertible Notes (continued)

(b) On January 22, 2020, the Company entered into a convertible note with an unrelated party for $78,750, of which $9,750 was paid directly to third parties for financing costs, resulting in proceeds to the Company of $69,000. The note was due on January 22, 2021, and bears interest on the unpaid principal balance at a rate of 10% per annum, payable in common stock, which increases to 24% per annum upon default of the note. The note may be converted at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to 65% of the lowest trading price during the 20-trading day period ending on the latest complete trading day prior to the conversion date. In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Derivatives and Hedging, and determined the conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value. The initial fair value of the conversion feature was determined to be $75,179. The Company recognized the maximum intrinsic value of the embedded beneficial conversion feature of $68,500, resulting in a loss on change in fair value of derivative liabilities of $6,679, and reduced the carrying value of the convertible note to $500. The carrying value will be accreted over the term of the convertible note up to its face value of $78,750.   The financing costs were netted against the convertible note and are being amortized over the term using the effective interest rate method. During the year ended September 30, 2020, the Company defaulted on the convertible note and recognized accretion expense of $78,250. On January 22, 2021, the Company failed to repay the note upon maturity and is currently in default.   As at June 30, 2023, the carrying value of the convertible note was $78,750 (September 30, 2022 - $78,750) and the fair value of the derivative liability was $144,794 (September 30, 2022 - $260,908.

(c) On March 11, 2022, the Company entered into a convertible note with an unrelated party for $30,000, with an advance on January 18, 2022, for the full amount. The note is due on January 18, 2023, and bears interest on the unpaid principal balance at a rate of 10% per annum. The note may be converted at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to the closing price on the day of receiving the notice to convert. In connection with the issuance of the above convertible note, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Derivatives and Hedging, and determined the conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value. The initial fair value of the conversion feature was determined to be $15,011, which reduced the carrying value of the convertible note to $14,989. The carrying value will be accreted over the term of the convertible note up to its face value of $30,000.   As of June 30, 2023, the carrying value of the convertible notes was $30,000 (September 30, 2022 - $23,489), had an unamortized discount of $nil (September 30, 2022 - $6,511), and the fair value of the derivative liability was $19,306 (September 30, 2022 - $10,486). During the nine months ended June 30, 2023, the Company recorded accretion expense of $6,511 (2022 - $4,206).  On January 18, 2023, the Company failed to repay the note upon maturity and is currently in default.

13

PHARMAGREEN BIOTECH INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

(Expressed in U.S. dollars)

(Unaudited)

7. Convertible Notes (continued)

(d) On November 2, 2022, the Company entered into a secured convertible note with an unrelated party for proceeds of $50,000. The note is due on May 1, 2023 (subsequently defaulted upon maturity) and bears a one-time interest charge of 10% automatically accrued on the issuance date. The one-time interest charge was netted against the convertible note and is being amortized over the term using the effective interest rate method. Stringent pre-payment terms of 25% apply and any amount of principal or interest on the note which is not paid when due shall bear interest at 22% per annum or the highest rate permitted by law.   The note may be converted at any time after March 2, 2023, which was 120 days following the date of issuance, into shares of Company’s common stock at a conversion price equal 57.5% of the average of the 3 lowest trading prices during the 15-trading day period prior to the conversion date. On March 2, 2023, the Company evaluated the conversion option for derivative treatment under ASC 815-15, Derivatives and Hedging, and determined the conversion feature qualified as derivatives. The Company classified the conversion feature as a derivative liability at fair value. The initial fair value of the conversion feature was determined to be $48,419. The Company recognized the maximum intrinsic value of the embedded beneficial conversion feature of $44,500, resulting in a loss on change in fair value of derivative liabilities of $3,919, and reduced the carrying value of the convertible note to $500. The carrying value will be accreted over the term of the convertible note up to its face value of $50,000.   During the nine months ended June 30, 2023, the Company issued 9,200,000 shares of common stock with a fair value of $30,950 upon the conversion of $8,685 of the principal amount and $5,000 of accrued interest.  As a result, the Company recognized a gain of $5,916 upon the settlement of convertible debt. In connection to the conversion, the Company incurred $540 of fees which was added to the principal of the note.  As of June 30, 2023, the carrying value of the convertible notes was $41,855 (September 30, 2022 - $nil), had an unamortized discount of $nil (September 30, 2022 - $nil), and the fair value of the derivative liability was $51,549. During the nine months ended June 30, 2023, the Company recorded accretion expense of $49,500 (2022 - $nil).

8.

Derivative Liabilities

The embedded conversion option of the Company’s convertible notes described in Note 7 contain a conversion feature that qualifies for embedded derivative classification. The fair value of this liability will be re-measured at the end of every reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on change in fair value of derivative liabilities. The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities:

Balance, September 30, 2022	271,394
Additions	44,500
Conversions	(23,181	)
Change in fair value of embedded conversion option	(77,064	)
Balance, June 30, 2023	215,649

The Company uses Level 3 inputs for its valuation methodology for the embedded conversion option liabilities as their fair values were determined by using the binomial model based on various assumptions. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the inputs and assumptions used in the calculations:

	Exercise price		Stock price on measurement date		Expected volatility			Risk-free interest rate			Expected dividend yield			Expected life (in years)
As at September 30, 2022	$	0.0038	$	0.01		161	%		3.33	%		0	%		0.26
As at June 30, 2023	$	0.0013	$	0.0018		210	%		5.47	%		0	%		0.50

14

PHARMAGREEN BIOTECH INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

(Expressed in U.S. dollars)

(Unaudited)

9. Related Party Transactions

(a)	As at June 30, 2023, the Company owed $726,759 (Cdn$962,956) (September 30, 2022 - $588,165 (Cdn$804,285)) to the President of the Company, which is non-interest bearing, unsecured, and due on demand. During the nine months ended June 30, 2023, the President of the Company provided an advance of $33,962 (Cdn$45,000) to the Company and the Company incurred consulting fees of $88,833 (2022 - $70,992) to the President of the Company.
(b)	As at June 30, 2023, the Company owed $55,472 (Cdn$73,500) (September 30, 2022 - $53,750 (Cdn$73,500)) to the father of the President of the Company, which is non-interest bearing, unsecured, and due on demand.
(c)	As at June 30, 2023, the Company owed $41,509 (Cdn$55,000) (September 30, 2022 - $40,221 (Cdn$55,000)) to the father of the President of the Company, which bears interest at 10% per annum, is unsecured and due on June 1, 2026. As of June 30, 2023, the Company recognized accrued interest of $4,492 (Cdn$5,952) (September 30, 2022 – $331 (Cdn$452)).
(d)	As at June 30, 2023, the Company owed $50,000 (September 30, 2022 - $50,000) to the father of the President of the Company, which bears interest at 10% per annum, is unsecured and due on June 1, 2026. As of June 30, 2023, the Company recognized accrued interest of $5,411 (September 30, 2022 - $387).
(e)	As at June 30, 2023, the Company owed $25,292 (Cdn$33,512) (September 30, 2022 – $25,010 (Cdn$34,200)) to a company owned by the father of the President of the Company, which is included in accounts payable and accrued liabilities. The amount due is non-interest bearing, unsecured, and due on demand.
(f)	As at June 30, 2023, the Company owed $557,560 (Cdn$738,768) (September 30, 2022 – $509,610 (Cdn$696,866)) to a company controlled by the Chief Financial Officer of WFS, which is included in accounts payable and accrued liabilities. The amount due is non-interest bearing, unsecured, and due on demand. During the nine months ended June 30, 2023, the Company incurred consulting fees of $44,417 (2022 - $70,992) to the company controlled by the Chief Financial Officer of WFS.

10.	Common Stock
	Nine months ended June 30, 2023

(a)	On October 3, 2022, the Company issued 2,500,000 shares of common stock with a fair value of $27,500 for management consulting and strategic business advisory services (Note 14(g)).
(b)	On December 14, 2022, the Company issued 10,000,000 shares of common stock with a fair value of $50,000 for product endorsement services (Note 14(h)).
(c)	On May 4, 2023, the Company issued 2,700,000 shares of common stock with a fair value of $10,800 pursuant to the conversion of $1,210 of a convertible debt and $5,000 of accrued interest (Note 7(d)).
(d)	On June 14, 2023, the Company issued 6,500,000 shares of common stock with a fair value of $20,150 pursuant to the conversion of $7,475 of a convertible debt (Note 7(d)).

15

PHARMAGREEN BIOTECH INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

(Expressed in U.S. dollars)

(Unaudited)

10. Common Stock (continued)

Nine months ended June 30, 2022

(e)	On October 21, 2021, the Company issued 4,000,000 shares of common stock at $0.025 per share for proceeds of $100,000. In connection with the financing, the Company incurred commission fees of $8,000.
(f)	On January 19, 2022, the Company issued 650,000 units at $0.01 per unit for proceeds of $6,500. Each unit is comprised of one share of common stock and one share purchase warrant exercisable at $0.05 per share of common stock expiring 24 months from the date of issuance.
(g)	On January 19, 2022, the Company issued 800,000 shares of common stock at $0.025 per share for proceeds of $20,000.
(h)	On January 19, 2022, the Company issued 6,800,000 shares of common stock with a fair value of $136,000 for consultation communication and media services.
(i)	On January 19, 2022, the Company issued 1,800,000 shares of common stock with a fair value of $36,000 for strategic and business development advisory services.
(j)	On January 21, 2022, the Company issued 1,000,000 shares with a fair value of $19,700 for management consulting and strategic business advisory services.
(k)	On February 10, 2022, the Company issued 1,000,000 shares of common stock with a fair value of $17,000 for market awareness services.
(l)	(h) On May 3, 2022, the Company issued 7,000,000 shares of common stock with a fair value of $84,700 for market awareness services.
(m)	(i) On June 8, 2022, the Company issued 20,200,000 units at $0.0025 per unit for proceeds of $68,500. Each unit is comprised of one share of common stock and one purchase warrant exercisable at $0.05 per share of common stock expiring 24 months from the date of issuance.

11.

Preferred Stock

On October 13, 2020, the Company filed a certificate of amendment to its articles of incorporation, whereby it increased the authorized capital to 2,000,000,000 shares of common stock with a par value of $0.001 per share and 1,000,000 preferred shares with a par value of $0.001. On October 14, 2020, the Company designated 10,000 preferred shares as Series A Super Voting Preferred Stock. The Series A Super Voting Preferred Stock has the following rights and restrictions: Dividends - Initially, there will be no dividends due or payable on the Series A Super Voting Preferred Stock. Any future terms with respect to dividends shall be determined by the Board consistent with the Corporation’s Certificate of Incorporation. Any and all such future terms concerning dividends shall be reflected in an amendment to this Certificate, which the Board shall promptly file or cause to be filed. Liquidation and Redemption Rights - Upon the occurrence of a Liquidation Event, the holders of Series A Super Voting Preferred Stock are entitled to receive net assets on a pro-rata basis. Each holder of Series A Super Voting Preferred Stock is entitled to receive ratably any dividends declared by the Board, if any, out of funds legally available for the payment of dividends. Rank - All shares of the Series A Super Voting Preferred Stock shall rank (i) senior to the Corporation’s (A) Common Stock, par value $0.001 per share ( “Common Stock” ), and any other class or series of capital stock of the Corporation hereafter created, except as otherwise provided in clauses (ii) and (iii) of this Section 4, (ii) pari passu with any class or series of capital stock of the Corporation hereafter created and specifically ranking, by its terms, on par with the Series A Super Voting Preferred-Stock and (iii) junior to any class or series of capital stock of the Corporation hereafter created specifically ranking, by its terms, senior to the Series A Preferred Stock, in each case as to distribution of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. Voting Rights - If at least one share of Series A Super Voting Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series A Super Voting Preferred Stock at any given time, regardless of their number, shall have voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding at the time of voting. Each individual share of Series A Super Voting Preferred Stock shall have the voting rights equal to:

· [twenty times the sum of: {all shares of Common stock issued and outstanding at the time of voting + all shares of Series A, Series A and any newly designated Preferred stock issued and outstanding at the time of voting}] Divided by:

· [the number of shares of Series A Super Voting Preferred Stock issued and outstanding at the time of voting]

With respect to all matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent, the holders of the outstanding shares of Series A Super Voting Preferred Stock shall vote together with the holders of Common Stock without regard to class, except as to those matters on which separate class voting is required by applicable law or the Certificate of Incorporation or By-laws.

Protective Provisions - So long as any shares of Series A Super Voting Preferred Stock are outstanding, the Corporation shall not, without first obtaining the unanimous written consent of the holders of Series A Super Voting Preferred Stock, alter or change the rights, preferences or privileges of the Series A Super Voting Preferred so as to affect adversely the holders of Series A Super Voting Preferred Stock.

On October 14, 2020, the Company issued 10,000 shares of Series A Super Voting Preferred Stock to a Director of the Company for proceeds of $10. In connection with the issuance of the Series A Super Voting Preferred Stock, the Company evaluated whether the preferred stock should be classified as a liability based on the guidance under ASC 480, Distinguishing Liabilities from Equity. The Series A Super Voting Preferred Stock are not considered mandatorily redeemable, are not settleable in a variable number of shares, and do not contain any features embedded that required a separate assessment. As a result, the Company determined the Series A Super Voting Preferred Stock were not a liability and classified the preferred stock within equity in the amount of the aggregate par value of the issued shares of preferred stock, with any excess attributed to additional paid-in capital.

16

PHARMAGREEN BIOTECH INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

(Expressed in U.S. dollars)

(Unaudited)

12.	Share Purchase Warrants
	The following table summarizes the continuity of the Company’s share purchase warrants:

	Number of warrants			Weighted average exercise price $
Balance, September 30, 2022		58,722,500			0.05
Expired		(29,772,500	)		0.05
Balance, June 30, 2023		28,950,000			0.05

As at June 30, 2023, the following share purchase warrants were outstanding:

Number of warrants		Exercise price		Expiry date
	5,100,000		$0.05	July 1, 2023
	500,000		$0.05	July 19, 2023
	500,000		$0.05	July 24, 2023
	2,000,000		$0.05	September 15, 2023
	650,000		$0.05	January 19, 2024
	4,800,000		$0.05	May 19, 2024
	2,400,000		$0.05	May 20, 2024
	10,000,000		$0.05	May 26, 2024
	2,000,000		$0.05	May 27, 2024
	1,000,000		$0.05	May 30, 2024
	28,950,000

13.

Memorandum of Understanding

On July 25, 2021, the Company entered into a Memorandum of Understanding (“MOU”) to acquire all the assets and cannabis business operation, including 12 acres of property, structure and cannabis licenses, existing sales channels and distribution networks, from a private company situated in Northern California. Upon reaching a definitive agreement, the Company intends to further develop a state- of-the-art flowering greenhouse of approximately 12,000 square feet or the maximum allowed by California State and Regional County. The acquisition price is $2,400,000 to be paid through a combination of cash and shares. The Company also has an option from the seller to acquire an additional 120 acres or more of land for business expansion and development. The Company has advanced $88,850 (September 30, 2022 - $88,850) under the MOU, which will be applied against the final purchase price upon completion of a definitive agreement. On February 5, 2023, the Company terminated the MOU. The advance of $88,850 was converted into a note bearing no interest until September 30, 2025 (Note 4).

17

PHARMAGREEN BIOTECH INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

(Expressed in U.S. dollars)

(Unaudited)

14. Commitments and Contingency

(a)	Effective December 11, 2017, the Company entered into a binding Letter of Intent (“LOI”) with Alliance Growers Corp. (“Alliance”), whereby the Company will build a new cannabis biotech complex located in Deroche, British Columbia, through their subsidiary, 115BC. On January 25, 2019, the Company’s subsidiaries WFS and 115BC entered into an option agreement with Alliance, which superseded the LOI entered into on December 11, 2017. The option agreement grants an option to Alliance to purchase 10% equity interest in 115BC for Cdn$1,350,000 and previously granted a second option to purchase an additional 20% equity interest in 115BC for funding of 30% of the total construction and equipment costs for the biotech complex less Cdn$1,350,000. On January 25, 2019, 115BC issued 8 shares of common stock to Alliance upon exercise of the first option for consideration of $1,018,182 (Cdn$1,350,008), which was recognized as additional paid-in capital. The second option expired unexercised. As at June 30, 2023, the Company received advances of $56,604 (Cdn$75,000) (September 30, 2022 - $54,847 (Cdn$75,000)) from Alliance, which is unsecured, non-interest bearing, and due on demand.
(b)	On November 22, 2019, the Company entered into an equity purchase agreement with an unrelated party, whereby the third party is to purchase up to $10,000,000 of the Company’s common stock. The equity purchase agreement is effective for a term of 2 years from the effective date of the registration statement. The purchase price would be 85% of the market price. In return, the Company issued a promissory note of $40,000 (Refer to Note 6(a)). In addition, the Company is required to pay an additional commitment fee of $10,000, of which $5,000 was paid upon signing the term sheet and the remaining $5,000 is due upon completion of the first tranche of the financing.
	On March 10, 2021, the noteholder filed a Notice of Motion for Summary Judgement in Lieu of Complaint (the “Notice”) with the State of New York Supreme Court, County of New York for $40,504 plus interest at the rate of 10% per annum from January 6, 2021, plus costs. On July 31, 2021, the Notice was dismissed without prejudice by the State of New York Supreme Court. On September 23, 2021, the noteholder filed a new Notice of Motion for Summary Judgement in Lieu of Complaint with the State of New York Supreme Court, County of New York for $44,504 plus interest at the rate of 10% per annum from January 6, 2021, plus costs. The plaintiff filed for an oral argument which was heard by the State of New York Supreme Court on September 15, 2022, and is pending a final decision. The Company believes that the claim has no merit and intends to defend its position vigorously.
(c)	On May 2, 2022, the Company entered into a consulting agreement with a six-month term. Pursuant to the agreement, the Company agreed to issue 7,000,000 shares of common stock in exchange for market awareness services. On May 3, 2022, the Company issued 7,000,000 shares of common stock with a fair value of $84,700 pursuant to the agreement. As at June 30, 2023, the Company recognized $nil (September 30, 2022 - $15,191) in prepaid expenses and deposits. During the nine months ended June 30, 2023, the Company recognized consulting fees of $15,191 (2022 - $nil) pursuant to the agreement.
(d)	On May 20, 2022, the Company entered into a consulting agreement with a six-month term. Pursuant to the agreement, the Company agreed to issue 9,000,000 shares of common stock in exchange for public relations and communications services. If both parties agree to continue the agreement for another 6 months, the Company will issue common stock of the Company with a fair value of $80,000. On August 22, 2022, the Company issued 9,000,000 shares of common stock with a fair value of $81,000 pursuant to the agreement. As at June 30, 2023, the Company recognized $nil (September 30, 2022 - $21,481) in prepaid expenses and deposits. During the nine months ended June 30, 2023, the Company recognized consulting fees of $21,481 (2022 - $nil) pursuant to the agreement.

18

PHARMAGREEN BIOTECH INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2023

(Expressed in U.S. dollars)

(Unaudited)

14. Commitments and Contingency (continued)

(e)	On September 8, 2022, the Company entered into a consulting agreement with a six-month term. Pursuant to the agreement, the Company agreed to issue 9,500,000 shares of common stock in exchange for corporate development, investor, media, public relations, and marketing services. On September 13, 2022, the Company issued 9,500,000 shares of common stock with a fair value of $85,500 pursuant to the agreement. As at June 30, 2023, the Company recognized $nil (September 30, 2022 - $75,050) in prepaid expenses and deposits. During the nine months ended June 30, 2023, the Company recognized consulting fees of $75,050 (2022 - $nil) pursuant to the agreement.
(f)	On September 15, 2022, the Company entered into a consulting agreement with a twelve-month term. Pursuant to the agreement, the Company agreed to issue 2,500,000 shares of common stock in exchange for management consulting and strategic business advisory services. On October 3, 2022, the Company issued 2,500,000 shares of common stock with a fair value of $27,500 pursuant to the agreement (Note 10(a)). As at June 30, 2023, the Company recognized $5,819 (September 30, 2022 - $nil) in prepaid expenses and deposits. During the nine months ended June 30, 2023, the Company recognized consulting fees of $20,551 (2022 - $nil) pursuant to the agreement.
(g)	On November 28, 2022, the Company entered into a product endorsement agreement with Tyrell Crosby for an eighteen-month term. Pursuant to the agreement, the Company agreed to issue 10,000,000 shares of common stock in exchange for product endorsement services. On December 14, 2022, the Company issued 10,000,000 shares of common stock with a fair value of $50,000 pursuant to the agreement (Note 10(b)), which are restricted for sale until 6 months from the issuance date. As at June 30, 2023, the Company recognized $30,476 (September 30, 2022 - $nil) in prepaid expenses and deposits. During the nine months ended June 30, 2023, the Company recognized consulting fees of $19,524 (2022 - $nil) pursuant to the agreement.

15.

Subsequent Event

On July 2, 2023, the Company defaulted on the convertible debt referenced in Note 7(d).  As a result, the Company recognized a default penalty of $20,928, which increased the principal amount due to $62,783. Subsequent to June 30, 2023, the Company issued a total of 37,500,000 shares of common stock upon the conversion of $24,150 of a convertible note. Subsequent to June 30, 2023, a total of 6,100,000 share purchase warrants with an exercise price of $0.05 per share expired unexercised.

19

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This section of the Form 10-Q includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

Company History Overview

Pharmagreen Biotech Inc. (“the Company”) was incorporated under the laws of Nevada, U.S. on November 26, 2007 under the name Azure International, Inc. On October 30, 2008 and effective as of the same date, the Company filed Articles of Merger with the Secretary of the State of Nevada, to effect a merger by and between Air Transport Group Holdings, Inc., a Nevada corporation incorporated on October 16, 2008, and Azure International, Inc. As a result of the merger, the Company changed its name to Air Transport Group Holdings, Inc.

On April 12, 2018, the Company entered into a share exchange agreement with WFS Pharmagreen Inc., a private company incorporated under the laws of British Columbia, Canada, whereby the Company acquired all of the issued and outstanding shares of WFS Pharmagreen Inc. in exchange for 37,704,500 shares of common stock of the Company. Upon completion of this transaction, the shareholders of WFS Pharmagreen hold 95.5% of voting control of the Company.

Immediately prior to closing of the Agreement, the majority shareholder of the Company was also the majority shareholder of WFS. As a result of the common ownership upon closing of the transaction, the acquisition was considered a common-control transaction and was outside the scope of the business combination guidance in ASC 805-50. The entities are deemed to be under common control as of February 27, 2018, which was the date that the majority shareholder acquired control of the Company and, therefore, held control over both companies. On May 2, 2018, the Share Exchange Agreement was effected. In connection with this transaction, the Company changed its name on May 8, 2018 to Pharmagreen Biotech Inc. and changed its year end from April 30th to September 30th.

Our principal executive offices are temporarily located at 2987 Blackbear Court, Coquitlam, British Columbia, Canada. Our telephone number is (702-803-9404). Our internet address is www.pharmagreen.ca.

On August 7, 2020, our Company (including subsidiaries) filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Nevada, Case No. 20-13886.

On October 9, 2020, a stay order was lifted by a United States District Judge of the United States District Court for the Southern District of New York, on an action filed by a lender. This effectively removed the Company from its Chapter 11 bankruptcy proceedings and protection.

We expect to continue to incur losses for at least the next 12 months. We do not expect to generate revenue that is sufficient to cover our expenses, and we do not have sufficient cash and cash equivalents to execute our plan of operations for at least the next twelve months. We will need to obtain additional financing, through equity security sales, debt instruments and private financing, to conduct our day-to-day operations, and to fully execute our business plan. We plan to raise the capital necessary to fund our business through the sale of equity securities, debt instruments or private financing. These factors raise substantial doubt upon the Company’s ability to continue as a going concern. This report does not reflect all the adjustments that may be necessary if the Company is unable to continue as a going concern.

20

Our Current Business

Pharmagreen Biotech Inc. (the “Company”) was incorporated under the laws of the State of Nevada on November 26, 2007. The Company is headquartered in Coquitlam, British Columbia. The Company’s mission is to advance the technology of tissue culture science and to provide the highest quality 100% germ free, disease free and all genetically the same plantlets of high CBD hemp and other flora and offering full spectrum DNA testing for plant identification, live genetics preservation using low temperature storage for various cannabis and horticulture plants; extraction of botanical oils mainly CBD oil, and to deliver laboratory based services to the North American high CBD hemp, Cannabis and agriculture sectors.

Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. However, if the Company is unable to raise additional capital in the near future, due to the Company’s liquidity problems, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures. These consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

In 2021, the Company had changed its business development from Canada to the United States, as it was determined that the opportunities in the hemp and cannabis industries were much greater in the United States, specifically California.

On July 25, 2021, the Company entered into a Memorandum of Understanding (“MOU”) to acquire all the assets and cannabis business operations (includes 12 acres property, structure and cannabis licenses, existing sales channels and distribution networks) from a private company situated in Northern California. Upon reaching a definitive agreement, the Company intended to further develop a state-of-the-art flowering greenhouse of approximately 12,000 square feet or the maximum allowed by California State and Regional County. The acquisition price of $2.4 million was to be paid through a combination of cash and shares. The Company also had an option from the seller to acquire an additional 120 acres or more of land for business expansion and development. The Company currently lacks funds with which to consummate the contemplated transaction and has not negotiated a definitive agreement with respect to the contemplated transaction.

In 2022, the Cannabis market in California entered a regression stage with prices for the raw materials dropping below production costs including greatly diminished demand for the sun grown raw material. Because of the current state of the Cannabis market in California, the Company terminated the MOU during to the nine months ended June 30, 2023. The Company will revisit the development of the biotech complex infrastructure that will be capable of producing tissue cultured high CBD hemp starter plantlets, once the economy turns around.

Focusing on immediate revenues, the Company has been and is currently formulating its nutraceutical products from blends of therapeutic plants and fungi. Utilizing the Company’s expertise in plant genetics, Pharmagreen’s transgenic program uses the newest technology available to research and create nutraceuticals, for daily supplements with the potential to help, support and improve human lives, and to address a wide variety of ailments.

Pharmagreen’s first new product, MaxGenomic(TM) Supplement, is a proprietary blend, formulated in the U. S. A., of nine medicinal mushrooms and six medicinal plants to help support the human mind and body. This supplement is produced in a U.S.A cGMP facility, in enteric capsules to enhance the bioavailability of the MaxGenomic(TM) supplement.

21

Capital Resources and Liquidity

Our auditors have issued a “going concern” opinion on the Company’s or our audited financial statements for the latest year ended September 30, 2022, meaning that there is substantial doubt if we can continue as an on-going business unless we obtain additional capital. No substantial revenues from our planned business model are anticipated until we have completed financing the Company. As at June 30, 2023, the Company has a working capital deficit of $2,147,349 and an accumulated deficit of $12,965,155. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

We need to seek capital from resources such as the sale of private placements in the Company’s common stock or debt financing, which may not even be available to the Company. However, if such financing were available, because we are a, early-stage company with no or limited operations to date, it would likely have to pay additional costs associated with such financing and in the case of high risk loans be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such financing. If the Company cannot raise additional proceeds via such financing, it may be required to cease business operations.

As of June 30, 2023, we had $5,315 in cash, amounts receivable of $606, and prepaid expenses and deposits of $36,295, as compared to $8,016 in cash, amounts receivable of $383 and prepaid expenses and deposits of $200,572 as of September 30, 2022. As of the date of this Form 10-Q, the current funds available to the Company will not be sufficient to fund the expenses related to maintaining our planned operations. We are in the process of seeking additional equity financing in the form of private placements, loans and registration statements to fund our intended business operations.

Management believes that if subsequent private placements are successful or we are successful in raising funds from registered securities, we will generate sales revenue within twelve months thereof. However, additional equity financing may not be available to us on acceptable terms or at all, and thus we could fail to satisfy our future cash requirements.

We do not anticipate researching any further products nor the purchase or sale of any significant equipment. We also do not expect any significant additions to the number of employees.

Results of Operations

Three Months Ended June 30, 2023

We had insignificant revenue for the three months ended June 30, 2023, and no revenue for the three months ended June 30, 2022.

Operating expenses in the three months ended June 30, 2023, were $82,193 as compared to operating expenses for the three months ended June 30, 2022 of $241,218. The net decrease in expenses during the current period is mainly due to the decrease in consulting fees from $198,091 in 2022 to $51,472 in 2023.

We had a comprehensive loss of $193,785 during the three months ended June 30, 2023, compared to comprehensive income of $292,280 during the three months ended June 30, 2022. The increase in comprehensive loss in 2023 was mainly attributable to a change in fair value of derivative liabilities from a gain of $510,066 in 2022 to a loss of $66,738 in 2023, which resulted from fluctuations of the derivative liability due to the floating rates attached to the conversion rights of the convertible debt.

During the three months ended June 30, 2023, and 2022, we recognized a net loss of $162,931 and a net income of $251,935, respectively.

Nine Months Ended June 30, 2023

We had insignificant revenue for the nine months ended June 30, 2023, and no revenue for the nine months ended June 30, 2022.

Operating expenses in the nine months ended June 30, 2023, were $383,513 as compared to operating expenses for the nine months ended June 30, 2022, of $903,738.  The net decrease in expenses during the current period is mainly due to the decrease in consulting fees from $761,972 in 2022 to $275,505 in 2023.

We had a comprehensive loss of $435,680 during the nine months ended June 30, 2023, compared to a comprehensive loss of $744,130 during the nine months ended June 30, 2022. The decrease in comprehensive loss in 2023 was mainly attributable to a decrease in operating expenses of $520,225 and a change in fair value of derivative liabilities from a gain of $180,423 in 2022 to a gain of $77,064 in 2023, which resulted from fluctuations of the derivative liability due to the floating rates attached to the conversion rights to the convertible debt.

During the nine months ended June 30, 2023, and 2022, we recognized net loss of $390,287 and $765,082, respectively.

22

Off-balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management including our principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure.

In connection with this quarterly report, as required by Rule 15d-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of the design and operation of our Company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our Company’s management, including our company’s principal executive officer and principal financial officer. Based upon that evaluation, our Company’s principal executive officer and principal financial officer concluded that as of June 30, 2023, our disclosure controls and procedures were not effective due to the existence of material weaknesses in our internal controls over financial reporting.

The matters involving internal controls and procedures that the Company’s management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee and lack of a majority of outside directors on the Company’s board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. Due to these material weaknesses management concluded that our internal control over financial reporting was not effective as of September 30, 2022.

Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an effect on the Company’s previous reported financial results. However, management believes that the lack of a functioning audit committee and lack of a majority of outside directors on the Company’s board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures can result in the Company’s determination to its financial statements for the future periods.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)) during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Turner, Stone & Company, L.L.P., our independent auditors, are not required to and have not performed an assessment of our internal controls over financial reporting.

23

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

On July 22, 2020, the Company received a preliminary statement of claim from a convertible note holder for failure of the Company to deliver shares of common stock upon receipt of notices of conversion. Pursuant to the claim, the plaintiff has requested receipt of all shares of common stock requested in the notices of conversion, and also damages in an amount to be determined at trial but in any event in excess of principal amount of $78,000 for a total sum of $180,000, including without limitation the balance of any portion of the convertible note that ultimately is not converted into shares of common stock, along with default interest, liquidated damages, and damages as provided for in the convertible note.

On October 9, 2020, a stay order was lifted by a United States District Judge of the United States District Court for the Southern District of New York, on an action filed by a lender. This effectively removed the Company from its Chapter 11 bankruptcy proceedings and protection. The lifting of the stay order further allowed the convertible note holders to convert thereby increasing the number of shares issued and outstanding.

On October 29, 2020 a second note holder filed a statement of claim. This lender, as of December 24, 2020, has completely converted the full amount of the note of $100,000, interest of $8,690 and penalty and fees aggregating $19,500.

Also, as mentioned above, the Company filed voluntary petitions for reorganization under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Nevada on August 7, 2020. The Company’s filing with the Court was designated as Case No. 20-13886. During the pendency of this matter, the Company has also filed motions with the Court seeking authorization to continue to operate its businesses as “debtors-in-possession” under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court. Due to the stay order mentioned, the Company did not file a plan of reorganization with the Court for approval.

On March 12, 2021, the Company entered into a settlement agreement with the convertible noteholder that had filed a preliminary statement of claim on July 22, 2020. Pursuant to the agreement the Company was required to honor various conversion notices and the note holder agreed to wave all principal, interest and penalties incurred.

On March 10, 2021, the promissory note holder referred to in Note 4 (a) of the accompanying consolidated financial statements filed a Notice of Motion For Summary Judgement in Lieu of Complaint (the “Notice”) with the State of New York Supreme Court, County of New York for $40,504 plus interest at the rate of 10% per annum from January 6, 2021 plus costs. On July 31, 2021, the Notice was dismissed without prejudice by the State of New York Supreme Court. On October 20, 2021, the promissory note holder filed an Amended Notice of Motion for Summary Judgment in Lieu of Complaint with the State of New York Supreme Court, County of New York for $44,504 plus interest at the rate of 10% per annum from January 6, 2021, plus costs and attorney fees. The plaintiff filed for an oral argument which was heard by the State of New York Supreme Court on September 15, 2022 and is pending a final decision. The Company believes the claim is without merit, as evidenced by the initial claim being dismissed by the same courts, and will vigorously defend its position.

Except as mentioned in the preceding paragraphs, there are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or stockholder is a party adverse to the Company or has a material interest adverse to the Company.

24

Item 1A. Risk Factors.

As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.

Item 2. Unregistered Sales of Securities and Use of Proceeds.

None

Item 3. Defaults Upon Senior Securities.

The commencement of the Chapter 11 Cases discussed above constituted an event of default under certain of the Company’s debt instruments, including various convertible notes, which resulted in automatic acceleration of the Company’s obligations under such debt instruments. Any efforts to enforce payment obligations under the aforementioned debt instruments are automatically stayed as a result of the filing of the Chapter 11 Cases and the creditors’ rights of enforcement in respect of the debt instruments are subject to the applicable provisions of the Bankruptcy Code.

Item 4. Mine Safety Disclosure.

N/A

Item 5. Other Information.

None

25

Item 6. Exhibits.

The following documents are filed as a part of this report or are incorporated by reference to previous filings, if so indicated:

Exhibit Number	Description
(3)	Articles of Incorporation; and (ii) Bylaws
3.1	Articles of Incorporation and Bylaws dated November 26, 2007, as previously filed with the SEC on March 20, 2019.
3.2	Articles of Merger dated, October 30, 2008 (Azure International, Inc./ Air Transport Group Holding, Inc. as previously filed with the SEC on March 20, 2019.
3.3	Securities Exchange Agreement dated April 12, 2018, by and among Air Transport Group Holdings Inc. and WFS Pharmagreen Inc., as previously filed with the SEC on March 20, 2019.
3.4	Articles of Incorporation and Bylaws dated December 19, 2013 for WFS Pharmagreen Inc. as previously filed with the SEC on March 20, 2019.
3.5	Articles of Incorporation and Bylaws dated March 2, 2018 for BC1155097 as previously filed with the SEC on March 20, 2019.
3.6	Articles of Incorporation and Bylaws dated August 2, 2018 for BC1174505 as previously filed with the SEC on March 20, 2019.
(10)	Material Contracts
10.1	Option Agreement with Alliance Growers January 25, 2019 as previously filed with the SEC on March 20, 2019.
10.2	Equity Purchase Agreement with Oscaleta Partners LLC as previously filed with the SEC on December 2, 2019.
10.3	Registration Rights Agreement with Oscaleta Partners LLC as previously filed with the SEC on December 2, 2019.

26

(31)	Rule 13a-14(a)/15d-14(a) Certifications
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a–14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
31.2	Certification of Principle Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.*
(32)	Section 1350 Certifications
32.1	Certification of Chief Executive Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principle Financial Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL 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 Labels 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).

* Included in Exhibit 31.1

** Included in Exhibit 32.1

27

SIGNATURES*

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Pharmagreen Biotech Inc.
Dated August 14, 2023	By:	/s/ Peter Wojcik
		Peter Wojcik
		President and Director Principal Executive Officer

By:	/s/ Terry Kwan
	Terry Kwan
	Principal Accounting Officer

28