0001387131-19-002745.txt : 20190418 0001387131-19-002745.hdr.sgml : 20190418 20190418144245 ACCESSION NUMBER: 0001387131-19-002745 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 46 CONFORMED PERIOD OF REPORT: 20160831 FILED AS OF DATE: 20190418 DATE AS OF CHANGE: 20190418 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Phoenix Life Sciences International Limited. CENTRAL INDEX KEY: 0001493212 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 460525378 STATE OF INCORPORATION: NV FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-167275 FILM NUMBER: 19755594 BUSINESS ADDRESS: STREET 1: 3000 LAWRENCE STREET CITY: DENVER STATE: CO ZIP: 80205 BUSINESS PHONE: 1.720.699.7222 MAIL ADDRESS: STREET 1: 3000 LAWRENCE STREET CITY: DENVER STATE: CO ZIP: 80205 FORMER COMPANY: FORMER CONFORMED NAME: MEDIJANE HOLDINGS INC. DATE OF NAME CHANGE: 20140310 FORMER COMPANY: FORMER CONFORMED NAME: MOKITA, INC. DATE OF NAME CHANGE: 20130604 FORMER COMPANY: FORMER CONFORMED NAME: MOKITA VENTURES, INC. DATE OF NAME CHANGE: 20120521 10-Q 1 plsi-10q_083116.htm QUARTERLY REPORT

 

 

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 August 31, 2016

 

OR

 

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: 333-167275

 

Phoenix Life Sciences International Limited

(Exact name of registrant as specified in its charter)

 

Nevada   46-0525378

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

   
3000 Lawrence Street, Denver, CO   80205
(Address of principal executive offices)   (Zip Code)

 

(720) 699.7222

(Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report)

 

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☐  No ☒

 

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

 

Large accelerated filer ☐   Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)   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 ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class  Outstanding as of February 28, 2019
Common Stock, $0.001 par value per share  32,584,582 shares

 

 

 

 

 

 

Phoenix Life Sciences International Limited

FORM 10-Q

For the Quarter Ended August 31, 2016

INDEX

 

    Page
PART I. FINANCIAL INFORMATION  
  Item 1. Financial Statements (unaudited) 3
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 22
  Item 3. Quantitative and Qualitative Disclosures About Market Risk 25
  Item 4. Controls and Procedures 26
         
PART II. OTHER INFORMATION  
  Item 1. Legal Proceedings 26
  Item 1A. Risk Factors 27
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 27
  Item 3. Defaults upon Senior Securities 27
  Item 4. Mine Safety Disclosures 27
  Item 5. Other Information 27
  Item 6. Exhibits 27
         
SIGNATURE 28

 

Forward Looking Statements.

This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors”, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

 

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our financial statements are stated in United States Dollars ($) and are prepared in accordance with United States Generally Accepted Accounting Principles.

 

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States Dollars and all references to “common shares” refer to the common shares in our capital stock.

 

Except as otherwise indicated by the context, references in this report to “we”, “us” “our” and “the Company” are references to Phoenix Life Sciences International Limited.

 

 

 

 

Item 1. Financial Statements

 

Phoenix Life Sciences International Limited

Consolidated Balance Sheets

         
   August 31,
2016
$
   February 29,
2016
$
 
   Unaudited   Audited 
ASSETS          
           
Cash   2,519    7,591 
Notes receivable, related party   238,252    249,352 
Total Current Assets   240,771    256,943 
Total Assets   240,771    256,943 
           
LIABILITIES          
           
Current Liabilities          
Accounts payable and accrued liabilities   500,053    512,642 
Due to related parties   267,219    267,219 
Current Liabilities   767,272    779,861 
           
Convertible notes payable, net   297,708    193,306 
Derivative liability   243,579    397,512 
Total Liabilities   1,308,559    1,370,679 
           
STOCKHOLDERS’ DEFICIT          
           
Common Stock          
Authorized: 990,000,000 common shares, par value of $0.001 per share           
Issued and outstanding: 28,245 and 25,845 common shares, respectively   28    26 
Issued and outstanding Preferred shares Series B – 2,000,000   200    200 
Series C – 995,600 and 998,000 respectively   100    100 
           
Additional paid-in capital   17,704,975    17,704,977 
           
Accumulated deficit during the development stage   (18,773,091)   (18,819,039)
Total Stockholders’ Equity (Deficit)   (1,067,788)   (1,113,736)
Total Liabilities and Stockholders’ Equity   240,771    256,943 

 

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

 

3

 

 

Phoenix Life Sciences International Limited

Consolidated Statements of Operations - Unaudited

 

   Three Months Ended   Six Months Ended 
   August 31, 2016   August 31, 2015   August 31, 2016   August 31, 2015 
Income Statement      restated       restated 
Revenues  $   $15,975   $   $18,410 
Cost of Sales       5,035        5,933 
Gross Profit       10,940        12,477 
                     
Operating expenses                    
Product development expense       70,000        100,000 
Sales and marketing expenses       6,306        14,345 
Operations expense               1,745 
General and administrative   1,273    15,080    3,253    30,876 
Professional fees        79,437    330    217,712 
Lease operating expenses               7,500 
Total operating expenses   1,273    170,823    3,583    372,178 
Loss before other expenses   (1,273)   (159,883)   (3,583)   (359,701)
                     
Other income (expense)                    
Interest Income       980        2,093 
Interest Expense   (16,271)   (41,024)   (101,967)   (86,140)
Debt Issue costs       (7,830)       (7,830)
Discount Amortization           (2,435)   (46,049)
Gain (loss) on derivative liability   178,576    28,022    153,933    94,537 
Total other income (expense)   162,305    (19,852)   49,531    (43,389)
Net profit (loss)   161,031    (179,735)   45,948    (403,090)
                     
Basic and diluted loss per common share:                    
Income (loss) from continuing operations   5.70    (0.00)   1.63    (0.00)
Basic and diluted loss per common share  $5.70   $0   $1.63   $(0.00)
Weighted average shares outstanding - basic and diluted   28,245    258,030,222    28,206    364,290,048 

 

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

 

4

 

 

Phoenix Life Sciences International Limited

Consolidated Statements of Cash Flows

(Unaudited)

 

   Six Months Ended 
   August 31, 2016   August 31, 2015 
CASH FLOWS FROM OPERATING ACTIVITIES:          
           
Net loss$  45,948   $(403,090)
Adjustments to reconcile net loss to net cash used in operating activities:          
Non-cash amortization of discount on convertible notes payable   2,435    46,049 
Non-cash interest expense on convertible notes payable   101,967    86,140 
Non-cash stock option compensation        
Non-cash loss (gain) on derivative liability   (153,933)   (94,537)
           
Changes in operating assets and liabilities:          
Accounts receivable       2,300 
Deposit        1,250 
Inventory       5,933 
Accounts payable and accruals   (12,589)   226,871 
Net Cash provided by (used for) operating activities   (16,172)   (129,084)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
           
Related party notes receivable   11,100    8,907 
Net Cash provided by (used in) Investing Activities   11,100    8,907 
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
           
Proceeds from notes payable         
Due to related parties       111,250 
Net Cash Provided By Financing Activities       111,250 
Increase (Decrease) in Cash - continuing operations   (5,072)   (8,927)
Cash - Beginning of Period - continuing operations   7,591    9,400 
Cash - End of Period - continuing operations$  2,519   $473 
           

Supplemental disclosures

    
Interest paid         
Income tax paid   12,589     
Non-cash issuance of stock for consulting agreements        
Non-cash issuance of stock for distribution agreement        
Non-cash issuance of stock for conversion of debt       29,000 

 

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

 

5

 

1.Nature of Operations and Continuance of Business

 

The company was incorporated in the State of Nevada on April 21, 2009 under the name Mokita Exploration, Ltd. (the “Company”). On February 27, 2014, there was a change of control of the Company. On February 28, 2014, our board of directors and a majority of holders of the Company’s voting securities approved a change of name of the Company to MediJane Holdings Inc. A Certificate of Amendment to effect the change of name was filed and became effective with the Nevada Secretary of State on March 4, 2014.  A Certificate of Correction was subsequently filed with the Nevada Secretary of State on March 6, 2014 to correct a spelling error in the Company’s new name. These amendments have been reviewed by FINRA and were approved for filing with an effective date of March 12, 2014. The name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on March 12, 2014 under our new ticker symbol “MJMD”.

 

On March 8, 2017 the Company filed an Amendment to its Articles of Incorporation (the “Amendment”) with the Secretary of State of Nevada. As a result of the Amendment, the Company changed its name with the State of Nevada from MediJane Holdings, Inc. to Stem Bioscience, Inc.

 

In May 2018 the Company again changed its name to Phoenix Life Sciences International Limited. A Certificate of Amendment to effect the change of name was filed and became effective with the Nevada Secretary of State on May 31, 2018. The name change was accepted by FINRA and became effective with the Over-the- Counter Bulletin Board on November 2, 2018 with the trading symbol “PLSI”.

 

On February 27, 2014, after the change of control, the Company became a sales and distribution company focused on cannabinoid infused products for the treatment of medical conditions.

 

On January 5, 2015, the Company underwent a change in control following the issuance of 276,000,000 common shares to Phoenix Bio Pharmaceuticals Corporation pursuant to a license agreement. On November 4, 2015, these shares were exchanged for 2,000,000 Series B Preferred Shares.

 

The business was then changed to only focus on Cannabidiol (CBD) products. CBD is a non-psychotropic cannabinoid that is not restricted as part of the U.S. Controlled Substances Act (CSA), as defined under the 2014 U.S Farming Bill to be derivatives of the Industrial Hemp plant that contains less than 0.3% tetrahydrocannabinol (THC). The company will contract out the manufacturing of the products. Phoenix Bio Pharmaceuticals Corporation and other groups may manufacture our products under our license agreement.

 

The Company follows the accounting guidance outlines in the Financial Accounting Standards Board Codification guidelines. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted principles for interim financial information and with the items under Regulation S-K required by the instructions to Form 10-Q. They may not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as disclosed here in, there have been no material change in the information disclosed in the notes to the financial statements for the year ended February 29, 2016 included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on March 13, 2019. The interim unaudited financial statements presented herein should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, which unless otherwise disclosed herein, consistent with normal re-occurring adjustments, have been made. Operating results for three months ended August 31, 2016 are not necessarily indicative results that may be expected for the year ended February 28, 2017.

 

6

 

 

Going Concern

 

These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company’s total operating expenditure plan for the following twelve months will require significant cash resources to meet the goals of its business plan. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.  These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.  

 

2.Summary of Significant Accounting Policies

 

Basis of Presentation – The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars.  The Company’s fiscal year end is February 28 or 29.

 

Basis of Consolidation – The consolidated financial statements include the accounts of Phoenix Life Sciences International Limited and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

 

On March 17, 2014, MediHoldings, Inc (“MediHoldings”), a Colorado corporation, was formed as a wholly owned subsidiary of the Company. On June 27, 2014, MediSales (CA), Inc. (“MediSales”), a California corporation, was formed as a wholly owned subsidiary of the Company. These companies have not traded and are inactive.

 

Stock Split – on October 21, 2015 the Company’s Board of Directors declared a One for 10,000 reverse stock split on its common stock as of a record date of October 22, 2015. The effect of the stock split decreased the number of shares of common stock outstanding from 501,242,594 to 50,125. All common share and per common share data in these financial statements and related notes here to have been retroactively adjusted to account for the effect of the stock split for all periods presented. The total number of authorized common shares on the par value thereof was not changed by the split.

 

Use of Estimates – The preparation of 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 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.

 

7

 

 

A significant item that requires management’s estimates and assumptions is the valuation of intangible assets, valuation allowances for income tax, valuation of derivatives instruments and accrued liabilities, among others. Although management believes these estimates are reasonable, actual results could differ from these estimates.

 

Cash and cash equivalents – The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. At August 31, 2016 and February 28, 2016, the Company did not hold any cash equivalents.

 

Accounts receivable – Accounts receivable consists of trade accounts arising in the normal course of business. No interest is charged on past due accounts. Accounts receivable are carried at the original invoice amount less a reserve for doubtful receivables based on a review of all outstanding amounts on a monthly basis.

 

Basic and Diluted Net Loss per Share – The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net 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. At February 28, 2016 and August 31, 2016, the Company had no outstanding stock options. At August 31, 2016 and 2015, the Company had did not have potentially dilutive shares outstanding.

 

Financial Instruments – Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1 – Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

Level 2 – Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

Level 3 – Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, amounts due to related parties, and convertible debenture. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

 

8

 

 

Derivative Financial Instruments – The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.

 

The Company reviews the terms of the common stock, warrants and convertible debt it issues 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. The Company uses a Black-Scholes model for valuation of the derivative. 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, using the effective interest method.

 

Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net cash settlement of the derivative instrument could be required within the 12 months of the balance sheet date.

 

Comprehensive Loss – ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at August 31, 2016 and 2015, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

 

Stock-based Compensation – The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505-50 - Equity-Based Payments to Non-Employees. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

 

We account for share-based payments granted to non-employees in accordance with ASC Topic 505, “Equity Based Payments to Non-Employees.” The Company determines the fair value of the stock-based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.  If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

 

The fair value of each share based payment is estimated on the measurement date using the Black-Scholes model with the following assumptions, which are determined at the beginning of each year and utilized in all calculations for that year:

 

9

 

 

Risk-Free Interest Rate. We utilized the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected term of our awards.  

 

Expected Volatility. We calculate the expected volatility based on a volatility index of peer companies as we did not have sufficient historical market information to estimate the volatility of our own stock. 

 

Dividend Yield. We have not declared a dividend on its common stock since its inception and have no intentions of declaring a dividend in the foreseeable future and therefore used a dividend yield of zero.

 

Expected Term. The expected term of options granted represents the period of time that options are expected to be outstanding.  We estimated the expected term of stock options by using the simplified method.  For warrants, the expected term represents the actual term of the warrant.

 

Forfeitures. Estimates of option forfeitures are based on our experience. We will adjust our estimate of forfeitures over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of compensation expense to be recognized in future periods.

 

Revenue Recognition – The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin Topic 13 when persuasive evidence of an arrangement exists and delivery has occurred, provided the fee is fixed or determinable and collection is probable. The Company assesses whether the fee is fixed and determinable based on the payment terms associated with the transaction. If a fee is based upon a variable such as acceptance by the customer, the Company accounts for the fee as not being fixed and determinable. In these cases, the Company defers revenue and recognizes it when it becomes due and payable. Up-front engagement fees are recorded as deferred revenue and amortized to income on a straight-line basis over the term of the agreement, although the fee is due and payable at the time the agreement is signed or upon annual renewal. Payments related to substantive, performance-based milestones in an agreement are recognized as revenue upon the achievement of the milestones as specified in the underlying agreement when they represent the culmination of the earnings process.

 

The Company assesses the probability of collection based on a number of factors, including past transaction history with the customer and the current financial condition of the customer. If the Company determines that collection of a fee is not reasonably assured, revenue is deferred until the time collection becomes reasonably assured. Significant management judgment and estimates must be made and used in connection with the revenue recognized in any accounting period. Material differences may result in the amount and timing of our revenue for any period if our management made different judgments or utilized different estimates.

 

Shipping and Handling costs – shipping and handling costs are included in cost of sales in the Statements of Operations.

 

Recent Accounting Pronouncements – The recent accounting pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company 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

 

 

Reclassifications - Certain amounts in the prior period financial statements have been reclassified to conform with the current period presentation. These reclassifications had no effect on previously reported losses, total assets or stockholders equity.

 

3.Variable Interest Entity

 

The Company follows the guidelines in FASB Codification of ASC 810 “Consolidation” which indicates “a legal entity that is deemed to be a business need not be evaluated by a reporting entity to determine if the legal entity is a Variable Interest Entity (“VIE”)” unless any one of four conditions exist: 

 

  - The reporting entity, its related parties, or both participated significantly in the design or redesign of the legal entity;
  - The legal entity is designed so that substantially all of its activities involve or are conducted on behalf of the reporting entity and its related parties;
  - The reporting entity and its related parties provide more than half of the total of the equity, subordinated debt, and other forms of subordinated financial support to the legal entity; or
  - The activities of the legal entity are primarily related to the securitizations or other forms of asset-backed financings or single-lessee leasing arrangements.

 

 A VIE is an entity that either (a) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (b) has equity investors who lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary. The primary beneficiary has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. If we determine that we have operating power and the obligation to absorb losses or receive benefits, we consolidate the VIE as the primary beneficiary, and if not, we do not consolidate. The Company has not identified any VIEs as of August 31, 2016.

 

4.Intangible Assets

 

Effective September 1, 2014, the Company changed its method of computing amortization from a sales percentage method to the straight-line method for the intangible assets. An assessment of useful life and / or discounted cash flow of the intangible asset is made and where the value is overstated the value is impaired.

 

5.Income Taxes

 

The deferred tax assets or liabilities represent the future tax benefits or cost of those differences. The Company’s principal deferred tax items arise from net operating losses. Net operating losses approximate $18,800,000 which expire in the years 2030 through 2037. The net operating loss results in a deferred tax asset of $2,820,000. As future earnings are uncertain, the Company has provided a valuation allowance for the entire amount of the deferred tax asset.

 

The Company is required to evaluate the tax positions taken in the course of preparing its tax returns to determine whether tax positions are “more likely than not” of being sustained by the applicable tax authority. “More likely than not” is defined as greater than a 50% chance. The Company is delinquent on nearly all of its tax filings. As a result, there are presently no uncertain tax position and no reserves for uncertain tax positions.

 

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The Company has no unrecognized tax benefits at February 29, 2016. The Company’s income tax returns are subject to examination by federal and state tax authorities. Due to the failure to file its tax returns, all prior tax years are open to examination. The Company recognizes interest and penalties associated with uncertain tax positions as part of the income tax provision and would include accrued interest and penalties with the related tax liability in the balance sheet. There were no interest and penalties paid or accrued during the years ended February 29, 2016.

 

6.CV Sciences, Inc. FKA CannaVest Corp.

 

On December 23, 2014, the Company entered into a convertible promissory note for $1,200,000 with CannaVest Corp.  The note represents $1,200,000 worth of raw material inventory to be obtained from CannaVest Corp. to use in the Company’s cannabidiol product formulations.  The note accrues simple interest at a rate of 10% per annum and is due and payable in six months from the date of issue.  The note cannot be prepaid.  At any time, the outstanding principal amount of this note and all accrued but unpaid interest under this note can be converted into common shares at a price equal to the lesser of $0.02 per common share, the closing sale price, or the average of the lowest closing sale prices of the Company’s common shares during the five trading day period immediately preceding the date of such determination.  

 

Should the Company default on this convertible promissory note, all outstanding obligations payable by the Company are immediately due and payable.  In addition, CannaVest Corp. may exercise any other right, power or remedy permitted by law.  Further, upon even of default, all unpaid obligations under this note shall bear interest at the rate of 12% per annum.

 

Warrant Agreement

 

In connection with the convertible promissory note dated December 23, 2014, the Company subsequently issued warrants to purchase 20,000,000 common shares at an exercise price of $0.02 per common share to Kisha Spendthrift Trust, an affiliate of CannaVest Corp.  These warrants were issued on January 6, 2015.  In exchange for these warrants, the Company shall have access to the technical and management staff of CannaVest Corp. for the development of products to be manufactured from cannabidiol sourced from CannaVest Corp.  

 

On or about January 25, 2016, the Company entered into an Amendment No. 1 to the Convertible Promissory Note executed by and between the Company and CV Sciences, Inc (FKA Cannavest Corp. and referred to herein as “CVS”) dated December 23, 2014 (the “Note”), whereby the company and CVS agreed to terminate the Note upon the Company’s return of five containers of raw hemp oil to CVS. As of February 28, 2017 all remaining product had been returned to CVS, as the inventory did not meet quality standards and was returned for a reduction of the note balance.

 

It was determined that the remaining inventory should be written off as at February 29, 2016.

 

7.Subsidiary Companies

 

On March 17, 2014, MediHoldings, Inc. (“MediHoldings”), a Colorado corporation, was formed as a wholly-owned subsidiary of the Company.

 

On June 27, 2014, MediSales (CA), Inc. (“MediSales”), a California corporation, was formed as a wholly-owned subsidiary of the Company.

 

Both these subsidiaries as at August 31, 2016 had not traded and were inactive.

 

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8.Related Party Transactions

 

Martin Tindall

 

Mr. Martin Tindall, assists the Company with business development activities through the Advisory Services Agreement with Kronos as discussed below. Mr. Tindall serves as the CEO of Kronos. Additionally, Mr. Tindall has provided new product development services through a New Product Development Agreement with Phoenix Pharms Capital Corporation, as discussed below. Mr. Tindall services as CFO and a Director of Phoenix Pharms Capital Corporation. Mr. Tindall also serves as a director of Phoenix Bio Pharmaceuticals Inc.

 

Kronos International Investments Ltd. (“Kronos”)

 

Sublease Agreement: Effective March 1, 2014, the Company entered into a Sublease Agreement with Kronos for a four (4) year term. Kronos’s CEO, Martin Tindall also provides advisory services to the Company. The monthly sublease rent is $2,500 per month. During the year ended February 29, 2016, the Company paid Kronos $7,500 in rent expense, and had previously paid security deposit of $1,250. In June 2015, the sublease was cancelled and the security deposit of $1,250 was offset against amounts owed to Kronos for advisory service fees. No payments were made to Kronos for the period March 1, 2016 and August 31, 2016.

 

Advisory Services: Effective March 1, 2014, the Company engaged Kronos to provide Advisory Services for a monthly retainer fee of $10,000 per month. The advisory services include and are not limited to accounting and corporate compliance, business development and strategic planning services, corporate advisory and operational oversight. For the year March 1, 2015 and February 29, 2016, expenses related to the Advisory Services were $120,000. There were no payments made for the period March 1, 2016 and August 31, 2016.

 

Phoenix Pharms Capital Corporation (“Phoenix Pharms”)

 

Related Party Loan: On September 18, 2014, the Company advanced Phoenix Pharms a total of $85,000 as a short term loan. The loan bears a simple interest rate of 8% and was due and payable on May 31, 2014. As of February 28, 2016, the Company has received principal payments totaling $26,425 including cash payment of $15,900, and expense offset $10,525. As of February 28, 2016, accrued interest on this loan is $2,687. As of August 31, 2016, the outstanding balance due the Company on this related party loan is $42,392.

 

Russell Stone: Mr. Russell Stone, the Company’s Chief Operating Officer, holds approximately 14% of the outstanding common shares of Phoenix Pharms Capital Corporation indirectly through a trust.

 

Lewis “Spike” Humer:

 

Mr. Humer, the interim Chief Executive officer and a director of the Company, serves as CEO and a director of Phoenix Bio Pharmaceuticals and CEO and a director of Phoenix Pharms Capital Corporation. As of August 2014, the Company began paying Mr. Humer a consulting fee of $1,500 per week. As of February 28, 2015, the Company has paid Mr. Humer $19,000 and has accrued a related party payable to Mr. Humer of $27,000. During the year from March 1, 2015 to February 29, 2016, a further $81,000 was accrued to Mr. Humer. There were no further accruals from March 1, 2016 to February 28, 2017.

 

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9.Common Stock

 

The Company has authorized 990,000,000 shares of its common stock, $0.001 par value. On February 29, 2016 there were 25,845 shares of common stock on issue.

 

On March 4, 2016, YP Holdings LLC converted 2,400 series C preferred stock to 2,400 shares of common stock.

 

As at August 31, 2016, there were 28,245 shares of common stock issued and outstanding.

 

10.Preferred Stock

 

On September 22, 2015, the Company amended and restated its Articles of Incorporation to create and authorize four (4) classes of preferred stock.  The Company has authorized Series A, Series B, Series C and Series D Preferred Stock (the “Preferred Stock”).  

 

Series A Preferred Stock:

Series A preferred shares have a par value of $0.0001, and are convertible into common shares at $1.00 per common share.  Series A preferred shares rank senior to common stock with respect to the right to participate in distributions or payments in the event of liquidation, dissolution, or winding up of the Company.  Holders of Series A preferred shares are entitled to a preferred return equal to the purchase price paid for such Series A preferred shares.  Series A preferred shares do not have any voting rights.

 

Holders of Series A preferred shares are not entitled to preemptive rights to purchase stock in future stock offerings of the Company.  Holders of Series A preferred shares have the right to register their unregistered stock when either the Company or another investor initiates a registration of the Company’s securities, and they have the right of co-sale.  Holders of Series A preferred shareholders are not required to sell all of their Series A preferred shares on the same terms or conditions of a co-sale by a majority shareholder.  There is no right of first refusal for Series A preferred shares.

 

Series B Preferred Stock:

Series B preferred shares have a par value of $0.0001, and are convertible into common shares at a rate of 100 common shares per preferred share.  Series B preferred shares are entitled to cast 500 votes for each preferred share owned.  Series B preferred shares are senior to common shares with respect to the right to participate in distributions or payments in the event of any liquidation, dissolution, or winding up of the Company, and holders of Series B preferred shares are entitled to receive a preferred return equal to the purchase price paid for such Series B preferred stock.

 

Holders of Series B preferred shares are entitled to preemptive rights to purchase stock in future offerings, and have the right to register their unregistered stock when either the Company or another investor initiates a registration of the Company’s securities.  Holders do not have the right of co-sale, and are not required to sell all of their Series B preferred shares on the same terms or conditions of a co-sale by a majority shareholder.  If any Series B preferred shareholder wishes to sell, transfer or otherwise dispose of any or all of their Series B preferred shares, the other Series B preferred shareholders shall not have a prior right to buy such Series B preferred shares.

 

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Series C Preferred Stock:

Series C preferred shares have a par value of $0.0001, and are convertible into common shares at a rate of $1.00 per common share.  Series C preferred shares are not entitled to any voting rights, unless such vote is to modify rights, preferences, privileges and restrictions granted to and imposed on Series C preferred shares.  Series C preferred shares are senior to common shares and Series B preferred shares with respect to the right to participate in distributions or payments in the event of any liquidation, dissolution, or winding up of the Company, and holders of Series C preferred shares are entitled to receive a preferred return equal to the purchase price paid for such Series C preferred, which is deemed to be $600,000. If the closing price per share of the Company’s common shares is less than $1.00 for a period of five consecutive trading days, the YP Holdings will have the one-time right, exercisable at its discretion, to require that the conversion price of the shares become equal to 75% of the average closing bid price per shares for the five consecutive trading days immediately preceding the date that YP Holdings notifies the Company that it wishes to convert some or all of its Series C preferred shares into common shares.  The reset shall not be available if the proceeds of the sale of converted common shares equals or exceeds $750,000.  Should proceeds of the sale of converted common shares equal or exceed $1,000,000, any unconverted Series C preferred shares shall be returned to the Company for retirement.  Converted common shares are subject to a leak-out agreement, and no more than 50,000 common shares may be sold by YP Holdings in any one month.

 

Holders of Series C preferred shares are entitled to receive a preferred return equal to 10% of the gross cash sales income received in the ordinary course of business.  Holders are not entitled to preemptive rights to purchase shares in future offerings of the Company.

 

Holders of Series C preferred shares have the right to register their unregistered shares when either the Company or another investor initiates a registration of the Company’s securities.  Holders have the rights of co-sale, and are not required to sell all of their Series C preferred shares on the same terms or conditions of a co-sale by a majority shareholder.  If any Series C preferred shareholder wishes to sell, transfer, or otherwise dispose of any or all of their Series C preferred shares, other Series C preferred shareholders shall not have a prior right to buy such shares.

 

Series D Preferred Stock

Series D preferred shares have a par value of $0.0001, and are convertible into common shares at a conversion rate of $1.00 per common share.  Series D preferred shares rank senior to common shares and the Series B preferred shares.  In the event of any liquidation, dissolution, or winding up of the Company, holders of Series D preferred shares shall be entitled to receive a preferred return equal to the purchase price paid for such Series D preferred shares after payment of the preferred returns relating to the Series A and C preferred shares.  Series D preferred shares are not entitled to voting rights.

 

Holders of Series D preferred shares shall be entitled to receive a preferred return equal to 10% of the Gross Cash Sales Income received in the ordinary course of business.  Upon issue of the dividend, the value of such shares shall be deemed to be retired.  Holders of Series D preferred shares are not entitled to preemptive rights to purchase stock in future offerings of the Company.  Holders of Series D preferred shares have the right to register their unregistered stock when either the Company or another investor initiates a registration of the Company’s securities.  Holders of Series D preferred shares have the right of co-sale, but they are not required to sell all of their Series D preferred shares on the same terms or conditions of a co-sale by a majority shareholder.

 

As at February 28, 2016, Phoenix Bio Pharmaceuticals Corporation had been issued 2,000,000 Series B Preferred Shares. YP Holdings, LLC had been issued 1,000,000 Series C Preferred Shares. but had converted 2,000 into common shares and therefore owned 998,000 Series C Preferred Shares.

 

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On March 4, 2016, YP Holdings, LLC converted 2,400 series C preferred stock to 2,400 shares of common stock.

 

As at August 31, 2016, Phoenix Bio Pharmaceuticals Corporation held 2,000,000 Series B Preferred Shares. YP Holdings, LLC had been issued 1,000,000 Series C Preferred Shares. but had converted 4,400 into common shares and therefore held 995,600 Series C Preferred Shares.

 

11.Common Stock Options

 

As at August 31, 2016 and February 29, 2016 there were no common stock options on issue.

 

12.Convertible Promissory Note

 

On June 24, 2014, the Company entered into a securities purchase agreement with Typenex Co-Investment, LLC, a Utah limited liability company. Under this agreement, the Company has issued a secured convertible promissory note in the original principal amount of $1,105,000, deliverable in eleven tranches (the “Typenex Note”). On the closing date, Typenex delivered the initial cash purchase price of $150,000, plus any interest, costs, fees or charges accrued under the Typenex Note, including the original issue discount of $20,000. The outstanding principal and accrued and unpaid interest on the Typenex Note is convertible at any time into shares of common stock at a conversion price of $1.00, subject to adjustment as described below (the “Lender Conversion Price”). As of June 24, 2014, the Company evaluated the Beneficial Conversion Feature under this note and determined as of June 24, 2014, there was no beneficial conversion feature as the Lender Conversion Price exceeded the fair market value of the Company’s common stock.

 

As of November 30, 2014, the company has received net proceeds of $135,000 related to this convertible promissory note, representing $150,000 less financing costs of $15,000. During the nine months ended November 30, 2014 the Company has recorded interest expense of $7,725, and amortization expense of $554,413 related to the amortization of the original issue discount and the full-value of the warrant discussed below ($552,500).

 

Each subsequent tranche will be in the amount of $85,000, plus any interest, costs, fees or charges accrued thereon under the terms of the Typenex Note, including the original issuer discount of $8,500. Each tranche will be accompanied by its own secured investor note (the “Investor Notes”). The Company has agreed to pay $5,000 to cover Typenex’s legal fees, accounting costs, due diligence, monitoring and other transaction costs in connection with the purchase and sale of the Typenex Note. All loans received bear an interest rate of 10% per annum. The loan is due 23 months after the initial cash purchase price is delivered to the Company. Typenex has pledged a 40% membership interest in Typenex Medical, LLC to secure its obligations under all of the Typenex Notes.

 

A warrant to purchase shares of the Company has been issued to Typenex as of June 24, 2014. This warrant grants Typenex the ability to purchase a number of fully paid and non-assessable shares of the Company’s stock, par value $0.001, equal to $552,500 divided by the market price. This warrant is issued pursuant to the terms of the securities purchase agreement as described above.

 

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Provided there is an outstanding balance, the Company will pay an installment amount equal to $61,388.89 plus any accrued and unpaid interest on the installment due date, which is six months after the initial loan disbursement. This installment amount is the maximum that must be paid on any given installment due date, and is limited by the amounts owed. This amount can be converted at the lesser of either the lender conversion price or at 70% of the average of the three lowest closing bid prices in the 20 trading days immediately preceding the applicable conversion. Should the average trading price be less than $0.35 during any such period, then the conversion factor will be reduced to 65% for all future conversion, additionally the conversion price will be reduced by 5% if the Company’s common stock is not available for DWAC. Should the Company decide to prepay this amount, there is a prepayment premium equal to 125% of the outstanding balance of the Typenex Note. Should the prepayment premium not be paid within 2 days of the prepayment notice, the Company forfeits its right to prepay the Typenex Note.

 

Under this agreement, Typenex has the right at any time after the purchase price date until the outstanding balance has been paid in full to convert any or all of the outstanding balance into shares of the Company’s common stock under the following formula: the number of shares issued equals the amount being converted divided by $1. These shares must be delivered to Typenex within three trading days of the conversion notice being given to the Company. Should any shares be sold to Typenex or any third party at a value that is less than the effective lender conversion price, then the lender conversion price will be reduced to equal such lower issuance price. The effective lender conversion price will also be adjusted as needed upon any forward or reverse split of the Company’s shares. Should the Company fail to deliver the shares in a timely manner, a late fee of the greater of $500 per day and 2% of the applicable lender conversion share value rounded to the nearest multiple of $100 will be assed for each day after the third that the Company is late (though not exceeding 200% of the applicable lender conversion share value.

 

In the event of a default, the Typenex Note may be accelerated by Typenex by providing written notice to the Company. The outstanding balance is immediately due and payable at the greater of the outstanding balance divided by the installment conversion price, or the default effect, which is calculated by multiplying the conversion eligible outstanding balance by 15% for each major default or 5% for each minor default and then adding the resulting product to the outstanding balance as of the date of default. In addition, an interest rate of the lesser of 22% per annum (or the maximum rate permitted under law) will be applied to the outstanding balance. Typenex is prohibited from owning more than 4.99% of the Company’s outstanding shares, unless the market capitalization of the Company’s common stock is less than $10,000,000, in which case Typenex is prohibited from owning more than 9.99% of the Company’s outstanding shares.

 

On a date that is 23 trading days from each date that the Company delivers conversion shares to Typenex, there is a true-up date in which the Company will deliver additional shares if the installment conversion price on that date is less than the installment conversion price used in the applicable installment notice. These additional shares will be equal to the difference between the number of shares that would be delivered to Typenex at the time of the true-up date and the amount originally delivered.

 

Notice of Default – on January 9, 2015, the Company received a Notice of Default from Typenex under the Convertible Promissory Note described in Note 12 above. In the letter, the noteholder described two major defaults where the Company failed to meet its obligations under the Typenex Note. The first default was triggered on December 16, 2014 related to a request from the noteholder to increase the number of shares reserved for issuance under the Typenex Note on the books of the Company’s transfer agent. The second default was triggered on December 27, 2014, when the Company failed to make its first installment payment of $61,888.89 according to the terms of the Typenex Note. Each default triggered a penalty of 115% of the then outstanding principal and accrued and unpaid interest and triggers the interest rate to 22%. As of January 9, 2015, the outstanding principal, accrued interest and accrued penalties on the Typenex Note was $239,483.61. On January 23, 2015, the Company satisfied its first default by instructing its transfer agent to reserve a total of 50,925,000 shares of common stock covering the potential conversion of the original principal value of the Typenex Note ($1,100,000) plus common shares issuable upon the exercise of warrants underlying the Typenex Note. On February 12, 2015, the Company received a notice from Typenex waiving the penalties on the December 16, 2014 default and waived $26,755.16 of penalties imposed on December 16, 2014. Under the terms of the Typenex Note, the Lenders Conversion Price will reset to 60% of the average of the three lowest closing bid prices of the Company’s common stock in the 20 days prior to conversion. As of December 16, 2014, the Company has re-evaluated the beneficial conversion feature under the Typenex Note and has recorded a liability for the beneficial conversion feature totaling $230,392. This discount will be amortized over the remaining life of the Typenex Note.

 

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On February 3, 2015, the Company exercised its borrower offset right under the Typenex Note.  Through this offset right, the Company is entitled to deduct and offset any amount owing by Typenex under the initial securities purchase agreement dated June 24, 2014 from any amount owed by the Company under the note.  The combined balance of the secured investor notes and the investor notes as of the January 28, 2015 offset date was $890,800.  In addition, the note balance prior to the offset included $85,000 of unearned original issue discounts.

 

In conjunction with the Company’s exercise of its offset right, the Company and Typenex each hereby acknowledge that the secured investor notes and the investor notes were offset against the Company balances owed under the note as of the offset date, and as a result thereof, each of the secured investor notes and the investor notes is deemed to have been paid in full and are now cancelled and terminated and the Company balance owed under the note has been reduced to $218,028.47 as of the offset date.  Additionally, the Company specifically acknowledges that Typenex has no further obligations under any of the secured investor notes and investor notes.

 

Further, the Company acknowledges that the investor pledge agreement, dated June 24, 2014, and all security interests granted thereunder with respect to the collateral (as defined in the investor pledge agreement) have terminated and all such security interests shall be deemed released.

 

Notice of Conversion – Between February 28, 2016 and August 31, 2016, the Company has received no further conversion notices from its noteholder on the Typenex Note to convert principal on the Typenex Note into shares of the Company’s Common Stock at a market price as defined by the Typenex Note.

 

13.Securities Purchase Agreement

 

On September 17, 2014, the Company entered into a securities purchase agreement with YP Holdings, LLC.  YP Holdings, LLC has no material relationship with the Company other than with respect to this agreement.

 

Under this agreement, the purchasers will be purchasing units of one common share and two warrants to purchase common shares for $0.09 per unit, for a total of $600,000.  The common shares have a par value of $0.001 per share.  The warrants are exercisable for five years from the date of issuance and shall have an initial exercise price equal to $0.20.  As a result of this agreement, the Company issued 667 (6,666,667 pre-split) common shares and 1,333 (13,333,333 pre-split) warrants to the purchasers. On August 29, 2014 and September 17, 2014, the Company received gross proceeds of $100,000 and $500,000, respectively and has recorded financing fees of $18,000 and $52,000, related to this agreement.

 

The warrants can be exercised by paying the price for shares as stipulated by the warrant, or through cashless exercise, through which the purchaser will be issued a number of shares equal to the number of warrant shares applied to the subject exercise multiplied by the current market price on the date of conversion minus the exercise price on that date.  This total is then divided by the current market price on the date of conversion.  The cashless exercise may only be exercised after six months have passed from the original issuance of the warrants.

 

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The purchaser has waived the clause prohibiting conversion of warrants into common shares if that would result in the purchaser owning in excess of 4.99% of the outstanding shares.  A second clause prohibits the conversion of warrants if the purchaser owns in excess of 9.99% of the outstanding common shares.  This clause can be waived by the purchaser providing notice of waiver.

 

The Company has agreed to pay a flat $20,000 to YP Holdings, LLC to reimburse them for the fees and expenses incurred by it in connection with its due diligence review of the Company and the preparation, negotiation, executive, delivery and performance of the agreement.

 

The two parties also entered into a registration rights agreement.  Under this agreement, the Company will prepare and file a registration statement on Form S-1 in order to register all shares issued under the securities purchase agreement.  The Company will keep the registration statement continuously effective for a period of two years following the effective date of the registration statement.  The Company will pay all reasonable fees and expenses incurred with respect to this agreement.  Unless previously agreed to in writing, the Company may not register any shares other than those intended to be sold under this agreement.

 

Should the Company fail to comply with the registration rights agreement, the Company agrees to pay liquidated damages to YP Holdings, LLC equal to 3% of the purchase price of the common shares paid by the purchaser for the first 30 day period, and 2% of such purchase price for each subsequent 30 day period.  These payments are payable upon demand in cash.

 

Pursuant to the registration rights agreement, the Company agreed to several lock-up agreements between itself and four shareholders of the Company: Phoenix Bio Pharmaceuticals Corporation, Ronald Lusk, Lewis Humer, and Caduceus Industries LLC.  Under these agreements, each shareholder has agreed that they will not offer, pledge, sell, contract to sell, grant any options for sale or transfer, distribute or dispose of, directly or indirectly, any shares of the Company for a 90 day period following the date that the registration statement is declared effective.

 

Additionally, on September 16, 2014, the Company issued warrants to purchase 53 (533,333 pre-split) common shares to consultants for services rendered. The warrants expire five years from the date of issuance and are exercisable for $0.20 per share. The Company has valued these warrants using the Black Scholes option pricing model and has recorded expense related to the issuance of these warrants totaling $104,578 during the quarter ended May 31, 2014.

 

14.Subsequent Events

 

On September 15, 2016, Typenex Co-Investment, LLC exercised part of their warrant and were issued 2,822 shares of common stock.

 

On September 21, 2016, the registrant dismissed Fruci & Associates II, PLLC as their registered independent public accountant. On September 21, 2016, the Company’s Board of Directors approved the engagement of BMKR, LLP to provide auditing services on a prospective basis, and to perform a full audit of the Company’s books and records for the years ended February 29, 2016, February 28, 2017 and February 28, 2018.

 

On March 8, 2017, the Company filed an Amendment to its Articles of Incorporation (the “Amendment”) with the Secretary of State of Nevada. As a result of the Amendment, the Company has changed its name with the State of Nevada from MediJane Holdings, Inc. to Stem Bioscience, Inc.

 

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On May 31, 2018, the Company filed an Amendment to its Articles of Incorporation (the “Amendment”) with the Secretary of State of Nevada. As a result of the Amendment, the Company has changed its name with the State of Nevada from Stem Bioscience, Inc. to Phoenix Life Science International Limited.

 

Pursuant to the Agreement and Plan of Merger, dated as of September 18, 2018 as (The “Merger Plan” by and between Phoenix Life Sciences International Limited, a Nevada Corporation (the “Company”) and Phoenix Life Sciences International Limited, a Canadian Corporation (“PLSI CA”), the Company completed its merger with PLSI CA, with the Company as the surviving entity.

 

On September 18, 2018, the Company’s Board of Directors announced the finalized consolidation activities of Phoenix Life Sciences International Limited with Stem Biosciences, Inc., Blue Dragon Ventures, and the MediJane Brand, and that the Company’s common stock would trade publicly under the symbol MJMD.

 

On September 21, 2018, the Company announced it had obtained consent from the holder, Phoenix Bio Pharmaceuticals Corporation for the cancellation of 2,000,000 Preferred Series B shares in the Company in connection with the restructure of the Company and merger with Phoenix Life Sciences International Limited, a Canadian Corporation.

 

On September 22, 2018, the Company’s Board of Directors accepted the resignation of Russell Stone from his position as a Director.

 

On or about June 24, 2014, the Company entered into a Convertible Promissory Note with a face value of $1,105,000 (the “Note”) by and between the Company and Typenex Co-Investment, LLC (“Typenex”). On or about April 19, 2018, the Phoenix Life Sciences International Ltd, a Canadian Corporation (“PLSI CA”) acquired the entirety of the Notes outstanding principal and interest balance from Typenex. Upon the completion of the merger, that Note was conveyed to the Company.

 

On September 22, 2018, the Company’s Board of Directors resolved to deem the acquired Notes principal balance satisfied, and to terminate the Note and any and all rights and obligations arising thereunder, including without limitation the cancellation of all Warrants issued to Typenex under the Note.

 

On September 24, 2018, the Company issued 30,502,375 shares of common stock bearing the restricted legend without registration (the “Issued Shares”). Of these, 29,802,375 shares were issued in reliance on Rule 802 under the Securities Act in a 1:1 share exchange related to the merger of PLSI CA and the company as described above, and 700,000 shares were issued as compensation for services rendered in reliance of Section 4(a)(2) of the Securities Act. All of the Issued Shares were issued in private transactions, and the company received no proceeds from the Issued Shares. The Issued Shares, in conjunction with the 47,571 shares of common stock previously issued by the Company, brings the current issued and outstanding share count to 30,549,946.

 

On October 3, 2018, the following persons were appointed to the Board of the Company, Stephen Cornford, Martin Tindall as Chief Executive Officer, Janelle Marsden as Managing Director and Geoffrey Boynton as Chief Financial Officer. Lewis “Spike” Humer stepped down from his executive role but remains a Director.

 

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On October 3, 2018, the Company agreed to issue 48,000 shares of restricted common stock to KHAOS Media Group as compensation for services rendered in reliance of Section 4(a)(2) of the Securities Act for services previously rendered and invoiced between March and December 2014.

 

On November 2, 2018, FINRA confirmed the name change and change of symbol to “PLSI”.

 

On November 9, 2018, the Company announced that 2,000,000 Series C Preferred Stock had been cancelled and all convertible debt had been retired. There was no outstanding preferred stock on issue as at this day.

 

On December 4, 2018, the Company issued 229,600 common shares as part of settlement agreements.

 

On December 17, 2018, the Company issued 675,028 common shares which included 191,668 common shares as part of settlement agreements and 483,360 common shares issued as compensation for services rendered in reliance of Section 4(a)(2) of the Securities Act.

 

On January 11, 2019, the Company issued 500,600 common shares to YP Holding, LLC. as part of a settlement agreement.

 

On January 15, 2019 the Company issued 54,580 common shares which included 53,500 common shares as part of settlement agreements and 1,080 common shares issued as compensation for services rendered in reliance of Section 4(a)(2) of the Securities Act.

 

On February 20, 2019 the Board of the Company appointed Michael Gobel, who has long and distinguished career in corporate finance in Australia, as a non-executive Director.

 

On February 26, 2019 the Company issued 315,928 common shares which included 5,460 common shares as part of settlement agreements, 126,750 common shares issued as compensation for services rendered in reliance of Section 4(a)(2) of the Securities Act and 183,718 for cash consideration.

 

On April 2, 2019 the Company issued 151,216 common share for cash consideration.

 

Phoenix Life Sciences International Limited (Canada) and Phoenix Life Sciences International Limited (Nevada) commenced the consolidation of business in 2018. During that time, affiliates of the Company provided certain working capital and covering of costs related to the consolidation. Subsequently the Company has entered into subscription agreements with certain affiliates and key non-affiliate investors to provide a total of approximately USD $2.1million of financing. Shares of common stock issued for this total financing represent approximately 800,000. The key non-affiliate investor who had previously entered into a subscription agreement to purchase USD $20 million of shares at $10 per share with Phoenix Life Sciences International Limited Canada has entered into an agreement to exchange the subscription for warrants to purchase Company common stock at a price of $10, with the purchases to be completed by December 31, 2019.

 

Further, as part of the merger and consolidation, Phoenix Life Sciences International Limited (Canada) and Phoenix Life Sciences International Limited (Nevada) entered into settlement agreements with former investors, employees and contractors whereby their debt, shares held in entities subject of the consolidation, or outstanding amounts were settled in exchange for a full release of claims and the Company issuing approximately eight (8) million shares and the assumption of approximately $2 million of settlements payable. The purpose of the consolidation, in addition to providing the deemed necessary relationships and contracts for the Company to execute on its strategy, was to settle any potential claim or liability to ensure that the Company was not subject to any claims by former investors, employees and contractors.

 

21

 

 

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

 

Overview    

 

The Company was incorporated in the State of Nevada on April 21, 2009, under the name Mokita Exploration, Ltd. On February 5, 2010, the Company filed a Certificate of Amendment to the Articles of Incorporation changing our name to Mokita, Inc. On February 27, 2014, there was a change of control of the Company. On February 28, 2014, our board of directors and a majority of holders of the Company’s voting securities approved a change of name of the Company to MediJane Holdings Inc. A Certificate of Amendment to effect the change of name was filed and became effective with the Nevada Secretary of State on March 4, 2014. A Certificate of Correction was subsequently filed with the Nevada Secretary of State on March 6, 2014 to correct a spelling error in the Company’s new name. These amendments have been reviewed by FINRA and were approved for filing with an effective date of March 10, 2014. The name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on March 10, 2014 under our new ticker symbol “MJMD”.

 

After the change of control on February 27, 2014, the Company became a medical delivery systems company with a pharmaceutical approach to cannabinoid treatment of various illnesses with medical cannabis, currently being launched in Colorado and California.

 

Recent Developments

 

With the merger by and between Phoenix Life Sciences International Limited, a Nevada Corporation (the “Company”) and Phoenix Life Sciences International Limited, a Canadian Corporation (“PLSI CA”), whereby the Company completed its merger with PLSI CA on September 18, 2018, with the Company as the surviving entity, the Company will continue to pursue a pharmaceutical approach to cannabinoid treatment of various illnesses with medical cannabis.

 

On October 10, 2018, the Company announced it had received approval from the Vanuatu Investment Promotion Authority (VIPA) to establish operations in the Republic of Vanuatu and manufacture botanical pharmaceutical products.

 

Consolidated Results of Operations

 

The results of the business as a medical cannabis sales and distribution company for the three months and six months ended August 31, 2016.

 

Revenue for the three months ended August 31, 2016 and 2015 was $0 and $15,975 respectively. Revenues for the six months ended August 31, 2016 and 2015 were $0 and $18,410. Revenues and related expenses were primarily from sale of CBD products.

 

22

 

 

Cost of Sales for the three months ended August 31, 2016 and 2015 was $0 and $5,035. Cost of Sales for the six months ended August 31, 2016 and 2015 were $0 and $5,933 respectively.

 

Product development expense for the three months ended August 31, 2016 and 2015 was $0 and $70,000 respectively. Product development expenses for the six months ended August 31, 2016 and 2015 were $0 and $100,000 respectively. Product development expenses in the 2015 period represent payments to Phoenix Bio Pharm for the product development of branded products of the Company.

 

Sales and marketing expenses for the three months ended August 31, 2016 and 2015 were $0 and $6,306. Sales and marketing expenses for the six months ended August 31, 2016 and 2015 were $0 and $14,953, respectively. Sales and marketing expenses have been curtailed due to the lack of funds.

 

Operations expenses for the three months ended August 31, 2016 and 2015 were $0. Operations expenses for the six months ended August 31, 2016 and 2015 were $0 and $1,745, respectively. The decrease in operating expenses during the 2016 period are due to reduced activities due to limited funded.

 

General and administrative expenses for the three months ended August 31, 2016 and 2015 were $1,273 and $15,080 respectively. General and administrative expenses for the six months ended August 31, 2016 and 2015 were $3,253 and $30,876. General and administrative expenses generally include costs for running the company’s administrative office. The decrease this year has been due to limited funds.

 

Professional fees for the three months ended August 31, 2016 and 2015 were $0 and $79,437 respectively. Professional fees for the six months ended August 31, 2016 and 2015 were $330 and $217,712, respectively. Professional fees consist of cost of financing, legal, accounting, consulting and advisory services.

 

Lease operating expenses for the three months ended August 31, 2016 and 2015 were $0. Lease operating expenses for the six months ended August 31, 2016 and 2015 were $0 and $7,500, respectively.

 

Other income and expenses for the three months ended August 31, 2016 were net income of $162,305 and for the three months ended August 31, 2015 were net expenses of $19,582, for interest, amortization of a convertible note and loss or gain on a derivative liability. Other income and expense for the six months ended August 31, 2016 and 2015 were net income of $49,531 and a net loss of $43,389, respectively.

 

Net profit for the three months ended August 31, 2016 was $161,031 and a net loss for 3 months ended August 31, 2015 of $179,735. Net profit for the six months ended August 31, 2016 was $45,948 and a net loss for 6 months ended August 31, 2015 of $403,090.

 

Liquidity and Capital Resources

 

At August 31, 2016, the Company had a cash balance of $2,519 compared with $7,591 at February 28, 2016. The decrease in cash was cash used for operating expenses as described above partially offset by repayment of some of a note payable by a related party.

 

23

 

 

Cash flow from Operating Activities. During the six months ended August 31, 2016, the Company used $16,172 in cash for operating activities for its current operations. During the six months ended August 31, 2015, the Company used $129,084 for operating activities.

 

Cash flow from Investing Activities. During the six months ended August 31, 2016 and August 31, 2015, the Company received $11,100 and $8,970, respectively, for investing activities. Cash Flows from investing activities in the period ended August 31, 2016 represents partial repayment of the Company’s loan with its affiliate Phoenix Pharms Capital Corporation.

 

Cash flow from Financing Activities. During the six months ended August 31, 2016 and 2015, the Company received proceeds of $0 and $111,250 respectively.

 

Going Concern

We have not attained profitable operations and are dependent upon the commencement of the sale of our products and obtaining financing to increase the production and development of our products. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.

 

Future Financings

 

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.

 

Off-Balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

 

Critical Accounting Policies

 

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

 

24

 

 

Use of Estimates. The preparation of 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 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.

 

Stock-based Compensation. The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505-50 - Equity-Based Payments to Non-Employees. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

 

Revenue Recognition. The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin Topic 13 when persuasive evidence of an arrangement exists and delivery has occurred, provided the fee is fixed or determinable and collection is probable. The Company assesses whether the fee is fixed and determinable based on the payment terms associated with the transaction. If a fee is based upon a variable such as acceptance by the customer, the Company accounts for the fee as not being fixed and determinable. In these cases, the Company defers revenue and recognizes it when it becomes due and payable. Up-front engagement fees are recorded as deferred revenue and amortized to income on a straight-line basis over the term of the agreement, although the fee is due and payable at the time the agreement is signed or upon annual renewal. Payments related to substantive, performance-based milestones in an agreement are recognized as revenue upon the achievement of the milestones as specified in the underlying agreement when they represent the culmination of the earnings process.

 

The Company assesses the probability of collection based on a number of factors, including past transaction history with the customer and the current financial condition of the customer. If the Company determines that collection of a fee is not reasonably assured, revenue is deferred until the time collection becomes reasonably assured. Significant management judgment and estimates must be made and used in connection with the revenue recognized in any accounting period. Material differences may result in the amount and timing of our revenue for any period if our management made different judgments or utilized different estimates.

 

Recent Accounting Pronouncements

 

The recent accounting pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company 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.

Contractual Obligations

As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable for smaller reporting companies.

 

25

 

 

Item 4. Controls and Procedures

 

During the period ended August 31, 2016, there were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of August 31, 2016. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Based on this evaluation, our chief executive officer and chief financial officer have concluded such controls and procedures to be not effective as of August 31, 2016 to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act 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.

 

Remediation Plan

 

We will aggressively recruit experienced professionals to ensure that we include all necessary disclosures in our filings with the Securities and Exchange Commission. Although we believe that this corrective step will enable management to conclude that the internal controls over our financial reporting are effective when the staff is trained, we cannot assure you these steps will be sufficient. We may be required to expend additional resources to identify, assess and correct any additional weaknesses in internal control.

 

We are unable to remedy our controls related to the inadequate segregation of duties until we receive financing to hire additional employees.

 

PART II – OTHER INFORMATION

 

Item 1.    

Legal proceedings

 

Except as disclosed below, the Company, is not involved in any material active or pending legal proceedings. The Company has entered into settlement agreements with all known potential or asserted claims. The Company is currently involved in two disputes relating to deposits being due on proposed property purchases. The attorneys representing the Company in Vanuatu maintain that the claims are spurious, as the related contracts were never validly executed and at no time were unconditional, negating any obligation by the Company to pay the deposit. As at the date of this filing, the Company has moved to dismiss both claims, and is confident that the matters will be resolved in its favor.

 

26

 

 

Item 1A.

Risk Factors

 

Not applicable for smaller reporting companies

   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   
  During the period 1 March 2016 to 31 August 2016, 2,400 shares of common stock were issued  pursuant to conversion of 2,400 Series C Preferred stock.
   

Item 3.

Defaults Upon Senior Securities.
   
None
   
Item 4. Mine Safety Disclosures
   
  Not applicable
   
Item 5. Other Information
   
  None

 

Item 6. Exhibit
   
Exhibit 31.1* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1* Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2* Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS XBRL Taxonomy Extension Schema Document
101.SCH XBRL Taxonomy Extension Calculation Linkbase Document
101.CAL XBRL Taxonomy Extension Definition Linkbase Document
101.DEF XBRL Taxonomy Extension Label Linkbase Document
101.LAB XBRL Taxonomy Extension Presentation Linkbase Document
101.PRE XBRL Instance Document

 

*Filed herewith.

**Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections.

 

27

 

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

PHOENIX LIFE SCIENCES INTERNATIONAL LIMITED

 

/s/ Martin H. Tindall   Dated April 15, 2019
Martin H. Tindall  
Chief Executive Officer  
     
/s/ Geoffrey K. Boynton   Dated April 15, 2019
Geoffrey K. Boynton  
Chief Financial Officer  
Director  

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

 

/s/ Martin H. Tindall   Dated April 15, 2019
Martin H. Tindall  
Chief Executive Officer  
Director  

 

 

28

 

EX-31.1 2 ex31-1.htm CERTIFICATION OF CHIEF EXECUTIVE OFFICER

 

Phoenix Life Sciences International Limited 10-Q

 

EXHIBIT 31.1

 

302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER

 

I, Martin H. Tindall, certify that:

 

         1. I have reviewed this quarterly report on Form 10-Q of Phoenix Life Sciences International Limited;

 

         2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

         3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

         4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

      a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

      b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

      c)  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report, our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

      d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

         5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

 

         a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

         b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

 

Date: April 15, 2019

 

/s/ Martin H. Tindall

Martin H. Tindall

Chief Executive Officer

 

 

EX-31.2 3 ex31-2.htm CERTIFICATION OF CHIEF FINANCIAL OFFICER

 

Phoenix Life Sciences International Limited 10-Q

 

EXHIBIT 31.2

 

302 CERTIFICATION OF CHIEF FINANCIAL OFFICER

 

I, Geoffrey K. Boynton, certify that:

 

         1. I have reviewed this quarterly report on Form 10-Q of Phoenix Life Sciences International Limited;

 

         2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

         3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

         4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

      a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

      b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

      c)  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report, our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

      d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

         5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

 

         a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

         b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

 

Date: April 15, 2019

 

/s/ Geoffrey K. Boynton

Geoffrey K. Boynton

Chief Financial Officer

 

 

 

EX-32.1 4 ex32-1.htm CERTIFICATION OF CHIEF EXECUTIVE OFFICER

 

Phoenix Life Sciences International Limited 10-Q

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Phoenix Life Sciences International Limited (the “Company”) on Form 10-Q for the period ended August 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Martin H. Tindall, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

            (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

            (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

/s/ Martin H. Tindall

Martin H. Tindall

Chief Executive Officer

 

April 15, 2019

 

 

 

EX-32.2 5 ex32-2.htm CERTIFICATION OF CHIEF FINANCIAL OFFICER

 

Phoenix Life Sciences International Limited 10-Q

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Phoenix Life Sciences International Limited (the “Company”) on Form 10-Q for the period ended August 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Geoffrey K. Boynton, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

            (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

            (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

/s/ Geoffrey K. Boynton

Geoffrey K. Boynton

Interim Chief Financial Officer

 

April 15, 2019

 

 

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Subsidiary Companies Subsidiary Companies Related Party Transactions [Abstract] Related Party Transactions Common Stock Common Stock Number of stock issued, cash consideration Preferred Stock Common Stock Options Common Stock Options Debt term Convertible Promissory Note Number of stock issued, cash consideration Securities Purchase Agreement Subsequent Events [Abstract] Subsequent Events Basis of Presentation Basis of Consolidation Stock Split Use of Estimates Cash and cash equivalents Accounts receivable Basic and Diluted Net Loss per Share Financial Instruments Derivative Financial Instruments Comprehensive Loss Stock-based Compensation Revenue Recognition Shipping and Handling Costs Recent Accounting Pronouncements Reclassifications Common shares issued Common shares exchanged for Series B preferred shares Description of reverse stock split Common stock outstanding Net operating losses Expiration Date Deferred tax asset net operating loss Debt amount Interest rate Conversion price per common share Raw materials inventory to be acquired Default interest rate Number of common shares for issued warrants Exercise price Stockbased compensation expense Russell Stone - CEO [Member] Lease term Monthly rent expense Rent expenses (Increase) Decrease in security deposit Monthly agreement payment Advisory service fees Amortization expenses Term of the agreement Loans made to related parties Advances repaid of related party loan Product development expense Ownership interest of Company Consulting fee Due to related party Expenses invoiced from related party Due from related party loan Due from related party Principal payments of related party loan Cash payments of related party loan Expense offset against related party loan Common stock, pre-split Shares issued upon conversion of convertible debt (shares) Prinicpal amount of debt converted Number of common shares, remaining Number of common stock, cancelled Number of common shares exchange Number of common shares converted Conversion of stock shares issued Preferred stock, shares authorized Conversion price per share Preferred stock, voting rights Percentage of preferred stock returns Number of preferred stock, pre-split Number of preferred shares exchange Number of preferred shares converted Number of preferred stock, owned Preferred stock conversion basis Preferred stock deemed Closing price per share ( in dollars per share) Conseuctive trading days Percentage of stock price Proceeds from sale of converted common stock Expected proceeds from the sale of converted common stock Minimum common shares sold Percentage gross cash sale income Original issue discount Number of tranches Debt term Membership interest pledged Warrant issued fair value Debt installment amount Number of consecutive trading days Conversion price equals average closing bid price (percent) Share price Conversion price reduction due to closing bid price (percent) Conversion price reduction due to availability of common stock (percent) Prepayment premium (percent) Late fee for failure to deliver shares Late fee applicable lender conversion share value (percent) Maximum late fee applicable lender conversion share value (percent) Major default rate of conversion eligible balance (percent) Minor default rate of conversion eligible balance (percent) Market capitalization under agreement Number of trading days from coversion date Default penalty of outstanding balance (percent) Outstanding debt amount Common stock reserved for conversion of debt Amount of penalties waived Proceeds from notes payable, net Financing costs Interest expense - debt Costs payable under agreement Shares issued for agreement (shares) Shares issued for agreement Number of common shares per unit Number of warrants per unit Warrant term Proceeds from issuance of purchasing units Financing fees Issuance of warrants Number of warrants issued for services Liquidated damages first 30 days (percent) Liquidated damages subsequent 30 days (percent) Pre split Number of share issued Expense related to the issuance of these warrants Shares issued new issues during the period (shares) Shares issued new issues during the period Shares issued for settlements during the period (shares) Shares issued with rule 802 (shares) Stockholder's equity exchange ratio description Stock issued for services (shares) Number of shares issued in the exchange (shares) Number of common shares exchanged for preferred stock (shares) Number of common shares cancelled (shares) Number of preferred shares cancelled (shares) Number of preferred shares converted to common stock (shares) Number of share to be purchased under agreement Share price Assumption of settlements payable in merger Common stock issued (shares) Common stock outstanding (shares) Shares issued upon exercise of warrants (shares) Amount of advisory service fees incurred during the period. An affiliate is a party that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the entity. Agreement entered between parties. Represent agreement domain. The cash payment received from a related party borrowing. Number of shares issued during the period as a result of the exchange of common to preferred stock. The entire disclosure for common stock. Information pertaining to consultants. Amount of consulting fees incurred during the period. One time right per agreement where percent of the average closing bid price equals conversion price. Percent conversion price reduction due to availabilty of Company's stock. Percent conversion price reduction due to closing bid price of Company's stock. The entire disclosure for convertible promissory note. The name of the original debt issue that has been converted in a noncash (or part noncash) transaction during the accounting period. "Part noncash" refers to that portion of the transaction not resulting in cash receipts or cash payments in the period. The debt intsrument maturity date. The amount of debt penalities waived by the lender during the period. Percent default penalty rate as defined in the agreement. Expenses due from related party offset against related party debt during the period. The member represent related parties. Percent late fees for failure to deliver shares in conversion of debt per agreement. The amount of late fees for failure to deliver shares in conversion of debt per agreement. Rights, generally of limited duration, under a license arrangement (for example, to sell or otherwise utilize specified products or processes in a specified territory). Percent of the purchase price of common shares paid by the purchaser for first 30 day period as liquidated damages. Percent of the purchase price of common shares paid by the purchaser foreach subsequent 30 day period as liquidated damages. The major default rate applied to debt upon default under agreement. The market capitalization amount of the Company as defined under agreement. The maximum percentage of late fees for failure to deliver shares in conversion of debt per agreement. The membership interest pledged under note agreement. The minor default rate applied to debt upon default under agreement. Information of generally of limited duration, under a consulting agreement. Information pertaining to Mr Russell Stone. Information of generally of limited duration, under a new product development agreement. It represents non affiliate investor. Amount refer to non-cash interest expense on convertible notes payable. It represents number of common shares exchange. Number of common shares per purchase unit per agreement. Number of consecutive trading days. It represents number of preferred shares exchange. It represents number of preferred stock owned. Number of trading days from conversion date. Number of tranches in securities purchase agreement. Number of warrants per purchase unit per agreement. Percent ownership in the entity as of date reported. Percentage represents the gross cash sale income. It represents percentage of preferred stock returns. The member represent related parties. It represents pre split. Amount refer to preferred stock deemed. Percent prepayment penalty applied to outstanding balance per agreement. The cash inflow from issuance of common stock. The cash inflow from a borrowing supported by a written promise to pay an obligation, net of financing costs. The amount of raw materials to be acquired from borrowed funds. Securities agreement entered by the Company. The entire disclosure for Securities Purchase Agreement. The membe represent settlement agreement ration. Price of a single share of a number of saleable stocks of a company. Represent stock exchange ratio. The fair value of stock issued in noncashdistribution agreement. Number of new stock issued during the period. It represents stock issued during period shares stock pre split. It represents stock issued during period shares stock pre splits. It represents subscription agreement. The entire presentation represents subsidiary companies textblock Term of the agreement. Represent the threshold consecutive trading days. Represent the threshold percentage of stock price trigger. It represents typnex co investment llc. Name of the class or type of warrant or right outstanding. Warrants and rights represent derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. The member represent related parties. Term of lessee's operating lease, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents reported fact of one year, five months, and thirteen days. The number of shares issued in the exchange of stock. Number of common shares exchanged for preferred stock. The number of common shares cancelled during the period. The number of preferred shares cancelled during the period. Number of shares to be purchased under the agreement. Number of common shares issued upon exercise of stock warrant. 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Document and Entity Information - shares
6 Months Ended
Aug. 31, 2016
Feb. 28, 2019
Document And Entity Information    
Entity Registrant Name Phoenix Life Sciences International Limited.  
Entity Central Index Key 0001493212  
Document Type 10-Q  
Document Period End Date Aug. 31, 2016  
Trading Symbol PLSI  
Amendment Flag false  
Current Fiscal Year End Date --02-28  
Entity's Reporting Status Current No  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   32,584,582
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2017  
XML 13 R2.htm IDEA: XBRL DOCUMENT v3.19.1
Consolidated Balance Sheets (Unaudited) - USD ($)
Aug. 31, 2016
Feb. 29, 2016
ASSETS    
Cash $ 2,519 $ 7,591
Notes receivable, related party 238,252 249,352
Total Current Assets 240,771 256,943
Total Assets 240,771 256,943
Current Liabilities    
Accounts payable and accrued liabilities 500,053 512,642
Due to related parties 267,219 267,219
Current Liabilities 767,272 779,861
Convertible notes payable, net 297,708 193,306
Derivative liability 243,579 397,512
Total Liabilities 1,308,559 1,370,679
STOCKHOLDERS' DEFICIT    
Common Stock Authorized: 990,000,000 common shares, par value of $0.001 per share Issued and outstanding: 28,245 and 25,845 common shares, respectively 28 26
Additional paid-in capital 17,704,975 17,704,977
Accumulated deficit during the development stage (18,773,091) (18,819,039)
Total Stockholders' Equity (Deficit) (1,067,788) (1,113,736)
Total Liabilities and Stockholders' Equity 240,771 256,943
Series B Preferred Stock [Member]    
STOCKHOLDERS' DEFICIT    
Issued and outstanding Preferred shares 200 200
Series C Preferred Stock [Member]    
STOCKHOLDERS' DEFICIT    
Issued and outstanding Preferred shares $ 100 $ 100
XML 14 R3.htm IDEA: XBRL DOCUMENT v3.19.1
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares
Aug. 31, 2016
Feb. 29, 2016
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, authorized 990,000,000 990,000,000
Common stock, issued 28,245 25,845
Common stock, outstanding 28,245 25,845
Series B Preferred Stock [Member]    
Preferred stock, par value (in dollars per share) $ 0.0001  
Preferred stock, issued 2,000,000 2,000,000
Preferred stock, outstanding 2,000,000 2,000,000
Series C Preferred Stock [Member]    
Preferred stock, par value (in dollars per share) $ 0.0001  
Preferred stock, issued 995,600 998,000
Preferred stock, outstanding 995,600 998,000
XML 15 R4.htm IDEA: XBRL DOCUMENT v3.19.1
Consolidated Statements of Operations - Unaudited - USD ($)
3 Months Ended 6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
Aug. 31, 2016
Aug. 31, 2015
Income Statement [Abstract]        
Revenues   $ 15,975   $ 18,410
Cost of Sales   5,035   5,933
Gross Profit   10,940   12,477
Operating expenses        
Product development expense   70,000   100,000
Sales and marketing expenses   6,306   14,345
Operations expense       1,745
General and administrative $ 1,273 15,080 $ 3,253 30,876
Professional fees   79,437 330 217,712
Lease operating expenses       7,500
Total operating expenses 1,273 170,823 3,583 372,178
Loss before other expenses (1,273) (159,883) (3,583) (359,701)
Other income (expense)        
Interest Income   980   2,093
Interest Expense (16,271) (41,024) (101,967) (86,140)
Debt Issue costs   (7,830)   (7,830)
Discount Amortization     (2,435) (46,049)
Gain (loss) on derivative liability 178,576 28,022 153,933 94,537
Total other income (expense) 162,305 (19,852) 49,531 (43,389)
Net profit (loss) $ 161,031 $ (179,735) $ 45,948 $ (403,090)
Basic and diluted loss per common share:        
Income (loss) from continuing operations (in dollars per share) $ 5.7 $ (0.00) $ 1.63 $ (0.00)
Basic and diluted loss per common share (in dollars per share) $ 5.7 $ 0 $ 1.63 $ 0
Weighted average shares outstanding - basic and diluted (in shares) 28,245 258,030,222 28,206 364,290,048
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.19.1
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
6 Months Ended
Aug. 31, 2016
Aug. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ 45,948 $ (403,090)
Adjustments to reconcile net loss to net cash used in operating activities:    
Non-cash amortization of discount on convertible notes payable 2,435 46,049
Non-cash interest expense on convertible notes payable 101,967 86,140
Non-cash stock option compensation  
Non-cash loss (gain) on derivative liability (153,933) (94,537)
Changes in operating assets and liabilities:    
Accounts receivable   2,300
Deposit   1,250
Inventory   5,933
Accounts payable and accruals (12,589) 226,871
Net Cash provided by (used for) operating activities (16,172) (129,084)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Related party notes receivable 11,100 8,907
Net Cash provided by (used in) Investing Activities 11,100 8,907
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from notes payable  
Due to related parties   111,250
Net Cash Provided By Financing Activities   111,250
Increase (Decrease) in Cash - continuing operations (5,072) (8,927)
Cash - Beginning of Period - continuing operations 7,591 9,400
Cash - End of Period - continuing operations 2,519 473
Supplemental disclosures    
Interest paid  
Income tax paid 12,589  
Non-cash issuance of stock for consulting agreements  
Non-cash issuance of stock for distribution agreement  
Non-cash issuance of stock for conversion of debt   $ 29,000
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.19.1
Nature of Operations and Continuance of Business
6 Months Ended
Aug. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Operations and Continuance of Business
  1. Nature of Operations and Continuance of Business

  

The company was incorporated in the State of Nevada on April 21, 2009 under the name Mokita Exploration, Ltd. (the “Company”). On February 27, 2014, there was a change of control of the Company. On February 28, 2014, our board of directors and a majority of holders of the Company’s voting securities approved a change of name of the Company to MediJane Holdings Inc. A Certificate of Amendment to effect the change of name was filed and became effective with the Nevada Secretary of State on March 4, 2014.  A Certificate of Correction was subsequently filed with the Nevada Secretary of State on March 6, 2014 to correct a spelling error in the Company’s new name. These amendments have been reviewed by FINRA and were approved for filing with an effective date of March 12, 2014. The name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on March 12, 2014 under our new ticker symbol “MJMD”.

  

On March 8, 2017 the Company filed an Amendment to its Articles of Incorporation (the “Amendment”) with the Secretary of State of Nevada. As a result of the Amendment, the Company changed its name with the State of Nevada from MediJane Holdings, Inc. to Stem Bioscience, Inc. 

 

In May 2018 the Company again changed its name to Phoenix Life Sciences International Limited. A Certificate of Amendment to effect the change of name was filed and became effective with the Nevada Secretary of State on May 31, 2018. The name change was accepted by FINRA and became effective with the Over-the- Counter Bulletin Board on November 2, 2018 with the trading symbol “PLSI”. 

 

On February 27, 2014, after the change of control, the Company became a sales and distribution company focused on cannabinoid infused products for the treatment of medical conditions. 

 

On January 5, 2015, the Company underwent a change in control following the issuance of 276,000,000 common shares to Phoenix Bio Pharmaceuticals Corporation pursuant to a license agreement. On November 4, 2015, these shares were exchanged for 2,000,000 Series B Preferred Shares. 

 

The business was then changed to only focus on Cannabidiol (CBD) products. CBD is a non-psychotropic cannabinoid that is not restricted as part of the U.S. Controlled Substances Act (CSA), as defined under the 2014 U.S Farming Bill to be derivatives of the Industrial Hemp plant that contains less than 0.3% tetrahydrocannabinol (THC). The company will contract out the manufacturing of the products. Phoenix Bio Pharmaceuticals Corporation and other groups may manufacture our products under our license agreement. 

 

The Company follows the accounting guidance outlines in the Financial Accounting Standards Board Codification guidelines. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted principles for interim financial information and with the items under Regulation S-K required by the instructions to Form 10-Q. They may not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as disclosed here in, there have been no material change in the information disclosed in the notes to the financial statements for the year ended February 29, 2016 included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on March 13, 2019. The interim unaudited financial statements presented herein should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, which unless otherwise disclosed herein, consistent with normal re-occurring adjustments, have been made. Operating results for three months ended August 31, 2016 are not necessarily indicative results that may be expected for the year ended February 28, 2017. 

 

Going Concern 

 

These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company’s total operating expenditure plan for the following twelve months will require significant cash resources to meet the goals of its business plan. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.  These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

XML 18 R7.htm IDEA: XBRL DOCUMENT v3.19.1
Summary of Significant Accounting Policies
6 Months Ended
Aug. 31, 2016
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

2.Summary of Significant Accounting Policies

 

Basis of Presentation – The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars.  The Company’s fiscal year end is February 28 or 29.

 

Basis of Consolidation – The consolidated financial statements include the accounts of Phoenix Life Sciences International Limited and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

 

On March 17, 2014, MediHoldings, Inc (“MediHoldings”), a Colorado corporation, was formed as a wholly owned subsidiary of the Company. On June 27, 2014, MediSales (CA), Inc. (“MediSales”), a California corporation, was formed as a wholly owned subsidiary of the Company. These companies have not traded and are inactive.

 

Stock Split – on October 21, 2015 the Company’s Board of Directors declared a One for 10,000 reverse stock split on its common stock as of a record date of October 22, 2015. The effect of the stock split decreased the number of shares of common stock outstanding from 501,242,594 to 50,125. All common share and per common share data in these financial statements and related notes here to have been retroactively adjusted to account for the effect of the stock split for all periods presented. The total number of authorized common shares on the par value thereof was not changed by the split.

 

Use of Estimates – The preparation of 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 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. 

 

A significant item that requires management’s estimates and assumptions is the valuation of intangible assets, valuation allowances for income tax, valuation of derivatives instruments and accrued liabilities, among others. Although management believes these estimates are reasonable, actual results could differ from these estimates.

 

Cash and cash equivalents – The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. At August 31, 2016 and February 28, 2016, the Company did not hold any cash equivalents.

 

Accounts receivable – Accounts receivable consists of trade accounts arising in the normal course of business. No interest is charged on past due accounts. Accounts receivable are carried at the original invoice amount less a reserve for doubtful receivables based on a review of all outstanding amounts on a monthly basis.

 

Basic and Diluted Net Loss per Share – The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net 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. At February 28, 2016 and August 31, 2016, the Company had no outstanding stock options. At August 31, 2016 and 2015, the Company had did not have potentially dilutive shares outstanding.

 

Financial Instruments – Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1 – Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

Level 2 – Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

Level 3 – Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, amounts due to related parties, and convertible debenture. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. 

 

Derivative Financial Instruments – The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.

 

The Company reviews the terms of the common stock, warrants and convertible debt it issues 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. The Company uses a Black-Scholes model for valuation of the derivative. 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, using the effective interest method.

 

Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net cash settlement of the derivative instrument could be required within the 12 months of the balance sheet date.

 

Comprehensive Loss – ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at August 31, 2016 and 2015, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

 

Stock-based Compensation – The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505-50 - Equity-Based Payments to Non-Employees. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

 

We account for share-based payments granted to non-employees in accordance with ASC Topic 505, “Equity Based Payments to Non-Employees.” The Company determines the fair value of the stock-based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.  If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

 

The fair value of each share based payment is estimated on the measurement date using the Black-Scholes model with the following assumptions, which are determined at the beginning of each year and utilized in all calculations for that year: 

 

Risk-Free Interest Rate. We utilized the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected term of our awards.  

 

Expected Volatility. We calculate the expected volatility based on a volatility index of peer companies as we did not have sufficient historical market information to estimate the volatility of our own stock. 

 

Dividend Yield. We have not declared a dividend on its common stock since its inception and have no intentions of declaring a dividend in the foreseeable future and therefore used a dividend yield of zero.

 

Expected Term. The expected term of options granted represents the period of time that options are expected to be outstanding.  We estimated the expected term of stock options by using the simplified method.  For warrants, the expected term represents the actual term of the warrant.

 

Forfeitures. Estimates of option forfeitures are based on our experience. We will adjust our estimate of forfeitures over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of compensation expense to be recognized in future periods.

 

Revenue Recognition – The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin Topic 13 when persuasive evidence of an arrangement exists and delivery has occurred, provided the fee is fixed or determinable and collection is probable. The Company assesses whether the fee is fixed and determinable based on the payment terms associated with the transaction. If a fee is based upon a variable such as acceptance by the customer, the Company accounts for the fee as not being fixed and determinable. In these cases, the Company defers revenue and recognizes it when it becomes due and payable. Up-front engagement fees are recorded as deferred revenue and amortized to income on a straight-line basis over the term of the agreement, although the fee is due and payable at the time the agreement is signed or upon annual renewal. Payments related to substantive, performance-based milestones in an agreement are recognized as revenue upon the achievement of the milestones as specified in the underlying agreement when they represent the culmination of the earnings process.

 

The Company assesses the probability of collection based on a number of factors, including past transaction history with the customer and the current financial condition of the customer. If the Company determines that collection of a fee is not reasonably assured, revenue is deferred until the time collection becomes reasonably assured. Significant management judgment and estimates must be made and used in connection with the revenue recognized in any accounting period. Material differences may result in the amount and timing of our revenue for any period if our management made different judgments or utilized different estimates.

 

Shipping and Handling costs – shipping and handling costs are included in cost of sales in the Statements of Operations.

 

Recent Accounting Pronouncements – The recent accounting pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company 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. 

 

Reclassifications - Certain amounts in the prior period financial statements have been reclassified to conform with the current period presentation. These reclassifications had no effect on previously reported losses, total assets or stockholders equity.

 

XML 19 R8.htm IDEA: XBRL DOCUMENT v3.19.1
Variable Interest Entity
6 Months Ended
Aug. 31, 2016
Variable Interest Entity  
Variable Interest Entity

3.Variable Interest Entity

 

The Company follows the guidelines in FASB Codification of ASC 810 “Consolidation” which indicates “a legal entity that is deemed to be a business need not be evaluated by a reporting entity to determine if the legal entity is a Variable Interest Entity (“VIE”)” unless any one of four conditions exist: 

 

  - The reporting entity, its related parties, or both participated significantly in the design or redesign of the legal entity;
  - The legal entity is designed so that substantially all of its activities involve or are conducted on behalf of the reporting entity and its related parties;
  - The reporting entity and its related parties provide more than half of the total of the equity, subordinated debt, and other forms of subordinated financial support to the legal entity; or
  - The activities of the legal entity are primarily related to the securitizations or other forms of asset-backed financings or single-lessee leasing arrangements.

 

 A VIE is an entity that either (a) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (b) has equity investors who lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary. The primary beneficiary has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. If we determine that we have operating power and the obligation to absorb losses or receive benefits, we consolidate the VIE as the primary beneficiary, and if not, we do not consolidate. The Company has not identified any VIEs as of August 31, 2016.

 

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.19.1
Intangible Assets
6 Months Ended
Aug. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets
  4. Intagible Assets

  

Effective September 1, 2014, the Company changed its method of computing amortization from a sales percentage method to the straight-line method for the intangible assets. An assessment of useful life and / or discounted cash flow of the intangible asset is made and where the value is overstated the value is impaired.

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.19.1
Income Taxes
6 Months Ended
Aug. 31, 2016
Income Tax Disclosure [Abstract]  
Income Taxes

5.Income Taxes

 

The deferred tax assets or liabilities represent the future tax benefits or cost of those differences. The Company’s principal deferred tax items arise from net operating losses. Net operating losses approximate $18,800,000 which expire in the years 2030 through 2037. The net operating loss results in a deferred tax asset of $2,820,000. As future earnings are uncertain, the Company has provided a valuation allowance for the entire amount of the deferred tax asset.

 

The Company is required to evaluate the tax positions taken in the course of preparing its tax returns to determine whether tax positions are “more likely than not” of being sustained by the applicable tax authority. “More likely than not” is defined as greater than a 50% chance. The Company is delinquent on nearly all of its tax filings. As a result, there are presently no uncertain tax position and no reserves for uncertain tax positions. 

 

The Company has no unrecognized tax benefits at February 29, 2016. The Company’s income tax returns are subject to examination by federal and state tax authorities. Due to the failure to file its tax returns, all prior tax years are open to examination. The Company recognizes interest and penalties associated with uncertain tax positions as part of the income tax provision and would include accrued interest and penalties with the related tax liability in the balance sheet. There were no interest and penalties paid or accrued during the years ended February 29, 2016.

 

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.19.1
CV Sciences, Inc. FKA CannaVest Corp.
6 Months Ended
Aug. 31, 2016
Debt Disclosure [Abstract]  
CV Sciences, Inc. FKA CannaVest Corp.
  6. CV Sciences, Inc. FKA CannaVest Corp.

  

On December 23, 2014, the Company entered into a convertible promissory note for $1,200,000 with CannaVest Corp.  The note represents $1,200,000 worth of raw material inventory to be obtained from CannaVest Corp. to use in the Company’s cannabidiol product formulations.  The note accrues simple interest at a rate of 10% per annum and is due and payable in six months from the date of issue.  The note cannot be prepaid.  At any time, the outstanding principal amount of this note and all accrued but unpaid interest under this note can be converted into common shares at a price equal to the lesser of $0.02 per common share, the closing sale price, or the average of the lowest closing sale prices of the Company’s common shares during the five trading day period immediately preceding the date of such determination.   

 

Should the Company default on this convertible promissory note, all outstanding obligations payable by the Company are immediately due and payable.  In addition, CannaVest Corp. may exercise any other right, power or remedy permitted by law.  Further, upon even of default, all unpaid obligations under this note shall bear interest at the rate of 12% per annum. 

 

Warrant Agreement

 

In connection with the convertible promissory note dated December 23, 2014, the Company subsequently issued warrants to purchase 20,000,000 common shares at an exercise price of $0.02 per common share to Kisha Spendthrift Trust, an affiliate of CannaVest Corp.  These warrants were issued on January 6, 2015.  In exchange for these warrants, the Company shall have access to the technical and management staff of CannaVest Corp. for the development of products to be manufactured from cannabidiol sourced from CannaVest Corp.   

 

On or about January 25, 2016, the Company entered into an Amendment No. 1 to the Convertible Promissory Note executed by and between the Company and CV Sciences, Inc (FKA Cannavest Corp. and referred to herein as “CVS”) dated December 23, 2014 (the “Note”), whereby the company and CVS agreed to terminate the Note upon the Company’s return of five containers of raw hemp oil to CVS. As of February 28, 2017 all remaining product had been returned to CVS, as the inventory did not meet quality standards and was returned for a reduction of the note balance. 

 

It was determined that the remaining inventory should be written off as at February 29, 2016.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.19.1
Subsidiary Companies
6 Months Ended
Aug. 31, 2016
Subsidiary Companies  
Subsidiary Companies
  7. Subsidiary Companies

  

On March 17, 2014, MediHoldings, Inc. (“MediHoldings”), a Colorado corporation, was formed as a wholly-owned subsidiary of the Company. 

 

On June 27, 2014, MediSales (CA), Inc. (“MediSales”), a California corporation, was formed as a wholly-owned subsidiary of the Company. 

 

Both these subsidiaries as at August 31, 2016 had not traded and were inactive.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.19.1
Related Party Transactions
6 Months Ended
Aug. 31, 2016
Related Party Transactions [Abstract]  
Related Party Transactions
  8. Related Party Transactions

  

Martin Tindall

 

Mr. Martin Tindall, assists the Company with business development activities through the Advisory Services Agreement with Kronos as discussed below. Mr. Tindall serves as the CEO of Kronos. Additionally, Mr. Tindall has provided new product development services through a New Product Development Agreement with Phoenix Pharms Capital Corporation, as discussed below. Mr. Tindall services as CFO and a Director of Phoenix Pharms Capital Corporation. Mr. Tindall also serves as a director of Phoenix Bio Pharmaceuticals Inc. 

 

Kronos International Investments Ltd. (“Kronos”)

 

Sublease Agreement: Effective March 1, 2014, the Company entered into a Sublease Agreement with Kronos for a four (4) year term. Kronos’s CEO, Martin Tindall also provides advisory services to the Company. The monthly sublease rent is $2,500 per month. During the year ended February 29, 2016, the Company paid Kronos $7,500 in rent expense, and had previously paid security deposit of $1,250. In June 2015, the sublease was cancelled and the security deposit of $1,250 was offset against amounts owed to Kronos for advisory service fees. No payments were made to Kronos for the period March 1, 2016 and August 31, 2016. 

 

Advisory Services: Effective March 1, 2014, the Company engaged Kronos to provide Advisory Services for a monthly retainer fee of $10,000 per month. The advisory services include and are not limited to accounting and corporate compliance, business development and strategic planning services, corporate advisory and operational oversight. For the year March 1, 2015 and February 29, 2016, expenses related to the Advisory Services were $120,000. There were no payments made for the period March 1, 2016 and August 31, 2016. 

 

Phoenix Pharms Capital Corporation (“Phoenix Pharms”)

 

Related Party Loan: On September 18, 2014, the Company advanced Phoenix Pharms a total of $85,000 as a short term loan. The loan bears a simple interest rate of 8% and was due and payable on May 31, 2014. As of February 28, 2016, the Company has received principal payments totaling $26,425 including cash payment of $15,900, and expense offset $10,525. As of February 28, 2016, accrued interest on this loan is $2,687. As of August 31, 2016, the outstanding balance due the Company on this related party loan is $42,392. 

 

Russell Stone: Mr. Russell Stone, the Company’s Chief Operating Officer, holds approximately 14% of the outstanding common shares of Phoenix Pharms Capital Corporation indirectly through a trust. 

 

Lewis “Spike” Humer:

  

Mr. Humer, the interim Chief Executive officer and a director of the Company, serves as CEO and a director of Phoenix Bio Pharmaceuticals and CEO and a director of Phoenix Pharms Capital Corporation. As of August 2014, the Company began paying Mr. Humer a consulting fee of $1,500 per week. As of February 28, 2015, the Company has paid Mr. Humer $19,000 and has accrued a related party payable to Mr. Humer of $27,000. During the year from March 1, 2015 to February 29, 2016, a further $81,000 was accrued to Mr. Humer. There were no further accruals from March 1, 2016 to February 28, 2017.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.19.1
Common Stock
6 Months Ended
Aug. 31, 2016
Common Stock  
Common Stock
  9. Common Stock

 

The Company has authorized 990,000,000 shares of its common stock, $0.001 par value. On February 29, 2016 there were 25,845 shares of common stock on issue. 

 

On March 4, 2016, YP Holdings LLC converted 2,400 series C preferred stock to 2,400 shares of common stock. 

 

As at August 31, 2016, there were 28,245 shares of common stock issued and outstanding.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.19.1
Preferred Stock
6 Months Ended
Aug. 31, 2016
Number of stock issued, cash consideration  
Preferred Stock
  10. Preferred Stock

  

On September 22, 2015, the Company amended and restated its Articles of Incorporation to create and authorize four (4) classes of preferred stock.  The Company has authorized Series A, Series B, Series C and Series D Preferred Stock (the “Preferred Stock”).   

 

Series A Preferred Stock: 

Series A preferred shares have a par value of $0.0001, and are convertible into common shares at $1.00 per common share.  Series A preferred shares rank senior to common stock with respect to the right to participate in distributions or payments in the event of liquidation, dissolution, or winding up of the Company.  Holders of Series A preferred shares are entitled to a preferred return equal to the purchase price paid for such Series A preferred shares.  Series A preferred shares do not have any voting rights. 

 

Holders of Series A preferred shares are not entitled to preemptive rights to purchase stock in future stock offerings of the Company.  Holders of Series A preferred shares have the right to register their unregistered stock when either the Company or another investor initiates a registration of the Company’s securities, and they have the right of co-sale.  Holders of Series A preferred shareholders are not required to sell all of their Series A preferred shares on the same terms or conditions of a co-sale by a majority shareholder.  There is no right of first refusal for Series A preferred shares. 

 

Series B Preferred Stock: 

Series B preferred shares have a par value of $0.0001, and are convertible into common shares at a rate of 100 common shares per preferred share.  Series B preferred shares are entitled to cast 500 votes for each preferred share owned.  Series B preferred shares are senior to common shares with respect to the right to participate in distributions or payments in the event of any liquidation, dissolution, or winding up of the Company, and holders of Series B preferred shares are entitled to receive a preferred return equal to the purchase price paid for such Series B preferred stock. 

 

Holders of Series B preferred shares are entitled to preemptive rights to purchase stock in future offerings, and have the right to register their unregistered stock when either the Company or another investor initiates a registration of the Company’s securities.  Holders do not have the right of co-sale, and are not required to sell all of their Series B preferred shares on the same terms or conditions of a co-sale by a majority shareholder.  If any Series B preferred shareholder wishes to sell, transfer or otherwise dispose of any or all of their Series B preferred shares, the other Series B preferred shareholders shall not have a prior right to buy such Series B preferred shares. 

 

Series C Preferred Stock: 

Series C preferred shares have a par value of $0.0001, and are convertible into common shares at a rate of $1.00 per common share.  Series C preferred shares are not entitled to any voting rights, unless such vote is to modify rights, preferences, privileges and restrictions granted to and imposed on Series C preferred shares.  Series C preferred shares are senior to common shares and Series B preferred shares with respect to the right to participate in distributions or payments in the event of any liquidation, dissolution, or winding up of the Company, and holders of Series C preferred shares are entitled to receive a preferred return equal to the purchase price paid for such Series C preferred, which is deemed to be $600,000. If the closing price per share of the Company’s common shares is less than $1.00 for a period of five consecutive trading days, the YP Holdings will have the one-time right, exercisable at its discretion, to require that the conversion price of the shares become equal to 75% of the average closing bid price per shares for the five consecutive trading days immediately preceding the date that YP Holdings notifies the Company that it wishes to convert some or all of its Series C preferred shares into common shares.  The reset shall not be available if the proceeds of the sale of converted common shares equals or exceeds $750,000.  Should proceeds of the sale of converted common shares equal or exceed $1,000,000, any unconverted Series C preferred shares shall be returned to the Company for retirement.  Converted common shares are subject to a leak-out agreement, and no more than 50,000 common shares may be sold by YP Holdings in any one month.

  

Holders of Series C preferred shares are entitled to receive a preferred return equal to 10% of the gross cash sales income received in the ordinary course of business.  Holders are not entitled to preemptive rights to purchase shares in future offerings of the Company. 

 

Holders of Series C preferred shares have the right to register their unregistered shares when either the Company or another investor initiates a registration of the Company’s securities.  Holders have the rights of co-sale, and are not required to sell all of their Series C preferred shares on the same terms or conditions of a co-sale by a majority shareholder.  If any Series C preferred shareholder wishes to sell, transfer, or otherwise dispose of any or all of their Series C preferred shares, other Series C preferred shareholders shall not have a prior right to buy such shares.

  

Series D Preferred Stock

Series D preferred shares have a par value of $0.0001, and are convertible into common shares at a conversion rate of $1.00 per common share.  Series D preferred shares rank senior to common shares and the Series B preferred shares.  In the event of any liquidation, dissolution, or winding up of the Company, holders of Series D preferred shares shall be entitled to receive a preferred return equal to the purchase price paid for such Series D preferred shares after payment of the preferred returns relating to the Series A and C preferred shares.  Series D preferred shares are not entitled to voting rights. 

 

Holders of Series D preferred shares shall be entitled to receive a preferred return equal to 10% of the Gross Cash Sales Income received in the ordinary course of business.  Upon issue of the dividend, the value of such shares shall be deemed to be retired.  Holders of Series D preferred shares are not entitled to preemptive rights to purchase stock in future offerings of the Company.  Holders of Series D preferred shares have the right to register their unregistered stock when either the Company or another investor initiates a registration of the Company’s securities.  Holders of Series D preferred shares have the right of co-sale, but they are not required to sell all of their Series D preferred shares on the same terms or conditions of a co-sale by a majority shareholder. 

 

As at February 28, 2016, Phoenix Bio Pharmaceuticals Corporation had been issued 2,000,000 Series B Preferred Shares. YP Holdings, LLC had been issued 1,000,000 Series C Preferred Shares. but had converted 2,000 into common shares and therefore owned 998,000 Series C Preferred Shares. 

 

On March 4, 2016, YP Holdings, LLC converted 2,400 series C preferred stock to 2,400 shares of common stock. 

 

As at August 31, 2016, Phoenix Bio Pharmaceuticals Corporation held 2,000,000 Series B Preferred Shares. YP Holdings, LLC had been issued 1,000,000 Series C Preferred Shares. but had converted 4,400 into common shares and therefore held 995,600 Series C Preferred Shares.

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.19.1
Common Stock Options
6 Months Ended
Aug. 31, 2016
Common Stock Options  
Common Stock Options
  11. Common Stock Options

  

As at August 31, 2016 and February 29, 2016 there were no common stock options on issue.

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.19.1
Convertible Promissory Note
6 Months Ended
Aug. 31, 2016
Debt term  
Convertible Promissory Note
  12. Convertible Promissory Note

  

On June 24, 2014, the Company entered into a securities purchase agreement with Typenex Co-Investment, LLC, a Utah limited liability company. Under this agreement, the Company has issued a secured convertible promissory note in the original principal amount of $1,105,000, deliverable in eleven tranches (the “Typenex Note”). On the closing date, Typenex delivered the initial cash purchase price of $150,000, plus any interest, costs, fees or charges accrued under the Typenex Note, including the original issue discount of $20,000. The outstanding principal and accrued and unpaid interest on the Typenex Note is convertible at any time into shares of common stock at a conversion price of $1.00, subject to adjustment as described below (the “Lender Conversion Price”). As of June 24, 2014, the Company evaluated the Beneficial Conversion Feature under this note and determined as of June 24, 2014, there was no beneficial conversion feature as the Lender Conversion Price exceeded the fair market value of the Company’s common stock. 

 

As of November 30, 2014, the company has received net proceeds of $135,000 related to this convertible promissory note, representing $150,000 less financing costs of $15,000. During the nine months ended November 30, 2014 the Company has recorded interest expense of $7,725, and amortization expense of $554,413 related to the amortization of the original issue discount and the full-value of the warrant discussed below ($552,500). 

 

Each subsequent tranche will be in the amount of $85,000, plus any interest, costs, fees or charges accrued thereon under the terms of the Typenex Note, including the original issuer discount of $8,500. Each tranche will be accompanied by its own secured investor note (the “Investor Notes”). The Company has agreed to pay $5,000 to cover Typenex’s legal fees, accounting costs, due diligence, monitoring and other transaction costs in connection with the purchase and sale of the Typenex Note. All loans received bear an interest rate of 10% per annum. The loan is due 23 months after the initial cash purchase price is delivered to the Company. Typenex has pledged a 40% membership interest in Typenex Medical, LLC to secure its obligations under all of the Typenex Notes. 

 

A warrant to purchase shares of the Company has been issued to Typenex as of June 24, 2014. This warrant grants Typenex the ability to purchase a number of fully paid and non-assessable shares of the Company’s stock, par value $0.001, equal to $552,500 divided by the market price. This warrant is issued pursuant to the terms of the securities purchase agreement as described above. 

 

Provided there is an outstanding balance, the Company will pay an installment amount equal to $61,388.89 plus any accrued and unpaid interest on the installment due date, which is six months after the initial loan disbursement. This installment amount is the maximum that must be paid on any given installment due date, and is limited by the amounts owed. This amount can be converted at the lesser of either the lender conversion price or at 70% of the average of the three lowest closing bid prices in the 20 trading days immediately preceding the applicable conversion. Should the average trading price be less than $0.35 during any such period, then the conversion factor will be reduced to 65% for all future conversion, additionally the conversion price will be reduced by 5% if the Company’s common stock is not available for DWAC. Should the Company decide to prepay this amount, there is a prepayment premium equal to 125% of the outstanding balance of the Typenex Note. Should the prepayment premium not be paid within 2 days of the prepayment notice, the Company forfeits its right to prepay the Typenex Note. 

 

Under this agreement, Typenex has the right at any time after the purchase price date until the outstanding balance has been paid in full to convert any or all of the outstanding balance into shares of the Company’s common stock under the following formula: the number of shares issued equals the amount being converted divided by $1. These shares must be delivered to Typenex within three trading days of the conversion notice being given to the Company. Should any shares be sold to Typenex or any third party at a value that is less than the effective lender conversion price, then the lender conversion price will be reduced to equal such lower issuance price. The effective lender conversion price will also be adjusted as needed upon any forward or reverse split of the Company’s shares. Should the Company fail to deliver the shares in a timely manner, a late fee of the greater of $500 per day and 2% of the applicable lender conversion share value rounded to the nearest multiple of $100 will be assed for each day after the third that the Company is late (though not exceeding 200% of the applicable lender conversion share value. 

 

In the event of a default, the Typenex Note may be accelerated by Typenex by providing written notice to the Company. The outstanding balance is immediately due and payable at the greater of the outstanding balance divided by the installment conversion price, or the default effect, which is calculated by multiplying the conversion eligible outstanding balance by 15% for each major default or 5% for each minor default and then adding the resulting product to the outstanding balance as of the date of default. In addition, an interest rate of the lesser of 22% per annum (or the maximum rate permitted under law) will be applied to the outstanding balance. Typenex is prohibited from owning more than 4.99% of the Company’s outstanding shares, unless the market capitalization of the Company’s common stock is less than $10,000,000, in which case Typenex is prohibited from owning more than 9.99% of the Company’s outstanding shares. 

 

On a date that is 23 trading days from each date that the Company delivers conversion shares to Typenex, there is a true-up date in which the Company will deliver additional shares if the installment conversion price on that date is less than the installment conversion price used in the applicable installment notice. These additional shares will be equal to the difference between the number of shares that would be delivered to Typenex at the time of the true-up date and the amount originally delivered.

 

Notice of Default – on January 9, 2015, the Company received a Notice of Default from Typenex under the Convertible Promissory Note described in Note 12 above. In the letter, the noteholder described two major defaults where the Company failed to meet its obligations under the Typenex Note. The first default was triggered on December 16, 2014 related to a request from the noteholder to increase the number of shares reserved for issuance under the Typenex Note on the books of the Company’s transfer agent. The second default was triggered on December 27, 2014, when the Company failed to make its first installment payment of $61,888.89 according to the terms of the Typenex Note. Each default triggered a penalty of 115% of the then outstanding principal and accrued and unpaid interest and triggers the interest rate to 22%. As of January 9, 2015, the outstanding principal, accrued interest and accrued penalties on the Typenex Note was $239,483.61. On January 23, 2015, the Company satisfied its first default by instructing its transfer agent to reserve a total of 50,925,000 shares of common stock covering the potential conversion of the original principal value of the Typenex Note ($1,100,000) plus common shares issuable upon the exercise of warrants underlying the Typenex Note. On February 12, 2015, the Company received a notice from Typenex waiving the penalties on the December 16, 2014 default and waived $26,755.16 of penalties imposed on December 16, 2014. Under the terms of the Typenex Note, the Lenders Conversion Price will reset to 60% of the average of the three lowest closing bid prices of the Company’s common stock in the 20 days prior to conversion. As of December 16, 2014, the Company has re-evaluated the beneficial conversion feature under the Typenex Note and has recorded a liability for the beneficial conversion feature totaling $230,392. This discount will be amortized over the remaining life of the Typenex Note. 

 

On February 3, 2015, the Company exercised its borrower offset right under the Typenex Note.  Through this offset right, the Company is entitled to deduct and offset any amount owing by Typenex under the initial securities purchase agreement dated June 24, 2014 from any amount owed by the Company under the note.  The combined balance of the secured investor notes and the investor notes as of the January 28, 2015 offset date was $890,800.  In addition, the note balance prior to the offset included $85,000 of unearned original issue discounts. 

 

In conjunction with the Company’s exercise of its offset right, the Company and Typenex each hereby acknowledge that the secured investor notes and the investor notes were offset against the Company balances owed under the note as of the offset date, and as a result thereof, each of the secured investor notes and the investor notes is deemed to have been paid in full and are now cancelled and terminated and the Company balance owed under the note has been reduced to $218,028.47 as of the offset date.  Additionally, the Company specifically acknowledges that Typenex has no further obligations under any of the secured investor notes and investor notes. 

 

Further, the Company acknowledges that the investor pledge agreement, dated June 24, 2014, and all security interests granted thereunder with respect to the collateral (as defined in the investor pledge agreement) have terminated and all such security interests shall be deemed released. 

 

Notice of Conversion – Between February 28, 2016 and August 31, 2016, the Company has received no further conversion notices from its noteholder on the Typenex Note to convert principal on the Typenex Note into shares of the Company’s Common Stock at a market price as defined by the Typenex Note.

XML 29 R18.htm IDEA: XBRL DOCUMENT v3.19.1
Securities Purchase Agreement
6 Months Ended
Aug. 31, 2016
Securities Purchase Agreement Abstract  
Securities Purchase Agreement
  13. Securities Purchase Agreement

  

On September 17, 2014, the Company entered into a securities purchase agreement with YP Holdings, LLC.  YP Holdings, LLC has no material relationship with the Company other than with respect to this agreement. 

 

Under this agreement, the purchasers will be purchasing units of one common share and two warrants to purchase common shares for $0.09 per unit, for a total of $600,000.  The common shares have a par value of $0.001 per share.  The warrants are exercisable for five years from the date of issuance and shall have an initial exercise price equal to $0.20.  As a result of this agreement, the Company issued 667 (6,666,667 pre-split) common shares and 1,333 (13,333,333 pre-split) warrants to the purchasers. On August 29, 2014 and September 17, 2014, the Company received gross proceeds of $100,000 and $500,000, respectively and has recorded financing fees of $18,000 and $52,000, related to this agreement. 

 

The warrants can be exercised by paying the price for shares as stipulated by the warrant, or through cashless exercise, through which the purchaser will be issued a number of shares equal to the number of warrant shares applied to the subject exercise multiplied by the current market price on the date of conversion minus the exercise price on that date.  This total is then divided by the current market price on the date of conversion.  The cashless exercise may only be exercised after six months have passed from the original issuance of the warrants. 

 

The purchaser has waived the clause prohibiting conversion of warrants into common shares if that would result in the purchaser owning in excess of 4.99% of the outstanding shares.  A second clause prohibits the conversion of warrants if the purchaser owns in excess of 9.99% of the outstanding common shares.  This clause can be waived by the purchaser providing notice of waiver. 

 

The Company has agreed to pay a flat $20,000 to YP Holdings, LLC to reimburse them for the fees and expenses incurred by it in connection with its due diligence review of the Company and the preparation, negotiation, executive, delivery and performance of the agreement. 

 

The two parties also entered into a registration rights agreement.  Under this agreement, the Company will prepare and file a registration statement on Form S-1 in order to register all shares issued under the securities purchase agreement.  The Company will keep the registration statement continuously effective for a period of two years following the effective date of the registration statement.  The Company will pay all reasonable fees and expenses incurred with respect to this agreement.  Unless previously agreed to in writing, the Company may not register any shares other than those intended to be sold under this agreement. 

 

Should the Company fail to comply with the registration rights agreement, the Company agrees to pay liquidated damages to YP Holdings, LLC equal to 3% of the purchase price of the common shares paid by the purchaser for the first 30 day period, and 2% of such purchase price for each subsequent 30 day period.  These payments are payable upon demand in cash. 

 

Pursuant to the registration rights agreement, the Company agreed to several lock-up agreements between itself and four shareholders of the Company: Phoenix Bio Pharmaceuticals Corporation, Ronald Lusk, Lewis Humer, and Caduceus Industries LLC.  Under these agreements, each shareholder has agreed that they will not offer, pledge, sell, contract to sell, grant any options for sale or transfer, distribute or dispose of, directly or indirectly, any shares of the Company for a 90 day period following the date that the registration statement is declared effective. 

 

Additionally, on September 16, 2014, the Company issued warrants to purchase 53 (533,333 pre-split) common shares to consultants for services rendered. The warrants expire five years from the date of issuance and are exercisable for $0.20 per share. The Company has valued these warrants using the Black Scholes option pricing model and has recorded expense related to the issuance of these warrants totaling $104,578 during the quarter ended May 31, 2014.

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.19.1
Subsequent Events
6 Months Ended
Aug. 31, 2016
Subsequent Events [Abstract]  
Subsequent Events
  14. Subsequent Events

  

On September 15, 2016, Typenex Co-Investment, LLC exercised part of their warrant and were issued 2,822 shares of common stock. 

 

On September 21, 2016, the registrant dismissed Fruci & Associates II, PLLC as their registered independent public accountant. On September 21, 2016, the Company’s Board of Directors approved the engagement of BMKR, LLP to provide auditing services on a prospective basis, and to perform a full audit of the Company’s books and records for the years ended February 29, 2016, February 28, 2017 and February 28, 2018. 

 

On March 8, 2017, the Company filed an Amendment to its Articles of Incorporation (the “Amendment”) with the Secretary of State of Nevada. As a result of the Amendment, the Company has changed its name with the State of Nevada from MediJane Holdings, Inc. to Stem Bioscience, Inc. 

 

On May 31, 2018, the Company filed an Amendment to its Articles of Incorporation (the “Amendment”) with the Secretary of State of Nevada. As a result of the Amendment, the Company has changed its name with the State of Nevada from Stem Bioscience, Inc. to Phoenix Life Science International Limited. 

 

Pursuant to the Agreement and Plan of Merger, dated as of September 18, 2018 as (The “Merger Plan” by and between Phoenix Life Sciences International Limited, a Nevada Corporation (the “Company”) and Phoenix Life Sciences International Limited, a Canadian Corporation (“PLSI CA”), the Company completed its merger with PLSI CA, with the Company as the surviving entity. 

 

On September 18, 2018, the Company’s Board of Directors announced the finalized consolidation activities of Phoenix Life Sciences International Limited with Stem Biosciences, Inc., Blue Dragon Ventures, and the MediJane Brand, and that the Company’s common stock would trade publicly under the symbol MJMD. 

 

On September 21, 2018, the Company announced it had obtained consent from the holder, Phoenix Bio Pharmaceuticals Corporation for the cancellation of 2,000,000 Preferred Series B shares in the Company in connection with the restructure of the Company and merger with Phoenix Life Sciences International Limited, a Canadian Corporation. 

 

On September 22, 2018, the Company’s Board of Directors accepted the resignation of Russell Stone from his position as a Director. 

 

On or about June 24, 2014, the Company entered into a Convertible Promissory Note with a face value of $1,105,000 (the “Note”) by and between the Company and Typenex Co-Investment, LLC (“Typenex”). On or about April 19, 2018, the Phoenix Life Sciences International Ltd, a Canadian Corporation (“PLSI CA”) acquired the entirety of the Notes outstanding principal and interest balance from Typenex. Upon the completion of the merger, that Note was conveyed to the Company. 

 

On September 22, 2018, the Company’s Board of Directors resolved to deem the acquired Notes principal balance satisfied, and to terminate the Note and any and all rights and obligations arising thereunder, including without limitation the cancellation of all Warrants issued to Typenex under the Note. 

 

On September 24, 2018, the Company issued 30,502,375 shares of common stock bearing the restricted legend without registration (the “Issued Shares”). Of these, 29,802,375 shares were issued in reliance on Rule 802 under the Securities Act in a 1:1 share exchange related to the merger of PLSI CA and the company as described above, and 700,000 shares were issued as compensation for services rendered in reliance of Section 4(a)(2) of the Securities Act. All of the Issued Shares were issued in private transactions, and the company received no proceeds from the Issued Shares. The Issued Shares, in conjunction with the 47,571 shares of common stock previously issued by the Company, brings the current issued and outstanding share count to 30,549,946. 

 

On October 3, 2018, the following persons were appointed to the Board of the Company, Stephen Cornford, Martin Tindall as Chief Executive Officer, Janelle Marsden as Managing Director and Geoffrey Boynton as Chief Financial Officer. Lewis “Spike” Humer stepped down from his executive role but remains a Director. 

 

On October 3, 2018, the Company agreed to issue 48,000 shares of restricted common stock to KHAOS Media Group as compensation for services rendered in reliance of Section 4(a)(2) of the Securities Act for services previously rendered and invoiced between March and December 2014. 

 

On November 2, 2018, FINRA confirmed the name change and change of symbol to “PLSI” 

 

On November 9, 2018, the Company announced that 2,000,000 Series C Preferred Stock had been cancelled and all convertible debt had been retired. There was no outstanding preferred stock on issue as at this day. 

 

On December 4, 2018, the Company issued 229,600 common shares as part of settlement agreements. 

 

On December 17, 2018, the Company issued 675,028 common shares which included 191,668 common shares as part of settlement agreements and 483,360 common shares issued as compensation for services rendered in reliance of Section 4(a)(2) of the Securities Act 

 

On January 11, 2019, the Company issued 500,600 common shares to YP Holding, LLC. as part of a settlement agreement. 

 

On January 15, 2019 the Company issued 54,580 common shares which included 53,500 common shares as part of settlement agreements and 1,080 common shares issued as compensation for services rendered in reliance of Section 4(a)(2) of the Securities Act 

 

On February 20, 2019 the Board of the Company appointed Michael Gobel, who has long and distinguished career in corporate finance in Australia, as a non-executive Director 

 

On February 26, 2019 the Company issued 315,928 common share which included 5,460 common shares as part of settlement agreements, 126,750 common shares issued as compensation for services rendered in reliance of Section 4(a)(2) of the Securities Act and 183,718 for cash consideration. 

 

On April 2, 2019 the Company issued 151,216 common share for cash consideration. 

 

Phoenix Life Sciences International Limited (Canada) and Phoenix Life Sciences International Limited (Nevada) commenced the consolidation of business in 2018. During that time, affiliates of the Company provided certain working capital and covering of costs related to the consolidation. Subsequently the Company has entered into subscription agreements with certain affiliates and key non-affiliate investors to provide a total of approximately USD $2.1million of financing. Shares of common stock issued for this total financing represent approximately 800,000. The key non-affiliate investor who had previously entered into a subscription agreement to purchase USD $20 million of shares at $10 per share with Phoenix Life Sciences International Limited Canada has entered into an agreement to exchange the subscription for warrants to purchase Company common stock at a price of $10, with the purchases to be completed by December 31, 2019. 

 

Further, as part of the merger and consolidation, Phoenix Life Sciences International Limited (Canada) and Phoenix Life Sciences International Limited (Nevada) entered into settlement agreements with former investors, employees and contractors whereby their debt, shares held in entities subject of the consolidation, or outstanding amounts were settled in exchange for a full release of claims and the Company issuing approximately eight (8) million shares and the assumption of approximately $2 million of settlements payable. The purpose of the consolidation, in addition to providing the deemed necessary relationships and contracts for the Company to execute on its strategy, was to settle any potential claim or liability to ensure that the Company was not subject to any claims by former investors, employees and contractors.

XML 31 R20.htm IDEA: XBRL DOCUMENT v3.19.1
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Aug. 31, 2016
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation – The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars.  The Company’s fiscal year end is February 28 or 29.

Basis of Consolidation

Basis of Consolidation – The consolidated financial statements include the accounts of Phoenix Life Sciences International Limited and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

 

On March 17, 2014, MediHoldings, Inc (“MediHoldings”), a Colorado corporation, was formed as a wholly owned subsidiary of the Company. On June 27, 2014, MediSales (CA), Inc. (“MediSales”), a California corporation, was formed as a wholly owned subsidiary of the Company. These companies have not traded and are inactive.

 

Stock Split

Stock Split – on October 21, 2015 the Company’s Board of Directors declared a One for 10,000 reverse stock split on its common stock as of a record date of October 22, 2015. The effect of the stock split decreased the number of shares of common stock outstanding from 501,242,594 to 50,125. All common share and per common share data in these financial statements and related notes here to have been retroactively adjusted to account for the effect of the stock split for all periods presented. The total number of authorized common shares on the par value thereof was not changed by the split.

 

Use of Estimates

Use of Estimates – The preparation of 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 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. 

 

A significant item that requires management’s estimates and assumptions is the valuation of intangible assets, valuation allowances for income tax, valuation of derivatives instruments and accrued liabilities, among others. Although management believes these estimates are reasonable, actual results could differ from these estimates.

 

Cash and cash equivalents

Cash and cash equivalents – The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. At August 31, 2016 and February 28, 2016, the Company did not hold any cash equivalents.

 

Accounts receivable

Accounts receivable – Accounts receivable consists of trade accounts arising in the normal course of business. No interest is charged on past due accounts. Accounts receivable are carried at the original invoice amount less a reserve for doubtful receivables based on a review of all outstanding amounts on a monthly basis.

Basic and Diluted Net Loss per Share

Basic and Diluted Net Loss per Share – The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net 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. At February 28, 2016 and August 31, 2016, the Company had no outstanding stock options. At August 31, 2016 and 2015, the Company had did not have potentially dilutive shares outstanding.

 

Financial Instruments

Financial Instruments – Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1 – Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

Level 2 – Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

Level 3 – Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, amounts due to related parties, and convertible debenture. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. 

 

Derivative Financial Instruments

Derivative Financial Instruments – The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.

 

The Company reviews the terms of the common stock, warrants and convertible debt it issues 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. The Company uses a Black-Scholes model for valuation of the derivative. 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, using the effective interest method.

 

Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net cash settlement of the derivative instrument could be required within the 12 months of the balance sheet date.

 

Comprehensive Loss

Comprehensive Loss – ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at August 31, 2016 and 2015, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

 

Stock-based Compensation

Stock-based Compensation – The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505-50 - Equity-Based Payments to Non-Employees. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

 

We account for share-based payments granted to non-employees in accordance with ASC Topic 505, “Equity Based Payments to Non-Employees.” The Company determines the fair value of the stock-based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.  If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

 

The fair value of each share based payment is estimated on the measurement date using the Black-Scholes model with the following assumptions, which are determined at the beginning of each year and utilized in all calculations for that year: 

 

Risk-Free Interest Rate. We utilized the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected term of our awards.  

 

Expected Volatility. We calculate the expected volatility based on a volatility index of peer companies as we did not have sufficient historical market information to estimate the volatility of our own stock. 

 

Dividend Yield. We have not declared a dividend on its common stock since its inception and have no intentions of declaring a dividend in the foreseeable future and therefore used a dividend yield of zero.

 

Expected Term. The expected term of options granted represents the period of time that options are expected to be outstanding.  We estimated the expected term of stock options by using the simplified method.  For warrants, the expected term represents the actual term of the warrant.

 

Forfeitures. Estimates of option forfeitures are based on our experience. We will adjust our estimate of forfeitures over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of compensation expense to be recognized in future periods.

 

Revenue Recognition

Revenue Recognition – The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin Topic 13 when persuasive evidence of an arrangement exists and delivery has occurred, provided the fee is fixed or determinable and collection is probable. The Company assesses whether the fee is fixed and determinable based on the payment terms associated with the transaction. If a fee is based upon a variable such as acceptance by the customer, the Company accounts for the fee as not being fixed and determinable. In these cases, the Company defers revenue and recognizes it when it becomes due and payable. Up-front engagement fees are recorded as deferred revenue and amortized to income on a straight-line basis over the term of the agreement, although the fee is due and payable at the time the agreement is signed or upon annual renewal. Payments related to substantive, performance-based milestones in an agreement are recognized as revenue upon the achievement of the milestones as specified in the underlying agreement when they represent the culmination of the earnings process.

 

The Company assesses the probability of collection based on a number of factors, including past transaction history with the customer and the current financial condition of the customer. If the Company determines that collection of a fee is not reasonably assured, revenue is deferred until the time collection becomes reasonably assured. Significant management judgment and estimates must be made and used in connection with the revenue recognized in any accounting period. Material differences may result in the amount and timing of our revenue for any period if our management made different judgments or utilized different estimates.

 

Shipping and Handling Costs

Shipping and Handling costs – shipping and handling costs are included in cost of sales in the Statements of Operations.

Recent Accounting Pronouncements

Recent Accounting Pronouncements – The recent accounting pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company 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. 

 

Reclassifications

Reclassifications - Certain amounts in the prior period financial statements have been reclassified to conform with the current period presentation. These reclassifications had no effect on previously reported losses, total assets or stockholders equity.

XML 32 R21.htm IDEA: XBRL DOCUMENT v3.19.1
Nature of Operations and Continuance of Business (Details Narrative) - shares
Nov. 04, 2015
Aug. 31, 2016
Feb. 29, 2016
Jan. 05, 2015
Common shares issued   28,245 25,845  
Phoenix Bio Pharm [Member] | Series B Preferred Stock [Member]        
Common shares exchanged for Series B preferred shares 2,000,000      
Additional License Agreement [Member] | Phoenix Bio Pharm [Member]        
Common shares issued       276,000,000
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.19.1
Summary of Significant Accounting Policies (Details Narrative) - shares
Oct. 22, 2015
Aug. 31, 2016
Feb. 29, 2016
Oct. 20, 2015
Accounting Policies [Abstract]        
Description of reverse stock split One for 10,000      
Common stock outstanding 50,125 28,245 25,845 501,242,594
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.19.1
Income Taxes (Details Narrative)
6 Months Ended
Aug. 31, 2016
USD ($)
Net operating losses $ 18,800,000
Deferred tax asset net operating loss $ 2,820,000
Minimum [Member]  
Expiration Date Jan. 01, 2030
Maximum [Member]  
Expiration Date Dec. 31, 2036
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.19.1
CV Sciences, Inc. FKA CannaVest Corp. (Details Narrative) - USD ($)
Jan. 06, 2015
Dec. 23, 2014
Convertible Promissory Notes [Member]    
Debt amount   $ 1,200,000
Interest rate   10.00%
Conversion price per common share   $ 0.02
Raw materials inventory to be acquired   $ 1,200,000
Default interest rate   12.00%
Warrant [Member]    
Number of common shares for issued warrants 20,000,000  
Exercise price $ 0.02  
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.19.1
Related Party Transactions (Details Narrative) - USD ($)
1 Months Ended 6 Months Ended 12 Months Ended
Feb. 28, 2015
Sep. 18, 2014
Aug. 14, 2014
Jun. 30, 2015
Mar. 31, 2014
Aug. 31, 2016
Aug. 31, 2015
Feb. 29, 2016
Feb. 28, 2016
Loans made to related parties             $ 258,122    
Principal payments of related party loan             111,250    
Kronos [Member]                  
Lease term           4 years      
Monthly rent expense           $ 2,500      
Rent expenses               $ 7,500  
(Increase) Decrease in security deposit               1,250  
Advisory service fees       $ 1,250 $ 10,000     120,000  
Phoenix Pharms [Member]                  
Interest rate   8.00%              
Loans made to related parties   $ 85,000              
Advances repaid of related party loan                 $ 10,029
Expenses invoiced from related party                 30,421
Due from related party loan           42,392      
Due from related party                 2,687
Principal payments of related party loan                 26,425
Cash payments of related party loan                 15,900
Expense offset against related party loan                 $ 10,525
Phoenix Pharms [Member] | New Product Development Agreement [Member]                  
Monthly agreement payment             16,000    
Advisory service fees             $ 64,000    
Term of the agreement             4 months    
Mr. Humer - CEO And Director [Member]                  
Monthly agreement payment     $ 1,500            
Consulting fee $ 19,000                
Due to related party           $ 27,000   $ 81,000  
Mr. Russell Stone [Member]                  
Ownership interest of Company           14.00%      
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.19.1
Common Stock (Details Narrative) - $ / shares
Mar. 04, 2016
Aug. 31, 2016
Feb. 29, 2016
Oct. 22, 2015
Oct. 20, 2015
Common stock, par value (in dollars per share)   $ 0.001 $ 0.001    
Common stock, authorized   990,000,000 990,000,000    
Common stock, issued   28,245 25,845    
Common stock, outstanding   28,245 25,845 50,125 501,242,594
YP Holding, LLC [Member] | Series B Preferred Stock [Member]          
Number of common shares converted 2,400        
Conversion of stock shares issued 2,400        
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.19.1
Preferred Stock (Details Narrative)
6 Months Ended
Mar. 04, 2016
shares
Feb. 28, 2016
shares
Aug. 31, 2016
USD ($)
Number
$ / shares
shares
Feb. 29, 2016
shares
Minimum common shares sold     28,245 25,845
YP Holding, LLC [Member] | Common Stock [Member]        
Number of preferred shares converted   2,000    
Series A Preferred Stock [Member]        
Preferred stock, par value (in dollars per share) | $ / shares     $ 0.0001  
Conversion price per share | $ / shares     $ 1.00  
Preferred stock, voting rights     Series A preferred shares do not have any voting rights.  
Series B Preferred Stock [Member]        
Preferred stock, par value (in dollars per share) | $ / shares     $ 0.0001  
Conversion price per share | $ / shares     $ 100  
Preferred stock, voting rights     500 votes for each preferred share owned.  
Preferred stock, issued     2,000,000 2,000,000
Number of preferred stock, owned     2,000,000  
Series B Preferred Stock [Member] | YP Holding, LLC [Member]        
Number of preferred shares converted 2,400      
Conversion of stock shares issued 2,400      
Series B Preferred Stock [Member] | Phoenix Bio Pharm [Member]        
Preferred stock, issued   2,000,000    
Number of preferred stock, owned     2,000,000  
Series C Preferred Stock [Member]        
Preferred stock, par value (in dollars per share) | $ / shares     $ 0.0001  
Conversion price per share | $ / shares     $ 1.00  
Percentage of preferred stock returns     10.00%  
Preferred stock, issued     995,600 998,000
Preferred stock deemed | $     $ 600,000  
Series C Preferred Stock [Member] | YP Holding, LLC [Member]        
Preferred stock, issued   1,000,000 1,000,000  
Number of preferred shares converted 2,400   4,400  
Number of preferred stock, owned   998,000 995,600  
Conseuctive trading days | Number     5  
Percentage of stock price     75.00%  
Proceeds from sale of converted common stock | $     $ 750,000  
Expected proceeds from the sale of converted common stock | $     $ 1,000,000  
Minimum common shares sold     50,000  
Percentage gross cash sale income     10.00%  
Conversion of stock shares issued 2,400      
Series D Preferred Stock [Member]        
Preferred stock, par value (in dollars per share) | $ / shares     $ 0.0001  
Conversion price per share | $ / shares     $ 1.00  
Percentage of preferred stock returns     10.00%  
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.19.1
Convertible Promissory Note (Details Narrative)
5 Months Ended 6 Months Ended 9 Months Ended
Feb. 12, 2015
USD ($)
Jan. 09, 2015
USD ($)
Jun. 24, 2014
USD ($)
Number
$ / shares
Nov. 30, 2014
USD ($)
Aug. 31, 2016
USD ($)
Aug. 31, 2015
USD ($)
Nov. 30, 2014
USD ($)
Feb. 29, 2016
USD ($)
Jan. 28, 2015
USD ($)
$ / shares
Jan. 23, 2015
USD ($)
shares
Dec. 16, 2014
USD ($)
Sep. 17, 2014
Proceeds from notes payable                      
Derivative liability         243,579     $ 397,512        
Non-cash amortization of discount on convertible notes payable         $ 2,435 $ 46,049            
Securities Agreement [Member] | Maximum [Member]                        
Ownership interest of Company                       9.99%
Securities Agreement [Member] | Minimum [Member]                        
Ownership interest of Company                       4.99%
Securities Agreement [Member] | Typenex Note [Member]                        
Debt amount     $ 1,105,000           $ 890,800      
Conversion price per common share | $ / shares     $ 1.00                  
Original issue discount     $ 20,000           $ 85,000      
Number of tranches | Number     11                  
Proceeds from notes payable       $ 150,000                
Membership interest pledged     40.00%                  
Warrant issued fair value     $ 552,500 552,500     $ 552,500          
Debt installment amount     $ 61,889                  
Number of consecutive trading days     20 days                  
Conversion price equals average closing bid price (percent)     70.00%                  
Share price | $ / shares     $ 0.35           $ 0.001      
Conversion price reduction due to closing bid price (percent)     65.00%                  
Conversion price reduction due to availability of common stock (percent)     5.00%                  
Prepayment premium (percent)     125.00%                  
Late fee for failure to deliver shares     $ 500                  
Late fee applicable lender conversion share value (percent)     2.00%                  
Maximum late fee applicable lender conversion share value (percent)     200.00%                  
Default interest rate     22.00%                  
Major default rate of conversion eligible balance (percent)     15.00%                  
Minor default rate of conversion eligible balance (percent)     5.00%                  
Number of trading days from coversion date     23 days                  
Outstanding debt amount                 $ 218,028      
Amount of penalties waived $ 26,755                      
Derivative liability                     $ 230,932  
Proceeds from notes payable, net       135,000                
Financing costs       $ 15,000                
Interest expense - debt             7,725          
Non-cash amortization of discount on convertible notes payable             $ 554,413          
Costs payable under agreement     $ 5,000                  
Securities Agreement [Member] | Typenex Note [Member] | Notice 1 [Member]                        
Debt amount                   $ 1,100,000    
Debt installment amount   $ 61,889                    
Conversion price reduction due to closing bid price (percent)   60.00%                    
Default penalty of outstanding balance (percent)   115.00%                    
Outstanding debt amount   $ 239,484                    
Common stock reserved for conversion of debt | shares                   50,925,000    
Securities Agreement [Member] | Typenex Note [Member] | Maximum [Member]                        
Ownership interest of Company     9.99%                  
Securities Agreement [Member] | Typenex Note [Member] | Minimum [Member]                        
Ownership interest of Company     4.99%                  
Market capitalization under agreement     $ 10,000,000                  
Securities Agreement [Member] | Typenex Note [Member] | Tranche [Member]                        
Debt amount     $ 85,000                  
Interest rate     10.00%                  
Original issue discount     $ 8,500                  
Debt term     23 months                  
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.19.1
Securities Purchase Agreement (Details Narrative) - USD ($)
3 Months Ended
Sep. 17, 2014
Sep. 17, 2014
Sep. 17, 2014
Sep. 17, 2014
Sep. 16, 2014
Aug. 29, 2014
May 31, 2014
Aug. 31, 2016
Feb. 29, 2016
Common stock, par value (in dollars per share)               $ 0.001 $ 0.001
Warrant [Member] | Consultants [Member]                  
Warrant term         5 years        
Exercise price         $ 0.20        
Number of warrants issued for services         533,333        
Expense related to the issuance of these warrants             $ 104,578    
Securities Agreement [Member]                  
Proceeds from issuance of purchasing units   $ 500,000       $ 100,000      
Financing fees   $ 52,000       $ 18,000      
Liquidated damages first 30 days (percent)   3.00%              
Liquidated damages subsequent 30 days (percent)   2.00%              
Securities Agreement [Member] | Maximum [Member]                  
Ownership interest of Company 9.99% 9.99% 9.99% 9.99%          
Securities Agreement [Member] | Minimum [Member]                  
Ownership interest of Company 4.99% 4.99% 4.99% 4.99%          
Securities Agreement [Member] | Purchasing Unit [Member]                  
Share price $ 0.09 $ 0.09 $ 0.09 $ 0.09          
Number of common shares per unit 1 1 1 1          
Number of warrants per unit 2 2 2 2          
Common stock, par value (in dollars per share) $ 0.001 $ 0.001 $ 0.001 $ 0.001          
Warrant term 5 years                
Exercise price $ 0.20 $ 0.20 $ 0.20 $ 0.20          
Proceeds from issuance of purchasing units $ 600,000                
Costs payable under agreement $ 20,000 $ 20,000 $ 20,000 $ 20,000          
Securities Agreement [Member] | Common Stock [Member]                  
Pre split     6,666,667            
Number of share issued     667            
Securities Agreement [Member] | Warrant [Member]                  
Pre split       13,333,333          
Number of share issued       1,333          
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.19.1
Subsequent Events (Details Narrative) - USD ($)
6 Months Ended
Apr. 02, 2019
Feb. 26, 2019
Jan. 15, 2019
Jan. 11, 2019
Dec. 17, 2018
Dec. 04, 2018
Nov. 09, 2018
Oct. 03, 2018
Sep. 24, 2018
Sep. 21, 2018
Sep. 15, 2018
Mar. 04, 2016
Aug. 31, 2016
Feb. 29, 2016
Oct. 22, 2015
Oct. 20, 2015
Common stock outstanding (shares)                         28,245 25,845 50,125 501,242,594
Phoenix Life Sciences International Limited [Member] | Settlement Agreements [Member]                                
Shares issued for settlements during the period (shares)                         8,000,000      
Assumption of settlements payable in merger                         $ 2,000,000      
Phoenix Bio Pharm [Member] | Series B Preferred Stock [Member]                                
Number of preferred shares cancelled (shares)                   2,000,000            
YP Holding, LLC [Member] | Series B Preferred Stock [Member]                                
Number of preferred shares converted to common stock (shares)                       2,400        
YP Holding, LLC [Member] | Series C Preferred Stock [Member]                                
Number of preferred shares converted to common stock (shares)                       2,400 4,400      
Subsequent Event [Member]                                
Shares issued new issues during the period (shares) 151,216                              
Shares issued for settlements during the period (shares)   315,928 54,580   675,028                      
Common stock outstanding (shares)                 30,549,946              
Subsequent Event [Member] | Subscription Agreements [Member]                                
Shares issued new issues during the period (shares) 800,000                              
Shares issued new issues during the period $ 2,100,000                              
Subsequent Event [Member] | Settlement Agreements [Member]                                
Shares issued new issues during the period (shares)   183,718                            
Shares issued for settlements during the period (shares)   5,460 53,500   191,668 229,600                    
Stock issued for services (shares)   126,750 1,080   483,360                      
Subsequent Event [Member] | Series C Preferred Stock [Member]                                
Number of preferred shares cancelled (shares)             2,000,000                  
Subsequent Event [Member] | Restricted Common Stock [Member] | Private Placement [Member]                                
Shares issued new issues during the period (shares)                 30,502,375              
Common stock issued (shares)                 47,571              
Subsequent Event [Member] | Restricted Common Stock [Member] | Private Placement [Member] | Phoenix Life Sciences International Limited [Member]                                
Shares issued with rule 802 (shares)                 29,802,375              
Stockholder's equity exchange ratio description                 1:1              
Stock issued for services (shares)                 700,000              
Subsequent Event [Member] | Typenex Co-Investment, LLC [Member] | Warrant [Member]                                
Shares issued upon exercise of warrants (shares)                     2,822          
Subsequent Event [Member] | KHAOS Media Group [Member] | Restricted Common Stock [Member]                                
Stock issued for services (shares)               48,000                
Subsequent Event [Member] | YP Holding, LLC [Member] | Settlement Agreements [Member]                                
Shares issued for settlements during the period (shares)       500,600                        
Subsequent Event [Member] | Non Affiliate Investor [Member] | Subscription Agreements [Member]                                
Number of share to be purchased under agreement 20,000,000                              
Share price $ 10.00                              
Subsequent Event [Member] | Non Affiliate Investor [Member] | Warrant [Member] | Subscription Agreements [Member]                                
Share price $ 10.00                              
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