Phoenix Life Sciences International Limited. - Quarter Report: 2015 November (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the Quarterly Period Ended November 30, 2015

OR

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)

(720) 699.7222

(Registrant’s telephone number, including area code)

MediJane Holdings, Inc.

2011 Ken Pratt Boulevard, Suite 300, Longmont CO, 80501

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.

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.

Phoenix Life Sciences International Limited

FORM 10-Q

For the Quarter Ended November 30, 2015

INDEX

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 as formerly known as MediJane Holdings, Inc.

PHOENIX LIFE SCIENCES INTERNATIONAL LIMITED

Consolidated Balance Sheets

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

PHOENIX LIFE SCIENCES INTERNATIONAL LIMITED

Consolidated Statements of Operations - Unaudited

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

PHOENIX LIFE SCIENCES INTERNATIONAL LIMITED

Consolidated Statements of Cash Flows

(Unaudited)

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

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 28, 2015 included in the Company’s annual report on Form 10-K|A filed with the Securities and Exchange Commission on March 4, 2019. The interim unaudited financial statements presented herein should be read in conjunction with those financial statements included in the Form 10-K|A. 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 nine months ended November 30, 2015 are not necessarily indicative results that may be expected for the year ended February 29, 2016.

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.

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. All significant intercompany balances and transactions have been eliminated in consolidation.

Stock Split – on October 21, 2015 the Company’s Board of Directors declared a 1 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 November 30, 2015 and February 28, 2015, 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, 2015 and November 30, 2015, the Company had outstanding stock options outstanding, the Company does not deem these options to be dilutive as the exercise price exceeds the current fair market value of the Company’s common stock. At November 30, 2015 and 2014, 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 financial instruments are 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 November 30, 2014 and 2013, 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.

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 sale is fixed or determinable and collection is probable. The Company assesses whether the sale is fixed and determinable based on the payment terms associated with the transaction. If a sale is based upon a variable such as acceptance by the customer, the Company accounts for the sale as not being fixed and determinable. In these cases, the Company defers revenue and recognizes it when it becomes due and payable.

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.

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:

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 November 30, 2015.

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.

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 $18,600,000 which expire in the years 2030 through 2036. The net operating loss results in a deferred tax asset of $2,790,000. 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 28, 2015. 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 28, 2015.

On March 14, 2014, the Company entered into a License Agreement with Phoenix Bio Pharmaceuticals Corporation (“Phoenix Bio Pharm”) where Phoenix Bio Pharm has granted exclusive rights to the Company for North America to exploit all presently owned and after-acquired intellectual property rights and know-how of Phoenix Bio Pharm for certain medical cannabinoid products and delivery systems for the treatment and management of illnesses. The term of the License Agreement is Ten (10) years. In consideration of the acquired license, the Company issued 26,000,000 shares of common stock to Phoenix Bio Pharm, valued at $13,000,000 based on the fair value of the assets acquired in the license agreement.

On January 5, 2015, the Company entered into an additional license agreement with Phoenix Bio Pharmaceuticals Corporation to expand the territories covered under its original license agreement dated March 14, 2014. Under the terms of the additional license agreement, the Company acquired the marketing rights to distribute products developed by Phoenix Bio Pharmaceuticals Corporation in Australia and New Zealand for ten years. In exchange for the license, the Company has issued 250,000,000 restricted common shares at $0.016 per common share, for an aggregate value of $4,000,000. This amount represents 33% over the market value on the date of execution of the license agreement being $3,000,000.

On July 8, 2015, the Company agreed to enter into a new licensing agreement with Phoenix Bio Pharmaceuticals Corporation. This new agreement shall replace the previous licensing agreements. The new licensing agreement shall be non-exclusive, CBD only licensing agreement with Phoenix Bio Pharmaceuticals Corporation. This license agreement operates for a twenty (20) year period. Phoenix Bio Pharm has granted to the Company a license for the territory of North America, Australia and New Zealand to exploit all presently owned and after-acquired intellectual property rights and know-how of Phoenix Bio Pharm related to CBD based cannabinoid products and delivery systems for the treatment and management of illnesses. Products falling under the license will include the following CBD products: transdermal patches, orally administered extracts, concentrated extracts of vaporizers and inhalers, sublingual and buccal dispensing products and extraction technology, suppository delivery systems, salves, creams, gels, lotions, and liquid extracts, and any product or active ingredients sourced through Phoenix Bio Pharm or third party suppliers or licensors. The Company will also have the right to sublicense the rights acquired pursuant to the license agreement and to use and develop copyrighted materials of Phoenix Bio Pharm for marketing and distribution purposes.

In addition to the new licensing agreement, on July 8, 2015 the Company has entered into an exchange agreement with Phoenix Bio Pharm where all existing common shares held by Phoenix Bio Pharm (276,000,000) are exchanged for 2,000,000 Series B Preferred Shares, par value $0.0001. These preferred shares are entitled to 100 votes for each share held, and convertible into 100 common shares per preferred share at any time at the discretion of the holder.

As the Company has failed to meet projected cash flows which underpin the valuation model of the License Agreement, the Company determined that the balance of License Agreement should be impaired at February 29, 2015, and accordingly a total of $14,014,1899 was expensed as an impairment to the License Agreement and paid in capital was reduced by $2,282,132 at year ended February 28, 2015.

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 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 November 30, 2015 had not traded and were inactive.

Martin Tindall

Mr. Martin Tindall, assists the Company with business development activities through the Advisory Services Agreement with Kronos as discussed below. Mr. Tindal serves as the CEO of Kronos. Additionally, Mr. Tindal 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.

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. Between March 1, 2014 and February 28, 2015, expenses related to the Advisory Services totaled $120,000. For the year March 1, 2015 and November 30, 2015, expenses related to the Advisory Services, provided by the CEO of Kronos, Martin Tindall with respect to business development of cannabidiol products that the Company intends to market, were $62,500.

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. As of November 30, 2015, the outstanding balance due the Company on this related party loan is $54,324

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

Lewis “Spike” Humer:

Mr. Humer, 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 November 30, 2015, the Company has accrued a related party payable to Mr. Humer of $75,260.

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.

The Company has authorized 990,000,000 shares of its common stock, $0.001 par value. On November 30, 2015, following the reverse share split, there were 24,512 shares of common stock issued and outstanding and 31,154 (311,540,534 pre-split) shares of common stock reserved for issuance.

Effective August 23, 2013, the Company filed a Certificate of Change with the Nevada Secretary of State to give effect to a forward split of our authorized, issued and outstanding shares of common stock on a 10 new for 1 old basis and, consequently, an increase to our authorized share capital from 99,000,000 to 990,000,000 common shares, with a par value of $0.001 per share.

On October 21, 2015, the Company effectuated a 1 for 10,000 reverse split on its common stock as of a record date of October 22, 2015. As a result, the 458,892,294 outstanding shares as of the record date were reversed to 45,935 shares. All common share and per common share data in these financial statements and related notes hereto have been retroactively adjusted to account for the effect of the stock split for all periods presented. The total number of authorized common shares and par value was not changed for the split.

On February 27, 2014, the Company issued 500 (5,000,000 pre-split) shares to its Chief Executive Officer, who agreed to retire the 500 common shares and return them to the unissued, authorized common shares of the Company in exchange for a stock option.

On March 13, 2014, the Company issued 20 (200,000 pre-split) shares of its restricted common stock to GoKush, Inc. as described above. On July 1, 2014, these restricted shares were issued.

On March 14, 2014, the Company issued 2,600 (26,000,000 pre-split) shares of its restricted common stock to Phoenix Bio Pharm as described above. On July 1, 2014, these restricted shares were issued.

On January 23, 2015, the Company issued 25,000 (250,000,000 pre-split) shares of its restricted common stock to Phoenix Bio Pharm as described in above.

On December 9, 2014, the Company issued 500 (5,000,000 pre-split) shares of its common stock as compensation under two consulting agreements, each for one-year of marketing services. The Company values the issuance of shares at $119,666, which will be amortized over the twelve months beginning November 2014 to October 2015.

On December 16, 2014, the Company issued 667 (6,666,667 pre-split) shares of its common stock to YP Holdings for $600,000 under a Securities Purchase Agreement as discussed below.

During the year ended February 28, 2015, the Company issued 1,002 (10,020,000 pre-split) shares of common stock to Typenex from the conversion of a total principal amount of $38,500 under a Convertible Notes Agreement as discussed in Note 13 below.

Between March 1, 2015 and August 31, 2015, the Company issued 9,756 (97,560,000 pre-split) shares of common stock to Typenex from the conversion of a total principal amount of $54,000 under a Convertible Notes Agreement and 3,157 (31,575,175 pre-split) shares of Common Stock to Typenex related to true-up notices received from the noteholder, as discussed in Note 13 below.

On August 14, 2015, Phoenix Bio Pharm returned 27,600 (276,000,000 pre-split) shares of common stock to the Company to hold in safe keeping for an exchange into 2,000,000 shares of preferred stock.

As at November 30, 2015 there were 50,171 common shares on issue.

2014 Stock Awards Plan: Effective June 4, 2014, the Board of Directors adopted the 2014 Stock Awards Plan (the “Plan”) under which the Company is authorized to grant employees, directors, and consultants (“Participant”) incentive and non-qualified stock options. Pursuant to the Plan, the Company is authorized to grant an aggregate of 1,000 (10,000,000 pre-split) stock options to purchase common stock of the Company. The stock option price and vesting terms are determined by the Board of Directors or Compensation Committee (the “Committee”), and evidenced by a stock option agreement extended to the Participant. The options granted generally terminate five years from the date of issuance.

Effective February 27, 2014, the Company’s former CEO and Director was granted incentive stock options to purchase 500 (5,000,000 pre-split) common shares of the Company at $3,400 ($0.34 pre-split) per common share valued at $551,363. Immediately upon the grant of the option, options to purchase 250 (2,500,000 pre-split) common shares vested. The option to purchase the remaining 2,500,000 common shares shall vest in equal amounts over the next three years ending February 27, 2017. As of February 18, 2015, the unvested options totaling 2,500,000 were cancelled upon resignation by the holder. The remaining 250 (2,500,000 pre-split) vested options are exercisable until February 17, 2016.

The following table describes stock options outstanding and exercisable at November 30, 2015:

Options Outstanding and Exercisable

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.

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 5,092 (50,925,000 pre-split) 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. During the quarter ended August 31, 2015, the Company re-evaluated the Notice of Default and determined that it had previously recorded a beneficial conversion feature incorrectly. The Company has computed a Derivative liability effective December 2014 and has corrected its statements as of February 28, 2015 to reflect this accounting treatment. As of February 28, 2015 and November 30, 2015, the Derivative Liability on the Typenex Note was $169,868 and $143,335, respectively.

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 March 1, 2015 and August 31, 2015 the Company has received 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. The table below lists the conversion activity and the shares of common stock issued pursuant to each conversion:

*Market Price as defined by the Typenex Note.

All shares and Market Price in the above table are stated to reflect the 10,000 to 1 reverse stock split.

At August 31, 2015 and February 28, 2015, convertible notes payable included the following:

On August 29, 2014, the company entered into a Promissory Note with YP Holdings, LLC for gross proceeds $100,000 as an advance towards the Securities Purchase Agreement dated September 17, 2014 described in Note 13 (the “YP Note”). The YP Note matures in 60-days and bears interest of 12% per annum. During the nine months ended November 30, 2014, the Company recorded $18,000 in financing fees related to the YP Note. On September 17, 2014, the YP Note converted to equity in connection with the Securities Purchase Agreement dated September 17, 2014 as discussed below. The Company has no further obligation under the YP Note.

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 will issue 667 (6,666,667 pre-split) common shares and 1,333 (13,333,334 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 Company has valued these warrants using the Black Scholes option pricing model and has recorded expense related to the issuance of these warrants totaling $552,500 during the year ended February 28, 2015.

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 November 30, 2014.

Due to a change in auditors and a subsequent review of the accounting treatment surrounding the Typenex Notes, there were corrections of expenses related to the Derivative Liability and Beneficial Conversion Feature recorded on the Typenex Notes for the year ended February 28, 2015 and the three months ended May 31, 2015. The table below for the shows the effects on Net loss, earnings per share, and accumulated deficit for each of the periods.

Common Share Cancellation and Preferred Share Issue: On November 4, 2015, Phoenix Bio Pharmaceuticals Corporation’s offer to exchange 27,600 common shares for 2,000,000 Series B Preferred shares was accepted and 27,600 common shares were cancelled.

Common Share Issue: On November 5, 2015 Cede & Co were issued 1,941 common shares to rectify a mistake that had been made when the share split was performed.

Common Share Cancellation and Preferred Share Issue: On February 18, 2016, 667 common shares issued to YP Holdings, LLC pursuant to a securities purchase agreement were cancelled in exchange for 1,000,000 Series C Preferred shares. YP Holdings LLC then converted 2,000 of the preferred shares to common shares which were issued by the Company.

Convertible Note Agreement: 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. On or about June 1, 2016, the Company returned the entirety of the raw hemp oil to CVS, and the Note and all rights and obligations thereunder would deemed fully satisfied.

Change of Auditor: 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.

Change of Name: 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.

Change of Name: 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. On November 2, 2018 the symbol changed from MJMD to PLSI.

Merger: 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.

Consolidation of Activities: 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, subsequently on November 2, 2018 this changed to PLSI.

Cancellation of Pref B Shares: 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.

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

Convertible Note retired: 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.

Cancellation of Warrants: 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.

Issuance of Common Stock: 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.

Appointment of Directors: 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.

Issuance of Stock for Services: On October 03, 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.

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

Retirement of Preferred Stock: 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.

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

Issuance of Common Stock: 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.

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

Issuance of Common Stock: 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

Appointment of a Director: 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.

Issuance of Common Stock: 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.

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

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”.

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.

Subsequently, 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. The name change became effective with the Over-the-Counter Bulletin Board on November 2, 2018 with the symbol changing to “PLSI”.

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 marijuana.

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 marijuana.

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

On March 1, 2014, the Company discontinued its previous operations as an oil and gas enterprise to pursue its new operations as a medical marijuana sales and distribution company. The results of operations for the three and nine months ended November 30, 2014 represent results of the new business. The results of operations for the comparable period have been recorded as discontinued operations.

Revenues for the three months ended November 30, 2015 and 2014 were $0 and $17,936, respectively. Cost of sales for the three months ended November 30, 2015 and 2014 were $0 and $9,144, respectively. Revenues for the nine months ended November 30, 2015 and 2014 were $18,410 and $20,716 respectively. Cost of Sales for the nine months ended November 30, 2015 and 2014 were $5,933 and $10,694 respectively. Revenues and related expenses were primarily from sale of CBD products.

Amortization expense for the three ended November 30, 2015 and 2014 were $0 and 650,250. Amortization expense for the nine months ended November 30, 2015 and 2014 were $0 and $650,250 respectively. Amortization expenses relates to a license agreement.

Product development expense for the three ended November 30, 2015 and 2014 were $0 and 65,365. Product development expenses for the nine months ended November 30, 2015 and 2014 were $100,000 and $80,356 respectively. Product development expenses in the 2014 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 November 30, 2015 and 2014 were $200 and $51,788 respectively. Sales and marketing expenses for the nine months ended November 30, 2015 and 2014 were $14,545 and $199,710, respectively. The decrease in sales and marketing expenses in the 2015 period are due primarily to activity in the 2014 period to grow the Company’s sales organization. During the 2015 period, sales and marketing expenses represent continued efforts to promote the Company’s products.

Operations expenses for the three months ended November 30, 2015 and 2014 were $1,304 and $46,162, respectively Operations expenses for the nine months ended November 30, 2015 and 2014 were $3,049 and $146,399, respectively. The decrease in operating expenses during the 2015 period are due to reduced activities due to limited funded. During the 2015 period, operations expenses represent continued efforts to support the Company’s selling organization.

General and administrative expenses for the three months ended November 30, 2015 and 2014 were $1,147 and $109,419, respectively. General and administrative expenses for the nine months ended November 30, 2015 and 2014 were $31,615 and $168,450. General and administrative expenses generally include costs for running the Company’s administrative office.

Professional fees for the three months ended November 30, 2015 and 2014 were $93,503 and $266,216, respectively. Professional fees for the nine months ended November 30, 2015 and 2014 were $311,220 and $437,945, respectively. Professional fees consist of cost of financing, legal, accounting, consulting and advisory services. Included in professional fees during the nine months ended November 30, 2015 are $100,000 of non-cash expenses related to consulting fees paid in stock.

Lease operating expenses for the three months ended November 30, 2015 and 2014 were $0 and $11,685. Lease operating expenses for the nine months ended November 30, 2015 and 2014 were $7,500 and $26,685, respectively.

Other income and expenses for the three months ended November 30, 2015 and 2014 were net expense of $63,897 and $5,812, respectively. Other income and expense for the nine ended November 30, 2015 and 2014 were net expense of $107,386 and $562,793, respectively. The decrease in other income and expenses in the 2015 periods from the 2014 periods are due to non-cash expenses related to the issuance of warrants on convertible securities during the 2014 periods totaling $554,413.

Net loss for the three months ended November 30, 2015 and 2014 were $160,056 and $1,197,896, respectively. Net loss for the nine ended November 30, 2015 and 2014 were $563,246 and $2,262,566, respectively.

Net gain from discontinued operations for the nine months ended November 30, 2014 was $722.

Liquidity and Capital Resources

At November 30, 2015, the Company had a cash balance of $2,425 compared with $9,400 at February 28, 2015. The decrease in cash was cash used for operating expenses as described above.

Cash flow from Operating Activities. During the nine months ended November 30, 2015, the Company used $183,666 in cash for operating activities for its current operations.

Cash flow from Investing Activities. During the nine months ended November 30, 2015, the Company received $8,770 for investing activities. Cash Flows from investing activities in the period ended November 30, 2015 represents partial repayment of the Company’s loan to its affiliate Phoenix Pharms Capital Corporation.

Cash flow from Financing Activities. During the nine months ended November 30, 2015, the Company received $42,350 from the issuance of convertible promissory notes $125,571 from related parties. During the nine months ended November 30, 2014, the Company received proceeds of $375,925 from the sale of its common stock, $135,000 from the issuance of convertible promissory notes payable, and $600,000 from a securities purchase agreement.

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.

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.

Item 4. Controls and Procedures

During the period ended November 30, 2015, 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 November 30, 2014. 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 November 30, 2014 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

*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.

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

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.