VERDE BIO HOLDINGS, INC. - Quarter Report: 2021 July (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2021

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

For the transition period from ______ to _______

Commission File Number 000-54524

VERDE BIO HOLDINGS, INC.

(Name of small business issuer in its charter)

Nevada		30-0678378
(State of incorporation)		(I.R.S. Employer Identification No.)

5750 Genesis Court, Suite 220B

Frisco Texas 75034

(Address of principal executive offices)

(972) 217-4080

(Registrant's telephone number)

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.

[X] 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 (Sec.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). [X] 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	[X]	Smaller reporting company	☒
		Emerging growth company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes [X] No

As of October 5, 2021, there were 1,164,565,468 shares of the registrant's $0.001 par value common stock issued and outstanding.

VERDE BIO HOLDINGS, INC.*

TABLE OF CONTENTS		Page

PART I. FINANCIAL INFORMATION
ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	4
ITEM 3.	QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK	6
ITEM 4.	CONTROLS AND PROCEDURES	6

PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	7
ITEM 1A.	RISK FACTORS	7
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	7
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	7
ITEM 4.	MINE SAFETY DISCLOSURES	7
ITEM 5.	OTHER INFORMATION	7
ITEM 6.	EXHIBITS	8

Special Note Regarding Forward-Looking Statements

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Verde Bio Holdings, Inc., (the "Company"), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," or "project" or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

*Please note that throughout this Quarterly Report, except as otherwise indicated by the context, references in this report to "Company", "VBH", "we", "us" and "our" are references to Verde Bio Holdings, Inc.

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED FINANCIAL STATEMENTS

VERDE BIO HOLDINGS, INC.

Condensed Consolidated Financial Statements

For the Three Months Ended July 31, 2021 and 2020

(unaudited)

Condensed Consolidated Balance Sheets (unaudited)	F-2
Condensed Consolidated Statements of Operations (unaudited)	F-3
Condensed Consolidated Statements of Stockholders Equity (Deficit) (unaudited)	F-4
Condensed Consolidated Statements of Cash Flows (unaudited)	F-5
Notes to the Condensed Consolidated Interim Financial Statements (unaudited)	F-7

Table of Contents

VERDE BIO HOLDINGS INC.

Condensed Consolidated Balance Sheets

(Expressed in US dollars)

	July 31, 2021 $	April 30, 2021 $
	(unaudited)
ASSETS

Current Assets

Cash	1,320,479	2,087,897
Accounts receivable	132,374	86,744
Prepaid expenses	26,856	32,392

Total current assets	1,479,709	2,207,033

Non-current assets
Right-of-use operating lease asset	105,474	115,478
Property and equipment, net	125,595	-
Oil and natural gas properties , net based on full cost method of accounting	4,784,764	895,487

Total assets	6,495,542	3,217,998

LIABILITIES

Current Liabilities

Accounts payable and accrued liabilities	206,696	211,769
Convertible debenture	-	1,203
Derivative liability	-	8,519
Current portion of operating lease liability	49,756	47,583
Convertible preferred Series B stock liability	-	214,940

Total Current Liabilities	256,452	484,014

Operating lease liability, net of current portion	64,944	78,228

Total Liabilities	321,396	562,242


STOCKHOLDERS’ EQUITY

Preferred stock - 10,000,000 authorized shares, par value of $0.001 per share Convertible preferred Series A: Issued and outstanding: 500,000 shares	500	500

Common stock – 5,000,000,000 common shares, par value of $0.001 per share Issued and outstanding: 1,163,465,468 and 683,084,699 common shares, respectively	1,163,466	683,085

Common stock issuable	-	676,250
Additional paid-in capital	16,519,920	12,132,666
Accumulated deficit	(11,509,740)	(10,836,745)

Total Stockholders’ Equity	6,174,146	2,655,756

Total Liabilities and Stockholders’ Equity	6,495,542	3,217,998

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

F-1

Table of Contents

VERDE BIO HOLDINGS INC.

Condensed Consolidated Statements of Operations

(Expressed in US dollars)

(unaudited)

	Three months ended July 31, 2021 $	Three months ended July 31, 2020 $

Revenue

Mineral and royalty revenues	64,599	-

Operating Expenses

Consulting fees	108,385	40,800
Depletion, depreciation, and amortization	21,989	-
General and administrative	436,024	62,092
Management fees	-	204,000
Professional fees	77,417	34,617
Project expenditures	98,134	-

Total Operating Expenses	741,949	341,562

Net Operating Loss	(677,350)	(341,562)

Other Income (Expenses)

Loss on change in fair value of derivative liability	-	(471,266)
Interest expense	(367)	(96,717)
Gain (loss) on extinguishment of debt	4,722	(1,002)

Total Other Income (Expenses)	4,355	(568,985)

Net Loss	(672,995)	(910,547)
Net Loss Per Share - Basic and Diluted	(0.00)	(0.04)
Weighted Average Shares Outstanding – Basic and Diluted	1,059,014,157	22,370,654

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

F-2

Table of Contents

VERDE BIO HOLDINGS INC.

Condensed Consolidated Statements of Stockholder’s Equity (Deficit)

(Expressed in US dollars)

For the three months ended July 31, 2021 and 2020

(unaudited)

					Additional
	Preferred Stock		Common Stock		Paid-in	Shares	Accumulated
	Shares	Par Value	Shares	Par Value	Capital	Issuable	Deficit	Total
	#	$	#	$	$	$	$	$

Balance – April 30, 2021	500,000	500	683,084,699	683,085	12,132,666	676,250	(10,836,745)	2,655,756

Common shares issued upon conversion of notes payable	-	-	6,500,000	6,500	74,750	(81,250)	-	-
Common shares issued for cash	-	-	451,550,000	451,550	4,063,950	(595,000)	-	3,920,500
Common shares issued for conversion of Series B preferred shares	-	-	15,030,769	15,031	199,909	-	-	214,940
Common shares issued for services	-	-	3,300,000	3,300	45,810	-	-	49,110
Common shares issued to settle accounts payable	-	-	4,000,000	4,000	36,000	-	-	40,000
Share issuance costs	-	-	-	-	(33,165)	-	-	(33,165)
Net loss for the period	-	-	-	-	-	-	(672,995)	(672,995)

Balance – July 31, 2021	500,000	500	1,163,465,468	1,163,466	16,519,920	-	(11,509,740)	6,174,146

					Additional
	Preferred Stock		Common Stock		Paid-in	Subscriptions	Accumulated
	Shares	Par Value	Shares	Par Value	Capital	Payable	Deficit	Total
	#	$	#	$	$	$	$	$

Balance – April 30, 2020	500,000	500	1,829,867	1,830	4,384,537	-	(7,521,745)	(3,134,878)

Rounding shares (Reverse split)	-	-	76	-	-	-	-	-

Shares issued for management and consulting fees	-	-	24,500,000	24,500	225,400	-	-	249,900

Shares issued upon conversion of notes payable	-	-	2,429,135	2,429	133,958	-	-	136,387

Shares issued for cash	-	-	1,250,000	1,250	23,750	-	-	25,000

Beneficial conversion feature on convertible debt	-	-	-	-	19,500	-	-	19,500

Subscriptions payable	-	-	-	-	-	15,000		15,000

Net loss	-	-	-	-	-		(910,547)	(910,547)

Balance – July 31, 2020	500,000	500	30,009,078	30,009	4,787,145	15,000	(8,432,292)	(3,599,638)

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

F-3

Table of Contents

VERDE BIO HOLDINGS INC.

Condensed Consolidated Statements of Cashflow

(Expressed in US dollars)

(unaudited)

	Three months ended July 31, 2021 $	Three months ended July 31, 2020 $

Operating Activities

Net loss	(672,995)	(910,547)

Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of discount on convertible debt payable	-	44,016
Amortization of right-of-use asset	10,004	-
Default and conversion fees	-	20,500
Depletion, depreciation and amortization expense	21,989	-
Loss on change in fair value of derivative liability	-	471,266
Loss (gain) on settlement of debt	(4,722)	1,002
Rent-free period on operating lease	(11,111)	-
Shares issued for services	49,110	249,900

Changes in operating assets and liabilities:
Accounts receivable	(45,630)	-
Prepaid expenses	5,536	-
Accounts payable and accrued liabilities	34,927	37,862
Due to and from related parties	-	24,232

Net Cash Used In Operating Activities	(612,892)	(61,769)

Investing Activities
Acquisition and exploitation of oil and gas properties	(3,911,266)	-
Acquisition of property and equipment	(125,595)	-

Net Cash Used In Investing Activities	(4,036,861)	-

Financing Activities
Proceeds from issuance of common stock	3,920,500	25,000
Proceeds from common stock issuable	-	15,000
Proceeds from loans payable	-	22,917
Repayment of convertible debenture	(5,000)	-
Share issuance costs	(33,165)	-

Net Cash Provided by Financing Activities	3,882,335	62,917

Change in Cash	(767,418)	1,148

Cash – Beginning of Period	2,087,897	1,631

Cash – End of Period	1,320,479	2,779

Supplemental Disclosures
Interest paid	-	-
Income tax paid	-	-

Non-cash investing and financing activities
Beneficial conversion feature	-	19,500
Common stock issued/issuable for conversion of convertible debentures	81,250	136,387
Common stock issued for conversion of Series B preferred shares	214,940	-
Common stock issued for settlement of accounts payable	10,000	-

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

F-4

Table of Contents

VERDE BIO HOLDINGS INC.

Notes to the Condensed Consolidated Financial Statements

(Expressed in US dollars)

(unaudited)

1.Nature of Operations and Continuance of Business

Verde Bio Holdings Inc. (the “Company”) was incorporated in the State of Nevada on February 24, 2010. Currently, the Company is in the business of oil and gas exploration and investment.

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. The impact on the Company has not been significant but management continues to monitor the situation.

Going Concern

These consolidated 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. During the period ended July 31, 2021, the Company incurred a net loss of $672,995 and used cash of $612,892 for operating activities. As at July 31, 2021, the Company had an accumulated deficit of $11,509,740. 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. The Company will continue to rely on equity sales of its common shares in order to continue to fund business operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year from the date these financial statements are issued. 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

(a)Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated interim financial statements of the Company should be read in conjunction with the consolidated interim financial statements and accompany notes filed with the U.S. Securities and Exchange Commission for the year ended April 30, 2021. These interim condensed consolidated interim financial statements are unaudited and have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

These condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The condensed consolidated interim financial statements are comprised of the records of the Company and its wholly owned subsidiary, IP Control Risk Inc., a company incorporated in the State of Nevada, United States. All intercompany transactions have been eliminated on consolidation. The Company’s fiscal year end is April 30.

(b)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.

F-5

Table of Contents

VERDE BIO HOLDINGS INC.

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

2.Summary of Significant Accounting Policies (continued)

(b)Use of Estimates (continued)

The Company regularly evaluates estimates and assumptions related to the collectability of accounts receivable relating to oil and gas interests which is based on the operator’s production statements, carrying value of oil and gas properties, the useful life, carrying value, and incremental borrowing rate used for right-of-use assets and lease liabilities, the fair value of convertible debentures, derivative liabilities, stock-based compensation, revenue recognition including the calculation of the reserves and the fair value of the reserves for oil and gas interests, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

(c)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. As of July 31, 2021, the Company had 5,000 (April 30, 2021 – 7,718,600) potentially dilutive common shares outstanding.

(d) Fair Value Measurements

The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by U.S. generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows:

Level 1 – quoted prices for identical instruments in active markets;

Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and

Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Financial instruments consist principally of cash, accounts payable and accrued liabilities, notes payable, convertible debentures and amounts due to related parties. The fair value of cash is determined based on Level 1 inputs. There were no transfers into or out of “Level 3” during the years ended April 30, 2021, and 2020. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

F-6

Table of Contents

VERDE BIO HOLDINGS INC.

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

2.Summary of Significant Accounting Policies (continued)

(d) Fair Value Measurements (continued)

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

(j)Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These 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.

3.Right-of-Use Operating Lease Asset and Lease Liability

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term. ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term.

On March 11, 2021, the Company entered into a sublease agreement with a sublandlord regarding its office at 5750 Genesis Court, Suite 220, Frisco, Texas 75036. The agreement was treated as an operating lease in accordance with ASC 842, Lease, which resulted in initial recognition of right-of-use asset and lease liability of $122,120. The incremental borrowing rate used in the calculation is 18%.

	July 31, 2021	April 30, 2021
	$	$

Components of lease expense were as follows:

Operating lease cost	10,004	6,642

Supplemental cash flow information related to leases:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases	16,607	-

Right-of-use assets obtained in exchange for lease obligations:

Operating leases	-	122,120

F-7

Table of Contents

VERDE BIO HOLDINGS INC.

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

3.Right-of-Use Asset and Lease Liability (continued)

	July 31, 2021	April 30, 2021
Supplemental balance sheet information related to leases:

Operating Leases

Operating lease right-of-use assets	105,474	115,478

Operating lease liabilities	114,700	125,811

Weighted Average Remaining Lease Term

Operating leases	2.16 years	2.41 years

Weighted Average Discount Rate

Operating leases	18%	18%

Maturities of lease liabilities are as follows:
Year Ending April 30,	Operating Leases	Operating Leases

2022	55,358	66,430
2023	66,430	66,430
2024	22,143	22,143

Total lease payments	143,931	155,003
Less: imputed interest	(29,231)	(29,192)

Total	114,700	125,811

4.Royalty Interests in Oil and Gas Properties

	July 31, 2021 $	April 30, 2021 $

Opening Balance	895,487	-

Acquisition costs	3,911,266	2,867,042
Registration costs	-	6,440
Depletion expense	(21,989)	(50,185)
Impairment loss	-	(1,927,810)

Ending Balance	4,784,764	895,487

On July 19, 2020, the Company signed a purchase agreement for a 50% right, title and interest to certain oil and gas properties located in the United States in exchange for 10,000,000 shares of common stock of the Company with fair value of $245,000 which was determined based on the fair value of the Company’s common shares on the date of issuance on August 10, 2020.

On September 21, 2020, the Company signed a purchase agreement for a 100% right, title and interest to certain oil and gas properties located in the United States for consideration of 5,000,000 shares of common stock of the Company with a fair value of $126,500.

On March 5, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Adams County, Colorado for cash consideration of $150,000.

On March 16, 2021, the Company signed a purchase and sale agreement for 50% right, title and interest to certain oil and gas properties located in Weld County, Colorado for cash consideration of $152,000.

F-8

Table of Contents

VERDE BIO HOLDINGS INC.

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

4.Royalty Interests in Oil and Gas Properties (continued)

On March 18, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Desoto and Sabine Parish, LA and Loving County, Texas for cash consideration of $127,500.

On March 18, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Adams County, Colorado for cash consideration of $150,000.

On March 22, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Weld County, Colorado for cash consideration of $152,000.

On March 26, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Red River and Sabine Parish, LA for cash consideration of $380,952.

On April 1, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Red River and Desoto Parish, LA for cash consideration of $359,975.

On April 1, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Ohio County, West Virginia for cash consideration of $133,000.

On April 13, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Laramie County, Wyoming for cash consideration of $502,764.

On April 19, 2021, the Company signed a purchase and sale agreement for 100% right, title and interest to certain oil and gas properties located in Howard County, Texas for cash consideration of $430,000.

On May 4, 2021, the Company signed a purchase and sale agreement for 100% right, title, and interest to certain properties located in Laramie County, Wyoming for cash consideration of $431,425.

On May 13, 2021, the Company signed a purchase and sale agreement for 100% right, title, and interest to certain properties located in Colorado and Ohio for cash consideration of $1,100,000.

On June 14, 2021, the Company signed a purchase and sale agreement for 100% right, title, and interest to certain properties located in Jack County, Texas for cash consideration of $1,600,000.

On July 16, 2021, the Company signed a purchase and sale agreement for 100% right, title, and interest to certain properties located in Bienville, Louisiana for cash consideration of $800,000.

5.Related Party Transactions

(a)During the period ended July 31, 2021, the Company incurred $nil (2020 - $204,000) in management fees to the President and Director of the Company which was paid in common shares (see Note 11).

6.Convertible Debenture

On July 19, 2017, the Company issued a convertible debenture, to a non-related party, in the amount of $33,333. Pursuant to the agreement, the note was issued with an original issue discount and as such the purchase price was $28,000. Under the terms of the debenture, the amount is unsecured, bears interest at 12% per annum, and was due on July 19, 2018. The debenture is convertible into common shares of the Company at a conversion price equal to 50% of the lowest trading price of the Company’s common stock of the past twenty-five trading days prior to notice of conversion or the issuance of the note. In the event of default, the interest rate increases to 24%.

Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $33,333, of which $5,333 of the discount resulted from debt issuance costs. The carrying value of the convertible note was be accreted over the term of the convertible note up to the face value of $33,333. During the period ended July 31, 2021, the Company repaid the balance owing on the debenture.

As at July 31, 2021, the carrying value of the note was $nil (April 30, 2021 - $1,203) and the Company recorded derivative liability of $nil (April 30, 2021 - $8,519).

F-9

Table of Contents

VERDE BIO HOLDINGS INC.

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

7.Derivative Liability

The fair value of the derivative liability was calculated using a Binomial model. The fair value of the derivative liability is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of operations. During the period ended July 31, 2021, the Company recorded a loss on the change in fair value of $nil (2020 –$471,266). As at July 31, 2021, the Company recorded a derivative liability of $nil (April 30, 2021 - $8,519).

A summary of the activity of the derivative liability is shown below:

					$

Balance, April 30, 2021					8,519
Adjustment for conversion					(8,519)

Balance, July 31, 2021					-

8.Convertible Preferred Series B Stock Liability

On June 13, 2019, the Company designated 1,000,000 shares of preferred stock as Series B. The holders of Series B preferred shares are not entitled to receive dividends except as may be declared by the Board at its sole and absolute discretion. Each Series B preferred share is convertible into common shares according to the following formula: the Stated Value of $1.10 per share of Series B preferred stock divided by the closing price of the Common Stock on the day prior to the conversion. Holders of Series B preferred stock shall not have voting rights.

On June 17, 2019, the Company issued 530,000 shares of Series B preferred stock at a fair value of $583,000 based on the stated value of $1.10 per share, in exchange for the settlement of accounts payable of $266,523, notes payable of $990, accrued interest of $535, and management fees of $33,000. As the Series B shares represent an unconditional obligation that the Company must or may settle in a variable number of its equity shares and the monetary value of the obligation is predominantly based on a fixed monetary amount, the 530,000 shares with a balance of $583,000 is recorded as a liability on the balance sheet. During the year ended April 30, 2021, the Company issued 21,441,440 shares of common stock for the conversion of 334,600 shares of Series B preferred stock. During the period ended July 31, 2021, the Company issued 15,030,769 common shares for the conversion of 195,400 Series B preferred stock. As of July 31, 2021, the carrying value of nil Convertible Preferred Series B Stock was $nil (April 30, 2021 - $214,940). As of July 31, 2021 there was zero Convertible Preferred Series B Stock outstanding (April 30, 2021 – 195,400).

9.Common Shares

Authorized: 5,000,000,000 common shares with a par value of $0.001 per share.

During the three months ended July 31, 2021, the Company issued 451,550,000 common shares at $0.01 per common share for proceeds of $4,545,500, of which $595,000 was received as at April 30, 2021. As part of the financing, the Company paid share issuance costs of $33,165 which is recorded as a charge against additional paid-in capital.

On May 4, 4021, the Company issued 3,000,000 common shares with a fair value of $45,300 for consulting services.

On May 13, 2021, the Company issued 15,030,769 common shares pursuant to the conversion of 195,400 shares of Series B convertible preferred stock. Refer to Note 8.

On May 14, 2021, the Company issued 100,000 common shares with a fair value of $1,330 for consulting services.

On May 17, 2021, the Company issued 1,000,000 common shares with a fair value of $10,000 for settlement of accounts payable.

On June 21, 2021, the Company issued 100,000 common shares with a fair value of $1,400 for consulting services.

On July 15, 2021, the Company issued 100,000 common shares with a fair value of $1,080 for consulting services.

On July 22, 2021, the Company issued 3,000,000 common shares with a fair value of $30,000 for settlement of accounts payable.

F-10

Table of Contents

VERDE BIO HOLDINGS INC.

Notes to the Condensed Consolidated Interim Financial Statements

(Expressed in US dollars)

(unaudited)

10.Preferred Shares

Authorized: 10,000,000 preferred shares with a par value of $0.001 per share

Convertible Preferred Series A stock

On April 18, 2017, the Company designated 500,000 shares of preferred stock as Series A. The holders of Series A preferred shares are entitled to receive dividends equal to the amount of the dividend or distribution per share of common stock payable multiplied by the number of shares of common stock the shares of Series A preferred shares held by such holder are convertible into. Each Series A preferred shares is convertible into one common share. Each holder of Series A preferred shares is entitled to cast 10,000 votes for every one Series A preferred share held.

Convertible Preferred Series B stock – see Note 8.

11. Commitments and Contingencies

On May 28, 2020, the Company and an unrelated party entered into equity financing agreement, whereby the investor shall invest up to $5,000,000 over the period of 36 months pursuant to a “put” option held by the Company, subject to certain limitations. The price of the common shares shall be equal to 80% of the lowest traded price during the last 10 trading days leading up to each put notice, subject to a floor of $0.001 per share. As part of the agreement, the Company issued a convertible promissory note to the unrelated party to offset transaction costs of $20,000, which was deemed as earned upon the execution of the agreement. The note was convertible into common stock of the Company at a fixed price of $0.01, which equals the lowest traded price for the common stock on the trading day preceding the execution of the note. During the year ended April 30, 2021, the convertible promissory note was repaid. As of July 31, 2021, no common shares have been sold pursuant to the equity financing agreement.

12. Subsequent Events

On August 3, 2021, the Company issued 1,000,000 common shares to a non-related party for consulting services.

On August 16, 2021, the Company issued 100,000 common shares to a non-related party for consulting services.

On August 20, 2021, the Company acquired 100% right, title, and interest to certain properties located in Jack County, Texas for cash consideration of $900,000.

F-11

Table of Contents

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our 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 those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

RESULTS OF OPERATIONS

Working Capital

	July 31, 2021	April 30, 2021
	$	$
	(unaudited)
Current Assets	1,479,709	2,207,033
Current Liabilities	256,452	484,014
Working Capital	1,223,257	1,723,019

Cash Flows

	July 31, 2021	July 31, 2020
	$	$
	(unaudited)	(unaudited)
Cash Flows used in Operating Activities	(612,892)	(61,769)
Cash Flows from (used in) Investing Activities	(4,036,861)	-
Cash Flows from Financing Activities	3,882,335	62,917
Net increase (decrease) in Cash During Period	(767,418)	1,148

Operating Revenues

During the three months ended July 31, 2021, the Company earned royalty revenues of $64,599 relating to its interests in various oil and gas properties compared to $nil during the three months ended July 31, 2020 as the Company did not invest in any oil and gas properties in the same period in the prior year.

Operating Expenses and Net Loss

During the three months ended July 31, 2021, the Company incurred operating expenses of $741,949 compared to operating expenses of $341,562 during the three months ended July 31, 2020. The increase in operating expenses was due to an increase in operating activity during the period as the Company has invested in significant oil and gas properties and commenced earning royalty revenues during the current fiscal period compared to minimal operations in the prior year. Expenditures included $98,134 of additional maintenance and general costs relating to maintaining the oil and gas properties as well as $436,024 of general and administrative expenses which includes over $208,000 of payroll costs. As part of the revenues generated from the oil and gas properties, the Company recorded depletion expense of $21,989 during the period ended July 31, 2021 which represents the proportionate use of the produced units in the properties relative to proven and probable reserves. There was no depletion during the period ended July 31, 2020 as the Company had not acquired its oil and gas properties at the time.

Table of Contents

Net loss for the three months ended July 31, 2021 was $672,995 compared to a net loss of $910,547 during the three months ended July 31, 2020. The decrease in net loss was due to the fact that the Company recorded a loss on the change in fair value of derivative liability of $471,266 and interest expense of $96,717 during the three months ended July 31, 2020 from the convertible debentures that the Company had to support its operations. In the current year, the Company has obtained financing through the issuance of common shares and no longer has any outstanding convertible debentures.

For the three months ended July 31, 2021, the Company recorded a basic and diluted loss per share of $0.00 as compared with a basic and diluted net loss per share of $0.04 per share for the three months ended July 31, 2020.

Liquidity and Capital Resources

As at July 31, 2021, the Company had cash of $1,320,479 and total assets of $6,495,542 compared to cash of $2,087,897 and total assets of $3,217,998 as at April 30, 2020. The increase in total assets was due to the purchase of an additional $3,911,265 of oil and gas property interests and the decrease in cash was due to the fact that the oil and gas acquisitions were paid by cash based on the Company’s existing holdings and new financing of common shares in a Regulation A filing for $0.01 per share.

The Company had total liabilities of $321,396 as at July 31, 2021 compared to $562,242 as at April 30, 2021. The decrease in liabilities is due to the conversion of $214,940 of its convertible preferred Series B shares in exchange for 15,030,769 common shares. As at July 31, 2021, the Company no longer has any outstanding convertible preferred Series B shares. The Company also repaid its remaining convertible debentures of $1,203 which also resulted in the decrease in derivative liability of $8,519 as the Company no longer has any convertible debentures or any fair value related to any beneficial conversion of debt to common shares.

As of July 31, 2021, the Company had working capital of $1,223,257 compared to working capital of $1,723,019. The decrease in working capital was due to the use of cash to acquire additional oil and gas properties offset by additional proceeds received from issuance of common shares during the current period.

Cash Flow from Operating Activities

During the three months ended July 31, 2021, the Company used $612,892 of cash for operating activities compared with $61,769 for operating activities during the three months ended July 31, 2020. The increase in the use of cash for operating activities was due to an overall increase in general operations as the Company purchased oil and gas properties and earned royalty revenue during the current period compared to minimal operations during the prior year.

Cash Flow from Investing Activities

During the three months ended July 31, 2021, the Company used $4,036,861 of cash for investing activities including $3,911,266 for purchases of oil and gas properties and $125,595 of equipment. The Company did not have any investing activities during the three months ended July 31, 2020.

Cash Flow from Financing Activities

During the three months ended July 31, 2021, the Company raised $3,882,335 of cash from financing activities, including $3,920,500 from the issuance of common shares less repayment of $5,000 to repay the outstanding balance of a convertible debenture and $33,165 of share issuance costs. During the three months ended July 31, 2020, the Company raised $62,917 of cash from financing activities which included $40,000 from the issuance of common shares and share subscriptions as well as $22,917 of loans payable related to the SBA paycheck protection program.

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. During the period ended July 31, 2021, the Company incurred a net loss of $672,995 and used cash of $612,892 for operating activities. At July 31, 2021, the Company has an accumulated deficit of $11,509,740. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The unaudited financial statements included in this report on Form 10-Q does 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.

Table of Contents

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.

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.

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.

Recently Issued Accounting Pronouncements

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of July 31, 2021. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of July 31 2021, that occurred during the period that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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

1.Quarterly Issuances:

Other than as previously disclosed in the above Notes to the Condensed Consolidated Financial Statements, we did not issue any unregistered securities during the quarter.

2.Subsequent Issuances:

Other than as previously disclosed in the above Notes to the Condensed Consolidated Financial Statements, we did not issue any unregistered securities subsequent to the quarter.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.

ITEM 5. OTHER INFORMATION.

None.

Table of Contents

ITEM 6. EXHIBITS

Exhibit Number	Description of Exhibit	Filing
3.1	Articles of Incorporation	Filed previously and incorporated by reference.
3.2	Bylaws	Filed previously and incorporated by reference.
31.1	Certification of Principal Executive Officer Pursuant to Rule 13a-14	Filed herewith.
31.2	Certification of Principal Financial Officer Pursuant to Rule 13a-14	Filed herewith.
32.1	Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith.
32.2	Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith.

*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

Table of Contents

SIGNATURES

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

	VERDE BIO HOLDINGS, INC. (FORMERLY APPIPHANY TECHNOLOGIES HOLDINGS CORP.)

Dated: October 6, 2021		/s/ Scott Cox
	By:	Scott Cox
	Its:	President, Principal Executive Officer & Principal Financial Officer (Principal Accounting Officer)

Pursuant to the requirement 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:

Dated: October 6, 2021	By:	/s/ Scott Cox
	Its:	Scott Cox, Director