UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

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

For the Quarterly Period Ended November 30, 2018

☐

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

For the Transition Period From to

Commission File Number: 333-167275

Phoenix Life Sciences International Limited

(Exact name of registrant as specified in its charter)

Nevada		46-0525378
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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

(720) 699.7222

(Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant has submitted electronically 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.

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☐		Smaller reporting company ☒
Emerging growth company ☐

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

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

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

Class	Outstanding as of February 28, 2019


Common Stock, $0.001 par value per share		32,584,582 common shares

Phoenix Life Sciences International Limited

FORM 10-Q

For the Quarter Ended November 30, 2018

INDEX

			Page
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements (unaudited)	3
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
	Item 4.	Controls and Procedures	25

PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	27
	Item 1A.	Risk Factors	27
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
	Item 3.	Defaults upon Senior Securities	27
	Item 4.	Mine Safety Disclosures	27
	Item 5.	Other Information	27
	Item 6.	Exhibits	28

SIGNATURE			29

Forward Looking Statements.

This 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.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

PHOENIX LIFE SCIENCES INTERNATIONAL LIMITED

Consolidated Balance Sheets


	November 30, 2018 $			February 29, 2018 $
		Unaudited			Audited
ASSETS

Cash		6,923			697
Notes receivable, related party		—			235,752
Trade account		299,000
Prepayments		1,525,625			—
Total Current Assets		1,831,548			236,449
Intellectual Property including formulations		6,000,000			—
Total Assets		7,831,548			236,449

LIABILITIES

Current Liabilities
Accounts payable and accrued liabilities		933,131			518,310
Due to related parties		352,057			277,219
Current Liabilities		1,285,188			795,529
Convertible notes payable, net		—			415,581
Derivative liability, Typenex Note		—			390,009
Total Liabilities		1,285,188			1,601,119

STOCKHOLDERS’ DEFICIT

Common Stock
Authorized: 990,000,000 common shares, par value of $0.001 per share
Issued and outstanding: 30,810,346 and 34,171 common shares respectively		30,810			34
Issued and outstanding Preferred shares
Series B – 2,000,000		—			200
Series C – 995,600		100			100

Additional paid-in capital		29,959,705			17,785,335

Accumulated deficit during the development stage		(23,444,255	)		(19,150,339	)
Total Stockholders’ Equity (Deficit)		6,546,360			(1,364,670	)
Total Liabilities and Stockholders’ Equity		7,831,548			236,449

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

PHOENIX LIFE SCIENCES INTERNATIONAL LIMITED

Consolidated Statements of Operations - Unaudited

	3 Months Ended						9 Months Ended
	Nov. 30, 2018			Nov. 30, 2017			Nov. 30, 2018			Nov. 30, 2017
Income Statement

Revenues		—			—			—			—
Cost of Sales		—			—			—			—
Gross Profit		—			—			—			—

Operating expenses
Amortization expense		—			—			—			—
Product development expense		—			—			—			—
Sales and marketing expenses		—			—			—			—
Operations expense		1,401,801			—			1,401,801			—
General and administrative		57,233			30			57,278			406
Professional fees		152,939			—			152,939			—
Lease operating expenses		—			—			—			—
Total operating expenses		1,611,973			30			1,612,018			406

Loss before other expenses		(1,611,973	)		(30	)		(1,612,018	)		(406	)

Other income (expense)
Interest Income		2			—			2			—
Interest Expense		—			(21,271	)		(49,442	)		(60,831	)
Settlement expenses		(1,518,920	)		—			(1,650,170	)		—
Gain (Loss) on currency conversion		(11,000	)		—			(11,000	)		—
Gain (loss) on derivative liability		254,128			20,957			—			248,336
Total other income (expense)		(1,275,790	)		(314	)		(1,710,610	)		187,505

Net profit (loss)		(2,887,763	)		(344	)		(3,322,628	)		187,099
Basic and diluted loss per common share:
Income (loss) from continuing operations		(0.19	)		(0.01	)		(0.67	)		6.02
Basic and diluted loss per common share	($	0.19	)	($	0.01	)	($	0.67	)	$	6.02
Weighted average shares outstanding - basic and diluted		15,046,358			31,067			4,971,644			31,067

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

PHOENIX LIFE SCIENCES INTERNATIONAL LIMITED

Consolidated Statements of Cash Flows

(Unaudited)

	9 Months Ended
	Nov. 30, 2018			Nov. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:

Net profit (loss)		(3,322,638	)		187,099

Loss from discontinued operations		—			—

Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash stock compensation		3,726,855			—
Non-cash interest expense on convertible notes payable		49,442			60,831
Debt issuance costs		5,283			—
Non-cash loss (gain) on derivative liability		—			(248,336	)
Changes in operating assets and liabilities:
Accounts receivable		—			—
Deposit		—			—
Trade account		(299,000	)
Prepaid expense and deposits		(1,025,625	)		—
Accounts payable and accruals		316,231			—
Net Cash provided by (used for) operating activities		(549,442	)		(406	)

CASH FLOWS FROM INVESTING ACTIVITIES:

Related party notes receivable		—			—
Net Cash provided by (used in) Investing Activities - continuing operations		—			—

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from loans		23,427			—
Due to related parties		—			—
Proceeds from issuance of common shares		532,241			—
Net Cash Provided By Financing Activities - continuing operations		555,668			—

Increase (Decrease) in Cash - continuing operations		6,226			(406	)

Cash - Beginning of Period - continuing operations		697			1,155
Cash - End of Period - continuing operations		6,923			749

Supplemental disclosures
Interest paid		—			—
Income tax paid		—			—
Non-cash issuance of stock for consulting agreements		2,076,685			—
Non-cash issuance of stock settlement agreements		1,650,170			—
Non-cash issuance of stock for distribution agreement		—			—
Non-cash issuance of stock for conversion of debt		5,283			—

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

Nature of Operations and Continuance of Business

The company was incorporated in the State of Nevada on April 21, 2009 under the name Mokita Exploration, Ltd. (the “Company”). On February 27, 2017, there was a change of control of the Company. On February 28, 2017, 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, 2017. A Certificate of Correction was subsequently filed with the Nevada Secretary of State on March 6, 2017 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, 2017. The name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on March 12, 2017 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”.

In September 2018, the Company completed a merger and consolidation with Phoenix Life Sciences International Limited (Canada) and related Phoenix Life Sciences International Limited (Vanuatu) became a wholly owned subsidiary. As part of the consolidation, the Series B Preferred Shares owned by Phoenix Bio Pharmaceuticals that were previously authorized to be cancelled were finally cancelled. Phoenix Life Sciences International Limited (Nevada) had entered into asset purchase agreements with Phoenix Life Sciences Inc, Phoenix BioPharmaceuticals Corporation, Phoenix Pharms Capital Corporation and Phoenix Pharms Inc to consolidate all assets, liabilities, trade secrets, knowhow, diagrams and business plans, as well as all government relationships and pending contracts. Other than as specifically negotiated with former employees, contractors and officers, all shareholders were provided with a share exchange whereby they received one share of the Company for one share previously owned in one of these Companies.

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

On September 18, 2018, the Company’s Board of Directors announced the finalized consolidation activities of Phoenix Life Sciences International Limited with Stem Biosciences, Inc., Blue Dragon Ventures, and the MediJane Brand, and that the Company’s common stock would trade publicly under the symbol MJMD, subsequently on November 2, 2018 this changed to PLSI.

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

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

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

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.

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, 2018 included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on April 22, 2019. The interim unaudited financial statements presented herein are condensed and should be read in conjunction with those financial statements included in the Form 10-K. The interim disclosures generally do not repeat those in the annual statements. Management’s opinion that all adjustments necessary for a fair statement of the results for the interim periods have been made, and a statement that all adjustments are of a normal recurring nature or a description of the nature and amount of any adjustments other than normal recurring adjustments. Operating results for nine months ended November 30, are not necessarily indicative results that may be expected for the year ended February 28, 2019.

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.

Summary of Significant Accounting Policies

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

Basis of Consolidation – The consolidated financial statements include the accounts of Phoenix Life Sciences International Limited. 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, 2018 and February 28, 2018, 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, 2018 and November 30, 2018, 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, 2018 and 2017, 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, 2018 and 2017, 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 adopted ASC 606 using the modified retrospective method applied to all contracts not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606 while prior period amounts continue to be reported in accordance with legacy GAAP. The adoption of ASC 606 did not result in a change to the accounting for any of the in-scope revenue streams; as such, no cumulative effect adjustment was recorded.

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.

Variable Interest Entity

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

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

A VIE is an entity that either (a) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (b) has equity investors who lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary. The primary beneficiary has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. If we determine that we have operating power and the obligation to absorb losses or receive benefits, we consolidate the VIE as the primary beneficiary, and if not, we do not consolidate. The Company has not identified any VIEs as of November 30, 2018.

Intangible Assets

Effective September 1, 2017, 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.

Income Taxes

The deferred tax assets or liabilities represent the future tax benefits or cost of those differences. The Company’s principal deferred tax items arise from net operating losses. Net operating losses approximate $25,442,000 which expire in the years 2030 through 2038. The net operating loss results in a deferred tax asset of $3,816,000. 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, 2018. 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, 2018.

Subsidiary Companies

On March 17, 2017, MediHoldings, Inc. (“MediHoldings”), a Colorado corporation, was formed as a wholly-owned subsidiary of the Company.

On June 27, 2017, MediSales (CA), Inc. (“MediSales”), a California corporation, was formed as a wholly-owned subsidiary of the Company.

Both these subsidiaries as at November 30, 2018 had not traded and were inactive.

On September 18, 2018, with the merger with Phoenix Life Sciences International Limited (Canada), the Company gained an Australian Incorporated subsidiary, Phoenix Life Sciences (Australia) Pty Ltd.

Related Party Transactions

Russell Stone

Mr. Russell Stone, the Company’s former Chief Operating Officer, entered into a settlement agreement with the Company for unpaid services where he would be paid $125,000 over a maximum of 24 months. As at November 30, 2018, Mr. Stone was still owed $85,000.

Mr. Stone prior held approximately 14% of the outstanding common shares of Phoenix Pharms Capital Corporation (PPCC) indirectly through a trust, prior to PPCC being sold into Phoenix Life Sciences International Limited (a Canadian Corporation).

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

Martin Tindall

Mr. Martin Tindall join the Board as Chief Executive Officer on October 3, 2018. Previous Mr. Tindall had assisted Company with business development activities through the Advisory Services Agreement. Mr. Tindall serviced as CFO and a Director of Phoenix Pharms Capital Corporation, a director of Phoenix Bio Pharmaceuticals Inc. and a director of Phoenix Life Sciences International Limited (a Canadian Corporation) which were all vended into the Company on September 18, 2018.

Lewis “Spike” Humer:

Mr. Lewis “Spike” Humer was previously the interim Chief Executive Officer and a director of the Company. After the merger he stepped down from an executive role but remains on the Board and has been appointed Non-executive Chairman. He also previously served as CEO and a director of Phoenix Bio Pharmaceuticals and CEO and a director of Phoenix Pharms Capital Corporation, which were part of the merger. A settlement agreement has been reached with Mr. Humer for unpaid services, prior to the merger where he would be paid $125,000 plus $5,000 in unpaid expenses with the money to be paid over a maximum of 24 months and issued 100,000 common shares in the Company. Mr. Humer was owed $90,000 as at November 30, 2018.

Preferred Stock

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

Series A Preferred Stock:

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

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

Series B Preferred Stock:

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

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

Series C Preferred Stock:

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

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

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

Series D Preferred Stock

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

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

As at February 28, 2018, Phoenix Bio Pharmaceuticals Corporation held 2,000,000 Series B Preferred 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 therefore there were no Series B Preferred Shares on issue at November 30, 2018.

As at February 28, 2018 and November 30, 2018 YP Holdings LLC had been issued 1,000,000 Series C Preferred Shares, but had converted 4,400 into common shares and therefore held 995,600 Series C Preferred Shares. However subsequently agreement was reached to cancel all outstanding Series C Preferred Shares.

Common Stock

The Company has authorized 990,000,000 shares of its common stock, $0.001 par value. As at February 28, 2018 there were 34,171 shares of common stock on issue, respectively.

On April 4, 2018 the Company received a conversion notice 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. Accordingly the Company issued 900 shares at an issue price of $5.87.

On May 29, 2018 the Company issued 12,500 shares at $10.50 per share to Trevor Saliba as part of a settlement agreement as detailed below.

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. A further 60,400 were issued as part of the merger in reliance on Rule 802 under the Securities Act in a 1:1 share exchange related to the merger of PLSI CA All of the Issued Shares were issued in private transactions, and the company received no proceeds from the Issued Shares.

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. A further 152,000 shares were issued as compensation for services rendered in reliance of Section 4(a)(2) of the Securities Act for services post those dates.

As at November 30, 2018 there were 30,810,346 shares of common stock on issue.

10.

Common Stock Options

As at November 30, 2018 and February 29, 2018 there were no common stock options on issue

11.

Convertible Promissory Note

On June 24, 2017, 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, 2017, the Company evaluated the Beneficial Conversion Feature under this note and determined as of June 24, 2017, 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, 2017, the company has received net proceeds of $135,000 related to this convertible promissory note, representing $150,000 less financing costs of $15,000. During the nine months ended November 30, 2017 the Company has recorded interest expense of $7,725, and amortization expense of $554,413 related to the amortization of the original issue discount and the full-value of the warrant discussed below ($552,500).

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

A warrant to purchase shares of the Company has been issued to Typenex as of June 24, 2017. 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, 2017 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, 2017, when the Company failed to make its first installment payment of $61,888.89 according to the terms of the Typenex Note. Each default triggered a penalty of 115% of the then outstanding principal and accrued and unpaid interest and triggers the interest rate to 22%. As of January 9, 2015, the outstanding principal, accrued interest and accrued penalties on the Typenex Note was $239,483.61. On January 23, 2015, the Company satisfied its first default by instructing its transfer agent to reserve a total of 50,925,000 shares of common stock covering the potential conversion of the original principal value of the Typenex Note ($1,100,000) plus common shares issuable upon the exercise of warrants underlying the Typenex Note. On February 12, 2015, the Company received a notice from Typenex waiving the penalties on the December 16, 2017 default and waived $26,755.16 of penalties imposed on December 16, 2017. Under the terms of the Typenex Note, the Lenders Conversion Price will reset to 60% of the average of the three lowest closing bid prices of the Company’s common stock in the 20 days prior to conversion. As of December 16, 2017, the Company has re-evaluated the beneficial conversion feature under the Typenex Note and has recorded a liability for the beneficial conversion feature totaling $230,392. This discount will be amortized over the remaining life of the Typenex Note.

On February 3, 2015, the Company exercised its borrower offset right under the Typenex Note. Through this offset right, the Company is entitled to deduct and offset any amount owing by Typenex under the initial securities purchase agreement dated June 24, 2017 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, 2017, 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 August 31, 2018 and November 30, 2018 the Company has received no conversion notices from its noteholder on the Typenex Note to convert principal on the Typenex Warrant into shares of the Company’s Common Stock at a market price as defined by the Typenex Note.

On or about June 24, 2017, the Company entered into a Convertible Promissory Note with a face value of $1,105,000 (the “Note”) by and between the Company and Typenex Co-Investment, LLC (“Typenex”).

On or about April 19, 2018, the Phoenix Life Sciences International Ltd, a Canadian Corporation (“PLSI CA”) acquired the entirety of the Notes outstanding principal and interest balance from Typenex. Upon the completion of the merger, that Note was conveyed to the Company.

On September 22, 2018, the Company’s Board of Directors resolved to deem the acquired Notes principal balance satisfied, and to terminate the Note and any and all rights and obligations arising thereunder, including without limitation the cancellation of all outstanding Warrants issued to Typenex under the Note. This also meant that the derivative liability carried on the balance sheet was retired.

12.

Settlements

NMS Advisors were previously engaged as the Investment Bankers for the Company. In May 2019, the Company issued 12,500 shares at $10.50 to settle any potential claims against the Company for these services and NMS provided full release of the Company from any claims. Trevor Saliba, as principal of NMS Advisors instructed the Company that the shares be issued in his name directly. The release included the Company, previous and future officers and successors.

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

13.

Subsequent Events

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 which included cancellation of 1,000,000 Series C Preferred Shares.

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.

Issuance of Common Stock: On April 2, 2019 the Company issued 151,216 common share for cash consideration.

Issuance of Common Stock: On April 25, 2019 the Company issued 100,000 common share for cash consideration.

Capital Raising: On April 30, 2019 the Company announced that it intended to raise up $40,000,000 from professional investors. The Company will file a Form D with SEC for a 506c capital raise.

Issuance of Common Stock: On May 1, 2019 the Company issued 155,452 common share which included 137,523 common shares issued as compensation for services rendered in reliance of Section 4(a)(2) of the Securities Act and 17,929 for cash consideration.

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

Overview

The Company was incorporated in the State of Nevada on April 21, 2009, under the name Mokita Exploration, Ltd. On February 5, 2010, the Company filed a Certificate of Amendment to the Articles of Incorporation changing our name to Mokita, Inc. On February 27, 2017, there was a change of control of the Company. On February 28, 2017, 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, 2017. A Certificate of Correction was subsequently filed with the Nevada Secretary of State on March 6, 2017 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, 2017. The name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on March 10, 2017 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, 2017, the Company became a medical delivery systems company with a pharmaceutical approach to cannabinoid treatment of various illnesses with medical cannabis.

Recent Developments

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

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

The Company’s focus is on creating healthcare solutions with a specific focus on the use of cannabinoids to manage a broad range of health conditions, both generically and through our proprietary formulations. We are focused on establishing farming operations and pharmaceutical manufacturing laboratories using specific strains of the cannabis sativa plant and other cannabinoids as a base element in the range of products produced and sold. Our goal is to research, produce, and distribute products around the globe that target and treat; diabetes, cancer, pain, autoimmune, psychological, neurological, and sleep disorders. These categories include conditions that affect hundreds of millions of patients worldwide.

The initial products that Phoenix Life intends to manufacture and distribute is Phoenix Metabolic. Extracted from specific strains of cannabis sativa, Phoenix Metabolic has been developed to provide a safe, non-toxic and efficacious way to manage blood sugar levels and diabetic complications. This is based on mounting levels of data supporting the use of cannabinoids in the management of diabetes and clinical experience of Phoenix Life’s U.S. Diabetes Director.

We plan to build an integrated healthcare organization by creating products and programs using emerging biological products such as cannabinoid plant extracts. We intend to deliver these programs through managed agriculture, pharmaceutical production, physician education and national networks of community clinic and dispensing pharmacies, combined with wholesale and distribution networks. Leading formulators have developed a range of pharmaceutical-grade products from the cannabis plant. The Company will utilize its intellectual property in extraction technology, proprietary compounds, delivery systems, and distribution to produce high-quality products in terms of control, consistency, accountability, and packaging.

We anticipate that our delivery systems will include oral soft gel capsules, thin film dissolvable strips, transdermal patches, sublingual oral sprays, suppositories and topical creams.

We initially intend to produce our products, in the Republic of Vanuatu, using cannabinoids derived from various strains of cannabis sativa. Several of these strains may be classified as Industrial hemp. Industrial Hemp has been defined, accordingly, as an exclusion/exception to the Controlled Substances Act (“CSA”), as, “the plant Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-9 tetrahydrocannabinol (“THC”) concentration of not more than 0.3 percent on a dry weight basis.” Although it is clear that marijuana, or “marihuana,” is a Schedule I controlled substance under the CSA, not all parts of the Cannabis sativa L. plant are considered “marihuana” under the federal definition. Moreover, as set forth in the Agriculture Act of 2016 (commonly known as the Farm Bill), the entire industrial hemp plant is lawful and is not subject to the CSA.

Phoenix Life’s Vanuatu operation is licensed as a pharmaceutical manufacturer and following completion of legislation, be licensed for cultivation and export of cannabis derived products. While, the United States maintains cannabis sativa, and specifically THC as a Schedule 1 Controlled Substance, the Republic of Vanuatu has joined over forty-five (45) countries, including Canada, Australia, New Zealand and the United Kingdom in legalizing cannabis for medical use.

Our business strategy includes providing capital to a series of fully or partially owned laboratories and ventures with medical professionals, researchers, cannabinoid related projects and pharmacists. We will provide access to intellectual property and distribution networks, plus a range of services that will include the following: preparing the legal framework, purchasing of real estate, building of production facilities, community clinics and dispensing pharmacies and retail outlets as well as operating of health and wellness centers.

We believe that we are positioned to earn revenue through the sales of products through supplying products and services to national healthcare systems, doctors’ offices, pharmacies, ecommerce and our community clinic and dispensing pharmacy network and leveraging the high margins created between being a pharmaceutical producer, growing and manufacturing in equatorial developing national and being part of the world’s fastest growing industry – medical cannabis.

Consolidated Results of Operations

The results of operations for the three and nine months ended November 30, 2018 represent results of the business as a healthcare solutions and pharmaceutical manufacturing distribution company, focused on products derived from the cannabis plant.

Revenues for the three months ended November 30, 2018 and 2017 were $0. Revenues for the nine months ended November 30, 2018 and 2017 were $0.

Cost of sales for the three months ended November 30, 2018 and 2017 were $0. Cost of Sales for the nine months ended November 30, 2018 and 2017 were $0.

Product development expense for the three ended November 30, 2018 and 2017 were $0. Product development expenses for the nine months ended November 30, 2018 and 2017 were $0.

Sales and marketing expenses for the three months ended November 30, 2018 and 2017 were $0. Sales and marketing expenses for the nine months ended November 30, 2018 and 2017 were $0. Sales and marketing expenses have been curtailed due to the lack of funds.

Operations expenses for the three months ended November 30, 2018 and 2017 were $1,401,801 and $0, respectively. Operations expenses for the nine months ended November 30, 2018 and 2017 were $1,401,801 were $0, respectively.

General and administrative expenses for the three months ended November 30, 2018 and 2017 were $57,233 and $30, respectively. General and administrative expenses for the nine months ended November 30, 2018 and 2017 were $57,278 and $406, respectively. General and administrative expenses generally include costs for running the Company’s administrative office. Costs have increased as the Company seeks to rejuvenate.

Professional fees for the three months ended November 30, 2018 and 2017 were $152,939 and $0, respectively. Professional fees for the nine months ended November 30, 2018 and 2017 were $152,939 and $0, respectively. Professional fees consist of cost of financing, legal, accounting, consulting and advisory services. Again as the Company is now active, professional fee expenses have risen.

Lease operating expenses for the three months ended November 30, 2018 and 2017 were $0. Lease operating expenses for the nine months ended November 30, 2018 and 2017 were $0.

Other income and expenses for the three months ended November 30, 2018 and 2017 were net expense of $1,275,790 and $314, respectively. Other income and expense for the nine months ended November 30, 2018 and 2017 were a net expense of $1,710,610 and a net income of $187,505, respectively. The increase in other expenses in the 2018 periods from the 2017 periods are due to non-cash expenses related to settlement costs to various parties.

Net loss for the three months ended November 30, 2018 and 2017 was $2,887,763 and $344, respectively. Net loss for the nine months ended November 30, 2018 was $3,322,628 and a net profit for 2017 of $187,099. The loss in 2018 was primarily due to settlement costs and services, both of which were paid using common shares.

Liquidity and Capital Resources

At November 30, 2018, the Company had a cash balance of $6,923 compared with $697 at February 28, 2018. The increase in cash was cash raised through share issues.

Cash flow from Operating Activities. During the nine months ended November 30, 2018 and 2017, the Company used $549,442 and $406, respectively, in cash for operating activities for its current operations.

Cash flow from Investing Activities. During the nine months ended November 30, 2018 and 2017, the Company received $0 for investing activities.

Cash flow from Financing Activities. During the nine months ended November 30, 2018 and 2017, the Company received $555,668 and $0 from financing activities, respectively. Majority of the cash raised through financing activities was from common share issues.

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 adopted ASC 606 using the modified retrospective method applied to all contracts not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606 while prior period amounts continue to be reported in accordance with legacy GAAP. The adoption of ASC 606 did not result in a change to the accounting for any of the in-scope revenue streams; as such, no cumulative effect adjustment was recorded.

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, 2018, 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, 2017. 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, 2018 to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Remediation Plan

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

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

PART II – OTHER INFORMATION

Item 1.	Legal proceedings Except as disclosed below, the Company, is not involved in any material active or pending legal proceedings. The Company has entered into settlement agreements with all known potential or asserted claims. The Company is currently involved in two disputes relating to deposits being due on proposed property purchases. The attorneys representing the Company in Vanuatu maintain that the claims are spurious, as the related contracts were never validly executed and at no time were unconditional, negating any obligation by the Company to pay the deposit. As at the date of this filing, the Company has moved to dismiss both claims, and is confident that the matters will be resolved in its favor.

Item 1A.	Risk Factors Not applicable for smaller reporting companies.

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
	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. A further 60,400 were issued as part of the merger in reliance on Rule 802 under the Securities Act in a 1:1 share exchange related to the merger of PLSI CA All of the Issued Shares were issued in private transactions, and the company received no proceeds from the Issued Shares. 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. A further 152,000 shares were issued as compensation for services rendered in reliance of Section 4(a)(2) of the Securities Act for services post those dates.

Item 3.	Defaults Upon Senior Securities.
	None.

Item 4.	Mine Safety Disclosures
	Not applicable.

Item 5.	Other Information
	None.

Item 6.	Exhibit

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

*Filed herewith.

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

SIGNATURES

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

PHOENIX LIFE SCIENCES INTERNATIONAL LIMITED

/s/Martin H. Tindall		Dated May 24, 2019
Martin H. Tindall
Chief Executive Officer

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

/s/Martin H. Tindall		Dated May 24, 2019
Martin H. Tindall
Chief Executive Officer
Director

/s/Geoffrey K. Boynton		Dated May 24, 2019
Geoffrey K. Boynton
Chief Financial Officer
Director

Phoenix Life Sciences International Limited. 10-Q