Inside CBIH's 10-K: A 'Going Concern' Warning Shadows Revenue Growth

Cannabis Bioscience International Holdings, Inc. (CBIH), a company operating at the intersection of clinical research and cannabis science, recently released its annual financial results in a 10-K filing with the SEC for the fiscal year ending May 31, 2025. The report provides a detailed look into the company's performance, revealing a story of growing revenue overshadowed by substantial costs and a critical warning about its future. Let's dive into the income statement to see what's happening.

CBIH is not your typical cannabis company; it doesn't grow or sell marijuana. Instead, it operates through three main arms: Alpha Research Institute, which conducts clinical trials for pharmaceutical firms; Pharmacology University, an education and research-focused division; and a developing CBD Business planning to launch products like "VitaCookies."

A Deep Dive into Revenue and Expenses

For the 2025 fiscal year, CBIH reported total revenue of $303,022, a notable increase from the prior year's $248,841. This growth was almost entirely driven by its clinical trials business, which brought in $301,731. However, revenue from its other ventures, such as consulting and merchandise, saw a steep decline.

A crucial point highlighted in the filing is the company's high customer concentration. For the year, a staggering 91% of its revenue came from just two clients, creating significant risk if either of those relationships were to change.

The following flow diagram illustrates how the company's revenue is consumed by costs and expenses, ultimately leading to a net loss.

As the diagram shows, after accounting for $40,106 in the cost of revenue—expenses directly tied to its clinical trial services and reported at the company level—CBIH was left with a healthy gross profit of about $263,000. However, the story changes dramatically when we look at operating expenses.

The High Cost of Ambition

The company’s operating expenses for the year totaled $684,281, more than double its total revenue. The largest components of this spending were:

• Professional fees: $317,137
• Contract labor: $175,420
• General and administrative costs: $101,906

These figures suggest a heavy reliance on external expertise and significant overhead, which led to an operating loss of $421,365. After factoring in other expenses, primarily $136,262 in interest payments on its debt, the company posted a net loss of $548,820.

The "Going Concern" Red Flag

Perhaps the most critical piece of information in the entire filing is the "going concern" warning issued by the company's independent auditors. This is an accounting term used when there is substantial doubt about a company's ability to continue its operations for the foreseeable future, typically the next 12 months. The auditors cited CBIH's history of recurring losses, negative working capital of over $916,000, and negative cash flow as the basis for this warning.

In essence, CBIH is burning through cash faster than it's generating it. The company's survival depends on its ability to execute its business plan, which includes raising additional capital through debt or equity financing.

Looking Ahead

Cannabis Bioscience International Holdings is in a challenging position. While its clinical trials segment shows promise with growing revenue, the company's financial structure is unsustainable without a major change. To survive and thrive, CBIH must either find a way to dramatically scale its revenue—perhaps through the successful launch of its VitaCookies CBD line—or significantly rein in its high operating costs. For investors, the "going concern" warning serves as a stark reminder of the risks involved as the company navigates the turbulent but promising waters of the bioscience and cannabis markets.