CBDG THC Farmaceuticals Inc (PK)

Commission file number 000-54754

THC Farmaceuticals, Inc.

 (Exact Name of Small Business Issuer as specified in its charter)

UTAH

(State or other Jurisdiction of Incorporation or Organization)

7170 E. McDonald Dr., Ste 3

Scottsdale, Arizona   85253

(Address of principal executive offices)

(480) 725-9060

(Issuer’s telephone number, including area code)

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 (SS 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   YES x     NO o  (The Registrant does not have a corporate Web site.)

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  YES o      NO x

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

As of August 12, 2015, 14,996,600 shares of the registrant’s common stock were outstanding.

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, Financial Statements and Notes to Financial Statements contains forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or intended

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

C O N T E N T S

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THC FARMACEUTICALS, INC.

Condensed Consolidated Balance Sheets

June 30, 2015 and September 30, 2014

(Unaudited)

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

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THC FARMACEUTICALS, INC.

Condensed Consolidated Statements of Operations

For the Three Months and Nine Months Ended June 30, 2015 and 2014

(Unaudited)

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

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THC FARMACEUTICALS, INC.

Condensed Consolidated Statements of Cash Flows

For the Three Months Ended June 30, 2015 and 2014

(Unaudited)

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

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THC FARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements

June 30, 2015

NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2015, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2014.  The results of operations for the three-month period ended June 30, 2015 are not necessarily indicative of the operating results for the full year.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements

The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position or cash flows.  Based on that review, the Company believes that none of these pronouncements will have a significant effect on its condensed consolidated financial statements.

NOTE 3 – RELATED PARTY TRANSACTIONS / SERVICE AGREEMENT

The Company has a Service Agreement with Wasatch ATM (“Wasatch”), a Utah limited liability corporation owned and managed by a Company stockholder.  The agreement provides for Wasatch to provide all maintenance, repair and service work along with distribution of vault cash.  Since December 1, 2014, Wasatch has been compensated at a rate of $1,500 per month. The fee paid to Wasatch may be subject to change.

NOTE 4 - RELATED PARTY TRANSACTIONS / LONG-TERM DEBT

On June 30, 2015, the Company owed $104,908 in related party long-term debt and $924 related party accrued interest.

NOTE 5 - SUBSEQUENT EVENTS

None.

NOTE 6 – COST OF INVESTMENTS

During the quarter ended June 30, 2015, the Company acquired 8,745,000 shares of Rocky Mountain Ayre, Inc. (RMTN) in exchange for the majority of the Company’s hempcoin assets.  This transaction was recorded at fair market value based upon the market value of the RMTN shares. This was not a related party transaction.

During the quarter ended March 31, 2015, the Company acquired a 30% interest in Las Vegas Cannabis Info Center, Inc. in exchange for $25,000 cash and 25,000 shares of the Company’s common stock valued at $1 per share.   This transaction was booked at Fair Market Value based upon the market price of the Company’s common stock and value of the consideration paid.

Since these investments exceed 20% and/or allow us to exercise significant influence over management, the Company is following the guidance of ASC 323 for the equity method of recording investments.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.

When used in this Annual Report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27a of the Securities Act and Section 21e of the Exchange Act regarding events, conditions, and financial trends that may affect Guide’s future plans of operations, business strategy, operating results, and financial position.  Persons reviewing this Annual Report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and actual results may differ materially from those included within the forward-looking statements as a result of various factors.  Such factors are discussed further below under “Trends and Uncertainties,” and also include general economic factors and conditions that may directly or indirectly impact our financial condition or results of operations.

Plan of Operation

Our primary focus during 2014 was the placement and servicing of ATM machines for public use along the Wasatch Front in the State of Utah.  During the quarter ended June 30, 2015, we had a total of eight machines in operation and all eight machines remain in operation as of the quarter ended June 30, 2015.  The Company’s primary focus now, however, is on hemp and natural products, plus where feasible technology and ancillary products and services for the medical marijuana and legal recreational marijuana industry.

With the recent addition of Ed Rosenthal as the Company’s president, the Company has begun research on plant terpenes and is investigating the feasibility and marketability of terpene based natural products.  The Company intends to acquire and/or develop hemp based products in 2015.

During the quarter ended June 30, 2015, the Company sold the majority of its hempcoin assets Rocky Mountain Ayre, Inc. (RMTN) in exchange for an approximate 8,745,000 shares of RMTN.  We believe the transaction brings value to the Company through ownership of RMTN and the Company’s continued ownership approximately 899,074,298 Hempcoins (HMP).  Additionally, the Company plans to expand into related additional areas they believe would be profitable for the Company and benefit its shareholders.  One such area is the cultivation and sale of industrial hemp.

Presently, the Company does not have sufficient funds, without additional equity or debt financing to support operations for the next fiscal year.  There is presently no commitment to provide any further funding to the Company.  Given our current lack of liquidity and difficulty in obtaining debt from traditional banking sources, we will focus future fund raising on the sale of our equity securities. There can be no assurance that we will be successful at raising additional capital and without additional capital, we will not be able to expand operations and reach long term profitability.

Results of Operations

Three Months Ended June 30, 2015 Compared to Three Months Ended June 30, 2014

During the three months ended June 30, 2015, we recognized $4,501 in revenues.  During the three months ended June 30, 2014, we recognized $4,368 in revenues.  The increase in revenue for the period ended 2015 over the same period in 2014, appears to be attributable to a slight increase in consumer demand for cash transactions, possibly created by an improving economy and tourism industry in Utah.

We had a net loss for the three months ended June 30, 2015, of $35,387 and a net loss of $4,252 for the three months ended June 30, 2014.  The loss for the quarter ended June 30, 2015 was more than the loss which occurred during the same quarter in 2014, primarily due to increases in general and administrative expenses during the quarter ended June 30, 2015 from increased staffing, planning and consulting activities and commencement of our terpene research.

We will need additional capital to expand operations and anticipate seeking both debt and equity capital in 2015. Additionally, as our business operations are only beginning, it is difficult to predict our ability to generate sufficient revenue to generate positive cash flows.  Currently our biggest expenses are related to general and administrative costs consisting mainly of employee compensation which was $17,000 for the three months ended June 30, 2015 and $0 for the three months ended June 30, 2014.  Our service fee to maintain ATM cash levels and operating functionality is $1,500 per month.  We anticipate these fees remaining constant during 2015; however, that could change based upon market conditions.

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Nine Months Ended June 30, 2015 Compared to Nine Months Ended June 30, 2014

During the nine months ended June 30, 2015, we recognized $13,733 in revenues.  During the nine months ended June 30, 2014, we recognized $14,249 in revenues.  The nominal decrease in revenue for the period ended 2015 over the same period in 2014 may be attributed to a decrease in consumer demand for cash transactions during the this first few months of this year.

We had a net loss for the nine months ended June 30, 2015, of $63,852 and a net loss of $22,076 for the nine months ended June 30, 2014.  Our net loss for the 2015 period was the result of increased employee expense and the commencement of research activities in the areas of hemp and natural products.

Liquidity and Capital Resources

We had $5,551 cash or cash equivalents on hand as of June 30, 2015.

For the quarter ending June 30, 2015, the Company owed $684,223 to related parties for loans made to the Company.

The Company has accumulated losses of 203,680. As previously discussed above, management’s plans include a review of the ATM business model and the addition of new business units in order to improve our cash flows and profitability. Without further related party funding or outside investment, the Company will not have sufficient capital to fund operations for the next 12 months.  

Off-Balance Sheet Arrangements

We had no Off-Balance Sheet arrangements during the quarter ended June 30, 2015.

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

Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that as of June 30, 2015, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were not effective to satisfy the objectives for which they are intended.

Management believes that, as of June 30, 2015, the Company’s internal control over financial reporting was ineffective, due to the following material weaknesses listed below:

Limited personnel; Reliance on third party.  During the fiscal quarter, our only personnel resources were the Company’s former president, chief executive officer, our treasurer and a third party accounting vendor.  We have terminated the accounting vendor during the fiscal quarter. The Company has now brought the accounting function directly under the CFO and hired an outside accounting advisor.  However, even with these additions, the company remains minimally staffed and has limited funds for staffing.  This could result in future errors or material misstatements.

Lack of Adequate Controls and Procedures.  The Company lacks adequate controls and procedures.  Additionally, management has not developed and effectively communicated to our employees its accounting policies and procedures.  This has resulted in inconsistent practices.

These control deficiencies could result in a material misstatement to our interim or annual financial statements that possibly would not be prevented or detected.

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When we are financially able, we intend to take appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies and we intend to consider the results of our remediation efforts and related testing as part of our next assessment of the effectiveness of our internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the three months ended June 30, 2015 that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting, except for the on-going efforts to address the significant deficiencies identified above.

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

None.

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 SALE OF EQUITY SECURITIES.

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

MINE SAFETY DISCLOSURES.

None.

ITEM 5.

OTHER INFORMATION.

None.

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ITEM 6.

EXHIBITS.

The following documents are included herein:

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities on this 18th day of August, 2015.

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