UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 20182019

Commission File No. 000-55523

9701 Wilshire Blvd., Suite 1000

Beverly Hills, California 90212

(Address of principal executive offices, zip code)

(310) 356-7374

(Registrant’s telephone number, including area code)

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

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

None

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

Common Stock, $.00001 Par Value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) Yes ¨x No xo

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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 of the Exchange Act. (Check one):

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. o

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

At September 30, 2017,2018, the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting common stock held by non-affiliates of the Registrant (without admitting that any person whose shares are not included in such calculation is an affiliate) was approximately $16,832,909.$10,259.104. At June 12, 2018,26, 2019, there were 10,499,61013,447,113 shares of the Registrant’s common stock, par value $0.00001 per share, outstanding.

APPLIED BIOSCIENCES CORP.

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FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K of Applied BioSciences Corp., a Nevada corporation (the “Company”), contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology. These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources. 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. Actual results may differ materially from the predictions discussed in these forward-looking statements. The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include, among other things: (i) the development and protection of our brands and other intellectual property, (ii) the need to raise capital to meet business requirements, (iii) significant fluctuations in marketing expenses, (iv) the ability to achieve and expand significant levels of revenues, or recognize net income, from the sale of our products and services, (v) the Company’s ability to conduct the business if there are changes in laws, regulations, or government policies related to cannabis, (vi) management’s ability to attract and maintain qualified personnel necessary for the development and commercialization of its planned products, and (vii) other information that may be detailed from time to time in the Company’s filings with the United States Securities and Exchange Commission. (“SEC”).

Our management has included projections and estimates in this Form 10-K, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

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PART I

ITEM 1. BUSINESS

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS

Our Corporate History and Background

Applied BioSciences Corp. was incorporated on February 21, 2014 under the laws of the State of Nevada, under the name “First Fixtures, Inc.” Under the laws of the State of Nevada, we amended our Articles of Incorporation to change our name to “Stony Hill Corp.” on October 13, 2016. On March 6, 2018, we amended our Articles of Incorporation to change our name to "Applied“Applied Biosciences Corp."” From our formation on February 21, 2014 until November 4, 2016, we were engaged in the business of being an online shopping mall specializing in bathroom and kitchen fixtures and faucets. Colin Povall served as President, Treasurer and sole director from February 21, 2014, until his resignation on October 3, 2016. Concurrent with his resignation, Mr. Povall appointed Damian Marley as the President and Chief Executive Officer, and sole member of the Board of Directors, Dan Dalton as the Treasurer, and John Brady as the Secretary. On February 10, 2017, the board of directors appointed Chris Bridges as our President. Concurrent with the appointment of Mr. Bridges, Damian “Jr. Gong” Marley resigned as our President and Chief Executive Officer. Mr. Marley also resigned as a director on March 5, 2018. Effective March 9, 2017, Chris Bridges was appointed a director of the Company. John Brady was also elected a director on December 29, 2017, and replaced Dan Dalton as Treasurer on January 5, 2018. Chris BridgesOn April 15, 2019. Scott Stevens was appointed as a director of the Company, and John Brady comprisewas elected Chairman of the Board on May 17, 2019. On May 28, 2019, Raymond Urbanski was appointed as Chief Executive officer of the Company and elected as a director. The board of directors of the Company.

The Company does not have any current plans, arrangements, discussions or intentions, whether written or oral, to engage in a merger or acquisition with an identified or unidentified company or person to be used as a vehicle for a private company to become a reporting company.

From inception until we completed our reverse acquisitionis currently composed of Stony Hill Ventures, the principal business of being online shopping mall specializing in bathroomScott Stevens, Chris Bridges, John Brady, and kitchen fixtures and faucets.Raymond Urbanski. 

Reverse Acquisition of Stony Hill Ventures

On November 4, 2016, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”), by and among the Company, Stony Hill Ventures Corp., a Nevada corporation (“Stony Hill Ventures”), and the holders of common stock of Stony Hill Ventures. The holders of the common stock of Stony Hill Ventures consisted of 26 stockholders.

Under the terms and conditions of the Share Exchange Agreement, the Company offered, sold and issued 10,840,000 shares of common stock in consideration for all the issued and outstanding shares in Stony Hill Ventures. The effect of the issuance was that Stony Hill Ventures shareholders held, at the time, approximately 73% of the issued and outstanding shares of common stock of the Company.

 

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As a result of the share exchange, Stony Hill Ventures became a wholly-owned subsidiary of the Company.

The share exchange transaction with Stony Hill Ventures was treated as a reverse acquisition, with Stony Hill Ventures as the acquiror and the Company as the acquired party. Unless the context suggests otherwise, when we refer in this Form 8-K10-K to business and financial information for periods prior to the consummation of the reverse acquisition, we are referring to the business and financial information of Stony Hill Ventures.

Organization & Subsidiaries

We currently have onefour operating subsidiary,subsidiaries: (i) Applied Products LLC, a Washington limited liability company.(ii) VitaCBD LLC, (iii) Trace Analytics, Inc., and (iv) SHL Management LLC.

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Overview of Applied BioSciences

We are a diversified companyvertically integrated Company focused on multiple areasthe development of the medical, bioceuticalscience-driven Cannabinoid therapeutics/biopharmaceuticals, and pet health industry.delivering high-quality CBD products as well as state -of-the-art testing and analytics capabilities to our customers. As a company in the bioceutical and pet health industries, the company is currently shipping to the majority of US states, as well as to multiple non-US countries. The Company is focused on select investment, consumer brands, and partnership opportunities in the recreational, health and wellness, nutraceutical, and media industries.

We have established key exclusive strategic alliances which serve to help accomplish the task of becoming the market leader. Directly and through our partners, we sell consumer products including health and wellness creams, tinctures, edibles, confections, clothing, apparel, and other various branded products.

Our principal administrative offices are located at 9701 Wilshire Blvd., Suite 1000, Beverly Hills, California 90212. Our website is www.appliedbiocorp.com.

Primary Business

Applied BioSciences offers a broad selection of medical and consumer products including creams, balms, tinctures, concentrates and edibles and is organized for various investments under the Applied BioSciences brand as well as to conduct any other related business and activities. Applied BioSciences is the owner and has right to intellectual property, including trademark, trade names, images, likenesses and other associated intellectual property, such as the namenames “Remedi”, “Remedi Plus”,  “TherPet”“HerbalPet”, “Champ Organics” and “Equine Care.”

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The company also offers state-of-the-art testing and analytics capabilities through its majority owned subsidiary, Trace Analytics.

We intend to:

	·	establish a global medical and consumer platform and multiple brands;
	·
	·	create of platform to partner and invest in various segments in the consumer industry; and
	·
	·	establish key exclusive strategic alliances which serve to accomplish the task of becoming the market leader

We currently independently or in conjunction with third parties, sell products focused on the medical, bioceutical and pet health industry. We source products from multiple production facilities in California, Colorado, Nevada and Florida.

Remedi and Remedi Plus

The team at Remedi are based in Colorado, and is a collaboration project of hemp industry professionals. With an advisory board of scientists, physicians, farmers and extraction specialists, Remedi has launched an initial line of Hemp Infused products focused on delivery methods with proven, noticeable effects. The State Approved Industrial Hemp farms in Colorado are required to grow their crops in a Pesticide-Free Environment. On Certified Organic land, the Hemp used to create the extracts in our products is certified by the Colorado Department of Agriculture to be free of any residual chemicals.

Currently there are 3 categories of the Remedi Brand:

	·	Essential – designed for everyday life with essential flavors and natural organic ingredients
	·
	·	Boost – designed for daily life infused with essential flavors, vitamins and minerals and natural additives
	·
	·	Relax – designed for relaxing and as a natural sleep aid with natural organic ingredients

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TherPetHerbalPet

TherPetHerbalPet was established to create a new standard of care in the pet health industry by providing pet owners with safe, natural, veterinarian-recommended products. By placing pets over profits, TherPetHerbalPet delivers the highest quality cannabinoid-based nutraceuticals for cats, dogs and horses. The longer we can enrich our furry friends’ lives, the lonerlonger they can enrich ours.

TherPetHerbalPet Hemp Tinctures are formulated with your dog or cat’s holistic well-being as the central focus. Easily digested and dosed by the single drop, you can add this naturally-flavored supplement to your pet’s food, treats or easily right on their tongue. Beef and Peanut Butter for dogs, Chicken for Cats and Apple for Horses. Full Spectrum CBD Oil infused tinctures contain a wide range of beneficial cannabinoids and terpenes, extracted from CBD-rich industrial hemp, you will see the difference in your Pet’s quality of life.

Currently there are 3 categories of the TherPetHerbalPet Brand:

	·	Canine – Beef and Peanut Butter Flavor
	·	Feline – Chicken Flavor
	·	Equine Care – Apple Flavor

Champ Organics

Champ Organics is a line of athlete-focused cannabidiol ("CBD") based health and wellness Supplements to enhance training and recovery launched with Shannon Briggs, former heavy weight boxing champion and world record-holder for the most first-round knockouts.

Trace Analytics, Inc.

Trace Analytics, Inc., a majority owned subsidiary of the Company was acquired on January 1, 2019, and is a cannabis testing laboratory and service company located in Spokane, Washington. Some of the services provided by Trace Analytics are:

Equity Investments

We have a total of $468,537$898,292 of equity investments in the following threefour entities: High Times, GemmaCert, and Precision Cultivation Systems.Systems, and Bailey Venture Partners XII LLC .

High Times

For more than 40 years, High Times has been the authoritative voice of authentic cannabis culture, including leading the fight for legalization and empowering entrepreneurs in this burgeoning industry. High Times’ content spans digital, social, video and print platforms as well as location-based events highlighted by the global Cannabis Cup franchise and the High Times Business Summit conference series.

GemmaCert

GemmaCert, based in Israel, states that it is developing the world’s first truly non-destructive detection device, which is affordable, quick and easy-to-use, for the precise testing of the composition and potency of cannabis flowers. The company’s proprietary technology features patented optical analysis and advanced imaging tools delivering the industry'sindustry’s most accurate quality control testing of cannabis flowers, along with integrated cloud database, sorting and labeling systems, traceable packaging, mobile apps, and more.

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Precision Cultivation Systems

Precision Cultivation Systems LLC is a company which represents itself as specializing in the design, manufacture, and implementation of its patent-pending award winning proprietary high-performance plant cultivation systems. Precision Cultivation Systems proudly designs, manufactures and assembles all core system components in the United States of America from medical grade plastics. Precision Cultivation Systems has decades of expertise in commercial cultivation, environmental science, plant physiology, engineering, and manufacturing to make it possible to not just grow but to grow with precision.

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Bailey Venture Partners XII LLC

Bailey Venture Partners XII LLC is an investment fund targeting strategic investments in various companies. Bailey's investments include JUUL, for which the Company received a distribution of $186,396 for the fiscal year ended March 31, 2019.

Intellectual Property

We rely on a combination of trademark laws, trade secrets, confidentiality provisions and other contractual provisions to protect our proprietary rights, which are primarily our brand names, product designs and marks. We do not own any patents.

Government Regulation and Approvals

We are not aware of any governmental regulations or approvals for any of our products. We do not believe that we are subject to any government regulations relating to the ownership and licensing of our intellectual property.

Employees

As of the date hereof, we have 15 employees, 2 of whom are officers and directors who operate our company: Our President and director, Chris Bridges, and our Secretary, Treasurer and a director, John Brady.approximately 25 employees.

Research and Development Expenditures

For the yearyears ended March 31, 2019 and 2018, we incurred no research or development expenditures.

Bankruptcy or Similar Proceedings

We have never been subject to bankruptcy, receivership or any similar proceeding.

ITEM 1A. RISK FACTORS

As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.

ITEM 1B. UNRESOLVED STAFF COMMENTS

The Company has does not have any unresolved comments from the staff of the Securities Exchange Commission.

ITEM 2. PROPERTIES

We currently do not own any physical property or real property. Our executive offices are located at 9701 Wilshire Blvd., Suite 1000, Beverly Hills, California 90212. We believe that this space is adequate for our present operations. We do not own any real estate or other physical properties.

ITEM 3. LEGAL PROCEEDINGS

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.

ITEM 4. MINE SAFETY DISCLOSURES

None.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Since March 29, 2018, our shares of common stock have been quoted on the OTCQB tier of the OTC Markets Group Inc. under the ticker symbol APPB. Between October 25, 2016 and March 28, 2018, our shares of common stock were quoted on the OTCQB under the symbol “STNY.” Between May 19, 2016, and October 24, 2016, our shares of common stock were quoted under the stock symbol “FRRX”. The following table shows the reported high and low closing bid prices per share for our common stock based on information provided by the OTCQB. The over-the-counter market quotations set forth for our common stock reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

HOLDERSHolders

As of June 21, 2018,26, 2019, there were approximately 10,499,61013,447,113 shares of common stock issued and outstanding (excluding shares of common stock issuable upon conversion or conversion into shares of common stock of all of our currently outstanding Series A Preferred Stock and exercise of our warrants)convertible promissory notes) held by approximately 4461 stockholders of record.

TRANSFER AGENTTransfer Agent

Our transfer agent is VStock Transfer, whose address is 18 Lafayette Place, Woodmere, New York, and whose telephone number is (212) 828-8436.

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DIVIDENDSDividends

Historically, we have not paid any dividends to the holders of our common stock and we do not expect to pay any such dividends in the foreseeable future as we expect to retain our future earnings for use in the operation and expansion of our business.

RECENT SALES OF UNREGISTERED SECURITIESRecent Sales of Unregistered Securities

There are no unreported sales of equity securities at March 31, 2018.2019.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANSSecurities Authorized for Issuance Under Equity Compensation Plans

We have not established any compensation plans under which equity securities are authorized for issuance.  

PURCHASES OF EQUITY SECURITIES BY THE REGISTRANT AND AFFILIATED PURCHASERS

As previously reportedSubsequent to the fiscal year end of March 31, 2019, on Current Report on Form 8-K (File No. 000-55523), filed withMay 17, 2019, the SEC on March 5, 2018, effective March 5, 2018,board of directors of the Company consummated certain of the transactions under that certain Intellectual Property Purchaseapproved and Stock Repurchase Agreement (the “Agreement”), dated February 9, 2018, by and among the Company, Damian Marley and Daniel Dalton. Pursuant toadopted the terms and conditionsprovisions of a 2019 Stock Option Plan (the "Plan") for the Company. No stockholders approval has been obtained approving the Plan. An aggregate of 2,000,000 shares of the Agreement, the Company repurchased 3,150,000 shares ofCompany's common stock are initially reserved for issuance of nonqualified and/or incentive stock options which may be granted under the Company from Mr. Marley for $50,000Plan. No options have yet been issued under the Plan.

Purchases of Equity Securities by The Registrant and rights to the name Stony Hill. Additionally, the Company repurchased 2,250,000 sharesAffiliated Purchasers

There are no unreported purchases of common stock of the Company from Mr. Dalton for consideration of $50,000. The transaction with Mr. Dalton was consummated on February 9, 2018, and previously disclosed in Quarterly Report on Form 10-Q File No. 000-55523), filed with SEC on February 14, 2018. In the aggregate Mr. Marley and Mr. Dalton transferred 5,400,000 shares, or approximately 40.4% of the issued and outstanding common stock issued and outstanding on February 14, 2018 andequity securities at March 5, 2018, to the Company. The Company subsequently canceled all 5,400,000 shares, returning such shares to the authorized capital of the Company, as stated in the Company’s Articles of Incorporation, as amended.31, 2019.

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ITEM 6. SELECTED FINANCIAL DATA

As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Cautionary Statement Regarding Forward-Looking Statements" and "Risk Factors" sections of this report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Cautionary Statement Regarding Forward-Looking Information

The statements in this registration statement that are not reported financial results or other historical information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements appear in a number of different places in this report and can be identified by words such as "estimates", "projects", "expects", "intends", "believes", "plans", or their negatives or other comparable words. Also look for discussions of strategy that involve risks and uncertainties. Forward-looking statements include, among others, statements regarding our business plans and availability of financing for our business.

Merger

On November 4, 2016, the Company, entered into a Share Exchange Agreement by and among the Company, Stony Hill Ventures Corp. (“Stony Hill Ventures”), and the holders of common stock of Stony Hill Ventures, which consisted of 26 stockholders. Stony Hill Ventures was incorporated on March 15, 2016, in Nevada and was organized for various investments under the Stony Hill brand as well as to conduct any other related business and activities.

Under the terms and conditions of the Share Exchange Agreement, the Company offered, sold and issued 10,830,000 shares of common stock of the Company in consideration for all the issued and outstanding shares in Stony Hill Ventures. The effect of the issuance was Stony Hill Ventures became a wholly-owned subsidiary of the Company and represents the Company’s principal business. On March 6, 2018, the Company changed its name from Stony Hill Corp. to Applied BioSciences Corp.

The merger between the Company and Stony Hill Ventures was treated as a reverse acquisition for financial statement reporting purposes with Stony Hill Ventures deemed the accounting acquirer and the Company deemed the accounting acquiree. Accordingly, Stony Hill Ventures’ assets, liabilities and results of operations became the historical financial statements of the Company. No step-up in basis or intangible assets or goodwill was recorded in this transaction.

Results of Operations

Our revenue, operating expenses, and net loss from operations for our fiscal year ended March 31, 2018 as compared to our fiscal year ended March 31, 2017 were as follows:

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Fiscal Year Ended March 31, 2018 Compared to Fiscal Year Ended March 31, 2017

		Fiscal Year				Fiscal Year								Percentage
		Ended				Ended								Change
		March 31, 2018				March 31, 2017				$ Change				Inc (Dec)
REVENUE
Products, net		$	197,554			$	18,054			$	179,500				994	%
Services			-				27,500				(27,500	)		(100)		%
			197,554				45,554				152,000				9
COST OF REVENUE, PRODUCT			155,549				6,391				149,158				2,334	%
GROSS MARGIN			42,005				39,163				2,842				7	%
EXPENSES
Sales and marketing			356,948				16,899			��	340,049				2,012	%
General and administrative			953,484				141,862				811,622				572	%
Reverse merger costs			-				376,366				(376,366	)		(100)		%
Depreciation and amortization			224,770				19,956				204,814				1,026	%
Impairment of asset			893,667				-				893,667				-
TOTAL OPERATING EXPENSES			2,428,869				555,083				1,873,786				338	%
NET LOSS			(2,386,864	)			(515,920	)			(1,870,944	)			363	%
Less: Net loss attributable to non controlling interest			10,763				(1,736	)			12,499			(720)		%
NET LOSS ATTRIBUTABLE TO APPLIED BIOSCIENCES CORP.		$	(2,376,101	)		$	(514,184	)		$	(1,858,445	)			361	%

Revenues: Revenue from products relate to shipments of cannabidiol (“CBD”) brand products, which we began selling in late February 2017. During our fiscal year ended March 31, 2018, we earned revenue from our CBD product lines of $197,554 as compared to $18,054 for our fiscal year ended March 31, 2017. The increase of 994% reflects a full year of sales incurred from our CBD brand products as compared to one month in fiscal 2017. In addition, during our fiscal year ended March 31, 2017, we received $27,500 from a license agreement which did not recur nor did we receive any other revenue from licenses during our fiscal year ended March 31, 2018.

Cost of Revenue: Cost of goods sold consists of purchases of inventory for sale. We generally purchase products that are private labels and brand the products using our tradenames. During the fiscal year ended March 31, 2018, we incurred $155,549 of costs to purchase product which represented 80% of our product revenues. Since we began sales of CBD products in late February 2017, cost of products for fiscal year ended March 31, 2017 were minimal.

Gross Margin: For our fiscal year ended March 31, 2018, gross margin comprised entirely from sale of our CBD products and was $42,005 or 21% of our revenue. For our fiscal year ended March 31, 2017, gross margin was $39,163 which comprised $27,500 from sale of services and $11,663 from sale of our CBD products.

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Sales and marketing: Sales and marketing expenses mainly comprised of advertising, public relations, events, and website marketing costs. Sales and marketing expenses increased to $356,948 for our fiscal year ended March 31, 2018 as compared to $16,899 for our fiscal year ended March 31, 2017. The majority of the increase related to public relation services, website marketing development and increased advertising and promotion costs.

General and administrative: General and administrative expenses mainly comprised of professional fees, travel expenses, meals and entertainment and other office support costs. General and administrative expenses increased $811,622 to $953,484 for our fiscal year ended March 31, 2018 as compared to $141,862 for our fiscal year ended March 31, 2017. General and administrative expenses during our fiscal year ended March 31, 2018 included non-cash stock based compensation related to our issuance of stock for services to board advisory members and our CEO, which totaled approximately $598,000. The majority of the remaining increase in general and administrative expenses related to higher professional fees and general and administrative expenses incurred related to our CBD products launched in March 2017.

Reverse merger costs: In conjunction with the Share Exchange Agreement, Stony Hill Ventures paid us $325,000 and we assumed $51,366 of liabilities, which was recorded as a cost of the reverse merger.

Depreciation and amortization: Depreciation and amortization relates to depreciation of our property and equipment and the amortization of a brand that we acquired in February 2017, which was being amortized over a period of 5 years. Amortization totaled $224,770 for our fiscal year ended March 31, 2018 as compared to $19,956 for our fiscal year ended March 31, 2017.

Impairment of asset: During our fiscal year ended March 31, 2018, sales of the VitaCBD products did not meet our expectations. As such, we were not able to achieve the expected operating results from the VitaCBD brand products. As a result, we impaired the intangible asset related to the acquisition of the VitaCBD brand name and recorded an impairment charge of $893,667 which reflected the net book value of the intangible as of March 31, 2018.

Liquidity and Capital Resources

Cash Flows

A summary of our cash flows for our fiscal year ended March 31, 2018 as compared to our fiscal year ended March 31, 2017 is as follows:

Net cash used in operating activities was $637,467 for our fiscal year ended March 31, 2018 as compared to $137,464 for our fiscal year ended March 31, 2017. The increase in use of cash in operations mainly related to higher general and administrative and sales and marketing expenses from our operations.

Net cash used in investing activities was $173,236 for our fiscal year ended March 31, 2018 as compared to $775,000 for our fiscal year ended March 31, 2017. The decrease primarily related to lower investments in equity and an intangible purchased during our fiscal year ended March 31, 2017, which we did not purchase a similar asset during our fiscal year ended March 31, 2018. In addition, investing activities during our fiscal year ended March 31, 2017 included reverse merger costs paid in cash of $325,000 for which we did not incur a similar cost in our fiscal year ended March 31, 2018.

Net cash provided by financing activities was $695,000 for our fiscal year ended March 31, 2018 as compared to $1,125,101 for our fiscal year ended March 31, 2017. The decrease primarily relates to less sales of our shares of our common stock offset slightly by a higher price per share obtained from our sale of common stock during our fiscal year 2018. In addition, during our fiscal year ended March 31, 2018, we paid $100,000 to repurchase 5,400,000 shares of our common stock held by two former board members.

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Going Concern

Our uses of cash have been primarily for strategic investments we made and operations and marketing efforts to promote our products and company. Our principal sources of liquidity have been cash provided by financing, primarily through the sale of equity securities, as we have only recently begun to receive revenues from our principal business activities and we have used cash for various strategic investments for which we typically receive returns when such investments are sold and when or if dividends are declared. We anticipate that significant additional expenditures will be necessary to expand and bring to market our products and investments before sufficient and consistent positive operating cash flows will be achieved. As such, we anticipate that additional funds will be needed to continue operations, obtain profitability and to achieve our objectives. As of the date of this Form 10-K, our cash resources are insufficient to meet our current operating expense requirements and planned business objectives beyond the date of this Form 10-K filing without additional financing.

As reflected in the consolidated financial statements contained elsewhere is this Form 10-K, as of March 31, 2018 we had cash on hand and had an accumulated deficit of $60,934 and $2,901,933 respectively, and during our fiscal year ended March 31, 2018, we utilized cash for operations and incurred a net loss of $673,467 and $2,386,864, respectively. These and other factors raise substantial doubt about our ability to continue as a going concern. Further, our independent auditors in their audit report for our fiscal year ended March 31, 2018 expressed substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.

Our ability to continue as a going concern is dependent on our ability to raise additional capital and to ultimately achieve sustainable revenues and income from our operations. During the fiscal year ended March 31, 2018, we raised $795,000 through the receipt of Subscription Agreements (“Subscription”) where we sold 397,500 shares of our common stock to accredited investors at a price of $2.00 per share. As of March 31, 2018, we had cash on hand of $60,934. We estimate that such funds will not be sufficient to continue operations without obtaining additional funds. As such, we are currently working on obtaining additional funds to operate our business through and beyond the date of this Form 10-K filing. However, there can be no assurance that such funds will be available or at terms acceptable to us. Even if we are able to obtain additional financing, it may contain undue restrictions and covenants on our operations, in the case of debt financing or cause substantial dilution for our stockholders in the case of convertible debt and equity financing.

Summary of Significant Accounting Policies

Use of Estimates

Financial statements prepared in accordance with accounting principles generally accepted in the United States require us 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 revenues and expenses during the reporting period. Among other things, estimates include the collectability of accounts receivable, recoverability of inventory, assumptions made in determining impairment of investments and intangible, useful life of our intangible, and accruals for potential liabilities. These estimates generally involve complex issues and require judgments, involve analysis of historical information and the prediction of future trends, and are subject to change from period to period. Actual amounts could differ significantly from these estimates. 

Investments

For investments that are not required to be consolidated, we use either the equity method or the cost method of accounting. We use the equity method for unconsolidated equity investments in which we are considered to have significant influence over the operations of the investee. We use the cost method for all other investments. Under the cost method, there is no change to the cost basis unless there is an other-than-temporary decline in value or dividends are received. If the decline is determined to be other-than-temporary, we write down the cost basis of the investment to a new cost basis that represents realizable value.

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Intangible Asset

Intangible assets are recorded when such assets are acquired and are amortized over the estimated useful life of the intangible asset. We regularly review intangible assets to determine if facts and circumstances indicate that the useful lives have changed from the original estimate or that the carrying amount of the assets may not be recoverable. If such facts and circumstances exist, we assess the recoverability of identified intangible assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets and occur in the period in which the impairment determination was made.

Recent Accounting Pronouncements

See our discussion of recent accounting policies in Footnote 2 to the condensed financial statements contained elsewhere in this Form 10-K.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Cautionary Statement Regarding Forward-Looking Statements" and "Risk Factors" sections of this report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Cautionary Statement Regarding Forward-Looking Information

The statements in this registration statement that are not reported financial results or other historical information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements appear in a number of different places in this report and can be identified by words such as "estimates", "projects", "expects", "intends", "believes", "plans", or their negatives or other comparable words. Also look for discussions of strategy that involve risks and uncertainties. Forward-looking statements include, among others, statements regarding our business plans and availability of financing for our business.

Merger

On November 4, 2016, the Company, entered into a Share Exchange Agreement by and among the Company, Stony Hill Ventures Corp. (“Stony Hill Ventures”), and the holders of common stock of Stony Hill Ventures, which consisted of 26 stockholders. Stony Hill Ventures was incorporated on March 15, 2016, in Nevada and was organized for various investments under the Stony Hill brand as well as to conduct any other related business and activities.

Under the terms and conditions of the Share Exchange Agreement, the Company offered, sold and issued 10,830,000 shares of common stock of the Company in consideration for all the issued and outstanding shares in Stony Hill Ventures. The effect of the issuance was Stony Hill Ventures became a wholly-owned subsidiary of the Company and represents the Company’s principal business. On March 6, 2018, the Company changed its name from Stony Hill Corp. to Applied BioSciences Corp.

The merger between the Company and Stony Hill Ventures was treated as a reverse acquisition for financial statement reporting purposes with Stony Hill Ventures deemed the accounting acquirer and the Company deemed the accounting acquiree. Accordingly, Stony Hill Ventures’ assets, liabilities and results of operations became the historical financial statements of the Company. No step-up in basis or intangible assets or goodwill was recorded in this transaction.

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Acquisition of Trace Analytics, Inc.

On January 7, 2019, the Company closed on a purchase of 520,410 shares of common stock of Trace Analytics, Inc., a Washington corporation (“Trace Analytics”). Pursuant to a Common Stock Purchase Agreement, the Company purchased Trace Analytics at a purchase price of $2.40 per share, for an aggregate purchase price of $1,250,000, of which $750,000 was paid in cash and $500,000 was paid through the issuance of shares of the Company’s common stock. Trace Analytics is a cannabis testing laboratory acquired to enable the Company to position itself as the leading provider of testing solutions for CBD products for both compliance requirements and consumer safety as these products continue to increase in popularity. Immediately following the purchase, the Company holds 51% of the issued and outstanding shares of common stock of Trace Analytics. The Common Stock Purchase Agreement included the option for Trace to repurchase 205,410 shares of Common Stock based on the occurrence of certain Repurchase Triggering Events. Based on a review of the Repurchase Triggering Events, it is considered unlikely that any of the events will occur. Additionally, the Company entered into a Voting Agreement with Trace concurrent with the Common Stock Purchase Agreement. The Voting Agreement provided for the designation of three out of five positions on the Trace Analytics Board of Directors by the Company. The Voting Agreement also detailed certain transactions that require two-thirds approval by the Board of Directors. The Voting Agreement is not considered to impact the ability of the Company to control the operations and assets of Trace Analytics.

The Company has included the financial results of Trace Analytics in the consolidated financial statements from the date of acquisition, January 1, 2019. The purchase price for Trace Analytics was $1,250,000. Based on management’s analysis of the acquisition transaction pursuant to the provisions of ASC 805, the Company determined that any customer lists or business licenses held by Trace Analytics are immaterial in relation to the overall value of Trace; additionally, Trace Analytics does not hold any patents or proprietary technology, and does not have long-term contractual arrangements with customers. As such, there are no separately identifiable intangible assets meeting the criteria of ASC 805. Concurrently, the Company preliminarily allocated the $1,941,149 excess of the purchase price over the identifiable net assets of $509,831 to goodwill.

Results of Operations

Our revenue, operating expenses, and net loss from operations for our fiscal year ended March 31, 2019 as compared to our fiscal year ended March 31, 2018 were as follows:

Fiscal Year Ended March 31, 2019 Compared to Fiscal Year Ended March 31, 2018

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Revenues: Revenue relate to shipments of cannabidiol (“CBD”) brand products and lab testing services. During our fiscal year ended March 31, 2019, we earned revenue from our CBD product lines of $543,970 as compared to $197,554 for our fiscal year ended March 31, 2018. The increase reflects higher sales from our expansion of our CBD brand product lines. Service revenue resulting from our lab testing is attributed solely to the acquisition of Trace Analytics on January 1, 2019, and totaled $163,092.

Cost of Revenue: Cost of goods sold is driven by product sales, and primarily consists of purchases of inventory for sale. We generally purchase products that are private labels and brand the products using our tradenames. During the fiscal year ended March 31, 2019, we incurred $498,993 of costs to purchase product which represented 91% of our product revenues as compared to $155,549 or 80% of our product revenues for our fiscal year ended March 31, 2019. Cost of services of $22,781 is related to lab testing, and is attributed solely to the acquisition of Trace Analytics on January 1, 2019.

Gross Margin: For our fiscal year ended March 31, 2019, gross margin from sale of our CBD products was $44,977 or 8% of our revenue as compared to $42,005 or 21% of our revenue for our fiscal year ended March 31, 2018. The lower gross margin percentage is primarily due a significant portion of sales for the fiscal year ended March 31, 2019 derived from lower margin bulk sales of industrial Hemp. Gross margin from our lab testing services, which started January 1, 2019, totaled $140,311 or 86% of our lab testing revenues.

Sales and marketing: Sales and marketing expenses mainly comprised of advertising, public relations, events, and website marketing costs. Sales and marketing expenses increased to $698,185 for our fiscal year ended March 31, 2019 as compared to $356,948 for our fiscal year ended March 31, 2018. The majority of the increase related to public relation services, website marketing development and increased advertising and promotion costs.

General and administrative: General and administrative expenses mainly comprised of professional fees, travel expenses, meals and entertainment and other office support costs. General and administrative expenses increased $1,139,291 to $2,092,775 for the fiscal year ended March 31, 2019 as compared to $953,484 for the fiscal year ended March 31, 2018. The majority of the increase related to increased utilization of common stock as compensation for services provided by certain officers, advisory members and board members which totaled $1,343,690 for the fiscal year ended March 31, 2019 as compared to $598,000 for our fiscal year ended March 31, 2018 driven by efforts to increase overall awareness and aid in raising capital. Additionally, the acquisition of Trace Analytics in January 2019 contributed $171,132 of general and administrative expenses for the fiscal year ended March 31, 2019. The remaining amount of the increase related to higher professional and advisory fees and other supportive general and administrative expenses.

Depreciation and amortization: Depreciation expense was $40,627 for our fiscal year ended March 31, 2019 as compared to $224,770 for our fiscal year ended March 31, 2018. The decrease relates to amortization during our fiscal year ended March 31, 2018 related to a brand that we acquired in February 2017, which was fully expensed during our fiscal year ended March 31, 2018. We did not own any similar intangibles that required amortization during our fiscal year ended March 31, 2019.

Impairment of asset: During our fiscal year ended March 31, 2018, sales of the VitaCBD products did not meet our expectations. As such, we were not able to achieve the expected operating results from the VitaCBD brand products. As a result, we impaired the intangible asset related to the acquisition of the VitaCBD brand name and recorded an impairment charge of $893,667, which reflected the net book value of the intangible as of March 31, 2018.

Change in fair value of Equity Investments: On April 1, 2018, we adopted ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. As such, during our fiscal year ended March 31, 2019, we measured our equity investments at each reporting period at fair value with changes in fair value recognized in net income. During our fiscal year ended March 31, 2019, we were able to obtain observable evidence that certain of our equity investments had increased to a total aggregate value of $898,292, which was $429,755 higher than the original purchase price of these investments. As such, we recorded an unrecognized gain from the change in market value of $429,755 during our fiscal year ended March 31, 2019.

Dividend received from equity investment: In February 2019, we received a distribution of $186,397 from our investment with Bailey Venture Partners XII LLC (“Bailey”) through Bailey’s investment in JUUL Labs, Inc.

Interest Expense: During our fiscal year ended March 31, 2019, we recorded $148,601 of interest costs related to a convertible notes that we entered into during our current fiscal year ended March 31, 2019 along with amortization of $500,274 of debt discount recorded in conjunction with the convertible notes.

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Liquidity and Capital Resources

Cash Flows

A summary of our cash flows for our fiscal year ended March 31, 2019 as compared to our fiscal year ended March 31, 2018 is as follows:

Net cash used in operating activities was $905,051 for our fiscal year ended March 31, 2019 as compared to $637,467 for our fiscal year ended March 31, 2018. The increase in use of cash in operations mainly related to higher general and administrative and sales and marketing expenses from our operations.

Net cash used in investing activities was $713,294 for our fiscal year ended March 31, 2018 as compared to $173,236 for our fiscal year ended March 31, 2018. The increase in use of cash was primarily related to $711,739 related to our purchase of Trace Analytics as compared to our acquisition of equity investments of $168,537 during our fiscal year ended March 31, 2018.

Net cash provided by financing activities was $1,604,455 for our fiscal year ended March 31, 2019 as compared to $695,000 for our fiscal year ended March 31, 2018. The increase primarily relates to our issuance of convertible notes totaling $1,529,455 during our fiscal year ended March 31, 2019, which we did not incur during our fiscal year ended March 31, 2018, as compared to sales of shares of our common stock which totaled $75,000 during our fiscal year ended March 31, 2019 as compared to $795,000 for our fiscal year ended March 31, 2018. In addition, during our fiscal year ended March 31, 2018, we paid $100,000 to repurchase 5,400,000 shares of our common stock held by two former board members.

Going Concern

Our uses of cash have been primarily for strategic investments we made, including the purchase of Trace Analytics, and operations and marketing efforts to promote our products and company. Our principal sources of liquidity have been cash provided by financing, primarily through the sale of equity securities and issuance of convertible notes. We anticipate that significant additional expenditures will be necessary to expand and bring to market our products and investments before sufficient and consistent positive operating cash flows will be achieved. As such, we anticipate that additional funds will be needed to continue operations, obtain profitability and to achieve our objectives. As of the date of this Form 10-K, our cash resources are insufficient to meet our current operating expense requirements and planned business objectives beyond the date of this Form 10-K filing without additional financing.

As reflected in the consolidated financial statements contained elsewhere is this Form 10-K, as of March 31, 2019 we had cash on hand and had an accumulated deficit of $47,044 and $5,531,260, respectively, and during our fiscal year ended March 31, 2019, we utilized cash for operations and incurred a net loss of $905,051 and $2,679,022, respectively. These and other factors raise substantial doubt about our ability to continue as a going concern. Further, our independent auditors in their audit report for our fiscal year ended March 31, 2019 expressed substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.

Our ability to continue as a going concern is dependent on our ability to raise additional capital and to ultimately achieve sustainable revenues and income from our operations. During the fiscal year ended March 31, 2019, we raised $1,529,455 through the issuance of convertible notes and $75,000 through the receipt of Subscription Agreements (“Subscription”) where we sold shares of our common stock to accredited investors. As of March 31, 2019, we had cash on hand of $47,044. We estimate that such funds will not be sufficient to continue operations without obtaining additional funds. As such, we are currently working on obtaining additional funds to operate our business through and beyond the date of this Form 10-K filing. However, there can be no assurance that such funds will be available or at terms acceptable to us. Even if we are able to obtain additional financing, it may contain undue restrictions and covenants on our operations, in the case of debt financing or cause substantial dilution for our stockholders in the case of convertible debt and equity financing.

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Summary of Significant Accounting Policies

Use of Estimates

Financial statements prepared in accordance with accounting principles generally accepted in the United States require us 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 revenues and expenses during the reporting period. Among other things, estimates include the collectability of accounts receivable, recoverability of inventory, assumptions made in determining impairment of investments and intangible, useful life of our intangible, and accruals for potential liabilities. These estimates generally involve complex issues and require judgments, involve analysis of historical information and the prediction of future trends, and are subject to change from period to period. Actual amounts could differ significantly from these estimates. 

Investments

Through March 31, 2018, we used either the equity method or the cost method of accounting. We used the equity method for unconsolidated equity investments in which we were considered to have significant influence over the operations of the investee. We used the cost method for all other investments. Under the cost method, there is no change to the cost basis unless there is an other-than-temporary decline in value or dividends are received. If the decline is determined to be other-than-temporary, we would write down the cost basis of the investment to a new cost basis that represents realizable value.

On April 1, 2018, we adopted ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 primarily affects equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. Among other things, this new guidance requires certain equity investments to be measured at fair value with changes in fair value recognized in net income. As such, we now measure our equity investments at their fair value at end of each reporting period.

Goodwill

Goodwill represents the excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired in a business combination.  The Company evaluates goodwill for impairment on an annual basis or whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. The Company conducts its annual impairment analysis in the fourth quarter of each fiscal year. Impairment of goodwill is tested at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit. Estimations and assumptions regarding the number of reporting units, future performances, results of the Company’s operations and comparability of its market capitalization and net book value will be used. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and an impairment loss is measured by the resulting amount. Because the Company has one reporting unit, as part of the Company’s qualitative assessment an entity-wide approach to assess goodwill for impairment is utilized. No impairment losses have been recorded in the fiscal years ended March 31, 2019 and 2018.  The Company has currently recorded goodwill of $1,941,089 representing the excess of purchase consideration over the fair value of net tangible assets in the acquisition of Trace Analytics.  This is considered a provisional allocation of the purchase price and is subject to adjustment as additional information is obtained through the purchase price measurement period (a period of up to one year from the closing date of January 1, 2019).

Business Combinations

The Company accounts for its business combinations using the purchase method of accounting where the cost is allocated to the underlying net tangible and intangible assets acquired, based on their respective fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Additionally, contingent consideration, if any. is recorded at fair value on the acquisition date and classified as a liability. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interests requires management’s judgment and often involves the use of significant estimates and assumptions.

Recent Accounting Pronouncements

See our discussion of recent accounting policies in Footnote 2 to the condensed financial statements contained elsewhere in this Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.

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ITEM 8. FINANCIAL STATEMENTS

Applied BioSciences Corp.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors

Applied Biosciences Corp.

(Formerly Stony Hill Corp.)

Beverly Hills, California

Opinion on the Financial StatementsConsolidated financial statements

We have audited the accompanying consolidated balance sheets of Applied Biosciences Corp. (Formerly Stony Hill Corp.) (the "Company") as of March 31, 20182019 and 2017,2018, the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "consolidated"(consolidated financial statements").   In our opinion, the  consolidated financial statements present fairly, in all material respects, the  financial position of the Company as of March 31, 20182019 and 2017,2018, and the  results of its operations and its cash flows for the fiscal years then ended, in conformity with accounting principles generally accepted in the United States of America.

Going concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management.   Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.   Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.  Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.   We believe that our audits provide a reasonable basis for our opinion.

/s/ Weinberg & Company, P.A.

Weinberg & Company, P.A.

Los Angeles, California

July 1, 2019

We have served as the Company's auditor since 2016.

Los Angeles, California

June 28, 2018

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APPLIED BIOSCIENCES CORP. (FORMERLY KNOWN AS STONY HILL CORP.)

CONSOLIDATED BALANCE SHEETS

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

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APPLIED BIOSCIENCES CORP. (FORMERLY KNOWN AS STONY HILL CORP.)

CONSOLIDATED STATEMENTS OF OPERATIONS

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

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APPLIED BIOSCIENCES CORP. (FORMERLY KNOWN AS STONY HILL CORP.)

CONSOLIDATED STATEMENTS OF STOCHOLDERS’ EQUITY (DEFICIT)

FOR THE FISCAL YEARS ENDED MARCH 31, 20182019 AND 20172018

		Common Stock												Common Stock				Additional				Non-								Stockholders'
		$0.00001 Par								Subscription				to be				Paid In				Controlling				Accumulated				Equity
		Number				Amount				Receivable				Issued				Capital				Interest				Deficit				(Deficit)
Balance, March 31, 2016			10,090,000			$	101			$	(101	)		$	-			$	-			$	-			$	(8,176	)		$	(8,176	)
Payment received from stock subscription											101																				101
Issuance of shares upon reverse merger			4,001,757				40												(40	)											-
Issuance of common stock for cash			937,500				9												1,124,991												1,125,000
Issuance of common stock for cancellation of amount due to former CEO			18,343				-												49,524												49,524
Issuance of shares for acquisition of intangible			200,000				2												567,997												567,999
Common stock to be issued for acquisition of intangible															426,000																426,000
Net loss																							1,736				(517,656	)			(515,920	)
Balance, March 31, 2017			15,247,600				152				-				426,000				1,742,472				1,736				(525,832	)			1,644,528
Issuance of common stock for cash			347,500				3								100,000				694,997												795,000
Shares repurchased for cash and cancelled			(5,400,000	)			(54	)											(99,946	)											(100,000	)
Fair value of Shares issued to consultants for services			154,510				2												341,776												341,778
Fair value of Shares issued to Company's CEO			150,000				2												374,998												375,000
Net loss																							(10,763	)			(2,376,101	)			(2,386,864	)
Balance, March 31, 2018			10,499,610			$	105			$	-			$	526,000			$	3,054,297			$	(9,027	)		$	(2,901,933	)		$	669,442

		Common Stock $0.00001 Par								Common Stock to be				Additional Paid In				Non-Controlling				Accumulated				Stockholders'
		Number				Amount				Issued				Capital				Interest				Deficit				Equity
Balance, March 31, 2017			15,247,600			$	152			$	426,000			$	1,742,472			$	1,736			$	(525,832	)		$	1,644,528
Issuance of common stock previously committed but not issued
Issuance of common stock for cash			347,500				3				100,000				694,997												795,000
Shares repurchased for cash and cancelled			(5,400,000	)			(54	)							(99,946	)											(100,000	)
Shares issued to consultants for services			154,510				2								341,776												341,778
Shares issued to Company's CEO			150,000				2								374,998												375,000
Net loss																			(10,763	)			(2,376,101	)			(2,386,864	)
Balance, March 31, 2018			10,499,610				105				526,000				3,054,297				(9,027	)			(2,901,933	)			669,442
Issuance of common stock previously committed but not issued			50,000				1				(100,000	)			99,999												-
Issuance of common stock for cash			12,500								50,000				25,000												75,000
Fair value of shares issued for services			160,000				1				61,852				284,949												346,802
Fair value of shares issued to Company officers and directors			875,000				9								1,058,741												1,058,750
Beneficial conversion feature associated with issuance of convertible notes															500,274												500,274
Shares issued for acquisition of Trace Analytics, Inc.			250,000				3				181,000				318,997												500,000
Non-controlling interest recognized upon acquisition of Trace Analytics			-				-												1,200,980								1,200,980
Shares issued upon conversion  of convertible notes			1,550,000				16				54,955				1,549,985												1,604,956
Net loss																			(49,695	)			(2,629,327	)			(2,679,022	)
Balance, March 31, 2019			13,397,110			$	135			$	773,807			$	6,892,242			$	1,142,258			$	(5,531,260	)		$	3,277,182

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

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APPLIED BIOSCIENCES CORP. CORP. (FORMERLY KNOWN AS STONY HILL CORP.)

CONSOLIDATED STATEMENTS OF CASH FLOWS