Exhibit 99.1
CLEARMIND MEDICINE INC.
Condensed Interim Consolidated Financial Statements
For The Three and Six Months Ended April 30, 2023
(Expressed in United States Dollars)
(Unaudited)
CLEARMIND MEDICINE INC.
Condensed Interim Consolidated Statements of Financial Position
(Expressed in United States Dollars)
(Unaudited)
| April 30, 2023 |
October 31, 2022 |
|||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Other receivables | ||||||||
| Short-term investment (Note 3) | ||||||||
| Prepaid expenses | ||||||||
| Related parties (Note 4b) | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property and equipment | ||||||||
| Intangible assets | ||||||||
| Restricted cash | ||||||||
| Right-of-use asset | ||||||||
| Deferred offering costs | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Due to related parties (Note 4) | ||||||||
| Derivative warrants liability (Note 5) | - | |||||||
| Derivative liability (Note 6c (i)) | - | |||||||
| Lease liability | ||||||||
| Total liabilities | $ | $ | ||||||
| Shareholders’ equity (deficit) | ||||||||
| Share capital and share premium (Note 6) | ||||||||
| RSU reserve (Note 9) | ||||||||
| Warrants (Note 7) | ||||||||
| Share-based payment reserve (Note 8) | ||||||||
| Accumulated other comprehensive loss | ( |
) | ( |
) | ||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Total shareholders’ equity (deficit) | ( |
) | ||||||
| Total liabilities and shareholders’ equity (deficit) | $ | $ | ||||||
Approved and authorized for issuance on behalf of the Board on June 14, 2023:
| /s/ “Alan Rootenberg” | /s/ “Adi Zuloff-Shani” | |
| Alan Rootenberg, Director, CFO | Adi Zuloff-Shani, Director, CEO |
(The accompanying notes are an integral part of these condensed interim consolidated financial statements)
F-2
CLEARMIND MEDICINE INC.
Condensed Interim Consolidated Statements of Operations and Comprehensive Loss
(Expressed in United States Dollars)
(Unaudited)
| Three months ended | Six months ended | |||||||||||||||
| April 30, | April 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | $ | $ | $ | $ | ||||||||||||
| Research and development | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss before other expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Finance expenses | ||||||||||||||||
| Changes in fair value of warrants (Note 5) | ( | ) | ( | ) | ||||||||||||
| Unrealized gain (loss) on short-term investment (Note 3) | ( | ) | ( | ) | ( | ) | ||||||||||
| Foreign exchange loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Finance income, net | ||||||||||||||||
| Total finance expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other incomes | ||||||||||||||||
| Dividend received | ||||||||||||||||
| Total other incomes | ||||||||||||||||
| Loss before taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Tax expenses | ( | ) | ( | ) | ||||||||||||
| Net Loss and Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| (*) |
(The accompanying notes are an integral part of these condensed interim consolidated financial statements)
F-3
CLEARMIND MEDICINE INC.
Condensed Interim Statements of Changes in Shareholders’ Equity (Deficit)
(Expressed in United States Dollars)
(Unaudited)
| Share capital and share premium |
RSU and | Share-based | Accumulated other |
Total | ||||||||||||||||||||||||||||
| Number of shares (*) |
Amount | share reserve |
Warrants | payment reserve |
comprehensive income |
Accumulated deficit |
shareholders’ equity (deficit) |
|||||||||||||||||||||||||
| Balance, October 31, 2021 | $ | $ | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||||
| Shares issuable for vested RSU’s | – | |||||||||||||||||||||||||||||||
| Shares issued and issuable for services | ||||||||||||||||||||||||||||||||
| Units issued for cash | ||||||||||||||||||||||||||||||||
| Issuance costs | – | ( |
) | ( |
) | |||||||||||||||||||||||||||
| Units issued for short-term investment | ||||||||||||||||||||||||||||||||
| Share-based compensation | – | |||||||||||||||||||||||||||||||
| Net loss for the period | – | ( |
) | ( |
) | |||||||||||||||||||||||||||
| Balance, April 30, 2022 | $ | $ | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||||
| Balance, October 31, 2022 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||||||
| Net loss for the period | – | ( |
) | ( |
) | |||||||||||||||||||||||||||
| Issuance of shares (Note 6c(i)) | ||||||||||||||||||||||||||||||||
| Shares and warrants issuable to Medigus (Note 6c(i)) | – | |||||||||||||||||||||||||||||||
| Issuance of shares, pre-funded warrants and warrants (Note 6c(iii)) | ||||||||||||||||||||||||||||||||
| Shares issued from RSUs (Note 6c(ii)) | ( |
) | ||||||||||||||||||||||||||||||
| Shares for services (Notes 12a, 12f) | – | |||||||||||||||||||||||||||||||
| RSU’s vested (Note 9(i)) | – | |||||||||||||||||||||||||||||||
| Share-based compensation (Note 8) | – | |||||||||||||||||||||||||||||||
| Balance, April 30, 2023 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||
| (*) |
(The accompanying notes are an integral part of these condensed interim consolidated financial statements)
F-4
CLEARMIND MEDICINE INC.
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in United States Dollars)
(Unaudited)
| Six months ended | Six months ended | |||||||
| April 30, | April 30, | |||||||
| 2023 | 2022 | |||||||
| Operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments for: | ||||||||
| Amortization of intangible assets | ||||||||
| Amortization of right-of-use asset | ||||||||
| Interest on lease liability | ||||||||
| Depreciation of property and equipment | ||||||||
Exchange rate differences | ( | ) | ||||||
| Changes in fair value of warrants | ||||||||
| Share-based compensation | ||||||||
| Unrealized loss on short-term investment | ||||||||
| Tax expenses | ||||||||
| Movements in working capital: | ||||||||
| Increase in other receivables | ( | ) | ( | ) | ||||
| Decrease (increase) in prepaid expenses | ( | ) | ||||||
| Decrease in accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
| Increase (decrease) in due to related parties | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Financing activities | ||||||||
| Proceeds from issuance of shares, net of issuance costs (Note 6c (i)) | – | |||||||
| Proceeds from issuance of shares, pre-funded warrants and warrants, net of issuance costs (Note 6c (iii)) | ||||||||
| Proceeds from issuance of shares and warrants, net of issuance costs (Note 6d (iii)) | – | |||||||
| Repayment of lease liabilities | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | ( | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplementary disclosure of cash flow information: | ||||||||
| Cash received for interest | $ | $ | ||||||
| Non-cash financing and investing activities | ||||||||
| Derivative liability converted to equity (Note 6c(i)) | $ | $ | ||||||
| Units issued for short-term investment | ||||||||
F-5
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)
| 1. | Nature of Operations and Going Concern |
| a. | Clearmind Medicine Inc. (formerly Cyntar Ventures Inc.) (the “Company”) was incorporated in the province of British Columbia on July 18, 2017. The Company changed its name from Cyntar Ventures Inc. to Clearmind Medicine Inc. on March 24, 2021. The Company’s previous business was carrying out mining exploration operations and was involved in the exploration of the Lorn mineral property located in the Clinton and Lillooet Mining Divisions of British Columbia. Effective May 18, 2021, the Company is in the business of researching, developing and marketing proprietary formulations of psychedelic designer therapeutics with an initial focus of developing products. The Company’s head office is located at Suite 101, 1220 West 6th Avenue, Vancouver, BC, V6H 1A5. The Company’s Israeli subsidiary (Clearmindmed Ltd.) provides research and development services to the Company. |
On November 14, 2022, the Company completed
a public offering for aggregate gross proceeds of US$
On April 6, 2023, the Company completed
an underwritten public offering for aggregate gross proceeds of US$
| b. | Going concern |
These condensed interim consolidated
financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets
and discharge its liabilities in the normal course of business. For the six months ended April 30, 2023, the Company has not generated
any revenues and has negative cash flow from operations of $
| c. | Reverse share split |
On September 30, 2022, the Company’s
Board of Directors approved a 1-for-30 reverse split of its issued and outstanding ordinary shares, effective as of September 30,
2022, pursuant to which holders of the Company’s ordinary shares received
All issued and outstanding ordinary shares or instruments convertible into ordinary shares contained in these financial statements prior to the reverse share split have been retroactively adjusted to reflect the reverse share split for all periods presented, unless explicitly stated otherwise.
| d. | Functional Currency and Presentation Currency |
The financial statements of each company within the consolidated group are measured using their functional currency which is the currency of the primary economic environment in which an entity operates. The Company changed its functional currency from the Canadian dollar (C$) to the United States dollar (US$) as of November 1, 2022. The change in presentation currency is a voluntary change which is accounted for retrospectively. For comparative reporting purposes, historical financial information has been translated to United States dollars using the exchange rate as of November 1, 2022, which is the date of the change in the functional and presentation currency.
| e. | Translation of Foreign Currency |
These consolidated financial statements are presented in United States dollars. As of November 1, 2022, the functional currency of Clearmind is the US dollar (as described above). The functional currency of Clearmindmed Ltd. is the United States dollar.
F-6
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)
| 2. | Significant Accounting Policies |
| a. | Basis of Presentation |
The accompanying condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) on a going concern basis.
These condensed interim consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Clearmindmed Ltd. and Clearmind Labs Corp. (inactive). All inter-company balances and transactions have been eliminated on consolidation.
These condensed interim consolidated financial statements have been prepared on a historical cost basis, except for financial assets and liabilities (including derivatives) which are presented at fair value through profit or loss (“FVTPL”), and are presented in United States dollars, which is the Company’s functional currency.
| b. | Unaudited Interim Financial Information |
Certain information and footnote disclosures normally included in financial statements prepared in accordance with IFRS have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed financial statements should be read in conjunction with the audited financial statements as of and for the year ended October 31, 2022 and the notes thereto (the “2022 Annual Report”).
The unaudited condensed financial statements have been prepared on the same basis as the audited financial statements, except for the change in functional and presentational currency (note 1d). In the opinion of the Company’s management, the accompanying unaudited condensed financial statements contain all adjustments that are necessary to present fairly the Company’s financial position and results of operations for the interim periods presented. The results for the six months ended April 30, 2023 are not necessarily indicative of the results for the year ending October 31, 2023, or for any future period.
As of April 30, 2023, there have been no material changes in the Company’s significant accounting policies from those that were disclosed in the 2022 Annual Report, except for the change in functional and presentational currency (note 1d).
| c. | Significant Accounting Estimates and Judgments |
The preparation of consolidated financial statements in accordance with IFRS requires management to make judgments, estimates, and assumptions that affect the application of policies and reported amounts of assets, liabilities, income, and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
F-7
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)
| 2. | Significant Accounting Policies (continued) |
| c. | Significant Accounting Estimates and Judgments (continued) |
Significant Estimates
Share-based Compensation
Fair values are determined using the Black-Scholes option pricing model. Estimating fair value requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. Option-pricing models require the use of highly subjective estimates and assumptions including the expected stock price volatility. Changes in the underlying assumptions can materially affect the fair value estimates and, therefore, existing models do not necessarily provide reliable measurement of the fair value of the Company’s stock options.
Warrant Liability
The Company uses the Black-Scholes option-pricing model to estimate fair value of options and the warrant liability at each reporting date. The key assumptions used in the model are the expected future volatility in the price of the Company’s shares and the expected life of the options and warrants.
Significant Judgments
The critical judgments that the Company’s management has made in the process of applying the Company’s accounting policies that have the most significant effect on the amounts recognized in the Company’s consolidated financial statements are as follows:
Going Concern
The application of the going concern assumption requires management to take into account all available information about the future, which is at least but not limited to, 12 months from the year end of the reporting period. The Company is aware that material uncertainties related to events or conditions may cast significant doubt upon the Company’s ability to continue as a going concern.
| 3. | Short-term Investment |
As of April 30, 2023, the Company
holds
| October 31, 2022 | Additions | Unrealized loss | April 30, 2023 | |||||||||||||
| Medigus Ltd. – Shares | $ | $ | $ | ( | ) | $ | ||||||||||
F-8
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)
| 4. | Related Party Transactions |
| a. | Compensation to key management personnel |
| (i) | The compensation to key management personnel for employment services they provide to the Company is as follows: |
| Three months ended | Three months ended | Six months ended | Six months ended | |||||||||||||
| April 30, | April 30, | April 30, | April 30, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Officers: | ||||||||||||||||
| Consulting fees | $ | $ | $ | $ | ||||||||||||
| Share based compensation | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Directors: | ||||||||||||||||
| Directors’ fees | $ | $ | $ | $ | ||||||||||||
| Share based compensation | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| (ii) | Balances with related parties |
| April 30, | October 31, | |||||||
| 2023 | 2022 | |||||||
| Amounts owed to officers | $ | $ | ||||||
| Amounts owed to directors | ||||||||
| $ | $ | |||||||
| b. | On March 7, 2022, the Company signed an agreement with SciSparc, pursuant to which the Company and SciSparc agreed to cooperate in conducting a feasibility study using certain molecules developed by each party (the “Cooperation Agreement”). Certain of the Company’s officers and directors currently operate, manage or are engaged as officers and/or directors of SciSparc, which may have similar or different objectives than the Company’s. Such activities could detract from the time these people have to allocate to the Company’s affairs. To date, no determination has been made to pursue the joint venture and the development of the research activities with SciSparc remains in a very early stage. For the six months ended April 30, 2023, the Company received $ as a reimbursement for research and development expenses conducted within the framework of the Cooperation Agreement. As of April 30, 2023, $ |
| c. | On July 1, 2021, the Company entered into a lease agreement (“2021
Lease”) with Scisparc Ltd, a related party (“Scisparc”) and a third party for a total area of approximately 240m2 ,
of which the Company occupies approximately 120m2 for the Company’s offices, in Tel Aviv, Israel. The lease expires on June 30,
2023. The Company, Scisparc and the third party have an option to extend the 2021 Lease for an additional three-year period. The Company’s
base rent was ILS11,000 per month ($ |
F-9
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)
| 5. | Warrant liability |
On April 6, 2023, the Company issued
The Black-Scholes option pricing model was used to measure the derivative warrant liability with the following assumptions:
| April 30, 2023 | ||||
| Share Price | $ | |||
| Exercise Price | $ | |||
| Expected life | ||||
| Risk-free interest rate | % | |||
| Dividend yield | % | |||
| Expected volatility | % | |||
| Value of warrants | $ | |||
The following table presents the changes in the warrants liability during the period:
| Balance as of November 1, 2022 | $ | |||
| Issuance of April 2023 Warrants | ||||
| Changes in fair value | ||||
| Balance as of April 30, 2023 | $ |
F-10
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)
| 6. | Share Capital |
| a. | The Company’s authorized share capital is unlimited common shares without par value share. As of April 30, 2023, the number of shares issued and outstanding are |
| b. | On September 30, 2022, the Company effected a 1-for-30 share consolidation (reverse share split) of its issued and outstanding shares. All share amounts and instruments convertible into shares have been retroactively restated for all periods presented. |
| c. | Share transactions during the six months ended April 30, 2023: |
| (i) | On November 14, 2022, the Company completed an underwritten public offering of |
In addition, the Company granted Aegis
Capital Corp. (“Aegis”), who acted as the underwriters for the deal, a 45-day option to purchase up to
Aegis received
| Risk-free interest rate | % | |||
| Expected life (in years) | ||||
| Expected volatility | % |
In connection with the offering, the Company’s common shares were approved for listing on the Nasdaq and began trading on the Nasdaq under the symbol “CMND” on November 15, 2022.
Following the public offering, Medigus
were entitled to receive
The anti-dilution feature was recorded as a derivative liability as of October 31, 2022 and has been classified to equity upon completion of the IPO.
| (ii) | On January 16, 2023,
On February 22, 2023, |
F-11
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)
| 6. | Share Capital (continued) |
| (iii) | On April 6, 2023 the Company completed
an underwritten public offering of |
| d. | Share transactions during the six months ended April 30, 2022: |
| (i) | On November 26, 2021, the Company issued |
| (ii) | On February 14, 2022, the Company issued |
| (iii) | On February 14, 2022, the Company closed a share purchase
agreement with Medigus, whereby the Company issued a total of |
Pursuant to the Cash Financing, the
Company issued
In connection with the Cash Financing,
the Company incurred finder’s fees of $
Pursuant to the Share Exchange, the
Company issued
In connection with the Share Exchange,
the Company incurred finder’s fees of $
In addition, Medigus will be entitled
to
F-12
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)
| 7. | Share Purchase Warrants |
The following table summarizes the changes in the Company’s share purchase warrants:
| Number of warrants | Weighted average exercise price (US$) | |||||||
| Balance, October 31, 2021 and April 30, 2022 | $ | |||||||
| Issued | (*) | |||||||
| Balance, October 31, 2022 | ||||||||
| Issuance of underwriter warrants (note 6c(i)) | ||||||||
| Issuance of April 2023 warrants (note 5) | ||||||||
| Expiration of warrants | ( | ) | ||||||
| Balance, April 30, 2023 | $ | |||||||
(*) Warrants issued with an exercise price of C$
As of April 30, 2023, the following share purchase warrants were outstanding:
| Number of warrants outstanding | Exercise price | Exercise price (USD) | Expiry date | |||||||||
| C$ | $ | |||||||||||
| C$ | $ | |||||||||||
| $ | $ | |||||||||||
| $ | $ | |||||||||||
F-13
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)
| 8. | Stock Options |
On September 1, 2021, the Company
implemented a stock option plan pursuant to which stock options may be granted to directors, officers, employees, and consultants of
the Company. The Board of directors is authorized to grant the maximum number of common shares reserved for issuance in any 12-month
period to anyone, optionee, other than a consultant may not exceed
The following table summarizes the changes in the Company’s stock options for the periods ended April 30, 2023 and October 31, 2022:
| Number of options |
Weighted (C$) |
Weighted (USD$) |
||||||||||
| Outstanding, October 31, 2021 | C$ | $ | ||||||||||
| Granted | ||||||||||||
| Cancelled | ( |
) | ||||||||||
| Outstanding, October 31, 2022 and April 30, 2023 | C$ | $ | ||||||||||
| Exercisable, April 30, 2023 | C$ | $ | ||||||||||
F-14
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)
| 8. | Stock Options (continued) |
Additional information regarding stock options outstanding as of April 30, 2023, is as follows:
| Outstanding | Exercisable | |||||||||||||||||||||||||
| Number of stock options |
Weighted average remaining contractual life (years) |
Weighted average exercise price (C$) |
Weighted average exercise price (USD$) |
Number of stock options |
Weighted average exercise price (C$) |
Weighted average exercise price (USD$) |
||||||||||||||||||||
| C$ | $ | C$ | $ | |||||||||||||||||||||||
| C$ | C$ | |||||||||||||||||||||||||
The fair value for stock options previously granted to certain consultants for ongoing services measured during the period have been estimated using the Black-Scholes option pricing model assuming no expected dividends or forfeitures and the following weighted average assumptions:
| 2023 | 2022 | |||||||
| Risk-free interest rate | % | % | ||||||
| Expected life (in years) | ||||||||
| Expected volatility | % | % | ||||||
The portion of the total fair value
of stock options expensed during the six months ended April 30, 2023, was $
F-15
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)
| 9. | Restricted Share Units |
On August 4, 2021, the Company approved an RSU plan, which is designed to provide certain directors, officers, employees, and consultants of the Company with the opportunity to acquire RSU’s of the Company. Each unit is equivalent in value to a common share and upon vesting results in the holder thereof being issued, at the discretion of the Board, either (i) a common share, or (ii) an amount of cash equal to the fair market value of a common share.
During the six months ended April
30, 2023, the Company recognized share-based compensation of $
The following table summarizes the continuity of RSUs:
| Number of RSUs | Weighted average issue price (C$) | Weighted average issue price (USD$) | ||||||||||
| Balance, October 31, 2021 | $ | $ | ||||||||||
| Granted | ||||||||||||
| Vested | ( | ) | ||||||||||
| Balance, October 31, 2022 | $ | $ | ||||||||||
| Granted (i) | ||||||||||||
| Vested | ( | ) | ||||||||||
| Balance, April 30, 2023 | $ | $ | ||||||||||
| (i) |
F-16
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)
| 10. | Financial Instruments and Risk Management |
Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s statement of financial position as of April 30, 2023, as follows:
| Fair Value Measurements Using | ||||||||||||||||
| Quoted prices in active markets for identical instruments (Level 1) |
Significant other observable inputs (Level 2) |
Significant unobservable inputs (Level 3) |
Balance April 30, 2023 |
|||||||||||||
| Short-term investment | $ | $ | $ | $ | ||||||||||||
| Derivative warrants liability | ||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s statement of financial position as of October 31, 2022, as follows:
| Fair Value Measurements Using | ||||||||||||||||
| Quoted prices in active markets for identical instruments (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Balance October 31, 2022 | |||||||||||||
| Short-term investment | $ | $ | $ | $ | ||||||||||||
| Derivative liability | ||||||||||||||||
The fair value of other assets and liabilities, which include cash, amounts receivable, accounts payable and accrued liabilities, and amounts due to related parties, approximate their carrying values due to the relatively short-term maturity of these instruments.
| b. | Credit Risk |
Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions. The carrying amount of financial assets represents the maximum credit exposure.
| c. | Foreign Exchange Rate Risk |
Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company is exposed to foreign currency risk to the extent that monetary assets and liabilities are denominated in a foreign currency. The Company’s subsidiary operates in Israel and has certain monetary financial instruments denominated in NIS and CAD. The Company has not entered into foreign exchange rate contracts to mitigate this risk.
The following table indicates the impact
of foreign currency exchange risk on net working capital as of April 30, 2023. The table below also provides a sensitivity analysis of
a
F-17
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)
| 10. | Financial Instruments and Risk Management (continued) |
| c. | Foreign Exchange Rate Risk (continued) |
| Cash | $ | |||
| Amounts receivable | ||||
| Accounts payable and accrued liabilities | ( |
) | ||
| Due to related parties | ( |
) | ||
| Total foreign currency financial assets and liabilities | $ | ( |
) | |
| Impact of a |
$ |
| d. | Interest Rate Risk |
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to significant interest rate risk as it does not have any liabilities with variable rates.
| e. | Liquidity Risk |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s objective to managing liquidity risk is to ensure that it has sufficient liquidity available to meet its liabilities when due. The Company relies on raising debt or equity financing in a timely manner.
The following amounts are the contractual maturities of financial liabilities as of April 30, 2023 and October 31, 2022:
| April 30, 2023 | Total | Within 1 year | Within 2-5 years | |||||||||
| Accounts payable and accrued liabilities | $ | $ | $ | |||||||||
| Due to related parties | ||||||||||||
| Derivative warrants liability | – | |||||||||||
| Lease liability | ||||||||||||
| $ | $ | $ | – | |||||||||
| October 31, 2022 | Total | Within 1 year | Within 2-5 years | |||||||||
| Accounts payable and accrued liabilities | $ | $ | $ | |||||||||
| Due to related parties | ||||||||||||
| Derivative liability | ||||||||||||
| Lease liability | ||||||||||||
| $ | $ | $ | ||||||||||
F-18
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)
| 11. | Capital Management |
The Company manages its capital to maintain its ability to continue as a going concern and to provide returns to shareholders and benefits to other stakeholders. The capital structure of the Company consists of cash and equity comprised of issued share capital, RSU reserve, warrants reserve, and options reserve.
The Company manages its capital structure and makes adjustments to it in light of economic conditions. The Company, upon approval from its Board of Directors, will balance its overall capital structure through new share issuances or by undertaking other activities as deemed appropriate under the specific circumstances.
The Company is not subject to externally imposed capital requirements and the Company’s overall strategy with respect to capital risk management remains unchanged from the six months ended April 30, 2023.
| 12. | Commitments |
| a. | On November 1, 2020 (as amended on May 12, 2021), the Company entered into an agreement to acquire the rights, title, and interest in certain patents and patent applications in exchange for entering into a consulting services agreement with the consultant. The consultant will become the Company’s scientific consultant and will be compensated with a monthly fee of $ |
| b. | Effective January 1, 2022, the Company entered into advisory agreements with an advisor of the Company, whereby the Company agreed to issue each consultant |
| c. | Effective January 1, 2022, the Company entered into advisory agreements with two advisors of the Company, whereby the Company agreed to issue each consultant
| |
| d. | On March 1, 2022, the Company entered into an advisory agreement with a consultant, whereby the Company agreed to pay the consultant ILS |
| e. | On March 14, 2022, the Company entered an agreement with a consultant, whereby the Company agreed to issue the consultant RSU’s equivalent to $ |
| f. | On May 23, 2022, the Company entered an agreement with a consultant, whereby the Company agreed to issue the consultant common shares equivalent to $ |
F-19
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)
| 13. | Segmented Information |
As of April 30, 2023, the Company
has
The Company’s non-current assets by geographical location are as follows:
| April 30, 2023 | Canada | United States |
Europe | Asia | Total | |||||||||||||||
| Intangible assets | $ | $ | $ | $ | $ | |||||||||||||||
| Property and equipment | ||||||||||||||||||||
| Restricted cash | ||||||||||||||||||||
| ROU asset | ||||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| October 31, 2022 | Canada | United States | Europe | Asia | Total | |||||||||||||||
| Intangible assets | $ | $ | $ | $ | $ | |||||||||||||||
| Property and equipment | ||||||||||||||||||||
| Restricted cash | ||||||||||||||||||||
| ROU asset | ||||||||||||||||||||
| Deferred offering costs | ||||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| 14. | Subsequent Events |
| a. | On May 23, 2023, the Company granted |
| b. | On May 23, 2023, |
| c. |
F-20