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CLEARMIND MEDICINE INC.
Condensed Interim Consolidated Financial Statements
For The Three and Six Months Ended April 30, 2023
(Expressed in United States Dollars)
CLEARMIND MEDICINE INC.
Condensed Interim Consolidated Statements of Financial Position
(Expressed in United States Dollars)
| April 30, 2023 | October 31, 2022 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 5,245,707 | $ | 128,777 | ||||
| Other receivables | 109,625 | 50,933 | ||||||
| Short-term investment (Note 3) | 135,001 | 193,750 | ||||||
| Prepaid expenses | 263,273 | 14,245 | ||||||
| Related parties (Note 4b) | 88,493 | 46,988 | ||||||
| Total current assets | 5,842,099 | 434,693 | ||||||
| Non-current assets | ||||||||
| Property and equipment | 9,773 | 12,902 | ||||||
| Intangible assets | 125,289 | 130,264 | ||||||
| Restricted cash | 14,730 | 14,653 | ||||||
| Right-of-use asset | 4,343 | 35,730 | ||||||
| Deferred offering costs | - | 198,173 | ||||||
| Total non-current assets | 154,135 | 391,722 | ||||||
| Total assets | $ | 5,996,234 | $ | 826,415 | ||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 805,453 | $ | 1,396,960 | ||||
| Due to related parties (Note 4) | 48,321 | 206,494 | ||||||
| Derivative warrants liability (Note 5) | 1,795,499 | - | ||||||
| Derivative liability (Note 6c (i)) | - | 290,569 | ||||||
| Lease liability | 4,941 | 38,390 | ||||||
| Total liabilities | $ | 2,654,214 | $ | 1,932,413 | ||||
| Shareholders' equity (deficit) | ||||||||
| Share capital and share premium (Note 6) | 14,758,127 | 6,706,644 | ||||||
| RSU reserve (Note 9) | 460,969 | 493,036 | ||||||
| Warrants (Note 7) | 741,628 | 459,110 | ||||||
| Share-based payment reserve (Note 8) | 1,525,623 | 1,403,688 | ||||||
| Accumulated other comprehensive loss | ( 21,250 | ) | ( 21,250 | ) | ||||
| Accumulated deficit | ( 14,123,077 | ) | ( 10,147,226 | ) | ||||
| Total shareholders' equity (deficit) | 3,342,020 | ( 1,105,998 | ) | |||||
| Total liabilities and shareholders' equity (deficit) | $ | 5,996,234 | $ | 826,415 |
Approved and authorized for issuance on behalf of the Board on June
| /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)
CLEARMIND MEDICINE INC.
Condensed Interim Consolidated Statements of Operations and Comprehensive
(Expressed in United States Dollars)
| Three months ended | Six months ended | |||||||||||||||
| April 30, | April 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | $ | 1,338,445 | $ | 1,059,881 | $ | 2,583,873 | $ | 2,276,202 | ||||||||
| Research and development | 317,572 | 1,160,758 | 905,202 | 1,471,595 | ||||||||||||
| Total operating expenses | 1,656,017 | 2,220,639 | 3,489,075 | 3,747,797 | ||||||||||||
| Loss before other expenses | ( 1,656,017 | ) | ( 2,220,639 | ) | ( 3,489,075 | ) | ( 3,747,797 | ) | ||||||||
| Finance expenses | ||||||||||||||||
| Changes in fair value of warrants (Note 5) | ( 360,557 | ) | - | ( 360,557 | ) | - | ||||||||||
| Unrealized gain (loss) on short-term investment (Note 3) | 4,445 | ( 95,812 | ) | ( 58,749 | ) | ( 95,812 | ) | |||||||||
| Foreign exchange loss | ( 60,952 | ) | ( 9,334 | ) | ( 95,356 | ) | ( 14,070 | ) | ||||||||
| Finance income, net | 5,966 | - | 23,981 | - | ||||||||||||
| Total finance expenses | ( 411,098 | ) | ( 105,146 | ) | ( 490,681 | ) | ( 109,882 | ) | ||||||||
| Other incomes | ||||||||||||||||
| Dividend received | - | - | 16,555 | - | ||||||||||||
| Total other incomes | - | - | 16,555 | - | ||||||||||||
| Loss before taxes | ( 2,067,115 | ) | ( 2,325,785 | ) | ( 3,963,201 | ) | ( 3,857,679 | ) | ||||||||
| Tax expenses | ( 9,267 | ) | - | ( 12,650 | ) | - | ||||||||||
| Net Loss and Comprehensive loss | $ | ( 2,076,382 | ) | $ | ( 2,325,785 | ) | $ | ( 3,975,851 | ) | $ | ( 3,857,679 | ) | ||||
| Loss per share (*), basic and diluted | $ | ( 0.55 | ) | $ | ( 1.78 | ) | $ | ( 1.32 | ) | $ | ( 3.01 | ) | ||||
| Weighted average number of shares (*) for the purposes of basic and diluted loss per share | 3,747,333 | 1,309,115 | 3,010,522 | 1,279,977 |
(The accompanying notes are an integral part of
these condensed interim consolidated financial statements)
CLEARMIND MEDICINE INC.
Condensed Interim Statements of Changes in Shareholders' Equity
(Expressed in United States Dollars)
| 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 | 1,250,858 | $ | 5,792,009 | $ | 112,829 | $ | 250,567 | $ | 615,031 | $ | - | $ | ( 3,259,364 | ) | $ | 3,511,072 | ||||||||||||||||
| Shares issuable for vested RSU's | - | - | 86,600 | - | - | - | - | 86,600 | ||||||||||||||||||||||||
| Shares issued and issuable for services | 2,667 | 38,684 | 45,913 | - | - | - | - | 84,597 | ||||||||||||||||||||||||
| Units issued for cash | 39,747 | 698,897 | - | - | - | - | - | 698,897 | ||||||||||||||||||||||||
| Issuance costs | - | ( 69,890 | ) | - | - | - | - | - | ( 69,890 | ) | ||||||||||||||||||||||
| Units issued for short-term investment | 26,498 | 372,745 | - | 82,742 | - | - | - | 455,487 | ||||||||||||||||||||||||
| Share-based compensation | - | - | - | - | 424,107 | - | - | 424,107 | ||||||||||||||||||||||||
| Net loss for the period | - | - | - | - | - | ( 3,857,679 | ) | ( 3,857,679 | ) | |||||||||||||||||||||||
| Balance, April 30, 2022 | 1319,770 | $ | 6,832,445 | $ | 245,342 | $ | 333,309 | $ | 1,039,138 | $ | - | $ | ( 7,117,043 | ) | $ | 1,333,191 | ||||||||||||||||
| Balance, October 31, 2022 | 1,319,770 | $ | 6,706,644 | $ | 493,036 | $ | 459,110 | $ | 1,403,688 | $ | ( 21,250 | ) | $ | ( 10,147,226 | ) | $ | ( 1,105,998 | ) | ||||||||||||||
| Net loss for the period | - | - | - | - | - | - | ( 3,975,851 | ) | ( 3,975,851 | ) | ||||||||||||||||||||||
| Issuance of shares (Note 6c(i)) | 1,153,847 | 6,081,619 | - | 282,287 | - | - | - | 6,363,906 | ||||||||||||||||||||||||
| Shares and warrants issuable to Medigus (Note 6c(i)) | - | 296,845 | - | 231 | - | - | - | 297,076 | ||||||||||||||||||||||||
| Issuance of shares, pre-funded warrants and warrants (Note 6c(iii)) | 4,505,718 | 1,522,948 | - | - | - | - | - | 1,522,948 | ||||||||||||||||||||||||
| Shares issued from RSUs (Note 6c(ii)) | 16,830 | 150,071 | ( 150,071 | ) | - | - | - | - | - | |||||||||||||||||||||||
| Shares for services (Notes 12a, 12f) | - | - | 40,372 | - | - | - | - | 40,372 | ||||||||||||||||||||||||
| RSU's vested (Note 9(i)) | - | - | 77,632 | - | - | - | - | 77,632 | ||||||||||||||||||||||||
| Share-based compensation (Note 8) | - | - | - | - | 121,935 | - | - | 121,935 | ||||||||||||||||||||||||
| Balance, April 30, 2023 | 6,996,165 | $ | 14,758,127 | $ | 460,969 | $ | 741,628 | $ | 1,525,623 | $ | ( 21,250 | ) | $ | ( 14,123,077 | ) | $ | 3,342,020 |
(The accompanying notes are an integral part of
these condensed interim consolidated financial statements)
CLEARMIND MEDICINE INC.
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in United States Dollars)
| Six months ended | Six months ended | |||||||
| April 30, | April 30, | |||||||
| 2023 | 2022 | |||||||
| Operating activities | ||||||||
| Net loss | $ | ( 3,975,851 | ) | $ | ( 3,857,679 | ) | ||
| Adjustments for: | ||||||||
| Amortization of intangible assets | 4,975 | 9,823 | ||||||
| Amortization of right-of-use asset | 26,789 | - | ||||||
| Interest on lease liability | 2,682 | - | ||||||
| Depreciation of property and equipment | 3,813 | 2,895 | ||||||
| Exchange rate differences | ( 77 | ) | - | |||||
| Changes in fair value of warrants | 360,557 | - | ||||||
| Share-based compensation | 246,446 | 595,303 | ||||||
| Unrealized loss on short-term investment | 58,749 | 95,812 | ||||||
| Tax expenses | 12,650 | - | ||||||
| Movements in working capital: | ||||||||
| Increase in other receivables | ( 100,197 | ) | ( 62,806 | ) | ||||
| Decrease (increase) in prepaid expenses | ( 249,028 | ) | 87,373 | |||||
| Decrease in accounts payable and accrued liabilities | ( 405,984 | ) | ( 145,085 | ) | ||||
| Increase (decrease) in due to related parties | ( 158,173 | ) | 18,287 | |||||
| Net cash used in operating activities | ( 4,172,649 | ) | ( 3,256,077 | ) | ||||
| Financing activities | ||||||||
| Proceeds from issuance of shares, net of issuance costs (Note 6c (i)) | 6,363,906 | - | ||||||
| Proceeds from issuance of shares, pre-funded warrants and warrants, net of issuance costs (Note 6c (iii)) | 2,957,890 | - | ||||||
| Proceeds from issuance of shares and warrants, net of issuance costs (Note 6d (iii)) | - | 629,007 | ||||||
| Repayment of lease liabilities | ( 30,984 | ) | - | |||||
| Net cash provided by financing activities | 9,290,812 | 629,007 | ||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | ( 1,233 | ) | 213 | |||||
| Net increase (decrease) in cash and cash equivalents | 5,116,930 | ( 2,626,857 | ) | |||||
| Cash and cash equivalents at beginning of period | 128,777 | 3,369,798 | ||||||
| Cash and cash equivalents at end of period | $ | 5,245,707 | $ | 742,941 | ||||
| Supplementary disclosure of cash flow information: | ||||||||
| Cash received for interest | $ | 26,663 | $ | - | ||||
| Non-cash financing and investing activities | ||||||||
| Derivative liability converted to equity (Note 6c(i)) | $ | 290,569 | $ | - | ||||
| Units issued for short-term investment | - | 223,904 |
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
On November 14, 2022, the Company completed
a public offering for aggregate gross proceeds of US$7.5 million and up listing to the Nasdaq Capital Market ("Nasdaq"),
see note 6c (i). The Company trades under the symbol CMND on both the Nasdaq and the Canadian Securities Exchange ("CSE")
On April 6, 2023, the Company completed
an underwritten public offering for aggregate gross proceeds of US$3.5 million. Net proceeds of US$2.9 million. See note 6c (iii).
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 $4,172,649. As of April 30, 2023, the Company has an accumulated deficit of
$14,123,077. The continued operations of the Company are dependent on its ability to generate future cash flows or obtain additional financing
through debt or equity. Management is of the opinion that sufficient working capital will be obtained from external financing to meet
the Company's liabilities and commitments as they become due, although there is a risk that additional financing will not be available
on a timely basis or on terms acceptable to the Company. These factors may cast substantial doubt on the Company's ability to continue
as a going concern. These condensed interim consolidated financial statements do not reflect any adjustments that may be necessary if
the Company is unable to continue as a going concern.
On September 30, 2022, the Company's
Board of Directors approved a 1-for-30 reverse split of its issued and outstanding ordinary shares, effective as of September 30,
2022, pursuant to which holders of the Company's ordinary shares received 0.0333 of an ordinary share for every one ordinary share.
All issued and outstanding ordinary
shares or instruments convertible into ordinary shares contained in these financial statements prior to the reverse share split have been
retroactively adjusted to reflect the reverse share split for all periods presented, unless explicitly stated otherwise.
The financial statements of each company
within the consolidated group are measured using their functional currency which is the currency of the primary economic environment in
which an entity operates. The Company changed its functional currency from the Canadian dollar (C$) 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.
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.
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
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.
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).
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.
CLEARMIND MEDICINE INC.
Notes to the Condensed Interim Consolidated Financial Statements
(Expressed in United States Dollars)
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