Full Press Release Details
CONDENSED FINANCIAL STATEMENTS FOR THE NINE
ENDED SEPTEMBER 30, 2020 AND 2019
| Unaudited Condensed Balance Sheets | 1 |
| Unaudited Condensed Statements of Operations and Comprehensive Loss | 2 |
| Unaudited Condensed Statements of Changes in Shareholders' Deficit | 3 |
| Unaudited Condensed Statements of Cash Flows | 4 |
| Notes to the Unaudited Condensed Financial Statements | 5 |
| September 30, 2020 | December 31, 2019 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 340,898 | $ | 43,714 | ||||
| Due from related party | 67,085 | - | ||||||
| Prepaid expenses and other current assets | 64,182 | 65,075 | ||||||
| Total current assets | 472,165 | 108,789 | ||||||
| Total assets | $ | 472,165 | $ | 108,789 | ||||
| Liabilities and Shareholders' Deficit | ||||||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 1,633,398 | $ | 1,157,645 | ||||
| Advance from related party | - | 22,409 | ||||||
| Notes payable | 2,077,925 | 446,415 | ||||||
| Convertible notes payable | 350,000 | 293,921 | ||||||
| Total liabilities | 4,061,323 | 1,920,390 | ||||||
| Commitments (Note 5) | ||||||||
| Shareholders' Deficit | ||||||||
| Common stock, no par value, unlimited authorized shares, | ||||||||
| 26,887,649 and 25,195,681 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | - | - | ||||||
| Additional paid-in capital | 3,829,609 | 3,094,902 | ||||||
| Accumulated deficit | (7,377,068 | ) | (4,894,881 | ) | ||||
| Accumulated other comprehensive loss | (41,699 | ) | (11,622 | ) | ||||
| Total shareholders' deficit | (3,589,158 | ) | (1,811,601 | ) | ||||
| Total liabilities and shareholders' deficit | $ | 472,165 | $ | 108,789 |
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| For the Nine Months Ended September 30, | ||||||||
| 2020 | 2019 | |||||||
| Expenses | ||||||||
| Operating expenses | $ | 2,094,044 | $ | 1,895,355 | ||||
| Loss from operations | (2,094,044 | ) | (1,895,355 | ) | ||||
| Other expense | ||||||||
| Extinguishment of note payable | - | 32,257 | ||||||
| Interest expense | 388,143 | 47,858 | ||||||
| Total other expense | 388,143 | 80,115 | ||||||
| Net loss | (2,482,187 | ) | (1,975,470 | ) | ||||
| Other comprehensive income | ||||||||
| Foreign exchange (loss) gain | (30,077 | ) | 5,204 | |||||
| Comprehensive loss | $ | (2,512,264 | ) | $ | (1,970,266 | ) | ||
| Net loss per share - basic and diluted | $ | (0.10 | ) | $ | (0.08 | ) | ||
| Weighted average shares outstanding, basic and diluted | 25,916,419 | 25,060,193 |
STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
| Common Stock | Addition paid-in | Accumulated | Accumulated Other Comprehensive | |||||||||||||||||||||
| Shares | Amount | capital | Deficit | Loss | Total | |||||||||||||||||||
| Balance as of January 1, 2019 | 24,972,504 | $ | - | $ | 2,423,709 | $ | (2,484,208 | ) | $ | (4,955 | ) | $ | (65,454 | ) | ||||||||||
| Common stock issued for services | 172,297 | - | 88,465 | - | - | 88,465 | ||||||||||||||||||
| Warrants issued in conjunction with issuance of notes payable | - | - | 24,875 | - | - | 24,875 | ||||||||||||||||||
| Stock based compensation - stock options | - | - | 535,587 | - | - | 535,587 | ||||||||||||||||||
| Foreign exchange loss | - | - | - | - | 5,204 | 5,204 | ||||||||||||||||||
| Net loss | - | - | - | (1,975,470 | ) | - | (1,975,470 | ) | ||||||||||||||||
| Balance as of September 30, 2019 | 25,144,801 | $ | - | $ | 3,072,636 | $ | (4,459,678 | ) | $ | 249 | $ | (1,386,793 | ) | |||||||||||
| Balance as of January 1, 2020 | 25,195,681 | $ | - | $ | 3,094,902 | $ | (4,894,881 | ) | $ | (11,622 | ) | $ | (1,811,601 | ) | ||||||||||
| September 2020 private placement | 166,667 | - | 227,500 | - | - | 227,500 | ||||||||||||||||||
| Conversion of related party advance and notes payable | 1,081,818 | - | 238,000 | - | - | 238,000 | ||||||||||||||||||
| Common stock issued for accounts payable | 388,483 | - | 173,482 | - | - | 173,482 | ||||||||||||||||||
| Common stock issued in conjuntion with note payable modification | - | - | 45,725 | - | - | 45,725 | ||||||||||||||||||
| Warrants issued in conjunction with notes payable | 55,000 | - | 32,149 | - | - | 32,149 | ||||||||||||||||||
| Beneficial conversion feature issued with note payable | - | - | 17,851 | - | - | 17,851 | ||||||||||||||||||
| Foreign exchange loss | - | - | - | - | (30,077 | ) | (30,077 | ) | ||||||||||||||||
| Net loss | - | - | - | (2,482,187 | ) | - | (2,482,187 | ) | ||||||||||||||||
| Balance as of September 30, 2020 | 26,887,649 | $ | - | $ | 3,829,609 | $ | (7,377,068 | ) | $ | (41,699 | ) | $ | (3,589,158 | ) |
STATEMENTS OF CASH FLOWS
| For the Nine Months Ended September 30, | ||||||||
| 2020 | 2019 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | (2,482,187 | ) | $ | (1,975,470 | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Extinguishment of notes payable | - | 32,257 | ||||||
| Accrued interest | 102,285 | 8,874 | ||||||
| Amortization of debt discount | 285,858 | 38,985 | ||||||
| Stock-based compensation | - | 624,052 | ||||||
| Change in operating assets and liabilities: | ||||||||
| Due from related party | (65,075 | ) | - | |||||
| Prepaid expenses and other current assets | (1,841 | ) | 67,591 | |||||
| Accounts payable and accrued liabilities | 522,162 | 571,121 | ||||||
| Net cash used in operating activities | (1,638,798 | ) | (632,590 | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from convertible notes payable | 50,000 | 300,000 | ||||||
| Proceeds from note payable | 1,812,410 | 198,000 | ||||||
| Advances from related party | - | 22,000 | ||||||
| Proceeds from sale of common stock, net of offering costs | 227,500 | - | ||||||
| Repayment of note payable | (157,714 | ) | - | |||||
| Net cash provided by financing activities | 1,932,196 | 520,000 | ||||||
| Effect of foreign exchange rate on cash | 3,786 | 7,802 | ||||||
| Net increase (decrease) in cash | 297,184 | (104,788 | ) | |||||
| Cash - beginning of period | 43,714 | 113,671 | ||||||
| Cash - end of period | $ | 340,898 | $ | 8,883 | ||||
| Supplemental non-cash financing activities: | ||||||||
| Beneficial conversion feature issued with note payable | $ | 17,851 | $ | - | ||||
| Warrants issued in conjunction with notes payable | $ | 32,149 | $ | 24,875 | ||||
| Common stock issued for accounts payable | $ | 173,482 | $ | - | ||||
| Common stock issued in conjuntion with note payable modification | $ | 45,725 | $ | - | ||||
| Notes payable issued to consultant for prepaid services | $ | - | $ | 150,000 | ||||
| Conversion of related party advances and notes payable into common stock | $ | 238,000 | $ | - |
TO CONDENSED FINANCIAL STATEMENTS
Pharma Inc. ("Jay Pharma" or the "Company") was incorporated under the Business Corporations Act (Canada)
on April 19, 2017 as Jay Resources Inc. The Company is a pharmaceutical company developing innovative, evidence-based cannabinoid
medicines. The head office of the Company is located in Naples, Florida.
2 - Liquidity and going concern
Company has incurred continuing losses from its operations and as of September 30, 2020, the Company had an accumulated deficit
of $7,377,068 and working capital deficiency of $3,589,158. The Company also has negative operating cash flow and no revenue,
with an insufficient amount of cash to sustain opertaions.
inception, the Company has met its liquidity requirements principally through the issuance of notes payable and the sale of its
shares of common stock.
Company has no present revenue and the Company's ability to continue its operations and to pay its obligations when they
become due is contingent upon the Company obtaining additional financing. Management's plans include seeking to procure
additional funds through debt and equity financings and to continue to develop its technologies and products.
are no assurances that the Company will be able to raise capital on terms acceptable to the Company or at all, or that cash flows
generated from its operations will be sufficient to meet its current operating costs and required debt service. If the Company
is unable to obtain sufficient amounts of additional capital, it may be required to reduce the scope of its planned product development,
which could harm its financial condition and operating results, or it may not be able to continue to fund its ongoing operations.
These conditions raise substantial doubt about the Company's ability to continue as a going concern to sustain operations
for at least one year from the issuance date of these condensed financial statements. The accompanying financial statements do
not include any adjustments that might result from the outcome of these uncertainties.
3 - SUMMARY OF Significant Accounting Policies
accompanying condensed financial statements have been prepared in accordance with accounting principles generally accepted in
the United States of America ("U.S. GAAP") and in accordance with the applicable rules and regulations of the United
States Securities and Exchange Commission (the "SEC") for interim financial statements. Accordingly, they do not include
all of the information and notes required by U.S. GAAP. However, in the opinion of the management of the Company, all adjustments
necessary for a fair presentation of the financial position and operating results have been included in these unaudited condensed
financial statements. These unaudited condensed financial statements should be read in conjunction with the financial statements
and notes thereto for the fiscal year ended December 31, 2019. Operating results for the nine months ended September 30, 2020
are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.
preparation of condensed financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amount of assets and liabilities at the date of the financial statements and expenses during the periods
reported. By their nature, these estimates are subject to measurement uncertainty and the effects on the financial statements
of changes in such estimates in future periods could be significant. Significant areas requiring management's estimates
and assumptions include determining the fair value of transactions involving common stock and valuation of stock-based compensation.
Actual results could differ from those estimates.
TO CONDENSED FINANCIAL STATEMENTS
3 - SUMMARY OF Significant Accounting Policies, continued
Currency Translation
reporting currency of the Company is the United States dollar. The financial statements of companies located outside of the U.S.
are measured in their functional currency, which is the local currency. The functional currency of the Company is the Canadian
dollar. Monetary assets and liabilities are translated using public exchange rates at the balance sheet date. Income and expense
items are translated using average monthly exchange rates. Shareholders' equity accounts and non-monetary assets are translated
at their historical exchange rates. Translation adjustments are included in accumulated other comprehensive loss in the accompanying
condensed balance sheets.
and cash equivalents
Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
The Company did not have any cash equivalents as of September 30, 2020 and December 31, 2019.
Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income
taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of
taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of
the Company's assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected
Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than
not that some portion or all the deferred tax assets will not be realized. Management makes judgments as to the interpretation
of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liabilities. In management's
opinion, adequate provisions for income taxes have been made. If actual taxable income by tax jurisdiction varies from estimates,
additional allowances or reversals of reserves may be necessary.
benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities.
recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement.
A liability for "unrecognized tax benefits" is recorded for any tax benefits claimed in the Company's tax returns
that do not meet these recognition and measurement standards. As of September 30, 2020 and December 31, 2019, no liability for
unrecognized tax benefits was required to be recorded.
Company's policy for recording interest and penalties associated with tax audits is to record such items as a component
of operating expenses. There were no amounts accrued for penalties and interest for the nine months ended September 30, 2020 and
2019. The Company does not expect its uncertain tax positions to change during the next twelve months. Management is currently
unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.
Company has identified its Canadian federal tax return and its provincial tax returns in Ontario as its "major" tax
is in the process of filing its corporate tax returns for the years ended December 31, 2019 and December 31, 2018. Net operating
losses for these periods will not be available to reduce future taxable income until the returns are filed.
Company follows Accounting Standards Codification ("ASC") 718, Compensation - Stock Compensation, which addresses
the accounting for stock-based payment transactions, requiring such transactions to be accounted for using the fair value method.
Awards of shares for property or services are recorded at the more readily measurable of the fair value of the stock and the fair
value of the service. The Company uses the Black-Scholes option-pricing model to determine the grant date fair value of stock-based
awards under ASC 718. The fair value is charged to earnings depending on the terms and conditions of the award, and the nature
of the relationship of the recipient of the award to the Company. The Company records the grant date fair value in line with the
period over which it was earned. For employees and consultants, this is typically considered to be the vesting period of the award.
The Company estimates the expected forfeitures and updates the valuation accordingly.
TO CONDENSED FINANCIAL STATEMENTS
3 - SUMMARY OF Significant Accounting Policies, continued
net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during
the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential
common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the
exercise of stock options and warrants (using the treasury stock method) and convertible notes. The computation of basic
net loss per share for the nine months ended September 30, 2020 and 2019 excludes potentially dilutive securities. The computations
of net loss per share for each period presented is the same for both basic and fully diluted.
dilutive securities outlined in the table below have been excluded from the computation of diluted net loss per share because
the effect of their inclusion would have been anti-dilutive.
| For the nine months ended September 30, 2020 | For the nine months ended September 30, 2019 | |||||||
| Warrants to purchase shares of common stock | 1,504,593 | 1,373,673 | ||||||
| Convertible notes | 631,579 | 500,000 | ||||||
| Options to purchase shares of common stock | 3,604,348 | 3,102,362 | ||||||
| Total potentially dilutive securities | 5,740,520 | 4,976,035 |
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which at times, may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these
accounts and management believes the Company is not exposed to significant risks on such accounts.