Full Press Release Details
AUDITED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2020
INDEPENDENT AUDITORS' REPORT
the Year Ended December 31, 2020
| Independent Auditor's Report | 1 |
| Balance Sheet | 2 |
| Statement of Operations | 3 |
| Statement of Shareholders' Deficit | 4 |
| Statement of Cash Flows | 5 |
| Notes to the Financial Statements | 6 |
on the Financial Statements
have audited the accompanying financial statements of BayMedica, Inc. (the "Company"), which comprise the balance sheet as
of December 31, 2020, the related statement of operations, statement of shareholders' deficit and cash flows for the year then ended,
and the related notes to the financial statements (collectively, the "financial statements").
Responsibility for the Financial Statements
is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally
accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of BayMedica,
Inc. as of December 31, 2020, and the results of its operations and its cash flows for the year then ended in accordance with accounting
principles generally accepted in the United States of America.
of Matter Regarding Going Concern The accompanying financial statements have been prepared assuming
that BayMedica, Inc. will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring
losses from operations, has a net capital deficiency, and has stated that substantial doubt exists about its ability to continue as a
going concern. Management's evaluation of the events and conditions and management's plans regarding these matters are also described
in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion
is not modified with respect to this matter.
| December 31, 2020 | ||||
| ASSETS | ||||
| Current assets: | ||||
| Cash | $ | 54,911 | ||
| Accounts receivable, net | 3,925 | |||
| Inventories | 103,446 | |||
| Prepaid expenses | 20,845 | |||
| Total current assets | 183,127 | |||
| Non-current assets: | ||||
| Property and equipment, net | 147,896 | |||
| Other assets | 100,000 | |||
| Total non-current assets | 247,896 | |||
| TOTAL ASSETS | $ | 431,023 | ||
| LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||
| Liabilities | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 307,529 | ||
| Short-term debt | 2,764,570 | |||
| Accrued expenses and other liabilities | 393,339 | |||
| Deferred revenue | 25,000 | |||
| Total current liabilities | 3,490,438 | |||
| Non-current liabilities: | ||||
| Long-term debt | 159,833 | |||
| Total non-current liabilities | 159,833 | |||
| Total Liabilities | 3,650,271 | |||
| Commitments and contingencies (Note 8) | ||||
| Shareholders' Deficit | ||||
| Common stock $.001 par value; authorized 70 million shares; 9.3 million issued and | ||||
| outstanding at December 31, 2020 | 9,303 | |||
| Paid-in capital | 70,168 | |||
| Accumulated deficit | (3,298,719 | ) | ||
| Total Shareholders' Deficit | (3,219,248 | ) | ||
| TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | $ | 431,023 |
accompanying notes are an integral part of these financial statements
the Year Ended December 31, 2020
| December 31, 2020 | ||||
| Net sales | $ | 720,849 | ||
| Cost of sales | 147,977 | |||
| Gross profit | 572,872 | |||
| Operating expenses | ||||
| Research and development | 1,087,551 | |||
| General and administrative | 274,667 | |||
| Depreciation | 17,878 | |||
| Loss from operations | (807,224 | ) | ||
| Other income (expense): | ||||
| Interest expense, net | (109,139 | ) | ||
| Foreign exchange (loss) | (213 | ) | ||
| Other income, net | 1,093 | |||
| Total other expense | (108,259 | ) | ||
| Loss before income taxes | (915,483 | ) | ||
| Income tax expense | (1,460 | ) | ||
| Net loss | $ | (916,943 | ) |
accompanying notes are an integral part of these financial statements
of Shareholders' Deficit
the Year Ended December 31, 2020
| Common Stock Shares | Common Stock Amount | Paid-in Capital | Accumulated Deficit | Total | ||||||||||||||||
| Balance at December 31, 2019 | 9,290,000 | $ | 9,290 | $ | 24,121 | $ | (2,381,776 | ) | $ | (2,348,365 | ) | |||||||||
| Net loss | - | - | - | (916,943 | ) | (916,943 | ) | |||||||||||||
| Employee option plans | 13,333 | 13 | 786 | - | 799 | |||||||||||||||
| Stock-based compensation | - | - | 45,261 | - | 45,261 | |||||||||||||||
| Balance at December 31, 2020 | 9,303,333 | $ | 9,303 | $ | 70,168 | $ | (3,298,719 | ) | $ | (3,219,248 | ) |
accompanying notes are an integral part of these financial statements
the Year Ended December 31, 2020
| December 31, 2020 | ||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||
| Net loss | $ | (916,943 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||
| Depreciation | 17,878 | |||
| Stock compensation expense | 45,261 | |||
| Non-cash interest | 107,072 | |||
| Other | 20,000 | |||
| Change in operating assets and liabilities: | ||||
| Accounts receivable | 210,700 | |||
| Inventories | (99,107 | ) | ||
| Prepaid expenses | 12,168 | |||
| Accounts payable | 99,685 | |||
| Accrued expenses and other liabilities | 15,314 | |||
| Net cash used in operating activities | (487,972 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Proceeds from debt | 439,403 | |||
| Proceeds from exercise of options and issuance of stock | 799 | |||
| Net cash provided by financing activities | 440,202 | |||
| CHANGE IN CASH | ||||
| Net decrease in cash | (47,770 | ) | ||
| Cash at beginning of period | 102,681 | |||
| CASH AT END OF PERIOD | $ | 54,911 | ||
| SUPPLEMENTAL CASH FLOW INFORMATION | ||||
| Cash paid for: | ||||
| Interest expense | $ | 2,069 | ||
| Income taxes | 1,460 |
accompanying notes are an integral part of these financial statements
to Financial Statements
1 NATURE OF BUSINESS
Inc. (the "Company") was incorporated in Nevada on September 16, 2016. The Company specializes in the manufacturing and commercialization
of rare cannabinoids for the health and wellness sector. The majority of the Company's sales are to customers located in the United
accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2014-15,
Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern (Subtopic 205-40), the Company has
evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company's
ability to continue as a going concern within one year after the date that the financial statements are issued.
December 31, 2020, the Company has funded its operations primarily with proceeds from the sale of convertible debt. The Company has incurred
recurring losses and negative cash flows from operations since its inception, including a net loss of $916,943for the year ended December
31, 2020. In addition, the Company had an accumulated deficit of approximately $3.2 million as of December 31, 2020. The Company expects
to continue to generate operating losses for the foreseeable future.
Company does not expect that its cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure
requirements for greater than 12 months from the date of issuance of these financial statements. Prior to the issuance date of these
financial statements, the Company merged with BayMedica, LLC, an indirect wholly-owned subsidiary of InMed Pharmaceuticals Inc. ("InMed"),
(the "Merger"). The future viability of the Company beyond that point is dependent on InMed's ability to fund the Company's
operations. As a result, the Company concluded that there is substantial doubt about its ability to continue as a going concern within
one year after the date that the financial statements are issued. These financial statements have been prepared on a going concern basis,
which assumes that the Company will be able to meet its commitments, realize its assets, and discharge its liabilities in the normal
course. These financial statements do not reflect adjustments to the carrying value of assets and liabilities that would be necessary
if the Company was unable to continue as a going concern and such adjustments could be material.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States
preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the balance sheet date, and the corresponding revenues and expenses for the periods
reported. It also requires management to exercise judgment in applying the Company's accounting policies. In the future, actual
experience may differ from these estimates and assumptions. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to these financial statements are the estimate of useful life of intangible assets, the
application of the going concern assumption, the impairment assessment for long-live assets, and determining the fair value of share-based
to Financial Statements
March 11, 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization. The full extent to which the COVID-19
pandemic may directly or indirectly impact the Company's business, results of operations and financial condition, including expenses,
research and development costs and employee-related amounts, will depend on future developments that are evolving and highly uncertain,
such as the duration and severity of outbreaks, including potential future waves or cycles, and the effectiveness of actions taken to
contain and treat COVID-19. The Company considered the potential impact of COVID-19 when making certain estimates and judgments relating
to the preparation of these financial statements. The Company's future assessment of the magnitude and duration of COVID-19, as
well as other factors, could result in a material impact to the Company's financial statements in future reporting periods.
includes cash on hand and deposits with financial institutions. The Federal Deposit Insurance Corporation ("FDIC") insures
up to $250,000 on many standard transaction accounts, such as checking and savings accounts. At December 31, 2020, no cash held at institutions
was in excess of the FDIC insurance limit.
receivable primarily consist of trade receivables from customers. Management provides for probable uncollectible amounts through a charge
to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances still
outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a
credit to accounts receivable. At December 31, 2020, no amounts had been charged to the valuation allowance.
consisting primarily of finished goods, are initially valued at weighted average cost and subsequently valued at the lower of weighted
average cost and net realizable value. In determining any valuation allowances, the Company reviews inventory for obsolete, redundant,
and slow-moving goods. At December 31, 2020, no amounts had been charged to the valuation allowance.
and equipment are stated at cost less accumulated depreciation. Depreciation is computed for assets placed in service using the straight-line
method over the estimated useful life of the asset. When assets are retired or sold, the cost and related allowance for depreciation
is eliminated from the respective accounts, and any resulting gain or loss is reflected in operations.
| Estimated Useful Lives | ||||
| Machinery and equipment | 10 years |
repairs, and renewals, which neither materially add to the value of property nor appreciably prolong its useful life, are expensed as
of long-lived assets
Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not
be recoverable. The evaluation of long-lived assets is performed at the lowest level of identifiable cash flows. Recoverability of assets