UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
OR
For the fiscal year ended
OR
For the transition period from _______________ to _______________
OR
Date of event requiring this shell company report _______________
Commission file number
(Exact name of Registrant specified in its charter)
Not Applicable
(Translation of Registrant's name into English)
British Columbia,
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
|
Title of Each Class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
|
|
|
|
|
The |
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)
Number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of business of the period covered by the annual report.
Indicate by check mark if the Registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.
Yes ☐
If this report is an annual or transition report, indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Yes ☐
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.
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of "accelerated filer," "large accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
|
Large Accelerated Filer ☐ |
Accelerated Filer ☐ |
|
|
Emerging Growth Company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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 pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark which basis of accounting the Registrant has used to prepare the financial statements included in this filing:
|
U.S. GAAP ☐ |
|
Other ☐ |
|
|
by the International Accounting Standards Board ☒ |
|
If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow: Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b 2 of the Exchange Act):
Yes ☐ No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Not applicable.
EXPLANATORY NOTE
Bright Minds Biosciences Inc. (the "Company") is filing this Amendment No. 1 to Form 20-F (the "Form 20-F/A") for the year ended September 30, 2021 to furnish Exhibit 101 to the Form 20-F, which provides certain items from our Form 20-F formatted in eXtensible Business Reporting Language ("XBRL"). In accordance with the policy of the Securities and Exchange Commission (the "Commission") stated in Release No. 33-9002, we are filing this Form 20-F/A within the 30-day period available to first-time XBRL filers following the filing of our Form 20-F, as filed with the Commission on December 29, 2021. Accordingly, this Form 20-F/A consists only of the facing page, this explanatory note, Item 18, Item 19, the signature page and Exhibit 101.
No other changes have been made to the Form 20-F other than the furnishing of the exhibit described above. This Form 20-F/A does not reflect subsequent events occurring after the original date of the Form 20-F, or modify or update in any way disclosures made in the Form 20-F.
Our financial statements were prepared in accordance with IFRS, as issued by the IASB, and are presented in Canadian dollars.
Financial statements are filed as part of this Annual Report:
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Bright Minds Biosciences Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Bright Minds Biosciences Inc. ("the Company") as of September 30, 2021 and 2020, and the related consolidated statements of comprehensive loss, changes in shareholders' equity and cash flows for the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2021 and 2020, and the results of its operations and its cash flows for the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's 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 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 whether the financial statements are free of material misstatement, whether due to fraud or error. The Company is not required to have, nor were we engaged to perform, an audit of 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 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ De-Visser Gray LLP
CHARTERED PROFESSIONAL ACCOUNTANTS
We have served as the Company's auditor since 2020.
Vancouver, Canada
December 24, 2021
|
Bright Minds Biosciences Inc. |
|
Consolidated Statements of Financial Position (Expressed in Canadian dollars) |
| September 30, | September 30, | ||||||
| As at | Notes | 2021 | 2020 | ||||
| $ | $ | ||||||
| ASSETS | |||||||
| Current Assets | |||||||
| Cash and cash equivalents | 9 | ||||||
| Sales tax receivable | |||||||
| Prepaids | |||||||
| Non-Current Assets | |||||||
| Intangible assets | 4 | ||||||
| TOTAL ASSETS | |||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Current Liabilities | |||||||
| Accounts payable and accrued liabilities | 5 | ||||||
| TOTAL LIABILITIES | |||||||
| Shareholders' equity | |||||||
| Share capital | 6 | ||||||
| Subscriptions receivable | 6 | ( |
) | ( |
) | ||
| Subscriptions received | 6 | ||||||
| Reserves | 6 | ||||||
| Deficit | ( |
) | ( |
) | |||
| TOTAL SHAREHOLDERS' EQUITY | |||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
Nature and continuance of operations (Note 1)
Subsequent events (Note 14)
|
Approved on behalf of the Board of Directors: |
||
|
|
|
|
|
"Ian McDonald" |
|
"Alan Kozikowski" |
|
Director |
|
Director |
The accompanying notes are an integral part of these consolidated financial statements.
| 2 | Page |
|
Bright Minds Biosciences Inc. |
| For the year ended |
For the year ended |
For the period ended |
||||||||
| Notes | September 30, 2021 |
September 30, 2020 |
September 30, 2019 |
|||||||
| $ | $ | $ | ||||||||
| EXPENSES | ||||||||||
| Consulting fees | 6 | |||||||||
| Directors' compensation | 6,7 | |||||||||
| Foreign exchange | ( |
) | ||||||||
| Funds processing fees - private placements | ||||||||||
| Marketing, advertising, and investor relations | 6 | |||||||||
| Office and administrative | 11 | |||||||||
| Professional fees | 6,7 | |||||||||
| Regulatory and filing | ||||||||||
| Research and development | 6,7,10 | |||||||||
| Net loss and comprehensive loss | ( |
) | ( |
) | ( |
) | ||||
| Basic and diluted loss per share | ( |
) | ( |
) | ( |
) | ||||
| Weighted average number of common shares outstanding -basic and diluted |
The accompanying notes are an integral part of these consolidated financial statements.
| 3 | Page |
|
Bright Minds Biosciences Inc. |
| Share Capital | |||||||||||||||||||||
| Number of shares |
Share capital |
Subscriptions receivable |
Subscriptions received |
Reserves | Deficit | Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||
| Balance at May 31, 2019 (date of incorporation) | |||||||||||||||||||||
| Private placement | ( |
) | |||||||||||||||||||
| Acquisition of intangible assets | |||||||||||||||||||||
| Net loss | - | ( |
) | ( |
) | ||||||||||||||||
| Balance as at September 30, 2019 | ( |
) | ( |
) | |||||||||||||||||
| Balance as at September 30, 2019 | ( |
) | ( |
) | |||||||||||||||||
| Private placement | |||||||||||||||||||||
| Share issue costs | - | ( |
) | ( |
) | ||||||||||||||||
| Share-based compensation | - | ||||||||||||||||||||
| Net loss | - | ( |
) | ( |
) | ||||||||||||||||
| Balance as at September 30, 2020 | ( |
) | ( |
) | |||||||||||||||||
| Balance as at September 30, 2020 | ( |
) | ( |
) | |||||||||||||||||
| Private placements | ( |
) | ( |
) | |||||||||||||||||
| Finder's fees - cash | - | ( |
) | ( |
) | ||||||||||||||||
| Finder's fees - broker warrants | - | ( |
) | ||||||||||||||||||
| Finder's fees - share options | - | ( |
) | ||||||||||||||||||
| Share issue costs | - | ( |
) | ( |
) | ||||||||||||||||
| Debt settlement with shares | |||||||||||||||||||||
| Special warrant conversion | |||||||||||||||||||||
| Warrants exercised | |||||||||||||||||||||
| Shares issued to the University | |||||||||||||||||||||
| Share-based compensation | - | ||||||||||||||||||||
| Net loss | - | ( |
) | ( |
) | ||||||||||||||||
| Balance as at September 30, 2021 | ( |
) | ( |
) | |||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 | Page |
|
Bright Minds Biosciences Inc. |
| For the year ended |
For the year ended |
For the period ended |
|||||||
| September 30, 2021 |
September 30, 2020 |
September 30, 2019 |
|||||||
| $ | $ | ||||||||
| Operating activities | |||||||||
| Net loss for the year | ( |
) | ( |
) | ( |
) | |||
| Non-cash items: | |||||||||
| Foreign exchange | ( |
) | |||||||
| Shares recorded as research and development | |||||||||
| Share-based compensation | |||||||||
| Changes in non-cash operating working capital items: | |||||||||
| Sales tax receivable | ( |
) | |||||||
| Prepaids | ( |
) | ( |
) | |||||
| Accounts payable and accrued liabilities | |||||||||
| Net cash used in operating activities | ( |
) | ( |
) | ( |
) | |||
| Financing activities | |||||||||
| Private placement proceeds | |||||||||
| Finder's fees | ( |
) | |||||||
| Share issuance costs | ( |
) | |||||||
| Special warrant proceeds | |||||||||
| Refund of special warrant proceeds | ( |
) | |||||||
| Warrant exercise proceeds | |||||||||
| Net cash from financing activities | |||||||||
| Change in cash | |||||||||
| Effect of foreign exchange on cash | |||||||||
| Cash, beginning of year | |||||||||
| Cash and cash equivalents, end of year | |||||||||
| SUPPLEMENTARY INFORMATION | |||||||||
| Debt settled by issuing shares | |||||||||
| Fair value ascribed to brokers' warrants issued | |||||||||
| Fair value of options issued as finder's fees | |||||||||
| Share issue costs included in accounts payable | |||||||||
| Acquisition of intangible assets by issuing common shares |
The accompanying notes are an integral part of these consolidated financial statements.
| 5 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
1. NATURE AND CONTINUANCE OF OPERATIONS
Bright Minds Biosciences Inc. (the "Company") was incorporated under the Business Corporations Act of British Columbia on May 31, 2019. The Company's objective is to generate income and achieve long term profitable growth through the development of therapeutics to improve the lives of patients with certain severe and life-altering diseases. On February 8, 2021, the Company started trading on the Canadian Stock Exchange ("CSE") under the symbol DRUG. On May 17, 2021, the Company started trading on the OTCQB under the symbol BMBIF. On November 8, 2021, the Company started trading on NASDAQ under the symbol DRUG. The head office, and principal address of the Company are located at 1500 - 1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7, Canada.
These consolidated financial statements have been prepared on a 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 foreseeable future. As at September 30, 2021, the Company is not able to finance day to day activities through operations and has incurred a loss of $
The coronavirus, also known as "COVID-19", has spread across the globe and is impacting worldwide economic activity. Government authorities have implemented emergency measures to mitigate the spread of the virus. The outbreak and the related mitigation measures may have an adverse impact on global economic conditions as well as on the Company's business activities specifically related to possible disruptions in the operations of the laboratories upon whom the Company relies, including laboratories situated in various parts of the United States and Europe. The extent to which the coronavirus may impact the Company's business activities will depend on future developments, such as the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in Canada and other countries to contain and treat the disease. These events are highly uncertain and as such, the Company cannot determine their financial impact at this time.
2. STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION
These consolidated financial statements were authorized for issue on December 24, 2021 by the directors of the Company.
Statement of compliance
These consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and Interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"). The principal accounting policies applied in the preparation of these financial statements are set out below.
Basis of preparation
Depending on the applicable IFRS requirements, the measurement basis used in the preparation of these financial statements is cost, net realizable value, fair value or recoverable amount. These financial statements, except for the statement of cash flows, are based on the accrual basis.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation
These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Psilocybinlabs Ltd. (see Note 4), Bright Minds Biosciences LLC, a Delaware limited liability company, and Bright Minds Bioscience Pty Ltd., a proprietary company registered under the Corporations Act of Australia on June 24, 2021. On June 10, 2021, the CEO of the Company transferred, assigned and conveyed all of his membership interests in Bright Minds Biosciences LLC to the Company.
A subsidiary is an entity that the Company controls, either directly or indirectly, where control is defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial results of the Company's subsidiaries are included in the financial statements from the date that control commences until the date that control ceases. The accounting policies of the Company's subsidiaries have been aligned with the policies adopted by the Company. When the Company ceases to control a subsidiary, the financial statements of that subsidiary are de-consolidated.
|
6 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
Inter-company balances and transactions, and any income and expenses arising from inter-company transactions, have been eliminated in these financial statements.
Critical accounting estimates
The preparation of the financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Certain of the Company's accounting policies and disclosures require key assumptions concerning the future and other estimates that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities or disclosures within the next fiscal year. Where applicable, further information about the assumptions made is disclosed in the notes specific to that asset or liability. The critical accounting estimates and judgments set out below have been applied consistently to all periods presented in these financial statements.
Ability to continue as a going concern
Evaluation of the ability of the Company to realize its strategy for funding its future needs for working capital involves making judgments.
Share-based compensation
The fair value of stock options is measured using a Black Scholes option pricing model. Measurement inputs include the common share price on the grant date, the exercise price of the instrument, the expected common share price volatility, the weighted average expected life of the instruments, the expected dividends and the risk-free interest rate. Service and non-market performance conditions are not taken into account in determining fair value. The fair value of equity settled RSUs is measured based on management's best estimate of the Company's share price on the grant date.
The share-based compensation recognized is also determined based on management's grant date estimate of the forfeitures that are expected to occur over the life of the stock options and equity settled RSUs. Cash settled RSUs outstanding are fair valued using a mark-to-market calculation based on the Company's closing common share price at the end of the period. The number of stock options and RSUs that actually vest could differ from the estimated number of awards expected to vest and any differences between the actual and estimated forfeitures are recognized prospectively as they occur.
Foreign currency translation
The functional currency of the Company, Psilocybinlabs Ltd., Bright Minds Biosciences LLC and Bright Minds Bioscience Pty Ltd. is the Canadian dollar and the presentation currency of the Company is the Canadian dollar. Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on the transaction date. Monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at each reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Foreign currency translation differences are recognized in profit or loss.
Business combinations
The Company uses the acquisition method to account for business combinations. The Company measures goodwill as the fair value of the consideration transferred, less the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. When the excess is negative, a gain on acquisition is recognized immediately in net income or loss.
|
7 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
Goodwill is not amortized and is tested for impairment annually. Additionally, goodwill is reviewed at each reporting date to determine if events or changes in circumstances indicate that the asset might be impaired, in which case an impairment test is performed. Goodwill is measured at cost less accumulated impairment losses.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Company incurs in connection with a business combination are expensed as incurred.
Internally generated intangible assets - Research and development expenditure
Intangible assets acquired separately are initially recognized at cost. Expenditure on research activities is recognized as an expense in the period in which it is incurred. An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following have been demonstrated:
• The technical feasibility of completing the intangible asset so that it will be available for use or sale;
• The intention to complete the intangible asset and use or sell it;
• The ability to use or sell the intangible asset;
• How the intangible asset will generate probable future economic benefits;
• The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
• The ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognized for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is recognized in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
At September 30, 2021 and 2020, the Company has not recognized any internally-generated intangible assets.
Share-based compensation awards
Share-based compensation expense relates to stock options as well as cash and equity settled restricted share units ("RSUs"). The grant date fair values of stock options and equity settled RSUs granted are recognized as an expense, with a corresponding increase in reserves in equity, over the vesting period. The amount recognized as an expense is based on the estimate of the number of awards expected to vest, which is revised if subsequent information indicates that actual forfeitures are likely to differ from the estimate. Upon exercise of stock options, the consideration paid by the holder is included in share capital and the related reserves associated with the stock options exercised is reclassified into share capital. Upon vesting of equity settled RSUs, the related reserves associated with the RSU is reclassified into share capital.
For cash settled RSUs, the fair value of the RSUs is recognized as share-based compensation expense, with a corresponding increase in accrued liabilities over the vesting period. The amount recognized as an expense is based on the estimate of the number of RSUs expected to vest. Cash settled RSUs are measured at their fair value at each reporting period on a mark-to-market basis. Upon vesting of the cash settled RSUs, the liability is reduced by the cash payout.
Provisions
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as a finance cost within net income or loss.
|
8 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
Income taxes
Current income tax:
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Company operates and generates taxable income.
Deferred tax:
Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Loss per share
Basic loss per share is calculated by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. The loss attributable to common shareholders equals the reported loss attributable to owners of the Company. Diluted loss per share is calculated using the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding for the calculation of diluted loss per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period. Because the Company incurred net losses, the effect of dilutive instruments would be anti-dilutive and therefore diluted loss per share equals loss per share.
Share capital
Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Company's common shares are classified as equity instruments.
Incremental costs directly attributable to the issue of new common shares are recognized as a deduction from equity, net of tax.
Financial instruments
Financial instruments are accounted for in accordance with IFRS 9, "Financial Instruments: Classification and Measurement". A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
(a) Recognition and measurement of financial assets
The Company recognizes a financial asset when it becomes a party to the contractual provisions of the instrument.
(b) Classification of financial assets
The Company classifies financial assets at initial recognition as financial assets: measured at amortized cost, measured at fair value through other comprehensive income ("FVTOCI") or measured at fair value through profit or loss ("FVTPL").
(i) Financial assets measured at amortized cost
A financial asset that meets both of the following conditions is classified as a financial asset measured at amortized cost:
• The Company's business model for such financial assets is to hold the assets in order to collect contractual cash flows.
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the amount outstanding.
|
9 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
A financial asset measured at amortized cost is initially recognized at fair value plus transaction costs directly attributable to the asset. After initial recognition, the carrying amount of the financial asset measured at amortized cost is determined using the effective interest method, net of impairment loss, if necessary.
(ii) Financial assets measured at FVTOCI
A financial asset measured at FVOCI is recognized initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, the asset is measured at fair value with changes in fair value included as "financial asset at fair value through other comprehensive income" in other comprehensive income or loss.
(iii) Financial assets measured at FVTPL
A financial asset measured at FVTPL is initially recognized at fair value with any associated transaction costs being recognized in profit or loss when incurred. Subsequently, the financial asset is re-measured at fair value and a gain or loss is recognized in profit or loss in the reporting period in which it arises.
The Company's cash and cash equivalents are classified as subsequently measured at FVTPL.
(c) Derecognition of financial assets
The Company derecognizes a financial asset if the contractual rights to the cash flows from the asset expire, or the Company transfers substantially all the risks and rewards of ownership of the financial asset. Any interests in transferred financial assets that are created or retained by the Company are recognized as a separate asset or liability. Gains and losses on derecognition are generally recognized in the statement of comprehensive loss. However, gains and losses on derecognition of financial assets classified as FVTOCI remain within accumulated other comprehensive income or loss.
Financial liabilities
(a) Recognition and measurement of financial liabilities
The Company recognizes a financial liability when it becomes a party to the contractual provisions of the instrument.
(b) Classification of financial liabilities
(i) Financial liabilities measured at amortized cost
A financial liability measured at amortized cost is initially measured at fair value less transaction costs directly attributable to the issuance of the financial liability. Subsequently, the financial liability is measured at amortized cost using the effective interest method.
The Company's accounts payable and accrued liabilities are classified as subsequently measured at amortized cost.
(ii) Financial liabilities measured at fair value through profit or loss
A financial liability measured at fair value through profit or loss is initially measured at fair value with any associated transaction costs being recognized in profit or loss when incurred. Subsequently, the financial liability is re-measured at fair value and a gain or loss is recognized in profit or loss in the reporting period in which it arises.
(c) Derecognition of financial liabilities
The Company derecognizes a financial liability when the financial liability is discharged, cancelled or expired. Generally, the difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognized in the statement of comprehensive loss.
Offsetting financial assets and liabilities
Financial assets and liabilities are offset and the net amount is presented in the statement of financial position only when the Company has a legally enforceable right to offset the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Impairment of financial assets
The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost.
|
10 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve-month expected credit losses. The Company recognizes in the statement of comprehensive income or loss, as an impairment loss (or gain), the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.
Leases
Leases are accounted for in accordance with IFRS 16, "Leases". At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset over a period of time in exchange for consideration. The Company assesses whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all of the economic benefits from the use of the asset during the term of the contract and if it has the right to direct the use of the asset.
As a lessee, the Company recognizes a right-of-use asset and a lease liability at the commencement date of the lease.
Right-of-use asset
The right-of-use asset is initially measured at cost, which is comprised of the initial amount of the lease liability adjusted for any lease payments made and any initial direct costs incurred at or before the commencement date, less any lease incentives received.
The right-of-use asset is subsequently depreciated from the commencement date to the earlier of the end of the lease term, or the end of the useful life of the asset. In addition, the right-of-use asset may be reduced due to impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
Lease liability
A lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date discounted by the interest rate implicit in the lease or, if that rate cannot be readily determined, the incremental borrowing rate. The lease liability is subsequently measured at amortized cost using the effective interest method.
New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are not yet effective for the year ended September 30, 2021 and have not been applied in preparing these financial statements. The following new standards have not been adopted which may impact the Company in future:
IAS 1 - Presentation of Financial Statements
An amendment to IAS 1 clarifies the criterion for classifying a liability as non-current relating to the right to defer settlement of a liability for at least 12 months after the reporting period.
IAS 1 has amended the definition of material to "information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity." The previous definition of material from IAS1 was "omissions or misstatements of items are material if they could, individually or collectively, influence the economic decisions that users make on the basis of the financial statements. Materiality depends on the size and nature of the omission or misstatement judged in the surrounding circumstances. The size or nature of the item, or a combination of both, could be the determining factor."
IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
IAS 8 amended the definition of material reflect the changes outlined above under IAS 1.
IAS 12 and IFRIC 23 - Income Taxes
IAS 12 currently provides guidance on current and deferred tax assets and liabilities however uncertainty may exist on how tax law applies to certain transactions. IFRIC 23 provides guidance on how to address uncertainty related to tax treatments.
|
11 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
4. SHARE EXCHANGE AND ASSIGNMENT
Psilocybinlabs Ltd. ("PL") was incorporated under the laws of the province of British Columbia on April 25, 2019, with the incorporator share being held by a company controlled by the CEO of the Company. On May 17, 2019, this share was transferred to the Company. On April 25, 2019, PL entered into a confirmatory assignment and waiver (the "CAW") with an individual, which was amended and restated on May 17, 2019. Pursuant to the amended and restated CAW, this individual assigned all of the right, title and interest, including all other intellectual property rights (the Rights, as described) to PL. As compensation for the assignment of the Rights, PL issued
5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
| September 30, 2021 |
September 30, 2020 |
|||||
| $ | $ | |||||
| Accounts payable | ||||||
| Accrued liabilities | ||||||
| Total accounts payable and accrued liabilities |
6. SHARE CAPITAL
Authorized share capital
Unlimited number of common shares without par value.
Issued share capital for the year ended September 30, 2021
On November 2, 2020, the Company closed the second tranche of a non-brokered private placement financing through the issuance of
On January 6, 2021, the Company issued
On February 3, 2021, the
On March 17, 2021, the Company issued
On April 6, 2021, the Company paid a New York-based company a contingent cash fee in the amount of $
|
12 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
On April 23, 2021,
On April 28, 2021, the Company issued
Issued share capital for the year ended September 30, 2020
On September 30, 2020, the Company closed the first tranche of a non-brokered private placement financing through the issuance of
Issued share capital from May 31, 2019 (date of incorporation) to September 30, 2019
On July 30, 2019, the Company closed a non-brokered private placement financing through the issuance of
Special Warrants and Resulting Share Issuance
In October 2020, the Company entered into subscription agreements for special warrants (the "SWs") whereby the subscribers subscribed for a total of
On November 2, 2020, the Company issued
Share subscriptions received/receivable
During the fiscal year ended September 30, 2020, the Company received $
On July 31, 2019,
Escrowed Securities
On January 28, 2021, the Company entered into an escrow agreement under National Policy 46-201 Escrow for Initial Public Offerings (the "Policy") in connection with the listing of common shares of the Company on the CSE, whereby
•
•
Stock options
The Company's stock option plan provides for stock options to be issued to directors, officers, employees and consultants of the Company, its subsidiaries and any personal holding company of such individuals so that they may participate in the growth and development of the Company. Subject to the specific provisions of the stock option plan, eligibility, vesting period, terms of the options and the number of options granted are to be determined by the Board of Directors at the time of grant. The stock option plan allows the Board of Directors to issue up to
|
13 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
Options granted during the year ended September 30, 2021
On November 17, 2020, the Company granted
•
•
•
•
The fair value of these stock options was measured using the Black Scholes option pricing model using the following inputs: i) exercise price: $
On April 28, 2021, the Company granted
•
•
The fair value of these stock options was measured using the Black Scholes option pricing model using the following inputs: i) exercise price: $
On June 15, 2021, the Company granted
On September 21, 2021, the Company granted
Options granted during the year ended September 30, 2020
On July 23, 2020, the Company granted
|
14 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
The following table summarizes the movements in the Company's outstanding stock options for the years ended September 30, 2021 and 2020:
| Number of options |
Weighted average exercise price |
|||||
| Balance at September 30, 2019 and May 31, 2019 | ||||||
| Granted | $ | |||||
| Balance at September 30, 2020 | $ | |||||
| Granted | $ | |||||
| Cancelled* | ( |
) | $ | |||
| Balance at September 30, 2021 | $ |
* On January 21, 2021, the Company cancelled
As at September 30, 2021, the options have a weighted average remaining life of
The following table summarizes the stock options issued and outstanding:
| Options Outstanding and Exercisable | ||||||||||||
| Expiry Date |
Number of options |
Exercisable |
Exercise price |
Remaining life (Years) |
||||||||
| September 21, 2024 | $ |
|
||||||||||
| July 23, 2025 | $ |
|
||||||||||
| November 17, 2025 | $ |
|
||||||||||
| April 28, 2026 | $ |
|
||||||||||
| June 15, 2026 | $ |
|
||||||||||
Restricted share unit plan
The Company's restricted share unit ("RSU") plan provides RSUs to be issued to directors, officers, employees and consultants of the Company, its subsidiaries and any personal holding company of such individuals so that they may participate in the growth and development of the Company. Subject to the specific provisions of the RSU plan, eligibility, vesting period, terms of the RSUs and the number of RSUs granted are to be determined by the Board of Directors at the time of the grant. The RSU plan allows the Board of Directors to issue common shares of the company as equity settled RSUs, provided that, when combined, the maximum number of common shares reserved for issuance under all share-based compensation arrangements of the Company does not exceed 10% of the Company's outstanding common shares.
On July 23, 2020 and September 18, 2020, the Company issued
The following table summarizes the movements in the Company's outstanding RSUs for the years ended September 30, 2021 and 2020:
| Equity settled | Cash settled | Total | |||||||
| Balance at September 30, 2019 and May 31, 2019 | |||||||||
| Granted | |||||||||
| Balance at September 30, 2020 | |||||||||
| Vested | ( |
) | ( |
) | |||||
| Balance at September 30, 2021 |
The estimated fair value of the equity settled RSUs granted during the year ended September 30, 2020 was $
|
15 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
The accounting fair value of the equity settled RSUs as at the grant date was estimated by management using the following inputs:
| Year ended September 30, 2020 |
|||
| Share price on grant date | $ | ||
| Forfeiture rate |
Share-based compensation expense recognized in the consolidated statements of comprehensive loss is comprised of the following:
| Year ended September 30, 2021 |
Year ended September 30, 2020 |
Period ended September 30, 2019 |
|||||||
| $ | $ | $ | |||||||
| Stock options | |||||||||
| Restricted share units - equity settled grants | |||||||||
| Total equity settled share-based compensation expense | |||||||||
| Restricted share units - cash settled grants | |||||||||
| Total share-based compensation expense |
Share-based compensation expense is included in the consolidated statements of comprehensive loss as follows:
| Year ended September 30, 2021 |
Year ended September 30, 2020 |
Period ended September 30, 2019 |
|||||||
| $ | $ | $ | |||||||
| Consulting fees | |||||||||
| Directors' compensation | |||||||||
| Marketing, advertising and investor relations | |||||||||
| Professional fees | |||||||||
| Research and development | |||||||||
| Total share-based compensation expense |
Warrants
The following table summarizes the movements in the Company's outstanding warrants for the years ended September 30, 2021 and 2020:
| Number of warrants | Weighted average exercise price |
|||||
| Balance at September 30, 2019 and May 31, 2019 | $ | |||||
| Issued | ||||||
| Balance at September 30, 2020 | ||||||
| Issued* | ||||||
| Issued - broker | ||||||
| Exercised | ( |
) | ||||
| Balance at September 30, 2021 | $ |
*On November 2, 2020, the Directors of the Company reduced the exercise price of the outstanding warrants from $
|
16 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
On March 17, 2021, the Company issued
As at September 30, 2021, the warrants have a weighted average remaining life of
The following table summarizes the warrants issued and outstanding:
| Warrants Outstanding | |||||||||
| Expiry Date | Number of warrants |
Exercise price |
Remaining life (Years) |
||||||
| July 30, 2024 (1) | $ |
|
|||||||
| March 17, 2024 | $ |
|
|||||||
| March 17, 2024 | $ |
|
|||||||
(1) On June 15, 2021, the Company entered into warrant exercise agreements with the two warrant holders, whereby the warrant holders authorized the Company to issue only such number of common shares (or other class of voting securities of the Company, if applicable) as will result in the warrant holders and any other person (as defined) holding less than the threshold number of
7. RELATED PARTY TRANSACTIONS
Related party transactions were recorded at the exchange value, which is the consideration determined and agreed to by the related parties. The Company's related parties include directors, key management and companies controlled by directors and key management.
Compensation of Key Management Personnel
Key management personnel are those persons that have authority and responsibility for planning, directing and controlling the activities of the Company, directly and indirectly, and by definition include the directors of the Company.
The following table summarizes expenses related to key management personnel:
| Year ended | Year ended | Period ended | |||||||
| September 30, 2021 |
September 30, 2020 |
September 30, 2019 |
|||||||
| $ | $ | $ | |||||||
| Professional fees | |||||||||
| Research and development | |||||||||
| Share-based compensation included in directors' compensation | |||||||||
| Share-based compensation included in professional fees | |||||||||
| Share-based compensation included in research and development | |||||||||
See Note 8 for related party contractual obligations.
8. CONTRACTUAL OBLIGATIONS
Option agreement
On May 26, 2020, the Company entered into an option agreement (the "OA") with the University of Illinois at Chicago (the "UIC"), whereby the Company obtained the right to evaluate certain of the UIC's technology (as defined) for the purpose of making a decision as to whether to exclusively license the rights to the technology. Pursuant to the OA, the Company was granted an exclusive option to evaluate the technology and obtain an exclusive license to the patents and patent applications (as listed) and a non-exclusive right to use the technology for non-commercial research purposes. The Company paid US$
|
17 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
License agreement
On April 23, 2021, the Company entered into an exclusive license agreement with equity (the "LA") with the Board of Trustees of the UIC (the "University") whereby the University granted to the Company, in all fields of use and worldwide, an exclusive, non-transferable license with the right to sublicense under the University's rights in and to the Patent Rights (as defined) and a non-exclusive, non-transferable license with the right to sublicense under the University's rights in and to the Technical Information (as defined) to make, have made, construct, have constructed, use, import, sell, and offer for sale royalty-bearing Product (as defined). As consideration for the grant of license, the Company will pay the following amounts (in US$) to the University:
| • |
Signing Fee - a signing fee of $ |
|
| • |
Net Sales - royalties on Net Sales (as defined) ranging from |
|
| • |
Sublicensee Revenues - royalties (as for net sales above) on Sublicensee Revenue (as defined), with such |
|
| • |
Annual Minimums - if the total royalties paid to the University for any license year are less than the following annual minimums, the Company must pay the University the amount equal to the shortfall: |
|
| o |
Years 1 and 2 - $; |
||
|
o |
Year 3 - $ |
||
| o |
Year 4 - $ |
||
|
o |
Year 5 - $ |
||
| o |
Year 6 and thereafter - $ |
||
|
o |
After first commercial sale - $ |
||
| • |
Milestone Payments - milestone payments after the occurrence of the following milestone events: |
|
|
Prior to any sublicensing agreements, joint ventures or change of control: |
|
o |
$ |
||
|
o |
$ |
||
|
o |
$ |
||
|
o |
$ |
|
After any sublicensing agreements, joint ventures or change of control: |
|
o |
As above; |
||
|
o |
$ |
||
|
o |
$ |
||
|
o |
$ |
Unless otherwise agreed to in writing by the University, the Company will reimburse the University for all documented costs and expenses in connection with the Patent Rights, including the preparation, filing, prosecution, maintenance and defense thereof. From time to time, the anticipated costs and expenses may be significant and, upon request, the Company will pay the estimated costs and expenses in advance of such costs and expenses being incurred by the University.
|
18 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
The term of the LA ends on the later of the last to expire of the Patent Rights, expiration of regulatory exclusivity for Product or when the Company provides notice that use of Technical Information has ceased. The University has the right to terminate the LA if the Company fails to make any required payments or is in breach of any provision of the LA. The Company may terminate the LA at any time upon providing at least 90 days written notice to the University.
Related party contracts
On June 5, 2020, the Company entered into an independent consultant agreement (the "ICA") whereby the consultant, a private corporation incorporated in the State of California, USA, was engaged and the consultant's representative will serve as the Company's Chief Medical Officer, with the services being provided in California. As compensation for performing these services, the consultant or the consultant's representative will participate in the Company's equity incentive plans and will be eligible for cash payments in respect of fees at such time as the Company begins to compensate other C-level personnel in cash and in similar proportion to total compensation (the "fees"). The non-cash portion of the consultant's fees for the first year of the term was in the form of a grant of
On October 29, 2020, the Company entered into an independent contractor agreement (the "ICA") whereby the contractor was engaged to serve as the Company's Chief Science Officer on an as-needed basis. The contractor will be compensated for these services as determined by the Board of Directors of the Company. The services will continue for an initial term of one year unless sooner terminated. The ICA can be terminated by the Company providing five working days written notice, the contractor providing three months' written notice or by mutual written agreement. At the end of the initial term, the ICA will automatically be extended for additional one-year period(s) unless the Company provides the contractor with 30 days written notice. In March 2021, the Board of Directors authorized a monthly fee of US$
Scientific advisory board agreements
On June 1, 2020, July 14, 2020 and April 12, 2021, the Company entered into scientific advisory board agreements (the "SABAs") whereby the advisors were retained to serve as members of the Company's scientific advisory board and as consultants to the Company and senior management in the areas of scientific, technical and business advice. As compensation for performing these services, the Company will pay the advisors hourly rates of $
Consulting agreements
The Company has entered into numerous consulting agreements (the "CAs") whereby the consultants were retained to serve as advisors to the Company and senior management in the areas of public relations and content creation and scientific, technical and business advice. As compensation for performing these services, the Company will pay the advisors hourly rates between US$
On October 9, 2020, the Company entered into a consulting agreement whereby the consultant was retained to serve as an advisor to the Company in the areas of scientific, technical and business advice. As compensation for performing these services, the Company will pay the advisor an hourly rate of US$
|
19 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
On November 6, 2020, the Company entered into a sponsored research agreement (the "SRA") with the University of Texas Medical Branch (the "UTMB") whereby the UTMB conducted a research program on behalf of the Company. Pursuant to the SRA, the agreement is effective as of October 15, 2020 and the research program was carried out through to its conclusion on February 15, 2021. As consideration for UTMB's performance, the Company paid US$
On November 17, 2020, the Company entered into an ICA whereby the contractor was engaged to serve as the Company's Vice President (Discovery). The contractor will be compensated for these services as determined by the Board of Directors of the Company. The services will continue for an initial term of one year unless sooner terminated. The ICA can be terminated by the Company providing five working days written notice, the contractor providing three months' written notice or by mutual written agreement. At the end of the initial term, the ICA will automatically be extended for additional one-year period(s) unless the Company provides the contractor with 30 days written notice. In March 2021, the Board of Directors authorized a monthly fee of US$
9. FINANCIAL INSTRUMENTS AND CAPITAL MANAGEMENT
The following table summarizes the carrying value of financial assets and liabilities:
| September 30, 2021 |
September 30, 2020 |
|||||
| FVTPL | $ | $ | ||||
| Cash | ||||||
| Guaranteed investment certificate | ||||||
| Cash and cash equivalents | ||||||
| Amortized cost | ||||||
| Accounts payable and accrued liabilities |
Fair value measurement
Financial assets and liabilities that are recognized on the statement of financial position at fair value can be classified in a hierarchy that is based on the significance of the inputs used in making the measurements.
The levels in the hierarchy are:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and
Level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
The Company's cash and cash equivalents is classified as Level 1, whereas accounts payable and accrued liabilities are classified as Level 2. As at September 30, 2021, the Company believes that the carrying values of cash and cash equivalents and accounts payable and accrued liabilities approximate their fair values because of their nature and relatively short maturity dates or durations.
Financial risk management
The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes. The type of risk exposure and the way in which such exposure is managed is provided as follows:
Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company's primary exposure to credit risk is on its cash and cash equivalents balance. As at September 30, 2021, the Company had cash and cash equivalents of $
|
20 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
Foreign exchange risk
Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. As at September 30, 2021, the Company had the following foreign currency balances - cash (US$
Liquidity risk
Liquidity risk arises through the excess of financial obligations over available financial assets due at any point in time. The Company's objective in managing liquidity risk is to maintain sufficient readily available reserves in order to meet its liquidity requirements at any point in time. The Company's main source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company's access to financing is always uncertain. There can be no assurance of continued access to significant equity funding. As at September 30, 2021, the Company had cash and cash equivalents of $
Capital management
Management's objective is to manage its capital to ensure that there are adequate capital resources to safeguard the Company's ability to continue as a going concern through the optimization of its capital structure. The capital structure consists of share capital and working capital. In order to achieve this objective, management makes adjustments to it in light of changes in economic conditions and risk characteristics of the underlying assets. To maintain or adjust the capital structure, management may invest its excess cash in interest bearing accounts of Canadian chartered banks and/or raise additional funds externally as needed. The Company is not subject to externally imposed capital requirements. The Company's management of capital did not change during the year ended September 30, 2021.
10. RESEARCH AND DEVELOPMENT
Research and development expense recognized in the consolidated statements of comprehensive loss is comprised of the following:
|
|
Year ended |
Year ended |
Period ended |
|
|
September 30, 2021 |
September 30, 2020 |
September 30, |
|
|
$ |
$ |
$ |
|
Laboratory costs (see Note 11) |
|
|
|
|
Novel drug development |
|
|
|
|
Patents and related payments |
|
|
|
|
Salary and subcontractors |
|
|
|
|
Share-based compensation (see Note 6) |
|
|
|
|
|
|
|
|
11. PREMISES LEASES
Commencing June 1, 2021, the Company entered into a commercial laboratory lease in Wauwatosa, Wisconsin USA for a term of
Commencing September 1, 2021, the Company entered into an apartment lease in New York, New York USA for a term of
12. INCOME TAXES
A reconciliation of the expected income tax recovery to the actual income tax recovery is as follows:
|
21 | Page |
|
Bright Minds Biosciences Inc. Notes to the Consolidated Financial Statements For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019 (Expressed in Canadian Dollars) |
| September 30, 2021 |
September 30, 2020 |
September 30, 2019 |
|||||||
| $ | $ | $ | |||||||
| Net loss | ( |
) | ( |
) | ( |
) | |||
| Statutory tax rate | |||||||||
| Expected income tax recovery | ( |
) | ( |
) | ( |
) | |||
| Deductible and non-deductible items | ( |
) | |||||||
| Change in deferred tax assets not recognized | |||||||||
| Total income tax recovery |
The Company has the following deductible temporary differences for which no deferred tax has been recognized:
| September 30, 2021 |
September 30, 2020 |
|||||
| $ | $ | |||||
| Non-capital losses | ||||||
| Share issue costs | ||||||
| Intangible assets | ( |
) | ( |
) | ||
| Valuation allowance | ( |
) | ( |
) | ||
| Net deferred income tax assets |
The Company has Canadian non-capital losses of approximately $
The Company's Canadian non-capital loss carry-forwards expire as follows:
| Year of Origin | Year of Expiry | Non-Capital Losses | ||
| $ | ||||
| 2019 | ||||
| 2020 | ||||
| 2021 | ||||
13. COMPARATIVE AMOUNTS
Certain of the prior year's amounts have been reclassified to conform with the current year's presentation (see Note 10).
14. SUBSEQUENT EVENTS
Events not disclosed elsewhere in these consolidated financial statements are as follows:
On November 1, 2021, the Company entered into a letter agreement (the "LA") with a New York-based company, whereby the company will provide investor relations services to the Company. As compensation for performing these services, the Company will pay a non-refundable monthly retainer of US$
|
22 | Page |
|
Bright Minds Biosciences Inc.
Notes to the Consolidated Financial Statements
For the years ended September 30, 2021 and 2020 and the period from May 31, 2019 (date of incorporation) to September 30, 2019
(Expressed in Canadian Dollars)
|
|
• |
Indemnify and save harmless the Directors against and from: |
|
|
o |
any and all charges or claims by reason of them being or having been a director of the Company or another corporation, at a time when the other corporation is or was an affiliate of the Company, or at the request of the Company; |
|
|
o |
any and all costs, damages, expenses, fines, liabilities, losses and penalties (the "Consequences") which they may sustain, incur or be liable for in consequence of their acting as a director of the Company, whether sustained or incurred by reason of their negligence, default, breach of duty or trust, failure to exercise due diligence or otherwise in relation to the Company or any of its affairs; and |
|
|
o |
in particular, and without in any way limiting the generality of the foregoing, any and all Consequences which they may sustain, incur or be liable for as a result of or in connection with the release or presence in the environment of substances, contaminants, litter, waste, effluent, refuse, pollutants or deleterious materials and that arise out of or are in any way connected with the management, operation, activities or existence of the Company or by virtue of them holding any other directorship with any other entity at the Company's request. |
|
|
• |
gross up any indemnity payment made pursuant to the DIAs by the amount of any income tax payable by the Directors in respect of that payment; and |
|
|
• |
indemnify the Directors for the amount of all costs they incur in obtaining any Court approval required to enable or require the Company to make a payment to them under the DIAs, or enforce the DIAs against the Company, including without limitation legal fees and disbursements on a full indemnity basis. |
|
|
23 | Page |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Filed herewith.
|
|
+
|
Portions of this exhibit have been omitted pursuant to a request for confidential treatment. Confidential information has been omitted from the exhibit in places marked "****"and has been filed separately with the SEC.
|
|
(1)
|
Filed as an exhibit to our registration statement on Form 20-F as filed with the SEC on June 17, 2021 and incorporated herein by reference.
|
|
(2)
|
Filed as an exhibit to our registration statement on Form 20-F/A (Amendment No. 1) as filed with the SEC on July 29, 2021 and incorporated herein by reference.
|
| (3) | Previously filed. |
Bright Minds Biosciences Inc.
|
By:
|
/s/ Ian McDonald
|
|
|
|
Ian McDonald
|
|
|
|
President and Chief Executive Officer
|
|