Exhibit 99.2
NEUROSENSE THERAPEUTICS LTD.
CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
UNAUDITED
INDEX
NeuroSense Therapeutics Ltd.
Condensed Interim Unaudited Statements of Financial Position
U.S. dollars in thousands
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | ||||||||
| Short term deposits (*) | ||||||||
| Other receivables | ||||||||
| Restricted deposits | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Right of use assets | - | |||||||
| Non-current restricted deposit | - | |||||||
| Property, plant and equipment, net | ||||||||
| Total non-current assets | ||||||||
| Total assets | ||||||||
| Liabilities and Equity | ||||||||
| Current liabilities: | ||||||||
| Trade payables | ||||||||
| Other payables | ||||||||
| Total current liabilities | ||||||||
| Non Current liabilities: | ||||||||
| Long term lease liability | - | |||||||
| Liability in respect of warrants | ||||||||
| Total liabilities | ||||||||
| Shareholders’ equity: | ||||||||
| Ordinary shares | - | |||||||
| Share premium and capital reserve | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | ||||||||
(*)
Date of approval of the interim financial statements: August 30, 2022
| Alon Ben-Noon | Or Eisenberg | |||
| Chief Executive Officer | Chief Financial Officer | |||
The accompanying notes are an integral part of the condensed interim financial statements.
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NeuroSense Therapeutics Ltd.
Condensed Interim Unaudited Statements of Income and Comprehensive Loss
U.S. dollars in thousands except share and per share data
| Six months | Six months | For the year | ||||||||||||||
| ended | ended | ended | ||||||||||||||
| June 30, | June 30, | December 31, | ||||||||||||||
| Note | 2022 | 2021 | 2021 | |||||||||||||
| Research and development expenses | 7 | ( | ) | ( | ) | ( | ) | |||||||||
| General and administrative expenses | 8 | ( | ) | ( | ) | ( | ) | |||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ||||||||||
| Financing income | ||||||||||||||||
| Financing expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Financing income, net | ||||||||||||||||
| Net loss and comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||||||
| ( | ) | ( | ) | ( | ) | |||||||||||
The accompanying notes are an integral part of the condensed interim financial statements.
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NeuroSense Therapeutics Ltd.
Condensed Interim Unaudited Statements of Changes in Equity
U.S. dollars in thousands
| Ordinary | Share Premium And Capital |
Accumulated |
Total | |||||||||||||
| Shares | Reserve | deficit | Equity | |||||||||||||
| Six months ended June 30, 2022: | ||||||||||||||||
| Balance as of January 1, 2022 | ( | ) | ||||||||||||||
| Share-based compensation | - | |||||||||||||||
| Net loss and comprehensive loss | - | ( | ) | ( | ) | |||||||||||
| Cancelation of options | - | ( | ) | - | ( | ) | ||||||||||
| Exercise of warrants | - | - | ||||||||||||||
| Balance as of June 30, 2022 | ( | ) | ||||||||||||||
| Six months ended June 30, 2021: | ||||||||||||||||
| Balance as of January 1, 2021 | ( | ) | ||||||||||||||
| Share-based compensation | - | |||||||||||||||
| Net loss and comprehensive loss | - | ( | ) | ( | ) | |||||||||||
| Issuance of SAFE instruments | - | - | ||||||||||||||
| Balance as of June 30, 2021 | ( | ) | ||||||||||||||
| For the year ended December 31, 2021: | ||||||||||||||||
| Balance as of January 1, 2021 | ( | ) | ||||||||||||||
| Issuance of SAFE instruments | - | |||||||||||||||
| Exercise of warrants and options | - | |||||||||||||||
| Share-based compensation | - | |||||||||||||||
| Issuance of ordinary shares , net upon IPO | - | |||||||||||||||
| Net loss and comprehensive loss | - | ( | ) | ( | ) | |||||||||||
| Balance as of December 31, 2021 | ( | ) | ||||||||||||||
The accompanying notes are an integral part of the condensed interim financial statements.
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NeuroSense Therapeutics Ltd.
Condensed Interim Unaudited Statements of Cash Flows
U.S. dollars in thousands
| Six months | Six months | For the year | ||||||||||
| ended | ended | ended | ||||||||||
| June 30, | June 30, | December 31, | ||||||||||
| 2022 | 2021 | 2021 | ||||||||||
| Cash flows from operating activities | ||||||||||||
| Net loss for the period | ( | ) | ( | ) | ( | ) | ||||||
| Adjustments: | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Share-based compensation | ||||||||||||
| Revaluation of liability in respect to warrants | ( | ) | ( | ) | ||||||||
| Loss from disposal of property and equipment | ||||||||||||
| Finance expenses | ||||||||||||
| Changes in assets and liabilities: | ||||||||||||
| Decrease (increase) in other receivables | ( | ) | ( | ) | ||||||||
| Increase (decrease) in trade payables | ( | ) | ( | ) | ||||||||
| Increase (decrease) in other payables | ||||||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ||||||
| Cash flows from investing activities | ||||||||||||
| Investment in short term deposit, net | ( | ) | ||||||||||
| Investment in restricted deposit | ( | ) | ||||||||||
| Purchase of property, plant and equipment | ( | ) | ( | ) | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ||||||
| Cash flows from financing activities | ||||||||||||
| Proceeds from issuance of SAFE instruments | ||||||||||||
| Share based payment acquired | ( | ) | ||||||||||
| Exercise of warrants and options | ||||||||||||
| Proceeds from issuance of shares and warrants, net | ||||||||||||
| Repayment of lease liability | ( | ) | ||||||||||
| Net cash provided by financing activities | ||||||||||||
| Effects of exchange rate changes on cash and cash equivalents | ( | ) | ||||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||||||
| Cash at beginning of the period | ||||||||||||
| Cash at end of the period | ||||||||||||
| Non-cash activity | ||||||||||||
| Exercise of warrants | ||||||||||||
| Exercise of options | ||||||||||||
| Recognition of right of use assets | ||||||||||||
| (*) |
The accompanying notes are an integral part of the condensed interim financial statements.
5
NeuroSense Therapeutics Ltd.
Notes to the Condensed Interim Financial Statements as of June 30, 2022
Note 1 – General
| A. | NeuroSense Therapeutics Ltd. (“NeuroSense” or the “Company”) was incorporated in Israel on February 13, 2017. NeuroSense is a clinical-stage pharmaceutical company focused on discovering and developing treatments for patients suffering from debilitating neurodegenerative diseases. The Company’s lead product candidate, PrimeC, is a novel oral formulation of a fixed dose combination composed of a specific ratio and doses of two FDA-approved drugs. |
In addition to PrimeC, the Company has initiated research and development efforts in Alzheimer’s disease and Parkinson’s disease, with a similar strategy of combined products.
The Company’s ordinary shares and warrants began trading on the Nasdaq Capital Market on December 9, 2021 under the ticker symbols “NRSN” and “NRSNW,” respectively.
| B. | The Company currently has no products approved for sale and the Company’s operations have been funded primarily by its shareholders and initial public offering. To date, the Company has generated no sales or revenues, has incurred losses and expects to incur significant additional losses due to the continuing focus on the research, development, clinical activities of its product candidates, preclinical programs, business development, organizational structure and to advance the programs within the Company’s pipeline. Consequently, its operations are subject to all the risks inherent in the establishment of a pre-revenue business enterprise as well as those risks associated with a company engaged in the research and development of pharmaceutical compounds. The Company will require additional cash to fund the execution of its mid and long-term development program. The Company anticipates raising additional funds through public or private sales of debt or equity securities, collaborative arrangements, or some combination thereof. While management is progressing with its plans to secure external financing, there is no assurance that any such arrangement will be entered into or that financing will be available when needed in order to allow the Company to continue its operations, or if available, on terms favorable or acceptable to it. |
In the event financing is not obtained, the Company may pursue cost cutting measures or may be required to delay, reduce the scope of, or eliminate any of its development programs or clinical trials. These decisions could have a material adverse effect on the Company’s business. Based on its current expected level of operating expenditures, the Company believes that its cash resources as of June 30, 2022 will be sufficient to continue the development of the Company’s product through the end of the third quarter of 2023.
Note 2 – Basis of Preparation
| A. | Statement of compliance |
These condensed interim financial statements have been prepared in accordance with International Accounting Standards (“IAS”) 34 “Interim Financial Reporting”. The condensed interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the Company’s financial statements for the year ended December 31, 2021 (the “annual financial statements”).
These condensed interim financial statements were authorized for issuance by the Company’s Board of Directors on August 30, 2022.
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NeuroSense Therapeutics Ltd.
Notes to the Condensed Interim Financial Statements as of June 30, 2022
Note 2 – Basis of Preparation (Cont.)
| B. | Use of estimates and judgments |
The preparation of interim financial statements in accordance to IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual financial statements.
Note 3 - Significant Accounting Policies
The accounting policies applied by the Company in these condensed interim financial statements are the same as those applied by the Company in its annual financial statements except the following:
IFRS 16, Leases
During the reporting period, International Financial Reporting Standard 16, Leases (hereinafter: “IFRS 16” or “the standard”) become applicable to the Company’s financial statements.
In accordance with IFRS 16, the Company recognizes a right-of-use asset and a lease liability at the commencement of the lease contract for all the leases in which the Company has a right to control identified assets for a specified period of time, other than exceptions specified in the standard. Accordingly, the Company recognizes depreciation and amortization expenses in respect of a right-of-use asset, tests a right-of-use asset for impairment in accordance with IAS 36 and recognizes financing expenses on a lease liability. Therefore, as from the date of January 1, 2022, lease payments relating to assets leased under an operating lease, which were presented as part of general and administrative expenses in the income statement, are capitalized to assets and written down as depreciation and amortization expenses.
On January 1, 2022, the Company
recognized a liability at the present value of the balance of future lease payments discounted at its incremental borrowing rate at
that date calculated according to the average duration of the remaining lease period as from the date of initial application which
was
Furthermore, as part of the initial application of the standard, the Company has chosen to apply the following expedients:
Applying the practical expedient regarding the recognition and measurement of short-term leases, for both leases that end within 12 months from the date of initial application and leases for a period of up to 12 months from the date of their commencement for all groups of underlying assets to which the right-of-use relates.
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NeuroSense Therapeutics Ltd.
Notes to the Condensed Interim Financial Statements as of June 30, 2022
Note 3 - Significant Accounting Policies (cont’d)
Presented hereunder are the main changes in accounting policies following the application of IFRS 16 as from January 1, 2022:
Contracts that award the Company control over the use of a leased asset for a period of time in exchange for consideration, are accounted for as leases. Upon initial recognition, the Company recognizes a liability at the present value of the balance of future lease payments, and concurrently recognizes a right-of-use asset at the same amount of the lease liability, adjusted for any prepaid or accrued lease payments, plus initial direct costs incurred in respect of the lease.
Subsequent to initial recognition, the right-of-use asset is accounted for using the cost model, and depreciated over the shorter of the lease term or useful life of the asset, which is 4 years.
The lease term
The lease term is the non-cancellable period of the lease plus periods covered by an extension or termination option if it is reasonably certain that the lessee will or will not exercise the option, respectively.
Variable lease payments
Variable lease payments that depend on an index or a rate are initially measured using the index or rate existing at the commencement of the lease and are included in the measurement of the lease liability. When the cash flows of future lease payments change as the result of a change in an index or a rate, the balance of the liability is adjusted against the right-of-use asset.
Other variable lease payments that are not included in the measurement of the lease liability are recognized in profit or loss in the period in which the event or condition that triggers payment occurs.
Note 4 - Liability in Respect of Warrants
The fair value of the liability in respect to the warrants at June 30, 2022 and December 31, 2021 was determined according to the warrant price at the stock market (fair value measurement at level 1).
The Company’s financial liabilities measured at fair value on a recurring basis, consisted of the following types of instruments as of the following dates:
| June 30, 2022 | ||||||||||||||||
| Description | Fair value | Level 1 | Level 2 | Level 3 | ||||||||||||
| Liability in respect of warrants | $ | $ | $ | $ | ||||||||||||
| December 31, 2021 | ||||||||||||||||
| Description | Fair value | Level 1 | Level 2 | Level 3 | ||||||||||||
| Liability in respect of warrants | $ | $ | $ | $ | ||||||||||||
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NeuroSense Therapeutics Ltd.
Notes to the Condensed Interim Financial Statements as of June 30, 2022
Note 5 – Lease
In December 2021, the Company entered
into an office space lease agreement, which commenced on January 1, 2022. Monthly rent payments including utilities amount to approximately
Right-of-use-assets
Carrying amounts of right-of-use assets and movement during the period:
| June 30, 2022 | ||||
| Balance as of January 1, 2022 | ||||
| Initial recognition | ||||
| Depreciation on right-of-use-assets | ( | ) | ||
| Balance as of June 30, 2022 | ||||
Lease liability
Maturity analysis of the Company’s lease liabilities
| June 30, 2022 | ||||
| Less than one year | ||||
| One to four years | ||||
| Total | ||||
| Current maturities of lease liability | ( | ) | ||
| Long-term lease liability | ||||
Additional information on leases
The following is a summary of weighted average remaining lease terms and discount rate for Company’s leases:
| June 30, 2022 | ||||
| Lease term (years) | ||||
| Weighted average discount rate | % | |||
The following are the amounts recognized in profit or loss:
| June 30, 2022 | ||||
| Interest expenses on lease liability | ||||
| Amortization of right-of-use-assets | ||||
| Total | ||||
9
NeuroSense Therapeutics Ltd.
Notes to the Condensed Interim Financial Statements as of June 30, 2022
Note 5 – Lease (Cont.)
Presented hereunder are the lease payments the Company paid in respect of these leases in the six months ended June 30, 2022:
| Fixed payments | Total payments | |||||||
| Lease payments | $ | |||||||
Amounts recognized in the statement of cash flows
| Six months ended June 30, 2022 | Six months ended June 30, 2021 | For the year ended December 31, 2021 | ||||||||||
| Cash flows for leases | $ | |||||||||||
Note 6 – Shareholders’ Equity
On January 10 and
January 11, 2022, the Company entered into option settlement agreement (“Agreements”) with certain consultants of the Company.
Pursuant to the Agreements, the Company exchanged
On January 25, 2022 and March 10, 2022,
the Company’s board of directors and shareholders, respectively, approved the compensation of each of the Company’s external directors
and a newly appointed director.
On January 25, 2022, the Company’s
board of directors approved the grant of aggregate amount of
In March 2022, the Company’s board
of directors approved the grant of an aggregate amount of
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NeuroSense Therapeutics Ltd.
Notes to the Condensed Interim Financial Statements as of June 30, 2022
Note 6 – Shareholders’ Equity (Cont.)
The following table lists the inputs used for calculation of fair value of the options granted to employees and directors during the reporting period, at the date of grant:
| Grant date | |||||
| Expected volatility | |||||
| Exercise price | |||||
| Share price | |||||
| Risk-free interest rate | |||||
| Dividend yield | |||||
| Expected life | |||||
The share-based expense recognized in the statements of income were as follows:
| Six months | Six months | For the year | ||||||||||
| ended | ended | ended | ||||||||||
| June 30, | June 30, | December 31, | ||||||||||
| 2022 | 2021 | 2021 | ||||||||||
| Share-based compensation expense – Research and development | ||||||||||||
| Share-based compensation expense – General and administrative | ||||||||||||
| Share-based compensation expense – Finance expenses | ||||||||||||
In March 2022, the
Company received an amount of $
Note 7 – Research and development expenses
| Six months | Six months | For the year | ||||||||||
| ended | ended | ended | ||||||||||
| June 30, | June 30, | December 31, | ||||||||||
| 2022 | 2021 | 2021 | ||||||||||
| Subcontractors and consultants | ||||||||||||
| Share-based compensation | ||||||||||||
| Salaries and social benefits | ||||||||||||
| Others | - | |||||||||||
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NeuroSense Therapeutics Ltd.
Notes to the Condensed Interim Financial Statements as of June 30, 2022
Note 8 – General and administrative expenses
| Six months | Six months | For the year | ||||||||||
| ended | ended | ended | ||||||||||
| June 30, | June 30, | December 31, | ||||||||||
| 2022 | 2021 | 2021 | ||||||||||
| Professional services | ||||||||||||
| Share-based compensation | ||||||||||||
| Salaries and social benefits | ||||||||||||
| Insurance | ||||||||||||
| Traveling abroad | ||||||||||||
| Others | ||||||||||||
Note 9 – Subsequent Events
On August 30, 2022, the Company’s board of directors approved an amendment to the Company’s 2018 Employee Share Option Plan (the “Amendment”). Among other things, the Amendment provides the ability to grant additional equity instruments (as opposed to just options).
On August 30, 2022, the Company’s
board of directors approved the grant of aggregate amount of
12