Exhibit 99.1
FEMTO TECHNOLOGIES INC.
(FORMERLY BYND CANNASOFT ENTERPRISES INC.)
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR NINE MONTHS ENDED SEPTEMBER 30, 2024
(EXPRESSED IN CANADIAN DOLLARS)
(UNAUDITED)
| - 1 - |
NOTICE TO READER
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the condensed consolidated interim financial statements have not been reviewed by an auditor.
The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management.
The Company’s independent auditors have not audited, reviewed or otherwise attempted to verify the accuracy or completeness of these condensed consolidated interim financial statements. Readers are cautioned that these statements may not be appropriate for their intended purposes.
November 13, 2024
| - 2 - |
FEMTO TECHNOLOGIES INC.
Consolidated Interim Statements of the Financial Position
(Expressed in Canadian dollars)
(Unaudited)
| As at | Notes | September 30, 2024 | December 31, 2023 | |||||||
| Assets | ||||||||||
| Cash | $ | $ | ||||||||
| Accounts receivables | 5 | |||||||||
| Prepaid expenses | ||||||||||
| Total Current Assets | ||||||||||
| Intangible assets | 6 | |||||||||
| Property and equipment | 7 | |||||||||
| Total Assets | $ | $ | ||||||||
| Liabilities and Shareholders’ Equity | ||||||||||
| Liabilities | ||||||||||
| Trade payables and accrued liabilities | 8 | $ | $ | |||||||
| Related Parties | 9 | |||||||||
| Deferred revenue | 14 | |||||||||
| Long term loan – current portion | 10 | |||||||||
| Total Current Liabilities | ||||||||||
| Long term loan | 10 | |||||||||
| Derivative warrants liabilities | 11 | |||||||||
| Liabilities for employee benefits | 12 | |||||||||
| Total Liabilities | $ | $ | ||||||||
| Shareholders’ equity | ||||||||||
| Share capital | 13 | $ | $ | |||||||
| Shares to be issued | ||||||||||
| Share-based payment reserve | ||||||||||
| Translation differences reserve | ( | ) | ( | ) | ||||||
| Capital reserve for re-measurement of defined benefit plan | 12 | |||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||||
| Total Shareholders’ equity | $ | $ | ||||||||
| Total Liabilities and Shareholders’ Equity | $ | $ | ||||||||
Nature of operations and going concern (Note 1)
These condensed consolidated interim financial statements were approved for issue by the Board of Directors on November 12, 2024 and signed on its behalf by:
| “Yftah Ben Yaackov” | “Gabi Kabazo” | |
| Director | Director |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| - 3 - |
FEMTO TECHNOLOGIES INC.
Consolidated Interim Statements of Income (Loss) and Comprehensive Income (Loss)
(Expressed in Canadian dollars)
(Unaudited)
| Notes | 2024 | 2023 | 2024 | 2023 | ||||||||||||||
| Three months ended September 30 | Nine months ended September 30 | |||||||||||||||||
| For the | Notes | 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | 14 | $ | $ | $ | $ | |||||||||||||
| Cost of revenue | 7,15 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Gross profit (loss) | ( | ) | ||||||||||||||||
| Consulting and marketing | ||||||||||||||||||
| Research and development | ||||||||||||||||||
| Depreciation and amortization | 7 | |||||||||||||||||
| Share-based compensation | ||||||||||||||||||
| General and admin expenses | ||||||||||||||||||
| Professional fees | ||||||||||||||||||
| Loss before other income (expense) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Other income (expense) | ||||||||||||||||||
| Change in fair value of derivative warrants liabilities | 11 | ( | ) | |||||||||||||||
| Impairments | ( | ) | ( | ) | ||||||||||||||
| Foreign exchange gain (loss) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Finance income (expenses), net | ( | ) | ( | ) | ( | ) | ||||||||||||
| ( | ) | ( | ) | ( | ) | |||||||||||||
| Loss before tax | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Tax recovery (expense) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Loss for the period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Other comprehensive income (loss) | ||||||||||||||||||
| Items that may be reclassified to profit or loss | ||||||||||||||||||
| Remeasurement of a defined benefit plan, net | ||||||||||||||||||
| Exchange differences on translation of foreign operations | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||
| Other comprehensive income (loss) for the period | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Loss per share – basic and diluted* | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||||
| Weighted average shares outstanding – basic and diluted | ||||||||||||||||||
| * |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| - 4 - |
FEMTO TECHNOLOGIES INC.
Consolidated Interim Statements of Changes in Shareholders’ Equity
(Expressed in Canadian dollars)
(Unaudited)
| Number of shares* | Share capital | Shares to be issued | Share purchase warrants reserve | Translation differences reserve | Share-based payment reserve | Capital reserve for re-measurement of defined benefit plan | Retained earnings (Deficiency) | Total | ||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Balance at January 1, 2023 | ( | ) | ||||||||||||||||||||||||||||||||||
| Shares issued, net | ||||||||||||||||||||||||||||||||||||
| Loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Shares issued for services | ( | ) | ||||||||||||||||||||||||||||||||||
| Share-based payments | - | |||||||||||||||||||||||||||||||||||
| Shares to be issued for services | - | |||||||||||||||||||||||||||||||||||
| Other comprehensive loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance at September 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance at January 1, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Cancellation of stock options | - | ( | ) | |||||||||||||||||||||||||||||||||
| Loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Shares issued for services | ( | ) | ||||||||||||||||||||||||||||||||||
| Shares, pre-funded warrants and warrants issued for cash, net | ||||||||||||||||||||||||||||||||||||
| Allocation to derivative warrants liabilities | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Shares issued pursuant to a Settlement Agreement | ||||||||||||||||||||||||||||||||||||
| Enhanced voting preference shares issued | ||||||||||||||||||||||||||||||||||||
| Other comprehensive loss for the period | - | |||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| - 5 - |
FEMTO TECHNOLOGIES INC.
Consolidated Interim Statements of Cash Flows
For the nine months ended September 30, 2024 and 2023
(Expressed in Canadian dollars)
(Unaudited)
| As at | September 30, 2024 | September 30, 2023 | ||||||
| Operating activities: | ||||||||
| Loss for the period | $ | ( | ) | $ | ( | ) | ||
| Items not involving cash: | ||||||||
| Finance expense | ||||||||
| Impairments | ||||||||
| Share-based compensation | ||||||||
| Depreciation | ||||||||
| Change in benefits to employees | ( | ) | ||||||
| Change in fair value of derivative warrants liabilities | ||||||||
| Shares issued for services | ||||||||
| Shares issued pursuant to a settlement agreement | ||||||||
| Unrealized foreign exchange loss (gain) | ( | ) | ||||||
| Changes in non-cash working capital items: | ||||||||
| Accounts receivables | ( | ) | ||||||
| Trade payables and accrued liabilities | ||||||||
| Deferred revenue | ( | ) | ( | ) | ||||
| Prepaid expenses | ( | ) | ||||||
| Related parties | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Investment in intangible assets | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Financing activities: | ||||||||
| Proceeds from public offering, net | ||||||||
| Proceeds from issuance of enhanced voting preference shares | ||||||||
| Repayment of from long term loan | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Net Increase (Decrease) in cash | $ | $ | ( | ) | ||||
| Effect of foreign exchange rate changes | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid during the year for interest | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| - 6 - |
FEMTO TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2024
(Expressed in Canadian dollars)
(Unaudited)
NOTE 1 – NATURE OF OPERATIONS AND GOING CONCERN
Femto Technologies Inc. (formerly known as BYND Cannasoft Enterprises Inc.) (the “Company” or “Femto”) is a Canadian company which was amalgamated under the Business Corporations Act (British Columbia) on March 29, 2021. The Company’s registered address is 2264 East 11th Avenue, Vancouver, Canada.
The Company currently operates only in Israel and through its subsidiaries (i) develops, markets and sells a proprietary client relationship management software known as “Benefit CRM” and its new Cannabis CRM platform, and (ii) is developing the Sensera device (formerly the EZ-G device), a unique, patent pending device that, combined with proprietary software (provisional application), regulates the flow of low-concentration CBD oils into the soft tissues of the female sexual organs, and (iii) manages the construction, licensing and operation of a cannabis farm and indoor cannabis growing facility.
On March 29, 2021, the Company completed the business combination transactions with BYND – Beyond Solutions Ltd. (“BYND”). As a result of the business combination transactions, BYND became a wholly owned subsidiary of the Company. This transaction is accounted for as a reverse asset acquisition of the Company by BYND (“RTO”).
On March 29, 2021, BYND completed the share exchange agreement with B.Y.B.Y. As a result of the share exchange agreement, BYND holds % ownership interest in B.Y.B.Y. One of the former shareholders holds the remaining 26% ownership interest in B.Y.B.Y. in trust for BYND, for the purpose to comply with Israeli Cannabis Laws regarding the ownership of medical cannabis license rights This transaction was accounted for as asset acquisition according to IFRS 2 Share-based Payment.
On September 22, 2022, the Company and the former shareholder of Zigi Carmel Initiatives and Investments Ltd. (“ZC”) entered into a share exchange agreement, whereby the Company would acquire % ownership interest in ZC from the former shareholder in exchange for subordinate voting shares ( subordinate voting shares post reverse splits) of the Company. The share exchange agreement was executed and fully completed on September 22, 2022.
As of March 14, 2024, the Company’s subordinate voting shares no longer were listed on the Canadian Securities Exchange following a voluntary delisting.
On July 22, 2024, the Company’s name has been changed to Femto Technologies Inc.
Reverse stock splits
On
March 15, 2024, the Company announced a
On
August 16, 2024, the Company announced a
All shares, stock options, share purchase warrants, RSU’s and per share information in these consolidated financial statements have been restated to reflect the reverse stock splits on a retroactive basis.
| - 7 - |
FEMTO TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2024
(Expressed in Canadian dollars)
(Unaudited)
NOTE 1 – NATURE OF OPERATIONS AND GOING CONCERN (continued)
War in Israel
On October 7, 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Following the attack, Israel’s government declared war against Hamas.
Other terrorist organizations such as the Hezbollah in Lebanon on Israel’s northern border have launched rocket attacks on Israel in support of Hamas. The military campaign against Hamas and other terrorist organizations is ongoing and could escalate in the future into a larger regional conflict. There is no certainty as to the duration, severity, results or implications of the war on the State of Israel generally or on the Company.
While many of Israeli civilians were draft to reserve duty, the company’s headquarter activity located in Israel remain unharmed. With regards to company’s source of income, during the first month of the war, a few credit card companies reported on a sharp decrease in transactions in Israel. Despite that, the company has not experienced any material impact on its revenues, mainly due the fact that most of the company’s revenue is generated from large institutions.
As of the date of these financial statements, the end of the war is unknown.
These condensed interim consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. These financial statements do not reflect the adjustments to the carrying values of assets and liabilities, the reported revenues and expenses, and the statement of financial position classifications used, that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES AND JUDGMENTS
a. Basis of presentation and statement of compliance
These condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Issues Committee (“IFRIC”) applicable to the preparation of interim financial statements, including International Accounting Standard (“IAS”) 34 Interim Financial Reporting.
The notes presented in these condensed consolidated interim financial statements include only significant events and transactions occurring since the Company’s last fiscal year end and they do not include all of the information required in the Company’s most recent annual consolidated financial statements. Except as noted below, these condensed consolidated interim financial statements follow the same accounting policies and methods of application as the Company’s annual financial statements and should be read in conjunction with the Company’s annual financial statements for the year ended December 31, 2023, which were prepared in accordance with IFRS as issued by IASB. There have been no significant changes in judgement or estimates from those disclosed in the consolidated financial statements for the year ended December 31, 2023.
| - 8 - |
FEMTO TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2024
(Expressed in Canadian dollars)
(Unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES AND JUDGMENTS (continued)
b. Basis of Consolidation
The condensed consolidated interim financial statements incorporate the financial statements of the Company and of its wholly owned subsidiaries, BYND, Zigi Carmel and B.Y.B.Y.. B.Y.B.Y is owned directly through BYND and % of the shares of B.Y.B.Y. are held by a
a related party in trust for the Company for the purpose to comply with Israeli Cannabis Laws regarding the ownership of medical cannabis license rights.
A subsidiary is an entity over which the Company has control, directly or indirectly, where control is defined as the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. A subsidiary is consolidated from the date upon which control is acquired by the Company and all intercompany transactions and balances have been eliminated on consolidation.
c. Basis of Measurement
The condensed consolidated interim financial statements were prepared based on the historical costs, except for financial instruments classified as fair value through profit and loss (“FVTPL”) and assets or liabilities for employee benefits, which are stated at their fair value. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
d. Currency of Operation and Currency of Presentation
The condensed consolidated interim financial statements are presented in Canadian dollars. The functional currency of the Company is Canadian dollars, and the functional currency of its subsidiaries is the New Israeli Shekel (“NIS”). NIS represents the main economic environment in which the subsidiaries operate.
e. Significant estimates and assumptions
The preparation of these condensed consolidated interim financial statements in accordance with IFRS requires the Company to use judgment in applying its accounting policies and make estimates and assumptions about reported amounts at the date of the financial statements and in the future. The Company’s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised.
Income taxes
Provisions for income taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these income tax provisions at the end of each reporting period. However, it is possible that at some future date an additional liability could result from audits by tax authorities. Where the final outcome of these tax-related matters is different from the amounts that were initially recorded, such differences will affect the tax provisions in the period in which such determination is made. Deferred tax assets are recognized when it is determined that the company is likely to recognize their recovery from the generation of taxable income.
| - 9 - |
FEMTO TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2024
(Expressed in Canadian dollars)
(Unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES AND JUDGMENTS (continued)
| e. | Significant estimates and assumptions (continued) |
Useful lives of property and equipment
Estimates of the useful lives of property and equipment are based on the period over which the assets are expected to be available for use. The estimated useful lives are reviewed annually and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence, and legal or other limits on the use of the relevant assets. In addition, the estimation of the useful lives of the relevant assets may be based on internal technical evaluation and experience with similar assets. It is possible, however, that future results of operations could be materially affected by changes in the estimates brought about by changes in the factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of the equipment would increase the recorded expenses and decrease the non-current assets.
Other Significant Judgments
The preparation of financial statements in accordance with IFRS requires the Company to make judgments, apart from those involving estimates, in applying accounting policies. The most significant judgments in applying the Company’s financial statements include:
| ● | the assessment of the Company’s ability to continue as a going concern and whether there are events or conditions that may give rise to significant uncertainty; | |
| ● | the classification of financial instruments; | |
| ● | the assessment of revenue recognition using the five-step approach under IFRS 15 and the collectability of amounts receivable; and | |
| ● | the determination of the functional currency of the company. |
NOTE 3 – RESTATEMENT OF PREVIOUSLY ISSUED FINANCIALS STATEMENT
As a result of the findings based on the Company’s ongoing reviews, the Company, in consultation with the Board of Directors, determined that the previously issued Consolidated Balance Sheet presented in the 20-F filed on April 27, 2023, for the year ended December 31, 2022 had a clerical error in relation to software development costs that should be part of intangible assets and not included in capital work in progress, and they would make the necessary accounting corrections and restate such financial statement.
This
error correction resulted in a decrease to property and equipment of $
| - 10 - |
FEMTO TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2024
(Expressed in Canadian dollars)
(Unaudited)
NOTE 4 – ACQUISITIONS
Acquisition of Zigi Carmel
On September 22, 2022, the Company and the former shareholder of Zigi Carmel Initiatives and Investments Ltd. (“ZC”) entered into a share exchange agreement, whereby the Company would acquire % ownership interest in ZC from the former shareholder in exchange for subordinate voting shares ( subordinate voting shares post reverse splits) of BYND. The share exchange agreement was executed and fully completed on September 22, 2022.
The acquisition of ZC has been accounted for as asset acquisition according to IFRS 2 Share-based Payment as the acquired assets and liabilities do not constitute a business under IFRS 3 Business Combinations. The transaction price of the acquisition was measured according to the fair value of the subordinate voting shares given in consideration for the assets and liabilities assumed from the acquisition, with equity increased by the corresponding amount equal to the total fair value of the subordinate voting shares given. As a result, the acquisition was recorded with the consideration as detailed in the table below:
| Consideration transferred: | $ | |||
| Value allocated to shares issued shares ( shares post reverse splits) at $ per share | ||||
| Fair value of assets and liabilities acquired: | ||||
| Investments | ||||
| Intangible asset – patents pending | ||||
| Shareholder loan | ( | ) | ||
The intangible asset acquired in the acquisition of ZC is attributed to 2 patents pending for a therapeutic device (the “Sensera” device) owned by ZC. The company has determined that the patents pending shall not be amortized until they are approved and then will be amortized over the course of their life.
NOTE 5 – ACCOUNTS RECEIVABLES
September 30, 2024 | December 31, 2023 | |||||||
| Trade receivables | $ | $ | ||||||
| Income tax advances | ||||||||
| Interest receivable | ||||||||
| Due from shareholders | ||||||||
| $ | $ | |||||||
| - 11 - |
FEMTO TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2024
(Expressed in Canadian dollars)
(Unaudited)
NOTE 6 – INTANGIBLE ASSETS
The Company’s intangible assets relate to the proprietary Cannabis CRM software the Company is Developing, Patent applications for the Sensera device (Note 4) as well as the primary growing license for medical cannabis in Israel. The Additions for the Software include cost of wages of the software developers for the time they spend on developing the Cannabis CRM software.
The
additions for the Patents include the fair value attributed to the Patents upon the acquisition of ZC as well as transaction and other
costs in the amount of $
The Company considered indicators of impairment at December 31, 2023 and at September 30, 2024. The Company recorded impairment loss during the year ended December 31, 2023 for the license, the software and the patent applications. The Company recorded impairment loss during the period ended September 30, 2024 for the patent applications. The impairment for the software and the license was done mainly because of recent medical cannabis legislation changes in Israel that have materially affected the value of these assets.
The impairment for the Patent applications was done because of updated forecasts for the revenue the Company anticipates generating from these patent applications.
| Cost | Software* | License | Patent applications and technological know how | Total | ||||||||||||
| Balance, January 1, 2023 | $ | $ | $ | $ | ||||||||||||
| Additions | ||||||||||||||||
| Impairments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Translation differences | ( | ) | ( | ) | ||||||||||||
| Balance, December 31, 2023 | ||||||||||||||||
| Additions | ||||||||||||||||
| Impairments | ( | ) | ||||||||||||||
| Translation differences | ( | ) | ||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | |||||||||||||
| Accumulated depreciation | ||||||||||||||||
| Balance, January 1, 2023 | $ | $ | $ | $ | ||||||||||||
| Depreciation | ||||||||||||||||
| Translation differences | ( | ) | ( | ) | ||||||||||||
| Balance, December 31, 2023 | ||||||||||||||||
| Depreciation | $ | |||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | ||||||||||||
| Net book value | ||||||||||||||||
| At December 31, 2023 | $ | $ | $ | $ | ||||||||||||
| At September 30, 2024 | $ | $ | $ | $ | ||||||||||||
| * |
| - 12 - |
FEMTO TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2024
(Expressed in Canadian dollars)
(Unaudited)
NOTE 7 – PROPERTY AND EQUIPMENT
| Computers & Equipment | Vehicles | Furniture & Equipment | Capital Work In Progress* | Total | ||||||||||||||||
| Cost | ||||||||||||||||||||
| Balance, January 1, 2023 | $ | $ | $ | $ | $ | |||||||||||||||
| Additions | ||||||||||||||||||||
| Impairments | ( | ) | ( | ) | ||||||||||||||||
| Translation differences | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Balance, December 31, 2023 | ||||||||||||||||||||
| Additions | ||||||||||||||||||||
| Disposals | ||||||||||||||||||||
| Translation differences | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | $ | |||||||||||||||
| Accumulated depreciation | ||||||||||||||||||||
| Balance as of January 1, 2023 | $ | $ | $ | $ | ||||||||||||||||
| Depreciation | ||||||||||||||||||||
| Translation differences | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Balance, December 31, 2023 | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
| Translation differences | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | ||||||||||||||||
| Net book value | ||||||||||||||||||||
| At December 31, 2023 | $ | $ | $ | $ | $ | |||||||||||||||
| At September 30, 2024 | $ | $ | $ | $ | $ | |||||||||||||||
| * |
During
the nine months ended September 30, 2024, depreciation of $
As of December 31, 2023 the Company’s Capital work in progress relates to the ongoing investment in the future medical cannabis cultivation facility in Moshav Kochav Michael, Israel which includes permits and design.
The Company considered indicators of impairment at December 31, 2023. The Company recorded impairment loss during the year ended December 31, 2023 for the capital work in progress.
The impairment for the capital work in progress was done mainly because of recent medical cannabis legislation changes in Israel that have materially affected the value of this asset.
| - 13 - |
FEMTO TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2024
(Expressed in Canadian dollars)
(Unaudited)
NOTE 8 – TRADE PAYABLES AND ACCRUED LIABILITIES
September 30, 2024 | December 31, 2023 | |||||||
| Trades payables | $ | $ | ||||||
| VAT, income and dividend taxes payable | ||||||||
| Salaries payable | ||||||||
| $ | $ | |||||||
NOTE 9– RELATED PARTY TRANSACTIONS BALANCES
Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of members of the Company’s Board of Directors and corporate officers. The remuneration of directors and key management personnel, not including normal employee compensation, made during the nine months ended September 30, 2024 and the nine months ended September 30, 2023 is set out below:
September 30, 2024 | September 30, 2023 | |||||||
| salary (cost of sales) | ||||||||
| consulting (research and development) | ||||||||
| salary (intangible asset – software) | ||||||||
| consulting (professional fees) | ||||||||
| salary (general and administrative expenses) | ||||||||
| Share based payments | ||||||||
| $ | $ | |||||||
As
at September 30, 2024, $
As
at September 30, 2024, $
NOTE 10 – LONG TERM LOAN
During
the year ended December 31, 2020, the Company secured a term loan with a principal amount of $
| - 14 - |
FEMTO TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2024
(Expressed in Canadian dollars)
(Unaudited)
NOTE 10 – LONG TERM LOAN (continued)
The activities of the long term loan during the nine month ended September 30, 2024 are as follows:
September 30, 2024 | December 31, 2023 | |||||||
| Balance, opening | $ | $ | ||||||
| Repayments | ( | ) | ( | ) | ||||
| Interest expense, accrued | ||||||||
| Translation difference | ( | ) | ( | ) | ||||
| Balance, ending | ||||||||
| Less: | ||||||||
| Long term loan – current portion | ||||||||
| Long term loan | $ | $ | ||||||
The undiscounted repayments for each of the next two years and in the aggregate are:
| Year ended | Amount | |||
| December 31, 2024 | $ | |||
| December 31, 2025 | ||||
| $ | ||||
NOTE 11 – DERIVATIVE WARRANTS LIABILITIES
| a. | On
December 21, 2023, the Company issued |
On
March 27, 2024, following the March 2024 Public offering, which included the offering of subordinate voting shares at a price lower than
the exercise price of the December 2023 Warrants, the exercise price of the December 2023 Warrants was reduced to US $
On
August 27, 2024, following the
| b. | On
March 14, 2024, the Company issued |
| - 15 - |
FEMTO TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2024
(Expressed in Canadian dollars)
(Unaudited)
NOTE 11 – DERIVATIVE WARRANTS LIABILITIES (continued)
On
March 27, 2024, following the
On
August 27, 2024, following the
| c. | During
the period ended September 30, 2024, the Company recorded a loss on the revaluation of the
total derivative liabilities of $ |
| d. | The Company engaged an outside valuation company to calculate the fair value of the derivative warrants based on the Monte Carlo simulation model with the following assumptions: |
| September 30, 2024 | ||||
| Share Price | US $ | |||
| Exercise Price | US $ | |||
| Expected life | - years | |||
| Risk-free interest rate | % | |||
| Dividend yield | % | |||
| Expected volatility | % | |||
| Early exercise threshold | US $ | |||
The following table presents the changes in the warrant liability during the period:
| Balance as of December 31, 2023 | $ | |||
| Issuance of March 2024 warrants | ||||
| Changes in fair value of warrants | ( | ) | ||
| Balance as of September 30, 2024 | $ |
| - 16 - |
FEMTO TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2024
(Expressed in Canadian dollars)
(Unaudited)
NOTE 12 – EMPLOYEE BENEFITS
The severance pay liability constitutes a defined benefit plan and was calculated using actuarial assumptions. In measuring the present value of the defined benefit obligation and the current service costs the projected unit credit method was used.
Plan assets (liability)
Information on the Company’s defined benefit pension plans and other defined benefit plans, in aggregate, is summarized as follows:
September 30, 2024 | December 31, 2023 | |||||||
| Defined benefit plan liabilities | $ | ( | ) | $ | ( | ) | ||
| Less: fair value of plan assets or asset ceiling | ||||||||
| $ | ( | ) | $ | ( | ) | |||
Changes in the present value of the defined benefit plan liability
The following are the continuities of the fair value of plan assets and the present value of the defined benefit plan obligations:
September 30, 2024 | December 31, 2023 | |||||||
| Balance, opening | $ | ( | ) | $ | ( | ) | ||
| Recognized in profit this year: | ||||||||
| Interest costs | ( | ) | ( | ) | ||||
| Current service cost | ( | ) | ( | ) | ||||
| Recognized in other comprehensive profit: | ||||||||
| Actuary loss for change of assumptions | ||||||||
| Translation differences | ||||||||
| Balance, ending | $ | ( | ) | $ | ( | ) | ||
The actual amount paid may vary from the estimate based on actuarial valuations being completed, investment performance, volatility in discount rates, regulatory requirements and other factors.
Major assumptions in determining the defined benefit plan liability
The principal actuarial assumptions used in calculating the Company’s defined benefit plan obligations and net defined benefit plan cost for the year were as follows (expressed as weighted averages):
September 30, 2024 | December 31, 2023 | |||||||
| Capitalization rate | % | % | ||||||
| Salary growth rate | % | % | ||||||
| Retirement rate | % | % | ||||||
| - 17 - |
FEMTO TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2024
(Expressed in Canadian dollars)
(Unaudited)
Authorized
Unlimited number of subordinate voting shares without par value.
Enhanced voting preference shares ( post reverse split) without par value. Each Enhanced voting preference share carries the right to votes.
Issued
As at September 30, 2024, subordinate voting shares and enhanced voting preference shares were issued and outstanding.
During the nine months ended September 30, 2024
On January 4, 2024, the Company issued subordinate voting shares ( subordinate voting shares post reverse splits) to two directors following the vesting of RSU’s with a fair value of $, for a compensation amount of $.
On January 10, 2024, the Company granted RSUs ( RSUs post reverse split) to five directors of the Company,
On January 16, 2024, the Company granted RSUs ( RSUs post reverse split) to a consultant of the Company,
On February 5, 2024, the Company granted RSUs ( RSUs post reverse split) to a consultant of the Company,
On March 5, 2024, the Company granted RSUs ( RSUs post reverse split) to a consultant of the Company,
On March 14, 2024 the Company announced the closing of an underwritten public offering with gross proceeds to the Company of approximately US$ million, before deducting underwriting discounts and other estimated expenses paid by the Company. The offering was for sale of units ( units post reverse split), each consisting of one subordinate voting share or pre-funded warrant, one series A warrants and two series B warrants. The offering price was US$ per unit.
On April 5, 2024, the Company issued subordinate voting shares ( subordinate voting shares post reverse split) to two directors following the vesting of RSU’s with a fair value of $ for a compensation amount of $.
On April 5, 2024, the Company granted RSUs ( RSUs post reverse split) to directors and consultants of the Company, the RSUs vested immediately, and subordinate voting shares ( subordinate voting shares post reverse split) were issued on April 8, 2024 with a fair value of $ for a compensation amount of $.
On April 9, 2024, the Company granted RSUs ( RSUs post reverse split) to a consultant of the Company, the RSUs vested immediately, and subordinate voting shares ( subordinate voting shares post reverse split) were issued with a fair value of $ for a compensation amount of $.
| - 18 - |
FEMTO TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2024
(Expressed in Canadian dollars)
(Unaudited)
NOTE 13 – SHARE CAPITAL (continued)
On
May 27, 2024, pursuant to a Settlement Agreement Dated May 27, 2024 (the “Settlement Agreement”), the Company issued
subordinate voting shares ( subordinate voting shares post reverse split) (valued at US$
On June 14, 2024, the Company issued subordinate voting shares ( subordinate voting shares post reverse split) to three directors following the vesting of RSU’s with a fair value of $, for a compensation amount of $.
On June 19, 2024, the Company issued subordinate voting shares ( subordinate voting shares post reverse split) to directors and consultants of the Company following the vesting of RSU’s with a fair value of $, for a compensation amount of $.
On July 16, 2024, the Company issued subordinate voting shares ( subordinate voting shares post reverse split) to a consultant following the vesting of RSU’s.
On September 20, 2024, the Company issued enhanced voting preference shares ( enhanced voting preference shares post reverse split) to its Chief Executive Officer. This new class of shares (enhanced voting preference shares) was created and the shares issued as approved by the Company’s shareholders on August 1, 2024.
As of September 30, 2024, the Company issued subordinate voting shares ( subordinate voting shares post reverse split ) following the closing of the underwritten public offering on March 14, 2024 as well as subordinate voting shares ( subordinate voting shares post reverse split ) following the cashless exercise of A warrants , subordinate voting shares ( subordinate voting shares post reverse split ) following the exercise of B warrants at an exercise price of US$ per subordinate voting share and subordinate voting shares following the exercise of B warrants at an exercise price of US$ per subordinate voting share.
During the nine months ended September 30, 2023
On January 3, 2023, the Company issued subordinate voting shares ( subordinate voting shares post reverse splits) to two directors following the vesting of RSU’s.
On April 4, 2023, the Company issued subordinate voting shares ( subordinate voting shares post reverse splits) to two directors following the vesting of RSU’s.
On April 27, 2023, the Company granted RSU’s ( RSU’s post reverse splits) to two directors,
On July 4, 2023, the Company issued subordinate voting shares ( subordinate voting shares post reverse splits) to two directors following the vesting of RSU’s.
On July 19, 2023 the Company issued subordinate voting shares ( subordinate voting shares post reverse splits) at a price of US$ per share following the closing of an underwritten public offering with gross proceeds to the Company of approximately US$ million, before deducting underwriting discounts and other estimated expenses paid by the Company.
| - 19 - |
FEMTO TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2024
(Expressed in Canadian dollars)
(Unaudited)
NOTE 13 – SHARE CAPITAL (continued)
On August 8, 2023, the Company granted RSU’s ( RSU’s post reverse splits) to two directors,
Stock options
The Company has a stock option plan to grant incentive stock options to directors, officers, employees and consultants. Under the plan, the aggregate number of subordinate voting shares that may be subject to option at any one time may not exceed 10% of the issued subordinate voting shares of the Company as of that date, including options granted prior to the adoption of the plan. The exercise price of these options is not less than the Company’s closing market price on the day prior to the grant of the options less the applicable discount permitted by the CSE. Options granted
| Number of Options | Weighted Average Exercise Price | |||||||
| Outstanding at January 1, 2023 | ||||||||
| Granted during the period | ||||||||
| Exercised during the period | ||||||||
| Outstanding at December 31, 2023 | $ | |||||||
| Granted during the period | ||||||||
| Cancelled during the period | ( | ) | ||||||
| Outstanding at September 30, 2024 | ||||||||
| Exercisable at September 30, 2024 | $ | |||||||
| Outstanding | Exercisable | |||||||||||||||||
| Number of stock options | Weighted average remaining contractual life (years) | Weighted Average Exercise Price | Number of stock options | Weighted Average Exercise Price | ||||||||||||||
| $ | $ | |||||||||||||||||
| $ | $ | |||||||||||||||||
| - 20 - |
FEMTO TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2024
(Expressed in Canadian dollars)
(Unaudited)
NOTE 13 – SHARE CAPITAL (continued)
| 2024 | 2023 | |||||||
| Weighted average fair value of options granted | $ | $ | ||||||
| Risk-free interest rate | % | % | ||||||
| Estimated life (in years) | ||||||||
| Expected volatility | % | % | ||||||
| Expected dividend yield | % | % | ||||||
On January 10, 2024, the Company cancelled stock options ( stock options post reverse splits) that were previously granted to 4 directors of the Company.
On January 16, 2024, the Company granted stock options ( stock options post reverse splits) to a consultant of the Company, the stock options vest as follows: on the date of the grant ( post reverse splits) and every month thereafter ( post reverse splits) every month thereafter. On June 30, 2024 the Company cancelled the stock options ( stock options post reverse splits) that were previously granted to that consultant.
NOTE 14 – REVENUE AND DEFERRED REVENUE
| September 30, 2024 | September 30, 2023 | |||||||
| Software development | $ | $ | ||||||
| Software license | ||||||||
| Software supports | ||||||||
| Cloud hosting | ||||||||
| Others | ||||||||
| $ | $ | |||||||
The Company recognized revenues from contracts with customers in accordance with the following timing under IFRS 15:
September 30, 2024 | September 30, 2023 | |||||||
| Revenue recognized over time | $ | $ | ||||||
| Revenue recognized at a point of time | ||||||||
| $ | $ | |||||||
Deferred revenue represents contract liabilities for customer payments received related to services yet to be provided subsequent to the reporting date. Significant changes in deferred revenue are as follows:
September 30, 2024 | December 31, 2023 | |||||||
| Deferred revenue, beginning | $ | $ | ||||||
| Customer payments received attributable to contract liabilities for unearned revenue | ||||||||
| Revenue recognized from fulfilling contract liabilities | ||||||||
| Deferred revenue, ending | $ | $ | ||||||
| - 21 - |
FEMTO TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the nine months ended September 30, 2024
(Expressed in Canadian dollars)
(Unaudited)
NOTE 14 – REVENUE AND DEFERRED REVENUE (continued)
The
Company derives significant revenues from one customer, which exceeds 10% of total revenues. Revenues earned from that customer were
NOTE 15 – COST OF REVENUE
Cost of revenue incurred are comprised of the following:
September 30, 2024 | September 30, 2023 | |||||||
| Salaries and benefits | $ | $ | ||||||
| Subcontractors | ||||||||
| Software and other | ||||||||
| Depreciation | ||||||||
| $ | $ | |||||||
NOTE 16 – SUBSEQUENT EVENTS
On
October 21, 2024, the Company effected a
All enhanced voting preference shares information in these consolidated financial statements have been restated to reflect the reverse stock split on a retroactive basis.
| - 22 - |