AI assistant
Nevis Brands Inc. — Interim / Quarterly Report 2023
Jul 20, 2023
46986_rns_2023-07-20_2fadce1a-3021-4d08-8a85-7657cbb5a947.pdf
Interim / Quarterly Report
Open in viewerOpens in your device viewer
NEVIS BRANDS INC. (FORMERLY PASCAL BIOSCIENCES INC.) Condensed Interim Consolidated Financial Statements For the Three and Six Months Ended May 31, 2023 and 2022
(Unaudited - Expressed in Canadian Dollars)
| Index | Page |
|---|---|
| Notice of no Auditor review of Condensed Interim Consolidated Financial Statements | 2 |
| Condensed Interim Consolidated Financial Statements | |
| Condensed Interim Consolidated Statements of Financial Position | 3 |
| Condensed Interim Consolidated Statements of Loss and Comprehensive Loss | 4 |
| Condensed Interim Consolidated Statements in Shareholders' Deficiency | 5 |
| Condensed Interim Consolidated Statements of Cash Flows | 6 |
| Notes to the Condensed Interim Consolidated Financial Statements | 7-14 |
1
NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
In accordance with National Instrument 51-102, released by the Canadian Securities Administrators, the Company discloses that its independent auditors have not reviewed the condensed interim consolidated financial statements for the three and six months ended May 31, 2023 and 2022.
2
Nevis Brands Inc. (Formerly Pascal Biosciences Inc.) Condensed Interim Consolidated Statements of Financial Position
(Unaudited - Expressed in Canadian Dollars)
| Nevis Brands Inc. (Formerly Pascal Biosciences Inc.) Condensed Interim Consolidated Statements of Financial Position (Unaudited - Expressed in Canadian Dollars) Notes |
May 31, 2023 |
November 30, 2022 |
|---|---|---|
| ASSETS Current Cash Prepaid expenses Receivables |
$ 153,699 14,218 7,354 |
$ 8,370 3,245 7,208 |
| Total current assets | 175,271 | 18,823 |
| Total assets | 175,271 | 18,823 |
| LIABILITIES Current liabilities Accounts payable and accrued liabilities 7 Short-term loanpayable 7 |
816,275 325,206 |
626,586 224,617 |
| Total current liabilities | 1,141,481 | 851,203 |
| Accountspayable | 41,965 | 111,725 |
| Total liabilities | 1,183,446 | 962,928 |
| SHAREHOLDERS' DEFICIENCY Equity attributable to shareholders Share capital 5 Share subscriptions received Reserves 5 Deficit |
13,052,100 150,000 365,205 (14,575,480) |
13,052,100 - 424,152 (14,420,357) |
| Total shareholders' deficiency | (1,008,175) | (944,105) |
| Total liabilities and shareholders' deficiency | 175,271 | 18,823 |
| Approved on behalf of the Board: “Patrick W. Gray” _________ Director |
“John Bell” ___ |
__ |
| Director |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
3
Nevis Brands Inc. (Formerly Pascal Biosciences Inc.)
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
(Unaudited - Expressed in Canadian Dollars)
| (Unaudited - Expressed in Canadian Dollars) | |||||
|---|---|---|---|---|---|
| For the Three Months | For the | Six Months | |||
| Ended May 31, | Ended May 31, | ||||
| Notes | 2023 | 2022 | 2023 | 2022 | |
| $ | $ | $ | $ | ||
| General and administrative expenses | |||||
| Accounting and audit fees | 19,411 | 23,217 | 57,747 | 37,548 | |
| Administrative and general office | 988 | 15,803 | 4,842 | 26,958 | |
| Amortization | - | 2,729 | - | 5,457 | |
| Bank charges and interest | 703 | 823 | 1,772 | 2,363 | |
| Consulting fees | 7 | 5,115 | 11,441 | 18,602 | 2,880 |
| Salaries and benefits | 4, 7 | - | 65,407 | - | 161,423 |
| Foreign exchange loss | (182) | (1,367) | 5,177 | (3,353) | |
| Insurance | - | 5,041 | 712 | 9,820 | |
| Investor relations and marketing | 1,636 | 610 | 8,441 | (5,083) | |
| Legal fees | 43,509 | 8,456 | 82,353 | 14,858 | |
| Research and development | 4 | 3,747 | (25,390) | 40,248 | (27,183) |
| Share-based payments | 5, 7 | - | 19,972 | 1,774 | 35,480 |
| Transfer agent, listing and filing fees | 8,363 | 8,441 | 19,085 | 11,622 | |
| Travel and entertainment | - | - | - | (741) | |
| Total general and administrative expenses | (83,290) | (135,183) | (240,753) | (272,049) | |
| Other Income | |||||
| Interest income | - | - | - | 1,402 | |
| Other income | 58 | - | 17,643 | - | |
| Gain on sale of equipment | 22 | - | 7,266 | - | |
| Gain on debt settlement | - | 86,550 | - | 86,550 | |
| Net loss and comprehensive loss for theperiod | (83,210) | (48,633) | (215,844) | (184,097) | |
| Lossper share,basic and diluted | (0.01) | (0.00) | (0.02) | (0.01) | |
| Weighted average common shares outstanding – | |||||
| basic and diluted1 | 13,118,955 | 13,118,955 | 13,118,955 | 13,099,723 |
1Post 5:1 share consolidation
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
4
Nevis Brands Inc. (Formerly Pascal Biosciences Inc.)
Condensed Interim Consolidated Statements in Shareholders' Deficiency (Unaudited - Expressed in Canadian Dollars)
| (Unaudited - Expressed in Canadian Dollars) | ||
|---|---|---|
| Common Shares Number of Option Shares1 Amount Shares to be Issued Reserve |
Total Shareholders' Deficit Deficiency |
|
| Balance, November 30, 2021 Share issuance costs Shares issued in lieu of salaries Share-based payments Fair value transfer on expiry of options Net loss for theperiod |
$ $ $ 13,018,955 13,026,100 46,000 712,851 - (20,000) - - 100,000 46,000 (46,000) - - - - 35,480 - - - (238,907) - - - - |
$ $ (14,276,246) (491,295) - (20,000) - - - 35,480 238,907 - (184,097) (184,097) |
| Balance, May 31, 2022 Share-based payments Fair value transfer on expiry of options Net loss for theperiod |
13,118,955 13,052,100 - 509,424 - - - 11,990 - - - (97,262) - - - - |
(14,221,436) (659,912) - 11,990 97,262 - (296,183) (296,183) |
| Balance, November 30, 2022 Share subscriptions received Share-based payments Fair value transfer on expiry of options Fair value transfer on expiry of warrants Net loss for theperiod |
13,118,955 13,052,100 - 424,152 - - 150,000 - - - - 1,774 - - - (51,221) - - - (9,500) - - - - |
(14,420,357) (944,105) - 150,000 - 1,774 51,221 - 9,500 - (215,844) (215,844) |
| Balance, May 31, 2023 | 13,118,955 13,052,100 150,000 365,205 |
(14,575,480) (1,008,175) |
1Post 5:1 share consolidation
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
5
Nevis Brands Inc. (Formerly Pascal Biosciences Inc.) Condensed Interim Consolidated Statements of Cash Flows
| Nevis Brands Inc. (Formerly Pascal Biosciences Inc.) Condensed Interim Consolidated Statements of Cash Flows |
||
|---|---|---|
| (Unaudited - Expressed in Canadian Dollars) | ||
| For the six months ended May 31: | ||
| 2023 | 2022 | |
| $ | $ | |
| Cash provided by (used in): | ||
| Operating activities: | ||
| Net loss for the period | (215,844) | (184,097) |
| Items not involving cash: | ||
| Amortization | - | 5,457 |
| Share-based payments | 1,774 | 35,480 |
| Gain on debt settlement | - | (86,550) |
| Gain on sale of equipment | (7,266) | - |
| Changes in non-cash working capital: | ||
| Prepaid expenses | (10,973) | (12,680) |
| Receivables | (146) | 10,070 |
| Accountspayable and accrued liabilities | 119,929 | 160,602 |
| (112,526) | (71,718) | |
| Investing activity: | ||
| Proceeds from sale of equipment | 7,266 | - |
| Financing activities: | ||
| Proceeds from short-term loan | 100,589 | 124,917 |
| Subscriptions received | 150,000 | - |
| Share issuance costs | - | (20,000) |
| 250,589 | 104,917 | |
| Net change in cash | 145,329 | 33,199 |
| Cash, beginning ofperiod | 8,370 | (7,759) |
| Cash, end ofperiod | 153,699 | 25,440 |
| Supplemental cash flow information: | ||
| Shares issued for services applied to accounts payable | - | - |
| Shares issued for services applied to share capital | - | (46,000) |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
6
Nevis Brands Inc. (Formerly Pascal Biosciences Inc.) Notes to the Condensed Interim Consolidated Financial Statements For the Three and Six Months Ended May 31, 2023 and 2022 (Unaudited - Expressed in Canadian Dollars)
1. NATURE OF OPERATIONS AND GOING CONCERN
Nevis Brands Inc. (formerly Pascal Biosciences Inc.) (the “Company”) was incorporated on January 28, 2011 pursuant to the Business Corporations Act (British Columbia). On May 24, 2013, the Company acquired all of the issued and outstanding shares of bioMmune Advanced Technologies Inc. (“BAT”), a private company (incorporated on July 5, 2012) formed to commercially exploit a number of patents and patent applications that surround three technologies. On March 27, 2017, the Company incorporated a wholly owned subsidiary in Seattle, Washington, named Nevis Brands, Inc. (formerly Pascal Biosciences US, Inc.) (“Nevis (US)”). The Company is a Tier 2 Biotechnology Issuer engaged in the research and development of products for the treatment of cancers and for improvement of the immune system, trading on the TSX Venture Exchange (the “Exchange”) under the trading symbol “PAS”. Subsequent to May 31, 2023, the Company delisted from the Exchange and listed on the Canadian Securities Exchange (“CSE”) upon receiving approval under the trading symbol “NEVI” and changed its name from Pascal Biosciences Inc. to Nevis Brands Inc. (Note 11).
The Company’s head office is 1900 Airport Way S, Suite 201, Seattle, WA 98134.
Prior to May 31, 2023, the Company has not generated any revenues and has incurred losses since inception. The Company expects that its operating expenses will be significant, and consequently, will require significant revenues to become profitable. Even if the Company does become profitable, it may not be able to sustain or increase profitability on a quarterly or annual basis. The Company cannot predict when, if ever, it will be profitable.
These condensed interim consolidated financial statements have been prepared under the assumption of a going concern, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at May 31, 2023, the Company has a working capital deficiency of $966,210 (November 30, 2022: $832,380) and reported a net loss of $215,844 (2022: $184,097). The Company’s ability to maintain its existence is dependent upon the continuing support of its creditors and its success in obtaining new equity financing for its ongoing operations. Financing options available to the Company include equity financings and loans. These conditions indicate the existence of material uncertainties that may cast significant doubt as to the ability of the Company to meet its obligations as they come due, and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. Realization values of the Company’s assets may be substantially different from carrying values as shown in these condensed interim consolidated financial statements and, accordingly, should the Company be unable to continue as a going concern, the adjustments could be material.
Subsequent to May 31, 2023, the Company completed two tranches of a financing pursuant to which the Company issued 20,000,000 units at a price of $0.10 per unit for gross proceeds of $2,000,000 and closed the acquisition of THC Essentials (Note 11).
2.
STATEMENT OF COMPLIANCE, BASIS OF PRESENTATION
- (a) Statement of compliance
These condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and International Accounting Standards, as issued by the International Accounting Standards Board (“IASB”).
These condensed interim consolidated financial statements were authorized for issue by the Board of Directors on July 20, 2023.
7
Nevis Brands Inc. (Formerly Pascal Biosciences Inc.) Notes to the Condensed Interim Consolidated Financial Statements For the Three and Six Months Ended May 31, 2023 and 2022 (Unaudited - Expressed in Canadian Dollars)
(b) Basis of measurement
These condensed interim consolidated financial statements have been prepared on a historical cost basis, except for financial instruments classified as fair value through profit or loss (“FVTPL”), which are stated at their fair values. In addition, these condensed interim consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment of complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are the same as those disclosed in Note 3 in the Company’s annual consolidated financial statements as at and for the year ended November 30, 2022.
- (c) Functional and presentation currency
These condensed interim consolidated financial statements are presented in Canadian dollars, which is the functional currency of the Company and its wholly owned subsidiaries, BAT and Nevis (US).
3. SIGNIFICANT ACCOUNTING POLICIES
These condensed interim consolidated financial statements are unaudited and have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and in accordance with the International Accounting Standards (“IAS”) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IIFRIC”). The accounting policies and methods of computation applied by the Company in these condensed interim consolidated financial statements are the same as those applied in the Company’s annual consolidated financial statements as at and for the year ended November 30, 2022.
4. RESEARCH AND DEVELOPMENT
During the year ended November 30, 2021, the Company was awarded a grant of US$321,406 from the National Cancer Institute of the US National Institutes of Health (NIH). This two-year award funded development of Nevis’ antibody drug for Acute Lymphoblastic Leukemia (ALL), which is the most common childhood leukemia. During the six months ended May 31, 2023, the Company incurred $71,113 (US$52,565) (2022: $48,519/US$38,171) in research and development expenditures against income of $30,865 (US$22,814) (2022: $48,519/US $38,171) in funding from NIH.
On September 14, 2020, the Company and SōRSE announced that they entered into a Collaborative Research Agreement (the “Agreement”) to advance Nevis’ immune-stimulating cannabinoid PAS-393 into clinical testing in humans. Nevis (US) and SōRSE shared their respective technologies to develop the cannabinoid PAS-393 for testing in human volunteers.
SōRSE will provided US$750,000 in research funding to Nevis (US) throughout the 15-month collaboration and paid for related research expenditures. During the year ended November 30, 2022, the Company received $nil (2021: $563,801/US$500,000) of research funding, which is included in salaries and benefits and has an account receivable of $nil (2021: $127,920/US$100,000). During the year ended November 30,
8
Nevis Brands Inc. (Formerly Pascal Biosciences Inc.) Notes to the Condensed Interim Consolidated Financial Statements For the Three and Six Months Ended May 31, 2023 and 2022 (Unaudited - Expressed in Canadian Dollars)
2022, the Company also wrote off accounts receivable of $129,477 (US$100,000) in relation to research funding from SōRSE.
5. SHARE CAPITAL
(a) Authorized
The authorized share capital of the Company consists of an unlimited number of common shares without par value.
Effective June 12, 2023, the Company consolidated its issued and outstanding common shares on the basis of five pre-consolidation shares for one post-consolidation share. All references to share and per share amounts in these financial statements have been retroactively restated to reflect the consolidation.
(b) Common shares
Subsequent to May 31, 2023, the Company completed two tranches of a financing pursuant to which the Company issued 20,000,000 units at a price of $0.10 per unit for gross proceeds of $2,000,000, with each unit comprising one common share and one-half share purchase warrant (Note 11).
Six months ended May 31, 2023
There were no financing activities during the six months ended May 31, 2023.
Six months ended May 31, 2022
On January 4, 2022, the Company issued 100,000 common shares, with a fair value of $46,000 to the former CEO, per his employment agreement in lieu of two months’ worth of salary. The fair value of $46,000 was recorded as shares to be issued in lieu of salary as at November 30, 2021.
(c) Stock options
During the year ended November 30, 2012, the Company adopted a stock option plan, which provides that the Board of Directors may, from time to time, in its discretion, and in accordance with the Exchange requirements, grant to directors, officers, employees and consultants of the Company, non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 10% of the issued and outstanding common shares and exercisable for five years from the date of grant.
9
Nevis Brands Inc. (Formerly Pascal Biosciences Inc.) Notes to the Condensed Interim Consolidated Financial Statements For the Three and Six Months Ended May 31, 2023 and 2022 (Unaudited - Expressed in Canadian Dollars)
A summary of the Company’s outstanding stock options and changes is as follows:
| Weighted Average | |||
|---|---|---|---|
| Quantity | Exercise Price($) | ||
| Outstanding, November 30, 2021 | 1,157,600 | 0.95 | |
| Granted | 100,000 | 0.40 | |
| Expired | (322,600) | 1.60 | |
| Outstanding, November 30, 2022 | 935,000 | 0.70 | |
| Expired | (120,000) | 0.58 | |
| Outstanding,May31,20231 | 815,000 | 0.70 | |
| Exercisable as at May31,20231 | 815,000 | 0.70 |
1The stock options have been restated to reflect the 5:1 share consolidation.
On February 28, 2022, the Company granted 100,000 stock options to the former CEO. The stock options are exercisable at a price of $0.40 per share, for a period of five years and will vest quarterly over one year. The fair value of the stock options was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions: risk-free interest rate of 1.73%, expected dividend rate of 0%, expected volatility of 94.02%, and forfeiture rate of 0%. The fair value of the options was calculated at $28,772. The share-based payment expense recognized during the six months ended May 31, 2023 was $1,774 (2022: $15,009).
Option pricing models require the use of highly subjective estimates and assumptions. The expected volatility assumption is based on the historical and implied volatility of the Company’s common share price on the Exchange. The risk-free interest rate assumption is based on yield curves on Canadian government zero-coupon bonds with a remaining term equal to the stock options’ expected life. The Company uses historical data to estimate option exercise, forfeiture and employee termination within the valuation model. Based on the best estimate, management applied the estimated forfeiture rate of 0% in determining the expense recorded in the accompanying consolidated statements of operations and comprehensive loss.
The options outstanding at May 31, 2023 are as follows:
| Weighted Average | ||||
|---|---|---|---|---|
| Weighted | Remaining | |||
| Average | Contractual Life | |||
| Expiry Date | Outstanding | Exercisable | Exercise Price ($) |
(Years) |
| August 2, 2023 | 160,000 | 160,000 | 1.75 | 0.17 |
| November 30, 2023 | 100,000 | 100,000 | 0.40 | 0.50 |
| December 18, 2025 | 80,000 | 80,000 | 0.75 | 2.55 |
| April 20,2026 | 475,000 | 475,000 | 0.40 | 2.89 |
| 815,000 | 815,000 | 0.70 | 2.03 |
Subsequent to May 31, 2023, the Company granted 2,240,000 stock options exercisable at $0.10, expiring on July 6, 2028.
10
Nevis Brands Inc. (Formerly Pascal Biosciences Inc.) Notes to the Condensed Interim Consolidated Financial Statements For the Three and Six Months Ended May 31, 2023 and 2022 (Unaudited - Expressed in Canadian Dollars)
- (d) Share purchase warrants
A summary of the Company’s outstanding share purchase warrants and changes is as follows:
| Weighted | |||
|---|---|---|---|
| Weighted | Average | ||
| Quantity | Average Exercise | Remaining | |
| Price ($) | Contractual Life | ||
| (Years) | |||
| Balance,November 30,2021 | 2,258,710 | 0.75 | 0.91 |
| Expired | (758,710) | 0.75 | 0.00 |
| Balance,November 30,2022 | 1,500,000 | 0.75 | 0.22 |
| Expired | (1,500,000) | 0.75 | 0.00 |
| Balance,May31,20231 | - | - | - |
1The Company’s warrants outstanding have been restated to reflect the 5:1 share consolidation.
6. CAPITAL RISK MANAGEMENT
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the development of any identified business opportunities and to maintain a flexible capital structure for the benefit of its stakeholders.
The Company includes shareholders’ equity (deficiency), comprised of issued share capital, reserves and deficit in the definition of capital.
The Company manages the capital structure and makes adjustments to it in light of changes in the economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, enter into joint venture arrangements, acquire or dispose of assets, or adjust the amount of cash.
The Board of Directors does not establish quantitative return on capital criteria for management but rather relies on the expertise of the Company’s management to manage its capital to be able to sustain the future development of the Company’s business. The Company is not subject to externally imposed capital requirements. There were no changes in the Company’s approach to capital management during the six months ended May 31, 2023.
11
Nevis Brands Inc. (Formerly Pascal Biosciences Inc.) Notes to the Condensed Interim Consolidated Financial Statements For the Three and Six Months Ended May 31, 2023 and 2022 (Unaudited - Expressed in Canadian Dollars)
7. RELATED PARTY TRANSACTIONS
The following is a summary of related party transactions that occurred during the three and six months ended May 31, 2023 and 2022:
| Three | months | Six months | |||
|---|---|---|---|---|---|
| ended | May 31, | ended May 31, | |||
| **Servicesprovided by: ** | 2023 | 2022 | 2023 | 2022 | |
| $ | $ | $ | $ | ||
| Key management salaries/fees | a) | 7,500 | 54,900 | 15,000 | 93,866 |
| Director and officer salaries/fees | b) | - | - | - | 15,132 |
| Share-based payments | - | 18,107 | - | 27,947 | |
| Benefits | - | - | - | 18,163 | |
| 7,500 | 73,007 | 15,000 | 155,108 |
Related parties include:
-
a) Key management salaries include amounts paid to the current CEO, former CEO and the CFO.
-
b) Director and officer salaries include amounts paid to the Vice President of Research and the Vice President of Therapeutic Development.
Included in accounts payable and accrued liabilities is $303,273 (November 30, 2022: $473,595) payable to directors and officers of the Company. The amounts in accounts payable and accrued liabilities are noninterest bearing and due within 30 days. Additionally, there are loans to the Company by a director of the Company totaling $325,206 (US $163,131) (November 30, 2022: $224,617 /US$137,818). The loan is unsecured, is due on demand and bears no interest.
On November 30, 2022, the Company entered into agreements with non-arm’s length parties stating that the Company will issue 240,849 common shares of the Company and $5,000 in cash to settle debt of $195,840. On December 30, 2022, the Company entered into an agreement with a non-arm’s length party to settle debt of $402,209 by issuing 1,005,523 common shares of the Company at a deemed price of $0.40 per share. As at May 31, 2023, the Company has not issued the common shares and the full amount is recorded in accounts payable and accrued liabilities. Subsequent to May 31, 2023, the Company issued the common shares and paid $5,000 in cash to settle the debt.
8.
FINANCIAL INSTRUMENTS
- (a) Fair value
Financial instruments recognized at fair value on the consolidated statements of financial position must be classified in one of the following three fair value hierarchy levels:
Level 1 – measurement based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities;
Level 2 – measurement based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability; or
Level 3 – measurement based on inputs that are not observable (supported by little or no market activity) for the asset or liability.
12
Nevis Brands Inc. (Formerly Pascal Biosciences Inc.) Notes to the Condensed Interim Consolidated Financial Statements For the Three and Six Months Ended May 31, 2023 and 2022 (Unaudited - Expressed in Canadian Dollars)
As at May 31, 2023 and November 30, 2022, the Company’s financial instruments are comprised of cash, receivables and accounts payable and accrued liabilities. The carrying amounts reported in the consolidated statements of financial position for cash, receivables, short-term loan payable, and accounts payable and accrued liabilities approximate fair values due to the short-term maturities of these financial instruments.
(b) Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge its obligation and cause the other party to incur a financial loss. The Company considers its exposure to credit risk to be low, as its cash is deposited with a large financial institution with a strong credit rating. During the year ended November 30, 2022, the Company recorded a provision of $129,477 against receivables from SōRSE.
(c) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meets its financial obligations as they become due. The Company’s approach to managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due.
At May 31, 2023, the Company had cash of $153,699 (November 30, 2022: $8,370) available to apply against short-term business requirements and current liabilities of $1,141,481 (November 30, 2022: $851,203). All of the liabilities presented as accounts payable and accrued liabilities are due within 90 days of May 31, 2023. The short-term loan payable is due on demand.
(d) Currency risk
The Company is exposed to currency risk to the extent expenditures incurred or funds received and balances maintained by the Company are denominated in currencies other than the Canadian dollar. The Company does not manage currency risks through hedging or other currency management tools.
As at May 31, 2023 and 2022, the Company’s net exposure to foreign currency risk is as follows:
| US dollars 2023 |
2022 |
|---|---|
| $ Cash (Bank indebtedness) 1,846 Accounts receivable - Accounts payable (324,089) Short-term loanpayable (100,131) |
$ 20,023 100,000 (306,291) (99,818) |
| Net exposure to foreign currencyrisk (422,374) |
(286,086) |
| Canadian dollar equivalent (574,556) |
(361,842) |
Based on the above net foreign currency exposure, and assuming all other variables remain constant, a 7% weakening or strengthening of the Canadian dollar against the US dollar would have an immaterial effect on the Company’s net loss and comprehensive loss.
13
Nevis Brands Inc. (Formerly Pascal Biosciences Inc.) Notes to the Condensed Interim Consolidated Financial Statements For the Three and Six Months Ended May 31, 2023 and 2022 (Unaudited - Expressed in Canadian Dollars)
- (e) Other price risk
Other price risk is the risk that future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or foreign currency risk. The Company is not exposed to significant other price risk.
9. SEGMENTED INFORMATION
The Company has one operating segment, biotechnology research and development, with lab and computer equipment in the United States of America. The Company closed down its biotechnology research and development segment during the six months ended May 31, 2023 (Note 11).
10. CONTINGENCY
On February 8, 2022, the Company received a Notice of Civil Claim against the Company from a former officer of the Company for damages due to a breach of contract and wrongful termination. The claim against the Company is for 500,000 common shares of the Company to be issued to the former officer, punitive damages, interest and costs. The 500,000 common shares with the fair value of $46,000 were issued during the three months ended February 28, 2022. No other amounts have been accrued in respect of this claim.
On January 19, 2023, the Company received a Notice of Application from the former officer.
Subsequent to May 31, 2023, the Company reached a settlement with the former officer, whereby the Company will pay $126,000 to the former officer over a period of eight months.
11. TRANSACTION WITH SōRSE
On February 11, 2023, the Company signed an asset purchase agreement (the “Agreement”) with SōRSE to acquire from SōRSE the assets comprising THC Essentials, as amended March 31, 2023, April 2, 2023, April 26, 2023, May 29, 2023 and June 8, 2023. Closing must be on or before June 30, 2023 (the “Closing Date”) and the Company’s shares must be listed on the CSE (the “Listing Date’). The purchase price of US$1,125,000 will be paid as follows: (i) a secured promissory note of US$500,000, bearing interest at 7.5% per annum payable 13 months from the Closing Date, (ii) an aggregate of the greater of 3,775,000 postconsolidation shares and 9.9% of the number of post-consolidation shares the Company has issued and outstanding on the Closing Date, and (iii) US$625,000 payable on the Closing Date.
The closing occurred on July 6, 2023, whereby a reorganization occurred. The reorganization included, inter alia, closing both a private placement of $2,000,000 and the acquisition of THC Essentials, issuing 1,246,372 shares for debt, the appointment of a new CEO and a change of directors, a name change and a share consolidation on the basis of one new share for five old shares and listing on the CSE. The share consolidation occurred on June 12, 2023.
During the six months ended May 31, 2023, the Company closed down its research labs and stopped its research and development activities related to cancer programs. The Company evaluated the change in their business in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations , and determined that it did not meet the definition of discontinued operations as it did not represent a separate major line of business.
14