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PsyBio Therapeutics Corp. — Interim / Quarterly Report 2021
Mar 2, 2021
46634_rns_2021-03-01_38d139d2-508b-403a-9974-44bd0d97215c.pdf
Interim / Quarterly Report
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PSYBIO THERAPEUTICS CORP.
(formerly, Leo Acquisitions Corp.)
INTERIM CONDENSED FINANCIAL STATEMENTS Unaudited - Prepared by Management THREE AND SIX MONTHS ENDED DECEMBER 31, 2020
(Expressed in Canadian Dollars)
PSYBIO THERAPEUTICS CORP.
(formerly, Leo Acquisitions Corp.) Unaudited - Prepared by Management
THREE AND SIX MONTHS ENDED DECEMBER 31, 2020
(Expressed in Canadian Dollars) CONTENTS
| Page | |
|---|---|
| NOTICE TO READER | 1 |
| INTERIM CONDENSED FINANCIAL STATEMENTS | |
| Interim Condensed Statements of Financial Position | 2 |
| Interim Condensed Statements of Comprehensive Loss | 3 |
| Interim Condensed Statements of Changes in Equity | 4 |
| Interim Condensed Statements of Cash Flows | 5 |
| Notes to the Interim Condensed Financial Statements | 6-14 |
NOTICE TO READER
Under National Instrument 51-102, Part 4, paragraph 4.3(3)(a), if an auditor has not performed a review of the interim condensed financial statements, they must be accompanied by a notice indicating that they have not been reviewed by an auditor.
The accompanying unaudited interim condensed financial statements of PsyBio Therapeutics Corp. (formerly, Leo Acquisitions Corp.) (the "Company") have been prepared by and are the responsibility of the Company's management.
The Company's independent auditor has not performed a review of these unaudited interim condensed financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity's auditor.
PSYBIO THERAPEUTICS CORP.
(formerly, Leo Acquisitions Corp.))
INTERIM CONDENSED STATEMENTS OF FINANCIAL POSITION Unaudited - Prepared by Management
AS AT DECEMBER 31, 2020 AND JUNE 30, 2020 (Expressed in Canadian Dollars)
| December 31, | December 31, | June 30, | |||
|---|---|---|---|---|---|
| 2020 | 2020 | ||||
| Note | (Unaudited) | (Audited) | |||
| ASSETS | |||||
| Current Assets | |||||
| Cash | 3 | $ | 180,721 | $ | 220,048 |
| Prepaid expenses | 1,412 | - |
|||
| $ | 182,133 | $ | 220,048 | ||
| LIABILITIES AND EQUITY | |||||
| Current Liabilities | |||||
| Accountspayable and accrued liabilities | $ | 118,036 | $ | 45,723 |
|
| Equity | |||||
| Share capital | 5 | 647,149 | 647,149 |
||
| Share option reserve | 5 | 155,869 | 155,869 |
||
| Deficit | (738,921) | (628,693) |
|||
| 64,097 | 174,325 | ||||
| $ | 182,133 | $ | 220,048 | ||
| Nature of Operations and Going Concern | (Note 1) | ||||
| Subsequent Events (Note 8) |
Approved on Behalf of the Board
| 'Gerry Goldberg' | 'Evan Levine' |
|---|---|
| Director | Director |
The accompanying notes are an integral part of these interim condensed financial statements.
2
PSYBIO THERAPEUTICS CORP.
(formerly, Leo Acquisitions Corp.)
INTERIM CONDENSED STATEMENTS OF COMPREHENSIVE LOSS Unaudited - Prepared by Management THREE AND SIX MONTHS ENDED DECEMBER 31, 2020 AND 2019
(Expressed in Canadian Dollars)
| Three Months Ended December 31, Six Months Ended December 31, |
Three Months Ended December 31, Six Months Ended December 31, |
|---|---|
| 2020 2019 2020 |
2019 |
| EXPENSES Professional fees $ 7,133 $ 11,367 $ 7,133 Filing fees 1,412 1,412 5,892 General and administrative - 1,009 - Expenses to identify qualifyingtransaction 97,203 - 97,203 |
$ 11,367 5,892 1,009 - |
| 105,748 13,788 110,228 |
18,268 |
| NET LOSS AND COMPREHENSIVE LOSS (105,748) (13,788) (110,228) |
(18,268) |
| LOSS PER SHARE - BASIC AND DILUTED $ (0.045) $ (0.006) $ (0.047) |
$ (0.008) |
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED 2,355,757 2,355,757 2,355,757 |
2,355,757 |
The accompanying notes are an integral part of these interim condensed financial statements.
3
PSYBIO THERAPEUTICS CORP.
(formerly, Leo Acquisitions Corp.)
INTERIM CONDENSED STATEMENTS OF CHANGES IN EQUITY Unaudited - Prepared by Management
SIX MONTHS ENDED DECEMBER 31, 2020 AND 2019
(Expressed in Canadian Dollars)
| Share | ||||||
|---|---|---|---|---|---|---|
| Common | Share | Option | Total | |||
| Note | Shares | Capital | Reserve | Deficit | Equity | |
| Balance at June 30, 2019 | 2,537,567 $ | 647,149 $ | 155,869 $ |
(606,685) $ | 196,333 | |
| Net loss | - | - | - | (18,268) | (18,268) | |
| Balance at December 31, 2019 | 2,537,567$ | 647,149$ | 155,869$ | (624,953) $ | 178,065 |
| Share | ||||||
|---|---|---|---|---|---|---|
| Common | Share | Option | Total | |||
| Note | Shares | Capital | Reserve | Deficit | Equity | |
| Balance at June 30, 2020 | 2,537,567 $ | 647,149 $ | 155,869 $ |
(628,693) $ | 174,325 | |
| Net loss | - | - | - | (110,228) | (110,228) | |
| Balance at December 31, 2020 | 2,537,567$ | 647,149$ | 155,869$ | (738,921) $ | 64,097 |
The accompanying notes are an integral part of these interim condensed financial statements.
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PSYBIO THERAPEUTICS CORP.
(formerly Leo Acquisitions Corp.)
INTERIM CONDENSED STATEMENTS OF CASH FLOWS Unaudited - Prepared by Management THREE AND SIX MONTHS ENDED DECEMBER 31, 2020 AND 2019
(Expressed in Canadian Dollars)
| Three Months | Three Months | Ended | Six Months Ended | Six Months Ended | Six Months Ended | |||
|---|---|---|---|---|---|---|---|---|
| December | 31, | December | 31, | |||||
| 2020 | 2019 | 2020 | 2019 | |||||
| CASH FLOWS FROM OPERATING | ||||||||
| ACTIVITIES | ||||||||
| Net loss for the period | $ | (105,748) | $ | (13,788) | $ | (110,228) | $ | (18,268) |
| Changes in non-cash working capital: | ||||||||
| Prepaid expenses | (1,412) | - | (1,412) | - |
||||
| Accountspayable and accrued liabilities | 67,833 | (4,329) | 72,313 | (10,622) |
||||
| CASH FLOWS USED IN OPERATING | ||||||||
| ACTIVITIES | (39,327) | (18,117) | (39,327) | (28,890) | ||||
| CASH FLOWS FROM FINANCING | ||||||||
| ACTIVITIES | ||||||||
| NET DECREASE IN CASH | (39,327) | (18,117) | (39,327) | (28,890) |
||||
| CASH, BEGINNING OF PERIOD | 220,048 | 242,145 | 220,048 | 252,918 |
||||
| CASH, END OF PERIOD | $ | 180,721 | $ | 224,028 | $ | 180,721 | $ | 224,028 |
| SUPPLEMENTAL CASH FLOW | ||||||||
| INFORMATION | ||||||||
| Interest paid | $ | - | $ | - | $ | - | $ | - |
| Income taxespaid | $ | - | $ | - | $ | - | $ | - |
PSYBIO THERAPEUTICS CORP.
(formerly, Leo Acquisitions Corp.)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited - Prepared by Management
DECEMBER 31, 2020
(Expressed in Canadian Dollars)
1. NATURE OF OPERATIONS AND GOING CONCERN
PsyBio Therapeutics Corp. (formerly, Leo Acquisitions Corp.) (the "Company") was incorporated by Certificate of Incorporation issued pursuant to the provisions of the Business Corporations Act (Ontario) (the "OBCA") on October 28, 2009. The Company was a Capital Pool Corporation ("CPC"), as defined in policy 2.4 of the TSX Venture Exchange (the "Exchange") with a view to completing a Qualifying Transaction. The Company was unable to complete a Qualifying Transaction within the time limits prescribed by the Exchange. As a result, on May 16, 2013, the Company’s common shares (the "Common Shares") were transferred to the NEX board of the Exchange, and were listed under the symbol “LEQ.H".
On February 19, 2021, in connection with the completion of the Transaction (as defined herein) which constituted the Company’s Qualifying Transaction, the Company changed its name to PsyBio Therapeutics Corp. and continued out of the jurisdiction of the OBCA into the jurisdiction of the Business Corporations Act (British Columbia) (“BCBCA”), amongst other things. Please see Note 8 (Subsequent Events) to these interim condensed financial statements for details. As a result of the Transaction, the Company redesignated the Common Shares as subordinate voting shares (the “Subordinate Voting Shares”) and created multiple voting shares (“Multiple Voting Shares”). The Subordinate Voting Shares are now trading on the Exchange under the symbol “PSYB”.
As at December 31, 2020, the Company has not commenced commercial operations and has no significant assets other than cash. The Company will not carry on any business other than the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction, as defined under the policies of the Exchange.
The Company’s registered address and principal place of business is 45 Sheppard Ave East, Suite 703, Toronto, Ontario, M2N 5W9.
These interim condensed financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) applicable to a going concern, which contemplates that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. The Company has no source of operating revenues and its ability to operate as a going concern in the near-term will depend on its ability to successfully raise additional financing and to commence profitable operations in the future. These interim condensed financial statements do not purport to give effect to adjustments, if any, that may be necessary should the Company be unable to continue and therefore, be required to realize its assets and discharge its liabilities in a manner other than in the ordinary course of business. These circumstances create material uncertainties that cast significant doubt on the Company's ability to continue as a going concern.
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PSYBIO THERAPEUTICS CORP.
(formerly, Leo Acquisitions Corp.)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited - Prepared by Management
DECEMBER 31, 2020
(Expressed in Canadian Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES
Statement of Compliance
These interim financial statements are unaudited and have been prepared on a condensed basis in accordance with International Accounting Standard 34, Interim Financial Reporting , issued by the International Accounting Standards Board (“IASB”) using accounting policies consistent with IFRS.
These interim condensed financial statements do not include all of the disclosures required by IFRS for annual financial statements and accordingly should be read in conjunction with the Company's audited annual financial statements for the year ended June 30, 2020.
These interim condensed financial statements were approved by the Company’s board of directors and authorized for issue on March 1, 2021.
Basis of Presentation
These interim condensed financial statements have been prepared on the historical cost basis, except for certain financial instruments which are measured at fair value. Historical cost is based on the fair value of the consideration given in exchange for assets.
Functional and Presentation Currency
The interim condensed financial statements have been prepared in Canadian dollars, which is the Company’s functional and presentation currency.
Accounting Estimates and Judgments
The preparation of interim financial statements requires management to make judgments, estimates and form assumptions that affect the application of policies and reported amounts of assets and liabilities. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under difference assumptions and conditions.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods. Critical accounting estimates are estimates and assumptions made by management that may result in material adjustments to the carrying amount of assets and liabilities within the next financial year.
Critical estimates used in the preparation of these interim condensed financial statements include, among others, the valuation of share-based compensation and recognition of deferred income tax amounts, and the estimated amount of accrued liabilities. Actual results may differ from those estimates.
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PSYBIO THERAPEUTICS CORP.
(formerly, Leo Acquisitions Corp.)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited - Prepared by Management
DECEMBER 31, 2020
(Expressed in Canadian Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
New Accounting Standards Implemented in 2020
IFRS 16, Leases (“IFRS 16”) was issued in January 2016 to improve the accounting for leases, generally by eliminating a lessees’ classification of leases and introducing a single lessee accounting model. The most significant effect of the new standard will be the lessee’s recognition of the initial present value of unavoidable future lease payments as lease assets and lease liabilities on the statement of financial position. Leases with durations of 12 months or less and leases for low value assets are both exempted. The measurement of the total lease expense over the term of a lease will be unaffected by the new standard. However, the new standard will result in the timing of lease expense recognition being accelerated for leases which would be currently accounted for as operating leases. The presentation on the statement of loss and other comprehensive loss required by the new standard will result in most lease expenses being presented as amortization of lease assets and financing costs arising from lease liabilities rather than as being a part of goods and services purchased. The standard is effective for annual periods beginning on or after January 1, 2019 and will supersede IAS 17 Leases . The application of this new IFRS standard has had no impact on the Comany's interim condensed financial statements as it had no leases in place.
In December 2017, the IASB published Annual Improvements to IFRS Standards 2015–2017 Cycle, containing the following amendments to IFRS. These amendments are effective for annual periods beginning on or after January 1, 2019.
IFRS 3 Business Combinations and IFRS 11 Joint Arrangements – The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business.
IAS 12 Income Taxes – The amendments clarify that the requirements in the former paragraph 52B (to recognise the income tax consequences of dividends where the transactions or events that generated distributable profits are recognised) apply to all income tax consequences of dividends by moving the paragraph away from paragraph 52A that only deals with situations where there are different tax rates for distributed and undistributed profits.
IAS 23 Borrowing Costs – The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings.
The application of these amended IFRS standards has had no impact on the Company's interim condensed financial statements.
8
PSYBIO THERAPEUTICS CORP.
(formerly, Leo Acquisitions Corp.)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited - Prepared by Management
DECEMBER 31, 2020
(Expressed in Canadian Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncements
New IFRS accounting standards, interpretations, and amendments to existing standards that were not yet effective as at June 30, 2020, are described in note 2 to the annual financial statements. The Company is currently assessing what impact the application of those standards or amendments will have on its financial statements. The Company intends to adopt the standards, when they become effective. There have been no other changes to existing IFRS accounting standards and interpretations since June 30, 2020 that are expected to have a material effect on the Company’s interim condensed financial statements.
3. CASH
Cash Restriction
Cash consists of cash held in trust by the Company’s lawyers. In accordance with the defined policies of the Exchange the gross proceeds raised from the issuance of Common Shares may only be used to identify and evaluate assets or businesses for future investment, with the exception that no more than the lesser of 30% of the gross proceeds from the issuance of shares and $210,000 may be used to cover prescribed costs of issuing the Common Shares or administrative and general expenses of the Company. These restrictions apply until completion of a Qualifying Transaction by the Company as defined under the policies of the Exchange. As at December 31, 2020, the Company has exceeded this limit. In connection with the completion of the Transaction, the Company disclosed this violation to the Exchange who waived the violation.
4. CAPITAL RISK MANAGEMENT
The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. The Company includes equity, comprised of issued share capital, share option reserve and accumulated deficit, in the definition of capital.
The Company’s primary objective with respect to its capital management is to ensure that it has sufficient cash resources to fund its activities relating to identifying and evaluating Qualifying Transactions. To secure the additional capital necessary to pursue these plans, the Company may attempt to raise additional capital through the issuance of equity.
The Company is not subject to any externally imposed capital requirements other than the cash restriction disclosed in note 3. There has been no change with respect to the overall capital risk management strategy during the period ended December 31, 2020.
9
PSYBIO THERAPEUTICS CORP.
(formerly, Leo Acquisitions Corp.)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited - Prepared by Management
DECEMBER 31, 2020
(Expressed in Canadian Dollars)
5. SHARE CAPITAL
Authorized, Issued, and Outstanding
The Company is authorized to issue an unlimited number of Common Shares.
On October 18, 2016, the Company completed a consolidation of its issued and outstanding Common Shares on the basis of one post-consolidation Common Share for 3.3 pre-consolidation Common Shares. All share quantities in the interim condensed financial statements are reflected on a post-consolidation basis.
On October 21, 2016, the Company issued 436,355 (727,272 pre-consolidated) Common Shares under a non-brokered private placement at price of $0.0825 ($0.0495 pre-consolidated) per share for gross proceeds of $36,000.
On July 11, 2017, the Company issued 784,784 (1,308,000 pre-consolidated) Common Shares under a non-brokered private placement at a price of $0.0917 ($0.055 pre-consolidated) per share for gross proceeds of $71,940.
Included in the issued and outstanding shares are 181,810 (303,027 pre-consolidated) seed shares which were issued at a price of $0.275 ($0.165 pre-consolidated) per Common Share which are subject to a CPC Escrow Agreement pursuant to the policies of the Exchange. Under the terms of the CPC Escrow Agreement, 10% of the escrowed Common Shares will be released from escrow upon receiving notice from the Exchange that the Company has completed a Qualifying Transaction (the “Initial Release”) and an additional 15% will be released on the dates 6 months, 12 months, 18 months, 24 months, 30 months, and 36 months following the Initial Release. Shares held in escrow will be cancelled should the Company fail to complete its Qualifying Transaction or become de-listed.
Effective February 19, 2021, the Company completed a Common Share consolidation on the basis of 1.6667 old Common Shares into one new Common Share (the “Consolidation”). Subsequent to the consolidation, the Company had a total of 2,537,567 Common Shares outstanding. All share and per share amounts have been restated to reflect the share consolidation retrospectively.
As a result of the Transaction, the Company redesignated the Common Shares as Subordinate Voting Shares and created Multiple Voting Shares.
10
PSYBIO THERAPEUTICS CORP.
(formerly, Leo Acquisitions Corp.)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited - Prepared by Management
DECEMBER 31, 2020
(Expressed in Canadian Dollars)
5. SHARE CAPITAL (Continued)
Stock Options
The Company awards stock options to directors, officers and technical consultants under an incentive stock plan (the "Plan"). Options are granted at the fair market value of the shares on the day granted, and vest over various terms. Compensation expense is recognized when options are issued. The board of directors of the Company may from time to time, in its discretion, grant to directors, officers, and technical consultants of the Company, non-transferable options to purchase Common Shares, provided that the number of Common Shares reserved for issuance will not exceed ten percent (10%) of the issued and outstanding Common Shares exercisable for a period of up to five years from the date of grant.
The following table reflects the continuity of stock options for the periods presented:
| Weighted Average | ||
|---|---|---|
| Number of Options | Exercise Price | |
| Outstanding and exercisable - June 30, 2020 | ||
| and December 31,2020 | 253,756 | $0.55 |
Options granted are accounted for by the fair value method of accounting for share-based payments. The Company records stock-based compensation expense over the vesting period and credits reserves for all options granted.
The Company had the following stock options outstanding and exercisable as at December 31, 2020:
| Weighted Average | |||
|---|---|---|---|
| Number of Options | Exercise | Remaining | |
| Outstanding | Price | Expiry Date | Contractual Life |
| 131,642 | $0.55 | February 17, 2021 | 0.14 years |
| 122,114 | $0.55 | March 5,2023 | 2.18years |
| 253,756 | 1.12years |
On February 19, 2021, upon completion of the Transaction, the Company adopted a new stock option plan (the “New Plan”) which permits the Board of Directors to grant options to acquire such number of Subordinate Voting Shares as is equal to up to 10% of the number of the Company’s issued and outstanding Subordinate Voting Shares at the time such awards are granted.
11
PSYBIO THERAPEUTICS CORP.
(formerly, Leo Acquisitions Corp.)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited - Prepared by Management
DECEMBER 31, 2020
(Expressed in Canadian Dollars)
6. FINANCIAL INSTRUMENTS AND RISK FACTORS
Risk management is carried out by the officers of the Company as discussed with the Board of Directors. The officers of the Company are charged with the responsibility of establishing controls and procedures to ensure that financial risks are appropriately mitigated.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company manages its liquidity risk by forecasting cash flows and anticipated investing and financing activities. Officers of the Company are actively involved in the review and approval of planned expenditures.
As at December 31, 2020, the Company has liabilities of $118,036 (June 30, 2020 - $45,723) due within twelve months and has cash of $180,721 (June 30, 2020 - $220,048) to meet its current obligations. As a result, the Company has minimal liquidity risk.
Credit Risk
The Company’s exposure to credit risk arises from the possibility that its debtors may fail to meet their obligations. Cash is held in trust by the Company’s lawyers. The Company manages the credit exposure related to cash by making sure that the lawyers maintain bank accounts with recognized Schedule I banks in Canada. The carrying amount of cash represents the maximum credit exposure.
7. SEGMENTED INFORMATION
The Company operates in only one reportable segment, being psilocybin research and development focused activities. Geographically, all of the Company’s assets and operations are conducted in the United States.
8. SUBSEQUENT EVENTS
On December 2, 2020, Leo, PsyBio Therapeutics, Inc. ("PsyBio"), PsyBio Therapeutics Financing Inc. (“ Finco ”), 1276949 B.C. Ltd. (“ Leo BC Sub ”) and Eluss, Inc. (“ Leo Delaware Sub ”) entered into a business combination agreement (the “ Definitive Agreement ”) which outlines the terms and conditions pursuant to which Leo and PsyBio agreed to complete a transaction that would result in a reverse take-over of Leo by the shareholders of PsyBio (the “ Transaction ”). The Definitive Agreement was negotiated at arm’s length. The Transaction closed on February 19, 2021.
On December 4, 2020, in connection with the Transaction, PsyBio announced the closing of the previously announced financing (the “Financing”) of subscription receipts of Finco (the “Subscription Receipts”) for aggregate gross proceeds of $14,493,394 through the issuance of 41,409,698 Subscription Receipts at a price of $0.35 per Subscription Receipt.
12
PSYBIO THERAPEUTICS CORP.
(formerly, Leo Acquisitions Corp.)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited - Prepared by Management
DECEMBER 31, 2020
(Expressed in Canadian Dollars)
8. SUBSEQUENT EVENTS (Continued)
In connection with the Financing, the Agents received a cash commission of $527,229 (the “Agents’ Commission”) and 1,506,368 compensation warrants (the “Compensation Warrants”). The Agents also received finance fees of $374,000 (the “Finance Fee”) and 1,069,000 advisor warrants (the “Advisor Warrants”). On closing of the Financing, the Agents received payment of 50% of the Agents’ Commission, 50% of the Finance Fee and were issued all of the Compensation Warrants and Advisor Warrants. The remaining 50% of the Agents’ Commission and 50% of the Finance Fee were paid to the Agent immediately prior to the closing of the Transaction, upon conversion of the Subscription Receipts in accordance with their terms.
Immediately prior to closing of the Transaction, Leo continued (the “ Continuance ”) from the OBCA to the BCBCA and, amended its articles to (i) reclassify its Common Shares as Subordinate Voting Shares and to amend the terms of such shares, (ii) create a class of Multiple Voting Shares, and (iii) change its name to “PsyBio Therapeutics Corp.” (collectively, the “ Article Amendments ”). Immediately thereafter, it effected the Consolidation. The Company's shareholders held an annual and special meeting on January 13, 2021, to approve matters related to the Transaction, including the Article Amendments. All matters put forth to shareholders at such meeting were passed with overwhelming shareholder approval.
Immediately prior to closing of the Transaction, PsyBio filed a certificate of amendment under the laws of the State of Delaware to effect a stock split currently anticipated to be on the basis of approximately 1.1529 “old” shares of PsyBio common stock (“ PsyBio Shares ”) for every one “new” PsyBio Share, subject to adjustment in accordance with the terms of the Definitive Agreement (the “ PsyBio Stock Split ”).
Immediately prior to closing the Transaction, each Subscription Receipt (as defined below) was automatically exchanged for one common share of Finco (a " Finco Share ") pursuant to the terms and conditions of the Subscription Receipts and the subscription receipt agreement governing the Subscription Receipts, including that all conditions precedent to the Transaction were satisfied or waived.
At closing of the Transaction, Leo, Finco and Leo BC Sub, a wholly-owned subsidiary of Leo, completed a three-cornered amalgamation under the laws of the Province of British Columbia, pursuant to which Finco shareholders (including former holders of the Subscription Receipts) received one Subordinate Voting Share in exchange for each Finco Share held, and Finco and Leo BC Sub amalgamated (the “ Amalgamation ”). Following closing, the resulting entity (“ Amalco ”) was wound-up and dissolved, pursuant to which all of the assets of Amalco were distributed to the Resulting Issuer. The Amalgamation also provided that all outstanding warrants to purchase Finco Shares (including the Compensation Warrants and Advisor Warrants) remained outstanding and thereafter entitle the holders thereof to acquire Subordinate Voting Shares in lieu of Finco Shares on the same terms and conditions.
13
PSYBIO THERAPEUTICS CORP.
(formerly, Leo Acquisitions Corp.)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited - Prepared by Management
DECEMBER 31, 2020
(Expressed in Canadian Dollars)
8. SUBSEQUENT EVENTS (Continued)
Concurrently with completion of the Amalgamation at closing of the Transaction, Leo, PsyBio and Leo Delaware Sub (“ Leo Delaware Sub ”),a wholly-owned subsidiary of Leo, completed a three-cornered merger (the “ Merger ”) under the laws of the State of Delaware pursuant to which PsyBio and Leo Delaware Sub merged with PsyBio to continue as the surviving corporation and a wholly-owned subsidiary of the Resulting Issuer. As a result of the Merger, Leo acquired all of the issued and outstanding PsyBio Shares (on a post-PsyBio Stock Split Basis) in exchange for Multiple Voting Shares on the basis of one PsyBio Share for every 1/1000th of a Multiple Voting Share.
Upon completion of the Transaction, with the exception of one Leo board member, all directors and officers of Leo resigned and were replaced by nominees of PsyBio.
On February 25, 2021, the Company announced that it had received all final approvals for the Transaction, including that of the Exchange. The Company's Subordinate Voting Shares now trade on the TSXV under the ticker symbol "PSYB". The total number of issued and outstanding Subordinate Voting Shares of PsyBio at the commencement of trading was 45,695,365 (or 112,838,977 on an as converted basis inclusive of the Company’s non-listed Multiple Voting Shares).
On February 17, 2021, certain directors and officers of Leo exercised 109,783 (182,975 pre-consolidation) outstanding stock options of Leo for gross proceeds of $60,382 and 109,783 Subordinate Voting Shares were issued on March 1, 2021.
On February 19, 2021, stock options to purchase up to an aggregate of 6,036,156 Subordinate Voting Shares were granted to certain directors and officers of the Company and options to purchase up to an aggregate of 2,129,985 Subordinate Voting Shares were granted to certain consultants and advisers of the Company. Each option is exercisable into one Subordinate Voting Share at an exercise price of $0.35 per share. The options will expire five years from the date of grant and are subject to vesting conditions. All options were granted in accordance with the Company's New Stock Option Plan as approved by shareholders at the annual and special meeting on January 13, 2021, and adopted by the Board of Directors of the Company on closing of the Transaction.
9. COVID-19
On January 30, 2020, the World Health Organization declared the coronavirus outbreak ("COVID-19") a "Public Health Emergency of International Concern" and on March 11, 2020, declared COVID-19 a pandemic. The outbreak of COVID-19 has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact they will have on the Company's financial position.
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