Solvbl Solutions Inc. — Annual Report 2020

Apr 30, 2021

GHP Noetic Science-Psychedelic Pharma Inc. Financial Statements For the period from the date of incorporation (March 25, 2020) to December 31, 2020

GHP Noetic Science-Psychedelic Pharma Inc. Contents

(in Canadian dollars)

Page Financial Statements 3 Statement of Financial Position ........................................................................................................................................ 4 Statement of Loss and Comprehensive Loss ................................................................................................................... 5 Statement of Changes in Shareholders’ Equity ................................................................................................................ 6 Statement of Cash Flows ................................................................................................................................................. 7 - 19 Notes to the Financial Statements ................................................................................................................................

Independent Auditor’s Report

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To the Shareholders of GHP Noetic Science-Psychedelic Pharma Inc.:

Opinion

We have audited the financial statements of GHP Noetic Science-Psychedelic Pharma Inc. (the "Corporation"), which comprise the statement of financial position as at December 31, 2020, and the statements of loss and comprehensive loss, changes in shareholders’ equity and cash flows for the period from March 25, 2020 (date of incorporation) to December 31, 2020, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Corporation as at December 31, 2020, and its financial performance and its cash flows for the period from March 25, 2020 to December 31, 2020 in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Corporation in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

Management is responsible for the other information. The other information comprises Management’s Discussion and Analysis.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Corporation’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Corporation or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Corporation’s financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Corporation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Corporation to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor's report is Brock Stroud.

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Toronto, Ontario April 30, 2021

Chartered Professional Accountants Licensed Public Accountants

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GHP Noetic Science-Psychedelic Pharma Inc. Statement of Financial Position As at December 31, 2020 (in Canadian dollars)

	2020
Assets
Current
Cash	$ 26,178
Short term investments_(Note 5)_	$ 1,204,142
	$ 1,230,320
Liabilities
Current
Accountspayable and accrued liabilities	$ 3,592
	$ 3,592
Shareholders' Equity
Share capital(Note 7)	$ 1,500,000
Share Issuance Costs(Note 7)	$ (198,177)
Contributed Surplus(Note 7)	$ 150,000
Warrants(Note 7)	$ 53,000
Deficit	$(278,096)
	$ 1,226,727
	$ 1,230,320

Nature of the Organization (Note 1)

Approved on behalf of the Board

[signed] "Warren Wright" Director	[signed] "Mike Franks"
	Director

The accompanying notes are an integral part of these financial statements

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GHP Noetic Science-Psychedelic Pharma Inc. Statement of Loss and Comprehensive Loss For the period from the date of incorporation (March 25, 2020) to December 31, 2020 (in Canadian dollars)

	2020
Revenue
Interest income	$ 4,225
Expenses
Bank charges	$ 329
Filing Fees	$ 28,354
Legal and Professional Fees	$ 76,958
Office/General Administrative Expenses	$ 26,680
Share-based compensation(Note 7)	$ 150,000
	$ 282,321
Net loss and comprehensive loss	$ (278,096)
Loss per share
Basic and diluted	(0.10)
Weighted average number of common shares	2,758,007

The accompanying notes are an integral part of these financial statements

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GHP Noetic Science-Psychedelic Pharma Inc. Statement of Changes in Shareholders’ Equity For the period from the date of incorporation (March 25, 2020) to December 31, 2020 (in Canadian dollars)

	(#) Amount Contributed Surplus Warrants Deficit Shareholders' Equity $ - $ - $ - $ - $ - 5,000,000 500,000 - - - 500,000 5,000,000 1,000,000 - - - 1,000,000 (198,177) - - - (198,177) - - - 53,000 - 53,000 - - 150,000 - - 150,000 - - - - (278,096) (278,096) 10,000,000 $ 1,301,823 $ 150,000 $ 53,000 $(278,096) $ 1,226,727 Share Capital
Balance - March 25, 2020 Share Subsciption Initial Public Offering Share Issuance costs Issuance of agent warrents Share-based compensation Net loss Balance - December 31, 2020

The accompanying notes are an integral part of these financial statements

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GHP Noetic Science-Psychedelic Pharma Inc. Statement of Cash Flows For the period from the date of incorporation (March 25, 2020) to December 31, 2020 (in Canadian dollars)

	2020
Cash provided by (used for) the following activities
Operating activities
Net loss	$	(278,096)
Adjusted for the following non-cash items:
Accrued interest		(4,225)
Stock based compensation(Note 7)		150,000
		(132,321)
Changes in working capital accounts
Subscription receivable		-
Prepaid expenses
Accountspayable and accrued liabilities		3,593
		3,593
Cash used for operating activities		(128,728)
Investing Activites
Purchase of short-term investments		(1,250,000)
Redemption of short-term investments		50,083
Cashprovided by (used for) investing activities		(1,199,917)
Financing activities
Proceeds from shares issued net of costs		1,354,823
Cashprovided by (used for) Financing activities		1,354,823
Increase(decrease) in cash		26,178
Cash, beginning ofperiod		-
Cash, end of period	$	26,178

The accompanying notes are an integral part of these financial statements

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GHP Noetic Science-Psychedelic Pharma Inc. Notes to the Financial Statements For the period from the date of incorporation (March 25, 2020) to December 31, 2020

1. DESCRIPTION OF BUSINESS

GHP Noetic Science-Psychedelic Pharma Inc. (the "Corporation") was incorporated under the Business Corporations Act (Ontario) on March 25, 2020 and is classified as a Capital Pool Company as defined in the Policy 2.4 of the TSX Venture Exchange (the “Exchange”) Corporate Finance Manual (the “Manual”). The principal business of the Corporation is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction (as such term is defined in the Manual) ("QT"). The Corporation has not commenced commercial operations and has no assets other than cash, subscriptions receivable and deferred offering costs. Given the nature of the activities, no separate segmented information is reported. The Corporation’s continuing operations, as intended, are dependent on its ability to secure equity financing with which it intends to identify and evaluate potential acquisitions of businesses, and once identified and evaluated, to negotiate an acquisition thereof or participation therein subject to receipt of regulatory and, if required, shareholders’ approval.

The proceeds raised from the issuance of share capital may only be used to identify and evaluate assets or businesses for future investment, with the exception that up to the lesser of 30% of the gross proceeds realized by the Corporation in respect of the sale of its securities or $210,000, may be used for purposes other than evaluating businesses or assets. These restrictions apply until completion of a QT by the Corporation. The Corporation is required to complete its QT on or before two years from the date the shares of the Corporation are listed on the Exchange.

The head office and the registered head office of the Corporation is located at 100 Broadview Avenue Suite 300 Toronto M4M 3H3.

On April 30, 2021, the Board of Directors of the Corporation approved the audited financial statements for the period from the date of incorporation (March 25, 2020) to December 31, 2020.

The global outbreak of COVID-19 (coronavirus) has had a significant impact on businesses through the restrictions put in place by the Canadian, provincial and municipal governments regarding travel, business operations and isolation/quarantine orders. At this time, it is unknown the extent of the impact the COVID19 outbreak may have on the Corporation as this will depend on future developments that are highly uncertain and that cannot be predicted with confidence. These uncertainties arise from the inability to predict the ultimate geographic spread of the disease, and the duration of the outbreak, including the duration of travel restrictions, business closures or disruptions, and quarantine/isolation measures that are currently, or may be put, in place by Canada and other countries to fight the virus.

Qualifying Transaction

On February 4, 2021, the Corporation announced that it had entered into a non-binding letter of intent dated February 2, 2021 with Diamond Therapeutics Inc. (“Diamond“), a psychedelic drug development company focused on low-dose therapies for mental health.

Terms of the Transaction

The Transaction is expected to proceed by way of a three-cornered amalgamation, pursuant to which Diamond will merge with a wholly-owned subsidiary of GHP formed for the purposes of completing the Transaction, following which GHP (following the Closing, the “Resulting Issuer”) will change its name to “Diamond Therapeutics Inc.” or such other name as may be determined by GHP and Diamond (the “Name Change”), and continue the business of Diamond. The final structure of the Transaction will be determined after the parties have considered applicable tax, securities and accounting matters. The Transaction will be subject to, among other things, the execution of a definitive agreement (the “Definitive Agreement”) to be negotiated by the parties.

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GHP Noetic Science-Psychedelic Pharma Inc. Notes to the Financial Statements For the period from the date of incorporation (March 25, 2020) to December 31, 2020

1. DESCRIPTION OF BUSINESS (Continued)

Proposed Private Placement

Prior to the Closing, GHP or Diamond is expected to undertake a private placement of subscription receipts to raise minimum gross proceeds of $2,000,000 (the “Private Placement”), on terms to be determined.

2. BASIS OF PRESENTATION

Statement of compliance

These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”) in effect at the closing date of December 31, 2020.

Basis of measurement

These financial statements have been prepared on a going concern basis, under the historical cost convention.

Functional currency and currency of presentation

The financial statements are presented in Canadian dollars which is also the functional currency of the Corporation.

Use of estimates and judgments

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. Areas where estimates are significant to the financial statements are disclosed in Note 3.

3. SIGNIFICANT ACCOUNTING POLICIES

Cash

Cash consists of amounts on deposit with high credit quality financial institutions.

Short-term investments

Short-term investments are comprised of liquid investments with maturities within 12 months of the date of the statement of financial position.

Income taxes

Tax expense comprises current and deferred tax. Tax is recognized in the statement of loss and comprehensive loss except to the extent it relates to items recognized directly in equity.

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GHP Noetic Science-Psychedelic Pharma Inc. Notes to the Financial Statements For the period from the date of incorporation (March 25, 2020) to December 31, 2020

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Current tax

Current tax expense is based on the results for the period as adjusted for items that are not taxable or not deductible. Current tax is calculated using tax rates and laws that were enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. Provisions are established where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred tax

Deferred taxes are the taxes expected to be payable or recoverable on differences between the carrying amounts of assets in the statement of financial position and their corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences between the carrying amounts of assets and their corresponding tax bases. Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets in a transaction that affects neither the taxable profit nor the accounting profit.

Share-based payments

The Corporation applies a fair value based method of accounting to all share-based payments. Employee and director stock options are measured at their fair value of each tranche on the grant date and recognized over its respective vesting period. Non-employee stock options are measured based on the service provided to the reporting date and at their then-current fair values. The cost of stock options is presented as share-based payment expense when applicable with a corresponding credit to contributed surplus. On the exercise of stock options share capital is credited for consideration received and for fair value amounts previously credited to contributed surplus. The Corporation uses the Black-Scholes option pricing model to estimate the fair value of share-based payments.

Share capital and share issuance costs

Share capital represents the amount received on the issuance of shares. Transaction costs directly attributable to the issuance of common shares are recognized as a reduction of share capital.

Agent warrants

The Corporation uses the fair value method based on the Black-Scholes pricing model to determine the fair value of the warrants issued to agents and records a debit to share issuance costs with a corresponding credit to warrants.

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GHP Noetic Science-Psychedelic Pharma Inc. Notes to the Financial Statements For the period from the date of incorporation (March 25, 2020) to December 31, 2020

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loss per share

Basic loss per share is computed by dividing the loss for the period by the weighted-average number of shares outstanding during the period. Common shares escrowed pursuant to the requirements of the Exchange are excluded from the number of outstanding common shares. Diluted earnings per share is calculated giving effect to potential dilution that would occur if stock options, warrants or other dilutive instruments were exercised. The dilutive impact is determined by assuming that any proceeds upon exercise for which market price exceeds exercise price, would be used to purchase shares at the average market price for the period. The number of additional shares included in the calculation is based on the treasury stock method for options and warrants. Diluted loss per share does not include the effect of potentially issuable common shares if their effect is anti-dilutive.

Financial instruments

Financial assets and financial liabilities are recognized when the Corporation becomes a party to the contractual provisions of the financial instrument.

Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred.

A financial liability is derecognized when it is extinguished, discharged, cancelled or when it expires.

Financial assets and financial liabilities are measured initially at fair value plus transactions costs, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value.

Financial assets and financial liabilities are measured subsequently as described below.

Financial assets

For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition:

• amortized cost,

• fair value through profit or loss (“FVTPL”); or

• fair value through other comprehensive income (“FVOCI”).

The classification is determined by both:

• the Corporation’s business model for managing the financial asset; and

• the contractual cash flow characteristics of the financial asset.

The category determines subsequent measurement and whether any resulting income and expense is recognized in profit or loss or in comprehensive income (loss) (all income and expenses relating to financial assets that are recognized in profit or loss are presented within finance income or other financial items).

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GHP Noetic Science-Psychedelic Pharma Inc. Notes to the Financial Statements For the period from the date of incorporation (March 25, 2020) to December 31, 2020

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments (Continued)

Subsequent measurement of financial assets

Financial assets at amortized cost

Financial assets are measured at amortized cost if the assets meet the following conditions (and are not designated as FVTPL):

• they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; and

• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

This category includes non-derivative financial assets like loans and receivables with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Corporation’s cash and short-term investments fall into this category of financial assets.

Financial assets at fair value through profit or loss (FVTPL)

Financial assets that are held within a different business model than ‘hold to collect’ or ‘hold to collect and sell’, and financial assets the contractual cash flows of which are not solely payments of principal and interest are accounted for at FVTPL. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply (see below).

Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique, where no active market exists. The Corporation does not have any financial instruments in this category as at December 31, 2020.

Financial assets at fair value through other comprehensive income (FVOCI)

The Corporation accounts for financial assets at FVOCI if the assets meet the following conditions:

• they are held under a business model whose objective it is to hold to collect the associated cash flows and sell; and

• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Any gains or losses recognised in OCI will be recycled upon derecognition of the asset. The Corporation does not have any financial instruments in this category as at December 31, 2020.

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GHP Noetic Science-Psychedelic Pharma Inc. Notes to the Financial Statements For the period from the date of incorporation (March 25, 2020) to December 31, 2020

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments (Continued)

Impairment of financial assets

IFRS 9’s new impairment requirements use more forward-looking information to recognise expected credit losses – the ‘expected credit loss’ (“ECL”) model. The Corporation considers a broad range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the financial instrument. In applying this forward-looking approach, a distinction is made between:

• financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (“Stage 1”); and

• financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (“Stage 2”).

“Stage 3” would cover financial assets that have objective evidence of impairment at the reporting date. However, none of the Corporation’s financial assets fall into this category.

“12-month expected credit losses” are recognised for the first category while “lifetime expected credit losses” are recognised for the second category.

Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.

Classification and measurement of financial liabilities

The Corporation’s financial liabilities include accounts payable and accrued liabilities. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Corporation designated a financial liability at fair value through profit or loss.

Subsequently, financial liabilities are measured at amortized cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments).

Significant accounting judgments, estimates and assumptions

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of the assets, liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates. The Corporation has identified the following critical accounting policies under which significant judgments, estimates and assumptions are made and where actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods.

In particular, the Corporation has identified the following areas where significant judgments, estimates, and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and in the relevant notes to the financial statements.

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GHP Noetic Science-Psychedelic Pharma Inc. Notes to the Financial Statements For the period from the date of incorporation (March 25, 2020) to December 31, 2020

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Significant accounting judgments, estimates and assumptions (Continued)

Significant management judgments

The following are significant management judgments in applying the accounting policies of the Corporation and have the most significant effect on the financial statements.

• Taxes

The Corporation recognizes deferred tax assets to the extent that it is probable that future taxable profits will be available to utilize the Corporation’s deductible temporary differences which are based on management’s judgement on the degree of future taxable profits.

• Financial instruments

The Corporation is required to classify its various financial instruments into certain categories for the financial instruments’ initial and subsequent measurement. This classification is based on management’s judgement as to the purpose of the financial instrument and to which category is most applicable.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Corporation based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Corporation. Such changes are reflected in the assumptions when they occur.

• Fair value of financial instruments

The estimated fair value of financial assets and liabilities, by their very nature, are subject to measurement uncertainty.

• Taxes

Provisions for taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Corporation reviews the adequacy of these provisions at the end of the reporting period. However, it is possible that at some future date an additional liability could result from audits by taxing 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.

• Share-based payments and fair value of warrants

Share-based payments to employees and directors and warrants issued are measured at the fair value of the equity instruments at the grant date. Determining the fair value of such share-based awards requires judgment as to the appropriate valuation model and the inputs for the model require assumptions including the rate of forfeiture of options granted, the expected life of the option, the expected volatility of the Corporation’s share price, the risk-free interest rate and expected dividends.

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GHP Noetic Science-Psychedelic Pharma Inc. Notes to the Financial Statements For the period from the date of incorporation (March 25, 2020) to December 31, 2020

4. CAPITAL MANAGEMENT

The Corporation’s objectives when managing capital are to safeguard the Corporation’s ability to continue as a going concern and allow it to identify an appropriate business or asset in order to acquire such a business or asset. The Corporation’s capital consists of shareholders’ equity.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Corporation, is reasonable. There were no changes in the Corporation's approach to capital management during the period ended December 31, 2020. The Corporation’s investment policy is to hold cash in interest bearing bank accounts. The Corporation is not subject to externally imposed capital requirements and does not have exposure to asset-backed commercial paper or similar products. The Corporation expects its current capital resources to be sufficient to carry out its activities for the next twelve months.

5. SHORT-TERM INVESTMENTS

Short-term investments consist of various guaranteed investment certificates that mature on August 27, 2021 with annual interest rates of 1%.

	Interest rate	Maturity	date	December 31, 2020	December 31, 2020
Guaranteed investment
certificates	1%	August	27, 2021	$	1,204,142

6. FINANCIAL INSTRUMENTS

Carrying values and fair values

Financial instruments are classified into one of the following categories: amortized cost, fair value through profit or loss (“FVTPL”) and fair value through other comprehensive income (FVOCI).

The carrying values of cash, short-term investments, and accounts payable and accrued liabilities approximate their fair values due to their relatively short periods to maturity.

Fair value

Fair value represents the price at which a financial instrument could be exchanged in an orderly market, in an arm's length transaction between knowledgeable and willing parties who are under no compulsion to act. The Corporation classifies the fair value of the financial instruments according to the following hierarchy based on the amount of observable inputs used to value the instrument.

• Level 1: Fair value measurements are those derived from quoted prices (unadjusted) in the active market for identical assets or liabilities.

• Level 2: Fair value measurements are those derived from inputs other than quoted prices that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (derived from prices).

• Level 3: Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data.

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GHP Noetic Science-Psychedelic Pharma Inc. Notes to the Financial Statements For the period from the date of incorporation (March 25, 2020) to December 31, 2020

6. FINANCIAL INSTRUMENTS (Continued)

As at December 31, 2020 the Corporation did not have any financial instruments remeasured at fair value.

It is management's opinion that the Corporation is not exposed to significant credit, interest, or currency risks arising from these financial instruments except as otherwise disclosed.

Credit risk

Credit risk refers to the potential loss arising from any failure by counterparties to fulfill their obligations, as and when they fall due. It is inherent to the business as potential losses may arise due to the failure of its counterparties to fulfill their obligations on maturity periods or due to adverse market conditions. The Corporation’s financial assets exposed to credit risk are primarily composed of cash and short-term investments. Maximum exposure is equal to the carrying values of these assets. The Corporation’s cash and short-term investments are held in a Canadian bank. The financial assets of the Corporation are neither past due nor impaired as at December 31, 2020.

Liquidity risk

Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they become due. As at December 31, 2020, the Corporation had a cash balance of $26,178 and short-term investments of $1,204,142 to settle current liabilities of $3,592. To the extent that the Corporation believes it has sufficient liquidity to meet its current obligations, the Board of Directors may consider securing additional funds through equity or partnering transactions to finance future operations. All the Corporation’s financial liabilities are normally paid within 30 days and are subject to normal trade terms. The Corporation has no source of operating cash flow to fund its evaluation potential Qualifying Transaction. Funding for a potential Qualifying Transaction requires equity or debt financing. The Corporation has limited financial resources and there is no assurance that funding will always be available to allow the Corporation to complete a Qualifying Transaction.

7. SHARE CAPITAL

Authorized

An unlimited number of common shares with no par value.

Issued and outstanding

Opening Balance, March 25, 2020 Private Placement – Common Shares Initial Public Offering Share Issuance costs Ending Balance, December 30, 2020	Number of Common Shares Amount
	$ - - 5,000,000 500,000 5,000,000 1,000,000 (198,177)
	10,000,000 1,376,123

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GHP Noetic Science-Psychedelic Pharma Inc. Notes to the Financial Statements For the period from the date of incorporation (March 25, 2020) to December 31, 2020

7. SHARE CAPITAL (Continued)

Issued and outstanding (Continued)

Private Placement

During the period ended December 31, 2020, the Corporation authorized a private placement of 5,000,000 common shares at a price of $0.10 per share for gross proceeds of $500,000 Share issuance costs of $15,000 were associated with these subscriptions.

Initial Public Offering

On July 29, 2020 the Corporation completed its Initial Public Offering (“IPO”). The IPO offered 5,000,000 Common Shares at a price of $0.20 per Common Share for gross proceeds of $1,000,000. The Corporation incurred $183,177 in cash share issuance costs associated with legal and underwriting fees and a further $53,000 in agent warrants.

Stock option plan

The Corporation has established a stock option plan available for directors, officers, employees and consultants, and has authorized a stock option pool equal to 10% of the outstanding common shares. At December 31, 2020, the available option pool was 1,000,000 and outstanding stock options totaled 1,000,000.

Options are granted with exercise prices equal to the fair market value of the common shares of the Corporation on the date of grant. Options generally vest immediately after a specific event has occurred. All options expire on the fifth anniversary of the grant. After termination of employment, unvested options are forfeited immediately and vested options expire 90 days subsequent to termination. The Board of Directors administers the stock option plan.

A summary of the Corporation’s stock options and changes during the periods is presented below:

		2020
	Number of	Weighted Average
	Options	Exercise Price ($)
Outstanding, beginning of year	-	-
Granted	1,000,000	0.20
Forfeited	-	-
Expired	-	-
Outstanding,end ofyear	1,000,000	0.20
Exercisable,end ofyear	1,000,000	0.20

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GHP Noetic Science-Psychedelic Pharma Inc. Notes to the Financial Statements For the period from the date of incorporation (March 25, 2020) to December 31, 2020

7. SHARE CAPITAL (Continued)

The following table summarizes the options outstanding and exercisable:

For	the	fiscal quarter ended December 31, 2020	fiscal quarter ended December 31, 2020	fiscal quarter ended December 31, 2020		For	the year ended December	the year ended December	31, 2019
	Options Outstanding			Options Exercisable		Options Outstanding			Options Exercisable
			Weighted					Weighted
Exercise Price ($)		Number Outstanding	Average Remaining Contractual	Number Exercisable	Exercise Price ($)		Number Outstanding	Average Remaining Contractual	Number Exercisable
			Life (years)					Life (years)
$	0.20	1,000,000	4.5	1,000,000	$	-	-	-	-

The fair value of options granted is determined using the Black-Scholes option pricing model. The underlying expected volatility was determined by reference to historical data of the Corporation’s shares over the expected life of the options. The following weighted average assumptions were used for options granted in the period:

	December 31, 2020
Risk-free interest rate	2%
Expected life of options (years)	5
Expected annualized volatility	100%
Expected dividend yield	N/A
Estimated forfeiture rate	0%
Weighted average fair value of each option	$0.15

Share-based compensation is recorded as an increase to contributed surplus and is transferred to share capital when the underlying options are exercised. A total of 1,000,000 stock options were granted during the period ended December 31, 2020 at an exercise price of $0.20 with a grant date fair value of $150,000.

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GHP Noetic Science-Psychedelic Pharma Inc. Notes to the Financial Statements For the period from the date of incorporation (March 25, 2020) to December 31, 2020

7. SHARE CAPITAL (Continued)

Agent warrants

On July 29, 2020, the Corporation granted 500,000 warrants as part of the units sold through their initial public offering. Each warrant is exercisable into one common share of the Corporation at a price of $0.20 per share and expires on July 29, 2022.

			Weighted
	Warrants		Average
	Outstanding	Exercise Price
	#		$
Outstanding, March 25, 2020	-		-
Granted	500,000		0.20
Exercised	-		-
Expired/cancelled	-		-
Outstanding,December 31,2020	1,000,000		0.20

The fair value of warrants granted is determined using the Black-Scholes option pricing model. The underlying expected volatility was determined by reference to historical data of the Corporation’s shares over the expected life of the warrants. The following weighted average assumptions were used for warrants granted in the period:

	December 31, 2020
Risk-free interest rate	2%
Expected life of options (years)	2
Expected annualized volatility	100%
Expected dividend yield	N/A
Estimated forfeiture rate	0%
Weighted average fair value of each option	$0.11

8. KEY MANAGEMENT PERSONNEL AND DIRECTOR COMPENSATION

Key management personnel are those individuals having authority and responsibility for planning, directing and controlling the activities of the Corporation and are defined as the Chief Officers of the Corporation and the Corporation’s Board of Directors. The Corporation’s compensation program is administered by the Board of Directors and specifically provides for total compensation for executive officers, which is a combination of base salary, performance-based incentives and benefit programs that reflect aggregated competitive pay in light of business achievement, fulfillment of individual objectives and overall job performance. Directors, executive officers and employees participate in the Corporation’s stock option plans.

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GHP Noetic Science-Psychedelic Pharma Inc. Notes to the Financial Statements For the period from the date of incorporation (March 25, 2020) to December 31, 2020

8. KEY MANAGEMENT PERSONNEL AND DIRECTOR COMPENSATION (Continued)

The following summarizes key management personnel and directors’ compensation for the period ended December 31, 2020:

	December 31, 2020
	$
Salaries and other compensation	-
Share-based compensation	150,000
	-

During the period ended December 31, 2020, the Corporation incurred expenses of $3,814 charged by a company controlled by a Board Member.

9. INCOME TAXES

(a) Provision for income taxes

Major items causing the Corporation’s effective tax rate to differ from the combined Canadian federal and provincial statutory rate of 26.5% were as follows:

	2020
	$
Loss before income taxes	(278,095)
Expected income taxes	(73,695)
Non deductible	39,750
Share issue costs and other	(38,472)
Amount not recognized as deferred tax asset	72,417
Income Tax Expense(Recovery)	-

• (a) Deferred income taxes

The Corporation has approximately $147,452 of non-capital losses in Canada which under certain circumstances can be used to reduce the taxable income of future years. The Canadian losses expire in the following periods:

Year	Amount ($)
2041	$147,452

Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profits will be available against which the Corporation can use the benefits.

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