Small Pharma to restate financial statements to reflect IFRS fair value of convertible notes and share options
The restatements relate to non-cash items with no material impact to the Company’s ongoing operations or cash position
LONDON, Oct. 19, 2021 — Small Pharma Inc. (TSXV: DMT) (the “Company” or “Small Pharma”), a neuropharmaceutical company focused on psychedelic-assisted therapies, today announced that the previously issued: (i) audited consolidated financial statements for the fiscal year ended February 28, 2021 for Small Pharma Ltd (“SPL”), the Company’s wholly-owned operating subsidiary (the “SPL Statements”); (ii) unaudited condensed consolidated financial statements of the Company for the three month period ended May 31, 2021 (the “SPI Statements”); and (iii) each corresponding management’s discussion and analysis, have all been amended, restated and reissued (collectively, the “Restated Documents”).
As a result of a review by management and the Company’s auditors of the previously issued SPL Statements, SPI Statements and each corresponding management’s discussion and analysis (collectively, the “Previous Documents”), it was determined that assumptions made under International Financial Reporting Standards (“IFRS”) for calculating the fair value of embedded derivatives and share options needed to be revised (the “Restatements”).
The effect of the Restatements does not impact the Company’s ongoing operations or cash position. The Restated Documents will reflect the following changes as a result of the Restatements:
- (a) convertible notes issued by SPL in the fiscal year ended February 28, 2021, and the three month period ended May 31, 2021, were reclassified to reflect the IFRS fair value on the embedded derivative arising from the discount on the conversion price. This resulted in: (i) an increase in Finance Costs on the statements of profit or loss and other comprehensive income in the Restated Documents; and (ii) an increase in short term liabilities on the statements of financial position, as reflected in the Restated Documents. All of the convertible notes converted into ordinary shares in the capital of SPL on April 29, 2021. The impact on the SPL Statements is: (i) an increase in Finance Costs of £685,235; and (ii) an increase in short term liabilities of £685,235; and the impact on the SPI Statements is: (i) an increase of $2,311,479 in Finance Costs; and (ii) an increase in share capital of $2,311,479;
- (b) volatility and price assumptions for calculating the IFRS fair value of share options were amended, which resulted in an increase in the charge recorded on the statements of profit or loss and other comprehensive income in the Restated Documents. The impact is an increase in administrative expenses of £318,590 in the SPL Statements and $138,554 in the SPI Statements;
- (c) share issuance costs of £147,395 previously expensed in the SPL Statements have been credited out of the statements of profit or loss and other comprehensive income and reclassified as deferred transaction costs in the statement of financial position; and
- (d) additional non cash adjustments in the SPI Statements resulted in an increased charge to the income statement of $247,038 arising primarily from foreign exchange losses and a reclassification of listing fees.
Please refer to Note 1 of the SPL Statements and Note 15 of the SPI Statements for further details regarding the Restatements. The Restated Documents are available under the Company’s profile on www.sedar.com. The Restated Documents will replace the Previous Documents and the Previous Documents should no longer be relied upon.
About Small Pharma
Small Pharma is a neuropharmaceutical company specialised in IP-led development of novel treatments for mental health conditions, with a focus on depression. Small Pharma initiated a clinical program into DMT-assisted therapy in February 2021. This program includes a Phase I/IIa trial on the Company’s lead candidate alongside development of a robust pipeline of proprietary preclinical assets.
DMT is a naturally occurring psychedelic tryptamine found in plants and in the brain of mammals. Scientific evidence suggests DMT offers the potential for rapid-acting and long-lasting antidepressant effects. DMT is differentiated by its short psychedelic experience (< 30mins), which allows for short treatment sessions and offers the potential for convenient supervised treatments within patient clinics. Small Pharma is advancing a pipeline of DMT-based therapies and is leading the world’s first DMT clinical trial for depression, in collaboration with Imperial College London.
For further information contact:Small Pharma
Peter Rands Chief Executive Officer Email: email@example.com Tel: +44 (0)2071 129118Investor Relations Contacts: Eric Ribner LifeSci Advisors Email: firstname.lastname@example.org
Tim Regan KCSA Strategic Communications Email: email@example.com Tel: +1 (347) 487-6788
Cautionary Note Regarding Forward-Looking Statements
This press release contains statements that constitute “forward-looking information” (“forward-looking information”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking information and are based on expectations, estimates and projections as at the date of this news release. Any statement that discusses predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking information. Forward-looking statements in this news release include statements regarding the Company’s placebo-controlled, proof-of-concept Phase IIa study of SPL026 and the Company’s ability to develop solutions to effectively address depression through DMT-based therapies. In disclosing the forward-looking information contained in this press release, the Company has made certain assumptions. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, it can give no assurance that the expectations of any forward-looking information will prove to be correct. Known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information. Such factors include, but are not limited to: compliance with extensive government regulations; domestic and foreign laws and regulations adversely affecting the Company’s business and results of operations; the impact of COVID-19; and general business, economic, competitive, political and social uncertainties. Accordingly, readers should not place undue reliance on the forward-looking information contained in this press release. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking information to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward-looking information or otherwise.
Small Pharma makes no medical, treatment or health benefit claims about its proposed products. The Medicines and Healthcare products Regulatory Agency (“MHRA”) or other similar regulatory authorities have not evaluated claims regarding DMT-assisted therapies and other next generation psychoactive compounds. The efficacy of such therapies have not been confirmed by MHRA-approved research. There is no assurance that such DMT-assisted therapies and other psychoactive compounds can diagnose, treat, cure or prevent any disease or condition. Vigorous scientific research and clinical trials are needed. Any references to quality, consistency, efficacy and safety of potential therapies do not imply that Small Pharma verified such in clinical trials or that Small Pharma will complete such trials. If Small Pharma cannot obtain the approvals or research necessary to commercialize its business, it may have a material adverse effect on Small Pharma’s performance and operations.
The TSX Venture Exchange (the “TSXV”) has neither approved nor disapproved the contents of this news release. Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.