CNBX Pharmaceuticals Inc 10-Q for FY2022 Q2
CNBX Pharmaceuticals Inc. (CNBX)
About this 10-Q
CNBX Pharmaceuticals Inc filed this 10-Q on April 12, 2022, covering the quarter ended February 28, 2022 (FY2022 Q2).
Headline figures
Quarter ended February 28, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $1.24M
- compared with a net loss of $534.76K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM
_______________
For the quarterly period ended
OR
For the transition period from ______ to ______.
Commission File Number:
___________________________________________________
(Exact name of registrant as specified in its charter)
___________________________________________________
|
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) | |
|
|
||
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered under Section 12(b) of the Act:
| Title of each class | Name of each exchange on which registered |
| N/A | N/A |
Securities registered under Section 12(g) of the Act:
(Title of class)
_____________________________________________________
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of April 12, 2022, the registrant had shares of its Common Stock, $0.0001 par value, outstanding.
When used in this quarterly report, the terms “CNBX,” “the Company,” “we,” “our,” and “us” refer to CNBX Pharmaceuticals Inc. and its wholly-owned subsidiaries, G.R.I.N Ultra Ltd. and Digestix Bioscience Inc.
CNBX PHARMACEUTICALS INC.
FORM 10-Q
FEBRUARY 28, 2022
INDEX
| 2 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information set forth in this Quarterly Report on Form 10-Q, including in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein may address or relate to future events and expectations and as such constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements which are not historical reflect our current expectations and projections about our future results, performance, liquidity, financial condition, prospects and opportunities and are based upon information currently available to us and our management and their interpretation of what is believed to be significant factors affecting our business, including many assumptions regarding future events. Such forward-looking statements include statements regarding, among other things:
| · | the size and growth of the potential markets for our products and the ability to serve those markets; | |
| · | our expectations regarding our expenses and revenue, the sufficiency of our cash resources and needs for additional financing; | |
| · | the rate and degree of market acceptance of any of our products; | |
| · | our expectations regarding competition; | |
| · | our anticipated growth strategies; | |
| · | our ability to attract or retain key personnel; | |
| · | our ability to establish and maintain development partnerships; | |
| · | regulatory developments in the U.S. and foreign countries, especially those related to change in, and enforcement of, cannabis laws; | |
| · | our ability to obtain and maintain intellectual property protection for our products; and | |
| · | the anticipated trends and challenges in our business and the market in which we operate. |
Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “should,” “would,” “could,” “scheduled,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,” or “project” or the negative of these words or other variations on these words or comparable terminology. Actual results, performance, liquidity, financial condition and results of operations, prospects and opportunities could differ materially and perhaps substantially from those expressed in, or implied by, these forward-looking statements as a result of various risks, uncertainties and other factors. These statements may be found under the section of our Annual Report on Form 10-K for the year ended August 31, 2021 (filed on November 29th, 2021) entitled “Risk Factors” as well as in our other public filings.
In light of these risks and uncertainties, and especially given the start-up nature of our business, there can be no assurance that the forward-looking statements contained herein will in fact occur. Readers should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.
| 4 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
CNBX PHARMACEUTICALS INC.
Consolidated Balance Sheets
| February 28, | August 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses and other receivables | ||||||||
| Total current assets | ||||||||
| Available for sale Investment | ||||||||
| Equipment, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Convertible loan | ||||||||
| Due to a related party | ||||||||
| Total current liabilities | ||||||||
| Stockholders' equity (deficit): | ||||||||
| Preferred stock, $ par value, shares authorized, shares issued and outstanding | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding at February 28, 2022 and August 31, 2021 respectively | ||||||||
| Additional paid-in capital | ||||||||
| Issuance of warrants | ||||||||
| Other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' equity (deficit) | ( | ) | ||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
| 5 |
CNBX PHARMACEUTICALS INC.
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| February 28, | February 28, | February 28, | February 28, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development expense | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (loss) | ||||||||||||||||
| Capital gain | ||||||||||||||||
| Financial Loss, net. | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Profit (loss) from available for sale assets | ( | ) | ( | ) | ||||||||||||
| Total comprehensive income (loss) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Net loss per share - basic and diluted: | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Weighted average number of shares outstanding - Basic and Diluted | ||||||||||||||||
See accompanying notes to consolidated financial statements.
| 6 |
CNBX PHARMACEUTICALS INC.
Consolidated Statements of Stockholder’s Equity
(Unaudited)
For the six months ended February 28, 2022
| Common Stock | Additional Paid In | Other Comprehensive | Accumulated | Total Stockholders’ Equity | ||||||||||||||||||||||||
| Shares | Amount | Capital | Warrants | Gain | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance, August 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
| Share based payment | – | |||||||||||||||||||||||||||
| Exercise of CLA to shares | ||||||||||||||||||||||||||||
| Other comprehensive loss | – | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, February 28, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
For the three months ended February 28, 2022
| Common Stock | Additional Paid In | Other Comprehensive | Accumulated | Total Stockholders’ Equity | ||||||||||||||||||||||||
| Shares | Amount | Capital | Warrants | Gain | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance, November 30, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
| Share based payment | – | |||||||||||||||||||||||||||
| Exercise of CLA to shares | ||||||||||||||||||||||||||||
| Other comprehensive loss | – | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, February 28, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
| 7 |
CNBX PHARMACEUTICALS INC.
Consolidated Statements of Stockholder’s Equity
(Unaudited)
For the six months ended February 28, 2021
| Common stock | Additional paid in | Unrealized gain (loss) on available-for-sale financial | Accumulated | Total stockholders’ equity | ||||||||||||||||||||||||
| Shares | Amount | capital | Warrants | gain | deficit | (deficit) | ||||||||||||||||||||||
| Balance, August 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
| Issuance of common stock for services, net. | ||||||||||||||||||||||||||||
| Issuance of warrants | – | |||||||||||||||||||||||||||
| Other comprehensive income | – | |||||||||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, February 28, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
For the three months ended February 28, 2021
| Common stock | Additional paid in | Unrealized gain (loss) on available-for-sale financial | Accumulated | Total stockholders’ equity | ||||||||||||||||||||||||
| Shares | Amount | capital | Warrants | gain | deficit | (deficit) | ||||||||||||||||||||||
| Balance, November 30, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
| Issuance of warrants | – | |||||||||||||||||||||||||||
| Other comprehensive income | – | |||||||||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, February 28, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
| 8 |
CNBX PHARMACEUTICALS INC.
Consolidated Statements of Cash Flows
(Unaudited)
| For the Six month Ended | ||||||||
| February 28, | February 28, | |||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net (Loss) | $ | ( | ) | $ | ( | ) | ||
| Adjustments required to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Capital gain | ( | |||||||
| Royalties receivables valuation | ||||||||
| Stock issued for services | ||||||||
| Profit from held for trading investments | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Convertible loan valuation | ||||||||
| Share based payment | ||||||||
| Accounts Receivable and pre paid expenses | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Realization of Available for sale investment | ||||||||
| Held for trading Investments | ||||||||
| Acquisition of equipment | ( | ) | ( | ) | ||||
| Net cash from (used) in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from convertible loan agreement | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase (Decrease) in cash | ( | ) | ||||||
| Cash and cash equivalents at beginning of the Period | ||||||||
| Cash and cash equivalents at end of the Period | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
| 9 |
CNBX PHARMACEUTICALS INC.
Notes to Consolidated Financial Statements
(Unaudited)
Note 1– Nature of Business, Presentation and Going Concern
Organization
CNBX Pharmaceuticals Inc. (the “Company”), was incorporated in the State of Nevada, on September 15, 2004, under the name of Thrust Energy Corp.
On September 30, 2010, we increased our authorized
capital to 900 million shares of common stock (par value $0.0001) and 100 million shares of preferred stock (par value $0.0001) and effected
a
On April 25, 2014, the Company experienced a change in control. Cannabics, Inc. (“Cannabics”) acquired a majority of the issued and outstanding common stock of the Company in accordance with stock purchase agreements. On the closing date, April 25, 2014, pursuant to the terms of the Stock Purchase Agreement, Cannabics purchased 41,000,000 shares of the Company’s outstanding restricted common stock for $198,000, representing 51%.
On May 21, 2014, the Company changed its name, via merger in the state of Nevada, to CNBX Pharmaceuticals Inc. The Company’s principal offices are in Bethesda, Maryland. The Company changed its course of business to laboratory research and development.
On June 19, 2014, FINRA granted final approval of Change of Name & Ticker Symbol of the Corporation from American Mining Corporation to CNBX PHARMACEUTICALS INC., with the new Ticker Symbol of “CNBX”. Said approval was predicated upon CNBX Pharmaceuticals Inc.’s filing of Articles of Merger with American Mining Corporation with the Nevada Secretary of State on May 21st, 2014. Under the laws of the State of Nevada, CNBX Pharmaceuticals Inc. was merged with and into the Registrant, with the Registrant being the surviving entity. The Merger was completed under Section 92A.180 of the Nevada Revised Statutes, Chapter 92A, as amended, and as such, does not require the approval of the stockholders of either the Registrant or CNBX Pharmaceuticals Inc.
On August 25, 2014, the Company organized G.R.I.N. Ultra Ltd. (“GRIN”), an Israeli corporation, as a wholly-owned subsidiary. GRIN will provide research and development activities for the Company’s products in Israel.
On July 24, 2017, the Company announced its establishment of a genetics laboratory to develop diagnostic tools based on human genome, tumor genetics and specific cannabinoids.
On August 20th, 2020, the Company announced the creation of a new Division for its Anti-Tumor drug candidate RCC-33, for the treatment of colorectal cancer. The emanates from the Company’s focus on a clinical validation path, including in-vivo experiments, collaborations with key medical centers, and the preparation of a product dossier with which the company plans to schedule a Pre IND-Meeting with the US FDA.
On October 18th, 2021, the Company filed 2 new Provisional Patent applications on Compositions and Methods for treating cancer, including colorectal cancer and early intervention therapy for colorectal cancer patients.
On February 13th, 2022, the company established a Nomination and Governance Committee.
| 10 |
Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial statement presentation and in accordance with Form 10-Q. Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year.
These unaudited financial statements should be read in conjunction with our August 31, 2021 annual financial statements included in our Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on November 29th, 2021.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and GRIN. All significant inter-company balances and transactions have been eliminated in consolidation.
Going Concern
The accompanying unaudited financial statements
have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. While the Company has incurred a net loss of $
The ability of the Company to continue as a going concern is dependent upon its abilities to generate revenues, to continue to raise investment capital, and develop and implement its business plan. No assurance can be given that the Company will be successful in these efforts.
Research and Development Costs
The Company accounts for research and development
costs in accordance with Accounting Standards Codification 730 “Research and Development” (“ASC 730”). ASC 730
requires that research and development costs be charged to expense when incurred. Research and development costs charged to expense were
$
Reclassifications
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses, total assets, or stockholders’ equity as previously reported.
Note 2 – Related Party Transactions
During the six months ending February 28, 2022,
the Company paid $
During the six months ending February 28, 2022, the Company recorded a non cash expense of $ in share based payment, to the company chairman, board members and advisor, compared to n for the six months ending February 28, 2021.
The Company had a balance outstanding on February
28, 2022 and at February 28, 2021 of $
| 11 |
Note 3 – Stockholders’ Equity (Deficit)
Authorized Shares
The Company is authorized to issue up to shares of common stock, par value $ per share. There is also shares of Preferred stock, none of which has been issued. Each outstanding share of common stock entitles the holder to one vote per share on all matters submitted to a stockholder vote. All shares of common stock are non-assessable and non-cumulative, with no pre-emptive rights.
Note 4 – Commitments and Contingencies
We lease the property of our corporate office in Tel Aviv, the monthly lease is $3,500, our current lease expires June 30th, 2022. The management intend to execute a lease agreement by that time for an additional year.
We lease the property of our laboratory in Rehovot, Israel, the monthly lease is $6,500 per month. Our current lease terminates at the end of February 2024, though we have a two additional one-year option, which management intends to execute prior to that time.
As security for its obligation under a property lease agreement, car lease and credit cards, the Company’s subsidiary provided a bank guarantee in the amount of $50,000.
Note 5 – Major Events During the six months ended on February 28, 2022
On February 4th, 2022, the Company filed a Pre-14C Information Statement with the SEC.
On February 15th, 2022 the Company filed its Definitive 14-C Information Statement with the SEC.
On February 17th, 2022, the Company filed an 8K with the SEC relating to a Forbearance Agreement with an institutional investor.
On February 18th, 2022, the Company filed an S-1 Registration Statement with the SEC.
During the six months ended February 28, 2022,
the Company issued shares of its common stock to an investor as a result of a convertible loan exercise in the sum of $
Note 6 – Subsequent Events
On March 16th, 2022, the Company filed an 8K with the SEC relating to a Forbearance Agreement as well as demand promissory note from an institutional investor in the principal amount of $280,000 with an original issue discount of $40,000.
The Demand Note is payable on demand at any time after the earlier to occur of (i) May 16, 2022, and (ii) the public or private offering of any securities by the Company (the “Next Subsequent Placement”). Any amount of Principal due under the Demand Note which is not paid when due shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of fifteen percent (15%) per annum.
On March 28th, 2022, the Company filed an 8K with the SEC giving notice of its formal name change to “CNBX Pharmaceuticals Inc.”
The Company has evaluated subsequent events through the date the financial statements were issued and filed with the SEC and has determined that there are no such events that warrant disclosure or recognition in the financial statements.
| 12 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Company Overview
We are a pre-clinical-stage, platform technology biopharmaceutical company which has developed proprietary innovative medicines in areas of significant unmet medical needs in oncology, with a current focus on colorectal cancer ("CRC"). Our drug candidate under development for colon cancer is RCC-33, a first-in-class therapy being developed primarily in two settings: one to reduce tumor cell activity in colon cancer patients as a standalone in neoadjuvant treatment or "window of opportunity" at the time after colonoscopy, prior to cancer staging; and another for patients with refractory to therapy and adjuvant to surgery also at the time after colonoscopy. The Company hopes to start first in human Phase I/II clinical trials in 2023. Neoadjuvant treatment is the administration of a therapy before the surgical treatment to improve patient outcome, and our business strategy is to advance our programs through clinical studies including with partners, and to opportunistically add programs in areas of high unmet medical needs through acquisition, collaboration, or internal development.
Results of Operations
For the Three Months Ended February 28, 2022 and 2021
Operating Expenses
For the three months ended February 28, 2022, our total operating expenses were $730,261 compared to $667,869 for the three months ended February 28, 2021, resulting in an increase of $62,392. The increase is attributable to a total decrease of $47,774 in general administration, and sales and marketing expenses and an increase of $14,618 in research and development expenses.
We realized other loss of $508,610 for the three months ended February 28, 2022, compared to other income of $133,114 for the three months ended February 28, 2021. The increase in financial expense was mainly attributable to convertible loan valuation of $481,624 and exchange differences in total of $26,900. As a result, the net loss was $1,238,871 for the three months ended February 28, 2022, compared to a net loss of $534,755 for the three months ended February 28, 2021.
Net Loss
Net loss for the three months ended February 28, 2022 was $1,238,871 compared to net loss $534,755 for the three months ended February 28, 2021, for the reasons explained above.
Other comprehensive profit
We incurred another comprehensive loss of $366,790 for the three months ended February 28, 2022. The loss was due to a valuation of a financial asset, consisting of the Company’s shares held in Sativus Inc (previously Seedo Inc), as a result; the total comprehensive loss was $1,605,661 for the three months ended February 28, 2022.
| 13 |
For the Six Months Ended February 28, 2022 and 2021
Operating Expenses
For the six months ended February 28, 2022, our total operating expenses were $1,840,610 compared to $1,327,601 for the six months ended February 28, 2021, resulting in an increase of $513,009. The increase is attributable to a total increase of $492,077 in general administration, and sales and marketing expenses and increase of $20,932 in research and development expenses.
We realized finance expenses of $721,280 for the six months ended February 28, 2022, which mainly attributable to convertible loan valuation of $678,392 and exchange differences in total of $42,256 and. Compared to other income of $138,079 for the six months ended February 28, 2021. As a result, the net loss was $2,561,891 for the six months ended February 28, 2022, compared to a net loss of $1,189,522 for the six months ended February 28, 2021.
Net loss
Net loss for the six months ended February 28, 2022 was $2,561,891 compare to net loss of $1,189,522 for the six months ended February 28, 2022.
Other comprehensive profit
We incurred another comprehensive loss of $648,001 for the six months ended February 28, 2022. The loss was mainly attributable to a revaluation of a financial asset, consisting of the Company’s shares held in Sativus (previously Seedo), in the total amount of $648,001 As a result; the total comprehensive loss was $3,209,892 for the six months ended February 28, 2022.
Liquidity and Capital Resources
Overview
As of February 28, 2022, we had $231,637 in cash compared to $1,386,472 on August 31, 2021. We expect to incur a minimum of $1,000,000 in expenses during the next twelve months of operations. We estimate that these expenses will be comprised primarily of general expenses including overhead, legal and accounting fees, research and development expenses, and fees payable to outside medical centers for clinical studies.
| 14 |
Liquidity and Capital Resources during the Six Months Ended February 28, 2022 compared to the Six Months Ended February 28, 2021
We used cash in operations of $1,154,322 for the six months ended February 28, 2022 compared to cash used in operations of $1,294,977 for the six months ended February 28, 2021. The negative cash flow from operating activities for the six months ended February 28, 2022 is primarily attributable to the Company's net loss from operations of $2,561,891, share based compensation of $530,662, convertible loan valuation in a total of $678,391, depreciation of $102,411, a decrease in accounts payables and accrued liabilities of $36,47 and an increase of $59,688 in account receivables and prepaid expenses.
We had cash used from investing activities of $513 during the six months ended February 28, 2022, compared to cash flow from investing activities of $645,025 for the six months ended February 28, 2021. The cash used to purchase of fixed assets in the aggregate amount of $513 for the six months ended February 28, 2022, comparing to cash flow from investing activities is due to the Company’s Realization of Wize Pharma Inc shares of $645,968 and its purchase of fixed assets in the aggregate amount of $943 for the six months ended February 28, 2021
We will have to raise funds to pay for our expenses. We may have to borrow money from shareholders, issue equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to us. We currently have no arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. Since we have no such arrangements or plans currently in effect, our inability to raise funds for our operations will have a severe negative impact on our ability to remain a viable company.
Going Concern
Our independent auditors included an explanatory paragraph in their report on the accompanying unaudited financial statements regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.
Our unaudited financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our unaudited financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.
There is no assurance that our operations will be profitable. Our continued existence and plans for future growth depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity.
Off-Balance Sheet Arrangements
We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
| 15 |
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions and conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2, “Summary of Significant Accounting Policies” in our audited consolidated financial statements for the year ended August 31, 2021, included in our Annual Report on Form 10-K as filed on November 29th, 2021, for a discussion of our critical accounting policies and estimates.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The disclosure required under this item is not required to be reported by smaller reporting companies; as such term is defined by Item 503(e) of Regulation S-K.
Item 4. Controls and Procedures.
| (a) | Evaluation of Disclosure Controls and Procedures |
The Company maintains a set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of the Company’s management, including its Chief Executive Officer, Chief Financial Officer and the full Audit Committee, of the effectiveness of its disclosure controls and procedures. The Audit Committee assessed, reviewed and determined that the Company’s disclosure controls and procedures were effective as to this quarterly filing. Based on that evaluation, The Board accepted and ratified the findings of the Audit Committee that the Company’s disclosure controls and procedures, as of November 30th, 2021, the end of the period covered by this Quarterly Report on Form 10-Q, were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management, including the Chief Executive Officer, Chief Financial Officer, and Audit Committee as appropriate to allow timely decisions regarding required disclosure.
| 16 |
| (b) | Changes in Internal Control over Financial Reporting |
Since our annual report, the Company has maintained an Audit Committee to better review our internal financial reporting. There were no other changes in our internal control over financial reporting during the period ending February 28th, 2022, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| (c) | Limitations on the Effectiveness of Internal Controls |
Readers are cautioned that our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our control have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any control design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
| 17 |
PART II- OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 2. Recent Sale of Unregistered Securities
None.
Item 6. Exhibits
______________________________
| * | Filed herewith. |
| ** | Furnished herewith. |
| *** | XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
| 18 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CNBX Pharmaceuticals Inc. | ||
| Date: April 12, 2022 | By: | /s/ Eyal Barad |
| Eyal Barad | ||
| Title: |
Chief Executive Officer (Principal Executive Officer) | |
| Date: April 12, 2022 | By: | /s/ Uri Ben Or |
| Uri Ben Or | ||
| Title: |
Chief Financial Officer (Principal Financial Officer) | |
| 19 |
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Eyal Barad, certify that:
| 1. | I have reviewed this Form 10-Q of CNBX PHARMACEUTICALS INC.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report; | |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have: | |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
| 5. | I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |
| Date: April 12, 2022 | By: | /s/ Eyal Barad | |
| Eyal Barad | |||
|
Director, Chief Executive Officer CNBX PHARMACEUTICALS INC. |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Uri Ben Or, certify that:
| 1. | I have reviewed this Form 10-Q of CNBX PHARMACEUTICALS INC.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report; | |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have: | |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
| 5. | I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |
| Date: April 12, 2022 | By: | /s/ Uri Ben Or | |
| Uri Ben Or | |||
|
Chief Financial Officer CNBX PHARMACEUTICALS INC. |
Exhibit 32.1
CERTIFICATION OF
PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report of CNBX PHARMACEUTICALS INC. (the “Company”) on Form 10-Q for the quarter ending February 28, 2022, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Eyal Barad, Director and Chief Executive Officer (Principal Executive Officer) of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | Such Quarterly Report on Form 10-Q for the quarter ending February 28, 2022, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in such Quarterly Report on Form 10-Q for the quarter ending February 28, 2022, fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: April 12, 2022 | By: | /s/ Eyal Barad | |
| Eyal Barad | |||
|
Director, Chief Executive Officer CNBX PHARMACEUTICALS INC. |
|||
Exhibit 32.2
CERTIFICATION OF
PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report of CNBX PHARMACEUTICALS INC. (the “Company”) on Form 10-Q for the quarter ending February 28, 2022, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Uri Ben Or, Chief Financial Officer (Principal Financial Officer) of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | Such Quarterly Report on Form 10-Q for the quarter ending February 28, 2022, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in such Quarterly Report on Form 10-Q for the quarter ending February 28, 2022, fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: April 12, 2022 | By: | /s/ Uri Ben Or | |
| Uri Ben Or | |||
|
Chief Financial Officer CNBX PHARMACEUTICALS INC. |
|||