Optimi Health Corp F-1/A, filed Apr 16, 2026
Optimi Health Corp. (OPTH)
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As filed with the U.S. Securities and Exchange Commission on April 16, 2026.
Registration No. 333-290086
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 4
TO
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
OPTIMI HEALTH CORP.
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s Name into English)
| British Columbia | 2834 | Not Applicable | ||
| (State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification No.) |
269 David Brown Way
Princeton, B.C. V0X 1W0
Canada
(778) 761-4551
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Cogency Global Inc.
122 East 42nd Street, 18th Floor New York, NY 10168
(800) 221-0102
(Names, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
| Kevin Friedmann, Esq. Siyuan An, Esq. Norton Rose Fulbright US LLP 1045 W. Fulton Market, Suite 1200 Chicago, IL 60607 (312) 964-7763 |
Kristopher Miks, Esq. Norton Rose Fulbright Canada LLP 510 West Georgia Street, Suite 1800 Vancouver, B.C. V6B 0M3, Canada (604) 687-6575 |
Kevin Roggow, Esq. Cozen O’Connor 3 World Trade Center 175 Greenwich Street, 55th Floor New York, NY 10007 (212) 908-1294 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement the same offering. ☐
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth company ☒
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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 7(a)(2)(B) of the Securities Act. ☐
| † | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the U.S. Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION, DATED APRIL 16, 2026
Optimi Health Corp.
2,500,000 Units
Each Consisting of One Common Share and One
Warrant to Purchase One Common Share
This is the initial public offering of common shares, with no par value (“common shares”), of Optimi Health Corp., a corporation incorporated under the Business Corporations Act (British Columbia), in the United States. We are offering 2,500,000 units (“Units”), with each Unit consisting of (i) one common share and (ii) one warrant (“Common Warrant”). Each whole Common Warrant is exercisable to purchase one common share at an assumed exercise price per share equal to 120% of the initial public offering price per Unit, will be exercisable upon issuance, subject to certain beneficial ownership limitations, and will expire two years from the date of issuance. We are also registering the issuance by us of (i) up to 2,875,000 common shares issuable upon the exercise of the Common Warrants (assuming the exercise of the over-allotment option to purchase additional Common Warrants by the underwriter in full), (ii) warrants to purchase up to 143,750 common shares (the “Underwriter Warrants”) to the underwriter (assuming the exercise of the over-allotment option by the underwriter to purchase additional common shares in full) as well as (iii) up to 143,750 common shares issuable upon the exercise of the Underwriter Warrants to purchase common shares at a price per common share equal to 120% of the initial public offering price per Unit.
The Units will be offered at an expected public offering price between US$6.00 and US$8.00 per Unit. The actual public offering price per Unit will be determined between us and the underwriter at the time of pricing and may be at a discount to the current market price for the common shares. Therefore, the assumed public offering price used throughout this prospectus may not be indicative of the final offering price. There is no established trading market for the Units and we do not intend to list the Units on any securities exchange or other trading market. The Units have no stand-alone rights and will not be certificated or issued as stand-alone securities. The common shares and Common Warrants are immediately separable and will be issued separately in this offering.
Although this is our initial public offering of our common shares in the United States, our common shares are listed in Canada on the Canadian Securities Exchange (the “CSE”) under the symbol “OPTI” and in Germany on the Frankfurt Stock Exchange (the “FSE”) under the symbol “8BN” and quoted for trading on OTC Markets Group Inc.’s OTCQX under the symbol “OPTHF”. On April 10, 2026, the last reported sale price of our common shares on the CSE was C$8.85 (C$0.30 pre-Reverse Share Split (as defined below)) (rounded to the nearest hundredths place), on the FSE was €$5.16 (€0.17 pre-Reverse Share Split) (rounded to the nearest hundredths place) and the last quoted price of our common shares on OTCQX was US$6.53 (US$0.22 pre-Reverse Share Split) (rounded to the nearest hundredths place). We have applied to list our common shares on the Nasdaq Capital Market (“Nasdaq”) under the trading symbol “OPTH”. If our application to Nasdaq is not approved or we otherwise determine that we will not be able to secure the listing of our common shares on Nasdaq, we will not complete this offering. If our common shares are approved for listing and commence trading on Nasdaq, trading of our common shares on the OTCQX will cease.
There is no established trading market for the Common Warrants and we do not intend to list the Common Warrants on any securities exchange or other trading market. We do not expect an active trading market to develop for the Common Warrants. Without an active trading market, the liquidity of these securities will be limited.
Although not yet effective, our Board of Directors has approved a reverse share split with a share split ratio of 1-for-30 (“Reverse Share Split”). We anticipate effecting the Reverse Share Split immediately prior to the effectiveness of the registration statement of which this prospectus is a part. The Reverse Share Split is intended to allow us to meet the minimum share price requirement of Nasdaq. Except as otherwise indicated, all references to our common shares, share data, per share data and related information reflect the Reverse Share Split as if it was effective and as if it had occurred at the beginning of the earliest period presented.
We are an “emerging growth company” and a “foreign private issuer” as those terms are defined under the U.S. federal securities laws, and, as such, are eligible for reduced public company reporting requirements. See “Prospectus Summary—Implications of Being an Emerging Growth Company” and “Prospectus Summary—Implications of Being a Foreign Private Issuer.”
Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 15 of this prospectus before making your investment decision.
Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
| Per Unit | Total | |||||||
| Initial public offering price |
US$ | US$ | ||||||
| Underwriting discounts and commissions(1) |
US$ | US$ | ||||||
| Proceeds to us, before expenses(2) |
US$ | US$ | ||||||
| (1) | Underwriting discounts and commissions do not include the reimbursement of certain expenses of the underwriter we have agreed to pay. See “Underwriting” for additional disclosure regarding underwriting discounts, commissions and estimated offering expenses, as well as a complete description of the compensation payable to the underwriter. |
| (2) | The amount of the offering proceeds to us presented in this table does not give effect to any exercise of the warrants being issued in this offering. |
We have granted the underwriter an option, exercisable for 45 days from the date of this prospectus, to purchase up to an additional 375,000 common shares and/or up to 375,000 Common Warrants, or any combination thereof, solely to cover over-allotments, if any.
The underwriter expects to deliver the securities to purchasers on or about , 2026.
Sole Bookrunner
Joseph Gunnar & Co., LLC
Prospectus dated , 2026
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We have not authorized anyone to provide any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we may have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the underwriter have not authorized any other person to provide you with different or additional information. Neither we nor the underwriter are making an offer to sell the common shares in any jurisdiction where the offer or sale is not permitted. This offering is being made in the United States and elsewhere solely on the basis of the information contained in this prospectus.
For investors outside the United States: Neither we nor the underwriter has done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities and the distribution of this prospectus outside the United States.
Until , 2026 (the 25th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
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The following summary highlights selected information contained in greater detail elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. You should carefully read this entire prospectus, including the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation” sections and the financial statements and the related notes, before deciding whether to invest in the securities. Certain capitalized terms used in this summary are defined in the section of this prospectus titled “Prospectus Summary—Conventions Which Apply to This Prospectus”.
Our Business
We are a Canadian Good Manufacturing Practices (“GMP”) compliant, pharmaceutical drug manufacturer licensed by Health Canada for the handling of controlled substances and GMP production. We specialize in controlled substances with our products being 3,4-Methylenedioxymethamphetamine hydrochloride (“MDMA”) and psilocybin derived from botanical sources. With a vertically integrated approach, we own two approximately 10,000-square-foot production facilities on leased land in Princeton, British Columbia and operate under a Drug Establishment Licence (“DEL”) awarded by Health Canada. Our DEL certifies that our facilities and quality management systems comply with GMP for the formulation of designated drug products and the manufacture of certain active pharmaceutical ingredients (“API”) from plant sources. Additionally, we hold a Dealer’s Licence (“DL”) under Canada’s Narcotic Control Regulations, allowing us to possess, produce, assemble, sell, and deliver psilocybin and other psychedelic substances within the regulated framework set forth by Health Canada. The DL allows us to possess up to 20kg of psilocybin and 200g of psilocin (equivalent to approximately 2,000kg of dried full-body psilocybin-containing mushrooms) and 2kg of MDMA. We also hold a Precursor Licence under Canada’s Precursor Regulations allowing us to import 3,4-Methylenedioxyphenyl-2-Propanone if used in the synthesis of MDMA.
The legal status of psychedelic drugs varies by country and our various licenses allow us to supply markets where it is legal and position ourselves for new markets. Our products are currently available in Australia where psilocybin and MDMA have been rescheduled to allow prescription by an Authorized Prescriber only for treatment-resistant depression (“TRD”) and post-traumatic stress disorder (“PTSD”). In Canada, our products are available via the Special Access Program (“SAP”), which we are authorized to supply as a provision of our DL whereby sale or provision to the holder of a Controlled Drugs and Substances Act subsection 56(1) exemption is not prohibited for licensed dealers to provide psilocybin and MDMA in relation to an SAP authorization. The SAP patient authorization process has been successfully achieved for MDMA products. Our psilocybin product is currently in phase 2b clinical trials in Canada conducted by third parties. In all other countries, access is restricted to approved clinical trials, including in Israel, one of our planned target markets, where our MDMA product is currently in phase 2 clinical trials conducted by third parties. We are currently restricted from selling our products in the United States, another one of our planned target markets, where psilocybin and MDMA are considered Schedule I “controlled or “scheduled” substances, meaning their manufacture, importation, exportation, domestic distribution, storage, sale and legitimate use is subject to a significant degree of regulation by the U.S. Drug Enforcement Administration (the “DEA”). While our MDMA and botanical psilocybin products are currently being accessed in Canada and Australia, in any new market, a regulatory approval would be required for our products – be that a clinical trial application approval, a marketing authorization approval or access via a change to regulatory access for these products.
Our DEL enables us to supply validated psilocybin API, psilocybin drug products and MDMA drug products to patients in Australia under the Authorised Prescribers Scheme. Through strategic collaborations and ongoing compliance with global regulatory authorities, we aim to expand our product availability to additional jurisdictions where psychedelic-assisted therapies are gaining regulatory approval.
The key differentiator of a DEL is that it enables our MDMA and psilocybin capsules to be prescribed by authorized physicians in Australia for the treatment of PTSD and TRD. Unlike most companies in the
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psychedelic sector that remain in clinical or pre-commercial phases, we are currently supplying regulated medicines under prescription in certain markets – supported by a DEL that also permits the legal manufacture and international export of both products.
As part of our commitment to innovation and broadening accessibility to psychedelic-based therapies, we continuously refine our production methodologies, invest in advanced extraction technologies and enhance our regulatory compliance frameworks to remain ahead of industry standards. By prioritizing sustainable and responsible production practices, we are dedicated to becoming a global leader in the psychedelic pharmaceutical sector. Our research initiatives focus on optimizing extraction efficiency, improving formulation stability and ensuring scalable manufacturing techniques that align with future market expansion plans. Although we do not currently own any patents, nor do we have any pending patent applications related to our MDMA and botanical psilocybin products, the design, formulation, and large-scale manufacture of these products are founded on—and would be materially impaired without—a comprehensive body of proprietary know-how, specialized production methodologies, and rigorously safeguarded trade secrets that we protect through internal controls and confidentiality agreements.
Our Competitive Strengths
We believe the following competitive strengths contribute to our success and differentiate us from our competitors:
| • | Our ability to manufacture at scale and vertically integrate operations ensuring pricing advantages and quality control. |
| • | Our two 10,000-square-foot production facilities allow for rapid scaling, one of which is covered under the DEL. |
| • | Holding a DEL and a DL gives us the capability to commercialize psychedelic drugs today and supply patients in Australia for the treatment of PTSD with MDMA, and TRD with psilocybin. |
| • | Our commitment to research and development, with continuous investments in supplying clinical trials and on-going product improvement. |
| • | Our formulation expertise and strategic partnerships allow us to legally bring finished drug product to patients in Australia and supply clinical trials to certain countries around the world. |
| • | Our early-mover advantage with two psychedelic drugs available in the prescription market in Australia, and be ready for future markets should regulations allow. |
Our Growth Strategies
We intend to pursue the following growth strategies to solidify our market leadership and achieve sustainable growth:
| • | Expand into additional markets such as the United States and Israel. |
| • | Continue to invest in research and development for drug formulations. |
| • | Continue to strengthen regulatory compliance. |
| • | Continue to collect real world evidence (“RWE”) and patient-reported outcomes (“PROs”) for regulatory submissions in Australia. |
| • | Further collaborations with healthcare providers and government agencies to advocate for safe and effective psychedelic-assisted therapies. |
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Summary of Our Risks and Challenges
We are subject to various risks and uncertainties, as more fully described in “Risk Factors” and elsewhere in this prospectus. We urge you to read the “Risk Factors” section and this prospectus in full. Below is a summary of the principal factors that make an investment in our securities speculative or subject to risk, organized under relevant headings.
Risks Related to Government Regulations
| • | We face various controlled substance regulatory compliance risks. |
| • | We may not be able to receive and maintain our licenses. |
| • | If we violate any laws and regulations related to controlled substances or precursors, we may face material adverse repercussions. |
| • | We may be materially adversely impacted by changes in U.S. legislative and regulatory policies. |
| • | We face various risks related to product liability and/or regulatory action. |
| • | Our products contain MDMA and/or psilocybin, which are controlled substances that are subject to international treaties and national regulatory frameworks, including import/export, manufacturing, or procurement restrictions and/or quotas, which may impact our ability to manufacture, distribute, or commercialize these products. |
Risks Related to Our Business and Industry
| • | Our industry and market are relatively new. |
| • | We have a limited operating history, and we may not be able to manage our growth. |
| • | We have a history of operating losses, and there is no assurance that will be able to achieve profitability, raise additional financing or continue as a going concern. |
| • | If we are unable to obtain additional financing and on acceptable terms, we could be forced to delay, limit or discontinue product candidate development and sales efforts. |
| • | Our product candidates represent novel and innovative therapeutic areas - negative perception of any of our products or product candidates that we develop could adversely affect our ability to conduct our business, obtain regulatory approvals or identify alternative regulatory pathways to market for such product candidate. |
Risks Related to Drug Development
| • | We face various risks associated with drug development. All of our products are in preclinical or clinical development with third parties, which is a lengthy and expensive process with uncertain outcomes. All of our products have had clinical trial applications (“CTAs”) submitted in certain jurisdictions, with psilocybin trials approved to proceed in Canada, a MDMA trial approved in Israel and a MDMA CTA in review in Canada. While the products in clinical trials are identical to those that are currently distributed to Australia, we cannot give any assurance that any of our product candidates will be successfully developed and/or receive regulatory approval in other jurisdictions, including by the United States Food and Drug Administration (“FDA”), which is necessary before they can be commercialized. |
| • | MDMA and psilocybin are Schedule I controlled substances in the U.S. and therefore for broad market access in the U.S., in addition to FDA approval, we are also dependent on the DEA rescheduling the drug. The U.S. Controlled Substances Act establishes five schedules for controlled substances based on |
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| a drug’s potential for abuse, currently-accepted medical use, and safety / dependence considerations. In making any scheduling decision, the following factors are considered: (i) a drug’s actual or relative potential for abuse; (ii) scientific evidence of its pharmacological effect; (iii) current scientific knowledge regarding the drug; (iv) its history and current pattern of abuse; (v) the scope, duration, and significance of abuse; (vi) risk to public health; (vii) psychic or physiological dependence liability; and (viii) any immediate precursors already controlled under the law. Schedule I drugs are considered to have high abuse potential with no accepted medical use; medications within this schedule may not be prescribed, dispensed, or administered. Schedule II through V medications may be prescribed as allowed by DEA and state-controlled substance law. Thus, rescheduling from Schedule I is necessary for commercial distribution in the U.S. and may only occur subsequent to the approval of a new drug application (“NDA”). Initially, the rescheduling change may be limited to apply only to the FDA approved drug formulation of an innovator-branded version of the compound(s), and that rescheduling decision may not occur on a timely basis or at all. |
Risks Related to Intellectual Property
| • | If we are unable to maintain or obtain sufficient intellectual property protection in the future for our existing product candidates or any other product candidates that we may identify, or if the scope of the intellectual property protection we have or may obtain in the future is not sufficiently broad, our competitors could develop and commercialize product candidates similar or identical to ours, and our ability to successfully commercialize our existing product candidates and any other product candidates that we may pursue may be impaired. |
Risks Related to This Offering and Ownership of Our Securities
| • | There has been no prior market for our common shares on a U.S. national securities exchange, and an active and liquid market for our common shares may fail to develop or be sustained, which could harm the market price of our common shares. |
| • | As a foreign private issuer, we are permitted, and intend, to rely on exemptions from certain Nasdaq corporate governance standards applicable to U.S. domestic issuers, which may afford less protection to holders of our common shares than they would enjoy if we complied with the Nasdaq corporate governance listing standards otherwise applicable to Nasdaq-listed issuers. |
| • | We will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act reporting requirements for companies that are not emerging growth companies, and our shareholders could receive less information than they might expect to receive from more mature public companies. |
| • | It may be difficult to enforce judgements or bring actions outside the United States against us and our directors. |
| • | Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment. |
Our Corporate Structure
We were incorporated under the Business Corporations Act (British Columbia) on May 27, 2020 under the name “1251418 B.C. Ltd.”. We changed our name to “Optimi Health Corp.” on August 17, 2020. Optimi Health Corp. owns all of the issued and outstanding equity securities of Optimi Labs Inc., a company incorporated under the Business Corporations Act (British Columbia) (“Optimi Labs”), and Optimi Nutraceuticals Corp., a company incorporated under the Business Corporations Act (British Columbia) (“Optimi Nutraceuticals”).
Optimi Labs is our operating subsidiary that is in the business of operating our manufacturing facilities and our related research and development initiatives and sales and marketing efforts. Optimi Nutraceuticals acts as our
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retail subsidiary, providing consumers with high quality, natural, plant-based products. However, we are in the process of permanently winding down that business to focus our efforts on our pharmaceutical grade manufacturing business.
Our Corporate Information
Our principal executive offices are located at 269 David Brown Way, Princeton, British Columbia, V0X 1W0. Our telephone number at this address is (778) 761-4551. Our registered and records office is located at 2054 Dowad Drive, Squamish, British Columbia, V8B 0Y8. Our agent for service of process in the United States, Cogency Global Inc., is located at 122 East 42nd Street, 18th Floor, New York, NY 10168.
Investors should contact us for any inquiries through the address and telephone number of our principal executive office. Our principal website is www.optimihealth.ca. The information contained on, or accessible through, our website is not a part of this prospectus.
Reverse Share Split
Although not yet effective, our Board of Directors approved a reverse share split with a share split ratio of 1-for-30 (“Reverse Share Split”). We anticipate effecting the Reverse Share Split immediately prior to the effectiveness of the registration statement of which this prospectus is a part. The Reverse Share Split is intended to allow us to meet the minimum share price requirement of the Nasdaq Capital Market (“Nasdaq”).
Except as otherwise indicated, all references to our common shares, share data, per share data and related information reflect the Reverse Share Split as if it was effective and as if it had occurred at the beginning of the earliest period presented. The Reverse Share Split, when effective, will combine each 30 outstanding common shares into one common share, without any change in the par value per share which will remain no par value, and the Reverse Share Split correspondingly will adjust, among other things, the number of common shares issuable upon exercise of outstanding options and warrants and the exercise price of such options and warrants and shares issuable upon conversion of other convertible securities. No fractional shares will be issued in connection with the Reverse Share Split, and any fractional shares resulting from the Reverse Share Split will be rounded to the nearest whole share.
Implications of Being an Emerging Growth Company
We had less than US$1.235 billion in annual gross revenue during our last fiscal year. As a result, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and may take advantage of reduced public reporting requirements for so long as we continue to qualify as an emerging growth company. These provisions include, but are not limited to:
| • | being permitted to present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations; |
| • | not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting; |
| • | reduced disclosure regarding executive compensation in periodic reports, proxy statements and registration statements; and |
| • | exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. |
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We may take advantage of these provisions and accommodations until the last day of our fiscal year following the fifth anniversary of the date of the first sale of the common shares in this offering. However, if certain events occur before the end of such five-year period, including if we become a “large accelerated filer,” if our annual gross revenues exceed US$1.235 billion or if we issue more than US$1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company before the end of such five-year period.
Implications of Being a Foreign Private Issuer
Upon consummation of this offering, we will report under the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), as a non-U.S. company with “foreign private issuer” status. Even after we no longer qualify as an emerging growth company, so long as we continue to qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act and the rules thereunder that are applicable to U.S. domestic public companies, including the rules that:
| • | require U.S. domestic public companies to issue financial statements prepared under accounting principles generally accepted by the United States (“U.S. GAAP”); |
| • | regulate the solicitation of proxies, consents or authorizations in respect of any securities registered under the Exchange Act; |
| • | impose liability on insiders who profit from trades made in a short period of time; and |
| • | require the filing with the U.S. Securities and Exchange Commission (“SEC”) of quarterly reports on Form 10-Q, containing unaudited financial and other specified information, and current reports on Form 8-K, upon the occurrence of specified significant events. |
As permitted under the Exchange Act for foreign private issuers, we present our financial statements pursuant to International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (the “IASB”), instead of pursuant to U.S. GAAP. Furthermore, following this offering and for so long as we remain a foreign private issuer incorporated in Canada and subject to National Instrument 55-104 in Canada, our directors, officers and principal shareholders will be exempt from the requirements to report transactions in our equity securities under Section 16 of the Exchange Act and for so long as we remain a foreign private issuer, will be exempt from the short-swing profit liability provisions contained in Section 16 of the Exchange Act. As a foreign private issuer, we will also not be subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act. In addition, as a foreign private issuer, we will be permitted, and intend to follow, certain home country corporate governance practices instead of those otherwise required under the Nasdaq listing rules for Nasdaq-listed domestic U.S. issuers. These exemptions and leniencies may reduce or alter the frequency and scope of information and protections available to you in comparison to those applicable to a U.S. domestic reporting company. For more information, see “Risk Factors — Risks Related to This Offering and Ownership of Our Securities— As a foreign private issuer, we are permitted, and intend, to rely on exemptions from certain Nasdaq corporate governance standards applicable to domestic U.S. issuers. This may afford less protection to holders of our common shares than they would enjoy if we complied fully with the Nasdaq corporate governance listing standards.”
We will file with the SEC, within four months after the end of each fiscal year, an annual report on Form 20-F (or such other reports required by the SEC) containing financial statements audited by an independent registered public accounting firm.
We may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We would cease to be a foreign private issuer at such time as more than 50% of our outstanding voting securities are held of record by U.S. residents and any of the following three circumstances applies: (i) the majority of our executive officers or the majority of our directors are U.S. citizens or residents, (ii) more than 50% of our assets are located in the United States or (iii) our business is administered principally in the United States.
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Both foreign private issuers and emerging growth companies are also exempt from certain of the more extensive SEC executive compensation disclosure rules. Therefore, if we no longer qualify as an emerging growth company but remain a foreign private issuer, we will continue to be exempt from such rules and will continue to be permitted to follow our home country practice as to the disclosure of such matters.
Conventions Which Apply to This Prospectus
Except as otherwise indicated by the context and for the purposes of this prospectus only, references in this prospectus to:
| • | “we,” “us,” “the Company,” “our” or “our company” and similar references refer to the combined business of Optimi Health Corp., a corporation incorporated under the Business Corporations Act (British Columbia), and its consolidated subsidiaries; |
| • | “API” refers to active pharmaceutical ingredients; |
| • | “BC Green” refers to BC Green Pharmaceuticals Inc., a private Canada federally licensed cannabis production company; |
| • | “Board” or “Board of Directors” refers to the board of directors of the Company; |
| • | “Canadian dollars”, “C$” and “$” are to the legal currency of Canada; |
| • | “CDSA” refers to the Canadian Controlled Drugs and Substances Act, SC 1996, c. 19; |
| • | “Common Shares” refer to the common shares in the capital of the Company, with no par value; |
| • | “DEA” refers to the United States Drug Enforcement Administration; |
| • | “Dealer’s Licence” or “DL” refers to a licensed dealer designation under the Narcotic Control Regulations CRC, c.1104; |
| • | “Drug Establishment Licence” or “DEL” refers to drug establishment license granted by Health Canada to Optimi Labs Inc., authorizing the fabrication, packaging, labeling, distribution and/or wholesale of its medical grade MDMA and psilocybin drug formulations and psilocybin active pharmaceutical ingredients in compliance with GMP standards; |
| • | “Facilities” refer to the Company’s combined 20,000 square foot cultivation and processing facilities in Princeton, British Columbia; |
| • | “FD Act” refers to the Canadian Food and Drug Act, RSC 1985, c. F-27; |
| • | “FDA” refers to United States Food and Drug Administration; |
| • | “First Private Placement” refers to the non-brokered private placement financing by the Company conducted on July 6, 2020; |
| • | “Food and Drug Regulations” refers to the Canadian Food and Drug regulations, CRC, c. 870; |
| • | “Good Manufacturing Practices” or “GMP” refers to Good Manufacturing Practices as specified in Part C, Division 2 of the Food and Drug Regulations; |
| • | “Health Canada” refers to the department of the Government of Canada responsible for national among other things, regulating food, drugs, and health products in Canada to support public safety; |
| • | “IFRS” refers to the International Financial Reporting Standards developed by the International Accounting Standards Board; |
| • | “Industrial Ground” refers to the underlying land described in the Lease Agreement, upon which the Facilities sit. |
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| • | “Lease Agreement” refers to the Amended and Restated Industrial Lease, dated September 1, 2021, as amended by that certain First Amendment to Amended and Restated Industrial Lease, dated July 1, 2025, by and between BC Green, as landlord, and the Company, as tenant, with respect to the lease of the Industrial Ground; |
| • | “MDMA” means 3,4-Methylenedioxymethamphetamine hydrochloride; |
| • | “NHP” refers to natural health product, as defined in subsection 1(1) of the NHPR; |
| • | “NHPR” refers to the Canadian Natural Health Product Regulations, SOR/2003-196; |
| • | “Precursor Licence” refers to the Company’s active Class A Precursor Licence issued by Health Canada that allows it to purchase or produce controlled materials that are used for synthesis of MDMA; |
| • | “Private Placements” refer to the First Private Placement and the Special Warrant Private Placement, collectively; |
| • | “PTSD” refers to Post-Traumatic Stress Disorder; |
| • | “SEC” refers to the United States Securities and Exchange Commission; |
| • | “Special Warrant Private Placement” refer to the private placement of Special Warrants closed by the Company on September 11, 2020; |
| • | “Special Warrants” refer to the special warrants issued by the Company, which special warrants converted into SW Units on January 12, 2021; |
| • | “SW Unit” refer to the units of the Company issued on January 12, 2021 on the deemed exercise of the Special Warrants; |
| • | “SW Warrant” refers to the Common Share purchase warrants issued on January 12, 2021 on the deemed exercise of the Special Warrants; |
| • | “TRD” refers to Treatment-Resistant Depression; and |
| • | “U.S. dollars,” “USD” or “US$” refer to the legal currency of the United States. |
Presentation of Financial and Other Information
Our financial statements and other financial information are prepared in accordance with IFRS, as issued by the IASB, in Canadian dollars. None of our consolidated financial statements have been prepared in accordance with U.S. GAAP, and our financial statements may therefore not be comparable to financial statements of United States domestic companies.
Our fiscal year end is September 30. References to a particular “fiscal year” are to our fiscal year ended September 30 of that calendar year.
Our reporting currency and our functional currency is the Canadian dollar. All dollar amounts in this prospectus are expressed in Canadian dollars unless otherwise indicated. This prospectus contains translations of Canadian dollars into U.S. dollars at specific rates solely for the convenience of the reader. Such convenience translations are presented only for the most recent fiscal year ended September 30, 2025 and the subsequent interim period ended December 31, 2025. Unless otherwise noted, all translations from Canadian dollars into U.S. dollars in this prospectus were made at the exchange rate in effect as of the applicable balance sheet date, including C$1.3927 per US$1.00 as of September 30, 2025 and C$1.3712 per US$1.00 as of December 31, 2025, which are the noon buying rates as set forth in the H.10 statistical release of the U.S. Federal Reserve Board in effect as of September 30, 2025 and December 31, 2025, respectively. We make no representation that the Canadian dollar
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or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Canadian dollars, as the case may be, at any particular rate or at all.
Except as otherwise indicated, all references to our common shares, share data, per share data and related information depict the Reverse Share Split as if it was effective and as if it had occurred at the beginning of the earliest period presented. The Reverse Share Split, when effective, will combine each 30 common shares into one common share, without any change in the par value per share which will remain no par value, and the Reverse Share Split correspondingly will adjust, among other things, the number of common shares issuable upon exercise of outstanding options and warrants and the exercise price of such options and warrants and shares issuable upon conversion of other convertible securities. Except as otherwise indicated, all references to this information depict the Reverse Share Split as if it was effective and as if it had occurred at the beginning of the earliest period presented. No fractional shares will be issued in connection with the Reverse Share Split, and any fractional shares resulting from the Reverse Share Split will be rounded to the nearest whole share.
Numerical figures included in this prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.
This prospectus includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, you are cautioned not to give undue weight to this information.
We have proprietary rights to trademarks used in this prospectus that are important to our business. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus are without the ®, ™ and other similar symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names.
This prospectus may contain additional trademarks, service marks and trade names of others. All trademarks, service marks and trade names appearing in this prospectus are, to our knowledge, the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other person.
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| Issuer |
Optimi Health Corp. |
| Units Offered |
2,500,000 Units, with each Unit consisting of (i) one common share and (ii) one Common Warrant to purchase one common share. The Units have no stand-alone rights and will not be certificated or issued as stand-alone securities. |
The common shares and the Common Warrants underlying the Units are immediately separable and will be issued separately in this offering but must be purchased together as a Unit in this offering.
| Each Common Warrant will have an assumed exercise price per share equal to 120% of the initial public offering price per Unit, will be immediately exercisable, subject to certain beneficial ownership limitations, and will expire on the two-year anniversary of the original issuance date. This prospectus also relates to the offering of the common shares issuable upon exercise of the Common Warrants. See “Description of Securities-Common Warrants” for more information on the Common Warrants. |
| Offering Price |
We currently expect the initial public offering price to be between US$6.00 and US$8.00 per Unit. |
| Over-Allotment Option |
We have granted the underwriter an option to purchase up to an aggregate of 375,000 additional common shares and/or up to an aggregate of 375,000 additional Common Warrants or any combination thereof solely to cover over-allotments, if any. The underwriter can exercise this option in whole or in part at any time and from time to time within 45 days after the closing of this offering. |
| The over-allotment option purchase price to be paid per additional common share by the underwriter shall be equal to the public offering price of one Unit, less $0.01 allocated to the Common Warrants and less the underwriting discount and commissions, and the purchase price to be paid per additional Common Warrant shall be equal to $0.01, less the underwriting discount and commissions. |
| Underwriter Warrants |
Upon the closing of this offering, we will issue to the underwriter the Underwriter Warrants entitling it to purchase up to 143,750 common shares if the underwriter exercises its over-allotment option to purchase additional common shares in full. The Underwriter Warrants will have an exercise price equal to 120% of the price per Unit sold in this offering and will expire five years from the commencement of sales in this offering. This prospectus also relates to the offering of the Underwriter Warrants and the common shares issuable upon exercise of the Underwriter Warrants. See “Underwriting” for more information on the Underwriter Warrants. |
| Common Shares Outstanding After This Offering |
5,725,899 common shares or 6,100,899 common shares if the underwriter exercises its over-allotment option to purchase additional common shares in full. This assumes no exercise of any warrants issued in this offering. |
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| Listing and Trading Symbols |
There is no established public trading market for the Units and we do not intend to list the Units on any national securities exchange or any other nationally recognized trading system. |
| Our common shares are currently traded on the CSE under the symbol “OPTI,” on the FSE under the symbol “8BN” and quoted for trading on the OTCQX under the symbol “OPTHF.” We have applied to list our common shares on Nasdaq under the symbol “OPTH.” The approval of our listing on Nasdaq is a condition of closing this offering. |
| There is no established public trading market for the Common Warrants and we do not expect a market to develop. In addition, we do not intend to list the Common Warrants on any national securities exchange or any other nationally recognized trading system. |
| Use of Proceeds |
Based on the low point of the estimated initial public offering price range set forth on the front cover of this prospectus, we estimate that the net proceeds from the sale of the Units in this offering, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us and assuming no exercise of any of the warrants issued in this offering, will be approximately US$12.2 million (or US$14.3 million if the underwriter exercises its over-allotment option to purchase additional common shares in full). |
| We currently intend to use the net proceeds we receive from this offering for scaling production and distribution of our products in our current markets, additional market expansion to Israel and the United States and sales growth and general working capital and other operating expenses. See “Use of Proceeds” for a complete description of the intended use of proceeds from this offering. |
| Lock-up |
All of our directors and officers and certain shareholders have agreed with the underwriter, subject to certain exceptions, not to sell, transfer or dispose of, directly or indirectly, any of our common shares or securities convertible into or exercisable or exchangeable for our common shares for a period of 180 days after the closing of this offering. See “Underwriting” for more information. |
| Dividend Policy |
We have paid no dividends on the common shares to date, and we do not expect to pay dividends on the common shares in the foreseeable future. |
| Reverse Share Split |
Immediately prior to the effectiveness of the registration statement of which this prospectus is a part, we will effect a Reverse Share Split of the outstanding common shares in a ratio of 1-for-30, i.e., each 30 outstanding common shares will be combined into one common share. The Reverse Share Split was approved by our Board of Directors, provided that such Reverse Share Split is not yet effective and is not planned to become effective until immediately prior to the effectiveness of the registration statement of which this prospectus is a part. Except as otherwise indicated, all references to our common shares, share data, per share data and related information depict the Reverse Share Split in a ratio of 1-for-30 as if it had occurred at the beginning of the earliest period presented. |
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| Transfer Agent and Registrar |
Endeavor Trust Corporation. |
| Taxation |
For a summary of certain Canadian and U.S. federal income tax considerations with respect to the ownership and disposition of the securities, see the information set forth under the heading “Taxation.” |
| Risk Factors |
Investing in our securities involves a high degree of risk, and purchasers of our securities may lose part or all of their investment. You should carefully read and consider the information set forth under the heading “Risk Factors” and all other information set forth in this prospectus before deciding to invest in our securities. |
Unless otherwise indicated, the information presented in this prospectus assumes the underwriter does not exercise its over-allotment option and no exercise of any of the warrants issued in this offering.
Unless otherwise indicated, the number of our common shares to be issued and outstanding immediately after this offering is based on 3,225,899 common shares issued and outstanding as of the date of this prospectus and gives effect to the sale of the common shares in this offering assuming no exercise of the underwriter’s over-allotment option and excludes:
| • | 141,888 common shares issuable upon exercise of outstanding warrants with an average weighted exercise price of C$11.79 as of the date of this prospectus; |
| • | 162,832 common shares issuable upon exercise of 162,832 share options granted and outstanding under the Equity Plan with an average weighted exercise price of C$23.73 as of the date of this prospectus; |
| • | 13,875 common shares issuable upon exercise of 13,875 restricted share rights granted and outstanding under the Equity Plan as of the date of this prospectus; |
| • | 307,176 additional common shares reserved for future issuance pursuant to equity awards to be granted under the Equity Plan as of the date of this prospectus; |
| • | 766,667 common shares issuable upon conversion of 3,450 convertible debentures outstanding convertible at the holders’ election into our common shares at a conversion price of C$4.50 as of the date of this prospectus; |
| • | 2,500,000 common shares issuable upon the full exercise of the Common Warrants; and |
| • | 125,000 common shares issuable upon the full exercise of the Underwriter Warrants. |
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SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following tables set forth a summary of our unaudited consolidated financial information as at and for the three months ended December 31, 2025 and 2024 and our audited consolidated financial information as at and for the fiscal years ended September 30, 2025 and 2024. The historical summary consolidated financial information set forth in the following tables has been derived from our consolidated financial statements included elsewhere in this prospectus. The following summary historical financial information should be read in conjunction with our consolidated financial statements and related notes included elsewhere in the prospectus and the information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our historical results for any period are not necessarily indicative of our future performance.
| Three Months Ended December 31, | ||||||||||||
| 2025 | 2024 | |||||||||||
| Statements of Comprehensive Loss |
C$ | US$ | C$ | |||||||||
| Revenue |
— | — | 232,700 | |||||||||
| Cost of sales |
— | — | 62,473 | |||||||||
| Expenses |
— | — | 1,436,456 | |||||||||
|
|
|
|
|
|
|
|||||||
| Loss and comprehensive loss |
— | — | (1,258,980 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| As of December 31, | ||||||||||||
| 2025 | 2024 | |||||||||||
| Statements of Financial Position |
C$ | US$ | C$ | |||||||||
| Assets: |
||||||||||||
| Current Assets |
1,111,106 | 810,317 | 900,983 | |||||||||
| Non-Current Assets |
13,125,097 | 9,571,979 | 13,103,114 | |||||||||
| Total Assets |
14,236,203 | 10,382,295 | 14,004,097 | |||||||||
| Liabilities: |
||||||||||||
| Current Liabilities |
9,068,256 | 6,613,372 | 3,574,540 | |||||||||
| Non-Current Liabilities |
150,934 | 110,074 | 1,790,000 | |||||||||
| Total Liabilities |
||||||||||||
| Shareholders’ Equity |
5,017,013 | 3,658,848 | 8,639,557 | |||||||||
| Total Liabilities and Shareholders’ Equity |
14,236,203 | 10,382,295 | 14,004,097 | |||||||||
| Year Ended September 30, | ||||||||||||
| 2025 | 2024 | |||||||||||
| Statements of Comprehensive Loss |
C$ | US$ | C$ | |||||||||
| Revenue |
426,301 | 306,097 | 389,850 | |||||||||
| Cost of sales |
(410,716 | ) | (294,906 | ) | (238,388 | ) | ||||||
| Expenses |
(5,075,829 | ) | (3,644,596 | ) | (6,309,434 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Loss and comprehensive loss |
(3,712,031 | ) | (2,665,349 | ) | (6,035,859 | ) | ||||||
|
|
|
|
|
|
|
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| As of September 30, | ||||||||||||
| 2025 | 2024 | |||||||||||
| Statements of Financial Position |
C$ | US$ | C$ | |||||||||
| Assets: |
||||||||||||
| Current Assets |
1,826,227 | 1,311,285 | 1,232,587 | |||||||||
| Non-Current Assets |
13,386,418 | 9,611,846 | 13,318,448 | |||||||||
| Total Assets |
15,212,645 | 10,923,131 | 14,551,035 | |||||||||
| Liabilities: |
||||||||||||
| Current Liabilities |
8,483,610 | 6,091,484 | 3,216,823 | |||||||||
| Non-Current Liabilities |
158,374 | 113,717 | 1,758,500 | |||||||||
| Total Liabilities |
8,641,984 | 6,205,201 | 4,975,323 | |||||||||
| Shareholders’ Equity |
6,570,661 | 4,717,930 | 9,575,712 | |||||||||
| Total Liabilities and Shareholders’ Equity |
15,212,645 | 10,923,131 | 14,551,035 | |||||||||
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Investing in our securities involves a high degree of risk. The following risk factors describe circumstances or events that could have a negative effect on our business, financial condition or operating results. You should carefully consider the risks described below, together with all of the other information included in this prospectus, before making an investment decision. If any of the following risks actually occur, our business, financial condition or results of operations could suffer. The risks set out below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently believe are not material could also impair our business, financial condition or results of operations. In that case, the trading price of our securities could decline, and you may lose all or part of your investment.
Risks Related to Government Regulations
We face various controlled substance regulatory compliance risks.
Psychedelic products and treatments, production and distribution is a new and emerging industry with substantial existing regulations and uncertainty as to future regulations. There is no assurance we will be able to derive meaningful revenue from our investment in psychedelic compounds, or that regulatory frameworks will support our business expansion, as the impact of various legislative regimes on our business plans and operations is uncertain. Our current and future product candidates are or may be subject to controlled substance laws and regulations in the territories where the product will be produced, manufactured, marketed, and sold, such as Canada and the United States. Failure to comply with these laws and regulations, or the cost of compliance, may adversely affect the results of our business operations, both during clinical development and post approval, and our financial condition. In addition, there is no guarantee that the applicable legislation regulating the research and development and manufacture of controlled substances in the jurisdictions where we operate now or in the future will create or allow for the growth opportunities we currently anticipate.
There is no guarantee that the legislative frameworks governing the research and development of controlled substances will enable the growth opportunities we currently anticipate. Our involvement in psychedelic product development positions us within a nascent, highly regulated and increasingly competitive industry that is evolving rapidly. Given the rapid pace of regulatory, market and scientific developments, new risks may emerge that management cannot foresee or adequately assess, potentially resulting in outcomes that differ materially from those expressed in any forward-looking statements. Regulatory uncertainty remains a key challenge; for example, approval pathways for substances such as MDMA and psilocybin differ significantly by jurisdiction, and there is no assurance of future regulatory acceptance in the United States or other target markets.
Additionally, the processing, manufacturing, packaging, labeling, advertising and distribution of our products are subject to oversight by regulatory authorities in each jurisdiction where our products are sold. These regulatory agencies may assert jurisdiction over any of our products and may not accept the evidence we provide to demonstrate product safety or efficacy. Regulatory bodies may also determine that a specific product or ingredient poses an unacceptable health risk, which could prohibit its sale or restrict the claims we are permitted to make. Additionally, we may be prevented from disseminating third-party literature in support of our products if it fails to meet applicable regulatory standards. Regulatory authorities may further require the withdrawal or recall of a product from the market. Any such action could result in significant costs, lost revenue, liability exposure and adverse impacts on our growth trajectory.
Achievement of our business objectives is subject to compliance with regulatory requirements enacted and enforced by governmental authorities and obtaining and maintaining all required regulatory approvals. We will incur costs and have ongoing obligations related to regulatory compliance, and, depending upon the jurisdictions in which we are conducting our business, those costs and obligations may be significant. Failure to comply with applicable laws, regulations and permits, license or approval requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be
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curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Our industry and market are also subject to numerous legal challenges, which may significantly affect the financial condition of market participants and which cannot be reliably predicted. We may be required to compensate those suffering loss or damage by reason of our operations and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.
We cannot predict the timeline required to secure all appropriate regulatory approvals or licenses for our business or the extent of testing and documentation that may be required by governmental authorities. Any delays in obtaining, or failing to obtain, required regulatory approvals or licenses may significantly delay or impact the research and development activities and could have a material adverse effect on our business, results of operations and financial condition. In addition, changes in regulations, more vigorous enforcement thereof or other unanticipated events could require extensive changes to our operations, increased compliance costs or give rise to material liabilities, which could have a material adverse effect on our business, results of operations and financial condition.
The marketability of any product may also be affected by numerous factors that are beyond our control and which cannot be predicted, including, in particular, changes to government regulations, such as those relating to taxes and other government levies which may be imposed on us. The current Canadian federal and provincial restrictions on the marketing and promotion of drugs, and medical services and the regulation of the import, export, production, distribution, possession and sale of controlled substances and precursor chemicals in Canada may limit the ability to effectively advertise and promote our products and business.
We may not be able to receive and maintain our licenses.
Our operations require us to obtain licenses, and in some cases, renewals of existing licenses and the issuance of permits by certain governmental authorities in Canada. We believe that we currently hold or have applied for all necessary licenses and permits to carry out the activities that we are currently conducting under applicable laws and regulations, and also believe that we are complying in all material respects with the terms of such licenses and permits. In addition, we will endeavor to apply for, as the need arises, all necessary licenses and permits to carry on the activities we expect to conduct in the future. However, our ability to obtain, sustain or renew any such licenses and permits on acceptable terms is subject to changes in regulations and policies and to the discretion of the applicable authorities or other governmental agencies in the jurisdictions where we conduct our business. Any loss of interest in any such required license or permit, or the failure of any governmental authority to issue or renew such licenses or permits upon acceptable terms, could have a material adverse impact on us.
Our ability to cultivate, extract, formulate and conduct research in psychedelic substances in Canada is dependent on our ability to obtain federal licenses from Health Canada, including the Dealer’s Licence and Precursor’s Licence. Licenses, once issued, are subject to ongoing compliance and reporting requirements. Our ability to fabricate, package, label and export to certain jurisdictions is depended on our ability to maintain the Health Canada issued Drug Establishment Licence which is also subject to ongoing compliance requirements. Failure to comply with the requirements would have a material adverse impact on our business, financial condition and operating results. There is also no assurance we will be able to obtain any required new licenses or approvals from Health Canada or that the licence remains recognized based on changes outside of our control. There can be no guarantee that Health Canada will continue to issue the Dealer’s Licence, Precursor Licence, Drug Establishment Licence or any other licenses to us. Government licenses are currently, and in the future will be, required in connection with our operations, in addition to other unknown permits and approvals which may be required. To the extent such permits and approvals are required and not obtained, we may be prevented from operating and/or expanding our business, which could have a material adverse effect on our business, financial condition and results of operations.
We cannot predict the time required to secure all appropriate regulatory approvals for our products or the extent of testing and documentation that may be required by governmental authorities. Any delays in obtaining, or
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failure to obtain the necessary regulatory approvals will significantly delay the development of our markets and products and could have a material adverse effect on our business, results of operations and financial condition.
If we violate any laws and regulations related to controlled substances or precursors, we may face material adverse repercussions.
In Canada, under the CDSA, psilocybin and MDMA are currently Schedule III and Schedule I substances, respectively. One of the precursors for our research grade MDMA is subject to restrictions under the precursor regulations and, for that reason, we hold a Precursor Licence for import in the event that we require a source from outside Canada. Our operations are conducted in strict compliance with the laws and regulations regarding our activities with such controlled substances. As such, all facilities engaged with such substances by or on behalf of us in Canada do so under current licenses, permits and approvals, as applicable, issued by appropriate Canadian federal, provincial, territorial, and local governmental agencies. In the United States, under the U.S. Controlled Substances Act, psilocybin and MDMD are currently Schedule I substances, meaning they cannot be commercialized or prescribed for medical use and are subject to strict regulatory requirements.
While we are focused on psychedelics, specifically psilocybin and MDMA inspired compounds, we do not have any direct or indirect involvement with the illegal selling, production or distribution of any substances in the jurisdictions in which we operate and do not intend to have any such involvement. A violation of any applicable laws and regulations, such as the CDSA, Narcotic Control Regulations, or of similar legislation in the jurisdictions in which we operate could result in significant fines, penalties, administrative sanctions, convictions or settlements arising from civil proceedings initiated by either government entities in the jurisdictions in which we operate, or private citizens or criminal charges, as well as result in reputational damage. Any such violations could have an adverse effect on our business, results of operations and financial condition. In addition, allegations of violations of applicable laws and regulations, even if ultimately determined to be unfounded, could result in reputational harm, increased scrutiny from regulatory authorities, and other adverse effects on our business, financial condition and results of operations.
We may be materially adversely impacted by changes in legislative and regulatory policies in jurisdictions where we sell our products and operate.
The change in the U.S. administration may result in legislative and regulatory changes that could have a material adverse effect on us and our financial condition. In particular, there is uncertainty regarding U.S. tariffs and support for existing treaty and trade relationships, including with Canada. The U.S. government has made proposals that are intended to address trade imbalances, which include encouraging increased production in the United States. These proposals could result in increased customs duties and tariffs, including on pharmaceutical products originating from Canada, and the renegotiation of some U.S. trade agreements. An increase in customs duties and tariffs with respect to any of our planned imports could negatively impact our financial performance. Any potential changes in trade policies in the United States and the potential corresponding actions by other countries in which we do business could adversely affect our financial performance. Implementation by the U.S. government of new legislative or regulatory policies could impose additional costs on us, decrease U.S. demand for our products, or otherwise negatively impact us, which may have a material adverse effect on our business, financial condition and operations. In addition, this uncertainty may adversely impact: (i) the ability of companies to transact business with companies such as us; (ii) our profitability; (iii) regulation affecting the life sciences industry; (iv) global stock markets (including the CSE and Nasdaq); and (v) general global economic conditions. All of these factors are outside of our control but may nonetheless lead us to adjust our strategy in order to compete effectively in global markets, which may be costly or hard to achieve. Changes in government policy, enforcement actions, or regulatory delays could materially impact business operations and expansion plans. Additionally, our planned product expansion into the U.S. depends on regulatory rescheduling and state and federal legislation allowing MDMA-assisted therapy to move from experimental to commercial use, which is uncertain. Scheduling and rescheduling determinations by the DEA are dependent on FDA approval. During the review process, and prior to approval, the FDA may determine that it requires additional data, either from non-
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clinical or clinical studies, including with respect to whether, or to what extent, the substance has abuse potential. This may introduce a delay into the FDA approval and any potential rescheduling process and there is no assurance that the DEA will make a favorable rescheduling decision. If the DEA does not reschedule Schedule I ingredients contained in our products in a manner which would facilitate expansion into the U.S., this will have a material adverse impact on the scope the market for our products produced in Canada.
Furthermore, changes in government, legislative or regulatory policies in Australia could have a material adverse effect on our business. Changes in product scheduling, including those products permitted for therapeutic use and changes to the indications for which those products are permitted, could affect our ability to sell our product in the Australian market. Additions or changes to a Therapeutics Good Standard for any of our products could also impact our ability to product, test and release those products to comply to such Therapeutics Good Standard. As data is currently being amalgamated based on the performance of the products, and competitor’s products for use by Authorized Prescribers in Australia, it is possible that data analysis will lead the Australian government to open up access or alternatively halt or suspend access to these medicines with the Authorised Prescribers Scheme.
Changes in government, legislative or regulatory policies in Canada could have a material adverse effect on our business. If the government of Canada decides to revoke or restrict eligibility for certain substances for the Special Access Programme program or if there is a change in how medical conditions are defined for Special Access Programme access, or if a mandate is put in place to increase regulatory scrutiny for Special Access Programme requests or clinical trials, this could mean slower turn around times for approvals for our client’s usage for our products.
In addition, although we do not conduct clinical trials ourselves, we are indirectly affected by the actions or failures of third parties conducting clinical trials using our products. Regulatory authorities such as the FDA, Health Canada and other comparable agencies require that clinical trials comply with applicable protocols, legal and regulatory standards and GCP guidelines, which govern the design, conduct, monitoring and reporting of human clinical trials. These authorities conduct periodic inspections of sponsors, investigators, clinical sites and institutional review boards (“IRBs”) to ensure compliance.
If our clients or their contractors fail to meet these standards, the resulting data may be deemed unreliable, potentially requiring additional clinical trials and delaying regulatory approval. We cannot guarantee that any trial involving our products will be found compliant upon inspection. Delays in the initiation, conduct or completion of any clinical trial of our product candidates will increase our costs, slow down the product candidate development and approval process and delay or potentially jeopardize our ability to commence product sales and generate revenue. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates. In the event we identify any additional product candidates to pursue, there is no assurance of the necessary regulatory approvals to allow clinical trials to begin in a timely manner, if at all. Any of these events could have a material adverse effect on our business, prospects, financial condition and results of operations.
We face various risks related to product liability and/or regulatory action.
As we continue to grow, we may distribute or import products from other countries that are designed to be ingested by humans. As such, we face an inherent risk of exposure to product liability claims, regulatory action and litigation if our products are alleged to have caused damages, loss or injury. In addition, the future sale of our products involves the risk of injury to consumers due to tampering by unauthorized third parties or product contamination. A product liability claim or regulatory action against us could result in increased costs, could adversely affect our reputation with our clients and consumers generally, and could have a material adverse effect on our results of operations and financial condition. There can be no assurances that we will be able to obtain or maintain product liability insurance in the future on acceptable terms or with adequate coverage against potential liabilities. Such insurance is expensive and may not be available in the future on acceptable terms, or at all.
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We may be required to pay for losses or injuries purportedly or actually caused by our products. In the event that our products are found to cause any injury or damage, we will be subject to substantial liability. This liability may exceed the funds available by us and result in the failure of our business.
Even though we are not aware of any actual or potential product liability claims against us at this time, our business exposes us to potential product liability, recalls and other liability risks. We can provide no assurance that such potential claims will not be asserted against us. A successful liability claim or series of claims brought against us could have a material adverse effect on our business, financial condition and results of operations. Although we believe we have adequate product liability insurance, we cannot provide any assurances that we will be able to obtain or maintain adequate product liability insurance in the future on acceptable terms, if at all, or that such insurance will provide adequate coverage against potential liabilities. Claims or losses in excess of any product liability coverage could have a material adverse effect on our business, financial conditional and results of operations.
Factors involving regulatory agencies that are outside our control, including disruptions at the FDA and other U.S. or foreign government agencies caused by funding shortages, staffing limitations, policy changes or other operational constraints could cause delays in our product candidate development plans, or otherwise prevent new products and services from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business, financial condition and operating results.
The ability of the FDA and comparable foreign authorities to review and approve new products or take action with respect to other regulatory matters can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and statutory, regulatory and policy changes. Average review times at the FDA and comparable foreign authorities have fluctuated in recent years as a result. In addition, government funding of the FDA and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable. Additionally, the current U.S. presidential administration has adopted certain policies and issued executive orders directed towards reducing the employee headcount and costs associated with U.S. administrative agencies, including the FDA, and it remains unclear the degree to which those efforts will limit or otherwise adversely affect the FDA’s ability to conduct routine activities. Current or future staff reductions could significantly impact the ability of the FDA and comparable foreign authorities to timely review and process our regulatory submissions and could reduce capacity for inspections and compliance oversight,
which could have a material adverse effect on our business. Similarly, any current or future staff reductions could prevent the timely review of the patent applications we may file in the future by the United States Patent and Trademark Office (“USPTO”), which could delay the issuance of any U.S. patents to which we might otherwise be entitled. Other policy changes that may result from the change in administration may also delay or limit the ability to obtain necessary regulatory approvals, including but not limited to proposed reorganization of regulatory authorities having jurisdiction over controlled substances, changes to prioritization of review for approval, changes to scientific considerations in the approval process, and general treatment of certain drug classes, including but not limited to controlled substances. These delays or lapses in regulatory engagement could negatively impact our development timelines and increase the risk of non-compliance with applicable laws and regulations, any of which could have a material adverse effect on our business, financial condition and results of operations.
Our products may be subject to regulatory quotas.
The DEA through its quota system limits the availability of the active ingredients in certain of our products and, as a result, our ability to procure or manufacture these ingredients may not be sufficient to complete clinical trials, or other demand. Schedule I controlled substances are considered to present the highest risk of abuse and their handling (including manufacture, research, shipment, storage, sale and use) are subject to a high degree of federal and state oversight and regulation. The amount of Schedule I substances that may be procured and manufactured is limited by the DEA through its quota system. DEA establishes quotas applicable to the
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individual manufacturer and applicable to the industry in the aggregate. Quotas for these substances may not be sufficient to complete clinical trials or to meet other demand. There is a risk that federal statutes and DEA regulations concerning applicable quotas may interfere with the supply of drugs used in clinical trials for our product candidates, and, in the future, the ability to manufacture and distribute our products in the volume needed to meet demand.
Canada does not have a formal quota system analogous to that which exists in the United States, but our ability to market and sell our Canadian-manufactured products in the United States may be inherently limited by DEA quotas on production, manufacturing, procurement, and importation, which apply to Schedule I substances.
Risks Related to Our Business and Industry
Our industry and market are relatively new.
We operate our business in a relatively new industry and market. While we have active sales in Australia, there is no guarantee that our revenue streams will be sustainable or sufficient to support long-term growth within Australia and beyond. There is also no assurance we will be able to derive meaningful revenue from our investment in psychedelic drugs, or to pursue that business to the extent currently proposed or at all. Adoption of psychedelic-assisted therapy is subject to stigma, legal uncertainty, and physician hesitancy, which could slow commercial penetration. Broader acceptance of these treatments depends on continued scientific validation, regulatory approval, and shifts in public perception.
In addition to being subject to general business risks, we must continue to build brand awareness in this industry and market through significant investments in our strategy, production capacity, quality assurance and compliance with regulations. There is no assurance that the industry and market will continue to exist and grow as currently estimated or anticipated or function and evolve in the manner consistent with management’s expectations and assumptions. Any event or circumstance that adversely affects our industry and market could have a material adverse effect on our business, financial conditions and results of operations.
We have a limited operating history, and we may not be able to manage our growth.
We have a relatively limited operating history in our industry upon which our business and future prospects may be evaluated. We are subject to all of the business risks and uncertainties associated with any new business enterprise, including the risk that we will not achieve our operating goals. In order for us to meet future operating and debt service requirements, we will need to be successful in our growing, marketing and sales efforts. Additionally, where we experience increased production and future sales, our current operational infrastructure may require changes to scale our business efficiently and effectively to keep pace with demand and achieve long-term profitability. If our products and services are not accepted by new customers, our operating results may be materially and adversely affected.
In order to manage growth and change in strategy effectively, we must: (a) maintain adequate systems to meet future customer demands; (b) expand sales and marketing, distribution capabilities and administrative functions; (c) expand the skills and capabilities of our current management team; and (d) attract and retain qualified employees. While we intend to focus on managing our costs and expenses over the long term, we expect to invest to support our growth and may have additional unexpected costs. We may not be able to expand quickly enough to exploit potential market opportunities.
We have a history of operating losses, and there is no assurance that we will be able to achieve profitability, raise additional financing or continue as a going concern.
We have suffered recurring losses from operations and have a net capital deficiency that raise substantial doubt about our ability to continue as a going concern. During the three months ended December 31, 2025 and the
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fiscal year ended September 30, 2025, we incurred a net loss of C$1,553,975 (US$1,133,296) and C$3,712,031 (US$2,665,349), respectively, and have not yet achieved profitable operations. We continue to incur significant expenses related to ongoing operations and building our business infrastructure and may not achieve profitable operations for the foreseeable future. We have an accumulated deficit as of December 31, 2025 of C$27,241,680 (US$20,001,233) since our inception. Our ability to continue as a going concern is dependent upon our attaining and maintaining profitable operations and raising additional capital as needed, but there can be no assurance that we will be able to raise sufficient financing. These uncertainties may cast significant doubt on our ability to continue as a going concern.
To become and remain profitable, we must succeed in developing and eventually commercializing products that generate significant revenue. Revenue from the sale of any product candidate for which regulatory approval is obtained will be dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval, the accepted price for the product, the acceptance of the product by physicians and patients, the ability to obtain reimbursement at any price and whether we own the commercial rights for that territory. Our growth strategy depends on our ability to generate revenue. In addition, if the number of addressable patients is not as anticipated, the indication or intended use approved by regulatory authorities is narrower than expected, or the reasonably accepted population for treatment is narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from sales of such products, even if approved. Even if we are able to generate revenue from the sale of any approved products, we may not become profitable and may need to obtain additional funding to continue operations.
We cannot provide any assurance that we will be able to secure additional funding from public or private offerings or debt financings on terms acceptable to us, if at all, and any debt financing we undertake could subject us to restrictive covenants that limit our operational flexibility and could adversely affect our business and financial condition. Any new securities that we may issue in the future may be sold on terms more favorable for our new investors than the terms of this offering. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other convertible securities that will have additional dilutive effects.
Further, we may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition and results of operations. Our ability to obtain needed financing may be impaired by such factors as the weakness of capital markets, and the fact that we have not been profitable, which could impact the availability and cost of future financings. For example, market volatility resulting from, among other factors, the imposition of tariffs and retaliatory tariffs, military conflicts, such as ongoing conflicts in the Middle East, as well as, Russia’s war in Ukraine, and other factors that are currently unknown or not yet material could also adversely impact our ability to raise or access funds as and when needed. If adequate funds are not available to us on a timely basis, we may be required to delay, limit or discontinue one or more research or development programs or the potential commercialization of any approved products or be unable to expand operations or otherwise capitalize on business opportunities, as desired, which could materially affect our business, prospects, financial condition and results of operations.
If we are unable to obtain additional financing and on acceptable terms, we could be forced to delay, limit or discontinue product candidate development and sales efforts.
Developing and manufacturing biopharmaceutical products is expensive and time-consuming, and we expect to require substantial additional capital to conduct research for our current and future programs, seek regulatory approvals for our product candidates and launch and commercialize any products for which we receive regulatory approval, including growing our commercial sales, marketing and distribution organization. We regularly assess the ongoing development of our programs and may, from time to time, delay, limit or otherwise discontinue a program in order to allocate resources towards our existing programs, more developed programs or new investments.
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Based on our current operating plan, we estimate that our existing cash, marketable securities and committed term loan funding, as well as the funds raised in this offering, will be sufficient to fund operations for the next 12 months. However, our operating plan has changed, and may continue to change, as a result of many factors, some of which may be currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings, sales of assets or programs, other sources, such as joint ventures, strategic collaborations or license and development agreements, or a combination of these approaches. We also may opportunistically seek additional capital following this offering if market conditions are favorable or if we have specific strategic considerations. For example, we anticipate that we will need to raise additional funds to continue preparing for market entry to the United States after the next 12 months as we do not expect to gain market entry to the United States within the next 12 months. Due to the uncertainty around the extent and timing of regulatory approval in the United States, we cannot currently estimate the amount of additional funds that will be needed to prepare for market entry to the United States. Any such additional fundraising efforts for us may divert our management’s attention from their day-to-day responsibilities, which may adversely affect our ability to develop and commercialize our product candidates or any future product candidates we may identify and pursue. Moreover, such financing may result in dilution to shareholders, imposition of debt covenants and repayment obligations or other restrictions that may adversely affect our business. Any new securities that we may issue in the future may be sold on terms more favorable for our new investors than the terms of this offering. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other convertible securities that will have additional dilutive effects. We cannot assure that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us. Further, we may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition and results of operations. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition and results of operations. Our ability to obtain needed financing may be impaired by such factors as the weakness of capital markets, and the fact that we have not been profitable, which could impact the availability and cost of future financings. If the amount of capital we are able to raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs, we may have to reduce our operations accordingly.
Changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.
Our future funding requirements, both short-term and long-term, will depend on many factors, including, but not limited to:
| • | the outcomes of ongoing and planned third-party clinical trials; |
| • | the outcome, timing and cost of meeting regulatory requirements established by Health Canada, the FDA, and other comparable foreign regulatory authorities; |
| • | the costs of obtaining clinical and commercial supplies of raw materials and drug products for our product candidates, as applicable and any other product candidates we may identify and develop; |
| • | our ability to successfully identify and negotiate acceptable terms for third-party supply and contract manufacturing agreements; |
| • | the costs of commercialization activities for any of our product candidates that receive marketing approval, including the costs and timing of establishing product sales, marketing, distribution and manufacturing capabilities, or entering into strategic collaborations with third parties to leverage or access these capabilities; |
| • | the amount and timing of sales and other revenues from our product candidates, if approved, including the sales price and the availability of coverage and adequate third-party reimbursement; |
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| • | the cash requirements of developing our programs and our ability and willingness to finance their continued development; |
| • | the time and cost necessary to respond to technological and market developments, including other products that may compete with one or more of our product candidates; |
| • | the costs of acquiring, licensing or investing in intellectual property rights, products, product candidates and businesses; |
| • | the costs of maintaining, expanding and protecting our intellectual property portfolio; |
| • | our ability to attract, hire and retain qualified personnel as we expand research and development and our operational and commercial infrastructure; and |
| • | the costs of operating as a public company in the United States, maintaining a listing in the United States and associated compliance with applicable rules and regulations. |
We may be subject to product recalls.
Manufacturers, producers and distributors of products are sometimes subject to the recall of their products for a variety of reasons, including risk to health or safety, product defects, such as contamination, unintended harmful side effects or interactions with other substances, packaging safety and inadequate or inaccurate labeling. If any of our products are recalled due to an alleged product defect or for any other reason, we could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall. We may lose a significant amount of sales and may not be able to replace those sales at an acceptable margin or at all. In addition, a product recall may require significant management attention.
Although we have detailed procedures and GMP controls in place for testing our products, there can be no assurance that any quality, potency or contamination problems will be detected in time to avoid unforeseen product recalls, regulatory action or lawsuits. Additionally, if we are subject to recall, our image and reputation could be harmed. A recall for any of the foregoing reasons could lead to decreased demand for our products and could have a material adverse effect on our results of operations and financial condition. Additionally, product recalls may lead to increased scrutiny of our operations by regulatory agencies, requiring further management attention, potential loss of applicable licenses and potential legal fees and other expenses.
We face increasing competition in our industry.
We face increasing competition in the markets in which we operate. Some of our competitors are more established than us and may have more resources than us and be better positioned to develop superior product features and technological innovations and able to better adapt to market trends than us. These competitors may receive regulatory approvals before us, introduce alternative treatments, or secure larger market shares. Our ability to compete depends on, among other things, high product quality, short lead time, timely delivery, competitive pricing, range of product offerings and superior customer service and support. Increased competition may require us to reduce prices or increase costs and may have a material adverse effect on our financial condition and results of operations. Any decrease in the quality of our products or level of service to customers or any occurrence of a price war among our competitors and us may adversely affect our business and results of operations.
Competition in the psychedelics industry is growing as various public and private companies enter the market. As a result of this competition, some of which is with large, well established companies with substantial capabilities and significant financial and technical resources, we may be unable to compete successfully in the future. There can be no assurance that we will be able to grow or sustain our business in the presence of these competitive conditions.
At the same time, because the psychedelics industry is in a nascent stage with uncertain boundaries, there is a lack of information about comparable companies available for potential investors to review in deciding about whether to invest in us and, few, if any, established companies whose business model we can follow or upon
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whose success we can build. Accordingly, investors will have to rely on their own judgement in deciding about whether to invest in us. There can be no assurance that our estimates are accurate or that the market size is sufficiently large for our business to grow as projected, which may negatively impact our financial results.
Our product candidates represent novel and innovative potential therapeutic areas, and negative perception of any of our products or product candidates that we develop could adversely affect our ability to conduct our business, obtain regulatory approvals or identify alternate regulatory pathways to market for such product candidate.
Our product candidates represent novel and innovative potential therapeutic areas, including substances like MDMA and psilocybin that might be controversial, overlooked or underused. Our success will depend upon physicians who specialize in the treatment of mental health disorders, including TRD and other neurological indications targeted by our product candidates. Additionally, our success will depend on physicians prescribing potential treatments that involve the use of our product candidates, if approved, in lieu of, or in addition to, existing treatments with which they are more familiar and for which greater clinical data may be available. Our product candidates may not be successful in gaining physician acceptance, which would adversely impact our ability to commercialize our product candidates, even if approved. The success of our products will also depend on consumer acceptance and adoption of our products that are commercialized, which is not guaranteed.
In addition, responses by the Canadian government or other governments like the U.S. federal and state governments to negative public perception or ethical concerns may result in new legislation or regulations that could limit our ability to develop or commercialize any of our products, obtain or maintain regulatory approval, identify alternate regulatory pathways to market or otherwise achieve profitability. More restrictive statutory regimes, government regulations or negative public opinion would have an adverse effect on our business, financial condition, results of operations and prospects and may delay or impair the development and commercialization of our product candidates or demand for any products we may develop.
Finally, there is no assurance that we will be able to achieve brand awareness in any of our target regions. In addition, we must develop successful marketing, promotional and sales programs in order to sell our products. If we are not able to develop successful marketing, promotional and sales programs, then such failure will have a material adverse effect on our business, financial condition and operating results.
Our product candidates contain psychedelic substances, the use of which may generate public controversy. Adverse publicity or public perception regarding our current or future product candidates may negatively influence the success of these therapies.
Our product candidates contain psychedelic substances that may generate public controversy. Political and social pressures and adverse publicity could lead to delays in approval of, and increased expenses for, our current product candidates and any future product candidates we may develop. Opponents of these compounds may seek restrictions on marketing and withdrawal of any regulatory approvals. In addition, these opponents may seek to generate negative publicity in an effort to persuade the medical community to reject these products, if approved. Adverse publicity from misuse may adversely affect the commercial success or market penetration achievable by our product candidates. Anti-psychedelic protests have historically occurred and may occur in the future and generate media coverage. Political pressures and adverse publicity could lead to delays in, and increased expenses for, and limit or restrict the introduction and marketing of, our product candidates or any future therapeutic candidates.
If our product candidates or any future therapeutic candidates are approved for commercial sale in the United States or other jurisdictions in which we intend to market our product candidates, we will be highly dependent upon consumer perceptions of the safety and quality of our product candidates. We may face limited adoption if third-party therapy sites, therapists or patients are unwilling to try such a novel treatment given that some of our product candidates are from substances that might be controversial, overlooked or underused. There has been a
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history of negative media coverage regarding psychedelic substances, including compounds in many of our product candidates, which may affect the public’s perception of our product candidates. In addition, compounds in most of our product candidates may elicit intense psychological experiences, and this could deter patients from choosing this course of treatment, if our product candidates were approved. Our business could be adversely affected if we were subject to negative publicity or if any of our product candidates, if approved, or any similar product candidates distributed by other companies prove to be, or are asserted to be, harmful to patients. Because of our dependence upon consumer perception, any adverse publicity associated with illness or other adverse effects resulting from patients’ use or misuse of any of our product candidates, if approved or any similar products distributed by other companies could have a material adverse impact on our business, prospects, financial condition and results of operations.
Future adverse events in research into depression and other mental health disorders, such as substance use disorder and anxiety, on which we focus our research efforts, or the pharmaceutical industry more generally, could also result in greater governmental regulation, stricter labeling requirements and potential regulatory delays in the testing or approvals of our product candidates. Any increased scrutiny could delay or increase the costs of obtaining regulatory approval for our product candidates or any future product candidates.
We have a limited number of products, and we may not be able to successfully develop new products.
Historically, our revenue is derived almost exclusively from sales of mushroom-based natural health products. We now derive revenue from the sale of limited pharmaceutical products. However, our success will depend, in part, on our ability to develop, introduce and market new and innovative products. If there is a shift in consumer demand, we must meet such demand through new and innovative products, or else our business will fail. Our ability to develop, market and produce new products is subject to us having substantial capital. There is no assurance that we will be able to develop new and innovative products or have the capital necessary to develop such products.
Further, because we have limited financial resources and access to funding, we have to make decisions regarding the allocation of capital and resources across our business. For example, we may forego or delay pursuit of certain product candidates or business opportunities that later may prove to have greater commercial potential than our current or future development programs and product candidates. In addition, our decisions concerning the allocation of research, collaboration, management and financial resources toward particular programs or product candidates may not lead to the development of viable commercial product candidates, and may divert resources, including personnel, away from more advantageous opportunities or from our other current programs. Similarly, our decisions to delay, terminate or collaborate with third parties in respect of certain product candidates and development programs could also prove not to be optimal and could cause us to miss valuable opportunities with no resulting benefit. If our assessment of the market potential of our product candidates or trends in the pharmaceutical or biotechnology industries proves to be inaccurate, our business, financial condition and results of operations could be materially adversely affected.
We face product pricing risks.
As the market for our products matures, or as new or existing competitors introduce new products or services that compete with us, we may experience pricing pressure and be unable to renew our agreements with existing customers or attract new customers at prices that are consistent with our pricing model and operating budget. If this were to occur, it is possible that we would have to change our pricing model or reduce prices, which could harm revenue, gross margin and operating results. In addition, reimbursement and pricing negotiations with healthcare providers and insurers regarding our products may impact our profitability. The adoption of psychedelic treatments within the healthcare industry depends on pricing structures, insurance coverage and regulatory acceptance, which remain uncertain. Further, there is a risk of long-term price compression as generic drug manufacturers enter the market for MDMA, psilocybin and other similar psychoactive drugs, which could have a materially adverse impact on our business, financial condition and results of operations.
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We face foreign currency risks.
As a company with global operations, fluctuations in currency exchange rates and inflationary pressures may affect operational expenses and profitability. Unfavorable exchange rate movements could impact the cost of raw materials, international sales, and financial reporting. In particular, the strengthening or weakening of the Canadian dollar versus other currencies will impact the translation of our net revenues generated in these foreign currencies into Canadian dollars. We import certain ingredients in our products from foreign countries, and may be forced to pay higher rates for our ingredients as a result of the weakening of the Canadian dollar.
We could experience distribution or supply chain interruptions.
We are susceptible to risks relating to distributor and supply chain interruptions. Distribution in Canada is largely accomplished through independent contractors, and, therefore, an interruption (e.g., a labor strike) for any length of time affecting such independent contractors may have a significant impact on our ability to sell our products. Limited GMP-qualified suppliers could create production bottlenecks and lead to disruptions in our supply chain. Supply chain interruptions, including a production or inventory disruption, could impact product quality and availability. Inherent to producing products is a potential for shortages or surpluses in future years if demand and supply are materially different from long-term forecasts. We monitor category trends and regularly reviews maturing inventory levels, but there can be no assurance that our estimates will be correct.
We rely on third party manufacturers and suppliers.
We rely on outside sources to manufacture our products including suppliers of critical raw materials and GMP-compliant testing services, shipping services and other suppliers to support the GMP facility. Dependence on third-party suppliers for raw material inputs and compliance with GMP standards creates potential risks related to production delays or quality control issues. Dependence on third-party laboratories for testing our finished products to GMP standards also creates risks related to release delays or quality control issues. Additionally, our failure to deliver either components or finished goods on a timely basis could have a material adverse effect on our business. Our ability to maintain consistent supply and meet regulatory requirements depends on factors outside of our control, including supplier reliability and raw material availability. As these are third parties over which we will have little or no control, the failure of such third parties to provide components or testing services on a timely basis could have a material adverse effect on our business, financial condition and operating results.
Our suppliers, service providers and distributors may elect, at any time, to breach or otherwise cease to participate in supply, service or distribution agreements, or other relationships, on which our operations rely. Loss of our suppliers, service providers or distributors would have a material adverse effect on our business and operational results. We currently rely on certain third party laboratories. Disruption of operations at any one of these facilities could adversely affect inventory supplies and our ability to meet product delivery deadlines.
We are currently party to and may seek to enter into additional collaborations, licenses and other similar arrangements and may not be successful in maintaining existing arrangements or entering into new ones, and even if we are, we may not realize the benefits of such relationships.
We are currently party to license and collaboration agreements with a number of universities and pharmaceutical companies, and we expect to enter into additional agreements as part of our business strategy. We anticipate relying upon strategic collaborations for marketing and commercializing our existing product candidates, if approved, and we may sell product offerings through strategic partnerships with pharmaceutical and biotechnology companies. The success of our current and any future collaboration arrangements may depend heavily on the efforts and activities of our collaborators. Collaborations are subject to numerous risks, such as:
| • | collaborators may have significant discretion in determining the efforts and resources that they will apply to collaborations; |
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| • | collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in their strategic focus due to their acquisition of competitive products or their internal development of competitive products, availability of funding or other external factors, such as a business combination that diverts resources or creates competing priorities; |
| • | collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial, abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; |
| • | collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates; |
| • | a collaborator with marketing, manufacturing and distribution rights to one or more products may not commit sufficient resources to or otherwise not perform satisfactorily in carrying out these activities; |
| • | we could grant exclusive rights to collaborators that would prevent us from collaborating with others; |
| • | collaborators may not properly maintain or defend our programs’ intellectual property rights or may use our programs’ intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate such intellectual property or proprietary information or expose us or our programs to potential liability; |
| • | disputes may arise between us and a collaborator that cause the delay or termination of the research, development or commercialization of our current or future product candidates or that results in costly litigation or arbitration that diverts management attention and resources; |
| • | collaborations may be terminated, which may result in a need for additional capital to pursue further development or commercialization of the applicable current or future product candidates; |
| • | collaborators may own or co-own intellectual property covering products that result from our collaboration with them, and in such cases, we would not have the exclusive right to develop or commercialize such intellectual property; |
| • | disputes may arise with respect to the ownership of any intellectual property developed pursuant to our collaborations; and |
| • | a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings. |
Management of our relationships with collaborators requires and, in the future, is expected to continue to require:
| • | significant time and effort from our management team; |
| • | coordination of our marketing and research and development programs with the marketing and research and development priorities of our collaborators; and |
| • | effective allocation of our resources to multiple projects. |
Additionally, we may seek to enter into additional collaborations, joint ventures, licenses and other similar arrangements for the development or commercialization of our product candidates, due to capital costs required to develop or commercialize the product candidate or manufacturing constraints. We may not be successful in our efforts to establish such collaborations for our product candidates because our research and development pipeline may be insufficient, our product candidates may be deemed to be at too early of a stage of development for collaborative effort or third parties may not view our product candidates as having the requisite potential to demonstrate safety and efficacy or significant commercial opportunity. If we are unable to establish or manage such strategic collaborations on terms favorable to us in the future, our research and development efforts and potential to generate revenue may be limited. In addition, we face significant competition in seeking appropriate
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strategic partners, and the negotiation process can be time consuming and complex. Further, any future collaboration agreements may restrict us from entering into additional agreements with potential collaborators. We cannot be certain that, following a strategic transaction or license we will achieve an economic benefit that justifies such transaction.
Even if we are successful in our efforts to establish such collaborations, the terms that we agree upon may not be favorable to us and we may not be able to maintain such collaborations if, for example, development or approval of a product candidate is delayed, the safety of a product candidate is questioned or sales of an approved product candidate are unsatisfactory.
In addition, any potential future collaborations may be terminable by our strategic partners, and we may not be able to adequately protect our rights under these agreements. Furthermore, strategic partners may negotiate for certain rights to control decisions regarding the development and commercialization of our product candidates, if approved, and may not conduct those activities in the same manner as we do. Any termination of collaborations we enter into in the future, or any delay in entering into collaborations related to our product candidates, could delay the development and commercialization of our product candidates and reduce their competitiveness if they reach the market, which could have a material adverse effect on our business, financial condition and results of operations.
We may face shortages in our raw materials.
One of our main products is derived from psychedelic mushrooms which are cultivated, harvested and dried at our facilities. Accordingly, we must grow enough mushrooms so that the products can be produced to meet the demand of our customers. A shortage of inputs, quality control issue with inputs to mushroom growing operations, issues in storage or culture of inputs, contamination or the loss of a key genetic, or a poor harvest could result in loss of sales and damage to us. If we become unable to harvest in a timely basis and at commercially reasonable prices, and are unable to produce mushrooms at a substantially equivalent cost, in substantially equivalent volumes and quality, and on a timely basis, we will be unable to meet customer demand. In particular, we will be unable to source mushrooms from an alternative grower with the necessary regulatory approvals in a timely manner, which would have a material adverse effect on our business, financial condition and operating results.
In addition to the mushroom input, which we supply internally, both of our drug products are derived from commercially available GMP-qualified ingredients including the active MDMA, excipients, capsules and packaging components. We are currently reliant on a key supplier for our API inputs, and any disruption in API inflow will have a material adverse effect on our business. Consequently, a subsequent change in API supplier may require additional regulatory approvals and increase the cost and timing of our product development. If we and/or our suppliers become unable to acquire materials, especially API, at commercially reasonable prices, and are unable to find one or more replacement suppliers at a substantially equivalent cost, in substantially equivalent volumes and quality, and on a timely basis, we will likely be unable to meet customer demand, which could have a material adverse effect on our business, financial condition and operating results.
Our success depends on the performance of our management and our employees.
Our success is largely dependent on the performance of our directors and officers. The loss of the services of any of these persons could have a materially adverse effect on our business and prospects. There is no assurance that we can maintain the services of our directors, officers or other qualified personnel required to operate our business.
We do not maintain key person insurance on any of our directors or officers, and, as result, we would bear the full loss and expense of hiring and replacing any director or officer in the event of the loss of any such persons by their resignation, retirement, incapacity, or death, as well as any loss of business opportunity or other costs suffered by us from such loss of any director or officer.
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The loss of any member of our management team, or of our key individuals, could have a material adverse effect on our business and results of operations. In addition, an inability to hire, or the increased costs of new personnel, including members of executive management, could have a material adverse effect on our business and operating results. At present and for the near future, we depend upon a relatively small number of contractors to develop, market, sell and support our products. The expansion of marketing and sales of our products will require us to find, hire and retain additional capable personnel who can understand, explain, market and sell our products. There is intense competition for capable personnel in all of these areas and we may not be successful in attracting, training, integrating, motivating, or retaining new personnel, vendors, or subcontractors for these required functions. New employees often require significant training and security clearances, and, in many cases, take significant time before they achieve full productivity. As a result, we may incur significant costs to attract and retain contractors, including significant expenditures related to salaries and benefits and compensation expenses related to equity awards, and may lose new employees to our competitors or other companies before we realize the benefit of our investment in recruiting and training them. In addition, if and when we move into new jurisdictions, we will need to attract and recruit skilled contractors in those areas.
Our directors and officers may have conflicts of interest with us.
Our directors and officers may serve as directors or officers of other similar companies or have significant shareholdings in other similar companies, and, to the extent that such other companies may participate in ventures in which we may participate, our directors may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. This could potentially result in the diversion of opportunities from us to other entities or persons with which any such director or officer is associated or has an interest, rather than offering such opportunities to us. To the extent that such conflicts of interest are approved by the disinterested directors or are not adequately disclosed, it could result in the loss of potential opportunities. Furthermore, while an effort has been made, and will continue to be made, to engage in transactions and enter into agreements with affiliated persons and other related parties on terms as favorable to us as they could have been if obtained from non-affiliated persons, there will always be an inherent conflict of interest between our interests and those of our affiliates and related parties if they have any interest adverse to ours. We may be adversely impacted if any related party agreement or transaction has been made, or is made in the future, on unfavorable terms. In the event that such a conflict of interest arises at a meeting of the directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms in accordance with the Business Corporations Act (British Columbia). In accordance with the laws of British Columbia, the directors of a company are required to act honestly, in good faith and in the best interests of such company.
For example, Bryan Safarik currently serves as a director and the president and chief operating officer and Jacob Safarik currently serves as the chief financial officer, respectively, of BC Green, a private Canada federally licensed cannabis production company. On July 23, 2020, we entered into an industrial ground lease agreement with BC Green for the Industrial Ground underlying our Facilities in Princeton, British Columbia, which was amended and restated on September 1, 2021 and was further amended on July 1, 2025 to extend the term of the lease to June 30, 2030 and to include three additional options to renew the agreement for successive terms of five years commencing on July 1, 2030.
Natural disasters, public health crises, political crises and other catastrophic events or other events outside of our control may adversely affect our business.
Any natural disaster-related disruptions or other events outside of our control could negatively affect our business and harm our operating results. In addition, if our facilities, or the facilities of our suppliers, third-party service providers or customers are affected by natural disasters, such as earthquakes, tsunamis, power shortages or outages, floods or monsoons, public health crises, such as pandemics and epidemics, political crises, such as terrorism, war, political instability or other conflict, or other events outside of our control, our business and operating results could suffer. Moreover, these types of events could negatively impact consumer spending in the
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impacted regions or, depending upon the severity, globally, which could adversely impact our operating results. Similar disasters occurring at our vendors’ manufacturing facilities could impact our reputation and our consumers’ perception of our brand.
We currently report our financial results under IFRS, which differs in certain significant respects from U.S. generally accepted accounting principles.
We report our financial statements under IFRS and expect to continue to do so for so long as we continue to qualify as a foreign private issuer. There are, and there may in the future be, certain significant differences between IFRS and U.S. GAAP, including differences related to revenue recognition, intangible assets, share-based compensation expense, income tax and earnings per share. As a result, our financial information and reported earnings for historical or future periods could be significantly different if they were prepared in accordance with U.S. GAAP. In addition, we do not intend to provide a reconciliation between IFRS and U.S. GAAP unless it is required under applicable law. As a result, you may not be able to meaningfully compare our financial statements under IFRS with those companies that prepare financial statements under U.S. GAAP.
Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
We are subject to certain reporting requirements of the Exchange Act. Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to management, recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements or insufficient disclosures due to error or fraud may occur and not be detected.
The availability of adequate third-party payer coverage and reimbursement for newly approved drugs is uncertain, and failure to obtain adequate coverage and reimbursement from third-party payers could impede our ability to market any future products we may develop and could limit our ability to generate revenue.
There is significant uncertainty related to the third-party payer coverage and reimbursement of newly approved drugs. The commercial success of our future products in both Canada and international markets depends on whether such third-party coverage and reimbursement are available for our product candidates. Governmental payers, health maintenance organizations, managed care, pharmacy benefit and other third-party payers are increasingly attempting to manage their healthcare expenditures by limiting both coverage and the level of reimbursement of new drugs and, as a result, they may not cover or provide adequate reimbursement for our product candidates, which is essential for most patients to be able to afford treatments. These payers may not view our future products as cost-effective, and coverage and reimbursement may not be available to our customers, may not be sufficient to allow our future products to be marketed on a competitive basis and will impact our ability to successfully commercialize our product candidates. Government authorities and third-party payers are exerting increasing influence and control on costs, known as cost containment, on their decisions regarding the use of, and coverage and reimbursement levels for, particular medications and treatments. In particular, third-party payers may limit the covered indications. This trend in cost-control initiatives in the United States and other countries could cause us to decrease the price we might establish for products, and monitor and control company profits, which could result in lower than anticipated product revenues. If the prices for our drug candidates decrease or if governmental and other third-party payers do not provide adequate coverage or reimbursement, our prospects for revenue and profitability will suffer.
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If the market opportunities for our product candidates are smaller than we believe they are, our revenue may be adversely affected, and our business may suffer. Our ability to successfully identify patients and acquire a significant market share will be necessary for us to achieve profitability and growth.
We focus research and product development on treatments for mental health disorders, including TRD and PTSD. Our projections of both the number of individuals who are affected by our target disorder indications and have the potential to benefit from treatment with our product candidates are based on estimates. These estimates have been derived from a variety of sources, including the scientific literature, and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these disorders. The number of patients may turn out to be lower than expected. The effort to identify patients with these mental health disorders we seek to treat is in early stages, and we cannot accurately predict the number of patients for whom treatment might be possible. Additionally, the potentially addressable patient population for our product candidates that we may identify may be limited or may not be amenable to treatment with our product candidates, and new patients may become increasingly difficult to identify or gain access to, which would adversely affect our results of operations and our business. Further, even if we obtain significant market share for our product candidates, because the potential target populations may be small, we may never achieve profitability.
If we are unable to effectively execute our growth strategies and manage risks associated with expanding the scale of our operations, our ability to grow our business and establish our international markets may be negatively affected.
To accomplish our growth strategies and manage the future growth of our operations, we will need to improve our operational and financial systems and internal controls, and expand, train and manage our growing employee base.
As we transition from early-stage operations to a more mature pharmaceutical model, we must invest in the development and refinement of operational infrastructure, including enterprise resource planning, inventory control, and financial reporting systems that can withstand audit scrutiny across multiple regulatory agencies.
The expansion of our workforce will require disciplined hiring, training, and retention strategies to ensure technical competency in highly regulated and scientific functions. Our ability to recruit and retain personnel with the requisite expertise may impair our capacity to meet compliance and supply obligations.
We will need to maintain and expand our relationships with our customers, suppliers and other third parties. Furthermore, as we enter new markets, we may face new market, technological, operational and regulatory risks and challenges with which we are unfamiliar.
We must also maintain and strengthen our commercial relationships with healthcare providers, clinical research organizations, contract manufacturing partners, and government stakeholders. Disruption in any of these partnerships - particularly those supporting our controlled substance supply chain -could compromise product availability, impact revenue forecasts, or damage our regulatory standing.
If we are unsuccessful in managing these complexities, the effect could result in delayed product launches, failed market entries, regulatory non-compliance, and reduced investor confidence, all of which would materially impair our long-term growth trajectory and financial performance.
Cyberattacks or other failures in our telecommunications or information technology systems, or those of our collaborators, contracted research organizations, third-party logistics providers, distributors or other contractors or consultants, could result in information theft, data corruption and significant disruption of our business operations which could materially affect our results.
We, our programs, our collaborators, our contracted research organizations, third-party logistics providers, distributors and other contractors and consultants rely on information technology, or IT, systems and networks to
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process, transmit and store electronic information, including but not limited to intellectual property, confidential information, proprietary business information, preclinical and clinical trial data and personal information in connection with our business activities (referred to herein collectively as “confidential information”). Our IT systems and those of current and future third parties on which we rely may fail and are vulnerable to breakdown, breach, interruption or damage from cyber incidents, employee error or malfeasance, misconfigurations, “bugs” or other vulnerabilities, theft or misuse, sophisticated nation-state and nation-state-supported actors, unauthorized access, natural disasters, terrorism, war, telecommunication and electrical failures or other compromises. As use of digital technologies has increased, cyber incidents, including third parties gaining access to employee accounts using stolen or inferred credentials, computer malware (e.g. ransomware), viruses, spamming, social engineering or phishing attacks, denial-of-service attacks or other means, and deliberate attacks and attempts to gain unauthorized access to computer systems and networks, have increased in frequency, intensity, and sophistication. These threats pose a risk to the security of our, our programs’, our collaborators’, our contracted research organizations’, third-party logistics providers’, distributors’ and other contractors’ and consultants’ systems and networks, and the confidentiality, availability and integrity of our confidential information. There can be no assurance that we will be successful in preventing cyberattacks or successfully mitigating their effects. There can also be no assurance that our, our programs’, our collaborators’, our contracted research organizations’, third-party logistics providers’, distributors’ and other contractors’ and consultants’ cybersecurity risk management program and processes, including policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems, networks and confidential information.
The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity, and sophistication of attempted attacks and intrusions from around the world have increased. In addition, varying parts of our workforce are currently working remotely on a part or full time basis. This could increase our cyber security risk, create data accessibility concerns, and make us more susceptible to communication disruptions. We may not be able to anticipate all types of security threats, and we may not be able to implement preventive measures effective against all such security threats. The techniques used by cyber criminals change frequently, may not be recognized until launched, and can originate from a wide variety of sources, including outside groups such as external service providers, organized crime affiliates, terrorist organizations or hostile foreign governments or agencies. We may also experience security incidents that may remain undetected for an extended period. Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence. Similarly, there can be no assurance that our collaborators, contracted research organizations, third-party logistics providers, distributors and other contractors and consultants will be successful in protecting our clinical and other data that is stored on their systems. Any loss of clinical trial data from our clients’ completed or ongoing clinical trials for any of our product candidates could result in delays in our development and regulatory approval efforts and significantly increase our costs to recover or reproduce the data. We and certain of our service providers are from time to time subject to cyberattacks and security incidents. We have experienced and expect to continue to experience actual and attempted cyberattacks of our IT networks, such as through phishing scams and ransomware. Although we do not believe that we have experienced any significant system failure, accident or cybersecurity incidents to date, we cannot guarantee that we will not experience such incidents in the future. Any adverse impact to the availability, integrity or confidentiality of our or third-party systems or confidential information can result in legal claims or proceedings (such as class actions), regulatory investigations and enforcement actions, fines and penalties, negative reputational impacts that cause us to lose existing or future customers, and/or significant incident response, system restoration or remediation and future compliance costs. Any or all of the foregoing could materially adversely affect our business, results of operations, and financial condition.
Any cyberattack that leads to unauthorized access, use, or disclosure of confidential information, data breach or destruction or loss of confidential information could result in a violation of applicable Canadian, U.S. and international privacy, data protection and other laws and regulations, require us to notify affected individuals or supervisory authorities, subject us to litigation and governmental investigations, proceedings and regulatory
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actions by federal, state and local regulatory entities in Canada and the United States and by international regulatory entities, cause our exposure to material civil and/or criminal liability and cause us to breach our contractual obligations, which could result in significant legal and financial exposure and reputational damages. As cyber threats continue to evolve, we may be required to incur significant additional expenses in order to implement further data protection measures or to remediate any information security vulnerability. Further, our general liability insurance and corporate risk program may not cover all potential claims to which we are exposed and may not be adequate to indemnify us for all liability. There can be no assurance that the limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from liabilities or damages as a result of the events referenced above. We also cannot be certain that our existing insurance coverage will continue to be available on acceptable terms or in amounts sufficient to cover the potentially significant losses that may result from a security incident or breach or that the insurer will not deny coverage wholly or in part, of any future claim. Accordingly, if our cybersecurity measures, and those of our service providers, fail to protect against unauthorized access, attacks and the mishandling of data by our employees and third-party service providers, then our business, financial condition, results of operations and prospects could be adversely affected. There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information.
Our business is subject to economic, political, regulatory and other risks associated with international operations.
As a company incorporated in British Columbia, Canada, with business outside of Canada, we are subject to risks associated with international operations. Our business strategy involves obtaining regulatory approval for and to commercialize our product candidates in patient populations outside Canada, and we may hire sales representatives and conduct physician and patient association outreach activities outside Canada. Doing business internationally involves a number of risks, including, but not limited to:
| • | multiple, conflicting, and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements, and other governmental approvals, permits, and licenses; |
| • | our failure to obtain and maintain regulatory approvals for the use of our products in various countries; |
| • | additional potentially relevant third-party patent rights; |
| • | complexities and difficulties in obtaining protection and enforcing our intellectual property; |
| • | difficulties in staffing and managing foreign operations; |
| • | complexities associated with managing multiple payer reimbursement regimes, government payers, or patient self-pay systems; |
| • | limits in our ability to penetrate international markets; |
| • | financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products, and exposure to foreign currency exchange rate fluctuations; |
| • | natural disasters, political and economic instability, including wars, terrorism, and political unrest, including the ongoing military conflict between Russia and Ukraine, conflicts in the Middle East, outbreak of disease, boycotts, curtailment of trade, and other business restrictions; |
| • | economic weakness, including inflation or stagflation, or political instability; |
| • | difficulties in compliance with different, complex and changing laws, regulations and court systems of multiple jurisdictions and compliance with a wide variety of foreign laws, treaties and regulations, including taxes; |
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| • | certain expenses including, among others, expenses for travel, translation, and insurance; and |
| • | regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the purview of the U.S. Foreign Corrupt Practices Act of 1977, as amended or the FCPA, its books and records provisions, or its anti-bribery provisions |
Any of these factors could significantly harm our potential international expansion and operations, and, consequently, our results of operations.
Risks Related to Drug Development
We face various risks associated with drug development.
We are engaged in the research of growing psilocybin mushrooms and undertaking extractions from these mushrooms with a view to ultimately developing patents and other intellectual property rights related to mushroom cultivation, extraction and formulation. We are also engaged in the research and development of MDMA capsules and the intellectual property related to MDMA formulation. However, it is uncertain whether any of our current or future product development efforts will prove to be successful and meet applicable regulatory requirements, and whether any of our future product candidates will receive the requisite regulatory approvals, be capable of being manufactured at a reasonable cost or be successfully marketed. To achieve profitable operations, we alone or with others, must successfully develop, gain regulatory approval for, and market our current and future products. To obtain regulatory approvals for our product candidates being developed and to achieve commercial success, clinical trials must demonstrate that the product candidates are safe for human use and that they demonstrate efficacy. The impact of legislative regimes on our business remains uncertain, particularly as regulatory bodies continue to develop and refine their approaches to psychedelic research and commercialization.
Many product candidates never reach the stage of clinical testing and even those that do have only a small chance of successfully completing clinical development and gaining regulatory approval. Product candidates may fail for a number of reasons, including being unsafe for human use or due to the failure to provide therapeutic benefits equal to or better than the standard of treatment at the time of testing. Unsatisfactory results obtained from a particular study relating to a research and development program may cause us or our collaborators to abandon commitments to that program. Positive results of early pre-clinical research may not be indicative of the results that will be obtained in later stages of pre-clinical or clinical research. Similarly, positive results from early-stage clinical trials may not be indicative of favorable outcomes in later-stage clinical trials, and we can make no assurance that any future studies, if undertaken, will yield favorable results.
If we are successful in developing our current and future product candidates into approved products, we will still experience many potential obstacles, which would affect our ability to successfully market and commercialize such approved products, such as the need to develop or obtain manufacturing, marketing and distribution capabilities, price pressures from third-party payers or proposed changes in health care systems. If we are unable to successfully market and commercialize our products, our financial condition and results of operations may be materially and adversely affected.
As of the date hereof, the clinical effectiveness and safety of any of our developmental products is not yet fully supported by clinical data and the medical community has not yet developed a large body of peer reviewed literature that supports the safety and efficacy of similar products. If future studies call into question the safety or efficacy of our products, our business, financial condition, and results of operations could be adversely affected. Our success depends on achieving necessary regulatory approvals, which involve stringent regulatory hurdles and potential delays.
We can make no assurance that any future studies, if undertaken, will yield favorable results. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in later-stage clinical trials after
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achieving positive results in early-stage development, and we cannot be certain that it will not face similar setbacks. These setbacks have been caused by, among other things, pre-clinical findings made while clinical trials were underway or safety or efficacy observations made in clinical trials, including previously unreported adverse events.
Our products are in preclinical or clinical development with third parties, which is a lengthy and expensive process with uncertain outcomes. We cannot give any assurance that any of our future product candidates will be successfully developed and/or receive regulatory approval, which is necessary before they can be commercialized.
Before obtaining marketing approval from regulatory authorities in most jurisdictions for the sale of our product candidates, our product candidates must undergo extensive preclinical and clinical testing to evaluate their safety and efficacy for human use. We are not, and do not intend to be the clinical trial applicant for any study, rather, third parties currently conduct preclinical and clinical studies of our product candidates. Such testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the development process. Some of our product candidates are in the preclinical stage, and their risk of failure is high. Before our clients commence clinical trials for our product candidates, they must complete extensive preclinical testing and studies that support the planned Clinical Trial Applications (“CTAs”) in Canada or Investigational New Drug Applications (“INDs”) in the United States or similar applications in other jurisdictions. We cannot be certain of the timely completion or outcome of clients’ preclinical testing and studies and cannot predict if Health Canada, the FDA or other regulatory authorities will accept the proposed clinical programs or if the outcome of preclinical studies will ultimately support the further development of the programs. As a result, we cannot be sure that we will be able to submit CTAs, INDs or similar applications for our clinical programs on the timelines we expect, if at all, and we cannot be sure that submission of CTAs, INDs or similar applications will result in Health Canada, the FDA or other regulatory authorities allowing clinical trials to begin.
Moreover, the results of preclinical studies may not be predictive of the results of clinical trials, and the results of any early-stage clinical trials our clients commence may not be predictive of the results of the later-stage clinical trials. The results of preclinical studies and clinical trials in one set of patients or disorder indications, or from preclinical studies or clinical trials that we did not lead, may not be predictive of those obtained in another. In some instances, there can be significant variability in safety or efficacy results between different clinical trials of the same product candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, changes in and adherence to the dosing regimen and other clinical trial protocol details and the rate of dropout among clinical trial participants. In addition, preclinical and clinical data are often susceptible to various interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval. A number of companies in the pharmaceutical, biopharmaceutical and biotechnology industries have suffered significant setbacks in clinical development even after achieving promising results in earlier studies, and any such setbacks in our clinical development could have a material adverse effect on our business and operating results. Even if early-stage clinical trials are successful, our clients may need to conduct additional clinical trials of our product candidates in additional patient populations or under different treatment conditions before we are able to seek approvals from Health Canada, the FDA or other comparable foreign regulatory authorities to market and sell these product candidates. Most product candidates that begin clinical trials are never approved by regulatory authorities for commercialization.
In addition, clinical trial design for our product candidates can be complex given their characteristics, and may not be accepted by the FDA. For example, clients will need to design clinical trials for certain product candidates to evaluate efficacy across a range of doses. Additionally, clients may utilize an “open-label” trial design for some of their future clinical trials. An open-label trial is one where both the patient and investigator know whether the patient is receiving the test article or either an existing approved drug or placebo. Open-label trials are subject to various limitations that may exaggerate any therapeutic effect as patients in open-label studies are aware that they are receiving treatment. Open-label trials may be subject to a “patient bias” where patients
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perceive their symptoms to have improved merely due to their awareness of receiving an experimental treatment. Patients selected for early clinical studies often include the most severe sufferers, and their symptoms may have been bound to improve notwithstanding the new treatment. In addition, open-label trials may be subject to an “investigator bias” where those assessing and reviewing the physiological outcomes of the clinical trials are aware of which patients have received treatment and may interpret the information of the treated group more favorably given this knowledge. The opportunity for bias in clinical trials as a result of open-label design may not be adequately handled and may cause any of our trials that utilize such design to fail or to be considered inadequate and additional trials may be necessary to support future marketing applications. Moreover, results acceptable to support approval in one jurisdiction may be deemed inadequate by another regulatory authority to support regulatory approval in that other jurisdiction. To the extent that the results of the trials are not satisfactory to Health Canada, the FDA or comparable foreign regulatory authorities for support of a marketing application, clients may be required to expend significant resources, which may not be available to them, to conduct additional trials in support of potential approval of our product candidates.
We cannot be certain that our product candidates will be successful in clinical trials. Our clients’ inability to successfully complete preclinical and clinical development could result in additional costs to us and negatively impact our ability to obtain approval and to generate revenue. Our future success is dependent on our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize product candidates. In addition, even if such clinical trials are successfully completed, we cannot guarantee that Health Canada, the FDA or comparable foreign regulatory authorities will interpret the results as we do, and more trials could be required before we submit our product candidates for approval. In addition, Health Canada, the FDA and other regulatory authorities’ policies with respect to clinical trials may change and additional government regulations may be enacted.
If we, as supplier, or our clients are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies governing clinical trials, our development plans may be impacted.
We may not achieve publicly announced milestone expectations and forecasts according to schedule, or at all.
From time to time, we may announce the timing of certain events that we expect to occur, such as the anticipated timing of results from our clients’ clinical trials. These statements are forward-looking and are based on the best estimates of management at the time relating to the occurrence of such events. However, the actual timing of such events may differ from what has been publicly disclosed. The timing of events such as a client’s initiation or completion of a clinical trial, filing of an application to obtain regulatory approval or announcement of additional clinical trials for a product candidate may ultimately vary from what is publicly disclosed. These variations in timing may occur as a result of different events, including the nature of the results obtained during a clinical trial or during a research phase, timing of the completion of clinical trials or any other event having the effect of delaying the publicly announced timeline. Further, any U.S. rescheduling delays or changes in Australian and Canadian policies may impact our market timelines. We undertake no obligation to update or revise any forward-looking information or statements, whether as a result of new information, future events or otherwise, except as otherwise required by law. Any variation in the timing of previously announced milestone expectations and forecasts could have a material adverse effect on our business plan, financial condition or operating results.
We rely on third parties to conduct clinical trials and some aspects of our research and preclinical testing, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, research or testing.
We currently rely, and expect to continue to rely, on third parties, including our clients and their contracted research organizations, clinical data management firms, medical institutions and clinical investigators, to conduct research, preclinical studies, and clinical trials involving our product candidates. These third parties are responsible for designing, executing and overseeing the clinical development and regulatory submission processes. Any of these third parties may terminate their engagements or fail to fulfill their contractual
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obligations. If any such relationships end, we may not be able to secure alternative arrangements on commercially reasonable terms, or at all, which could delay or impair development and commercialization timelines for our products.
Although we do not conduct clinical trials ourselves, we may remain indirectly affected by the actions or failures of these third parties. Regulatory authorities such as the FDA, Health Canada and other comparable agencies require that clinical trials comply with applicable protocols, legal and regulatory standards and GCP guidelines, which govern the design, conduct, monitoring and reporting of human clinical trials. These authorities conduct periodic inspections of sponsors, investigators, clinical sites and IRBs to ensure compliance. If our clients or their contractors fail to meet these standards, the resulting data may be deemed unreliable, potentially requiring additional clinical trials and delaying regulatory approval. We cannot guarantee that any trial involving our products will be found compliant upon inspection.
Additionally, under applicable regulations, our clients are responsible for registering clinical trials and reporting results in accordance with jurisdictional requirements. In Canada, for example, all Health Canada-authorized trials must be registered in a clinical trial registry meeting World Health Organization standards before the enrollment of participants, and summary results must be submitted to the same registry. In the United States, certain trials must be registered on ClinicalTrials.gov, and results of completed trials must be posted within specified timeframes. Noncompliance can lead to fines, adverse publicity and civil or criminal penalties.
Even if our clients complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time consuming and uncertain and may prevent us from obtaining approvals for the potential commercialization of our product candidates.
Any product candidates we may develop and the activities associated with their development and potential commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by Health Canada, the FDA and other comparable foreign regulatory authorities. Failure to obtain marketing authorization for a product candidate will prevent us from commercializing the product candidate in a given jurisdiction.
We currently expect to rely on our clients to file and support the applications necessary to gain marketing authorizations for our products in jurisdictions where we cannot supply our products directly. Securing regulatory approval requires the submission of preclinical and clinical data from our clients and supporting information to the various regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy, or with respect to biological products in the U.S., the product candidate’s safety, purity and potency. Securing regulatory approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority. Any product candidates we develop may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use, if approved.
The process of obtaining marketing authorizations, in Canada, the United States and abroad, is expensive, may take many years if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Changes in marketing authorization policies during the development period, changes in or the enactment of additional statutes or regulations or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application. Health Canada, the FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that clients’ data are insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a product candidate. Any marketing approval we ultimately obtain may be
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limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable. If we experience delays in obtaining approval, or if we fail to obtain approval of any product candidates we may develop, the commercial prospects for those product candidates may be harmed, and our ability to generate revenues will be materially impaired.
Research and development of drugs targeting the central nervous system (“CNS”) is particularly difficult and it can be difficult to predict and understand why a drug has a positive effect on some patients but not others, which may reduce the likelihood our product candidates are ultimately approved and therefore may have a material adverse effect on our business and operating results.
Discovery and development of new drugs targeting brain health disorders are particularly difficult and time-consuming, evidenced by the higher failure rate for new drugs for brain health disorders compared with most other areas of drug discovery. Any such setbacks in our clients’ clinical development could have a material adverse effect on our business and operating results. In addition, our later stage clinical trials may present challenges related to conducting adequate and well-controlled clinical trials, including designing an appropriate comparator arm in trials given the potential difficulties related to maintaining the blinding during the trial or placebo or nocebo effects.
Due to the inherent complexity of the human brain and the central nervous system, it is often challenging to predict or fully understand why a drug, including psilocybin, MDMA or any other product candidates, may demonstrate therapeutic benefits in some patients but not others, or why individuals may respond differently to the same treatment. The impact and complexities that arise from comingling therapeutic treatments with psychotherapy is an added variable not present in traditional medical treatments. Moreover, most of the patients treated in our clients’ clinical trials have previously been treated with the same drugs, other drugs or therapies, introducing additional variabilities. These factors collectively complicate the evaluation of prior treatment effects and make it more difficult to assess the true efficacy of our product candidates.
If our clients encounter difficulties enrolling patients in clinical trials, our clinical development activities could be delayed or otherwise adversely affected.
Third parties’ identification and qualification of trial participants to participate in clinical studies is critical to our success. The timing of our clients’ clinical trials depends on, among other things, the speed at which they can recruit trial participants to participate in testing our product candidates and their ability to enroll a sufficient number of patients who remain in the trial until its conclusion. Delays in enrollment and withdrawals from the trial may result in increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent completion of these trials and adversely affect our ability to advance the development of our product candidates. If trial participants are unwilling to participate in our studies because of negative publicity from adverse events in our trials or other trials of similar products, or those related to specific therapeutic area, or for other reasons, including competitive clinical studies for similar patient populations, the timeline for recruiting trial participants, conducting studies, and obtaining regulatory approval of potential products may be delayed. These delays could result in increased costs, delays in advancing our product candidate development, delays in testing the effectiveness of these product candidates, or termination of the clinical studies altogether.
Our clinical client partners may not be able to identify, recruit and enroll a sufficient number of trial participants, or those with required or desired characteristics to achieve diversity in a study, to complete their clinical studies in a timely manner. Patient and subject enrollment is affected by factors including:
| • | the size and nature of the patient population; |
| • | the patient eligibility criteria defined in the applicable clinical trial protocols, which may limit the patient populations eligible for clinical trials to a greater extent than competing clinical trials for the same indication; |
| • | the size of the study population required for analysis of the trial’s primary endpoints; |
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| • | the severity of the disorder under investigation; |
| • | the proximity of patients to a trial site; |
| • | the inclusion and exclusion criteria for the trial in question; |
| • | the design of the trial protocol; |
| • | the ability to recruit clinical trial investigators with the appropriate competencies and experience; |
| • | the approval or concurrent enrollment of clinical trials involving competing product candidates currently under development or competing clinical trials for similar product candidates or targeting patient populations meeting our patient eligibility criteria; |
| • | the availability and efficacy of approved medications or product candidates for the disorder or condition under investigation; |
| • | clinicians’ and patients’ perceptions as to the potential advantages and side effects of the product candidate being studied in relation to other available product candidates and product candidates; |
| • | the ability to obtain and maintain patient consents; and |
| • | the risk that patients enrolled in clinical trials will not complete such trials, for any reason. |
If our clients have difficulty enrolling sufficient numbers of patients to conduct clinical trials as planned, they may need to delay or terminate clinical trials, either of which would have an adverse effect on our business.
Use of our product candidates could be associated with side effects, adverse events or other properties or safety risks, which could delay or halt their clinical development, prevent their regulatory approval, cause our clients to suspend or discontinue clinical trials, cause us to abandon a product candidate, limit their commercial potential, if approved, or result in other significant negative consequences that could severely harm our business, prospects, financial condition and results of operations.
As is the case with pharmaceuticals generally, it is likely that there may be unexpected or undesirable side effects, adverse effects and other risks associated with the use of our product candidates. Results of clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Undesirable side effects caused by these product candidates could cause our clients or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by Health Canada, the FDA or other comparable foreign regulatory authorities. The side effects related to the product candidate could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition, results of operations and prospects significantly.
Moreover, if our product candidates are associated with undesirable side effects in preclinical studies or clinical trials or have characteristics that are unexpected, we may elect to abandon their development or limit their development to more narrow indications or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, which may limit the commercial expectations for the product candidate if approved. Our clients may also be required to modify or terminate their study plans based on findings in preclinical studies or clinical trials. Many product candidates that initially show promise in early-stage testing may later be found to cause side effects that prevent further development. As we work to advance existing product candidates and to identify new product candidates, we cannot be certain that later testing or trials of product candidates that initially showed promise in early testing will not be found to cause similar or different unacceptable side effects that prevent their further development.
It is possible that as our product candidates are tested in larger, longer and more extensive clinical trials, or as the use of these product candidates becomes more widespread if they receive regulatory approval, illnesses, injuries,
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discomforts and other adverse effects that were not observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials, may be reported by subjects. If such side effects become known later in development or upon approval, if any, such findings may harm our business, financial condition, results of operations and prospects significantly.
Additionally, adverse developments in clinical trials or use in the Authorised Prescribers Scheme in Australia of pharmaceutical, biopharmaceutical or biotechnology products conducted by others may cause Health Canada, the FDA or other regulatory oversight bodies to suspend or terminate our clinical trials or to change the requirements for approval of any of our product candidates.
In addition to side effects caused by the product candidate, the administration process, such as psychotherapy, or related procedures also can cause adverse side effects. If any such adverse effects occur, our clients’ clinical trials could be suspended or terminated. If our clients are unable to demonstrate that any adverse effects were caused by the administration process or related procedures, Health Canada, the FDA or other regulatory authorities could order us to cease further development of, or deny approval of, a product candidate for any or all targeted indications. Even if our clients can demonstrate that all future serious adverse events are not product-related, such occurrences could affect patient recruitment or the ability of enrolled patients to complete the trial. Moreover, if our clients elect, or are required, to not initiate, delay, suspend or terminate any future clinical trial of any of our product candidates, the commercial prospects of such product candidates may be harmed, and our ability to generate product revenues from any of these product candidates may be delayed or eliminated. Any of these occurrences may harm our ability to develop other product candidates, and may harm our business, financial condition, results of operations and prospects significantly.
Additionally, if any of our product candidates receive marketing authorization, Health Canada, the FDA or other regulatory authorities could impose contraindications or a boxed warning in the labeling of the product. For any of our drug product candidates receiving marketing authorization, Health Canada, the FDA or other regulatory authorities could require us to adopt a risk evaluation and mitigation strategy (“REMS”) or similar risk management measures and could apply elements to assure safe use to ensure that the benefits of the product outweigh its risks, which may include, among other things, a Medication Guide outlining the risks of the product for distribution to patients and a communication plan to health care practitioners. Furthermore, if we or others later identify undesirable side effects caused by our product candidates if approved, several potentially significant negative consequences could result, including:
| • | regulatory authorities may suspend or withdraw approvals of such product candidate, or seek an injunction against its manufacture or distribution; |
| • | regulatory authorities may require additional warnings on the label, including “boxed” warnings, or issue safety alerts, Deal Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product; |
| • | we may be required by Health Canada, the FDA or other regulatory authorities to implement a REMS or similar risk management measures; |
| • | we may be required to change the way a product candidate is administered; |
| • | our clients may have to conduct additional clinical trials; |
| • | we may be subject to fines, injunctions or the imposition of civil or criminal penalties; |
| • | we could be sued and held liable for harm caused to patients; and |
| • | our reputation may suffer. |
Any of these occurrences could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and may harm our business, financial condition, results of operations and prospects significantly.
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Even if any of our current or future product candidates receive regulatory approval in the United States, any such product candidates may fail to achieve the degree of market acceptance by physicians, patients, third-party payers and others in the medical community necessary for commercial success, in which case we may not generate significant revenues or become profitable.
We have never commercialized a product in the United States, and even if any of our current or future product candidates is approved by the appropriate regulatory authorities for marketing and sale, it may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payers and others in the medical community. Physicians may be reluctant to take their patients off their current medications and switch their treatment regimen. Further, patients often acclimate to the treatment regime that they are currently taking and do not want to switch unless their physicians recommend switching products or they are required to switch due to lack of coverage and adequate reimbursement. In addition, even if we are able to demonstrate our product candidates’ safety and efficacy to the FDA and other regulators, safety or efficacy concerns in the medical community may hinder market acceptance.
Efforts to educate the medical community and third-party payers on the benefits of our product candidates may require significant resources from our partners, including management time and financial resources, and may not be successful. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:
| • | the efficacy and safety of the product as demonstrated in pivotal clinical trials; |
| • | the potential and perceived advantages of the product compared to competitive and alternative products; |
| • | the prevalence and severity of any side effects; |
| • | whether the product is designated under physician treatment guidelines as a first-, second- or third-line therapy; |
| • | our ability, or the ability of any future collaborators, to offer the product for sale at competitive prices; |
| • | the product’s convenience and ease of dosing and administration compared to alternative treatments, including the need to have products administered in clinical settings, rather than the home, for patients who are prescribed the products; |
| • | the willingness of the target patient population to try, and of physicians to prescribe, the product; |
| • | limitations or warnings, including distribution or use restrictions contained in the product’s approved labeling; |
| • | the strength of sales, marketing and distribution support; |
| • | restrictions on how the product is distributed; |
| • | the timing of market introduction of competitive products; |
| • | publicity concerning these products or competing products and treatments; |
| • | changes in the standard of care for the targeted indications for the product; and |
| • | availability and adequacy of coverage and reimbursement from government payers, managed care plans and other third-party payers. |
Sales of medical products also depend on the willingness of physicians to prescribe the treatment, which is likely to be based on a determination by these physicians that the products are safe, therapeutically effective and cost effective. In addition, the inclusion or exclusion of products from treatment guidelines established by various physician groups and the viewpoints of influential physicians can affect the willingness of other physicians to prescribe the treatment. We cannot predict whether physicians, physicians’ organizations, hospitals, other
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healthcare providers, government agencies or public or private insurers will determine that any of our products is safe, therapeutically effective and cost effective as compared with competing treatments. If any product candidates we develop do not achieve an adequate level of acceptance, they may not generate significant product revenue, and we may not become profitable.
For any of our current or future product candidates that obtain regulatory approval, any failure to achieve market acceptance or commercial success would adversely affect our business prospects. In addition, for any approved product, any negative perception of such product once commercialized, or of a similar product developed by a competitor, may adversely affect our reputation in the marketplace or among industry participants and our business prospects.
We currently, and may in the future continue to, rely on data from clinical trials for product candidates conducted outside the United States, and the FDA and other comparable foreign regulatory authorities may not accept data from such trials.
The acceptance of study data from clinical trials conducted outside the United States, Canada, Australia or another jurisdiction by the FDA or any comparable foreign regulatory authority may be subject to certain conditions or may not be accepted at all. In cases where data from foreign clinical trials are intended to serve as the sole basis for marketing approval in the U.S., the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the U.S. population and U.S. medical practice; (ii) the trials were performed by clinical investigators of recognized competence and pursuant to Good Clinical Practice (“GCP”) regulations; and (iii) the data may be considered valid without the need for an on-site inspection by the FDA, or if the FDA considers such inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means. In addition, even where the foreign study data are not intended to serve as the sole basis for approval, if the applicable clinical trial was not otherwise subject to an IND, the FDA will not accept the data as support for an application for marketing approval unless the study is well-designed and well-conducted in accordance with GCP and the FDA is able to validate the data from the study through an onsite inspection if deemed necessary. Many foreign regulatory authorities have similar approval requirements. In addition, such foreign trials would be subject to the applicable local laws of the foreign jurisdictions where the trials are conducted. There can be no assurance that the FDA, or any comparable foreign regulatory authority will accept data from trials conducted outside of the United States or the applicable jurisdiction. If the FDA, or any comparable foreign regulatory authority, does not accept such data, it would result in the need for additional trials, which would be costly and time consuming and delay aspects of our business plan and may result in product candidates that we may develop not receiving approval for commercialization in the applicable jurisdiction.
If we are unable to obtain regulatory approval in one or more jurisdictions for any product candidates that we may identify and develop, our business will be substantially harmed.
We cannot commercialize a product until the appropriate regulatory authorities have reviewed and approved the product candidate. Approval by the FDA and comparable regulatory authorities is lengthy and unpredictable and depends upon numerous factors, including substantial discretion of the regulatory authorities. Approval policies, regulations or the type and amount of preclinical or clinical data necessary to gain approval may change during the course of a product candidate’s development and may vary among jurisdictions, which may cause delays in the approval or the decision not to approve an application. We cannot be certain that any of our future product candidates will receive regulatory approval or be successfully commercialized, even if they receive regulatory approval.
Obtaining marketing approval is an extensive, lengthy, expensive and inherently uncertain process, and regulatory authorities may delay, limit or deny approval of our product candidates for many reasons, including but not limited to:
| • | the inability to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that the applicable product candidate is safe and effective as a treatment for our targeted indications or otherwise meets the applicable regulatory standards for approval; |
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| • | the FDA or comparable foreign regulatory authorities may disagree with the design, endpoints or implementation of our clients’ clinical trials; |
| • | the population studied in the clinical program may not be sufficiently broad or representative to assure safety or efficacy in the full population for which we seek approval; |
| • | the FDA or comparable foreign regulatory authorities may require additional preclinical studies or clinical trials beyond those that we currently anticipate; |
| • | the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; |
| • | the data collected from clinical trials of product candidates that we may identify and pursue may not be sufficient to support the submission of an NDA or other submission for regulatory approval in the United States or elsewhere; |
| • | we may be unable to demonstrate to the FDA, or comparable foreign regulatory authorities that a product candidate’s risk-benefit ratio for its proposed indication is acceptable; |
| • | the FDA or comparable foreign regulatory authorities may identify deficiencies in the manufacturing processes, test procedures and specifications, or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and |
| • | the approval policies or regulations of the FDA or comparable foreign regulatory authorities may change in a manner that renders the clinical trial design or data insufficient for approval. |
The lengthy approval process, as well as the unpredictability of the results of clinical trials and evolving regulatory requirements, may result in our failure to obtain regulatory approval to market product candidates that we may pursue in the United States or elsewhere, which would significantly harm our business, prospects, financial condition and results of operations.
Furthermore, approval by the FDA in the United States, if obtained, does not ensure approval by regulatory authorities in other countries or jurisdictions. In order to market any products outside of Canada, we must establish and comply with numerous and varying regulatory requirements of other countries regarding safety and effectiveness. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not mean that regulatory approval will be obtained in any other country. Approval processes vary among countries and can involve additional product testing and validation and additional or different administrative review periods from those in Canada, including additional preclinical studies or clinical trials, as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In some cases, the price that we intend to charge for our products is also subject to approval.
Seeking foreign regulatory approval could result in difficulties and costs for us and require additional preclinical studies or clinical trials by our clients, which could be costly and time consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our products in those countries. The foreign regulatory approval process involves all of the risks associated with FDA approval. We currently have three products approved for sale in Australia. If we fail to comply with regulatory requirements in any markets or to obtain and maintain required approvals, or if regulatory approvals in international markets are delayed, our target market will be reduced and our ability to realize the full market potential of our products will be harmed.
We may be affected by negative results from clinical trials or studies conducted by third-parties.
From time to time, studies or clinical trials on various aspects of psychedelics are conducted by academic researchers, competitors or others. The results of these studies or trials, when published, may have a significant effect on the marketability of the substance that is the subject of the study. For example, the FDA rejected
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Resilient Pharmaceuticals, Inc.’s (formerly known as Lykos Therapeutics) application for MDMA-assisted therapy for PTSD on August 9, 2024. While we were not materially affected in that instance, there can be no assurance that similar events in the future will not have a materially adverse effect on our business. In particular, the publication of negative results of studies or clinical trials or the occurrence of adverse safety events related to psychedelics could adversely affect our operations, research, share price and ability to finance future operations.
Risks Related to Intellectual Property
If we are unable to maintain or obtain sufficient intellectual property protection in the future for our existing product candidates or any other product candidates that we may identify, or if the scope of the intellectual property protection we have or may obtain in the future is not sufficiently broad, our competitors could develop and commercialize product candidates similar or identical to ours, and our ability to successfully commercialize our existing product candidates and any other product candidates that we may pursue may be impaired.
As is the case with other pharmaceutical and biopharmaceutical companies, our success depends in large part on our ability to obtain and maintain protection of the intellectual property we may own solely and jointly with others, in Canada, the United States and other countries, with respect to our product candidates and technology. We may seek to protect our proprietary position by filing patent applications in Canada, the United States and abroad and by in-licensing intellectual property related to our existing product candidates, our various proprietary technologies and any other product candidates or technologies that we may identify.
Obtaining and enforcing pharmaceutical and biopharmaceutical patents is costly, time consuming and complex, and we may not be able to file and prosecute all necessary or desirable patent applications, or to maintain, enforce and license any patents that may issue from such patent applications, at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. We may not have the right to control the preparation, filing and prosecution of patent applications or to maintain the rights to patents licensed to third parties. Therefore, these potential patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.
The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal, technological and factual questions and has in recent years been the subject of much litigation. The standards that the Canadian Intellectual Property Office (“CIPO”), the USPTO and foreign counterparts use to grant patents are not always applied predictably or uniformly. Any future patent applications may not result in patents being issued that protect our product candidates or technology, in whole or in part, or which effectively prevent others from commercializing competitive product candidates. The coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. Even if future patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our future owned or licensed patents by developing similar or alternative product candidates in a non-infringing manner.
In addition, the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our future patents may be challenged in the courts or patent offices in Canada, the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical product candidates to ours, or limit the duration of the patent protection of our product candidates. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our intellectual property portfolio may not provide us with sufficient rights to exclude others from commercializing drugs similar or identical to ours.
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Third parties may claim that we are infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain and may prevent or delay our development and commercialization efforts.
Our commercial success depends in part on our ability to develop, manufacture, market and sell any product candidates that we may develop and use our proprietary technologies without infringing, misappropriating or otherwise violating the intellectual property and proprietary rights of third parties. However, our research, development and commercialization activities may be subject to claims that we infringe or otherwise violate patents or other intellectual property rights owned or controlled by third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions and inter partes re-examination proceedings before the CIPO, USPTO and corresponding foreign patent offices. Numerous Canadian, United States and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are pursuing development candidates. Our competitors in Canada, the United States and abroad, many of which have substantially greater resources and have made substantial investments in patent portfolios and competing technologies, may have applied for or obtained or may in the future apply for or obtain, patents that will prevent, limit or otherwise interfere with our ability to make, use and sell, if approved, our product candidates. The pharmaceutical and biotechnology industries have produced a considerable number of patents, and it may not always be clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If we were sued for patent infringement, we would need to demonstrate that our product candidates, products or methods either do not infringe the patent claims of the relevant patent or that the patent claims are invalid or unenforceable, and we may not be able to do this. Proving invalidity may be difficult. For example, in Canada, proving invalidity in court requires a showing of clear and convincing evidence to overcome the presumption of validity that applies to issued patents. In addition, many companies in the biotechnology and pharmaceutical industries have employed intellectual property litigation as a means to gain an advantage over their competitors. As the biotechnology and pharmaceutical industries expand and more patents are issued, and as we gain greater visibility and market exposure as a public company, the risk increases that our existing product candidates and any other product candidates that we may identify may be subject to claims of infringement of the patent rights of third parties.
There may be other third-party patents or patent applications with claims to composition of matter, materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our existing or future product candidates. Further, we may not be aware of patents that have already been issued and that a third party, for example, a competitor in the fields in which we are developing our product candidates, might assert are infringed by our current or future product candidates, including claims to compositions, formulations, methods of manufacture or methods of use or treatment that cover our product candidates. It is also possible that patents owned by third parties of which we are aware, but which we do not believe are relevant to our product candidates and other proprietary technologies we may develop, could be found to be infringed by our product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of our product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our ability to commercialize such product candidates unless we obtained a license under the applicable patents, or until such patents expire.
Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidates unless we obtained a license or until such patents expires. In either case, such a license may not be available on commercially reasonable terms or at all, or it may be non-exclusive, which could result in our competitors gaining access to the same intellectual property rights.
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Parties making claims against us may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or administrative proceedings, there is a risk that some of our confidential information could be compromised by disclosure. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have material adverse effect on our ability to operate effectively.
If we obtain patents in the future and are not able to obtain patent term extension in Canada, Australia, the United States and other foreign countries, in order to extend the marketing exclusivity term of our product candidates, our business may be materially harmed.
For the United States, depending upon the timing, duration and specifics of FDA marketing approval of our product candidates, one of the U.S. patents covering each of such product candidates or the use thereof may be eligible for up to five years of patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Amendments. The Hatch-Waxman Amendments allow a maximum of one patent to be extended per FDA approved product as compensation for the patent term lost during the FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only those claims covering such approved drug product, a method for using it or a method for manufacturing it may be extended. Patent term extension also may be available in Canada under the Supplementary Protection Regulations, or in other foreign countries upon regulatory approval of our product candidates, such as the Supplementary Protection Certificates in Europe. In particular, a maximum of five and a half years of supplementary protection can be achieved in Europe for an active ingredient or combinations of active ingredients of a medicinal product protected by a basic patent, if a valid marketing authorization exists (which must be the first authorization to place the product on the market as a medicinal product) and if the product has not already been the subject of supplementary protection.
Nevertheless, we may not be granted patent term extension either in the United States or in any other country because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. Moreover, the term of extension, as well as the scope of patent protection during any such extension, afforded by the governmental authority could be less than we request. If we are unable to obtain patent term extension or restoration, or the term of any such extension is less than we request, the period during which we will have the right to exclusively market our product may be shortened, and our competitors may obtain approval of competing products following our patent expiration and may take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data to launch their product earlier than might otherwise be the case, and our revenue could be reduced, possibly materially, which would have a material adverse effect on our business, financial condition and results of operations.
Also, there are detailed rules and requirements regarding the patents that in the United States may be submitted to the FDA for listing in the Approved Drug Products with Therapeutic Equivalence Evaluations, or the Orange Book, or in Canada, with the Health Canada Patent Register. We may be unable to obtain patents covering our product candidates that contain one or more claims that satisfy the requirements for listing in the Orange Book (or in Canada, with the Patent Register). Even if we submit a patent for listing in the Orange Book or Patent Register, the FDA or Health Canada, respectively, may decline to list the patent, or a manufacturer of generic drugs may challenge the listing. If or when one of our product candidates is approved and a patent covering that product candidate is not listed in the Orange Book (or Patent Register in Canada), a manufacturer of generic drugs would not have to provide advance notice to us of any abbreviated new drug application (“ANDA”), filed with the FDA or any abbreviated new drug submission (“ANDS”) filed with Health Canada to obtain permission to sell a generic version of such product candidate.
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If we are unable to protect the confidentiality of our trade secrets, the value of our product candidates and products could be materially adversely affected, and our business would be harmed.
We consider proprietary trade secrets, confidential know-how and unpatented know-how to be important to our business. We seek to protect our confidential proprietary information, in part, by entering into confidentiality agreements and invention assignment agreements with parties who have access to them, including our employees, consultants, scientific advisors, contractors, contracted research organizations, contract manufacturers, collaborators and other third parties, that are designed to protect our proprietary information. However, we cannot be certain that such agreements have been entered into with all relevant parties that may have or have had access to our trade secrets or proprietary technology, and we cannot be certain that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets and other confidential proprietary technology, or independently develop substantially equivalent information and techniques. For example, any of these parties may breach the agreements and disclose our proprietary information, including trade secrets, and we may not be able to obtain adequate remedies for such breaches. We also seek to preserve the integrity and confidentiality of our confidential proprietary information by maintaining physical security of our premises and physical and electronic security of our information technology systems, but it is possible that these security measures could be breached. Monitoring unauthorized uses and disclosures of our intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property will be effective.
Unauthorized parties may also attempt to copy or reverse engineer certain aspects of our products that we consider proprietary. We may not be able to obtain adequate remedies in the event of such unauthorized use. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. Trade secrets will also over time be disseminated within the industry through independent development, the publication of journal articles and the movement of personnel skilled in the art from company to company or academic institutions to industry scientific positions. Though our agreements with third parties typically restrict the ability of our advisors, employees, collaborators, licensors, suppliers, third-party contractors and consultants to publish data potentially relating to our trade secrets and proprietary information, our agreements may contain certain limited publication rights. In addition, if any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position. Despite employing the contractual and other security precautions described above, the need to share trade secrets increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. If any of these events occur or if we otherwise lose protection for our trade secrets, the value of such information may be greatly reduced and our competitive position, business, financial condition, results of operations and prospects would be harmed.
Because of the expense and uncertainty of litigation, we may not be in a position to enforce our intellectual property rights against third parties.
Because of the expense and uncertainty of litigation, we may conclude that, even if a third-party is infringing any future issued patents or other intellectual property rights, the risk-adjusted cost of bringing and enforcing such a claim or action may be too high or not in the best interest of our company or our shareholders, or it may be otherwise impractical or undesirable to enforce our intellectual property against some third parties. Our competitors or other third parties may be able to sustain the costs of complex patent litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. In such cases, we may decide that the more prudent course of action is to simply monitor the situation or initiate or seek some other non-litigious action or solution. In addition, the uncertainties associated with litigation could compromise our internal research programs, in-license needed technology or other product candidates, or enter into development partnerships that would help us bring our product candidates to market.
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Risks Related to This Offering and Ownership of Our Securities
There has been no prior market for our common shares on a U.S. national securities exchange, and an active and liquid market for our common shares may fail to develop or be sustained, which could harm the market price of our common shares.
Prior to this offering, there has been no public market on a U.S. national securities exchange for our common shares. We plan to apply to list our common shares on the Nasdaq Capital Market under the symbol “OPTH.” There is no guarantee that Nasdaq, or any other exchange or quotation system, will permit our common shares to be listed and traded. The closing of this offering is contingent upon the successful listing of our common shares on the Nasdaq Capital Market.
Even if our common shares are approved for listing on the Nasdaq Capital Market, a liquid public market for our common shares may not develop, or if it is developed, may not be sustained. The lack of an active market may impair your ability to sell your common shares at the time you wish to sell them or at a price that you consider reasonable. An inactive market may also impair our ability to raise capital by selling shares and may impair our ability to acquire other businesses using our shares as consideration.
The initial public offering price for our common shares has been determined by negotiation between us and the underwriter based upon several factors, including prevailing market conditions, our historical performance, estimates of our business potential and earnings prospects and the market valuations of similar companies. The price at which the common shares are traded after this offering may decline below the initial public offering price, meaning that you may experience a decrease in the value of your common shares regardless of our operating performance or prospects.
We are a foreign private issuer within the meaning of the rules under the Exchange Act, and, as such, we are exempt from certain provisions applicable to U.S. domestic public companies.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:
| • | the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; |
| • | the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; |
| • | the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities, as long as we remain incorporated in Canada and subject to National Instrument 55-104 in Canada; |
| • | the sections of the Exchange Act imposing liability for insiders who profit from trades made in a short period of time; and |
| • | the selective disclosure rules by issuers of material non-public information under Regulation FD. |
Following this offering, we will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our financial results on a quarterly basis, distributed pursuant to the rules and regulations of Nasdaq. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to the information required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.
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As a foreign private issuer, we are permitted, and intend, to rely on exemptions from certain Nasdaq corporate governance standards applicable to U.S. domestic issuers. This may afford less protection to holders of our common shares than they would enjoy if we complied fully with the Nasdaq corporate governance listing standards.
We are exempted from certain corporate governance requirements of Nasdaq by virtue of being a foreign private issuer. As a foreign private issuer, we are permitted to follow the governance practices of our home country in lieu of certain corporate governance requirements of Nasdaq. As result, the standards applicable to us are considerably different from the standards applied to U.S. domestic issuers and could provide less protection to you than you would have under the Nasdaq rules applicable to domestic issuers.
Specifically, we intend to rely on exemptions from the following Nasdaq corporate governance requirements:
| • | We do not intend to have a majority of our directors qualify as independent. This is not required under our home country practices. |
| • | We do not intend to hold regular scheduled meetings that independent directors exclusively attend. This is not required under our home country practices. |
| • | We do not intend to have a nomination committee. This is not required under our home country practices. |
| • | We do not intend to have a compensation committee comprised solely of independent directors who are independent under applicable Nasdaq and SEC standards for members of compensation committees. This is not required under our home country practices. |
| • | We do not intend to have director nominees selected or recommended for the Board’s selection by independent directors. We also do not intend to adopt a formal written charter or board resolution addressing the nominations process. Under our home country practices, when the Board identifies the need to fill a position, either due to a vacancy or as required to carry out the Board’s duties effectively and maintain a breadth of experience, the Board requests that current directors put forward potential candidates for consideration. |
| • | We do not intend to follow the requirement for holding an annual meeting of shareholders no later than one year after the end of the fiscal year-end. Instead, we will follow home country practice, which requires holding a general meeting of our shareholders at least once every calendar year, provided that the meeting must not be held later than 15 months after the preceding annual general meeting. See “Description of Securities – Shareholder Meetings”. |
| • | We do not intend to follow the requirements for shareholder quorum. Instead, we will follow home country practice, which requires a quorum of two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 5% of the issued shares entitled to be voted at the meeting. |
| • | We do not intend to have a fully independent audit committee for up to one year following this offering. We are relying on the phase-in rules of Nasdaq with respect to the independence of our audit committee. These rules require that all members of our audit committee must meet the independence standard for audit committee members within one year of the effectiveness of this registration statement. Accordingly, our audit committee may not be fully independent for up to one year after the competition of this offering, which could affect the effectiveness of our audit committee and the perception of our corporate governance by investors. |
| • | We do not intend to follow Nasdaq requirements that, subject to limited exceptions, shareholder approval be obtained prior to an issuance of securities in connection with: (i) the acquisition of the stock or assets of another company; (ii) equity-based compensation of officers, directors, employees or consultants; (iii) a change of control; and (iv) transactions other than a public offering. Instead, we will comply with the laws, rules and regulations of Canada and the Province of British Columbia and the |
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| policies of the Canadian Securities Exchange, which do not necessarily require shareholder approval. Under applicable Canadian Securities Exchange policies, we will be required to obtain the ordinary approval of our shareholders, where the total number of securities issuable, calculated on a fully diluted basis: (i) is more than 50% of the total number of securities outstanding (calculated on a non-diluted basis) and creates a new control person; (ii) is more than 100% of the total number of securities outstanding (calculated on a non-diluted basis) or (iii) would, as determined by us or the Canadian Securities Exchange, would materially affect control of our company. Further, under the Business Corporations Act (British Columbia) and our articles, certain extraordinary company alterations, such as certain amalgamations, sales, or other dispositions of all or substantially all of the assets of a company (other than in the ordinary course of business) liquidations, dissolutions, and certain arrangements are required to be approved by ordinary or special resolution as applicable. Under the Business Corporations Act (British Columbia), arrangements are permitted and a company may make any proposal it considers appropriate “despite any other provision” of the Business Corporations Act (British Columbia). In general, a plan of arrangement is approved by a company’s board of directors and then is submitted to a court for approval. It is customary for a company in such circumstances to apply to a court initially for an interim order governing various procedural matters prior to calling any security holder meeting to consider the proposed arrangement. Plans of arrangement involving shareholders must be approved by a special resolution of shareholders, including holders of shares not normally entitled to vote. The court may, in respect of an arrangement proposed with persons other than shareholders and creditors, require that those persons approve the arrangement in the manner and to the extent required by the court. The court determines, among other things, to whom notice shall be given and whether, and in what manner, approval of any person is to be obtained and also determines whether any shareholders may dissent from the proposed arrangement and receive payment of the fair value of their shares. Following compliance with the procedural steps contemplated in any such interim order. (including as to obtaining security holder approval), the court would conduct a final hearing, which would, among other things, assess the fairness of the arrangement and approve or reject the proposed arrangement. Lastly, under applicable Canadian Securities Exchange policies, our Equity Plan (as defined below) is subject to ordinary shareholder approval every three years. If shareholders fail to approve the resolution for the renewal of our Equity Plan, we are prohibited from granting equity-based compensation under the Equity Plan to our of officers, directors, employees or consultants, even if such renewal approval was sought prior to the end of the three-year period. |
As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.
We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses and may impede our ability to maintain our listing on Nasdaq.
After our listing on Nasdaq, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter. If we lose our foreign private issuer status on a determination date, then, beginning on the first day of the fiscal year following the determination date, we would have to comply with U.S. federal proxy rules and other requirements, and our officers, directors and principal shareholders would become subject to the reporting and short-swing profit recovery provisions of Section 16 of the Exchange Act. In addition, we would lose our ability to rely upon exemptions from certain corporate governance requirements under the Nasdaq listing rules as well as our ability under the Exchange Act to present our financial statements pursuant to IFRS instead of pursuant to U.S. GAAP. In addition, on June 4, 2025, the SEC issued a concept release seeking public comment on whether to amend the current eligibility criteria for foreign private issuer status under the U.S. securities laws to better balance investor protection and capital formation. This marks the first comprehensive review of the FPI regulatory framework since 2008 and signals a potential material shift in the FPI regulatory framework. While no rule changes have been proposed yet, any future amendments could impact our eligibility to qualify as a foreign private issuer.
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As a U.S. listed public company that would not qualify as a foreign private issuer, we would incur significant additional legal, accounting and other expenses that we would not incur as a foreign private issuer, as well as increased accounting, reporting and other expenses in order to maintain a listing on a U.S. securities exchange. If we lose our foreign private issuer status and are unable to devote adequate funding and the resources needed to maintain compliance with Nasdaq’s corporate governance requirements applicable to domestic issuers, we may become unable to maintain the listing of our common shares on Nasdaq.
We will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies, and our shareholders could receive less information than they might expect to receive from more mature public companies.
Upon the completion of this offering, we will qualify as an “emerging growth company” under the JOBS Act. As a result, we will be permitted to, and intend to, rely on exemptions from certain disclosure requirements. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) in the assessment of the emerging growth company’s internal control over financial reporting.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.235 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date on which we have, during the preceding three year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which could occur if the market value of our securities that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.
Because we will be subject to ongoing public reporting requirements for such time as we remain an emerging growth company that are less rigorous than Exchange Act rules for companies that are not emerging growth companies, our shareholders could receive less information than they might expect to receive from more mature public companies. We cannot predict if investors will find our securities less attractive if we elect to rely on these exemptions or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our securities.
We expect to incur increased costs and become subject to additional rules and regulations as a result of being a public company in the United States.
We will become a public company in the United States and expect to incur significant legal, accounting and other expenses. The Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC and Nasdaq, impose various requirements on the corporate governance practices of public companies in the United States. We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costly. We expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. For example, as a result of becoming a public company in the United States, we will need to adopt specific policies regarding internal controls and disclosure controls and procedures. We also expect that operating as a public company in the United States will make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we will incur additional costs associated with our public company reporting requirements in the United States. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the number of additional costs we may incur or the timing of such costs.
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It may be difficult to enforce judgments or bring actions outside the United States against us and our directors.
We are a Canadian corporation, and our officers and directors are neither citizens nor residents of the United States. All or a substantial part of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for an investor to enforce in courts outside the United States judgments obtained in United States courts based upon the civil liability provisions of United States federal securities laws against these persons and us or to bring in courts outside the United States an original action to enforce liabilities based upon United States federal securities laws against these persons and us.
We may be subject to securities litigation, which is expensive and could divert our management’s attention.
In the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action or other shareholder litigation. We may be the target of this type of litigation in the future. Even if such claims are without merit, litigation could result in substantial legal costs, divert management’s attention from the operation of our business and damage our reputation. In addition, while we maintain directors’ and officers’ liability insurance, our insurance coverage may not be sufficient to cover all costs, judgments, or settlements associated with such claims. If our insurance coverage is inadequate or unavailable, we may be exposed to significant liabilities, which could materially and adversely affect our financial condition and results of operations.
Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment.
The public offering price of our common shares is substantially higher than the pro forma net tangible book value per common share before giving effect to this offering. Accordingly, if you purchase our common shares in this offering, you will incur immediate substantial dilution. Furthermore, if the underwriter exercises its option to purchase additional shares, you could experience further dilution. For a further description of the dilution that you will experience immediately after this offering, see the section entitled “Dilution.”
If we sell shares of our common shares in future financings, shareholders may experience immediate dilution, and, as a result, our stock price may decline.
We expect our expenses to increase significantly in the foreseeable future and we may from time to time issue additional common shares. These issuances may be at a discount from the current trading price of our common shares. As a result, our shareholders would experience immediate dilution upon the purchase of any of our common shares sold at such discount. In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preferred shares or common shares. If we issue common shares or securities convertible into common shares, our common shareholders will experience additional dilution and, as a result, our share price may decline.
We have broad discretion to determine how to use the funds raised in this offering and may use them in ways that may not enhance our operating results or the price of our common shares.
Our management will have broad discretion over the use of proceeds from this offering, and we could spend the proceeds from this offering in ways our shareholders may not agree with or that do not yield a favorable return, if at all. We currently expect to use the net proceeds from this offering for scaling production and distribution of our products, market expansion and sales growth and general working capital and other operating expenses. However, our use of these proceeds may differ substantially from our current plans. If we do not invest or apply the proceeds from this offering in ways that improve our operating results, we may fail to achieve the expected financial results, which could cause our share price to decline.
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We do not currently intend to pay dividends on our common shares, and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common shares.
We do not currently intend to pay any cash dividends on our common shares for the foreseeable future. Therefore, you are not likely to receive any dividends on your common share for the foreseeable future. Since we do not intend to pay dividends, your ability to receive a return on your investment will depend on any future appreciation in the market value of our common shares. There is no guarantee that our common share will appreciate or even maintain the price at which our holders have purchased such common shares.
If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our common shares, our share price and trading volume could decline.
The trading market for our common shares will be influenced by the research and reports that industry or securities analysts publish about us or our business. If no or few securities or industry analysts commence or continue coverage of us, the trading price for our common shares would be negatively impacted. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, or our share performance, or if our operating results fail to meet the expectations of analysts, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline.
We may not be able to satisfy listing requirements of the Nasdaq Capital Market or obtain or maintain a listing of our common shares.
We must meet certain financial and liquidity criteria to obtain and maintain a listing on the Nasdaq Capital Market; however, there is no guarantee that we will be able to satisfy these requirements. If we violate Nasdaq listing requirements, our common shares may be delisted. If we fail to meet any of Nasdaq’s listing standards, our common shares may be delisted. In addition to applying its enumerated listing standards, Nasdaq has broad discretionary authority over the initial and continued listing of securities on Nasdaq in order to maintain the quality of and public confidence in its market, to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and to protect investors and the public interest. Nasdaq may use this discretion to deny initial listing, apply additional or more stringent criteria for the initial or continued listing of particular securities, or suspend or delist particular securities based on any event, condition, or circumstance that exists or occurs that makes initial or continued listing of the securities on Nasdaq inadvisable or unwarranted in the opinion of Nasdaq, even though the securities meet all enumerated criteria for initial or continued listing on Nasdaq. In addition, our Board of Directors may determine that the cost of maintaining our listing on a U.S. national securities exchange outweighs the benefits of such listing. A delisting of our common shares may materially impair our shareholders’ ability to buy and sell our common shares and could have an adverse effect on the market price of, and the efficiency of the trading market for, our common shares. The delisting of our common shares could significantly impair our ability to raise capital and the value of your investment.
Holders of the Common Warrants will have no rights as shareholders with respect to the common shares underlying the Common Warrants until such holders exercise their warrants and acquire our common shares.
Except as otherwise provided in the Common Warrants or by virtue of such holder’s ownership of Common Shares, until holders of the Common Warrants acquire common shares upon exercise thereof, such holders will have no rights with respect to the common shares underlying such Common Warrants. Upon exercise of the Common Warrants, the holders will be entitled to exercise the rights of a shareholder only as to matters for which the record date occurs on or after the exercise date.
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The Common Warrants are speculative in nature.
The Common Warrants do not confer any rights of common share ownership on its holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire common shares at a fixed price for a limited period of time. Following this offering, the market value of the Common Warrants, if any, is uncertain and there can be no assurance that the market price of our common shares will ever equal or exceed the exercise price of the Common Warrants offered and sold in this offering. Consequently, there can be no assurance whether it will ever be profitable for holders to exercise their warrants.
There is no public market for the Common Warrants being offered in this offering.
There is no established public trading market for the Common Warrants being offered in this offering, and we do not expect a market to develop. In addition, we do not intend to apply to list the Common Warrants on any securities exchange or nationally recognized trading system. Without an active market, the liquidity of the Common Warrants will be limited, which may adversely affect their value.
In the future, we may be deemed to be a controlled foreign corporation.
If a United States person is treated as owning (directly, indirectly, or constructively) at least 10% of the value or voting power of our common shares, such person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group. A United States shareholder of a controlled foreign corporation may be required to report annually and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income,” and investments in U.S. property by controlled foreign corporations, regardless of whether we make any distributions. We are not committing to assist investors in determining whether we or any of our non-U.S. subsidiaries is treated as a controlled foreign corporation or whether any investor is treated as a United States shareholder with respect to any such controlled foreign corporation, or to furnish to any United States shareholders with the information that may be necessary to comply with the aforementioned reporting and tax paying obligations. A United States investor should consult its advisors regarding the potential application of these rules to an investment in our common shares.
In the future, we may be classified as a passive foreign investment company for United States federal income tax purposes.
Generally, if for any taxable year 75% or more of our gross income is passive income, or at least 50% of the average quarterly value of our assets are held for the production of, or produce, passive income, we would be characterized as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes. Whether we are a PFIC for the current or any future taxable year is uncertain, as it will depend on our income and assets for each such year. We do not believe we were a PFIC for our most recently ended taxable year and based on current business plans and financial expectations, we do not expect to be a PFIC for our current taxable year. However, no assurance can be giving concerning our PFIC status for our current taxable year and for any subsequent tax years. Accordingly, we may be classified as a PFIC in the future. If we are characterized as a PFIC, U.S. holders of our common shares may suffer adverse tax consequences. Prospective U.S. investors are strongly urged to consult their own tax advisors with respect to the impact of PFIC status on the purchase, ownership and disposition of common shares.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements concerning our business, operations and financial performance, as well as our plans, objectives and expectations for our business operations and financial performance and condition. All statements other than statements of historical facts included in this prospectus are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “plans”, “expects”, “projected”, “estimated”, “forecasts”, “anticipates”, “intend”, “guidance”, “outlook”, “potential”, “prospects”, “seek”, “aim”, “strategy”, “targets” or “believes”, or variations of such words and phrases or statements that certain future conditions, actions, events or results “will”, “may”, “could”, “would”, “should”, “might” or “can”, or negative versions thereof, “occur”, “continue” or “be achieved” and other similar expressions. In addition, statements that “we believe” or similar statements reflect our beliefs and opinions on the relevant subject.
Forward-looking statements include, but are not limited to, statements with respect to:
| • | our ability to achieve our growth strategy; |
| • | the demand for our products; |
| • | expectations regarding revenue, expenses and operations; |
| • | government regulations of our products; |
| • | sufficiency of current working capital to support future operating and working capital requirements; |
| • | the stability of general economic and market conditions; |
| • | currency exchange rates and interest rates; |
| • | equity and debt markets continuing to provide us with access to capital; |
| • | our ability to comply with applicable laws and regulations; and |
| • | our continued compliance with third party intellectual property rights. |
We have based these forward-looking statements largely on our current expectations, estimates, forecasts and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we cannot guarantee that the future results, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. You should refer to the section entitled “Risk Factors” and elsewhere in this prospectus for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. Except as required by law, including applicable Canadian and U.S. securities laws, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
This prospectus also contains certain data and information, which we obtained from various government and private publications. Although we believe that the publications and reports are reliable, we have not independently verified the data. Statistical data in these publications includes projections that are based on a number of assumptions. If any one or more of the assumptions underlying the market data is later found to be incorrect, actual results may differ from the projections based on these assumptions.
You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this prospectus by these cautionary statements.
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After deducting the estimated underwriting discounts and commissions and offering expenses payable by us, we expect to receive net proceeds of approximately US$12.2 million from this offering (or approximately US$14.3 million if the underwriter exercises the over-allotment option to purchase additional common shares in full), based on an assumed public offering price of US$6.00 per Unit, which is the low point of the estimated initial public offering price range set forth on the front cover of this prospectus, and excludes the proceeds we may receive from the exercise of the warrants issued in this offering, if any. We cannot predict when or if the warrants offered will be exercised. It is possible that the warrants offered may expire and may never be exercised. A US$1.00 increase (decrease) in the assumed initial public offering price of US$6.00 per Unit would increase (decrease) the net proceeds to us from this offering by US$2.3 million, assuming the underwriter does not exercise its option to purchase additional Units and the number of Units offered by us, as set forth on the front cover of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us.
We intend to use the net proceeds from this offering for the following purposes:
| • | 28.7% of the net proceeds (approximately US$3.5 million) for scaling production and distribution of our products in our current markets; |
| • | 18.0% of the net proceeds (approximately US$2.2 million) for preparing additional market entry to Israel and the United States and sales growth; and |
| • | 53.3% of the net proceeds (approximately US$6.5 million) for general working capital and other operating expenses. |
The foregoing represents our current intentions to use and allocate the net proceeds of this offering based upon our present plans and business conditions. We believe that the net proceeds of this offering will be sufficient to meet our needs for scaling production and distribution of our products in our current markets. We also believe that the net proceeds of this offering will be sufficient to meet our needs for preparing additional market entry to Israel and the United States and sales growth for the next 12 months. However, we anticipate that we will need additional funds to continue preparing for market entry to the United States after the next 12 months as we do not expect to gain market entry to the United States within the next 12 months. Due to the uncertainty around the extent and timing of regulatory approval in the United States, we cannot currently estimate the amount of additional funds that will be needed to prepare for market entry to the United States. Any such additional fundraising efforts may divert our management’s attention from their day-to-day responsibilities and result in dilution to shareholders. For more information, see “Risk Factors – Risks Related to Our Business and Industry – If we are unable to obtain additional financing and on acceptable terms, we could be forced to delay, limit or discontinue product candidate development and sales efforts.”
Our management will have broad discretion in the way that we use the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus. To the extent that the net proceeds we receive from this offering are not immediately applied for the above purposes, we intend to invest our net proceeds in short-term, interest bearing, investment-grade securities.
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We have not previously declared or paid any cash dividend or dividend in kind and we have no plan to declare or pay any dividends in the near future on our common shares. We currently intend to retain most, if not all, of our available funds and any future earnings to finance the operation, development and expansion of the business. Any future declaration and payment of cash dividends or other distributions of capital will be at the discretion of our Board of Directors and will depend on our financial condition, results of operations, contractual restrictions, capital requirements, business prospects and any other factors that our Board deems relevant in making such a determination.
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The following table sets forth our total capitalization as of December 31, 2025:
| • | on an actual basis; and |
| • | on an as adjusted basis to give effect to the issuance and sale of 2,500,000 common shares in this offering, and the receipt of approximately US$12.2 million in estimated net proceeds, at an assumed initial public offering price of US$6.00 per Unit, the low point of the estimated initial public offering price range set forth on the cover page of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us (assuming the over-allotment option is not exercised and no exercise any warrants issued in this offering). |
You should read this table together with our consolidated financial statements, the related notes included elsewhere in this prospectus and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
| December 31, 2025 | December 31, 2025 | |||||||||||||||
| Actual | As Adjusted | |||||||||||||||
| C$ | US$ | C$ | US$ | |||||||||||||
| Cash and cash equivalents |
491,750 | 358,627 | 17,227,987 | 12,564,168 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Current liabilities |
||||||||||||||||
| Accounts payable and accrued liabilities |
1,549,202 | 1,129,815 | 781,409 | 569,872 | ||||||||||||
| Amounts due to related parties |
917,869 | 669,391 | 917,869 | 669,391 | ||||||||||||
| Deferred revenue |
207,759 | 151,516 | 207,759 | 151,516 | ||||||||||||
| Current portion of lease liabilities |
27,426 | 20,001 | 27,426 | 20,001 | ||||||||||||
| Current portion of loans payable (unguaranteed, secured) |
2,916,000 | 2,126,604 | 2,916,000 | 2,126,604 | ||||||||||||
| Convertible debt |
3,450,000 | 2,516,044 | 3,450,000 | 2,516,044 | ||||||||||||
| Long-term liabilities |
||||||||||||||||
| Long-term portion of lease liabilities |
150,934 | 110,074 | 150,934 | 110,074 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total liabilities |
9,219,190 | 6,723,445 | 8,451,397 | 6,163,502 | ||||||||||||
| Shareholders’ equity: |
||||||||||||||||
| Common shares, no par value; unlimited common shares authorized and 3,225,897 common shares issued and outstanding, actual; unlimited common shares authorized and 5,725,899 common shares issued and outstanding, as adjusted |
31,691,943 | 23,112,561 | 48,428,180 | 35,318,101 | ||||||||||||
| Reserves |
1,636,858 | 1,193,741 | 1,636,858 | 1,193,741 | ||||||||||||
| Accumulated deficit |
(28,311,788 | ) | (20,647,453 | ) | (28,311,788 | ) | (20,647,453 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total shareholders’ equity |
5,017,013 | 3,658,848 | 21,753,250 | 15,864,389 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total capitalization |
14,236,203 | 10,382,295 | 30,204,647 | 22,027,891 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
The above table is based on the number of shares outstanding at December 31, 2025, as adjusted for the Reverse Share Split and giving effect to the pro forma adjustments indicated therein. It does not give effect to the impact of the Common Warrants.
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If you invest in our common shares in this offering, your ownership interest will be immediately diluted to the extent of the difference between the offering price per Unit and the pro forma as adjusted net tangible book value per share after this offering. Historical net tangible book value per share represents the amount of our total tangible assets less total liabilities, divided by the number of common shares outstanding. Dilution in pro forma net tangible book value per share represents the difference between the amount per share paid by purchasers of our common shares in this offering and the pro forma as adjusted net tangible book value per common share immediately after the consummation of this offering.
As of December 31, 2025, our net tangible book value was C$5,017,013 (US$3,658,848), or C$1.56 (US$1.13) per common share, after giving effect to the Reverse Share Split. Our net tangible book value represents the amount of our total consolidated tangible assets (which is calculated by subtracting intangible assets from our total consolidated assets), less the amount of our total consolidated liabilities. Dilution is determined by subtracting net tangible book value after giving effect to this offering.
After giving effect to our sale of 2,500,000 common shares in this offering at an assumed initial public offering price of US$6.00 per Unit, which is the low point of the estimated offering price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses and excluding the proceeds we may receive from the exercise of the warrants issued in this offering, our pro forma as adjusted net tangible book value as of December 31, 2025 would have been US$15.9 million, or US$2.77 per common share. This amount represents an immediate increase in pro forma net tangible book value of US$1.64 per common share to existing shareholders and an immediate dilution in pro forma net tangible book value of US$3.23 per common share to purchasers of our common shares in this offering, as illustrated in the following table.
| Per Common Share |
||||
| Assumed initial public offering price per Unit |
US$ | 6.00 | ||
| Pro forma, as adjusted net tangible book value per share as of December 31, 2025 |
US$ | 1.13 | ||
| Increase in pro forma net tangible book value per share attributable to new investors in this offering |
US$ | 1.64 | ||
| Pro forma, as adjusted net tangible book value per share immediately after this offering |
US$ | 2.77 | ||
| Dilution per share to new investors in this offering |
US$ | 3.23 | ||
Each US$1.00 increase (decrease) in the assumed public offering price of US$6.00 per Unit, would increase (decrease) our as adjusted net tangible book value, after this offering by approximately US$2.3 million, or US$0.40 per common share and the dilution to new investors by (US$0.40) per common share, in each case assuming the number of common shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.
A 100,000 share increase (decrease) in the number of common shares offered by us would increase (decrease) our as adjusted net tangible book value by approximately US$0.5 million, or US$0.10 per common share, and increase (decrease) in the dilution to new investors by approximately (US$0.10) per share, in each case assuming the public offering price of US$6.00 per Unit remains the same, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.
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If the underwriter was to fully exercise its over-allotment option to purchase additional common shares in full, our pro forma net tangible book value would be approximately US$18.0 million or US$2.94 per common share. This represents an increase in pro forma as adjusted net tangible book value of US$1.80 per share to our existing investors and an immediate dilution of US$3.06 per share to new investors.
The following table summarizes the differences between our existing shareholders and the new investors with respect to the number of common shares purchased from us in this offering, the total consideration paid and the average price per common share paid at an assumed initial public offering price of US$6.00 per Unit, which is the low point of the estimated offering price range set forth on the cover page of this prospectus and before deducting estimated underwriting discounts and commissions and estimated offering expenses (assuming no exercise of the over-allotment option and no exercise of any warrants issued in this offering). As the table shows, new investors purchasing common shares in this offering may in certain circumstances pay an average price per common share substantially higher than the average price per common share paid by our existing shareholders.
| Shares Purchased |
Total Consideration | Average Price | ||||||||||
| Number |
% |
Amount | % | Per Share | ||||||||
| Existing shareholders |
3,221,274 | 56 | US$23,112,561 | 61 | US$7.17 | |||||||
| New investors |
2,500,000 | 44 | US$15,000,000 | 39 | US$6.00 | |||||||
|
|
|
|
|
|
| |||||||
| Total |
5,725,899 | 100 | US$38,112,561 | 100 | US$6.66 | |||||||
|
|
|
|
|
|
| |||||||
The above discussion and tables are based on the number of shares outstanding at December 31, 2025, as adjusted for the Reverse Share Split and giving effect to the pro forma adjustments indicated therein.
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CORPORATE HISTORY AND STRUCTURE
We were incorporated under the Business Corporations Act (British Columbia) on May 27, 2020 under the name “1251418 B.C. Ltd.”. We changed our name to “Optimi Health Corp.” on August 17, 2020. Optimi Health Corp. owns all of the issued and outstanding equity securities of Optimi Labs Inc., a company incorporated under the Business Corporations Act (British Columbia) (“Optimi Labs”), and Optimi Nutraceuticals Corp., a company incorporated under the Business Corporations Act (British Columbia) (“Optimi Nutraceuticals”). Optimi Labs is our operating subsidiary that is in the business of operating our manufacturing facilities and our related research and development initiatives and sales and marketing efforts. Optimi Nutraceuticals acts as our retail subsidiary, providing consumers with high quality, natural, plant-based products. However, we are in the process of permanently winding down that business to focus our efforts on our pharmaceutical grade manufacturing business. The following discussions do not reflect the Reverse Share Split.
Financing Activities
Following incorporation, we were capitalized by completing the First Private Placement, which raised C$1,000,000 and was completed on July 6, 2020.
On September 11, 2020, we closed the Special Warrant Private Placement, issuing 17,963,005 Special Warrants for gross proceeds of C$4,490,751. Each Special Warrant entitled the holder to acquire, without further payment, one SW Unit and was automatically deemed exercised on January 12, 2021. There are no Special Warrants outstanding as of the date of this prospectus. In connection with the Special Warrant Private Placement, we issued 25,150 broker units. Each broker unit was exercisable until September 11, 2021 at a price of C$0.25 for one Common Share and one Common Share purchase warrant, with each such warrant exercisable at C$0.40 per Common Share until September 11, 2021. The broker units and resulting warrants have been fully exercised.
On February 25, 2021, we announced the closing of our initial public offering in Canada of 27,600,000 units at a price of C$0.75 per unit for aggregate gross proceeds of C$20,700,000, with each unit composed of one Common Share and one-half of one Common Share purchase warrant (each, an “IPO Warrant”). The Common Shares and IPO Warrants commenced trading on the CSE on February 25, 2021 under the symbols “OPTI” and “OPTI.WT”, respectively.
On October 7, 2022, we issued 5,692,308 units at a price of C$0.325 per unit, for gross proceeds of C$1,850,000. Each unit consisted of one Common Share and one half of a Common Share purchase warrant. Each warrant was exercisable at C$0.50 for a period of two years from the date of issuance.
On August 4, 2023, we issued 100,000 common share purchase warrants as consideration for the entry into a loan agreement and general security agreement with Catcher Investments Ltd., a company controlled by John James Wilson, a director and non-executive Chair of the Board. The loan is secured against the assets of the Company and bears interest at a rate of 7.5% per annum, payable by us to Catcher Investments Ltd. quarterly on the last business day of every fiscal quarter until the loan is repaid. The loan will mature, and all outstanding principal shall be payable, on August 4, 2026. Each share purchase warrant entitles the holder to purchase one Common Share at a price of C$0.50 for a period of three years from the date of issuance.
On August 29, 2023, we issued 100,000 common share purchase warrants as consideration for the entry into a loan agreement and general security agreement with two independent third party lenders. The loan is secured against the assets of the Company and bears interest at a rate of 7.5% per annum, payable by us to the lenders quarterly on the last business day of every fiscal quarter until the loan is repaid. The loan will mature, and all outstanding principal shall be payable, on August 29, 2026. Each share purchase warrant entitles the holder to purchase one Common Share at a price of C$0.50 for a period of three years from the date of issuance.
On November 1, 2023, we issued 100,000 common share purchase warrants as consideration for the entry into a loan agreement and general security agreements with an independent third party. The loan is secured against the
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assets of the Company and bears interest at a rate of 7.5% per annum, payable by us to the lender quarterly on the last business day of every fiscal quarter until the loan is repaid. The loan will mature, and all outstanding principal shall be payable, on April 30, 2025. Each share purchase warrant entitles the holder to purchase one Common Share at a price of C$0.50 for a period of three years from the date of issuance.
On February 23, 2024, we issued 1,850,033 units at a price C$0.30 per unit, for gross proceeds of C$555,009. Each unit consisted of one Common Share and one-half of a common share purchase warrant. Catcher Investments Ltd., a company controlled by John James Wilson, and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 333,333 units and 1,000,000 units, respectively.
On May 10, 2024, we issued 1,333,334 units at a price C$0.30 per unit, for gross proceeds of C$400,000. Each unit consisted of one Common Share and one-half of a common share purchase warrant. Catcher Investments Ltd., a company controlled by John James Wilson, and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 666,667 units each.
On May 29, 2024, we issued 1,816,633 units at a price C$0.30 per unit, for gross proceeds of C$544,990. Each unit consisted of one Common Share and one-half of a common share purchase warrant. Each warrant entitles the holder to purchase one Common Share at a price of C$0.40 and is exercisable for two years from the date of issuance, subject to an accelerated expiry provision.
On August 15, 2024, we issued 1,796,666 units at a price of C$0.30 per unit, for gross proceeds of C$538,999.80. Each unit comprised of one Common Share and one-half of a common share purchase warrant. Each warrant entitles the holder to acquire one Common Share at C$0.40 for two years from the date of issuance, subject to an accelerated expiry provision. Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 333,333 of these units.
On January 24, 2025, we issued 1,316,668 units at a price of C$0.30 per unit for gross proceeds of C$395,000. Each unit is comprised of one Common Share and one-half of one transferable common share purchase warrant. Each whole warrant entitles the holder to acquire one Common Share at C$0.40 for two years from the date of issuance, subject to an accelerated expiry provision. Catcher Investments Ltd., a company controlled by John James Wilson, and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 583,334 units and 733,334 units, respectively.
On July 24, 2025, we issued 3,450 unsecured convertible debentures at a price of C$1,000 per convertible debenture for gross proceeds of C$3,450,000. The convertible debentures bear interest at a rate of 15.0% per annum, calculated and payable quarterly in arrears in cash, maturing July 24, 2026, twelve months from the date of issuance, unless extended by and at the option of the holders for a further twelve months. The principal amount of each convertible debenture is convertible into our common shares at a conversion price of C$0.15, being the closing price of our common shares on the CSE on July 16, 2025, the date preceding the execution by each holder of the subscription agreement for the convertible debentures. On maturity, any outstanding principal amount of the convertible debentures, plus any accrued and unpaid interest thereon, will be repaid by the Company in cash or, at the option of the holders, through the issuance of our common shares. Catcher Investments Ltd., a company controlled by John James Wilson, and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 3,000 convertible debentures and 450 convertible debentures, respectively.
On July 24, 2025, we issued 400,000 common share purchase warrants as consideration for the entry into a loan amendment with an independent third party to an original loan agreement dated November 1, 2023. Each warrant is exercisable at C$0.25 for a period of two years from the date of issuance. Under the terms of the loan amendment the maturity date was extended from April 30, 2025 to April 30, 2026.
Although not yet effective, our Board of Directors has approved a reverse share split with a share split ratio of 1-for-30 (“Reverse Share Split”). We anticipate effecting the Reverse Share Split immediately prior to the effectiveness of the registration statement of which this prospectus is a part. The Reverse Share Split is intended to allow us to meet the minimum share price requirement of Nasdaq.
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Buildout of the Facilities in Princeton, British Columbia
On July 23, 2020, we entered into an industrial ground lease agreement with BC Green for the Industrial Ground underlying our Facilities situated in Princeton, British Columbia, which was amended and restated on September 1, 2021 and was further amended on July 1, 2025 to extend the term of the lease to June 30, 2030 and to include three additional options to renew the agreement for successive terms of five years commencing on July 1, 2030. Bryan Safarik currently serves as a director and the president and chief operating officer and Jacob Safarik currently serves as the chief financial officer, respectively, of BC Green, a private Canadian federally licensed cannabis production company.
Pursuant to the terms of the Lease Agreement, during the term of the Lease Agreement, as extended and renewed from time to time, the title to and ownership of the Facilities (including all alterations, additions, changes, substitutions or improvements thereto) shall be vested in us and shall automatically vest in the name of BC Green at the expiry or earlier termination of the Lease Agreement. In June 2022, we completed the construction of the Facilities, which are two GMP-capable 10,000 sq. ft. purpose-built mushroom cultivation and processing facilities in Princeton, British Columbia. We continue to invest in automated production technologies at the Facilities to enhance scalability and cost efficiency.
Dealer’s Licence
We currently hold a Dealer’s Licence issued under the CDSA authorizing our possession of limited quantities of psilocybin, psilocin, and MDMA (as well as other controlled substances), as well as our production, assembly, sale and delivery of products containing the same within the confines of the regulatory framework prescribed by Health Canada. The Dealer’s Licence enables us to conduct research and development with in-house scientific and quality teams.
Precursors Licence
We were granted a Precursors Licence by Health Canada in December 2023 authorizing our import of 3,4-METHYLENEDIOXYPHENYL-2-PROPANONE (a chemical precursor for MDMA synthesis).
Drug Establishment Licence
In May 2024, we received a DEL for the fabrication, packaging, labeling and sale of our MDMA and psilocybin capsules as well as extraction of our psilocybin mushrooms to generate active pharmaceutical ingredients. As Health Canada is a participant in several Mutual Recognition Agreements (“MRAs”) for drug and medicinal products, our GMP-compliant manufacturing processes may be accepted by other regulatory authorities in participating jurisdictions, which may facilitate international distribution of our psilocybin and MDMA drug products. Examples of countries covered by MRAs include the Netherlands, Norway and the United Kingdom. We may consider these markets in the future. The DEL confirms that our Canadian facilities conform to Health Canada’s GMP compliance standards and those jurisdictions with equivalent GMP standards. The DEL differentiates us from other psychedelic manufacturers in the space and enables us to provide competitively priced products for human therapeutic use within the GMP psychedelics market. The DEL allows us flexibility to adapt to international licensing demands and changes in legislation and also gives our clients and patients assurance of a fully GMP product. Canadian companies without a DEL may not be issued export permits to supply Australia, or other countries where a market is established. In the Authorised Prescribers Scheme, authorized psychiatrists will be able to prescribe MDMA-assisted therapy for patient suffering from PTSD and psilocybin-assisted therapy for patients suffering from TRD. All products supplied to the Authorised Prescribers Scheme should be certified GMP compliant as per the Therapeutic Goods Administration of Australia.
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Clinical Trials and Related Approvals
We currently are not the clinical trial applicant for any study. Rather, our third-party partners conduct preclinical and clinical studies of our product candidates and produce data upon which we rely.
In February 2024, we announced our supplier partnership with Tel Aviv University to supply GMP-compliant MDMA and psilocybin for research and clinical development on the effects of MDMA in animal models of alcohol addiction.
In May 2024, we entered into a letter of intent with ATMA CENA Healthcare Solutions relating to the supply of natural psilocybin extract for a phase II clinical trial in patients with major depressive disorder. In February 2025, we entered into a definitive supply agreement with ATMA CENA Healthcare Solutions. We are awaiting confirmation from ATMA CENA Healthcare Solutions regarding next steps under the agreement and expect to supply psilocybin extract in connection with their planned clinical trial.
In June 2024, Health Canada issued three export permits to us to supply patients under Australia’s Authorised Prescribers Scheme. Two of these permits are active, and one has since expired. In particular, we received export permits for shipment of 160 doses of MDMA and psilocybin for patients with PTSD and TRD to Australia.
In September 2024, the first patients were dosed in Australia’s Authorised Prescribers Scheme in Australia with our MDMA capsules for PTSD.
In November 2025, we announced we were selected to supply the MDMA capsules for MAPS Israel’s Healing October 7th project, which includes a clinical trial for PTSD that has received formal approval from the Israeli Ministry of Health. The open-label, multicenter, non-inferiority study will evaluate the safety and effectiveness of individual versus group MDMA-assisted therapy for PTSD in patients diagnosed in the context of recent collective trauma. The trial is being conducted as part of MAPS Israel’s Healing October 7th initiative, which supports survivors, veterans, and community-based care. The study will enroll 168 participants, with initial approval already granted by the Israeli Ministry of Health for the first 20 patients.
Intellectual Property and Trademark Protection
On September 16, 2020, we applied for trademark protection for “Optimi” and “Optimi Health” in Canada and the United States and were granted trademark protection for “Optimi” and “Optimi Health” in Canada on January 12, 2024. We received a non-final office action letter from the United States Patent and Trademark Office, objecting to the registration of the “Optimi” and “Optimi Health” marks due to the likelihood of confusion with four prior U.S. registered trademarks. We have also received a cease and desist letter from a U.S. public company, alleging that the use and attempted registration of the “Optimi” and “Optimi Health” marks infringes the registered trademarks of the U.S. company. At this time, we do not intend to continue to pursue registration of the “Optimi” and “Optimi Health” marks in the U.S. due to the anticipated costs and time required. We may file a petition to revive the trademark applications in the future.
Other Key Events
On April 1, 2021, we obtained the symbol “OPTHF” to commencing trading on the OTCPINK market in the United States.
On April 6, 2021, we commenced trading on the Frankfurt Stock Exchange under the symbol “8BN”.
In April 2024, we completed validated GMP production of 5mg natural psilocybin extract capsules with a certificate of analysis (“COA”).
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In May 2024, we completed validated GMP production of MDMA 40mg & 60mg capsules with a COA. In addition, we received an export permit issued by Health Canada for our first international shipment of MDMA to Israel. In addition, in June 2024, we secured an import certificate from Mind Med Australia for 160 doses of MDMA and psilocybin capsules for therapeutic use in Australian patients.
In September 2024, upon receipt of our inaugural shipment into Australia, our MDMA capsules became available for prescription in Australia through the Authorised Prescribers Scheme.
In April 2025, we received our FDA Establishment Identifier (FEI) number, which is a key regulatory step for engaging in FDA filings and commercial supply into the United States.
Combined with our GMP certification and Health Canada DEL, we are in position to advance our strategy to supply MDMA and psilocybin into clinical, research and future commercial markets, in compliance with U.S. laws and requisite approvals for such activities.
In April 2025, we engaged mdi Consultants, Inc. to act as our U.S. agent for foreign manufacturers who intend to or are importing pharmaceuticals to the United States and or Official Correspondent, another key regulatory step for engaging in FDA filings and eventual commercial supply into the United States.
In May 2025, we completed our largest international export to date of MDMA capsules to Australia, supporting the treatment of PTSD under the Authorised Prescriber Scheme. The shipment, conducted in partnership with Mind Medicine Australia, included 1,000 GMP MDMA capsules in both 40mg and 60mg strengths.
In September 2025, we commercially launched our natural psilocybin capsules in Australia, which are now being prescribed to patients with TRD under the Authorised Prescribers Scheme. We completed an initial shipment of 1,000 psilocybin capsules.
In January 2026, we exported 1,000 capsules of 5mg psilocybin product and 1,000 capsules of 60mg MDMA to Australia.
Our Corporate Information
Our principal executive offices are located at 269 David Brown Way, Princeton, British Columbia, V0X 1W0. Our telephone number at this address is (778) 761-4551. Our registered and records office is located at 2054 Dowad Drive, Squamish, British Columbia, V8B 0Y8. Our agent for service of process in the United States, Cogency Global Inc., is located at 122 East 42nd Street, 18th Floor, New York, NY 10168.
Investors should contact us for any inquiries through the address and telephone number of our principal executive office. Our principal website is www.optimihealth.ca. The information contained on, or accessible through, our website is not a part of this prospectus.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion together with our condensed interim consolidated financial statements for the three month period ended December 31, 2025 and 2024 and the audited consolidated financial statements for the year ended September 30, 2025 and 2024 and the related notes included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus contains forward-looking statements that are based on our current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors, including those which we discuss under “Risk Factors” and elsewhere in this prospectus. See also “Special Note Regarding Forward-Looking Statements.”
The condensed interim consolidated financial statements for the three month period ended December 31, 2025 and 2024 and the audited consolidated financial statements for the years ended September 30, 2025 and 2024 are prepared pursuant to IFRS. As permitted by the rules of the SEC for foreign private issuers, we do not reconcile our financial statements to U.S. generally accepted accounting principles.
Overview
We are a Canadian GMP compliant, pharmaceutical drug manufacturer licensed by Health Canada for the handling of controlled substances and GMP production. We specialize in controlled substances with our products being MDMA and psilocybin derived from botanical sources. With a vertically integrated approach, we own two approximately 10,000-square-foot production facilities on leased land in Princeton, British Columbia and operate under a DEL awarded by Health Canada. Our DEL certifies that our facilities and quality management systems comply with GMP for the formulation of designated drug products and the manufacture of certain active pharmaceutical ingredients (“API”) from plant sources. Additionally, we hold a DL under Canada’s Narcotic Control Regulations, allowing us to possess, produce, assemble, sell and deliver psilocybin and other psychedelic substances within the regulated framework set forth by Health Canada. The DL allows us to possess up to 20kg of psilocybin and 200g of psilocin (equivalent to approximately 2,000kg of dried full-body psilocybin-containing mushrooms) and 2kg of MDMA. We also hold a Precursor License under Canada’s Precursor Regulations allowing us to import 3,4-Methylenedioxypheny-2-Propanone if used in the synthesis of MDMA.
The legal status of psychedelic drugs varies by country and our various licenses allow us to supply markets where it is legal and position ourselves for new markets. Our products are currently available in Australia where psilocybin and MDMA have been rescheduled to allow prescription by an Authorized Prescriber only for TRD and PTSD. In Canada, our products are available via the SAP, which we are authorized to supply as a provision of our DL whereby sale or provision to the holder of a Controlled Drugs and Substances Act subsection 56(1) exemption is not prohibited for licensed dealers to provide psilocybin and MDMA in relation to an SAP authorization. The SAP patient authorization process has been successfully achieved for MDMA products. Our psilocybin product is currently in phase 2b clinical trials in Canada conducted by third parties. In all other countries, access is restricted to approved clinical trials, including in Israel, one of our planned target markets, where our MDMA product is currently in phase 2 clinical trials conducted by third parties. We are currently restricted from selling our products in the United States, another one of our planned target markets, where psilocybin and MDMA are considered Schedule I “controlled or “scheduled” substances, meaning their manufacture, importation, exportation, domestic distribution, storage, sale and legitimate use is subject to a significant degree of regulation by the DEA. While our MDMA and botanical psilocybin products are currently being accessed in Canada and Australia, in any new market, a regulatory approval would be required for our products – be that a clinical trial application approval, a marketing authorization approval or access via a change to regulatory access for these products.
Our DEL enables us to supply validated psilocybin API, psilocybin drug products and MDMA drug products to patients in Australia under the Authorised Prescribers Scheme. Through strategic collaborations and ongoing
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compliance with global regulatory authorities, we aim to expand our product availability to additional jurisdictions where psychedelic-assisted therapies are gaining regulatory approval.
The key differentiator of a DEL is that it enables our MDMA and psilocybin capsules to be prescribed by authorized physicians in Australia for the treatment of PTSD and TRD. Unlike most companies in the psychedelic sector that remain in clinical or pre-commercial phases, we are currently supplying regulated medicines under prescription in certain markets – supported by a DEL that also permits the legal manufacture and international export of both products.
As part of our commitment to innovation and broadening accessibility to psychedelic-based therapies, we continuously refine our production methodologies, invest in advanced extraction technologies and enhance our regulatory compliance frameworks to remain ahead of industry standards. By prioritizing sustainable and responsible production practices, we are dedicated to becoming a global leader in the psychedelic pharmaceutical sector. Our research initiatives focus on optimizing extraction efficiency, improving formulation stability, and ensuring scalable manufacturing techniques that align with future market expansion plans. Although we do not currently own any patents, nor do we have any pending patent applications related to our MDMA and botanical psilocybin products, the design, formulation, and large-scale manufacture of these products are founded on—and would be materially impaired without—a comprehensive body of proprietary know-how, specialized production methodologies, and rigorously safeguarded trade secrets that we protect through internal controls and confidentiality agreements.
Principal Factors Affecting Our Results of Operations
Our operational and financial performance is primarily driven by our ability to execute on the manufacture and distribution of regulated psychedelic substances within the constraints of evolving global regulatory frameworks. We have established a defensible and scalable GMP platform, secured relevant licensing under Health Canada and demonstrated commercial supply capabilities to authorized markets, currently only to Australia. Our near-term results will be influenced by regulatory developments in key jurisdictions, order volume from existing partners, cost optimization through automation and disciplined capital deployment. As international access expands, we believe we are well positioned to scale responsibly and grow our share of the emerging global market for psychedelic-assisted therapies.
The operational and financial factors below materially affect our results of operations. Unlike traditional biotechnology issuers focused solely on clinical development, our performance is influenced by our role as a GMP-certified manufacturer with regulatory clearance to product and export controlled substances, including MDMA and psilocybin, for legal therapeutic use in international markets.
Commercial Manufacturing and Export Activity
Our revenue-generating operations depend primarily on the manufacture and export of MDMA and psilocybin drug products produced under our DEL. We are currently supplying commercial and investigational quantities of drug product to authorized markets, including Australia, where prescribers may access these compounds under the Authorised Prescriber Scheme.
As we expand into new jurisdictions and scale production capacity, the volume and consistency of export orders will directly impact revenue recognition, working capital utilization and gross margin performance. Our operational results are also sensitive to delivery timelines, batch release schedules, and the regulatory conditions under which orders are fulfilled.
Production Capacity and Operational Efficiency
Our ability to fulfill export orders and achieve meaningful gross margins depends on the efficiency of our manufacturing operations. Key performance drivers include capsule throughput, process yield, batch consistency and the integration of new automation technologies.
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Implementation of automated encapsulation and bottling equipment is expected to significantly increase capacity while reducing unit cost. The timing of these automation upgrades and their impact on operational efficiency will affect our margins, cost of goods sold, and ability to serve additional markets.
Cost of Goods and Input Supply Chain
The cost and availability of raw materials—including precursor chemicals for MDMA synthesis and cultivation inputs for psilocybin production—affect both our production cost structure and delivery lead times. These inputs are subject to compliance with controlled substance regulations and international sourcing constraints.
Although current input pricing is stable under existing contracts, fluctuations in chemical precursor availability, changes in controlled substance import/export policy or disruptions in agricultural input supply chains may affect our production cost and timing. Our financial performance is dependent on effective supply chain management, inventory planning and procurement discipline.
Regulatory Licensing and Compliance
Our operational continuity is dependent on maintaining full regulatory compliance with Health Canada, including our Drug Establishment Licence, Controlled Substances Licence, and adherence to GMP obligations. Compliance with these licenses and Health Canada inspections directly impacts our ability to manufacture, release, and export finished drug product.
In addition, our FDA Facility Establishment Identifier (“FEI”) registration and U.S. Agent appointment (mdi Consultants, Inc.) are critical to our future commercial participation in the U.S. market, particularly in the event of U.S. Drug Enforcement Administration (“DEA”) rescheduling of MDMA or psilocybin. Our results of operations will be materially impacted by the speed and extent of U.S. regulatory change, as well as our ability to rapidly activate supply chains and commercial relationships in the U.S. market.
Strategic Partnerships and Market Access
Our ability to grow revenue is also dependent on our partnerships with distributors, prescribers and clinical research sponsors. We are currently engaged in commercial supply agreements with entities in Australia and are supporting multiple research-stage collaborations. The scale, structure and renewability of these partnerships are central to our forward sales visibility and revenue growth.
As additional jurisdictions begin permitting regulated access to psychedelic-assisted therapies, we anticipate expanding our partnership model, which may include distribution, licensing or data-sharing arrangements. Our operational results will be influenced by the pace of these expansions and the cost structures attached to third-party engagements.
Research Support, Formulation Development, and Technical Upgrades
Although we are not currently a drug development company, we incur research-related costs in the areas of stability studies, shelf-life validation, analytical testing and formulation refinement. These costs are capitalized or expensed based on regulatory requirements and are expected to increase modestly as we support expanded shelf-life targets, international regulatory submissions, or technical method updates.
We also maintain internal technical teams dedicated to continuous process improvement, which may incur project-based costs related to method revalidation, equipment calibration or IT system integration. These initiatives are essential to long-term compliance and efficiency.
Capital Expenditure and Financing Strategy
Our ability to execute on scaling plans—particularly increased manufacturing automation, warehousing upgrades and regulatory submissions in new jurisdictions—is dependent on access to capital. As of the date hereof, we have operated with a lean capital structure, prioritizing core infrastructure and essential quality systems.
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Future capital allocation decisions, including any equity raises, debt facilities or strategic investments, will impact our working capital, margin trajectory, and the timing of expansion milestones. Our ability to raise capital on favorable terms will affect our capacity to participate meaningfully in global supply opportunities.
Key Components of Our Results of Operations
The following section presents the key components of our results of operations by the nature of corresponding operating activities for the periods indicated.
Revenue
The following table sets forth a breakdown of our revenue by nature, each expressed in the absolute amount and as a percentage of our total revenues, for the periods indicated.
| Three Months Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Revenue |
C$ | US$ | % | C$ | % | |||||||||||||||
| Drug products and licensing revenue |
— | — | — | 134,253 | 57.7 | |||||||||||||||
| Nutraceutical products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
— | — | — | 98,447 | 42.3 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
— | — | — | 232,700 | 100 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Year Ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Revenue |
C$ | US$ | % | C$ | % | |||||||||||||||
| Drug products and licensing revenue |
303,048 | 217,598 | 71.1 | 11,026 | 2.8 | |||||||||||||||
| Nutraceutical products |
123,253 | 88,499 | 28.9 | 378,824 | 97.2 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
426,301 | 306,097 | 100 | 389,850 | 100 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Our drug products and licensing revenue include the sale of GMP psychedelic substances, including MDMA and psilocybin, for research and therapeutic applications and licensing of intellectual property.
As of December 31, 2025, we have C$207,759 (US$151,516) in deferred revenue related to deposits received from a customer in advance of fulfilling drug product purchase orders. During the period ended December 31, 2025, the Company was focused on production planning for commercial shipments valued at C$93,000 (US$67,824) to this customer that occurred in January 2026.
We have historically generated revenue from the sale of nutraceutical products. We are in the process of permanently winding down the business segment that was responsible for the sale of nutraceutical products. We consider the assets, liabilities and operations of this business segment to be immaterial to our overall consolidated operations. While this business did contribute a significant portion of our historical revenue, it generated a net loss overall. The winding down of this business will bolster our financial performance given its history of recurring losses.
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The following table sets forth a breakdown of our revenue by geography, each expressed in the absolute amount and as a percentage of our total revenues, for the periods indicated.
| Three Months Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Revenue |
C$ | US$ | % | C$ | % | |||||||||||||||
| Australia and New Zealand |
— | — | — | 134,253 | 57.7 | |||||||||||||||
| Canada |
— | — | — | 97,399 | 41.8 | |||||||||||||||
| Israel |
— | — | — | — | — | |||||||||||||||
| United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
— | — | — | 1,048 | 0.5 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
— | — | — | 232,700 | 100 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Year Ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Revenue |
C$ | US$ | % | C$ | % | |||||||||||||||
| Australia and New Zealand |
219,753 | 157,789 | 51.5 | 2,750 | 0.7 | |||||||||||||||
| Canada |
201,483 | 144,671 | 47.3 | 377,602 | 96.9 | |||||||||||||||
| Israel |
3,795 | 2,725 | 0.9 | 4,526 | 1.2 | |||||||||||||||
| United States |
1,270 | 912 | 0.3 | 4,972 | 1.2 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
426,301 | 306,097 | 100 | 389,850 | 100 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cost of Sales
The following table sets forth a breakdown of our cost of sales by nature, each expressed in the absolute amount and as a percentage of our total cost of sales, for the periods indicated.
| Three Months Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Cost of Sales |
C$ | US$ | % | C$ | % | |||||||||||||||
| Finished goods drug products |
— | — | — | 15,955 | 25.5 | |||||||||||||||
| Finished goods nutraceutical products |
— | — | — | 44,672 | 71.5 | |||||||||||||||
| Other |
— | — | — | 1,846 | 3.0 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
— | — | — | 62,473 | 100 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Year Ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Cost of Sales |
C$ | US$ | % | C$ | % | |||||||||||||||
| Finished goods drug products |
77,390 | 55,568 | 18.8 | 4,986 | 2.1 | |||||||||||||||
| Finished goods nutraceutical products |
102,838 | 73,841 | 25.0 | 226,426 | 95.0 | |||||||||||||||
| Impairment of inventory |
225,900 | 162,203 | 55.0 | — | — | |||||||||||||||
| Other |
4,588 | 3,294 | 1.1 | 6,976 | 2.9 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
410,716 | 294,906 | 100 | 238,388 | 100 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Our cost of sales consists of finished goods drug products, finished goods nutraceutical products, impairment of inventory and others. During the year ended September 30, 2025, we elected to take a provision against mushroom biomass inventory due to the aging of the inventory. The cost of inventory of C$225,900 (US$162,203) was recorded through cost of sales and the fair value component of $83,715 (US$60,110) was recorded through the fair value adjustment of biological assets and inventory.
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Expenses
The following table sets forth a breakdown of our expenses by nature, each expressed in the absolute amount and as a percentage of our total expenses, for the periods indicated.
| Three Months Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Expenses |
C$ | US$ | % | C$ | % | |||||||||||||||
| Advertising, promotion and public relations |
1,949 | 1,421 | 0.1 | 30,503 | 2.1 | |||||||||||||||
| Amortization and depreciation |
264,749 | 193,078 | 17.0 | 228,917 | 15.9 | |||||||||||||||
| Bank charges and interest |
278,791 | 203,319 | 17.9 | 108,004 | 7.5 | |||||||||||||||
| Consulting |
279,193 | 203,612 | 17.9 | 219,734 | 15.3 | |||||||||||||||
| Consumables, supplies and overhead |
39,016 | 28,454 | 2.5 | 73,188 | 5.1 | |||||||||||||||
| Insurance |
56,592 | 41,272 | 3.6 | 82,863 | 5.8 | |||||||||||||||
| Investor relations |
184,670 | 134,678 | 11.8 | - | - | |||||||||||||||
| Office, rent and administration |
32,313 | 23,565 | 2.1 | 57,690 | 4.0 | |||||||||||||||
| Professional fees |
30,671 | 22,368 | 2.0 | 38,152 | 2.7 | |||||||||||||||
| Research and development |
48,495 | 35,367 | 3.1 | 201,998 | 14.1 | |||||||||||||||
| Share-based compensation |
327 | 238 | 0.0 | 2,825 | 0.2 | |||||||||||||||
| Shipping |
7,629 | 5,564 | 0.5 | 26,849 | 1.9 | |||||||||||||||
| Transfer agent and filing fees |
59,471 | 43,371 | 3.8 | 33,661 | 2.3 | |||||||||||||||
| Travel and accommodation |
11,435 | 8,339 | 0.7 | 11,179 | 0.8 | |||||||||||||||
| Wages and benefits |
264,087 | 192,596 | 16.9 | 320,893 | 22.3 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
1,559,388 | 1,137,242 | 100 | 1,436,456 | 100 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Year Ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Expenses |
C$ | US$ | % | C$ | % | |||||||||||||||
| Advertising, promotion and public relations |
33,390 | 23,975 | 0.7 | 216,135 | 3.4 | |||||||||||||||
| Amortization and depreciation |
950,348 | 682,378 | 18.7 | 867,947 | 13.8 | |||||||||||||||
| Bank charges and interest |
531,680 | 381,762 | 10.5 | 429,339 | 6.8 | |||||||||||||||
| Consulting |
819,067 | 588,114 | 16.1 | 1,122,812 | 17.8 | |||||||||||||||
| Consumables, supplies and overhead |
235,712 | 169,248 | 4.6 | 307,971 | 4.9 | |||||||||||||||
| Insurance |
257,376 | 184,804 | 5.1 | 325,369 | 5.2 | |||||||||||||||
| Investor relations |
20,844 | 14,967 | 0.4 | 104,086 | 1.6 | |||||||||||||||
| Office, rent and administration |
171,221 | 122,942 | 3.4 | 295,654 | 4.7 | |||||||||||||||
| Professional fees |
301,361 | 216,386 | 5.9 | 160,551 | 2.5 | |||||||||||||||
| Research and development |
347,698 | 249,657 | 6.9 | 387,591 | 6.1 | |||||||||||||||
| Share-based compensation |
46,422 | 33,332 | 0.9 | 60,079 | 1.0 | |||||||||||||||
| Shipping |
62,056 | 44,558 | 1.2 | 144,368 | 2.3 | |||||||||||||||
| Transfer agent and filing fees |
166,190 | 119,329 | 3.3 | 156,955 | 2.5 | |||||||||||||||
| Travel and accommodation |
39,966 | 28,697 | 0.8 | 63,425 | 1.0 | |||||||||||||||
| Wages and benefits |
1,092,498 | 784,447 | 21.5 | 1,667,152 | 26.4 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
5,075,829 | 3,644,596 | 100 | 6,309,434 | 100 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Amortization and depreciation expenses relates to the natural deterioration of plant and equipment due to the passage of time.
Bank charges and interest relates to interest and accretion on the Company’s loans and bank fees. Consulting expenses include amounts paid or payable to management and third-party consultants.
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Consumables, supplies and overhead relate to facility operating costs not capitalized to biological assets or inventory.
Professional fees relate to legal and audit fees. Wages and benefits include amounts paid to management and employees.
Results of Operations
The following tables set forth a summary of our consolidated results of operations for the periods indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
| Three Months Ended December 31, | ||||||||||||
| 2025 | 2024 | |||||||||||
| Statements of Comprehensive Loss |
C$ | US$ | C$ | |||||||||
| Revenue |
— | — | 232,700 | |||||||||
| Cost of sales |
— | — | (62,473 | ) | ||||||||
| Gross margin |
— | — | 170,227 | |||||||||
| Expenses |
(1,559,388 | ) | (1,137,243 | ) | (1,436,456 | ) | ||||||
| Interest and other income |
5,413 | 3,948 | 7,249 | |||||||||
|
|
|
|
|
|
|
|||||||
| Loss and comprehensive loss |
(1,553,975 | ) | (1,133,296 | ) | (1,258,980 | ) | ||||||
|
|
|
|
|
|
|
|||||||
Period Ended December 31, 2025 Compared to Year Ended December 31, 2024
Three-Month Period Ended December 31, 2025
During the three-month period ended December 31, 2025, the Company generated a net loss of $1,553,975 (US$1,133,296). The main factors that contributed to the loss in the fiscal period were amortization expense of $264,749 (US$193,078), bank charges and interest of $278,791 (US$203,319), consulting of $279,193 (US$203,612), and wages and benefits of $264,087 (US$192,596) .
Three-Month Period Ended December 31, 2024
During the three-month period ended December 31, 2024, the Company generated revenue of $232,700 and a net loss of $1,258,980. The main factors that contributed to the loss in the fiscal period were amortization expense of $228,917, consulting of $219,734, research and development costs of $201,998, and wages and benefits of $320,893.
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During the period ended December 31, 2024, the Company received $335,000 in share subscriptions received in advance which formed a portion of the proceeds for the private placement that was completed during the year ended September 30, 2025.
| Year Ended September 30, | ||||||||||||
| 2025 | 2024 | |||||||||||
| Statements of Comprehensive Loss |
C$ | US$ | C$ | |||||||||
| Revenue |
426,301 | 306,097 | 389,850 | |||||||||
| Cost of sales |
(410,716 | ) | (294,906 | ) | (238,388 | ) | ||||||
| Gross margin before fair value adjustments |
15,585 | 11,191 | 151,462 | |||||||||
| Fair value adjustment of biological assets and inventory, net |
(83,715 | ) | (60,110 | ) | 119,448 | |||||||
| Gross margin |
(68,130 | ) | (48,919 | ) | 270,910 | |||||||
| Expenses |
(5,075,829 | ) | (3,644,596 | ) | (6,309,434 | ) | ||||||
| Interest and other income |
14,313 | 10,277 | 2,665 | |||||||||
| Debt forgiveness |
1,417,615 | 1,017,890 | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Loss and comprehensive loss |
(3,712,031 | ) | (2,665,348 | ) | (6,035,859 | ) | ||||||
|
|
|
|
|
|
|
|||||||
Year Ended September 30, 2025 Compared to Year Ended September 30, 2024
Year Ended September 30, 2025
During the year ended September 30, 2025, the Company generated revenue of $426,301 (US$306,097) and a net loss of $3,712,031 (US$2,665,348). The main factors that contributed to the loss in the fiscal year were amortization expense of $950,348 (US$682,378), bank charges and interest of $531,680 (US$381,762), consulting of $819,067 (US$588,114), and wages and benefits of $1,092,498 (US$784,447).
During the year ended September 30, 2025, the Company received debt forgiveness of $1,417,615 (US$1,017,890) of which certain directors forgave $1,331,052 ($US955,735) in accounts payable.
Year Ended September 30, 2024
During the year ended September 30, 2024, the Company generated revenue of $389,850 and a net loss of $6,035,859. The main factors that contributed to the loss in the fiscal year were amortization expense of $867,947, consulting of $1,122,812, and wages and benefits of $1,667,152.
Liquidity and Capital Resources
The Company’s future capital requirements will depend upon many factors including, without limitation, its ability to produce, market and sell its products, consumer demand for its products, the Company’s ability to secure required financing, and in the event consumer demand is strong for its products, the Company’s ability to expand its business to facilitate this demand. The Company has limited capital resources and has historically relied upon the sale of equity securities for cash required for research and development purposes, for acquisitions and to fund the administration of the Company. The Company intends to finance its future requirements through a combination of debt and/or equity issuances. There is no assurance that the Company will be able to obtain such financings or obtain them on favorable terms. These uncertainties cast significant doubt on the Company’s ability to continue as a going concern. The condensed interim consolidated financial statements do not include any adjustments related to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.
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The following table sets forth a summary of our cash flows for the periods presented.
| Period Ended December 31, | ||||||||||||
| 2025 | 2024 | |||||||||||
| C$ | US$ | C$ | ||||||||||
| Cash used in operating activities |
|
(636,987 |
) |
|
(464,547 |
) |
|
(308,988 |
) | |||
| Cash used in investing activities |
(3,428 | ) | (2,500 | ) | (21,674 | ) | ||||||
| Cash provided by financing activities |
(12,900 | ) | (9,408 | ) | 309,500 | |||||||
| Changes in cash and cash equivalents |
(653,315 | ) | (476,455 | ) | (21,162 | ) | ||||||
| Cash and cash equivalents, beginning of year |
1,145,065 | 835,082 | 103,660 | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash and cash equivalents, end of year |
491,750 | 358,627 | 82,498 | |||||||||
|
|
|
|
|
|
|
|||||||
Three-Month Period Ended December 31, 2025 and December 31, 2024
Operating Activities
Net cash used in operating activities was C$636,987 (US$464,547) for the three-months ended December 31, 2025, primarily due to net loss of C$1,553,975 (US$1,133,296), adjusted for certain non-cash items and changes in non-cash working capital items. Adjustments for such non-cash items primarily include amortization and depreciation of C$264,749 (US$193,078) and loan accretion of C$31,500 (US$22,973). The amount was further adjusted by changes in non-cash working capital items that had a positive effect on cash flow, primarily an increase in amounts due to related parties of C$393,543 (US$287,006).
Net cash used in operating activities was C$308,988 for the three-months ended December 31, 2024, primarily due to net loss of C$1,258,980, adjusted for certain non-cash items and changes in non-cash working capital items. Adjustments for such non-cash items primarily include amortization and depreciation of C$228,917 and loan accretion of C$48,500. The amount was further adjusted by changes in non-cash working capital items that had a positive effect on cash flow, primarily an increase in amounts due to related parties of C$216,793.
Investing Activities
Net cash used in investing activities was C$3,428 (US$2,500) for the three-months ended December 31, 2025, which was attributed to plant and equipment expenditures of lab equipment purchased for the Facilities.
Net cash used in investing activities was C$21,674 for the three-months ended December 31, 2024, which was attributed to plant and equipment expenditures of lab equipment purchased for the Facilities.
Financing Activities
Net cash provided by financing activities was (C$12,900) (US$9,408) for the three-months ended December 31, 2025, which related to payment of lease obligations.
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Net cash provided by financing activities was C$309,500 for the three-months ended December 31, 2024, which was primarily attributed to subscriptions received in advance of C$335,000 less share issue costs of (C$15,000) payment of lease obligations of (C$10,500).
| Year Ended September 30, | ||||||||||||
| 2025 | 2024 | |||||||||||
| C$ | US$ | C$ | ||||||||||
| Cash used in operating activities |
(2,627,901 | ) | (1,886,911 | ) | (4,281,693 | ) | ||||||
| Cash used in investing activities |
(88,375 | ) | (63,456 | ) | (154,024 | ) | ||||||
| Cash provided by financing activities |
3,757,681 | 2,698,127 | 3,194,599 | |||||||||
| Changes in cash and cash equivalents |
1,041,405 | 747,760 | (1,241,118 | ) | ||||||||
| Cash and cash equivalents, beginning of year |
103,660 | 74,431 | 1,344,778 | |||||||||
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| Cash and cash equivalents, end of year |
1,145,065 | 822,191 | 103,660 | |||||||||
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Year Ended September 30, 2025 and September 30, 2024
Operating Activities
Net cash used in operating activities was C$2,627,901 (US$1,886,911) in fiscal year 2025, primarily due to net loss of C$3,712,031(US$ 2,665,349), adjusted for certain non-cash items and changes in non-cash working capital items. Adjustments for such non-cash items primarily include amortization and depreciation of C$950,348 (US$682,378) and loan accretion of C$166,000 (US$ 119,193), which was offset by debt forgiveness of C$1,417,615 (US$1,017,890). The amount was further adjusted by changes in non-cash working capital items that had a positive effect on cash flow, primarily an increase in amounts due to related parties of C$670,110 (US$481,159).
Net cash used in operating activities was C$4,281,693 in fiscal year 2024, primarily due to net loss of C$6,035,859, adjusted for certain non-cash items and changes in non-cash working capital items. Adjustments for such non-cash items primarily include amortization and depreciation of C$867,947 and loan accretion of C$184,750, which was offset by unrealized gain in fair value of biological assets of C$119,448. The amount was further adjusted by changes in non-cash working capital items that had a positive effect on cash flow, primarily an increase in amounts due to related parties of C$786,378.
Investing Activities
Net cash used in investing activities was C$88,375 (US$63,456) for fiscal year 2025, which was attributed to plant and equipment expenditures of lab equipment purchased for the Facilities.
Net cash used in investing activities was C$154,024 for fiscal year 2024, which was attributed primarily to plant and equipment expenditures of lab equipment purchased for the Facilities.
Financing Activities
Net cash provided by financing activities was C$3,757,681 (US$2,698,127) for fiscal year 2025, which was primarily attributed to proceeds from convertible debentures of C$3,450,000 (US$ 2,477,203) and private placements, net of share issue costs, of C$395,000 (US$283,622).
Net cash provided by financing activities was C$3,194,599 for fiscal year 2024, which was primarily attributed to private placements, net of share issue costs, of C$2,036,599 and proceeds from loans of C$1,000,000 and exercise of warrants for proceeds of C$200,000.
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Capital Commitments and Contractual Obligations
We have lease commitments for the Industrial Ground. Cash commitments for minimum lease payments in relation to the Industrial Ground leases as at December 31, 2025 were payable as follows:
| $ | ||||
| Within 1 year |
52,374 | |||
| Between 1 year and 5 years |
195,785 | |||
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| 248,159 | ||||
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Reverse Share Split
Although not yet effective, our Board of Directors has approved a reverse share split with a share split ratio of 1-for-30 (“Reverse Share Split”). We anticipate affecting the Reverse Share Split immediately prior to the effectiveness of the registration statement of which this prospectus is a part. The Reverse Share Split is intended to allow us to meet the minimum share price requirement of the Nasdaq Capital Market.
Except as otherwise indicated, all references to our common shares, share data, per share data and related information depict the Reverse Share Split as if it was effective and as if it had occurred at the beginning of the earliest period presented. The Reverse Share Split, when effective, will combine each 30 shares of our outstanding common shares into one common share, without any change in the par value per share which will remain no par value, and the Reverse Share Split correspondingly will adjust, among other things, the number of common shares issuable upon exercise of outstanding options and warrants and the exercise price of such options and warrants and shares issuable upon conversion of other convertible securities. No fractional shares will be issued in connection with the Reverse Share Split, and any fractional shares resulting from the Reverse Share Split will be rounded to the nearest whole share.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.
Quantitative and Qualitative Disclosures About Market Risk
We examine the various financial instrument risks to which we are exposed and assesses the impact and likelihood of these risks. These risks arise from the normal course of operations and all transactions undertaken are to support our ability to continue as a going concern. Management manages and monitors these exposures to ensure appropriate measures are implemented in a timely and effective manner. The risks associated with financial instruments and the policies on how to mitigate these risks are set out below.
Interest rate risk
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. Interest rate risk is limited to potential decreases in the interest rate offered on cash held with chartered Canadian financial institutions. We consider this risk to be limited, as we hold no assets or liabilities subject to variable rates of interest.
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Credit risk
Credit risk is the risk of financial loss to us if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The financial instruments that potentially subject us to credit risk consist of cash and cash equivalents and trade receivables. We limit exposure by maintaining our cash with major Canadian commercial banks and credit unions.
Liquidity risk
Liquidity risk is the risk that we will be unable to meet our financial obligations as they become due. We are reliant upon equity issuances and loans as our main sources of cash. We manage liquidity risk by maintaining an adequate level of cash to meet our ongoing obligations. We continuously review our actual expenditures, forecasts cash flows and matches the maturity dates of its cash to capital and operating needs. All of our existing commitments are budgeted and funded as at the date of the consolidated financial statements. All financial liabilities have contractual maturities of less than one year and are subject to normal trade terms with the exception of our lease liabilities, which matures based on the lease agreement, and loans payable, which have terms ranging from one and a half to three years.
Currency risk
We are not exposed to financial risk related to the fluctuation of foreign exchange rates.
Critical Accounting Judgments and Estimates
The preparation of consolidated financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported revenues and expenses during the year. Actual results may differ from these estimates. Significant estimates and judgments are evaluations and assumptions about the future and other sources of estimation uncertainty that management has made, which could result in a material adjustment to the carrying amounts of assets and liabilities. Significant estimates and judgments used in the preparation of these consolidated financial statements include, but are not limited to, the following:
Going concern
The assessment of whether the concern assumption is appropriate requires management to take into account all available information about the future, which is at least, but not limited to, twelve months from the end of the reporting period.
Provisions and contingencies
The amount recognized as a provision, including legal, contractual, constructive, and other exposures or obligations, is the best estimate of the consideration required to settle the related liability, including any related interest charges, taking into account the risks and uncertainties surrounding the obligation. In addition, contingencies will only be resolved when one or more future events occur or fail to occur. Therefore, assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events. We assess our liabilities and contingencies based upon the best information available.
Impairment of property, plant and equipment
Management considers both external and internal sources of information in determining if there are any indications that our property, plant and equipment is impaired. Management considers the market, economic and legal environment in which we operate that are not within our control and affect the recoverable amount of our plant. Management considers the manner in which the property, plant and equipment is being used or is expected to be used an indication of economic performance of the assets.
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Valuation of inventory
Inventories are valued at the lower cost and net realizable value except for biological inventory which includes a fair value component. Purchased inventory is accounted for using the weighted average purchase cost of the components that comprise finished goods inventory. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs to sell.
Valuation of share-based payments
We use the Black-Scholes option pricing model for valuation of share-based compensation. Option pricing models require the input of subjective assumptions including expected price volatility, interest rate and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate our earnings and equity reserves. We estimate volatility based on our historical share prices, excluding specific time frames in which volatility was affected by specific transactions that are not considered to be indicative of the entities’ expected share price volatility.
Biological assets and inventory
In calculating the value of the biological assets, management is required to make a number of estimates, including estimating the stage of growth of the mushrooms up to the point of harvest, harvesting costs, selling costs, sales price, wastage and expected yields for the mushrooms. In calculating final inventory values, management is required to determine an estimate of spoiled or expired inventory and compare the inventory cost versus net realizable value. The cost and fair value of biological assets are capitalized to the extent that their cost and fair value will be recoverable.
Loans payable
The identification of loan components is based on interpretation of the substance of the contractual arrangement and therefore, requires judgment from management. The separation of the components affects the initial recognition of the loans payable at issuance and the subsequent recognition of interest on the liability component. The determination of the fair value of the liability component is also based on a number of assumptions, including contractual future cash flows and discount rate.
Estimated useful lives of property, plant and equipment
Depreciation of property, plant and equipment is dependent upon estimates of useful lives which are determined through the exercise of judgment.
Recent Accounting Pronouncements
Certain pronouncements have been issued by the IASB that are effective for the Company’s accounting period beginning on October 1, 2023. The Company reviewed these updates and determined that none are applicable or consequential to the Company and have been excluded from the discussion within these material accounting policies. Additionally, the Company did not adopt any new accounting policies during the fiscal year ended September 30, 2025.
Standards Issued But Not Yet Effective
IFRS 18, Presentation and Disclosure of Financial Statements (“IFRS 18”), which will replace IAS 1 Presentation of Financial Statements, aims to improve how companies communicate in their financial statements, with a focus on information about financial performance in the statement of profit or loss, in particular additional defined subtotals, disclosures about management-defined performance measures and new
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principles for the aggregation and disaggregation of information. IFRS 18 is accompanied by limited amendments to the requirements of IAS 7 Statement of Cash Flows. IFRS 18 is effective from January 1, 2027. Companies are permitted to apply IFRS 18 before that date.
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Overview
We are a Canadian GMP compliant, pharmaceutical drug manufacturer licensed by Health Canada for the handling of controlled substances and GMP production. We specialize in controlled substances with our products being MDMA and psilocybin derived from botanical sources. With a vertically integrated approach, we own two approximately 10,000-square-foot production facilities on leased land in Princeton, British Columbia and operate under a DEL awarded by Health Canada. Our DEL certifies that our facilities and quality management systems comply with GMP for the formulation of designated drug products and the manufacture of certain active pharmaceutical ingredients (“API”) from plant sources. Additionally, we hold a DL under Canada’s Narcotic Control Regulations, allowing us to possess, produce, assemble, sell and deliver psilocybin and other psychedelic substances within the regulated framework set forth by Health Canada. The DL allows us to possess up to 20kg of psilocybin and 200g of psilocin (equivalent to approximately 2,000kg of dried full-body psilocybin-containing mushrooms) and 2kg of MDMA. We also hold a Precursor Licence under Canada’s Precursor Regulations allowing us to import 3,4-Methylenedioxyphenyl-2-Propanone if used in the synthesis of MDMA.
The legal status of psychedelic drugs varies by country and our various licenses allow us to supply markets where it is legal and position ourselves for new markets. Our products are currently available in Australia where psilocybin and MDMA have been rescheduled to allow prescription by an Authorized Prescriber only for TRD and PTSD. In Canada, our products are available via the SAP, which we are authorized to supply as a provision of our DL whereby sale or provision to the holder of a Controlled Drugs and Substances Act subsection 56(1) exemption is not prohibited for licensed dealers to provide psilocybin and MDMA in relation to an SAP authorization. The SAP patient authorization process has been successfully achieved for MDMA products. Our psilocybin product is currently in phase 2b clinical trials in Canada conducted by third parties. In all other countries, access is restricted to approved clinical trials, including in Israel, one of our planned target markets, where our MDMA product is currently in phase 2 clinical trials conducted by third parties. We are currently restricted from selling our products in the United States, another one of our planned target markets, where psilocybin and MDMA are considered Schedule I “controlled or “scheduled” substances, meaning their manufacture, importation, exportation, domestic distribution, storage, sale and legitimate use is subject to a significant degree of regulation by the DEA. While our MDMA and botanical psilocybin products are currently being accessed in Canada and Australia, in any new market, a regulatory approval would be required for our products – be that a clinical trial application approval, a marketing authorization approval or access via a change to regulatory access for these products.
Our DEL enables us to supply validated psilocybin API, psilocybin drug products and MDMA drug products to patients in Australia under the Authorised Prescribers Scheme. Through strategic collaborations and ongoing compliance with global regulatory authorities, we aim to expand our product availability to additional jurisdictions where psychedelic-assisted therapies are gaining regulatory approval.
The key differentiator of a DEL is that it enables our MDMA and psilocybin capsules to be prescribed by authorized physicians in Australia for the treatment of PTSD and TRD. Unlike most companies in the psychedelic sector that remain in clinical or pre-commercial phases, we are currently supplying regulated medicines under prescription in certain markets – supported by a DEL that also permits the legal manufacture and international export of both products.
As part of our commitment to innovation and broadening accessibility to psychedelic-based therapies, we continuously refine our production methodologies, invest in advanced extraction technologies and enhance our regulatory compliance frameworks to remain ahead of industry standards. By prioritizing sustainable and responsible production practices, we are dedicated to becoming a global leader in the psychedelic pharmaceutical sector. Our research initiatives focus on optimizing extraction efficiency, improving formulation stability and ensuring scalable manufacturing techniques that align with future market expansion plans. Although we do not
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currently own any patents, nor do we have any pending patent applications related to our MDMA and botanical psilocybin products, the design, formulation, and large-scale manufacture of these products are founded on—and would be materially impaired without—a comprehensive body of proprietary know-how, specialized production methodologies, and rigorously safeguarded trade secrets that we protect through internal controls and confidentiality agreements.
Our Competitive Strengths
We believe the following competitive strengths contribute to our success and differentiate us from our competitors:
| • | Our ability to manufacture at scale and vertically integrate operations ensures pricing advantages and quality control. |
| • | Our two 10,000-square-foot production facilities allow for rapid scaling, one of which is covered under the DEL. |
| • | Holding a DEL and a DL gives us the capability to commercialize psychedelic drugs today and supply patients in Australia for the treatment of PTSD with MDMA, and TRD with psilocybin. |
| • | Our commitment to research and development, with continuous investments in supplying clinical trials and on-going product improvement. |
| • | Our formulation expertise and strategic partnerships allows us to legally bring finished drug product to patients in Australia and supply clinical trials to certain countries around the world. |
| • | Our earlier-mover advantage with two psychedelic drugs available in the prescription market in Australia, and be ready for future markets should regulations allow. |
Our Growth Strategies
We intend to pursue the following growth strategies to solidify our market leadership and achieve sustainable growth:
| • | Expand into additional markets such as Israel and the United States. |
| • | Continue to invest in research and development for drug formulations. |
| • | Continue to strengthen regulatory compliance. |
| • | Continue to collect of real world evidence (“RWE”) and patient-reported outcomes (“PROs”) for regulatory submissions in Australia. |
| • | Further collaborations with healthcare providers and government agencies to advocate for safe and effective psychedelic-assisted therapies. |
We anticipate margin expansion through:
| • | Economies of scale in precursor and raw material procurement; |
| • | Higher batch yields and throughput efficiencies; |
| • | Automation of capsule filling and packaging processes; |
| • | Fixed-cost dilution as production sales; |
| • | Ongoing process optimization under GMP frameworks; |
| • | GMP and DEL licensing infrastructure that provides durable competitive advantages in terms of cost efficiency, quality assurance and regulatory readiness; and |
| • | GMP laboratory efficiencies and the build out of our on-site testing and analytical laboratory. |
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Description of Principal Products
We are licensed to provide GMP psychedelic substances, including MDMA and psilocybin, for research and therapeutic applications in certain countries. On May 24, 2024, we were awarded a DEL. Securing a DEL positions us as a pharmaceutical company with a strong portfolio of government approved licenses for controlled substances.
The DEL confirms that our Canadian facilities conform to Health Canada’s GMP compliance standards. The DEL differentiates us from other psychedelic manufacturers in the space and enables us to provide competitively priced products for human therapeutic use within the GMP psychedelics market. The DEL allows us flexibility to adapt to international licensing demands and changes in legislation and also gives our clients and patients assurance of a fully GMP product. Canadian companies without a DEL may not be issued export permits to supply Australia or other countries where a market is established.
Our MDMA capsules are manufactured for use by patients in Australia’s Authorised Prescribers Scheme, as well as licensed entities conducting clinical trials around the world. It is available in two dosages (40mg and 60mg) in hard gelatine capsule format for oral administration. Our product is stable over extended periods in HDPE (High Density Polyethylene) bottles at room temperature under both real-time and accelerated storage conditions for up to 24 months for all chemical and microbial attributes. The API remains stable under both real-time and accelerated storage conditions for up to 24 months for all chemical and microbial attributes. The MDMA capsules and API conform to the Therapeutic Goods (Standard for MDMA) (TGO 112) Order 2024 published by the Australian regulatory agency.
Our psilocybin extract (API) is manufactured for use in qualified patients with TRD within the Authorised Prescribers Scheme, as well as licensed entities conducting clinical trials around the world. It is formulated into 5mg hard HPMC capsule format for patients in Australia via oral administration. For clinical studies, a 10mg capsule is also available for clinical trials requiring a second dose format for study. The API product has maintained its original potency level without any degradation during stability testing of nine months. The psilocybin API and capsules conform to the Therapeutic Goods (Standard for Psilocybine) (TGO 113) Order 2024.
For each of the active products, we also have developed matching placebo capsules in order to facilitate clinical trials of our clients. The capsule size and color are the same, while the inner component is a mannitol blend without active ingredient.
All product development is in accordance with guidelines established by the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use (“ICH”) and the requirements of GMP.
Some of our recent key developments include:
| • | Obtained Health Canada DEL in May 2024. |
| • | Granted Precursor Licence by Health Canada for 3,4-Methylenedioxyphenyl-2-propanone (“MDP2P”), the precursor for MDMA synthesis. |
| • | Completed validation of GMP extraction of psilocybin containing mushrooms to develop botanical API. |
| • | Completed validated GMP production of 5mg natural psilocybin extract capsules. |
| • | Completed validated GMP production of MDMA 40mg and 60mg capsules. |
| • | Patients dosed in Australia’s Authorised Prescribers Scheme with MDMA capsules produced by us. |
| • | Approval from Health Canada for use of our psilocybin extract capsules in a Phase 2 clinical trial. |
| • | Secured import permit from Mind Medicine Australia for 160 doses of MDMA and psilocybin for therapeutic use. |
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| • | Signed supply agreements with leading institutions, including Tel Aviv University. |
| • | Preparing Drug Master File (“DMF”) for Psilocybin Extract Capsules. |
| • | Exported psilocybin extract for a clinical trial in New Zealand. |
| • | Receipt of additional permits to import MDMA into Australia, 500 capsules of 40mg, and 500 capsules of 60mg. |
| • | Completion of the encapsulation and manufacturing of GMP grade MDMA capsules for export, with certificates of analysis (“COAs”) confirming uniformity and quality of releasable product. |
| • | Completion of third shipment to Australia of 1,000 MDMA capsules. |
| • | Receipt of BICON permit from Australian Government for our Natural Psilocybin Extract to enter Australia. |
| • | Receipt of import permit from the TGA, and export permit from Health Canada for 1,000 capsules of 5mg natural psilocybin extract in May 2025. |
| • | Commercially launched natural psilocybin capsules in Australia and completed initial shipment of 1,000 capsules in September 2025 to be prescribed to patients with TRD under the Authorised Prescribers Program. |
We have historically, through Optimi Nutraceuticals, developed a nutraceutical brand that focuses on the health and wellness food markets. We sold our products directly to consumers, through Amazon and through distributors/brokers. However, this business was wound down in fiscal 2025 to focus our efforts on our pharmaceutical grade manufacturing business
We have evolved into a pharmaceutical grade manufacturer of MDMA and psilocybin capsules, with the ability to supply to authorized subscribers in Australia. Currently, we are only authorized to supply Australia’s Authorised Prescribers Scheme for those indications where psilocybin and MDMA are rescheduled as well as any approved clinical trial (currently approved trials in Canada and Israel).
Further, as a Canadian-based manufacturer, we can enter the U.S. market by exporting MDMA and psilocybin products, for clinical trials, research and development and for therapies contingent upon their rescheduling and approval for medical use in the U.S. This process involves compliance with both Canadian and U.S. regulations governing the export and import of controlled substances. Currently, these products are available in Canada via the Special Access Program (“SAP”).
Canadian Regulatory Compliance
Controlled Substances Licence: We currently hold a valid Dealer’s Licence under the CDSA, authorizing the production and distribution of MDMA and psilocybin for scientific or medical purposes.
Export Permit: For each shipment to any jurisdiction outside of Canada, we are required to obtain an export permit from Health Canada, which requires the submission of an import permit issued to the importer by the appropriate regulatory authority in receiving jurisdiction. These permits ensure that the export complies with Canadian regulations in respect of the export of controlled substances and/or precursor chemicals and the import regulations of the receiving jurisdiction. Export permits authorizing commercial exportation are only issued to licensed dealers, licensed producers or registered dealers.
DEL: We possess a DEL, which authorizes the fabrication, packing, labeling, distribution and/or wholesale of medical grade MDMA and psilocybin drug formulations and psilocybin active pharmaceutical ingredients in compliance with GMP standards.
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U.S. Regulatory Compliance
FDA Approval: Prior to importing our products into the U.S. in the future, MDMA and psilocybin must be approved by the FDA for medical use. This involves:
IND: The process of conducting clinical trials with a new drug product generally cannot begin until a company has submitted the appropriate regulatory authorities an application to do so and the required number of days have lapsed without objection from the applicable regulatory authority (in certain jurisdictions, a no objection letter or approval may be required before the clinical trial can proceed). In the U.S., this application is called an investigational new drug study, or “IND”, and in Canada and most European countries, a clinical trial application, or “CTA.” For the U.S., the sponsor of the study must submit the results of the non-clinical tests, manufacturing information, analytical data and available clinical data or literature, within the IND, to the FDA. Some information may be omitted from the IND in instances where prior FDA findings of safety or efficacy of a drug product are being relied upon. Even once the IND is submitted, non-clinical testing may continue to occur. An IND becomes effective automatically 30 days after receipt of the document by the FDA, unless within that time the FDA raises concerns or questions, in which case a clinical hold may be put in place until the concerns are adequately addressed by the study sponsor with the FDA.
GMP: Ensuring that our manufacturing processes meet FDA’s GMP standards to guarantee product quality and consistency.
DEA Import Permit: The DEA requires U.S. based entities intending to import controlled substances to obtain a DEA registration authorizing the importation of specific substances. For each shipment, the registered importer must secure an import permit from the DEA, confirming compliance with U.S. regulations.
Rescheduling: Products which involve Schedule I controlled substances under the U.S. Controlled Substances Act must be rescheduled.
Australian Regulatory Compliance
The Australian Poisons Standard governs the classification (“scheduling”) and control of poisons, including those for therapeutic use. This scheduling system controls how medicines are made available to the public. Medicines and chemicals are classified into schedules according to the level of regulatory control over the availability of the medicine or chemical, required to protect public health and safety. In 2023, Australia announced that for TRD and PTSD, psilocybin and MDMA will be listed as Schedule 8 (Controlled Drugs). For all other uses, they will remain in Schedule 9 (Prohibited Substances), which largely restricts their supply to clinical trials.
To access products containing MDMA or psilocybin, the psychiatrist must be registered as a specialist with the Medical Board of Australia as well as be an Authorised Prescriber for each product they want to access. The source and compliance of the intended drug to be prescribed will be assessed in the application for product including if the source is GMP and that the quality standard for the products are met.
Australia has published quality standards for both APIs and drug products that are prescribed under the Scheme – Therapeutic Goods (Standard for Psilocybine) (TGO 113) Order 2024 and Therapeutic Goods (Standard for MDMA) (TGO 112) Order 2024 and prescribers are responsible for ensuring their supply chain conforms to these requirements.
Collaborative Importation Strategy
U.S. Importer Partnership: We aim to establish a partnership with a U.S.-based importer who holds the necessary DEA registration. This collaborator will handle the importation process, including obtaining import permits and ensuring adherence to DEA regulations.
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Anticipating Rescheduling and Market Entry
Monitoring Regulatory Changes: We aim to stay informed about developments regarding the rescheduling of MDMA and psilocybin by U.S. authorities, as this will impact the legality of importation and distribution.
Pre-Approval Preparations: We aim to engage with regulatory consultants to prepare the necessary documentation and ensure that all manufacturing practices align with both Health Canada and FDA requirements.
Facilities
We own and operate two 10,000 sq. ft, state-of-the-art pharmaceutical-grade mushroom cultivation and drug processing facilities in Princeton, British Columbia (the “Facilities”), purpose-built to meet the highest standards of product quality, regulatory compliance, and operational excellence. The Facilities are being used for cultivation, processing, extraction, formulation, packaging and labeling, research and distribution of psilocybin and other psychedelic substances approved by Health Canada. Scale efficiencies are technically and commercially viable through state-of-the-art horticultural lighting and sensor technology intended to maximize production per square foot. We currently house a genetics bank of more than 200 varieties of psilocybe cubensis and other species.
Our infrastructure and quality systems are aligned with Canadian regulatory requirements, including Drug Establishment Licence and Dealer’s Licence standards, and are operated to Good Manufacturing Practice guidelines.
Our Facilities are designed to support all critical stages of production and testing, with specialized spaces that ensure environmental and product integrity:
| • | Five incubation and fruiting rooms supporting controlled growth environments; |
| • | Two GMP manufacturing sites for compliant drug manufacturing and handling; |
| • | Level 8 vault for secure storage of controlled substances; |
| • | Industrial autoclaves and pasteurization equipment for upstream mycology systems; |
| • | Advanced environmental controls to support both our growth areas and GMP suites; |
| • | Analytical laboratory enabling in-house testing; and |
| • | Warehouse and processing areas for material storage, handling and batching processing under validated conditions. |
Operations
Our operations encompass the full production lifecycle, from cultivation and extraction to formulation and distribution. We maintain state-of-the-art Facilities in Princeton, British Columbia that integrate climate-controlled growing rooms with automated environmental controls and one-way airflow, ensuring consistent high-quality yields.
We also operate a fully equipped analytical laboratory, featuring high-performance liquid chromatography (“HPLC”), mass spectrometry, and stability testing equipment. This enables in-house testing on various stages of production, with the goal of eventually being able to release certificates of analysis (“COAs”) for both psychedelic substances. We currently have a production capacity scalable to 500,000 or more doses annually of MDMA and 1,000,000 5mg doses of psilocybin.
MDMA Production
We have an active Class A Precursor Licence from Health Canada that allows for the purchase or production of controlled materials that are used for synthesis of MDMA. Synthesis of R&D-grade MDMA has been completed.
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Manufacturing of the product was performed on a 32 g scale (87% yield). Further scale up and process validation are in process. Once completed, Master Batch Records (“MBRs”) will be generated and the synthesis process will be added to the current DEL. Further, testing methodologies have been developed for identification of MDMA, assay of MDMA content, assay of chloride content, microbial content and water content.
Manufacture of formulated products of specific dosages (i.e., capsules) has been validated and is recognized as GMP-certified under our DEL. For MDMA, capsules have been manufactured and validated at 40 and 60 mg dosages as a scale of 4000 and 2800 capsules, respectively. MBR’s have been developed and optimized for the process.
Testing methodologies for the MDMA encapsulated products have been developed that allow for release of product into clinical trials in certain countries and the Authorised Prescribers Scheme in Australia. These tests include dosage array, content uniformity, dissolution, disintegration, microbial content and water content. As of the date of this prospectus, we have capabilities to manufacture 40mg and 60mg MDMA capsules.
Psilocybin Production
Psilocybin is a naturally occurring psychedelic product prodrug compound produced by more than 200 species of mushrooms, collectively known as “magic mushrooms”. The most potent are members of the genus Psilocybe, such as P. azurescens, P. semilanceata, and P. cyanescens, but psilocybin has also been isolated from about a dozen other genera. Psilocybin is quickly converted by the body to psilocin, which has mind-altering effects similar, in some respects, to those of LSD. Our Dealer’s Licence allows us to possess up to 20kg of pure psilocybin.
In fiscal year 2023, we commenced production and harvest of psilocybin mushrooms to be used for commercial purposes. Although we can sell our raw mushroom biomass, we further process the raw mushroom biomass into psilocybin extract.
GMP production of 2-5% Psilocybin Spectrum Mushroom Extract has been validated and is recognized as GMP-certified under our DEL. MBRs have been developed for production of 100 and 400 g batches of extract. Key steps in the process are: processing of dry mushrooms (input from Good Agricultural and Collection Practices (“GACP”) mushroom cultivation at the Company), extraction with solvent, filtration, removal of solvent and processing of final product. Greater than 80% recovery of psilocybin is achieved. Extract is a fine powder that is amendable for further processing into an encapsulated product. Stability studies have been completed 2-8ºC and at 25ºC and show that the psilocybin content is stable for up to 12 and 6 months, respectively. Testing methodologies have been developed for key application parameters (potency of psilocybin and psilocin, water content) and safe use as per pharmacopeia requirements (microbial content, heavy metals, aflatoxins, residual solvents). Testing methods are applicable with current international standards for use of pharma-grade products, including for specific use of psilocybin products under the Authorised Prescribers Scheme in Australia.
For 2-5% Psilocybin Full Spectrum Mushroom Extract, capsules have been manufactured and validated at 5 mg psilocybin dosage at 1000 capsule scale. Larger dosage formats have been generated (10 mg) under R&D conditions and are available to be manufactured under GMP for clinical programs. A higher dosage format will be developed once market demand has been evaluated. In line with the MDMA encapsulation process, scale up to 4000 capsules is planned. Testing methodologies for psilocybin encapsulated products have been developed that allow for release of product into clinical trials in certain countries and the Authorised Prescribers Scheme in Australia. These tests include dosage array, content uniformity, dissolution, disintegration, microbial content and water content.
As of the date of this prospectus, we have (i) confirmed one year stability testing for our psilocybin extract API; (ii) received finished product test results and a CAO for GMP natural psilocybin extract; (iii) signed a psilocybin supply agreement with Matai Medical Research; (iv) secured Import Permit from Mind Medicine Australia for 160 doses of psilocybin capsules to be exported to Australia; (v) received a “No Objection Letter” from Health Canada, permitting the use of our GMP natural psilocybin extract capsules in a phase 2 clinical trial; and
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(vi) commercially launched our natural psilocybin capsules in Australia, completing an initial shipment of 1,000 capsules, to be prescribed to patients with TRD under the Authorised Prescribers Scheme.
Currently, we have capabilities to manufacture both 5mg and 10mg capsules of psilocybin. Our 5mg natural psilocybin extract capsule is set to be used in a phase 2 clinical trial for major depressive disorder. This trial could validate our drug development initiative for psilocybin as a safe and viable treatment for depression.
Psilocybin Mushroom Cultivation Summary
Overview
We operate a Canada federally licensed psilocybin mushroom cultivation facility in British Columbia, in compliance with GMP. The facility is purpose-built for the scalable production of pharmaceutical-grade mushroom biomass and psilocybin extract. The cultivation program is governed by standardized operating procedures (“SOPs”), with environmental control systems, genetic tracking, batch-level traceability and microbiological surveillance integrated throughout the production lifecycle. Our psilocybin cultivation operation is highly controlled with all process steps documented and aligned with pharmaceutical production practices. Through environmental controls, validated genetics, microbial surveillance, and SOP-driven production, we deliver pharmaceutical-grade biomass suitable for standardized extraction, clinical trial formulation, and therapeutic applications in regulated markets.
Genetic Library and Strain Validation
We maintain a curated library of genetically isolated Psilocybe species. Each strain is phenotyped, catalogued and preserved in sterile slant cultures. Prior to commercial production, strains are evaluated through internal R&D protocols, which assess:
| • | Biological efficiency (yield per kilogram of substrate); |
| • | Potency uniformity (psilocybin and psilocin concentration); |
| • | Morphological consistency and fruiting timelines; and |
| • | Strains that meet performance benchmarks are assigned internal nomenclature and linked to a unique batch identification system throughout cultivation and processing. |
Cultivation Process
All stages of mushroom production—from inoculation to drying—are governed by detailed SOPs and performed in controlled environments. First, grain (typically millet or rye) is hydrated, drained, and sterilized. Upon cooling, the sterile grain is inoculated with verified mycelial culture under a Class II biosafety cabinet. Inoculated grainspawn is incubated until full colonization (typically 10–14 days). Next, substrate is formulated with hardwood sawdust and soybean hulls to achieve a certain moisture content. The material is sterilized in filter-patch grow bags. After sterilization and cooling, bags are aseptically inoculated with grain spawn by weight under ISO 8 HEPA-filtered conditions, sealed, labeled, and incubated. Next, colonized substrate is incubated at a certain temperature with a certain relative humidity (RH). Bags remain sealed during this period, which lasts 12–18 days. Progress is monitored by visual inspection and random bag sampling prior to transfer to fruiting. Then, substrate bags are transferred to climate-controlled fruiting chambers. Air filters are removed to allow gas exchange. Environmental controls are maintained via programmable HVAC systems. Mushrooms typically begin pinning within 7-14 days, depending on strain. Next, fruits are hand-harvested at optimal maturity (veil break and cap flattening) using sterile tools under full personal protective equipment. Biomass is weighted, batch-logged, and transferred for immediate drying. Finally, harvested mushrooms are dried on stainless-steel mesh trays with continuous airflow. Drying proceeds until water activity (Aw) falls below a certain level. The dried product is vacuum-sealed in food-grade Mylar, labeled with full batch and strain information, and stored in secure, climate-controlled vaults. Retained samples are archived for stability testing.
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Traceability and Regulatory Compliance
Each cultivated batch is linked to a Batch Production Record (“BPR”) documenting the entire lifecycle from Spore/genetic to mother culture to finished product. Records include inoculation logs, incubation parameters, harvest data, drying output and final yield metrics.
Warehousing and Distribution
We hold all products for sale in our level 8 secure vault on the premises until such time as clients are ready for shipment. Distribution is performed according to strict protocols whereby the licensing of the receiver is reviewed and shipment chain of custody is in place prior to shipment. Only approved carriers for controlled substances are used for shipments of these products.
Quality Control
Sanitation and quality controls are implemented at all critical stages in order to have strict controls on quality control parameters, especially microbials. The benefits of the indoor cultivation space allow us to have tight controls on the environment, testing and inputs to the cultivation process, such as:
| • | Environmental plates placed throughout cleanrooms and inoculation stages to monitor room performance; |
| • | Hydrogen Peroxide Vapour (HPV) disinfection of our grow rooms; |
| • | Sanitization of tools and materials entering production zones; and |
| • | Engineering controls in room construction and personnel flow. |
Gowning procedures include sleeve guards, sterile gloves, lab coats and boot covers.
Our infrastructure allows for operational control, ensuring products are consistently manufactured to quality and regulatory specifications.
Our GMP-compliant Quality Management System (“QMS”) supports every stage of production and release, ensuring that all activities meet GMP, GACP and regulatory standards. Key elements include:
| • | Document Control: secure management of controlled procedures, protocols and records. |
| • | Change Management: formalized systems for evaluating and implementing process or system changes. |
| • | Deviation and CAPA Management: immediate investigation and corrective action to resolve any non-conformances. |
| • | Supplier Qualification: rigorous selection and monitoring of critical material and service suppliers. |
| • | Training and Qualification: Structured programs ensuring all personnel are trained, qualified and competency-verified for their roles. |
| • | Audit Programs: Regular internal and external audits to maintain system integrity and regulatory readiness. |
| • | Client Programs: under quality agreements, clients will retain oversight of products released to their clinical programs. Optimi enables regulatory dossier submission via access to our technical experts and drafted quality summaries. |
To ensure the highest standard of product quality, we employ a stage-gated release process:
| • | GACP outputs: all raw materials and agricultural outputs are tested against predefined quality parameters prior to release for GMP processing. |
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| • | GMP Inputs and Drug Products: all manufacturing inputs and final drug products undergo analytical testing and batch record review prior to quality release. |
| • | Final Quality Release: only products that meet all release specifications, documentation requirements, and quality assurance reviews are approved for distribution. |
Our infrastructure and systems have been successfully validated through Health Canada licensing processes and internal performance audits. Our facility operates with a mindset of continuous improvement, ensuring that quality systems are not only compliant today but built to support future scale-up and international regulatory requirements.
Our robust facility, combined with a mature and comprehensive quality system, positions us to reliably produce, test, and release products to the highest standards of safety, efficacy and regulatory compliance. We are operationally ready to scale as market demand grows.
Research and Development
We were initially focused on the research and development of functional mushroom (non-psychedelic) cultivation and extraction. We are now focused on the research into mushroom-derived psilocin and psilocybin. This research is designed to investigate the use of psilocin and psilocybin in the treatment of mental illness, addiction, and other health conditions if and as permitted by applicable laws and regulations. We are also researching and producing a MDMA formulation that is used in clinical studies for PTSD and other applications.
We hold a Dealer Licence that allows us to possess, produce, assemble, sell, and deliver psilocybin and other psychedelic substances within the regulated framework set forth by Health Canada. The Dealer’s Licence allows us to possess up to 20kg of psilocybin and 200g of psilocin (which is estimated to be equal to approximately 2000kg of dried full-body psilocybin-containing mushrooms) and 2kg of MDMA. We have submitted and received approval for an additional 16 psychedelic substances providing opportunity for us to pursue research opportunities and clinical trial supply as opportunities arise.
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We also hold a Controlled Substance Licence issued by Health Canada to possess, produce, assemble, sell, and deliver the following controlled substances in the specified quantities:
Controlled Substance
| Controlled Substance |
Quantity Authorized for Production | |
| Per Calendar Year | ||
| 2,5-DIMETHOXYPHENETHYLAMINE |
500g | |
| 3,4-METHYLENEDIOXYAMPHETAMINE (MDA) |
2000g | |
| 4-BROMO-2,5-DIMETHOXY-N-(2-METHOXYBENZYL)PHENETHYLAMINE (25B-NBOME) |
500g | |
| 4-BROMO-2,5-DIMETHXOYBENZENE ETHANAMINE (2C-B) |
4000g | |
| 4-CHLORO-2,5-DIMETHOXY-N-(2-METHOXYBENZYL)PHENETHYLAMINE (25C-NBOME) |
500g | |
| 4-HYDROXYBUTANOIC ACID (GHB) |
200g | |
| 4-IODO-2,5-DIMETHOXY-N-(2-METHOXYBENZYL)PHENETHYLAMINE (25l-NBOME) |
500g | |
| HARMALINE |
40g | |
| HARMALOL |
100g | |
| KETAMINE |
200g | |
| LYSERGIC ACID DIETHYLAMIDE |
100g | |
| MESCALINE |
400g | |
| N,N-DIMETHYLTRYPTAMINE (DMT) |
400g | |
| N-METHYL-3,4-METHYLENEDIOXY AMPHETAMINE |
20000g | |
| PHENCYCLIDINE |
100g | |
| PSILOCIN |
200g | |
| PSILOCYBIN |
20000g | |
| SALVINORIN A |
400g |
We possess a fully-equipped analytical laboratory capable of conducting analytical testing for our psychedelic products release, as well as for use by third parties as a source of additional revenue. We hold the authorization for third-party cannabis testing, but have not yet implemented the GPP and GMP systems and validation requirements in order to perform this testing under GMP.
Further, to enhance our internal testing capabilities, we have completed the acquisition of advanced analytical instrumentation designed to significantly increase in-house productivity. This equipment includes stability chambers, gas chromatography-mass spectrometry with flame ionization detection (GC-MS-FID), backup high-performance liquid chromatography systems (HPLC), instrumentation supporting inductively coupled plasma mass spectrometry (ICP-MS), formulation support equipment, and all necessary tools for full panel microbial testing. Our next steps for implementation of the laboratory include development and validation of the methodologies according to USP or EP standards, validation of the instrumentations and software, staffing the laboratory, and completing the QMS requirements for GMP. There are also infrastructure requirements to put in place some of the larger instrumentation. After these efforts are completed, we will be equipped to generate complete Certificates of Analysis (COAs) for our psychedelic product lines as well as third party testing.
Our analytical capabilities encompass a range of assays, including potency testing via high-performance liquid chromatography (HPLC) with diode array detection. This allows for simultaneous quantification of multiple substances at various wavelengths. We also perform identity through thin layer chromatography (TLC), ultraviolet-visible (UV-Vis) spectroscopy, and mass spectrometry, ensuring comprehensive characterization of our materials. We also intend to bring in house stability testing of our products. Our stability chambers have been installed and licensed by Health Canada as storage devices for controlled substances. To complete this program we require validation of the chambers and the supporting lab infrastructure to bring stability in house.
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On the production side, we are advancing the scale up of the encapsulation program by validating an automatic encapsulator for use on our products as order volumes increased. We are advancing an intellectual property strategy that targets innovation in the areas of delivery mechanisms, extraction techniques, synthetic compound isolation, novel formulations, and testing protocols specific to mushroom-based products. To accelerate this work, we actively engage in both academic collaborations and strategic development partnerships.
For example, through a partnership with Mind Medicine Australia, we will have access to relevant patient outcomes and evidence pertaining to the use of MDMA & psilocybin as a treatment for PTSD and TRD. This data will allow us to collect relevant information for global NDA submissions using real patient outcomes for both indications.
On March 22, 2024, we entered into the Collaborative Research Agreement with the Kwantlen Polytechnic University, whereby we and Kwantlen Polytechnic University agreed to conduct a research project relating to the genetic identification of psilocybin containing mushrooms. This is in support of an ongoing research program relating to genomics and metabolomic solutions for agriculture in British Columbia, as part of a Build Innovation Enhancement grant by the Natural Sciences and Engineering Resources Council to Kwantlen Polytechnic University. During this project we were able to successfully cultivate over 200 species of psilocybin containing mushrooms and create a genetic bank that is unparalleled. We are also expanding our research partnerships beyond Canada and Australia into Israel and the U.S.
Recent Regulatory Communications
We are in the process of completing our Drug Master File (“DMF”) in Canada for psilocybin. Recently, we received a “No Objection Letter” from Health Canada to supply our 5mg psilocybin drug candidate to ATMA CENA Healthcare Solutions for a phase 2B clinical study. This critical documentation showcases our commitment to regulatory compliance and transparency, laying the foundation for streamlined communication with regulatory authorities.
DMFs are submissions to Health Canada and the FDA used to provide confidential, detailed information about facilities, processes, or articles used in the manufacturing, processing, packaging, and storing of human drug products, therefore allowing parties interested in the our drug candidates to reference our material without having to disclose DMF contents. DMF’s become “plug and play” documentation which supports a clinical trial application intending to have us supply our drug candidates.
Sales and Marketing
On February 28, 2023, we signed purchase orders with Mind Medicine Australia Limited (“Mind Medicine”) to ensure that patients in Australia with treatment resistant PTSD have access to medical grade GMP MDMA and patients with TRD have access to GMP grade psilocybin as part of therapy through their authorized treating psychiatrists.
On February 28, 2023, we entered into a supply agreement (the “Supply Agreement” ) with KMT Pharmaceuticals Pty Ltd (“KMT Pharmaceuticals”), an Australian company, with Mind Medicine acting as guarantor. Pursuant to the Supply Agreement, we have agreed to supply certain encapsulated products to KMT Pharmaceuticals for distribution in Australia. The Supply Agreement includes an exclusivity provision under which we will not supply MDMA or psilocybin products to any other party in Australia, and KMT Pharmaceuticals agrees not to source such products from third parties. This restriction does not apply to the supply of such products for clinical trials, provided that we notify the proposed purchaser of KMT Pharmaceuticals’ existence and its ability to supply those products. Either party may terminate the exclusivity arrangement with nine months’ written notice. The Supply Agreement has a term of five years and may be terminated earlier by either party for cause, including insolvency, breach of confidentiality, or regulatory non-compliance, or without cause upon nine months’ notice. There are no minimum purchase requirements under the Supply Agreement. Payment terms require a 25% deposit within ten business days of invoice issuance and the
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remaining 75% within twenty business days of product delivery. Mind Medicine guarantees the payment obligations of KMT Pharmaceuticals under the Supply Agreement.
MDMA and psilocybin drug candidates have been produced, encapsulated, and packaged entirely inside of our Facilities in compliance with GMP standards and the first commercial shipment of MDMA capsules was fulfilled in August 2024.
On November 3, 2023, we entered into a supply agreement with Sunshine Earth Labs Ltd., whereby we committed to manufacturing and supplying it with full spectrum API and encapsulated psilocybin product, and encapsulated MDMA products for a period of five years. Under the terms of the agreement, each purchase quantity order will be determined on a case-by-case basis to meet the evolving needs of the market.
On March 22, 2024, we entered into an international natural psilocybin supply agreement with New Zealand-based Mātai Medical Research Institute (“Mātai”), on behalf of the Tū Wairua Project, whereby we agreed to provide Mātai with a quantity of our validated GMP full spectrum natural psilocybin extract. We completed our initial shipment to Mātai in December 2024.
On September 3, 2025, we announced the commercial launch of our natural psilocybin capsules in Australia, which are now being prescribed to patients with TRD under the Authorised Prescribers Scheme. We completed an initial shipment of 1,000 psilocybin capsules, each containing 5mg of standardized naturally-derived psilocybin. Mind Medicine will oversee distribution and patient coordination through Australia’s network of clinics and hospitals.
We are actively engaged in identifying and closing further supply deals with international and domestic partners seeking GMP drug substance and encapsulated drug candidates. This includes negotiations with partners in Canada, Australia, the United States and Israel. We will supply a phase 2b study in Canada led by ATMA CENA Healthcare Solutions. This is a phase 2 study assessing the efficacy of psilocybin-assisted psychotherapy when administered to frontline mental healthcare workers suffering from major depressive disorder related to COVID-19. The enrollment will be 200 patients divided into cohorts of 12 patients and is the first clinical supply deal for us approved by Health Canada using our natural psilocybin extract 5mg capsules.
Intellectual Property
Our success depends on our ability to protect our core technology and intellectual property. We utilize a combination of trademarks, copyrights, trade secrets and confidentiality policies to protect our proprietary rights in our MDMA and botanical psilocybin drug products. We currently do not own any patents and we do not have any pending patents. We applied to register the trademark “Optimi Health” and “Optimi” with the Canadian Intellectual Property Office and the USPTO on September 16, 2020, and obtained registration with the Canadian Intellectual Property Office on January 12, 2024.
We received a non-final office action letter from the USPTO, objecting to the registration of the “Optimi” and “Optimi Health” marks due to the likelihood of confusion with four prior U.S. registered trademarks. We have also received a cease and desist letter from a U.S. public company, alleging that the use and attempted registration of the “Optimi” and “Optimi Health” marks infringes the registered trademarks of the U.S. company. At this time, we do not intend to continue to pursue registration of the “Optimi” and “Optimi Health” marks in the U.S. due to the anticipated costs and time required. We may file a petition to revive the trademark applications in the future.
Raw Materials
We source all materials used in the manufacture of our MDMA and psilocybin drug products through GMP-qualified and licensed (where required) suppliers, in accordance with our DEL, Controlled Substances Licence, and the applicable provisions of the Food and Drug Regulations and Controlled Drugs and Substances Act.
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MDMA Production Inputs
For GMP MDMA production, the API inputs are sourced from a GMP-compliant vendor approved in our quality management system with a quality agreement in place and periodically audited by us. Each shipment is subject to incoming quality control procedures including identification testing, Certificate of Analysis (CoA) verification, and documentation review prior to use. Material receipt, storage, and inventory controls are conducted in accordance with our controlled substance handling standard operating procedures.
For R&D MDMA production, all precursor chemicals including 3,4-METHYLENEDIOXYPHENYL-2-PROPANONE are obtained from approved vendors or equivalent international suppliers under valid permits.
Other non-controlled inputs include GMP-grade excipients and capsules, and various small scale chemicals, solvents and reagents. All non-controlled inputs are available from multiple vendors and interchangeable if required for scale or quality.
Psilocybin Production Inputs
Psilocybin is produced using in-house cultivated psilocybe mushrooms under our Controlled Substances Licence and under GACP. All non-active inputs (e.g., culture media, solvents, processing agents) are sourced from qualified suppliers. These inputs are reviewed by the quality assurance department against internal specifications and COAs. The cultivation and drying process uses raw material inputs that are qualified by quality assurance and generally readily available from large scale farm suppliers.
Extraction, and purification are carried out within our GMP-compliant facility and the inputs include solvents and reagents that have been risk assessed for use in human drug products and are available from multiple vendors and interchangeable if required for scale or quality.
Quality Assurance and Supply Chain Management
To date, we have not encountered material disruptions in the availability or quality of raw materials. All inventory levels are reviewed routinely under our inventory control program (SOP INV-005 “Inventory Control of CDS and GMP Materials”), with safety stock maintained for high-risk materials.
Although input costs have remained stable under existing contracts, we recognize that certain raw materials, including certain solvents or agricultural inputs, may be subject to supply chain volatility due to regulatory, political, or enforcement-related factors.
All sourcing, testing, and documentation procedures comply with Health Canada’s Good Manufacturing Practices Guidelines, relevant guidance on precursor and controlled substance handling, and our internal SOPs and QA systems.
Employees
As of December 31, 2025, we have six full time employees, four part-time employees and one independent contractor, in addition to the Board of Directors and the Advisory Board (as described in the section immediately following). All of our employees are based in Canada. We believe that we maintain a good working relationship with our employees, and we have not experienced any major labor disputes.
Advisory Board
In order to prudently pursue the development of our business, we have appointed an advisory board (the “Advisory Board”) comprised of technical experts and global leaders in the health, wellness and consumer goods
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industries, as set forth below. The Advisory Board provides advice to the Board of Directors and senior management on an ad hoc basis. There are no formal rules or procedures governing the Advisory Board. We paid members of the Advisory Board a one-time share-based payment vested over a period of three years when they first joined the Advisory Board. Additional compensation after joining the Advisory Board may be made at the discretion of the Board of Directors. The names of the individuals who serve on the Advisory Board and a summary of their relevant experience and qualifications to serve the Company in such capacity are included below.
Chip Wilson
Chip Wilson is a Canadian businessman and philanthropist, who has founded several retail apparel companies, most notably yoga-inspired athletic apparel company Lululemon Athletica (NASDAQ: LULU). Wilson is widely considered to be the creator of the athleisure trend.
Harley Pasternak
As a fitness and nutrition specialist, Mr. Pasternak’s client roster includes Ariana Grande, Lady Gaga, Rihanna, Kim Kardashian, Halle Berry, Katy Perry, Megan Fox, Robert Downey Jr., Robert Pattinson, Adam Levine, Jessica Simpson, Charlie Puth, Gwen Stefani, Ke$ha, Hilary Duff and Jennifer Hudson. He currently stars on the E! channel’s Revenge Body with Khloe Kardashian, makes regular appearances as a fitness contributor to Good Morning America on ABC, and formerly starred on ABC’s The Revolution, and as a judge on Top Model. Mr. Pasternak has made worldwide speaking appearances in over 30 countries and is a bestselling fitness and diet author published in 14 languages in over 25 countries. He holds a Master of Science in Exercise Physiology and Nutritional Sciences from the University of Toronto and an Honors Degree in Kinesiology from University of Western Ontario. He is also certified by The American College of Sports Medicine and The Canadian Society of Exercise Physiology, and served as an exercise and nutrition scientist for Canada’s Department of National Defense.
Edward Safarik
Mr. Safarik is a Member in good standing of the Law Society of British Columbia and former Founder, President and CEO of Ocean Fisheries Limited. Mr. Safarik offers extensive past board experience including six year board member of Genome BC, Chairman of the Fisheries Counsel of Canada, Co-chair of the Food Agriculture/Fisheries Initiative on Sustainable Economic Fisheries, Founder and Chairman of the Herring Conservation & Research Society of BC (HCRS), and a member of the Pacific Scientific Advice Review Committee (PSARC) and the Herring Industry Advisory Board (HIAB).
Dr. Azim Jamal
Dr. Jamal is the chief executive officer and co-founder of Pacific Reach, established in 2014, and is responsible for leading all business activities for that company. He is a respected industry leader who has extensive experience overseeing a diverse portfolio of business investments including hotels, commercial properties and seniors care communities. For over 20 years, Dr. Jamal was the president and chief executive officer of Retirement Concepts. Over that time, he grew that company from two small seniors care communities in Chilliwack and Victoria to 25 communities across British Columbia, Alberta and Quebec, making Retirement Concepts one of the largest and most respected seniors care companies in Canada. In 2004, Dr. Jamal purchased the Sheraton Vancouver Guildford to diversify Pacific Reach’s portfolio into alternative classes of real estate. This portfolio is now consolidated under the Pacific Reach banner and includes hotel properties such as the iconic Rosewood Hotel Georgia, multifamily and office assets located in Vancouver, Toronto, Los Angeles and Phoenix. Most recently, Dr. Jamal has joined the board of directors at a television production company, Thunderbird Studios.
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Dr. Jamal is a former family physician who graduated as a medical doctor from the University of British Columbia in 1994. After practicing as a family physician in Greater Vancouver, Dr. Jamal went on to found Dermal Laser Centers — a chain of medical aesthetic clinics, which he subsequently sold. He is a member of the Young Presidents’ Organization in Vancouver, B.C., a recipient of the Ernst & Young Entrepreneur of the Year Award and a winner of the Business in Vancouver Top 40 Under 40 Outstanding Achievement Award.
Elfi Daniel-Ivad
Ms. Daniel-Ivad formally served as Head of Submissions, Regulatory at Eurofins Experchem Laboratories Inc. In this role, she led a team of regulatory professionals in the development of regulatory submission strategies for NHPs, OTC drugs, cosmetics, medical devices, food products, site licenses, medical establishment licenses and applicants to become licensed producers and dealers of federally controlled substances.
Harrison Newlands
Mr. Newlands has extensive experience in business development and corporate strategy of high growth companies and has led numerous strategic initiatives such as mergers and acquisitions, private and public company fund raises, as well as developing and executing growth strategies across North America. He is skilled in entrepreneurship, business development, corporate strategy, venture capital and capital markets. Mr. Newlands is a partner at North King Capital.
Regulatory Environment
Controlled Substances
The psychoactive substances, psilocybin, psilocin, and MDMA are controlled in Canada under the CDSA and associated regulations in addition to being subject to the FD Act. The CDSA is the federal statute that provides a framework for the control of substances that can alter mental processes and may produce harm to health or society when diverted to an illegal market or misused. Unless otherwise authorized by regulations or exempted in accordance with section 56, the trafficking, possession for the purposes of trafficking, import, export, and production of all controlled substances and possession of controlled substances listed in Schedules I through III are prohibited.
The Precursor Control Regulations, SOR/2002-359 (“PCR”) sets out a framework within which activities with precursor chemicals are regulated. Under the PCR, a license is required for any person to produce, package, sell, provide, import, export, and possess for the purpose of export Class A precursors, and a registration is required for any person to produce for the purpose of sale, import and export Class B precursors. The PCR also specify record keeping, security and reporting requirements for licensed or registered dealers.
We currently hold a Precursor Licence issued by Health Canada for 3,4-Methylenedioxyphenyl-2-propanone (a Class A precursor), the precursor chemical used in the synthesis Methylenedioxymethamphetamine, more commonly known as MDMA. This Precursor Licence permits us to import 3,4-Methylenedioxyphenyl-2- propanone.
In addition, we currently hold the Dealer’s Licence issued by Health Canada under the CDSA which authorizes us to possess, produce, assemble, sell, and deliver psilocybin, psilocin and MDMA within the regulated framework set forth by Health Canada and the terms of the license itself. The Dealer’s Licence allows Optimi Labs to possess up to 20 kg of psilocybin and 200 g of psilocin (which is estimated to be equal to approximately 2000 kg of dried full-body psilocybin-containing mushrooms) and 2kg of MDMA. Optimi Labs has submitted and received approval for an additional 16 psychedelic substances providing opportunity for us to pursue research opportunities and clinical trial supply as opportunities arise.
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Drugs for Export
Prior to December 8, 2022, it was possible for manufacturers of drugs for export only to invoke section 37 of the FD Act and thereby avoid most Canadian requirements imposed by the FD Act and the Food and Drug Regulations thereunder, including in relation to a DEL. However regulatory changes meant that as of December 8, 2022, many of the provisions of the FDR are prescribed under Section 37 of the FD Act, including the requirements of Division 1A of Part C. This part imposes requirements for exporter of a drug product to another country – which is considered a sale in Canada. As such, to export a drug, a DEL that authorizes the sale of the drug in Canada is required. We undertook the process to obtain the DEL in 2023 and was awarded the DEL in 2024. This regulatory change allows Canada to meet its international obligations in ensuring that “export only” drugs still meet the high standards of GMP which protect human health.
The DEL confirms that our Canadian facilities conform to Health Canada’s GMP compliance standards. The DEL differentiates us from other psychedelic manufacturers in the space and enables us to provide competitively priced products for human therapeutic use within the GMP psychedelics market. The DEL allows us flexibility to adapt to international licensing demands and changes in legislation and also gives our clients and patients assurance of a fully GMP product. Canadian companies without a DEL may not be issued export permits to supply Australia or other countries where a market is established.
Australia’s Authorised Prescribers Scheme allows authorized psychiatrists in Australia to prescribe MDMA assisted therapy for patients suffering from PTSD and Psilocybin Assisted therapy for patients suffering from TRD. Australia has published quality standards for both APIs and drug products that are prescribed under the Scheme—Therapeutic Goods (Standard for Psilocybine) (TGO 113) Order 2024 and Therapeutic Goods (Standard for MDMA) (TGO 112) Order 2024 and prescribers are responsible to ensure their supply chain conforms to these requirements. We have updated the product specifications, where required, to conform to the orders.
See “Risk Factors- Risks Related to Government Regulations” for more information on the various regulatory risks we face.
Market for Products
Australian Total Addressable Market (TAM) and Production Capacity Overview
Australia has emerged as one of the first regulated jurisdictions globally for psychedelic-assisted therapies following the July 1, 2023 rescheduling of MDMA and psilocybin for prescription use in treatment-resistant patients under the Authorised Prescribers Scheme. We believe that Australia’s early adoption of regulated psychedelic therapies, combined with our scalable GMP manufacturing operations, provides us with a first-mover advantage in capturing meaningful patient volume, generating near-term revenue and validating products in real-world clinical environments. We are strategically positioned to address a significant portion of this early-stage market through our existing manufacturing capabilities.
MDMA-Assisted Therapy for PTSD
According to the Australian Bureau of Statistics, an estimated 5.7% of Australians aged 16–85 experience PTSD within a 12-month period, equating to approximately 1.48 million individuals nationwide. Taking a conservative estimated prevalence of PTSD among Australian adults of approximately 5%, results in an approximate addressable market of approximately 1,000,000 individuals nationwide. Standard treatment protocols for MDMA-assisted psychotherapy typically involve three treatment sessions, each requiring an approximate dose of 160mg of MDMA. Based on this protocol, each patient requires approximately nine capsules per course of therapy (comprising six 60mg capsules and three 40mg capsules).
For a 1,000,000-patient PTSD population, the total capsule demand would equate to approximately 9,000,000 capsules per year.
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Psilocybin-Assisted Therapy for Treatment Resistant Depression (TRD)
In parallel, Australia’s rescheduling of psilocybin enables the prescription of psilocybin-assisted therapy for patients suffering from TRD. According to Royal Australian College of Practitioners, the estimated TRD patient population in Australia is approximately 300,000 individuals, based on broader depression prevalence rates and the expected 30% of cases classified as treatment-resistant.
A standard psilocybin therapy protocol typically involves two treatment sessions, each utilizing a 25mg dose. Based on our 5mg capsule format, each patient would require approximately ten capsules for a complete treatment course.
To fully service the 300,000-patient TRD market, approximately 3,000,000 5mg capsules would be required.
Separately, per ScienceDirect and the Royal Australian College of General Practitioners, based on an approximate depression prevalence rate of 5.9% (approximately 1.3 million Australians) and established clinical estimates that approximately 30% of patients with depression are treatment-resistant, the TRD population in Australia is estimated at approximately 390,000 individuals.
United States Total Addressable Market (TAM) and Production Capacity Overview
In the United States, based on current production levels, we believe we can supply up to 100,000 PTSD patients (36,000g – 54,000g of MDMA) with MDMA therapy and 200,000 TRD (10,000g – 15,000g of psilocybin) patients with psilocybin therapy annually. As regulatory frameworks evolve, our scalable production platform, early GMP infrastructure and global export readiness position us to expand market share and revenue across multiple jurisdictions.
In the United States, the rescheduling of MDMA and psilocybin would be expected to catalyze the formation of a regulated commercial market for psychedelic-assisted therapies. Both substances have been part of therapies which have historically received Breakthrough Therapy Designation from the U.S. Food and Drug Administration, and multiple late-stage trials are progressing toward New Drug Application (“NDA”) submissions. Our GMP infrastructure, FDA drug establishment registration (FEI) and U.S. Agent designation (mdi Consultants, Inc.) will enable lawful cross-border positioning in advance of DEA rescheduling or controlled access frameworks.
According to the National Institute of Mental Health, approximately 3.6% of U.S. adults experience PTSD in a given year, equating to an estimated 12.3 million individuals. Existing first-line therapies, including SSRIs and trauma-focused psychotherapies, exhibit limited efficacy in a meaningful subset of patients. MDMA-assisted psychotherapy has emerged from Phase 3 trials as a credible potential alternative, with durable clinical response rates exceeding those of conventional pharmacologic treatments.
For TRD, clinical literature indicates that approximately 30.9% of individuals diagnosed with Major Depressive Disorder (MDD) are considered treatment-resistant. With MDD affecting approximately 28.3 million U.S. adults annually (8.3% of the adult population), the estimated TRD patient population is approximately 8.7 million individuals. Psilocybin, currently under investigation in multi-site Phase 3 trials, has demonstrated rapid-onset and durable responses in TRD populations. These figures define the U.S. total addressable patient base across two distinct but adjacent indications.
A standard MDMA-assisted therapy protocol for PTSD involves three sessions, with an average dose of 160mg per session, totaling approximately 480mg per patient across the full course of treatment. Using a capsule formulation of 60mg and 40mg doses, this equates to roughly nine capsules per patient (six 60mg + three 40mg). To treat the entire U.S. PTSD patient population, an estimated 110.7 million capsules would be required (12.3 million × 9).
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Similarly, for psilocybin, a standard TRD treatment protocol typically involves two 25mg sessions, totaling 50mg per patient. In our current 5mg capsule format, this corresponds to 10 capsules per patient. Based on an estimated TRD population of 8.7 million individuals, full national demand would require approximately 87 million capsules annually.
The United States represents a strategically critical and commercially significant jurisdiction for psychedelic-assisted therapies, particularly those targeting PTSD and TRD. With high prevalence rates, persistent treatment gaps, and expanding regulatory openness toward novel therapeutics, the U.S. market is positioned to become the largest global demand center for MDMA- and psilocybin-based interventions. By virtue of our regulatory footprint, current production capabilities, and strategic infrastructure, we believe we are equipped to engage in early-stage cross-border supply and to scale participation as regulatory, policy and clinical frameworks evolve.
Regulatory Status and U.S. Entry Pathway
We hold a valid DEL issued by Health Canada, authorizing the GMP-compliant manufacture, testing, and release of controlled substances. In addition, we are registered with the FDA and have been issued a Facility Establishment Identifier (“FEI”) number, formally recognizing its presence within the FDA Drug Registration and Listing System. This registration and future successful FDA inspection will enable the lawful shipment of active pharmaceutical ingredients and finished dosage forms into the United States for approved use by authorized institutions under applicable investigational or expanded access frameworks.
Pursuant to 21 C.F.R. § 207.69, we have appointed mdi Consultants, Inc. as our designated U.S. Agent. mdi Consultants, Inc. is responsible for interfacing with the FDA on our behalf, including for purposes of facility inspection coordination, document submission, and compliance communications. These elements—FDA registration, FEI assignment, and U.S. Agent appointment—form the required regulatory architecture for future lawful foreign manufacturer participation in the U.S. supply chain.
Both MDMA and psilocybin have been part of therapies which have historically received Breakthrough Therapy Designation from the FDA, entitling such therapies to expedited regulatory review. MDMA is expected to be re-submitted for New Drug Application (“NDA”) approval in upon successful completion of Resilient Pharmaceuticals, Inc.’s (formerly known as Lykos Therapeutics) Phase 3 clinical trial, with psilocybin to follow on a similar trajectory upon the Completion of Compass Pathways phase 3 clinical trials. In the event of FDA approval of NDAs related to therapies involving psilocybin and/or MDMA, such potential approvals may prompt rescheduling by the DEA under the Controlled Substances Act. Upon rescheduling, we will be able to pursue expanded commercial supply arrangements with licensed U.S. distributors, prescribers, and healthcare institutions.
Current Production Capacity
Under our GMP infrastructure, we currently have the capacity to support:
| • | Up to 100,000 PTSD (36,000g – 54,000g) patients annually with encapsulated MDMA, based on clinical protocols calling for three administration sessions per patient, totaling 360–540 mg per course; and |
| • | Up to 200,000 TRD (10,000g-15,000g) patients annually with psilocybin, assuming 50-75 mg per patient administered over two-three controlled sessions. |
These capacity figures are supported by completed release testing, validated stability data and observed production yields from active export orders fulfilled under the Australian Authorised Prescriber scheme. Our facility maintains validated SOPs for weighing, encapsulation, environmental control, and packaging, all operated in compliance with GMP standards set forth by Health Canada and internationally recognized under PIC/S.
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Strategic Positioning in the U.S. Market
We are one of the only vertically integrated psychedelic manufacturers globally that currently meets the following three criteria for entering the U.S. market: (i) regulatory clearance to manufacture controlled substances under a DL and DEL in Canada; (ii) FDA drug establishment registration and an assigned FEI number; and (iii) formal representation by a qualified U.S. Agent. These attributes will allow us in the future to be able to:
| • | Export MDMA and psilocybin into the United States for approved clinical research and investigational use; |
| • | Support authorized prescriber programs in other jurisdictions (e.g., Australia) while generating real-world data that will inform future U.S. payer and regulatory engagement; and |
| • | Expand capacity in alignment with U.S. market demand without dependence on third-party manufacturing. |
This capacity represents a first-mover foothold in a market where the majority of companies remain in pre-revenue clinical phases and lack commercial production authorization.
With a regulatory framework that meets Health Canada requirements, a validated GMP facility, and a track record of commercial exports to authorized jurisdictions, we believe we are better positioned among our peer group to support early-stage entry into the United States. The combination of licensed production in other jurisdictions, cross-border readiness, and scalable output defines a credible platform for participation in what may become the world’s largest regulated psychedelic therapy market.
Competitive Conditions
| Company |
Market Position |
Regulatory Status |
Revenue Model | Challenges | ||||
| Optimi Health | Currently in-market | GMP-certified, DEL holder | Prescription sales, research supply, lab services |
Scaling production, U.S. market entry | ||||
| Company A | Drug developer | Phase 3 trials, no market sales | R&D, future prescription sales |
High burn rate, uncertain approval timeline | ||||
| Company B | Drug developer & incubator | Multiple pre-market R&D projects | Investments, drug trials |
Expensive clinical trials, no revenues | ||||
| Company C | Research & development | Phase 2 trials for LSD & MDMA analogs | R&D, future sales |
No market-ready product | ||||
Currently, there are high barriers to entry into the market for pharmaceutical drug manufacturing of controlled substances such as MDMA and botanical psilocybin. High regulatory standards and rigorous compliance requirements limit new entrants. The high cost and complexity of manufacturing GMP-certified controlled substances presents an additional hurdle for companies seeking into our market. Further, our intellectual property, formulation expertise and strategic partnerships create a barrier around us from competitors.
Future Developments
We believe we are strategically positioned to supply pharmaceutical-grade MDMA and psilocybin capsules to regulated treatment providers in the United States immediately following rescheduling and FDA approval events.
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We intend to prepare for full abbreviated new drug application (“ANDA”) filings to access broader generic market channels post-exclusivity. This dual-pathway strategy enables both early revenue generation and long-term commercial positioning within the emerging psychedelic therapeutics sector.
Strategic Pathway to Generic MDMA and Psilocybin Supply Post-Rescheduling
Before we may supply MDMA or psilocybin into the United States market, two regulatory events must occur: (i) MDMA and/or psilocybin must be rescheduled from Schedule I to a lower schedule (e.g., Schedule II or III) under the Controlled Substances Act, and (ii) the FDA must approve an innovator-branded version of the compound, such as the products under development by Resilient Pharmaceuticals, Inc. (formerly known as Lykos Therapeutics) or Compass Pathways Plc. Following FDA approval, the innovator product would be listed as a Reference Listed Drug (“RLD”) in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”). Upon the occurrence of both events, lawful prescription, manufacturing, and distribution activities would be permissible in the United States under federal law within certain regulatory constraints.
Immediate Supply Pathway
Following rescheduling and FDA approval of a branded product and we obtain and maintain (i) a partnership with a third-party holding a DEA-licensed drug manufacturing establishment, (ii) an FDA Establishment Identifier (FEI) number, and (iii) compliance with current Good Manufacturing Practices (cGMP), we would be positioned to supply capsules into the United States market independently of formal ANDA pathways. Though we would not promote or commercialize products for off-label use, off-label prescribing by licensed physicians in the United States is lawful and does not require additional FDA approvals. Pharmacies, clinics, and treatment providers may procure substances that meet quality and controlled substance requirements from licensed manufacturers. Under this framework, we would not promote off-label uses but would lawfully supply capsules that meet all applicable DEA and FDA standards. We believe this pathway would enable early revenue generation concurrent with the clinical adoption of psychedelic-assisted therapies.
Mid-Term Pathway – ANDA Submission for Generic Drug Approval
Following expiration of marketing exclusivity periods applicable to the RLD (typically five years for new chemical entities), we intend to prepare and submit one or more ANDAs referencing the approved MDMA or psilocybin products. ANDA submissions would require us to demonstrate bioequivalence to the RLD and submit complete chemistry, manufacturing, and controls (CMC) data, stability data, and labeling materials. Approval of an ANDA would permit broader commercial distribution within the formal generic pharmaceutical supply chain, including access to formulary listings, insurance reimbursement, and pharmacy distribution channels.
Impact of Marketing Exclusivity and Market Exclusivity
Marketing exclusivity refers to regulatory protections awarded to an innovator product following FDA approval that prevent the FDA from accepting or approving competing ANDA submissions for a defined period. Typical exclusivity periods for new chemical entities extend five years. Market exclusivity, by contrast, reflects practical commercial dominance achieved through branding, payer contracts, and clinical adoption independent of regulatory protections. While marketing exclusivity bars generic approval through an ANDA for a limited time, it does not prevent DEA-licensed partners from supplying the same active pharmaceutical ingredients under lawful off-label frameworks, subject to compliance with federal controlled substance laws.
Key Regulatory and Commercial Considerations
Our ability to supply MDMA and psilocybin capsules would require strict compliance with Health Canada manufacturing, recordkeeping, reporting and diversion control regulations and export into the U.S. would require
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compliance to the DEA requirement for import and other FDA requirements. While off-label prescribing is lawful under United States law, marketing for off-label indications is prohibited. Pricing pressures, reimbursement limitations, and physician adoption rates could impact early revenue realization. Any further rescheduling actions by the DEA and FDA that reclassify MDMA or psilocybin into less restrictive schedules could materially improve commercial access and market penetration opportunities. Patent protections held by the innovator sponsors could delay generic ANDA approvals but would not prevent us from manufacturing and supplying separate non-infringing formulations for lawful use.
Properties
We are headquartered in Princeton, British Columbia. The following table sets forth the location, approximate size, primary use and lease term of our leased Industrial Land as of December 31, 2025.
| Location |
Approximately Size in Square Meters |
Primary use |
Lease term | |||||||
| Princeton, B.C. |
1,858 | Cultivation and processing facilities and office | July 1, 2025 – June 30, 2030 | |||||||
Legal Proceedings
We are currently not party to any material legal or arbitration proceedings, which may have, or have had in the recent past, significant effects on our financial position or profitability.
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Directors and Executive Officers
The following table sets forth certain information regarding our directors and executive officers as of the date of this prospectus. Unless otherwise stated, the business address of our directors and executive officers is our principal executive offices at 269 David Brown Way, Princeton, British Columbia, V0X 1W0.
| NAME |
AGE |
POSITION | ||
| Dane Stevens | 37 | Chief Executive Officer, Chief Marketing Officer and Director | ||
| Jacob Safarik | 38 | Interim Chief Financial Officer and Director | ||
| Bryan Safarik | 40 | Chief Operating Officer and Director | ||
| John James Wilson | 37 | Chairman | ||
| Jason Mosberian |
39 |
Independent Director |
Dane Stevens
Mr. Stevens has served as our Chief Executive Officer since October 2024 and our Chief Marketing Officer and Director since May 2020. Mr. Stevens is an entrepreneur with 18 years of experience in product sourcing, development, management, manufacturing, and quality control, he is the founder of multiple successful wholesale and direct-to-consumer jewelry businesses, including Cavalier Jewelers Limited (“Cavalier Jewelers”). He developed an integral understanding of effective sourcing and reliable distribution by vertically integrating all areas of the jewelry supply chain. To ensure product quality and viability, Mr. Stevens guided the growth of operations internationally throughout South America and Asia, setting up partnership offices to source gemstones and diamonds directly. Mr. Stevens’ experience in digitalizing, modernizing, and operating in today’s retail landscape allowed Cavalier Jewelers to achieve year-over- year growth, both online and in-person, in a highly competitive business arena.
Jacob Safarik
Mr. Safarik has served as our Chief Financial Officer and Director since May 2020. He is currently our Interim Chief Financial Officer. Mr. Safarik has over 16 years of experience in accounting, project finance, business development and quality assurance. He graduated from McGill University with a Bachelor of Commerce degree and is a Chartered Professional Accountant. Mr. Safarik is also a co-founder of BC Green and currently serves as its Chief Financial Officer.
Bryan Safarik
Mr. Safarik has served as our Chief Operating Officer and Director since May 2020. Mr. Safarik has over 19 years of experience in senior management roles, and he is also the founder and president of a number of profitable private companies. Mr. Safarik’s experience highlights include developing operational efficiencies in Ocean Fisheries Ltd.’s fresh packing and canning facilities before most notably serving as Director of Marine Operations prior to the company’s sale to the Jim Pattison group, where he oversaw fishing operations, logistics and quota management. After assisting with the successful sale of Ocean Fisheries Ltd., he co-founded BC Green, where he currently serves as a director and President and Chief Operating Officer. Mr. Safarik received a Bachelor of Science degree from Wingate University. Mr. Safarik is an employee and provides services on a part time (50%) basis to the Company, or such greater or lesser amount of time as may be required.
John James Wilson
Mr. Wilson has served as our Chairman since May 2020. Mr. Wilson is the current Chief Executive Officer and Co-Founder of Ride Cycle Club, an indoor cycling studio with locations in Toronto and Vancouver, and a Partner
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at Very Polite Agency, an international integrated communications and creative agency, headquartered in Vancouver, B.C. Mr. Wilson is also the founder of Reyal Performance, a men’s performance skincare and supplements company headquartered in Vancouver, B.C. Mr. Wilson’s previous experience includes leading the international expansion of the apparel brand Kit and Ace, in addition to developing the businesses’ brand, and e-commerce and retail platforms. Mr. Wilson now focuses on strategic growth initiatives and development for his operating companies, in addition to independent strategic investments and philanthropy.
Jason Mosberian
Mr. Mosberian has served as our independent director since December 2025. Mr. Mosberian graduated from the Sauder School of Business at the University of British Columbia and earned his CPA designation in 2011 working in audit in public practice for six years. He currently serves as Senior Vice President at BFL Canada and has over a decade of experience providing tailored risk management and insurance solutions to clients in various industries, including manufacturing, distribution and life sciences.
The Company has previously engaged BFL Canada as a broker for its purchase of director and officer insurance products. Mr. Mosberian’s title of Senior Vice President is related to his division specifically, namely the Construction Department in Vancouver. Mr. Mosberian was not involved with the Company’s file and will not be involved with the Company’s file at BFL Canada.
Relationships Among Officers and Directors
Jacob Safarik, our Interim Chief Financial Officer and Director, is the brother of Bryan Safarik, our Chief Operating Officer and Director. There are no other family relationships among our officers and directors.
Employment Arrangements
Compensation of Dane Stevens
We have an arrangement with Dane Stevens with an effective date of April 1, 2021, as approved by the Board on May 6, 2021 (the “Stevens Agreement”), pursuant to which Mr. Stevens provides his services to the Company. In consideration for his services, Mr. Stevens receives an annual salary of C$75,000 and may be awarded cash or share bonuses.
Compensation of Jacob Safarik
We entered into an employment agreement with Jacob Safarik dated as of July 2, 2021, confirming the compensation arrangement effective as of April 1, 2021, and as amended on August 1, 2023, pursuant to which Mr. Safarik provides his services as Interim Chief Financial Officer of the Company (the “Jacob Safarik Agreement”). In consideration for his services, Mr. Safarik receives an annual salary of C$150,000; is eligible for bonus or incentive payments at the discretion of the Board; is entitled to participate in the Equity Plan; the reimbursement of professional fees, dues and reasonable business expenses; four weeks’ vacation each calendar year; and reimbursement of up to 50% of insured life and health benefits, such benefits to be reasonable and to commensurate with market comparatives for his position. The Company may terminate the Jacob Safarik Agreement at any time and without any notice of termination for just cause. The Company may terminate the Jacob Safarik Agreement without just cause by providing the greater of: (i) the minimum amount of notice of termination or pay in lieu of notice of termination as required by the applicable employment standards legislation; or (ii) three (3) months of pay in lieu of notice of termination. Mr. Safarik may resign his employment at any time by providing the Company with two (2) weeks written notice of resignation, in which case the Company may elect, in its sole discretion, to direct Mr. Safarik not to attend at work for any portion of the notice period in which case the Company’s sole obligation will be to continue Mr. Safarik’s salary during the shorter of the balance of the notice period provided by Mr. Safarik and the minimum notice of termination required by the applicable employment standards legislation.
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Compensation of Bryan Safarik
We entered into an employment agreement with Bryan Safarik dated as of July 2, 2021, confirming the compensation arrangement effective as of April 1, 2021, and as amended on August 1, 2023, pursuant to which Mr. Safarik provides his services as Chief Operating Officer of the Company (the “Bryan Safarik Agreement”). In consideration for his services, Mr. Safarik receives an annual salary of C$150,000; is eligible for bonus or incentive payments at the discretion of the Board; is entitled to participate in the Equity Plan; the reimbursement of professional fees, dues and reasonable business expenses; four weeks’ vacation each calendar year; and reimbursement of up to 50% of insured life and health benefits, such benefits to be reasonable and to commensurate with market comparatives for his position. The Company may terminate the Bryan Safarik Agreement at any time and without any notice of termination for just cause. The Company may terminate the Bryan Safarik Agreement without just cause by providing the greater of: (i) the minimum amount of notice of termination or pay in lieu of notice of termination as required by the applicable employment standards legislation; or (ii) three (3) months of pay in lieu of notice of termination. Mr. Safarik may resign his employment at any time by providing the Company with two (2) weeks written notice of resignation, in which case the Company may elect, in its sole discretion, to direct Mr. Safarik not to attend at work for any portion of the notice period in which case the Company’s sole obligation will be to continue Mr. Safarik’s salary during the shorter of the balance of the notice period provided by Mr. Safarik and the minimum notice of termination required by the applicable employment standards legislation.
Clawback Policy
We have adopted a compensation recovery policy that is compliant with Nasdaq listing rules as required by the Dodd-Frank Act.
Board of Directors
Our Board of Directors consists of five directors, including one independent director, namely Jason Mosberian. A director is not required to hold any of our common shares to qualify to serve as a director. The listing rules of the Nasdaq Stock Market, LLC (the “Nasdaq Listing Rules”) generally require that a majority of an issuer’s board of directors must consist of independent directors. However, the rules permit foreign private issuers like us to follow “home country practice” in certain corporate governance matters. We rely on this “home country practice” exception and do not have a majority of independent directors serving on our Board of Directors.
A director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with our company is required to declare the nature of his interest at a meeting of our directors. A director may vote in respect of any contract, proposed contract, or arrangement notwithstanding that he may be interested therein, and if he does so his vote shall be counted and he may be counted in the quorum at any meeting of our directors at which any such contract or proposed contract or arrangement is considered.
Director Independence
The Board has elected to evaluate the independence of each director in accordance with the Nasdaq Listing Rules. Prior to this offering, the Company’s common shares were not listed on any Nasdaq market, and, as such, the Company is not currently, and has not previously been, subject to regulation or oversight by Nasdaq. The discussion below regarding independence uses the Nasdaq Listing Rules solely for disclosure purposes herein regarding director independence and committee composition. The Nasdaq definition of “independence” includes a series of objective tests, such as the director or director nominee is not, and was not during the last three years, an employee of the Company and has not received certain payments from, or engaged in various types of business dealings with, the Company. In addition, as further required by the Nasdaq Listing Rules, the Board has made a subjective determination as to each independent director that no relationships exist which, in the opinion of the Board, would interfere with such individual’s exercise of independent judgment in carrying out his
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responsibilities as a director. In making these determinations, the Board reviewed and discussed information provided by the directors with regard to each director’s business and personal activities as they may relate to Company and its management, including the beneficial ownership of our share capital by each non-employee director and any transactions with the Company involving them. As a result, the Board has affirmatively determined that Jason Mosberian is independent in accordance with the Nasdaq Listing Rules.
Board Committees
We have established an audit committee and a compensation committee of our Board of Directors. We have adopted a charter for each of the committees, which will be available on our website. Each committee’s members and functions are described below.
Audit Committee
Our audit committee consists of three directors, namely, Jason Mosberian, John James Wilson and Dane Stevens. We have determined that Jason Mosberian satisfies the “independence” requirements of Section 5605(c)(2) of the Nasdaq Listing Rules. We are relying on the phase-in exemption permitted under Nasdaq listing rules for the requirement of a fully independent audit committee. Jason Mosberian is the chairperson of our audit committee. We have also determined that Jason Mosberian qualifies as an “audit committee financial expert” within the meaning of the applicable rules and regulations of the SEC.
The audit committee oversees our accounting and financial reporting processes and the audits of our financial statements. The audit committee is responsible for, among other things:
| • | appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; |
| • | reviewing with the independent auditors any audit problems or difficulties and management’s response; |
| • | discussing the annual audited financial statements with management and the independent auditors; |
| • | reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; |
| • | reviewing and approving all proposed related party transactions; |
| • | meeting separately and periodically with management and the independent auditors; and |
| • | monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. |
Compensation Committee
Our compensation committee consists of three directors, namely, Jason Mosberian, John James Wilson and Jacob Safarik. We have determined that Jason Mosberian satisfies the “independence” requirements of Section 5605(c)(2) of the Nasdaq Listing Rules. Jason Mosberian is the chairperson of our compensation committee.
Because we are a “foreign private issuer” under the corporate governance rules of the Nasdaq Capital Market, we are not required to have a compensation committee and our compensation committee is not required to be fully independent, although if such rules change in the future or we no longer meet the definition of a foreign private issuer under the current rules, we will adjust the composition of the compensation committee accordingly in order to comply with such rules.
Our compensation committee assists the Board of Directors in discharging its responsibilities with respect to setting director and senior executive compensation and assessing and making recommendations to the Board
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regarding certain compensation related matters as delegated by the Board of Directors. The objective of the Board of Directors in setting compensation levels is to attract and retain individuals of high caliber to serve the Company, to motivate their performance in order to achieve the Company’s strategic objectives and to align the interests of the executive officers with the long-term interests of the shareholders. These objectives are designed to ensure that the Company’s business continues to grow and develop.
The Board of Directors sets the compensation received by the executive officers so as to be generally competitive with the compensation received by persons with similar qualifications and responsibilities who are engaged by other companies of corresponding size and stage of development, asset bases, number of employees and market capitalization. The Board has considered a number of peer group companies active in the mushroom, indoor cultivation and consumer products groups in determining compensation.
Compensation of Directors and Officers
We pay each of our independent directors a cash retainer of C$36,000 per year, with an additional cash retainer of C$129,000 per year to the Non-Executive Chair of the Board. In addition, the members of each committee of the Board receive a cash fee of C$1,000 per Audit Committee or Compensation Committee meeting. The independent directors are also eligible for equity-based compensation at the discretion of the Board.
Our directors do not have service contracts with us relating to their position as a director that provide for benefits upon termination of their position as a member of the Board.
The following tables sets forth all compensation paid or accrued, payable, awarded, granted, given or otherwise provided, directly or indirectly, by the Company or any subsidiary thereof, to each executive officer and director of the Company, for each of the two most recently completed fiscal years ended September 30, 2025 and 2024.
| Table of compensation excluding compensation securities |
||||||||||||||||||||||||||||
| Name and position |
Year | Salary, consulting fee, retainer or commission (C$) |
Bonus (C$) |
Committee or meeting fees (C$) |
Value of perquisites (C$) |
Value of all other compensation (C$) |
Total compensation (C$) |
|||||||||||||||||||||
| CIPRICK, William Former Chief Executive Officer |
2025 | 17,234 | Nil | Nil | Nil | Nil | 17,234 | |||||||||||||||||||||
| 2024 | 350,000 | Nil | Nil | Nil | Nil | 350,000 | ||||||||||||||||||||||
| SAFARIK, Jacob Interim Chief Financial Officer and Director |
2025 | 150,000 | Nil | Nil | Nil | Nil | 150,000 | |||||||||||||||||||||
| 2024 | 150,000 | Nil | 1,000 | Nil | Nil | 151,000 | ||||||||||||||||||||||
| SAFARIK, Bryan Chief Operating Officer and Director |
2025 | 150,000 | Nil | Nil | Nil | Nil | 150,000 | |||||||||||||||||||||
| 2024 | 150,000 | Nil | Nil | Nil | Nil | 151,000 | ||||||||||||||||||||||
| STEVENS, Dane Chief Executive Officer, Chief Marketing Officer and Director |
2025 | 75,000 | Nil | Nil | Nil | Nil | 75,000 | |||||||||||||||||||||
| 2024 | 75,000 | Nil | 2,000 | Nil | Nil | 77,000 | ||||||||||||||||||||||
| WILSON, John James Director |
2025 | 165,000 | Nil | Nil | Nil | Nil | 165,000 | |||||||||||||||||||||
| 2024 | 165,000 | Nil | 3,000 | Nil | Nil | 168,000 | ||||||||||||||||||||||
| SCHINTLER, Jonathan Former Director |
2025 | 36,000 | Nil | Nil | Nil | Nil | 36,000 | |||||||||||||||||||||
| 2024 | 36,000 | Nil | 4,000 | Nil | Nil | 40,000 | ||||||||||||||||||||||
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| Exercise of Compensation Securities | ||||||||
| Name and position |
Type of compensation security |
Number of underlying securities exercised |
Date of exercise | |||||
| STEVENS, Dane Chief Executive Officer, Chief Marketing Officer and Director |
Restricted Share Rights | |
525 525 |
|
November 6, 2023 May 6, 2024 | |||
| SAFARIK, Jacob Interim Chief Financial Officer and Director |
Restricted Share Rights | |
525 525 |
|
November 6, 2023 May 6, 2024 | |||
| SAFARIK, Bryan Chief Operating Officer and Director |
Restricted Share Rights | |
525 525 |
|
November 6, 2023 May 6, 2024 | |||
| WILSON, John James Director |
Restricted Share Rights | |
525 525 |
|
November 6, 2023 May 6, 2024 | |||
| SCHINTLER, Jonathan Former Director |
Restricted Share Rights | |
525 525 |
|
November 6, 2023 May 6, 2024 | |||
Share Option Plans and Other Incentive Plans
The following is a summary of our equity incentive plan (the “Equity Plan”), which is the only incentive plan in place. The Equity Plan was adopted and approved by our shareholders on October 9, 2020, and ratified, adopted and re-approved at the annual general meetings held on September 8, 2025, February 22, 2024, January 9, 2023 and February 24, 2022. The aggregate number of Common Shares that may be subject to issuance under the Equity Plan, together with any other securities-based compensation arrangements of the Company, is not to exceed 15% of the Company’s issued and outstanding share capital from time to time.
The Equity Plan provides for the grant to eligible directors, officers, employees and consultants, of share options (each a “Share Option” or “Option”) and restricted share rights (each an “RSR”). The Equity Plan also provides for the grant to eligible directors of deferred share units (“DSU”) which the directors are entitled to redeem for 90 days following retirement or termination from the Board.
Share Options
The Equity Plan authorizes the Board to grant Share Options. The number of Common Shares, the exercise price per Common Share, the vesting period and any other terms and conditions of Options granted from time to time pursuant to the Equity Plan, are determined by the Board at the time of the grant, subject to the defined parameters of the Equity Plan. The date of grant for the Options is to be the date such grant was approved by the Board. The exercise price of any Option cannot be less than the closing market price of the Common Shares on (a) the trading day prior to the date of grant of the Option; and (b) the date of grant of the Option (the “Fair Market Value”). Options are generally exercisable for a period of five years from the date the Option is granted or such greater or lesser period as determined by the Board. Options may be earlier terminated in the event of death or termination of employment or appointment. Vesting of Options is determined by the Board. Failing to include a specific vesting determination by the Board, Options automatically become exercisable incrementally over a period of eighteen months from the date of grant, as to: (i) 25% of the total number of shares under Option immediately upon the date of grant; and (ii) at each six-month interval thereafter, an additional 25% of the total number of shares under Option such that after the eighteenth month of the Option period, 100% of the Options will be exercisable. The terms of a Share Option are not to be amended once issued and the expiry date of a Share Option is to be no more than 10 years from the date of grant of such Option.
RSR
The Equity Plan authorizes the Board to grant RSRs, in its sole and absolute discretion, to any eligible director, officer, consultant or employee. Each RSR provides the recipient with the right to receive Common Shares as a discretionary payment in consideration of past services or as an incentive for future services, subject to the
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Equity Plan and with such additional provisions and restrictions as the Board may determine. Each RSR grant is to be evidenced by a RSR grant letter which is subject to the terms of the Equity Plan and any other terms and conditions which the Board deems appropriate. Concurrent with the granting of the RSR, the Board determines the period of time during which the RSR is not vested and the holder of such RSR remains ineligible to receive Common Shares. Such period of time may be reduced or eliminated from time to time for any reason as determined by the Board. Once the RSR vests, the RSR is automatically settled through the issuance of an equivalent number of underlying Common Shares as RSRs held. Participants who are resident in Canada for the purposes of the Income Tax Act (Canada) may elect to defer some or all of any part of the Common Share grant until one or more later dates. In the event the participant retires or is terminated during the vesting period, any RSR held by the participant is terminated immediately, provided however that the Board shall have the absolute discretion to accelerate the vesting date. In the event of death or total disability, the vesting period shall accelerate and the Common Shares underlying the RSRs shall be issued.
DSU
The Equity Plan authorizes the Board to grant DSUs, in its sole and absolute discretion in a lump sum amount or on regular intervals to eligible directors. Each DSU grant is to be evidenced by a DSU grant letter which is subject to the terms of the Equity Plan and any other terms and conditions which the Board deems appropriate. The DSUs held by each eligible director who is not a U.S. taxpayer will be redeemed automatically and with no further action by the eligible director on the 20th business day following the date such director ceases to hold any directorship. The DSUs held by any eligible directors who are U.S. taxpayers will be automatically redeemed with no further action by such director on the date that is 6 months following the date such director ceases to hold any directorship, or if earlier, upon such director’s death. Upon redemption, the director is entitled to receive (subject to any share issuance limits in the Equity Plan), the number of Common Shares equal to the number of DSUs in the director’s account. If the director ceases to hold office during a year where DSUs have been granted in advanced of being earned and they have not held office for the entire year, the director will only be entitled to a pro-rated issuance of shares.
The following table summarizes, as of the date of this prospectus, the number of common shares under the equity awards that we granted to our directors and executive officers.
| Name and position |
Type of compensation security |
Number of compensation securities, number of underlying securities, and percentage of class |
Date of issue or grant |
Issue, conversion or exercise price (C$) |
Expiry date | |||||||||||||||
| STEVENS, Dane Chief Executive Officer, Chief Marketing Officer and Director |
|
Share Options |
|
|
11,667 |
|
|
May 6, 2021 |
|
$ |
45.00 |
|
|
May 6, 2026 |
| |||||
| SAFARIK, Jacob Interim Chief Financial Officer and Director |
|
Share Options |
|
|
11,667 |
|
|
May 6, 2021 |
|
$ |
45.00 |
|
|
May 6, 2026 |
| |||||
| SAFARIK, Bryan Chief Operating Officer and Director |
|
Share Options |
|
|
11,667 |
|
|
May 6, 2021 |
|
$ |
45.00 |
|
|
May 6, 2026 |
| |||||
| WILSON, John James Director |
|
Share Options |
|
|
11,667 |
|
|
May 6, 2021 |
|
$ |
45.00 |
|
|
May 6, 2026 |
| |||||
| Jason Mosberian Director |
|
Share Options RSRs |
|
|
11,667 2,625 |
|
|
January 15, 2026 January 15, 2026 |
|
$
|
15.00 N/A |
|
|
January 15, 2031 January 15, 2029 |
| |||||
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Pension Disclosure
We do not have any defined benefit or defined contribution pension plans in place which provide for payments or benefits at, following, or in connection with retirement of its directors or executive officers.
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The following table sets forth information with respect to the beneficial ownership of the common shares as of the date of this prospectus by (i) each of our directors and executive officers; (ii) all of our directors and executive officers as a group; and (iii) each person known to us to own beneficially more than 5% of the common shares.
The calculations in the table below are based on 3,225,897 common shares outstanding as of the date of this prospectus and 5,725,899 common shares outstanding immediately after the completion of this offering (assuming the underwriter does not exercise its over-allotment option and no exercise of any warrants issued in this offering).
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant, or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.
Unless otherwise indicated, the business address of each of the individuals below is 269 David Brown Way, Princeton, British Columbia, V0X 1W0.
| Common Shares Beneficially Owned Prior to This Offering |
Common Shares Beneficially Owned Immediately After This Offering |
|||||||||||||||
| Number | Percent of Class(1) | Number | Percent of Class(1) | |||||||||||||
| Directors and Executive Officers: |
||||||||||||||||
| Dane Stevens(2) |
456,626 | 14.2 | 456,626 | 8.0 | ||||||||||||
| Jacob Safarik(3) |
115,304 | 3.6 | 115,304 | 2.0 | ||||||||||||
| Bryan Safarik(4) |
126,647 | 3.9 | 126,647 | 2.2 | ||||||||||||
| John James Wilson(5) |
327,083 | 10.1 | 327,083 | 5.7 | ||||||||||||
| Jason Mosberian(6) |
12,542 | 0.4 | 12,542 | 0.2 | ||||||||||||
| All directors and executive officers as a group |
1,038,202 | 32.2 | 1,038,202 | 18.1 | ||||||||||||
| Principal Shareholders: |
||||||||||||||||
| Dane Stevens(2) |
456,626 | 14.2 | 456,626 | 8.0 | ||||||||||||
| John James Wilson(5) |
327,083 | 10.1 | 327,083 | 5.7 | ||||||||||||
| Edward and Diana Safarik(7) |
326,133 | 10.1 | 326,133 | 5.7 | ||||||||||||
| (1) | For each person and group included in this table, percentage ownership is calculated by dividing the number of common shares beneficially owned by such person or group by the sum of (i) 3,225,899, being the number of common shares outstanding as of the date of this prospectus (96,776,919 common shares before the effect of the Reverse Share Split) or 5,725,899 (171,776,970 common shares before the effect of the Reverse Share Split), being the number of common shares outstanding immediately after the completion of this offering, as applicable, and (ii) the number of common shares underlying share options, warrants or other instruments (if any) held by such person or group that are exercisable within 60 days after the date of this prospectus. |
| (2) | Represents options and warrants exercisable for 11,667 common shares (350,000 common shares before the effect of the Reverse Share Split) held by Dane Stevens; and 427,181 common shares (12,815,438 common shares before the effect of the Reverse Share Split) and options and warrants exercisable for 17,778 common shares (533,333 common shares before the effect of the Reverse Share Split) held by Cathay Visions Enterprises Inc., a British Columbia corporation that is wholly-owned by Dane Stevens. The business address of Cathay Visions Enterprises Inc. is 215-4800 No 3 Road, Richmond, British Columbia, V6X 3A6, Canada. |
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| (3) | Represents 3,637 common shares (109,109 common shares before the effect of the Reverse Share Split) and options exercisable for 11,667 common shares (350,000 common shares before the effect of the Reverse Share Split) held by Jacob Safarik; and 100,000 common shares (3,000,000 common shares before the effect of the Reverse Share Split) held by BC Green Pharmaceuticals Inc., a British Columba corporation where Jacob Safarik serves as chief financial officer. Mr. Safarik disclaims beneficial ownership of the common shares held by BC Green Pharmaceuticals Inc. except to the extent of his pecuniary interest therein. The business address of BC Green Pharmaceuticals Inc. is 251 David Brown Way, Princeton, British Columbia V0X 1W0, Canada. Jacob Safarik is the brother of Bryan Safarik. |
| (4) | Represents 10,314 common shares (309,406 common shares before the effect of the Reverse Share Split) and options exercisable for 11,667 common shares (350,000 common shares before the effect of the Reverse Share Split) held by Bryan Safarik; 1,333 common shares (40,000 common shares before the effect of the Reverse Share Split) held by Vancouver ATM Corp., a British Columba corporation that is wholly-owned by Bryan Safarik; 3,333 common shares (100,000 common shares before the effect of the Reverse Share Split) held by Skaag Fisheries Inc., a British Columba corporation where Bryan Safarik serves as a director; and 100,000 common shares (3,000,000 common shares before the effect of the Reverse Share Split) held by BC Green Pharmaceuticals Inc., a British Columba corporation where Bryan Safarik serves as a director and president and chief operating officer. Mr. Safarik disclaims beneficial ownership of the common shares held by Skaag Fisheries Inc. and BC Green Pharmaceuticals Inc. except to the extent of his pecuniary interest therein. The business address of Vancouver ATM Corp. is 2108 W 47th Avenue, Vancouver, British Columbia, V6M 2M7, Canada and the business address of Skaag Fisheries Inc. is 901 - 77 Walter Hardwick Ave, Vancouver, British Columbia, V5Y 0C6, Canada. Bryan Safarik is the brother of Jacob Safarik. |
| (5) | Represents 22,533 common shares (676,000 common shares before the effect of the Reverse Share Split) and options and warrants exercisable for 11,667 common shares (350,000 common shares before the effect of the Reverse Share Split) held by John James Wilson; and 252,050 common shares (7,561,501 common shares before the effect of the Reverse Share Split) and options and warrants exercisable for 40,833 common shares (1,225,000 common shares before the effect of the Reverse Share Split) held by Catcher Investments Limited, a British Columba corporation that is wholly-owned by John James Wilson. The business address of Catcher Investments Limited is 600-21 Water St., Vancouver, British Columbia, V6B 1A1, Canada. |
| (6) | Represents 875 common shares (26,250 common shares before the effect of the Reverse Share Split) and options exercisable for 11,667 common shares (350,000 common shares before the effect of the Reverse Share Split) held by Jason Mosberian. |
| (7) | Represents 105,367 common shares (3,161,000 common shares before the effect of the Reverse Share Split) held jointly by Edward and Diana Safarik; 116,700 common shares (3,501,000 common shares before the effect of the Reverse Share Split) held by Diana Safarik; 733 common shares (22,000 common shares before the effect of the Reverse Share Split) held by Edward Safarik; 3,333 common shares (100,000 common shares before the effect of the Reverse Share Split) held by Skaag Fisheries Inc., a British Columba corporation that is wholly-owned by Edward and Diana Safarik; and 100,000 common shares (3,000,000 common shares before the effect of the Reverse Share Split) held by BC Green Pharmaceuticals Inc., a British Columba corporation where Edward Safarik serves as a director and chief executive officer. Edward and Diana Safarik disclaims beneficial ownership of the common shares held by BC Green Pharmaceuticals Inc. except to the extent of their pecuniary interest therein. Edward and Diana Safarik are the parents of Jacob Safarik and Bryan Safarik. |
None of the major shareholders have different voting rights from other shareholders. As of the date of this prospectus, a total of approximately 71,579 common shares (2,147,365 common shares before the effect of the Reverse Share Split) are held by registered holders in the United States, representing 2.2% of the outstanding common shares, and such shares are held by seven holders of record in the United States.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
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Compensation of Officers and Directors
We have entered into arrangements or written agreements with each of our executive officers and directors providing for renumeration for their service as executive officers or directors, as applicable. For more information, see “Management—Employment Arrangements” and “Management—Compensation of Directors and Officers.”
Private Placements
John James Wilson and Dane Stevens have participated in the offering of our securities in private placement transactions. These private placement transactions are described below.
On February 23, 2024, we issued 61,668 units at a price C$9.0 per unit, for gross proceeds of C$555,010. Each unit consisted of one common share and one-half of a common share purchase warrant. Each warrant entitles the holder to acquire one common share at C$12.0 for a period of two years from the date of issuance, subject to an accelerated expiry provision. Catcher Investments Ltd., a company controlled by John James Wilson and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 11,111 and 33,333 of these units, respectively.
On May 10, 2024, we issued 44,444 units at a price C$9.0 per unit, for gross proceeds of C$400,000. Each unit consisted of one common share and one-half of a common share purchase warrant. Each warrant entitles the holder to acquire one common share at C$12.0 for a period of two years from the date of issuance, subject to an accelerated expiry provision. Catcher Investments Ltd., a company controlled by John James Wilson and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 22,222 of these units each.
On August 15, 2024, we issued 89,889 units at a price of C$9.0 per unit, for gross proceeds of C$539,000. Each unit consisted of one common share and one-half of a common share purchase warrant. Each warrant entitles the holder to acquire one common share at C$12.0 for two years from the date of issuance, subject to an accelerated expiry provision. Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 11,111 of these units.
On January 24, 2025, we issued 43,889 units at a price of C$9.0 per unit for gross proceeds of C$395,000. Each unit consisted of one common share and one-half of a common share purchase warrant. Each warrant entitles the holder to acquire one common share at C$12.0 for two years from the date of issuance, subject to an accelerated expiry provision. Catcher Investments Ltd., a company controlled by John James Wilson and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 19,444 and 24,444 of these units, respectively.
On July 24, 2025, we issued 3,450 unsecured convertible debentures at a price of C$1,000 per convertible debenture for gross proceeds of C$3,450,000. The convertible debentures bear interest at a rate of 15.0% per annum, calculated and payable quarterly in arrears in cash, maturing July 24, 2026, twelve months from the date of issuance, unless extended by and at the option of the holders for a further twelve months. The principal amount of each convertible debenture is convertible into our common shares at a conversion price of C$4.50, being the closing price of our common shares on the CSE on July 16, 2025, the date preceding the execution by each holder of the subscription agreement for the convertible debentures. On maturity, any outstanding principal amount of the convertible debentures, plus any accrued and unpaid interest thereon, will be repaid by us in cash or, at the option of the holders, through the issuance of our common shares. Catcher Investments Ltd., a company controlled by John James Wilson and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 3,000 convertible debentures and 450 convertible debentures, respectively.
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Loan Agreement
On August 4, 2023, we entered into a loan agreement with Catcher Investments Ltd., a company controlled by John James Wilson, a director and non-executive Chair of the Board. Pursuant to the terms of the loan agreement with Catcher Investments Ltd., we borrowed from Catcher Investments Ltd. C$1,000,000, on a secured basis, at an interest rate of 7.5% per annum, calculating monthly, and with an initial repayment date of August 4, 2026 but repayable quarterly on the last business day of every fiscal quarter until the loan is repaid. As consideration for the entry into the loan, we issued 3,333 common shares purchase warrants to Catcher Investments Ltd., Each share purchase warrant entitles the holder to purchase one common share in the capital of the Company at a price of C$15.00 for a period of three years from the date of issuance.
Lease Agreement
On July 23, 2020, we entered into an industrial ground lease agreement with BC Green for the Industrial Ground underlying our Facilities situated in Princeton, British Columbia, which was amended and restated on September 1, 2021 and was further amended on July 1, 2025 to extend the term of the lease to June 30, 2030 and to include three additional options to renew the agreement for successive terms of five years commencing on July 1, 2030. Bryan Safarik currently serves as a director and the president and chief operating officer and Jacob Safarik currently serves as the chief financial officer, respectively, of BC Green, a private Canada federally licensed cannabis production company. Their respective compensation from BC Green is not materially impacted by BC Green’s interest in the Lease Agreement and the Lease Agreement is not material to BC Green. Bryan Safarik and Jacob Safarik own around 13.7% and 14.2%, respectively, of the equity interests in BC Green.
Pursuant to the terms of the Lease Agreement, the premises are to only be used for the purposes of producing, researching, storing, packaging and shipping agri-foods, with the only exclusion being cannabis and hemp products provided that such uses are permitted by applicable federal, provincial and municipal laws, rules and regulations and further provided that we have obtained all necessary permits and approvals. During the term of the Lease Agreement, as extended and renewed from time to time, the title to and ownership of the Facilities (including all alterations, additions, changes, substitutions or improvements thereto) shall be vested in us and shall automatically vest in the name of BC Green at the expiry or earlier termination of the Lease Agreement. Annual rent under the Lease Agreement is $4,300 per month for the first twelve months of the initial extended term of the Lease Agreement, subject to adjustments based on the Consumer Price Index beginning July 1, 2026, and escalating each year thereafter. We pay all electricity, gas, other fuel, water, sewer and other utilities consumed at the premises.
Debt Forgiveness
During the year ended September 30, 2025, our directors forgave an aggregate of C$1,331,052 in compensation earned by them but not yet paid for their services as directors or officers. In particular, John James Wilson forgave C$451,238 in compensation for his services as a director, Dane Stevens forgave C$258,595 in compensation for his services as a director and executive officer, Jacob Safarik forgave C$302,938 in compensation for his services as a director and executive officer and Bryan Safarik forgave C$318,281 in compensation for his services as a director and executive officer.
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Common Shares
Our authorized capital consists of an unlimited number of Common Shares, with no par value, of which 3,225,897 common shares are issued and outstanding as at the date of this prospectus as fully paid and non-assessable. Holders of the Common Shares are entitled to vote at all meetings of the holders of the Common Shares and, subject to the rights of holders of any shares ranking in priority to or on a parity with the Common Shares, to participate ratably in any distribution of our property or assets upon liquidation or wind-up. There are no pre-emptive, redemption, purchase or conversion rights attaching to our Common Shares. There are no sinking fund provisions applicable to our Common Shares. Holders of our Common Shares have equal rights of participation in the dividends and other distributions of our cash, stock or property when, as and if declared thereon by our Board from time to time out of our assets or funds legally available therefor and shall have equal rights to receive our assets and funds available for distribution to shareholders in the event of any liquidation, dissolution or winding up of our affairs, whether voluntary or involuntary.
The Board is authorized to issue additional Common Shares on such terms and conditions and for such consideration as the Board may deem appropriate without further security holder action. We will issue 2,500,000 common shares in this offering.
Warrants
As at the date of this prospectus, there are 141,889 warrants outstanding, each exercisable for one Common Share, the terms of which are set out below.
| Date of Issuance |
Date of Expiry | Number of Warrants | Exercise Price per Common Share |
|||||||
| August 4, 2023 |
August 4, 2026 | 3,333 | C$ | 15.00 | ||||||
| August 29, 2023 |
August 29, 2026 | 3,333 | C$ | 15.00 | ||||||
| November 1, 2023 |
November 1, 2026 | 3,333 | C$ | 15.00 | ||||||
| February 23, 2024 |
February 23, 2026 | 25,278 | C$ | 12.00 | ||||||
| May 10, 2024 |
May 10, 2026 | 11,111 | C$ | 12.00 | ||||||
| May 29, 2024 |
May 29, 2026 | 30,277 | C$ | 12.00 | ||||||
| August 15, 2024 |
August 15, 2026 | 29,945 | C$ | 12.00 | ||||||
| January 24, 2025 |
January 24, 2027 | 21,944 | C$ | 12.00 | ||||||
| July 17, 2025 |
July 17, 2027 | 13,333 | C$ | 7.50 | ||||||
Common Warrants
The following summary of certain terms and provisions of the Common Warrants that are being offered hereby is not complete and is subject to, and qualified in its entirety by, the provisions of the Common Warrants, the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part. Prospective investors should carefully review the terms and provisions of the form of Common Warrants for a complete description of the terms and conditions of the Common Warrants.
Duration, Exercise Price and Form
The Common Warrants will be exercisable for up to an aggregate of 2,500,000 Common Shares and will have an exercise price per share equal to 120% of the initial public offering price per Unit. Common Warrants will be exercisable immediately upon issuance, subject to certain beneficial ownership limitations, and will expire two years from the date of issuance. The exercise price and number of Common Shares issuable upon exercise is subject to proportionate adjustment in the event of share dividends, share splits, reorganizations or similar events affecting our Common Shares and the exercise price. The Common Warrants will be issued in certificated form only.
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Exercisability
The Common Warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice accompanied by payment in full for the number of Common Shares purchased upon such exercise (except in the case of a cashless exercise as discussed below). A holder (together with its affiliates) may not exercise any portion of the Common Warrants to the extent that the holder would own more than 5.99% or 9.99% (at the election of the holder) of the outstanding Common Shares immediately after exercise.
Fractional Shares
No fractional shares will be issued upon the exercise of the Common Warrants. In lieu of fractional shares, we will round up to the nearest whole number.
Transferability
Subject to applicable laws, a Common Warrant may be transferred at the option of the holder upon surrender of the Common Warrants to us together with the appropriate instrument of transfer.
Cashless Exercise
If, at the time a holder exercises its Common Warrants, a registration statement registering the issuance of Common Shares underlying the Common Warrants under the Securities Act is not then effective or available and an exemption from registration under the Securities Act is not available for the issuance of such Common Shares, then in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of Common Shares determined according to terms of the Common Warrants.
Exchange Listing
There is no established public trading market for the Common Warrants, and we do not expect a market to develop. In addition, we do not intend to list the Common Warrants on any securities exchange or nationally recognized trading system. Without an active trading market, the liquidity of the Common Warrants will be limited.
Right as a Shareholder
Except as otherwise provided in the Common Warrants or by virtue of such holder’s ownership of Common Shares, the holders of the Common Warrants do not have the rights or privileges of holders of our Common Shares, including any voting rights, until they exercise their Common Warrants.
Fundamental Transaction
In the event of a Fundamental Transaction, as defined in the form of Common Warrant, and generally including any reorganization, recapitalization or reclassification of our Common Shares, the sale, transfer or other disposition of all or substantially all of our properties or assets, our consolidation or merger with or into another person, the acquisition of greater than 50% of our outstanding Common Shares, or any person or group becoming the beneficial owner of greater than 50% of the voting power represented by our outstanding Common Shares, the holders of the Common Warrants will be entitled to receive upon exercise of the Common Warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the Common Warrants immediately prior to such Fundamental Transaction. In addition, in certain circumstances, upon a Fundamental Transaction, the holder of a Common Warrant will have the right to require us to repurchase its Common Warrants at the Black-Scholes value as determined in accordance with the terms of the Common Warrants.
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Underwriter Warrants
Please see “Underwriting” for a full description of the warrants (and the common shares underlying such warrants) that we are issuing to the Underwriter in connection with this offering.
Share Options and RSRs
As at the date of this prospectus, there are 162,832 Share Options outstanding to purchase Common Shares and 13,875 RSRs, the terms of which are set out below.
| Number of Share Options |
Price |
Date of Grant | Date of Expiry | |||
| 64,167 |
C$45.00 | May 6, 2021 | May 6, 2026 | |||
| 333 |
C$19.50 | March 29, 2023 | March 29, 2028 | |||
| 3,333 |
C$19.50 | April 26, 2023 | April 26, 2028 | |||
| 3,333 |
C$19.50 | November 1, 2023 | November 1, 2028 | |||
| 23,333 |
C$4.95 | April 19, 2025 | April 19, 2028 | |||
| 20,000 |
C$6.00 | April 19, 2025 | April 19, 2028 | |||
| 20,000 |
C$9.00 | April 19, 2025 | April 19, 2028 | |||
| 28,333 |
C$15.00 | January 15, 2026 | January 15, 2031 | |||
| 13,875 |
N/A – RSRs | January 15, 2026 | January 15, 2029 |
Anti-Takeover Provisions
Some provisions of the Business Corporations Act (British Columbia) (the “BCBCA”) and other British Columbia laws could make the following transactions more difficult: an acquisition of us by means of a tender offer; an acquisition of us by means of a proxy contest or otherwise; or the removal of our incumbent officers and directors. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interests or in our best interests, including transactions that provide for payment of a premium over the market price for our Common Shares.
In addition, the ability of our Board, without action by our stockholders, to create and issue undesignated shares in such classes and in such series as determined by our Board, with voting or other rights or preferences as designated by our Board could impede the success of any attempt to effect a change in control of our company. These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management of our company.
Certain Important Provisions of our Articles and the Business Corporations Act (British Columbia)
The following is a summary of certain important provisions of our articles and certain related sections of the BCBCA. Please note that this is only a summary and is not intended to be exhaustive. This summary is subject to, and is qualified in its entirety by reference to, the provisions of our articles and the BCBCA.
Stated Objects or Purposes
Our articles do not contain stated objects or purposes and do not place any limitations on the business that we may carry on.
Directors
Power to vote on matters in which a director is materially interested. Under the BCBCA a director who has a material interest in a contract or transaction, whether made or proposed, that is material to us, must disclose such
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interest to us, subject to certain exceptions such as if the contract or transaction: (i) is an arrangement by way of security granted by us for money loaned to, or obligations undertaken by, the director for our benefit or for one of our affiliates’ benefit; (ii) relates to an indemnity or insurance permitted under the BCBCA; (iii) relates to the remuneration of the director in his or her capacity as director, officer, employee or agent of our company or of one of our affiliates; (iv) relates to a loan to our company while the director is the guarantor of some or all of the loan; or (v) is with a corporation that is affiliated to us while the director is also a director or senior officer of that corporation or an affiliate of that corporation.
Voting on certain proposals, arrangement, or contract by directors. A director who holds such disclosable interest in respect of any material contract or transaction into which we have entered or propose to enter may be required to absent himself or herself from the meeting while discussions and voting with respect to the matter are taking place. Our articles restrict our directors’ power to vote on a proposal, arrangement, or contract in which the directors are materially interested, but do not restrict our directors’ power to vote with regard to compensation payable to themselves or any other members of their body in the absence of an independent quorum. Directors are also required to comply with certain other relevant provisions of the BCBCA regarding conflicts of interest. Neither our articles or the BCBCA contemplate the borrowing of monies by our directors.
Directors’ power to determine the remuneration of directors. The remuneration of our directors is determined by our directors subject to our articles. The remuneration may be in addition to any salary or other remuneration paid to any of our employees (including executive officers) who are also directors.
Number of shares required to be owned by a director. Neither our articles nor the BCBCA provide that a director is required to hold any of our shares as a qualification for holding his or her office. Our Board of Directors has discretion to prescribe minimum share ownership requirements for directors.
Retirement Policy for Directors. We do not have a retirement policy for our directors, nor does our articles or the BCBCA prescribe an age limit requirement.
Action Necessary to Change the Rights of Holders of Our Shares
Our directors can authorize the amendment of our articles to create or vary the special rights or restrictions attached to any of our shares by passing an ordinary resolution. However, a right or special right attached to any class or series of shares may not be prejudiced or interfered with unless the shareholders holding shares of that class or series to which the right or special right is attached consent by a separate special resolution. A special resolution generally means a resolution passed by: (1) a majority of not less than two-thirds of the votes cast by the applicable class or series of shareholders who vote in person or by proxy at a meeting, or (2) a resolution consented to in writing by all of the shareholders entitled to vote.
Shareholder Meetings
We must hold a general meeting of our shareholders at least once every calendar year at a time and place determined by our Board of Directors, provided that the meeting must not be held later than 15 months after the preceding annual general meeting. A meeting of our shareholders may be held anywhere in or outside British Columbia.
A notice to convene a meeting, specifying the date, time and location of the meeting, and, where a meeting is to consider special business, the general nature of the special business must be sent to each shareholder entitled to attend the meeting and to each director not less than 21 days prior to the meeting for so long as we are a public company. The accidental omission to send notice of any meeting of shareholders to, or the non- receipt of any notice by, any person entitled to notice does not invalidate any proceedings at that meeting.
Subject to the special rights and restrictions attached to the shares or any class or series of shares, the quorum for the transaction of business at a meeting of shareholders is two shareholders who, in the aggregate, hold at least
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5% of the issued shares entitled to be voted at the meeting, or one shareholder, where only one shareholder is entitled to vote. If there is only one shareholder, the quorum is one person present and being, or representing by proxy, such shareholder.
If a quorum is not present within one-half hour of the time set for the holding of a meeting of shareholders, the meeting stands adjourned to the same day in the next week at the same time and place, unless the meeting is a general meeting that was requisitioned by shareholders, in which case the meeting is dissolved.
Shareholder Proposals and Advance Notice Procedures
Under the BCBCA, qualified shareholders holding at least one percent (1%) of our issued voting shares or whose shares have a fair market value in excess of C$2,000 may make proposals for matters to be considered at the annual general meeting of shareholders. Such proposals must be sent to us in advance of any proposed meeting by delivering a timely written notice in proper form to our registered office in accordance with the requirements of the BCBCA. The notice must include information on the business the shareholder intends to bring before the meeting in the prescribed form. To be a qualified shareholder, a shareholder must currently be and have been a registered or beneficial owner of at least one share of the company for at least two years before the date of signing the proposal.
We have included certain advance notice provisions with respect to the election of our directors in our articles. The advance notice provisions are intended to: (i) facilitate orderly and efficient annual general meetings or, where the need arises, special meetings; (ii) ensure that all shareholders receive adequate notice of board nominations and sufficient information with respect to all nominees; and (iii) allow shareholders to register an informed vote. Only persons who are nominated in accordance with the advance notice provisions will be eligible for election as directors at any annual meeting of shareholders, or at any special meeting of shareholders if one of the purposes for which the special meeting was called was the election of directors.
Under the advance notice provisions, a shareholder wishing to nominate a director would be required to provide us notice, in the prescribed form, within the prescribed time periods. These time periods include, (i) in the case of an annual meeting of shareholders (including annual and special meetings), not less than 30 days prior to the date of the annual meeting of shareholders and no more than 65 days; provided, that if the first public announcement of the date of the annual meeting of shareholders, or the “Notice Date”, is less than 50 days before the meeting date, not later than the close of business on the 10th day following the Notice Date; and (ii) in the case of a special meeting (which is not also an annual meeting) of shareholders called for any purpose which includes electing directors, not later than the close of business on the 15th day following the Notice Date.
These provisions could have the effect of delaying until the next shareholder meeting the nomination of certain persons for director that are favored by the holders of a majority of our outstanding voting securities.
Limitation of Liability and Indemnification
Under the BCBCA, a company may indemnify: (i) a current or former director or officer of that company; (ii) a current or former director or officer of another corporation if, at the time such individual held such office, the corporation was an affiliate of the company, or if such individual held such office at the company’s request; or (iii) an individual who, at the request of the company, held, or holds, an equivalent position in another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment actually and reasonably incurred by him or her in respect of any legal proceeding or investigative action (whether current, threatened, pending or completed) in which he or she is involved because of that person’s position as an indemnifiable person, unless: (i) the individual did not act honestly and in good faith with a view to the best interests of such company or the other entity, as the case may be; or (ii) in the case of a proceeding other than a civil proceeding, the individual did not have reasonable grounds for believing that the individual’s conduct was lawful. A company cannot indemnify an indemnifiable person if it is prohibited from doing so under its articles
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or by applicable law. A company may pay, as they are incurred in advance of the final disposition of an eligible proceeding, the expenses actually and reasonably incurred by an indemnifiable person in respect of that proceeding only if the indemnifiable person has provided an undertaking that, if it is ultimately determined that the payment of expenses was prohibited, the indemnifiable person will repay any amounts advanced. Subject to the aforementioned prohibitions on indemnification, a company must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by an indemnifiable person in respect of such eligible proceeding if such indemnifiable person has not been reimbursed for such expenses, and was wholly successful, on the merits or otherwise, in the outcome of such eligible proceeding or was substantially successful on the merits in the outcome of such eligible proceeding. On application from us or from an indemnifiable person, a court may make any order the court considers appropriate in respect of an eligible proceeding, including the indemnification of penalties imposed or expenses incurred in any such proceedings and the enforcement of an indemnification agreement. As permitted by the BCBCA, our articles require us to indemnify our directors, former directors or alternate directors (and such individual’s respective heirs and legal representatives) and permit us to indemnify any person to the extent permitted by the BCBCA.
Competition Act
Limitations on the ability to acquire and hold our common shares may be imposed by the Competition Act (Canada). This legislation permits the Commissioner of Competition, or Commissioner, to review any acquisition or establishment, directly or indirectly, including through the acquisition of shares, of control over or of a significant interest in us. This legislation grants the Commissioner jurisdiction, for up to one year (in respect of an acquisition that was the subject of a request for a certificate under section 102 of the Competition Act (Canada) or a notification under section 114 of the Competition Act (Canada)) or up to three years (in respect of an acquisition that was not subject to such request or notification) after the acquisition has been substantially completed, to challenge this type of acquisition by seeking a remedial order, including an order to prohibit the acquisition or require divestitures, from the Canadian Competition Tribunal, which may be granted where the Competition Tribunal finds that the acquisition substantially prevents or lessens, or is likely to substantially prevent or lessen, competition.
This legislation also requires any person or persons who intend to acquire more than 20% of our voting shares or, if such person or persons already own more than 20% of our voting shares prior to the acquisition, more than 50% of our voting shares, to file a notification with the Canadian Competition Bureau if certain financial thresholds are exceeded. Where a notification is required, unless an exemption is available, the legislation prohibits completion of the acquisition until the expiration of the applicable statutory waiting period, unless the Commissioner either waives or terminates such waiting period or issues an advance ruling certificate. The Commissioner’s review of a notifiable transaction for substantive competition law considerations may take longer than the statutory waiting period.
Investment Canada Act
The Investment Canada Act requires each “non Canadian” who acquires “control” of an existing “Canadian business,” (as those terms are defined in the Investment Canada Act) to file a notification in prescribed form with the responsible federal government department or departments not later than 30 days after closing, provided the acquisition of control is not a reviewable transaction under the Investment Canada Act. Subject to certain exemptions, a transaction that is reviewable under the Investment Canada Act may not be implemented until an application for review has been filed and the responsible Minister of the federal cabinet has determined that the investment is likely to be of “net benefit to Canada” taking into account certain factors set out in the Investment Canada Act. Under the Investment Canada Act, an investment in our common shares by a non-Canadian who is a World Trade Organization member country investor that is not a state-owned enterprise, including a United States investor would be reviewable only if it were an investment to acquire control of us pursuant to the Investment Canada Act and our enterprise value (as determined pursuant to the Investment Canada Act and its regulations) was equal to or greater than C$386 billion (as of January 1, 2025). The enterprise value threshold for “trade agreement investors” that are not state-owned enterprises is C$2.079 billion (as of January 1, 2025).
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The Investment Canada Act contains various rules to determine if there has been an acquisition of control. Generally, for purposes of determining whether an investor has acquired control of a corporation by acquiring shares, the following general rules apply, subject to certain exceptions: the acquisition of a majority of the voting interests or a majority of the undivided ownership interests in the voting shares of the corporation is deemed to be acquisition of control of that corporation; the acquisition of less than a majority, but one-third or more, of the voting shares of a corporation or of an equivalent undivided ownership interest in the voting shares of the corporation is presumed to be acquisition of control of that corporation unless it can be established that, on the acquisition, the corporation is not controlled in fact by the acquirer through the ownership of voting shares; and the acquisition of less than one third of the voting shares of a corporation or of an equivalent undivided ownership interest in the voting shares of the corporation is deemed not to be acquisition of control of that corporation.
Under the national security review regime in the Investment Canada Act, review on a discretionary basis may also be undertaken by the federal government with respect to a much broader range of investments by a non-Canadian to “acquire, in whole or part, or to establish an entity carrying on all or any part of its operations in Canada.” No financial threshold applies to a national security review. The relevant test is whether such investment by a non-Canadian could be “injurious to national security.” Review on national security grounds is at the discretion of the responsible ministers and may occur on a pre- or post-closing basis.
Certain transactions relating to our common shares will generally be exempt from the Investment Canada Act, subject to the federal government’s prerogative to conduct a national security review, including:
| • | the acquisition of our common shares by a person in the ordinary course of that person’s business as a trader or dealer in securities; |
| • | the acquisition of control of us in connection with the realization of security granted for a loan or other financial assistance and not for any purpose related to the provisions of the Investment Canada Act if the acquisition is subject to approval under Canadian legislation relating to financial institutions; and |
| • | the acquisition of control of us by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of us, through ownership of our common shares, remains unchanged. |
Listing
We have applied to list our common shares on Nasdaq Capital Market under the symbol “OPTH.” Our common shares are currently traded on the CSE under the symbol “OPTI,” on the FSE under the symbol “8BN” and quoted for trading on the OTCQX under the symbol “OPTHF”.
Transfer Agent and Registrar
The transfer agent and registrar for our common shares and Common Warrants is Endeavor Trust Corporation with its principal office at Suite 702 - 777 Hornby Street, Vancouver, British Columbia, V6Z 1S4.
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Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides details of compensation plans under which our equity securities are authorized for issuance as of December 31, 2025.
| Plan Category |
Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) |
Weighted- average exercise price of outstanding options, warrants and rights(1) (b) |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
|||||||||
| Equity compensation plans approved by securityholders(1) |
137,999 | (2) | C$ | 25.68 | (3) | 345,191 | ||||||
| Equity compensation plans not approved by securityholders |
— | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total |
137,999 | C$ | 25.68 | 345,191 | ||||||||
|
|
|
|
|
|
|
|||||||
Notes:
| 1. | The Equity Plan provides that the aggregate number of securities reserved for issuance under the Equity Plan may not exceed 15% of the issued and outstanding common shares of the Company at the time of granting. As of December 31, 2025, there were 3,221,274 Common Shares issued and outstanding with the result that 483,190 were reserved for issuance under the Equity Plan. |
| 2. | Comprised of Share Options and no RSRs. |
| 3. | Representative of Share Options only. |
Share option plans and other incentive plans
The following is a summary of our equity incentive plan (the “Equity Plan”), which is the only incentive plan in place. The Equity Plan was adopted and approved by the Shareholders on October 9, 2020, and ratified, adopted and re-approved at the annual general meetings held on September 8, 2025, February 22, 2024, January 9, 2023 and February 24, 2022. The aggregate number of Common Shares that may be subject to issuance under the Equity Plan, together with any other securities-based compensation arrangements of the Company, is not to exceed 15% of the Company’s issued and outstanding share capital from time to time. The Equity Plan provides for the grant to eligible directors, officers, employees and consultants, of Share Options and RSRs. The Equity Plan also provides for the grant to eligible directors of DSUs which the directors are entitled to redeem for 90 days following retirement or termination from the Board.
Share Options
The Equity Plan authorizes the Board to grant Share Options. The number of Common Shares, the exercise price per Common Share, the vesting period and any other terms and conditions of Options granted from time to time pursuant to the Equity Plan, are determined by the Board at the time of the grant, subject to the defined parameters of the Equity Plan. The date of grant for the Options is to be the date such grant was approved by the Board. The exercise price of any Option cannot be less than the closing market price of the Common Shares on (a) the trading day prior to the date of grant of the Option; and (b) the date of grant of the Option (the “Fair Market Value”). Options are generally exercisable for a period of five years from the date the Option is granted or such greater or lesser period as determined by the Board. Options may be earlier terminated in the event of death or termination of employment or appointment. Vesting of Options is determined by the Board. Failing a
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specific vesting determination by the Board, Options automatically become exercisable incrementally over a period of eighteen months from the date of grant, as to: (i) 25% of the total number of shares under Option immediately upon the date of grant; and (ii) at each six-month interval thereafter, an additional 25% of the total number of shares under Option such that after the eighteenth month of the Option period, 100% of the Options will be exercisable. The terms of a Share Option are not to be amended once issued and the expiry date of a Share Option is to be no more than 10 years from the date of grant of such Option.
RSR
The Equity Plan authorizes the Board to grant RSRs, in its sole and absolute discretion, to any eligible director, officer, consultant or employee. Each RSR provides the recipient with the right to receive Common Shares as a discretionary payment in consideration of past services or as an incentive for future services, subject to the Equity Plan and with such additional provisions and restrictions as the Board may determine. Each RSR grant is to be evidenced by a RSR grant letter which is subject to the terms of the Equity Plan and any other terms and conditions which the Board deems appropriate. Concurrent with the granting of the RSR, the Board determines the period of time during which the RSR is not vested and the holder of such RSR remains ineligible to receive Common Shares. Such period of time may be reduced or eliminated from time to time for any reason as determined by the Board. Once the RSR vests, the RSR is automatically settled through the issuance of an equivalent number of underlying Common Shares as RSRs held. Participants who are resident in Canada for the purposes of the Income Tax Act (Canada) may elect to defer some or all of any part of the Common Share grant until one or more later dates. In the event the participant retires or is terminated during the vesting period, any RSR held by the participant is terminated immediately, provided however that the Board shall have the absolute discretion to accelerate the vesting date. In the event of death or total disability, the vesting period shall accelerate and the Common Shares underlying the RSRs shall be issued.
DSU
The Equity Plan authorizes the Board to grant DSUs, in its sole and absolute discretion, in a lump sum amount or on regular intervals to eligible directors. Each DSU grant is to be evidenced by a DSU grant letter which is subject to the terms of the Equity Plan and any other terms and conditions which the Board deems appropriate. The DSUs held by each eligible director who is not a U.S. taxpayer will be redeemed automatically and with no further action by the eligible director on the 20th business day following the date such director ceases to hold any directorship. The DSUs held by any eligible directors who are U.S. taxpayers will be automatically redeemed with no further action by such director on the date that is 6 months following the date such director ceases to hold any directorship, or if earlier, upon such director’s death. Upon redemption, the director is entitled to receive (subject to any share issuance limits in the Equity Plan), the number of Common Shares equal to the number of DSUs in the director’s account. If the director ceases to hold office during a year where DSUs have been granted in advanced of being earned and they have not held office for the entire year, the director will only be entitled to a pro-rated issuance of shares.
History of Securities Issuances
The following is a summary of our securities issuances in the past three years.
On January 3, 2023, the Company issued 1,667 common shares at C$6.9 per share in connection with an advisory services agreement.
On February 23, 2023, the Company issued 2,500 common shares at C$6.6 per share due to the vesting of RSRs.
On March 29, 2023, the Company granted 333 stock options, subject to vesting provisions, to an employee of the Company. The stock options are exercisable at a price of C$19.50 per common share until March 29, 2028, unless earlier terminated in accordance with the terms of the Equity Plan.
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On April 26, 2023, the Company granted 333 stock options, subject to vesting provisions, to an employee of the Company. The stock options are exercisable at a price of C$19.50 per common share until April 26, 2028, unless earlier terminated in accordance with the terms of the Equity Plan.
On May 8, 2023, the Company issued 4,638 common shares at C$7.8 per share due to the vesting of RSRs.
On November 1, 2023, the Company granted 333 stock options, subject to vesting provisions, to an employee of the Company. The stock options are exercisable at a price of C$19.5 per common share until November 1, 2028, unless earlier terminated in accordance with the terms of the Equity Plan.
On November 6, 2023, the Company issued 4,638 common shares at C$4.8 per share due to the vesting of RSRs.
On January 2, 2024, the Company issued 1,667 common shares at C$7.35 per share in connection with an advisory services agreement.
On February 23, 2024, the Company issued 61,668 units at a price C$9.0 per unit, for gross proceeds of C$555,010. Each unit consisted of one common share and one-half of a common share purchase warrant. Each warrant entitles the holder to acquire one common share at C$12.0 for a period of two years from the date of issuance, subject to an accelerated expiry provision. Catcher Investments Ltd., a company controlled by John James Wilson and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 11,111 and 33,333 of these units, respectively.
On April 29, 2024, the Company granted 500 stock options, subject to vesting provisions, to an employee of the Company. The stock options are exercisable at a price of C$10.5 per Common Share until April 29, 2029, unless earlier terminated in accordance with the terms of the Equity Plan.
On May 6, 2024, the Company issued 4,638 common shares at C$10.2 per share due to the vesting of RSRs.
On May 10, 2024, the Company issued 44,444 units at a price C$9.0 per unit, for gross proceeds of C$400,000. Each unit consisted of one common share and one-half of a common share purchase warrant. Each warrant entitles the holder to acquire one common share at C$12.0 for a period of two years from the date of issuance, subject to an accelerated expiry provision. Catcher Investments Ltd., a company controlled by John James Wilson and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 22,222 of these units each.
On May 29, 2024, the Company issued 60,554 units at a price C$9.0 per unit, for gross proceeds of C$544,990. Each unit consisted of one common share and one-half of a common share purchase warrant. Each warrant entitles the holder to purchase one Common Share at a price of C$12.0 and is exercisable for two years from the date of issuance, subject to an accelerated expiry provision.
On June 3, 2024, the Company issued 5,556 common shares at C$12.0 per share due to the exercise of warrants.
On June 18, 2024, the Company issued 3,333 common shares at C$12.0 per share due to the exercise of warrants.
On July 9, 2024, the Company issued common shares at C$0.40 per share due to the exercise of warrants.
On August 15, 2024, the Company issued 59,889 units at a price of C$9.0 per unit, for gross proceeds of C$539,000. Each unit consisted of one common share and one-half of a common share purchase warrant. Each warrant entitles the holder to acquire one common share at C$12.0 for two years from the date of issuance, subject to an accelerated expiry provision. Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 11,111 of these units.
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On January 24, 2025, the Company issued 43,889 units at a price of C$9.0 per unit for gross proceeds of C$395,000. Each unit is comprised of one common share and one-half of a common share purchase warrant. Each warrant entitles the holder to acquire one common share at C$12.0 for two years from the date of issuance, subject to an accelerated expiry provision. Catcher Investments Ltd., a company controlled by John James Wilson and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 19,444 and 24,444 of these units, respectively.
On January 24, 2025, the Company issued 15,272 common shares at a price of C$6.45 per share to settle a debt of C$98,126 with two creditors. The debt relates to marketing and investor relations services previously rendered.
On July 24, 2025, the Company issued 3,450 unsecured convertible debentures at a price of C$1,000 per convertible debenture for gross proceeds of C$3,450,000. The convertible debentures bear interest at a rate of 15.0% per annum, calculated and payable quarterly in arrears in cash, maturing July 24, 2026, twelve months from the date of issuance, unless extended by and at the option of the holders for a further twelve months. The principal amount of each convertible debenture is convertible into our common shares at a conversion price of C$4.5, being the closing price of our common shares on the CSE on July 16, 2025, the date preceding the execution by each holder of the subscription agreement for the convertible debentures. On maturity, any outstanding principal amount of the convertible debentures, plus any accrued and unpaid interest thereon, will be repaid by the Company in cash or, at the option of the holders, through the issuance of our common shares. Catcher Investments Ltd., a company controlled by John James Wilson and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 3,000 convertible debentures and 450 convertible debentures, respectively.
On July 24, 2025, the Company issued 13,333 common shares purchase warrants as consideration for the entry into a loan amendment with an independent third party to an original loan agreement dated November 1, 2023. Each warrant is exercisable at C$7.5 for a period of two years from the date of issuance. Under the terms of the loan amendment the maturity date was extended from April 30, 2025 to April 30, 2026.
On August 20, 2025, the Company granted 63,333 stock options to MZHCI, LLC, a MZ Group Company, as partial consideration for investor relations consulting services. Of the 63,333 stock options granted, 23,333 stock options are exercisable at C$4.95 vesting immediately on date of grant, 20,000 stock options are exercisable at C$6.0 vesting on December 20, 2025 and 20,000 stock options are exercisable at C$9.0 vesting on April 20, 2026. The options expire on August 20, 2028.
On January 15, 2026, the Company granted an aggregate of 28,333 stock options and 18,500 restricted share rights, subject to vesting provisions, to certain directors, officers, employees and key individuals associated with the Company. The stock options are exercisable at a price of C$15.0 per common share until January 15, 2031, unless earlier terminated in accordance with the terms of the Equity Plan. The restricted share rights will vest and convert into common shares of the Company for no additional consideration, subject to applicable vesting provisions.
On January 30, 2026, the Company issued 4,625 common shares at C$8.7 per common share due to the vesting of RSRs.
Exchange Controls
There are no governmental laws, decrees or regulations in Canada that restrict the export or import of capital, including foreign exchange controls, or that affect the remittance of dividends, interest or other payments to non-Canadian resident holders of our securities, other than Canadian withholding tax. See “Taxation”.
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SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering and assuming no exercise of any warrants issued in this offering, we will have issued and outstanding 5,725,899 common shares (or 6,100,899 common shares if the underwriter exercises the over-allotment option to purchase additional common shares in full). All of the common shares sold in this offering will be freely transferable without restriction under the United States Securities Act of 1933, as amended (the “Securities Act”) unless purchased by one of our affiliates as that term is defined in Rule 144 under the Securities Act, which generally includes directors, executive officers and 10% shareholders. Sales of substantial amounts of the common shares in the public market could adversely affect prevailing market prices of common shares. All “restricted securities” as that term is defined in Rule 144 may be sold only if they are sold pursuant to an effective registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act such as those provided in Rules 144 and 701 promulgated under the Securities Act, which rules are summarized below. Restricted common shares may also be sold outside of the United States in accordance with Regulation S under the Securities Act. This prospectus may not be used in connection with any resale of the common shares acquired in this offering by our affiliates.
Rule 144
In general, under Rule 144 of the Securities Act, a person or entity that has beneficially owned the common shares for at least six months and is not our “affiliate” will be entitled to sell the common shares, subject only to the availability of current public information about us, and will be entitled to sell common shares held for at least one year without any restriction. A person or entity that is our “affiliate” and has beneficially owned common shares for at least six months will be able to sell, within a rolling three month period, the number of common shares that does not exceed the greater of the following:
(i) 1% of the then outstanding common shares, which immediately after this offering will equal approximately 57,259 common shares (or 61,009 common shares if the underwriter exercises the over-allotment option to purchase additional common shares in full); and
(ii) the average weekly trading volume of common shares on Nasdaq Capital Market during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC.
Sales by affiliates under Rule 144 must be made through unsolicited brokers’ transactions. They are also subject to manner of sale provisions, notice requirements and the availability of current public information about us.
Rule 701
In general, under Rule 701 of the Securities Act as currently in effect, each of our shareholders who purchases common shares from us pursuant to a compensatory share or option plan or other written agreement relating to compensation and who is not deemed to have been an affiliate of our company during the immediately preceding 90 days is eligible to resell such common shares 90 days after we become a reporting company under the Exchange Act in reliance on Rule 144, but without being required to comply with the public information, holding period, volume limitation or notice provisions of Rule 144. Rule 701 also permits affiliates of our company to sell such shares under Rule 144 without complying with the holding period requirements of Rule 144. However, the Rule 701 shares would remain subject to lock-up arrangements and would only become eligible for sale when the lock-up period expires.
Canadian Resale Restrictions
Under the securities laws of the provinces of Canada, a person who owns our common shares, or a security convertible into our common shares (other than Options granted to our directors, officers and employees), distributed by us more than four months prior to the date of this prospectus will generally be able to freely sell
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those common shares, or the common shares issued upon the conversion of that convertible security, in Canada following the date of this prospectus. To the extent that such common shares or convertible securities were distributed by us during the four months preceding the date of this prospectus, those common shares, or the common shares issued upon the conversion of those convertible securities, may not be resold, except under a prospectus or an exemption from the prospectus requirement, until four months have passed since the date of distribution of those securities by us, at which time such a person will generally be able to freely sell those common shares in Canada. Any of our directors, officers and employees who purchase common shares from us pursuant to the exercise of Options granted at any time prior to the date of this prospectus will generally be able to freely resell those common shares in Canada following the date of this prospectus.
Lock-up Agreements
See “Underwriting—Lock-up Agreements.”
We are not aware of any plans by any significant shareholders to dispose of significant numbers of the common shares. However, one or more existing shareholders or owners of securities convertible or exchangeable into or exercisable for the common shares may dispose of significant numbers of the common shares. We cannot predict what effect, if any, future sales of the common shares, or the availability of common shares for future sale, will have on the trading price of the common shares from time to time. Sales of substantial amounts of the common shares in the public market, or the perception that these sales could occur, could adversely affect the trading price of the common shares.
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The following discussion of Canadian and U.S. federal income tax consequences of an investment in the common shares or the Common Warrants is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This discussion does not deal with all possible tax consequences relating to an investment in the common shares or the Common Warrants, such as the tax consequences under state, provincial, territorial, local and other tax laws.
Material Canadian Federal Income Tax Considerations
The following summary describes the material Canadian federal income tax considerations under the Income Tax Act (Canada) (the “Tax Act”) generally applicable at the date hereof to a purchaser (other than the underwriter) who acquires beneficial ownership of common shares or Common Warrants of the Company pursuant to this offering and who, for the purposes of the Tax Act and at all relevant times: (a) is neither resident nor deemed to be resident in Canada; (b) deals at arm’s length with and is not affiliated with the Company; and (c) does not use or hold and is not deemed to use or hold their common shares or Common Warrants in, or in the course of, carrying on a business in Canada. Such purchasers are referred to in this summary as a “Non-Resident Holder”.
This summary is based on the current provisions of the Tax Act, the regulations thereunder, all specific proposals to amend the Tax Act and the regulations publicly announced by the Minister of Finance (Canada) prior to the date hereof (the “Tax Proposals”), an understanding of the current administrative practices and assessing policies of Canada Revenue Agency (the “CRA”) and the current provisions of the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, as amended (the “Canada-U.S. Treaty”). There can be no assurance that the Tax Proposals will be implemented in their current form, or at all, nor can there be any assurance that the CRA will not change its administrative policies or assessing practices. Except as otherwise expressly provided, this summary does not take into account any provincial, territorial or foreign (including without limitation, any United States) tax law or treaty.
Special rules, which are not discussed in this summary, may apply to a Non-Resident Holder that is an insurer carrying on business in Canada and elsewhere or that is an “authorized foreign bank” (as defined in the Tax Act). Such Non-Resident Holders should consult their own tax advisors.
This summary is not exhaustive of all possible Canadian federal tax considerations applicable to an investment in common shares or Common Warrants of the Company. This description is of a general nature only and is not intended to constitute legal or tax advice to any current or prospective holder of common shares or Common Warrants. You should consult with your own tax advisors about tax consequences of an investment in common shares or Common Warrants based on your particular circumstances.
Currency Conversion
For the purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of common shares or Common Warrants must be expressed in Canadian dollars. Amounts denominated in United States dollars must be converted into Canadian dollars using the rate of exchange quoted by the Bank of Canada on the day on which the amount first arose or such other rate of exchange as is acceptable to the CRA.
Dividends on Common Shares
Dividends paid or credited, or deemed to be paid or credited, to a Non-Resident Holder by the Company will be subject to Canadian withholding tax at the rate of 25% of the gross amount of the dividend unless such rate is reduced by the terms of an applicable income tax treaty or convention. For example, under the Canada-U.S. Treaty, the rate of withholding tax on dividends paid or credited to a Non-Resident Holder that is (a) resident in the United States for purposes of the Canada-U.S. Treaty, (b) entitled to the full benefits of the Canada-U.S. Treaty, and (c) the beneficial owner of the dividend (a “U.S. Holder”), is generally limited to 15% of the gross
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amount of the dividend (or 5% in the case of a U.S. Holder that is a corporation that beneficially owns at least 10% of the Company’s voting shares). Non-Resident Holders should consult their own tax advisors to determine their entitlement to relief under the Canada-U.S. Treaty or any other applicable income tax treaty or convention.
Exercise of Common Warrants
No gain or loss will be realized by a Non-Resident Holder upon the exercise of a Common Warrant to acquire a common share. For purposes of the Tax Act, when a Common Warrant is exercised, the Non-Resident Holder’s cost of the common share acquired thereby will be the aggregate of the Non-Resident Holder’s adjusted cost base of such Common Warrant and the exercise price paid by the Non-Resident Holder for the common share, and the Non-Resident Holder’s adjusted cost base of the common share so acquired will be determined by averaging the cost of the common share so acquired with the adjusted cost base to the Non-Resident Holder of all common shares, if any, held by the Non-Resident Holder as capital property immediately prior to such acquisition.
Dispositions of Common Shares and Common Warrants
Upon a disposition or a deemed disposition of a common share (other than a disposition to the Company that is not a sale in the open market in the manner in which shares would normally be purchased by any member of the public in an open market) or a Common Warrant, a Non-Resident Holder will generally realize a capital gain (or a capital loss) equal to the amount by which the proceeds of disposition of the common share or Common Warrant, as the case may be, net of any reasonable costs of disposition, is greater (or are less) than the adjusted cost base of the common share or the Common Warrant, as the case may be, to the Non-Resident Holder.
A Non-Resident Holder will generally not be subject to tax under the Tax Act in respect of a capital gain realized on the disposition or deemed disposition of a common share or a Common Warrant unless the common share or the Common Warrant, as the case may be, constitutes “taxable Canadian property” (as defined in the Tax Act) of the Non-Resident Holder and the gain is not exempt from tax pursuant to the terms of an applicable income tax treaty or convention.
Provided that the common shares are listed on a “designated stock exchange” for purposes of the Tax Act (which currently includes the CSE) at the time of disposition, the common shares and the Common Warrants generally will not constitute “taxable Canadian property” of a Non-Resident Holder, unless at any time during the 60-month period immediately preceding the disposition, the following two conditions were satisfied concurrently:
| (a) | one or any combination of: (A) the Non-Resident Holder, (B) persons with whom Non-Resident Holder did not deal at arm’s length, and (C) partnerships in which the Non-Resident Holder or a person described in (B) holds a membership interest directly or indirectly through one or more partnerships, owned 25% or more of the issued shares of any class or series of shares of the Company and; |
| (b) | more than 50% of the fair market value of the common shares was derived directly or indirectly from one or any combination of real or immovable property situated in Canada, “Canadian resource properties” (as defined in the Tax Act), “timber resource properties” (as defined in the Tax Act) or options in respect of, interests in, or for civil law rights in, any such property, whether or not such property exists. |
Notwithstanding the foregoing, a common share or a Common Warrant may be deemed to be taxable Canadian property of a Non-Resident Holder for purposes of the Tax Act in certain circumstances.
Certain reporting obligations under the Tax Act may also apply in connection with the disposition or deemed disposition of common shares or Common Warrants by a Non-Resident Holder that are or are deemed to be taxable Canadian property.
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Non-Resident Holders whose common shares or Common Warrants may be taxable Canadian property should consult their own tax advisors.
Material United States Federal Income Tax Considerations
The following is a general summary of material U.S. federal income tax considerations applicable to a U.S. Holder (as defined below) arising from and relating to the acquisition, ownership, and disposition of common shares or Common Warrants of the Company as acquired pursuant to this offering. This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential tax considerations that may apply to a U.S. Holder arising from and relating to the acquisition, ownership and disposition of common shares or Common Warrants acquired pursuant to this offering. In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences to such U.S. Holder, including, without limitation, specific tax consequences to a U.S. Holder under an applicable income tax treaty. Accordingly, this summary is not intended to be, and should not be construed as, legal or tax advice with respect to any particular U.S. Holder. This summary does not address the U.S. federal alternative minimum, U.S. federal net investment income, U.S. federal estate and gift, and other U.S. federal, U.S. state and local, and non-U.S. tax consequences to U.S. Holders of the acquisition, ownership and disposition of common shares or Common Warrants, as applicable, as acquired pursuant to this offering. In addition, except as specifically set forth below, this summary does not discuss applicable tax reporting requirements. Each prospective U.S. Holder should consult its own tax advisors regarding the U.S. federal income, U.S. federal alternative minimum, U.S. federal net investment income, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences relating to the acquisition, ownership and disposition of common shares or Common Warrants, as applicable, as acquired pursuant to this offering.
Neither a ruling from the Internal Revenue Service (the “IRS”) nor an opinion of legal counsel has been requested, or will be obtained, regarding the U.S. federal income tax consequences of the acquisition, ownership and disposition of common shares or Common Warrants as acquired pursuant to this offering. This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, or contrary to, the positions taken in this summary. In addition, because the authorities on which this summary is based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or more of the conclusions described in this summary.
Scope of this Summary
Authorities
This summary is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), existing Treasury Regulations (whether final, temporary, or proposed) promulgated thereunder, published rulings of the IRS, published administrative positions of the IRS, the current provisions of the Convention between the United States of America and Canada with respect to Taxes on Income and on Capital (the “Canada-U.S. Tax Convention”), and U.S. court decisions that are applicable, and, in each case, as in effect and available, as of the date of this prospectus. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive or prospective basis, which could affect or cause the U.S. federal income tax considerations described in this summary to vary substantially from those described below. Except as provided herein, this summary does not discuss the potential effects, whether adverse or beneficial, of any pending or proposed legislation that, if enacted, could be applied on a retroactive, current or prospective basis.
U.S. Holders
For purposes of this summary, the term “U.S. Holder” means a beneficial owner of common shares or Common Warrants as acquired pursuant to this offering, that is for U.S. federal income tax purposes:
| • | An individual who is a citizen or resident of the United States; |
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| • | a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; |
| • | an estate whose income is subject to U.S. federal income taxation regardless of its source; or |
| • | a trust that (1) is subject to the primary supervision of a court within the U.S. and the control of one or more United States persons (as defined in the Code) for all substantial decisions or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a United States person. |
Non-U.S. Holders
For purposes of this summary, a “non-U.S. Holder” is a beneficial owner of common shares or Common Warrants as acquired pursuant to this offering that is not a U.S. Holder and not an entity or arrangement classified as a partnership for U.S. federal income tax purposes. This summary does not address the U.S. federal, state or local tax consequences to non-U.S. Holders arising from or relating to the acquisition, ownership and disposition of common shares or Common Warrants as acquired pursuant to this offering. Accordingly, a non-U.S. Holder should consult its own tax advisors regarding the U.S. federal, state, local and non-U.S. tax consequences (including the potential application of and operation of any income tax treaties) relating to the acquisition, ownership and disposition of common shares or Common Warrants, as applicable, as acquired pursuant to this offering.
U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed
This summary does not address the U.S. federal income tax considerations applicable to U.S. Holders that are subject to special provisions under the Code, including, but not limited to U.S. Holders that: (a) are tax-exempt organizations, governmental organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) are financial institutions, underwriters, insurance companies, mutual funds, real estate investment trusts, or regulated investment companies; (c) are broker-dealers, dealers, or traders in securities, currencies, or commodities or traders that elect to apply a mark-to-market accounting method; (d) have a “functional currency” other than the U.S. dollar; (e) own common shares or warrants as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other integrated transaction; (f) acquire common shares in connection with the exercise of employee share options or otherwise as compensation for services; (g) hold common shares or warrants other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes); (h) are subject to the alternative minimum tax; (i) are subject to special tax accounting rules with respect to the common shares or warrants; (j) are partnerships or other “pass-through” entities (and partners or other owners thereof); (k) are S corporations (and shareholders thereof); (l) are U.S. expatriates or former citizens or long-term residents of the United States; (m) hold common shares or warrants in connection with a trade or business, permanent establishment, or fixed base outside the United States; or (n) own or have owned or will own (directly, indirectly, or by attribution) 10% or more of the total combined voting power or value of our outstanding shares. U.S. Holders that are subject to special provisions under the Code, including, but not limited to, U.S. Holders described immediately above, should consult their own tax advisors regarding the U.S. federal, U.S. state and local, and non-U.S. tax consequences relating to the acquisition, ownership and disposition of common shares and warrants.
If an entity or arrangement that is classified as a partnership (or other “pass-through” entity) for U.S. federal income tax purposes holds common shares or warrants, the U.S. federal income tax consequences to such entity or arrangement and the partners (or other owners or participants) of such entity or arrangement generally will depend on the activities of the entity or arrangement and the status of such partners (or owners or participants). This summary does not address the tax consequences to any such partner (or owner or participant). Partners (or other owners or participants) of entities or arrangements that are classified as partnerships or as “pass-through” entities for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal, U.S. state and local, and non-U.S. tax consequences arising from and relating to the acquisition, ownership and disposition of common shares or warrants.
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Passive Foreign Investment Company Rules
If we were to constitute a “passive foreign investment company” or “PFIC” for any year during a U.S. Holder’s holding period, then certain potentially adverse rules described below would affect the U.S. federal income tax consequences to a U.S. Holder resulting from the acquisition, ownership and disposition of common shares or Common Warrants. We do not believe we were a PFIC within the meaning of Section 1297 of the Code for our most recently ended taxable year and based on current business plans and financial expectations, we do not expect to be a PFIC for our current taxable year. However, no opinion of legal counsel or ruling from the IRS concerning our status as a PFIC has been obtained or is currently planned to be requested. The determination of whether any corporation was, or will be, a PFIC for a tax year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations. In addition, whether any corporation will be a PFIC for any tax year depends on the assets and income of such corporation over the course of each such tax year and, as a result, cannot be predicted with certainty as of the date of this prospectus. Accordingly, no assurance can be given concerning our (or any of our non-U.S. subsidiaries) PFIC status. Each U.S. Holder should consult its own tax advisors regarding our PFIC status and the PFIC status of each of our non-U.S. subsidiaries.
We generally will be a PFIC if, for a given year, (a) 75% or more of our gross income in such year is passive income (the “PFIC income test”) or (b) 50% or more of the value of our assets either produce passive income or are held for the production of passive income, based generally on the quarterly average of the fair market value of such assets (the “PFIC asset test”). “Gross income” generally includes all sales revenues less the cost of goods sold, plus income from investments and from incidental or outside operations or sources, and “passive income” generally includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions. Active business gains arising from the sale of commodities generally are excluded from passive income if substantially all of a corporation’s commodities are stock in trade or inventory, depreciable property used in a trade or business, or supplies regularly used or consumed in the ordinary course of its trade or business, and certain other requirements are satisfied.
For purposes of the PFIC income test and PFIC asset test described above, if we own, directly or indirectly, 25% or more of the total value of the outstanding shares of another corporation, we will be treated as if we (a) held a proportionate share of the assets of such other corporation and (b) received directly a proportionate share of the income of such other corporation. In addition, for purposes of the PFIC income test and PFIC asset test described above, and assuming certain other requirements are met, “passive income” does not include certain interest, dividends, rents, or royalties that are received or accrued by us from certain “related persons” also organized in Canada, to the extent such items are properly allocable to the income of such related person that is not passive income.
Under certain attribution rules, if we are a PFIC, U.S. Holders will generally be deemed to own their proportionate share of our direct or indirect equity interest in any company that is also a PFIC (a “Subsidiary PFIC”), and will generally be subject to U.S. federal income tax on their proportionate share of (a) any excess distributions on the stock of a Subsidiary PFIC and (b) a disposition or deemed disposition of the stock of a Subsidiary PFIC by us or another Subsidiary PFIC, both as if such U.S. Holders directly held the shares of such Subsidiary PFIC. In addition, U.S. Holders may be subject to U.S. federal income tax on any indirect gain realized on the stock of a Subsidiary PFIC on the sale or disposition of common shares or Common Warrants. Accordingly, U.S. Holders should be aware that they could be subject to tax under the PFIC rules even if no distributions are received and no redemptions or other dispositions of common shares or Common Warrants are made.
If we are classified as a PFIC for any year during which a U.S. Holder holds common shares, such U.S. Holder would be liable for additional taxes and interest charges under the “PFIC excess distribution regime” upon (1) a distribution paid during a taxable year that is greater than 125% of the average annual distributions paid in the three preceding taxable years, or, if shorter, the U.S. Holder’s holding period for the common shares, and (2) any gain recognized on a sale, exchange or other disposition, including a pledge, of the common shares, whether or not we continue to be a PFIC. Under the PFIC excess distribution regime, the tax on such distribution or gain would be determined by allocating the distribution or gain ratably over the U.S. Holder’s holding period for the
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common shares. The amount allocated to the current taxable year (i.e., the year in which the distribution occurs or the gain is recognized) and any year prior to the first taxable year in which we are a PFIC would be taxed as ordinary income earned in the current taxable year. The amount allocated to other taxable years would be taxed at the highest marginal rates applicable to ordinary income of individuals or corporations, as applicable, for each such taxable year, and an interest charge, generally applicable to underpayments of tax, would be added to the tax. A U.S. Holder of Common Warrants would generally be taxed in a manner similar to a U.S. Holder of common shares if such U.S. Holder realizes gain on the sale of the Common Warrants. If the U.S. Holder of the Common Warrants exercises such warrants to purchase common shares, the holding period over which any income realized is allocated includes the holding period of the Common Warrants. The U.S. Holder of the Common Warrants is treated as a holder of PFIC stock taxable under the ordinary income allocation and interest charge regime described above.
If we are a PFIC, a U.S. Holder will not be subject to tax under the PFIC excess distribution regime on distributions or gain recognized on common shares if such U.S. Holder makes a valid “mark-to-market” election for our common shares. A mark-to-market election is available to a U.S. Holder only for “marketable stock.” “Marketable stock” is stock that is regularly traded on a qualified exchange or other market, as defined in applicable Treasury Regulations. Warrants may also be considered as “marketable stock” to the extent the warrants are also regularly traded on a qualified exchange or other market, as defined in applicable Treasury Regulations. The Nasdaq is a qualified exchange, but there can be no assurance that the trading in our common shares will be sufficiently regular to qualify our common shares as marketable stock. If a mark-to-market election is in effect, a U.S. Holder generally would take into account, as ordinary income each year, the excess of the fair market value of common shares held at the end of such taxable year over the adjusted tax basis of such common shares. The U.S. Holder would also take into account, as an ordinary loss each year, the excess of the adjusted tax basis of such common shares over their fair market value at the end of the taxable year, but only to the extent of the excess of amounts previously included in income over ordinary losses previously deducted as a result of the mark-to-market election. The U.S. Holder’s tax basis in the common shares would be adjusted to reflect any income or loss recognized as a result of the mark-to-market election. Any gain from a sale, exchange or other disposition of common shares in any taxable year in which we are a PFIC would be treated as ordinary income and any loss from such sale, exchange or other disposition would be treated first as ordinary loss (to the extent of any net mark-to-market gains previously included in income) and thereafter as a capital loss. A U.S. Holder of Common Warrants may not be entitled to make a “mark-to-market” election for the Common Warrants.
A mark-to-market election will not apply to common shares for any taxable year during which we are not a PFIC, but will remain in effect with respect to any subsequent taxable year in which we become a PFIC. Such election will not apply to any of our non-U.S. corporate subsidiaries that are themselves PFICs. Accordingly, a U.S. Holder may continue to be subject to tax under the PFIC rules with respect to any lower-tier PFICs that we may own notwithstanding the U.S. Holder’s mark-to-market election for the common shares. Each U.S. holder should consult its own tax advisor as to the availability and desirability of a mark-to-market election, as well as the impact of such election on interests in any lower-tier PFICs.
The tax consequences that would apply if we are a PFIC would also be different from those described above if a U.S. Holder were able to make a valid Qualified Electing Fund (“QEF”) election for the common shares. At this time we do not expect to provide U.S. Holders with the information necessary for a U.S. Holder to make a QEF election, and therefore prospective investors should assume that a QEF election will not be available.
In any year in which we are classified as a PFIC, each U.S. Holder that is an investor generally is required to file an annual information return, including the requirement to file IRS Form 8621. The failure to file IRS Form 8621 could result in the imposition of penalties and the extension of the statute of limitations with respect to U.S. federal income tax. U.S. Holders should consult their own tax advisors regarding the requirements of filing such information returns under these rules, including the requirement to file an IRS Form 8621 annually.
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The U.S. federal income tax rules relating to PFICs are very complex. Prospective U.S. investors are strongly urged to consult their own tax advisors with respect to the impact of PFIC status on the purchase, ownership and disposition of our common shares or Common Warrants.
General Rules Applicable to the Ownership and Disposition of Common Shares
The following discussion is subject, in its entirety, to the rules described above under the heading “Passive Foreign Investment Company Rules”.
Distributions on Common Shares
A U.S. Holder that receives a distribution, including a constructive distribution, with respect to our common shares will be required to include the amount of such distribution in gross income as a dividend (without reduction for any Canadian income tax withheld from such distribution) to the extent of our current or accumulated “earnings and profits”, as computed for U.S. federal income tax purposes. To the extent that a distribution exceeds our current and accumulated “earnings and profits”, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder’s tax basis in the common shares, and thereafter as gain from the sale or exchange of such common shares. (See “Sale or Other Taxable Disposition of Common Shares” below). However, we do not intend to maintain the calculations of our earnings and profits in accordance with U.S. federal income tax principles, and each U.S. Holder therefore should assume that any distribution by us with respect to common shares will constitute ordinary dividend income.
Dividends received on common shares by corporate U.S. Holders generally will not be eligible for the “dividends received deduction” generally applicable to corporations. Subject to applicable limitations and provided we are eligible for the benefits of the Canada-U.S. Tax Convention or the common shares are readily tradable on a United States securities market such as Nasdaq, dividends paid by us to non-corporate U.S. Holders, including individuals, in respect of common shares generally will be eligible for the preferential tax rates applicable to long-term capital gains for dividends, provided certain holding period and other conditions are satisfied, including that we not be classified as a PFIC in the tax year of distribution or in the preceding tax year. The dividend rules are complex, and each U.S. Holder should consult its own tax advisors regarding the application of such rules to it in light of its own circumstances.
Except as described above in “Passive Foreign Investment Company Rules,” ownership of Common Warrants generally has no tax impact on U.S. Holders since holders of warrants do not receive distributions unless and until the warrants are exercised and common shares are purchased. As described above, if we are a PFIC, ownership of Common Warrants may impact the holding period of PFIC shares and impact elections under the PFIC tax rules.
Exercise or Expiry of Common Warrants
No gain or loss will be realized on the exercise of a Common Warrant. When a Common Warrant is exercised, the U.S. Holder’s cost of the common share acquired thereby will be equal to the U.S. Holder’s adjusted cost basis of the Common Warrant plus the exercise price paid for the common share. The expiry of an unexercised Common Warrant will generally give rise to a capital loss equal to the adjusted cost basis to the U.S. Holder of the expired Common Warrant. The holding period of the common share acquired thru the exercise of a Common Warrant includes the holding period of the Common Warrant. See “Passive Foreign Investment Company Rules,” for the impact of the exercise of a Common Warrant on taxation of a U.S. Holder if we are a PFIC.
Sale or Other Taxable Disposition of Common Shares or Common Warrants
Upon the sale or other taxable disposition of common shares or Common Warrants a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the U.S. dollar value of cash received
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plus the fair market value of any property received and such U.S. Holder’s tax basis in such common shares or Common Warrants, as applicable, sold or otherwise disposed of. Gain or loss recognized on such sale or other taxable disposition generally will be long-term capital gain or loss if, at the time of the sale or other taxable disposition, the common shares or Common Warrants, as applicable, have been held for more than one year.
Preferential tax rates may apply to long-term capital gain of a U.S. Holder that is an individual, estate, or trust. There are currently no preferential tax rates for long-term capital gain of a U.S. Holder that is a corporation. Deductions for capital losses are subject to significant limitations under the Code. Each U.S. Holder should consult its own tax advisors regarding the tax consequences of a sale or other taxable disposition of common shares or Common Warrants in light of its own circumstances.
Additional Considerations
Receipt of Non-U.S. Currency
The amount of any distribution paid to a U.S. Holder in non-U.S. currency, or on the sale, exchange or other taxable disposition of common shares or Common Warrants generally will be equal to the U.S. dollar value of such non-U.S. currency based on the exchange rate applicable on the date of sale or other disposition (regardless of whether such non-U.S. currency is converted into U.S. dollars at that time). In such case, except as described in the next sentence, on the settlement date the U.S. Holder would recognize U.S. source foreign currency gain or loss (taxable as ordinary income or loss) equal to the difference (if any) between the U.S. dollar value of the amount received based on the exchange rates in effect on the date of sale or other disposition and the settlement date. However, if our common shares are traded on an established securities market such as Nasdaq, the amount realized by a cash basis U.S. Holder will be based on the exchange rate in effect on the settlement date for the sale, and no foreign currency gain or loss will be recognized at that time. A U.S. Holder will have a tax basis in the non-U.S. currency equal to its U.S. dollar value on the date of receipt. Any U.S. Holder who converts or otherwise disposes of the non-U.S. currency after the date of receipt may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes. Different rules apply to U.S. Holders who use the accrual method of tax accounting. Each U.S. Holder should consult its own U.S. tax advisors regarding the U.S. federal income tax consequences of receiving, owning, and disposing of non-U.S. currency in light of its own circumstances.
Foreign Tax Credit
Dividends paid on the common shares will be treated as foreign-source income, and generally will be treated as “passive category income” or “general category income” for U.S. foreign tax credit purposes. Any gain or loss recognized on a sale or other disposition of common shares or Common Warrants generally will be U.S. source gain or loss. Certain U.S. Holders that are eligible for the benefits of the Canada-U.S. Tax Convention may elect to treat such gain or loss as Canadian source gain or loss for U.S. foreign tax credit purposes. The Code applies various complex limitations on the amount of foreign taxes that may be claimed as a credit by U.S. taxpayers.
A U.S. Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on the common shares generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax. Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income that is subject to U.S. federal income tax. This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a year. The foreign tax credit rules are complex and involve the application of rules that depend on a U.S. Holder’s particular circumstances. Accordingly, each U.S. Holder should consult its own U.S. tax advisor regarding the application of the foreign tax credit rules to it in light of its own circumstances.
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Backup Withholding and Information Reporting
Under U.S. federal income tax law and Treasury Regulations, certain U.S. Holders must file information returns with respect to their investment in, or involvement in, a foreign corporation. For example, U.S. return disclosure obligations (and related penalties) are imposed on individuals who are U.S. Holders that hold certain specified foreign financial assets in excess of certain threshold amounts. The definition of specified foreign financial assets includes not only financial accounts maintained in foreign financial institutions, but also, unless held in accounts maintained by a financial institution, any stock or security issued by a non-U.S. person, any financial instrument or contract held for investment that has an issuer or counterparty other than a U.S. person and any interest in a non-U.S. entity. U.S. Holders may be subject to these reporting requirements unless their common shares or Common Warrants are held in an account at certain financial institutions. Penalties for failure to file certain information returns are substantial. U.S. Holders should consult their own tax advisors regarding the requirements of filing information returns, including the requirement to file an IRS Form 8938.
Payments made within the U.S. or by a U.S. payer or U.S. middleman, of dividends on, and proceeds arising from the sale or other taxable disposition of common shares or Common Warrants generally will be subject to information reporting and backup withholding tax (currently at a rate of 24%) if a U.S. Holder (a) fails to furnish such U.S. Holder’s correct U.S. taxpayer identification number (generally on IRS Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding tax. However, certain exempt persons generally are excluded from these information reporting and backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the U.S. backup withholding rules generally will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner.
The discussion of reporting requirements set forth above is not intended to constitute a complete description of all reporting requirements that may apply to a U.S. Holder. Failure to satisfy certain reporting requirements may result in an extension of the time period during which the IRS can assess a tax, and under certain circumstances, such an extension may apply to assessments of amounts unrelated to any unsatisfied reporting requirement. Each U.S. Holder should consult its own tax advisors regarding the application of the information reporting and backup withholding rules to it in light of its own circumstances.
THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO THE ACQUISITION, OWNERSHIP AND DISPOSITION OF COMMON SHARES OR COMMON WARRANTS. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
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We have entered into an underwriting agreement with Joseph Gunnar & Co. LLC, or the underwriter, with respect to the securities subject to this offering.
Subject to certain conditions, we have agreed to sell to the underwriter such securities listed next to its name in the below table at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus.
| UNDERWRITER |
Number of Units |
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| Joseph Gunnar & Co., LLC |
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| Total |
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The underwriting agreement provides that the obligation of the underwriter to purchase the securities offered by this prospectus is subject to certain conditions. The underwriter is obligated to purchase all of the securities offered hereby other than those covered by the option to purchase additional securities described below. The underwriter is offering the securities, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, and other conditions contained in the underwriting agreement. The underwriter reserves the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
Option to Purchase Additional Securities
We have granted the underwriter an option to buy up to an additional 375,000 common shares at a price of US$5.99 per share, and/or Common Warrants to purchase up to an additional 375,000 common shares at a price of US$0.01 per Common Warrant from us, in each case, less the underwriting discounts and commissions set forth on the cover of this prospectus in any combination thereof to cover over-allotments, if any. The underwriter may exercise this option at any time, in whole at any time or in part from time to time, during the 45-day period after the closing of this offering. We will be obligated, pursuant to the option, to sell these additional Units to the underwriters to the extent the option is exercised. If any additional common shares and/or Common Warrants are purchased, the underwriter will offer the additional common shares and/or Common Warrants on the same terms as those on which the other Units are being offered hereunder.
Discounts, Commissions and Expenses
The underwriter proposes to offer the securities purchased pursuant to the underwriting agreement to the public at the public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of US$ per Unit. After this offering, the public offering price and concession may be changed by the underwriter. No such change shall change the amount of proceeds to be received by us as set forth on the cover page of this prospectus.
In connection with the sale of the securities to be purchased by the underwriter, the underwriter will be deemed to have received compensation in the form of underwriting commissions and discounts. The underwriting commissions and discounts will be up to 7.5% of the gross proceeds of this offering.
We have also paid an advance of US$15,000 to the underwriter (the “Advance”), which will be applied against the accountable expenses that will be paid by us to the underwriter in connection with this offering. The Advance will be returned to us to the extent not actually incurred by the underwriter in accordance with Financial Industry Regulation Authority (“FINRA”) Rule 5110(g)(4)(A).
We have agreed to reimburse the underwriter for up to approximately US$185,000 of the underwriter’s reasonable and accountable out-of-pocket expenses relating to the offering, including up to US$125,000 for the fees and expenses of the underwriter’s outside legal counsel. We have also agreed to pay the underwriter a non-accountable expense allowance in the amount of one percent (1.0%) of the gross proceeds from this offering.
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We estimate that our total offering expenses for this offering, net of the underwriting discounts and commissions, will be approximately US$1.5 million.
The following table summarizes the underwriting discounts and commissions and proceeds, before expenses, to us assuming both no exercise and full exercise by the underwriter of its over-allotment option:
| Price Per Unit |
Total without Option |
Total with Option |
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| Public offering price |
US$ | 6.00 | US$ | 15,000,000 | US$ | 17,250,000 | ||||||
| Underwriting discount(1) |
US$ | 0.45 | US$ | 1,125,000 | US$ | 1,293,750 | ||||||
| Non-accountable expense allowance(2) |
US$ | 0.06 | US$ | 150,000 | US$ | 172,500 | ||||||
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| Proceeds, before expenses, to us(3) |
US$ | 5.49 | US$ | 13,725,000 | US$ | 15,783,750 | ||||||
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| (1) | The underwriting discount is up to 7.5% of the gross proceeds received from the sale of the securities in this offering. |
| (2) | The non-accountable expense allowance is 1% of the gross proceeds received from the sale of the securities in this offering. |
| (3) | The amount of the offering proceeds to us presented in this table does not give effect to the exercise, if any, of the Underwriter Warrants (as defined below). |
Indemnification
We have also agreed to indemnify the underwriter against certain liabilities, including civil liabilities under the Securities Act and to contribute to payments that the underwriter may be required to make in respect of those liabilities.
Lock-Up Agreements
We have agreed that, for a period of one hundred and eighty (180) days following the date of this prospectus, without the prior written consent of the underwriter, and subject to certain exceptions, neither we nor any of our subsidiaries shall issue, enter into any agreement to issue or announce the issuance or proposed issuance of any common shares or common share equivalents or file any registration statement or amendment or supplement thereto, other than this prospectus. These restrictions do not apply in the following circumstances, subject to certain requirements:
| • | the adoption of an equity incentive plan and the grant of awards pursuant to any equity incentive plan, and the filing of a registration statement on Form S-8 relating to such a plan; |
| • | the issuance of equity securities in connection with an acquisition or a strategic relationship, which may include the sale of equity securities; |
| • | the issuance of equity securities in connection with the exercise of our outstanding options and warrants or pursuant to the terms of any agreement existing on the date of this prospectus; and |
| • | the filing of a resale registration statement with respect to existing registration rights of the Company. |
In addition, each of our directors and officers and certain of our shareholders have entered into a lock-up agreement with the underwriter. Under the lock-up agreements, for a period of one hundred and eighty (180) days following the date of this prospectus, without the prior written consent of the underwriter, the
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foregoing persons may not make any demand for, or exercise any right with respect to, the registration of any common shares or any security convertible into or exercisable or exchangeable for common shares. These restrictions do not apply in the following circumstances, subject to certain requirements:
| • | transfers of securities acquired in the offering or in open market transaction on or after completion of the offering; |
| • | transfers as a bona fide gift or gifts, or charitable contribution(s); |
| • | transfers to any immediate family member or to any trust for the direct or indirect benefit of the lock-up party or the immediate family of such person; |
| • | transfers to any corporation, partnership, limited liability company, or other business entity all of the beneficial ownership interests of which are held by the lock-up party and/or the immediate family of such person; |
| • | if a corporation, partnership, limited liability company, trust or other business entity transfers (a) to another corporation, partnership, limited liability company, trust or other business entity that is an affiliate, (b) in the form of a distribution to limited partners, limited liability company members or shareholders, or (c) in connection with a sale, merger or transfer of all or substantially all of the assets or any other change of control, not undertaken for the purpose of avoiding the restrictions imposed by such lock-up agreement; |
| • | transfers that occur by operation of law, such as pursuant to a qualified domestic order or in connection with a divorce settlement; |
| • | if a trust, to the beneficiary of such trust; |
| • | transfers by will, other testamentary document or intestate succession to the legal representative, heir, beneficiary or a member of the immediate family of the lock-up party; |
| • | vesting, settlement or exercise of any RSR awards or options to purchase common shares granted under any employee benefit plan of the Company; provided that any common shares acquired in connection with any such exercise will be subject to the same lock-up agreement restrictions; |
| • | exercise or conversion of warrants, convertible preferred shares or any other security convertible into or exercisable for common shares; provided that any common shares acquired in connection with any such exercise or conversion will be subject to the same lock-up agreement restrictions; and |
| • | establishing a trading plan pursuant to Rule 10b5-1 under the Exchange Act; provided that (i) such plan may only be established if no public announcement or filing with the SEC, or other applicable regulatory authority, is made in connection with the establishment of such plan during the 90-day restricted period (except as required by law or regulation) and (ii) no sale of common shares are made pursuant to such plan during the 90-day restricted period. |
Underwriter Warrants
Upon the closing of this offering, we have agreed to issue to the underwriter, or its designees, certain underwriter warrants (the “Underwriter Warrants”) to purchase a number of common shares equal to an aggregate of 5% of the total number of securities sold in this public offering, including any securities sold pursuant to the underwriter’s option to purchase additional common shares. The Underwriter Warrants will be exercisable at a per share exercise price equal to 120% of the offering price of the shares sold in this offering. The Underwriter Warrants will be exercisable commencing upon the closing of this offering and will expire five years from the commencement of sales in this offering. The Underwriter Warrants have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up pursuant to FINRA Rule 5110(e)(1)(A). The underwriter (or its permitted assignees under Rule 5110(e)(2)) will not sell, transfer, assign, pledge, or hypothecate the Underwriter Warrants or the securities underlying the Underwriter Warrants, nor will they engage in any hedging, short sale,
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derivative, put, or call transaction that would result in the effective economic disposition of the Underwriter Warrants or the underlying securities for a period commencing 180 days from the commencement of sales of the common shares in this Offering.
The Underwriter Warrants will provide for adjustment in the number and price of the Underwriter Warrants and the common shares underlying such Underwriter Warrants in the event of recapitalization, merger, share split or other structural transaction.
Tail Financing
The underwriter will be entitled to compensation with respect to any public or private offering or other financing or capital raising transaction of any kind (“Tail Financing”) to the extent that such financing or capital is provided to us by investors the underwriter contacted for the purpose of participating in this offering, if such Tail Financing is consummated at any time prior to the twelve month period following the date of this prospectus.
Electronic Distribution
This prospectus may be made available in electronic format on websites or through other online services maintained by the underwriter or by its affiliates. In those cases, prospective investors may view offering terms online and prospective investors may be allowed to place orders online. Other than this prospectus in electronic format, the information on the underwriter’s website or our website and any information contained in any other websites maintained by the underwriter or by us is not part of this prospectus or the registration statement of which this prospectus form a part, has not been approved and/or endorsed by us or the underwriter in its capacity as the underwriter, and should not be relied upon by investors.
Passive Market Making
In connection with this offering, the underwriter and selling group members may also engage in passive market making transactions in our common shares. Passive market making consists of displaying bids limited by the prices of independent market makers and effecting purchases limited by those prices in response to order flow. Rule 103 of Regulation M promulgated by the SEC limits the amount of net purchases that each passive market maker may make and the displayed size of each bid. Passive market making may stabilize the market price of the common shares at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.
Nasdaq Capital Market Listing
We have applied to list our common shares on Nasdaq under the symbol “OPTH.” No assurance can be given that our listing application will be approved. If we do not meet all of Nasdaq’s initial listing criteria or our application for listing is not otherwise accepted, we will not consummate this offering. Our common shares are currently traded on the CSE under the symbol “OPTI,” on the FSE under the symbol “8BN” and quoted for trading on the OTCQX under the symbol “OPTHF”.
Price Stabilization, Short Positions and Penalty Bids
In connection with the offering, the underwriter may engage in stabilizing transactions, short sales and syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act:
| • | Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. |
| • | A short position involves sales by the underwriter of shares in excess of the number of shares the underwriter is obligated to purchase, which creates a syndicate short position. The short position may |
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| be either a covered short position or a naked short position. In a covered short position, the number of shares involved in the sales made by the underwriter in excess of the number of shares it is obligated to purchase is not greater than the number of shares that they may purchase by exercising its option to purchase additional shares. In a naked short position, the number of shares involved is greater than the number of shares that the underwriter may purchase pursuant to its option to purchase additional shares. A naked short position is more likely to be created if the underwriter is concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. |
| • | Syndicate covering transactions involve purchases of the common shares in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriter will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through its option to purchase additional shares. The underwriter may close out any covered short position by either exercising its option to purchase additional shares and/or purchasing shares in the open market. A naked short position can only be closed out by buying shares in the open market. |
| • | Penalty bids permit the underwriter to reclaim a selling concession from a syndicate member when the common shares originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. |
These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common shares or preventing or retarding a decline in the market price of the common shares. As a result, the price of our common shares may be higher than the price that might otherwise exist in the open market. These transactions may be discontinued at any time.
Neither we nor the underwriter make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common shares. In addition, neither we nor the underwriter make any representation that the underwriter will engage in these transactions or that any transaction, if commenced, will not be discontinued without notice.
Pricing of the Offering
The public offering price will be determined by arm’s length negotiations between us and the underwriter. In determining the initial public offering price, we and the underwriter expect to consider a number of factors including:
| • | the trading price of the common shares on the CSE and the OTCQX and the information set forth in this prospectus and otherwise available to the underwriter; |
| • | our prospects and the history and prospects for the industry in which we compete; |
| • | an assessment of our management; |
| • | our prospects for future earnings; |
| • | the general condition of the securities markets at the time of this offering; |
| • | the recent market prices of, and demand for, publicly traded common shares of generally comparable companies; and |
| • | other factors deemed relevant by the underwriter and us. |
Neither we nor the underwriter can assure investors that an active trading market will develop for the common shares, or that the common shares will trade in the public market at or above the initial public offering price.
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Other Relationships
The underwriter is a full-service financial institution engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. The underwriter and its affiliates may, from time to time, engage in transactions with and perform services for us in the ordinary course of its business for which it may receive customary fees and reimbursement of expenses. In the ordinary course of its various business activities, the underwriter and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for its own account and for the accounts of its customers and may at any time hold long and short positions in such securities and instruments. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriter and its affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Offer Restrictions Outside the United States
Other than in the United States, no action has been taken by us or the underwriter that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
Australia
This prospectus is not a disclosure document under Chapter 6D of the Australian Corporations Act, has not been lodged with the Australian Securities and Investments Commission and does not purport to include the information required of a disclosure document under Chapter 6D of the Australian Corporations Act. Accordingly, (i) the offer of the securities under this prospectus is only made to persons to whom it is lawful to offer the securities without disclosure under Chapter 6D of the Australian Corporations Act under one or more exemptions set out in section 708 of the Australian Corporations Act, (ii) this prospectus is made available in Australia only to those persons as set forth in clause (i) above, and (iii) the offeree must be sent a notice stating in substance that by accepting this offer, the offeree represents that the offeree is such a person as set forth in clause (i) above, and, unless permitted under the Australian Corporations Act, agrees not to sell or offer for sale within Australia any of the securities sold to the offeree within 12 months after its transfer to the offeree under this prospectus.
Canada
All purchasers participating in this offering may not offer for sale, sell, dispose of or otherwise transfer any of the common share or warrants in Canada or over the facilities of the Canadian Securities Exchange or any other exchange in Canada upon which the common shares may be trading, for a period of four months and one day from the date of issuance of the common shares.
The common shares and warrants may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or
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subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the securities must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws. Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor. Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriter is not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
Cayman Islands
No invitation, whether directly or indirectly, may be made to the public in the Cayman Islands to subscribe for our securities.
European Economic Area—Belgium, Germany, Luxembourg and Netherlands
The information in this document has been prepared on the basis that all offers of securities will be made pursuant to an exemption under the Regulation (EU) 2017/1129 (the “Prospectus Regulation”), as implemented in Member States of the European Economic Area (each, a “Relevant Member State”), from the requirement to produce a prospectus for offers of securities.
An offer to the public of securities has not been made, and may not be made, in a Relevant Member State except pursuant to one of the following exemptions under the Prospectus Regulation as implemented in that Relevant Member State:
| • | to legal entities that are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; |
| • | to any legal entity that has two or more of (i) an average of at least 250 employees during its last fiscal year; (ii) a total balance sheet of more than €43,000,000 (as shown on its last annual unconsolidated or consolidated financial statements) and (iii) an annual net turnover of more than €50,000,000 (as shown on its last annual unconsolidated or consolidated financial statements); |
| • | to fewer than 100 natural or legal persons (other than qualified investors within the meaning of Article 2(1)(e) of the Prospectus Regulation) subject to obtaining the prior consent of us or any underwriter for any such offer; or |
| • | in any other circumstances falling within Article 3(2) of the Prospectus Regulation, provided that no such offer of securities shall result in a requirement for the publication by us of a prospectus pursuant to Article 3 of the Prospectus Regulation. |
France
This document is not being distributed in the context of a public offering of financial securities (offre au public de titres financiers) in France within the meaning of Article L.411-1 of the French Monetary and Financial Code (Code Monétaire et Financier) and Articles 211-1 et seq. of the General Regulation of the French Autorité des marchés financiers (“AMF”). The securities have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France.
This document and any other offering material relating to the securities have not been, and will not be, submitted to the AMF for approval in France and, accordingly, may not be distributed or caused to be distributed, directly or indirectly, to the public in France.
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Such offers, sales and distributions have been and shall only be made in France to (i) qualified investors (investisseurs qualifiés) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2° and D.411-1 to D.411-3, D.744-1, D.754-1; and D.764-1 of the French Monetary and Financial Code and any implementing regulation and/or (ii) a restricted number of non-qualified investors (cercle restreint d’investisseurs) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2° and D.411-4, D.744-1, D.754-1; and D.764-1 of the French Monetary and Financial Code and any implementing regulation.
Pursuant to Article 211-3 of the General Regulation of the AMF, investors in France are informed that the securities cannot be distributed (directly or indirectly) to the public by the investors otherwise than in accordance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 to L.621-8-3 of the French Monetary and Financial Code.
Ireland
The information in this document does not constitute a prospectus under any Irish laws or regulations and this document has not been filed with or approved by any Irish regulatory authority as the information has not been prepared in the context of a public offering of securities in Ireland within the meaning of the Irish Prospectus (Directive 2003/71/EC) Regulations 2005 (the “Prospectus Regulations”). The securities have not been offered or sold, and will not be offered, sold or delivered directly or indirectly in Ireland by way of a public offering, except to (i) qualified investors as defined in Regulation 2(1) of the Prospectus Regulations and (ii) fewer than 100 natural or legal persons who are not qualified investors.
Israel
The securities offered by this prospectus have not been approved or disapproved by the Israeli Securities Authority (the “ISA”), nor have such securities been registered for sale in Israel. The shares may not be offered or sold, directly or indirectly, to the public in Israel, absent the publication of a prospectus. The ISA has not issued permits, approvals or licenses in connection with the offering or publishing the prospectus; nor has it authenticated the details included herein, confirmed their reliability or completeness, or rendered an opinion as to the quality of the securities being offered. Any resale in Israel, directly or indirectly, to the public of the securities offered by this prospectus is subject to restrictions on transferability and must be effected only in compliance with the Israeli securities laws and regulations.
Italy
The offering of the securities in the Republic of Italy has not been authorized by the Italian Securities and Exchange Commission (Commissione Nazionale per le Society e la Borsa, “CONSOB” pursuant to the Italian securities legislation) and, accordingly, no offering material relating to the securities may be distributed in Italy and such securities may not be offered or sold in Italy in a public offer within the meaning of Article 1.1(t) of Legislative Decree No. 58 of 24 February 1998 (“Decree No. 58”), other than:
| • | to Italian qualified investors, as defined in Article 100 of Decree no.58 by reference to Article 34-ter of CONSOB Regulation no. 11971 of 14 May 1999 (“Regulation no. 11971”) as amended (“Qualified Investors”); and |
| • | in other circumstances that are exempt from the rules on public offer pursuant to Article 100 of Decree No. 58 and Article 34-ter of Regulation No. 11971 as amended. |
Any offer, sale or delivery of the securities or distribution of any offer document relating to the securities in Italy (excluding placements where a Qualified Investor solicits an offer from the issuer) under the paragraphs above must be:
| • | made by investment firms, banks or financial intermediaries permitted to conduct such activities in Italy in accordance with Legislative Decree No. 385 of 1 September 1993 (as amended), Decree No. 58, CONSOB Regulation No. 16190 of 29 October 2007 and any other applicable laws; and |
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| • | in compliance with all relevant Italian securities, tax and exchange controls and any other applicable laws. |
Any subsequent distribution of the securities in Italy must be made in compliance with the public offer and prospectus requirement rules provided under Decree No. 58 and the Regulation No. 11971, as amended, unless an exception from those rules applies. Failure to comply with such rules may result in the sale of such securities being declared null and void and in the liability of the entity transferring the securities for any damages suffered by the investors.
Japan
The securities have not been and will not be registered under Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948), as amended (the “FIEL”) pursuant to an exemption from the registration requirements applicable to a private placement of securities to Qualified Institutional Investors (as defined in and in accordance with Article 2, paragraph 3 of the FIEL and the regulations promulgated thereunder). Accordingly, the securities may not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan other than Qualified Institutional Investors. Any Qualified Institutional Investor who acquires securities may not resell them to any person in Japan that is not a Qualified Institutional Investor, and acquisition by any such person of securities is conditional upon the execution of an agreement to that effect.
Portugal
This document is not being distributed in the context of a public offer of financial securities (oferta publica de valores mobiliarios) in Portugal, within the meaning of Article 109 of the Portuguese Securities Code (Codigo dos Valores Mobiliarios). The securities have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in Portugal. This document and any other offering material relating to the securities have not been, and will not be, submitted to the Portuguese Securities Market Commission (Comissao do Mercado de Valores Mobiliarios) for approval in Portugal and, accordingly, may not be distributed or caused to distributed, directly or indirectly, to the public in Portugal, other than under circumstances that are deemed not to qualify as a public offer under the Portuguese Securities Code. Such offers, sales and distributions of securities in Portugal are limited to persons who are “qualified investors” (as defined in the Portuguese Securities Code). Only such investors may receive this document and they may not distribute it or the information contained in it to any other person.
Sweden
This document has not been, and will not be, registered with or approved by Finansinspektionen (the Swedish Financial Supervisory Authority). Accordingly, this document may not be made available, nor may the securities be offered for sale in Sweden, other than under circumstances that are deemed not to require a prospectus under the Swedish Financial Instruments Trading Act (1991:980) (Sw. lag (1991:980) om handel med finansiella instrument). Any offering of securities in Sweden is limited to persons who are “qualified investors” (as defined in the Financial Instruments Trading Act). Only such investors may receive this document and they may not distribute it or the information contained in it to any other person.
Switzerland
The securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering material relating to the securities may be publicly distributed or otherwise made publicly available in Switzerland.
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Neither this document nor any other offering material relating to the securities have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of securities will not be supervised by, the Swiss Financial Market Supervisory Authority (FINMA).
This document is personal to the recipient only and not for general circulation in Switzerland.
United Arab Emirates
Neither this document nor the securities have been approved, disapproved or passed on in any way by the Central Bank of the United Arab Emirates or any other governmental authority in the United Arab Emirates, nor have we received authorization or licensing from the Central Bank of the United Arab Emirates or any other governmental authority in the United Arab Emirates to market or sell the securities within the United Arab Emirates.
This document does not constitute and may not be used for the purpose of an offer or invitation. No services relating to the securities, including the receipt of applications and/or the allotment or redemption of such shares, may be rendered within the United Arab Emirates by us.
No offer or invitation to subscribe for securities is valid or permitted in the Dubai International Financial Centre.
United Kingdom
Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Markets Act 2000, as amended (“FSMA”) has been published or is intended to be published in respect of the securities. This document is issued on a confidential basis to “qualified investors” (within the meaning of section 86(7) of FSMA) in the United Kingdom, and the securities may not be offered or sold in the United Kingdom by means of this document, any accompanying letter or any other document, except in circumstances which do not require the publication of a prospectus pursuant to section 86(1) FSMA. This document should not be distributed, published or reproduced, in whole or in part, nor may its contents be disclosed by recipients to any other person in the United Kingdom.
Any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) received in connection with the issue or sale of the securities has only been communicated or caused to be communicated and will only be communicated or caused to be communicated in the United Kingdom in circumstances in which section 21(1) of FSMA does not apply to us.
In the United Kingdom, this document is being distributed only to, and is directed at, persons (i) who have professional experience in matters relating to investments falling within Article 19(5) (investment professionals) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (“FPO”), (ii) who fall within the categories of persons referred to in Article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the FPO or (iii) to whom it may otherwise be lawfully communicated (together “relevant persons”). The investments to which this document relates are available only to, and any invitation, offer or agreement to purchase will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.
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EXPENSES RELATED TO THIS OFFERING
Set forth below is an itemization of our total expenses, excluding underwriting discounts and commissions, which are expected to be incurred in connection with the offer and sale of the common shares by us. With the exception of the SEC registration fee, the FINRA filing fee and the Nasdaq listing fee, all amounts are estimates.
| Amount | ||||
| SEC registration fee |
$ | 5,384 | ||
| FINRA filing fee |
4,552 | |||
| The Nasdaq listing fee |
50,000 | |||
| Accounting fees and expenses |
25,000 | |||
| Legal fees and expenses |
1,075,000 | |||
| Printing fees and expenses |
210,000 | |||
| Miscellaneous costs |
150,000 | |||
|
|
|
|||
| TOTAL |
$ | 1,519,936 | ||
|
|
|
|||
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Certain legal matters as to the United States federal securities and New York state law in connection with this offering will be passed upon for us by Norton Rose Fulbright US LLP. The validity of the common shares offered in this offering and certain other legal matters as to Canadian law will be passed upon for us by Norton Rose Fulbright Canada LLP. Certain legal matters in connection with this offering will be passed upon for the underwriter by Cozen O’Connor, New York, New York.
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The financial statements of Optimi Health Corp. as of September 30, 2025 and 2024 and for the years then ended included in this prospectus have been audited by Davidson & Company LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such financial statements are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
The office of Davidson & Company LLP is located at 1200—609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, B.C., Canada V7Y 1G6.
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CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
On November 6, 2024, Smythe LLP (“Smythe”) resigned as our independent registered public accounting firm, and our Board of Directors, on the recommendation of the Audit Committee of our Board of Directors, appointed Davidson & Company LLP (“Davidson”) as our new independent registered public accounting firm.
The report of Smythe on our consolidated financial statements for the fiscal year ended September 30, 2023 did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope, or accounting principles, except to indicate that there was substantial doubt about the Company’s ability to continue as a going concern. During fiscal years ended September 30, 2023 and 2024 and the subsequent interim period through November 6, 2024, (i) there were no “disagreements” (as the term is defined in Item 16F(a)(1)(iv) of Form 20-F) between Smythe and us on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Smythe would have caused Smythe to make a reference thereto in its reports on the financial statements for such fiscal years and (ii) during the fiscal years ended September 30, 2022 and 2023 and the subsequent interim period through November 6, 2024, there have been no “reportable events” as the term is defined in Item 16F(a)(1)(v) of Form 20-F.
We provided a copy of this disclosure to Smythe and requested it to furnish us with a letter addressed to the SEC stating whether it agrees with the above statements, and if not, stating the respects in which it does not agree. Smythe will furnish such letter as Exhibit 16.1 to this registration statement.
During the fiscal year ended September 30, 2023 and 2024, and the subsequent interim period through November 6, 2024, neither we nor any person on our behalf consulted with Davidson regarding either (i) the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on our financial statements and no written or oral advice was provided by Davidson was an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) any matter that was the subject of a disagreement or reportable event as defined in Form 20-F.
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ENFORCEMENT OF CIVIL LIABILITIES
We are incorporated under the laws of British Columbia. Our directors and officers, and some of the experts named in this prospectus, are residents of Canada or otherwise reside outside of the United States, and all or a substantial portion of their assets, and all or a substantial portion of our assets, are located outside of the United States. We have appointed an agent for service of process in the United States, but it may be difficult for shareholders who reside in the United States to effect service within the United States upon those directors, officers and experts who are not residents of the United States. It may also be difficult for shareholders who reside in the United States to realize in the United States upon judgments of courts of the United States predicated upon our civil liability and the civil liability of our directors, officers and experts under the United States federal securities laws.
Furthermore, because substantially all of our assets and all of our directors and officers are located outside the United States, any judgment obtained in the United States against us or any of our directors and officers may not be collectible within the United States. Without an order from a court of Canada, there can be no assurance that U.S. investors will be able to enforce against us, members of our Board of Directors, officers or certain experts named herein who are residents of Canada or other countries outside the United States, any judgments of courts of the United States in civil and commercial matters, including judgments of courts of the United States under the federal securities laws.
While Canadian courts are permitted to consider and apply United States laws in Canadian legal proceedings, including U.S. federal securities laws, there is uncertainty with respect to whether a Canadian court would take jurisdiction on a matter of liability predicated solely upon U.S. federal securities laws. Generally, Canadian courts have territorial competence in a legal proceeding if, among other things, there is a real and substantial connection between a Canadian province or territory and the facts on which the proceeding is based. A real and substantial connection between a Canadian province or territory and the facts on which the proceeding based is generally presumed to exist if, among other things, the proceeding concerns a business carried on in Canada, concerns a tort committed in Canada, and/or concerns contractual obligations that, to a substantial extent, were to be performed in Canada. While there is uncertainty with respect to whether a Canadian court would enforce a foreign judgment on liabilities predicated upon the securities laws of the United States, each Canadian province has enacted a statutory regime that allows a person to apply to enforce a foreign judgment obtained from a U.S. court, including on liabilities predicated upon the securities laws of the United States. Further, certain U.S. states have reciprocal agreements with Canadian provinces and territories regarding the enforcement of foreign judgments, which simplifies the process by which a person can seek to enforce a foreign judgment in Canada. In British Columbia, for example, the U.S. states of Washington, Alaska, California, Oregon, Colorado and Idaho are jurisdictions declared to be reciprocating states for the purposes of judgment enforcement under the Court Order Enforcement Act, R.S.B.C. 1996, C. 78. Other Canadian provinces have similar reciprocal relationships with certain U.S. states, which has the effect of simplifying foreign order enforcement, including with respect to liabilities predicated upon the securities laws of the United States.
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WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form F-1, including relevant exhibits and schedules, under the Securities Act with respect to the common shares to be sold in this offering. This prospectus, which constitutes a part of the registration statement, does not contain all of the information contained in the registration statement and the exhibits and schedules to the registration statement. You should read the registration statement on Form F-1 and its exhibits and schedules for further information with respect to us and the common shares. Each statement in this prospectus relating to a document filed as an exhibit is qualified in all respects by the filed exhibit.
Immediately upon completion of this offering, we will become subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we will be required to file and or furnish reports, including annual reports on Form 20-F, and other information with the SEC. The SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the website is www.sec.gov.
For so long as we remain a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing and content of proxy statements to shareholders and our executive officers, directors and principal shareholders are exempt from the short-swing profit recovery provisions contained in Section 16 of the Exchange Act, and for so long as we remain a foreign private issuer incorporated in Canada and subject to National Instrument 55-104 in Canada, our directors, officers and principal shareholders are exempt from the reporting provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| Page | ||||
| Consolidated Financial Statements for the Years Ended September 30, 2025 and 2024 (Expressed in Canadian Dollars) |
||||
| Report of Davidson & Company LLP, Independent Registered Public Accounting Firm |
F-3 | |||
| Consolidated Statements of Financial Position as of September 30, 2025 and 2024 |
F-5 | |||
| F-6 | ||||
| Consolidated Statements of Cash Flows for the Years Ended September 30, 2025 and 2024 |
F-7 | |||
| F-8 | ||||
| F-9 | ||||
| F-32 | ||||
| Consolidated Statements of Financial Position as of December 31, 2025 and 2024 |
F-33 | |||
| F-34 | ||||
| Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2025 and 2024 |
F-35 | |||
| F-36 | ||||
| F-37 | ||||
F-1
Table of Contents
PREFACE STATEMENT
The registration statement on Form F-1 under the Securities Act includes a draft report of independent registered public accounting firm due to the ongoing Reverse Share Split. We expect to be in a position to issue the audit report in the form present after giving effect to the Reverse Share Split and prior to effectiveness of the registration statement.
/s/ DAVIDSON & COMPANY LLP
Chartered Professional Accountants
Vancouver, Canada
April 16, 2026
F-2
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Directors of
Optimi Health Corp.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Optimi Health Corp. (the “Company”) as of September 30, 2025 and 2024, and the related consolidated statements of loss and comprehensive loss, changes in shareholders’ equity, and cash flows for the years ended September 30, 2025 and 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2025 and 2024, and the results of its operations and its cash flows for the years ended September 30, 2025 and 2024, in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board.
Going Concern
The accompanying financial statements have been prepared assuming that the entity will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has not yet achieved profitable operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Company’s auditor since 2024.
| /s/ DAVIDSON & COMPANY LLP |
| Chartered Professional Accountants |
Vancouver, Canada
To be issued on the date (the Reverse Share Split is completed)
1200 – 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, B.C., Canada V7Y 1G6
Telephone (604) 687-0947 Davidson-co.com
F-3
Table of Contents
Optimi Health Corp.
Consolidated financial statements
Year Ended September 30, 2025
(Expressed in Canadian Dollars)
F-4
Table of Contents
Optimi Health Corp.
Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
| Note | September 30, $ |
September 30, $ |
||||||||||
| ASSETS |
||||||||||||
| Current |
||||||||||||
| Cash and cash equivalents |
4 | 1,145,065 | 103,660 | |||||||||
| Accounts receivable |
95,054 | 124,147 | ||||||||||
| Inventory |
5 | 310,388 | 894,820 | |||||||||
| Prepaids and advances |
7 | 275,720 | 109,960 | |||||||||
|
|
|
|
|
|||||||||
| Total current assets |
1,826,227 | 1,232,587 | ||||||||||
| Deposits |
17,548 | 17,548 | ||||||||||
| Deferred financing costs |
21 | 807,936 | — | |||||||||
| Plant and Equipment |
8 | 12,380,190 | 13,278,883 | |||||||||
| Right-of-use asset |
9 | 180,744 | 22,017 | |||||||||
|
|
|
|
|
|||||||||
| Total assets |
15,212,645 | 14,551,035 | ||||||||||
|
|
|
|
|
|||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||
| Current |
||||||||||||
| Accounts payable and accrued liabilities |
10 | 1,390,980 | 922,383 | |||||||||
| Due to related parties |
15 | 524,326 | 1,185,268 | |||||||||
| Deferred revenue |
11 | 207,759 | 116,391 | |||||||||
| Current portion of lease liabilities |
9 | 26,045 | 32,781 | |||||||||
| Current portion of loans payable |
12, 15 | 2,884,500 | 960,000 | |||||||||
| Convertible debentures |
13, 15 | 3,450,000 | — | |||||||||
|
|
|
|
|
|||||||||
| Total current liabilities |
8,483,610 | 3,216,823 | ||||||||||
| Lease liability |
9 | 158,374 | — | |||||||||
| Loans payable |
12 | — | 1,758,500 | |||||||||
|
|
|
|
|
|||||||||
| Total liabilities |
8,641,984 | 4,975,323 | ||||||||||
|
|
|
|
|
|||||||||
| Shareholders’ equity |
||||||||||||
| Share capital |
14 | 31,691,943 | 31,158,441 | |||||||||
| Reserves |
14 | 2,120,398 | 2,028,102 | |||||||||
| Accumulated deficit |
(27,241,680 | ) | (23,610,831 | ) | ||||||||
|
|
|
|
|
|||||||||
| Total shareholders’ equity |
6,570,661 | 9,575,712 | ||||||||||
|
|
|
|
|
|||||||||
| Total liabilities and shareholders’ equity |
15,212,645 | 14,551,035 | ||||||||||
|
|
|
|
|
|||||||||
Approved and authorized by the Board on January 28, 2026
| “Jason Mosberian” | Director | “John James Wilson” | Director | |||||||
The accompanying notes are an integral part of these consolidated financial statements
F-5
Table of Contents
Optimi Health Corp.
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in Canadian Dollars)
| Note | Year Ended $ |
Year Ended $ |
||||||||||
| Revenue |
426,301 | 389,850 | ||||||||||
| Cost of sales |
5 | (410,716 | ) | (238,388 | ) | |||||||
|
|
|
|
|
|||||||||
| Gross margin before fair value adjustments |
15,585 | 151,462 | ||||||||||
| Fair value adjustment of biological assets and inventory, net |
(83,715 | ) | 119,448 | |||||||||
|
|
|
|
|
|||||||||
| Gross margin |
(68,130 | ) | 270,910 | |||||||||
| Expenses |
||||||||||||
| Advertising, promotion and public relations |
33,390 | 216,135 | ||||||||||
| Amortization and depreciation |
8, 9 | 950,348 | 867,947 | |||||||||
| Bank charges and interest |
9,12,13 | 531,680 | 429,339 | |||||||||
| Consulting |
15 | 819,067 | 1,122,812 | |||||||||
| Consumables, supplies and overhead |
235,712 | 307,971 | ||||||||||
| Insurance |
257,376 | 325,369 | ||||||||||
| Investor relations |
20,844 | 104,086 | ||||||||||
| Office, rent and administration |
171,221 | 295,654 | ||||||||||
| Professional fees |
301,361 | 160,551 | ||||||||||
| Research and development |
347,698 | 387,591 | ||||||||||
| Share-based compensation |
14,15 | 46,422 | 60,079 | |||||||||
| Shipping |
62,056 | 144,368 | ||||||||||
| Transfer agent and filing fees |
166,190 | 156,955 | ||||||||||
| Travel and accommodation |
39,966 | 63,425 | ||||||||||
| Wages and benefits |
15 | 1,092,498 | 1,667,152 | |||||||||
|
|
|
|
|
|||||||||
| (5,075,829 | ) | (6,309,434 | ) | |||||||||
|
|
|
|
|
|||||||||
| Interest and other income |
4 | 14,313 | 2,665 | |||||||||
| Debt forgiveness |
15 | 1,417,615 | — | |||||||||
|
|
|
|
|
|||||||||
| Loss and comprehensive loss for the year |
(3,712,031 | ) | (6,035,859 | ) | ||||||||
|
|
|
|
|
|||||||||
| Loss per share |
||||||||||||
| Basic and diluted |
$ | (1.2 | ) | $ | (2.1 | ) | ||||||
|
|
|
|
|
|||||||||
| Weighted average number of common shares outstanding |
||||||||||||
| Basic and diluted |
3,199,486 | 2,984,639 | ||||||||||
|
|
|
|
|
|||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Table of Contents
Optimi Health Corp.
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
| Year Ended $ |
Year Ended $ |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Net loss for the year |
(3,712,031 | ) | (6,035,859 | ) | ||||
| Add back non-cash items |
||||||||
| Amortization and depreciation |
950,348 | 867,947 | ||||||
| Share-based compensation |
46,422 | 60,079 | ||||||
| Unrealized gain in fair value of biological assets |
— | (119,448 | ) | |||||
| Loan accretion |
166,000 | 184,750 | ||||||
| Lease interest |
8,557 | 5,296 | ||||||
| Debt forgiveness |
(1,417,615 | ) | — | |||||
| Fair value adjustment on biological assets and inventory, net |
83,715 | — | ||||||
| Changes in non-cash working capital items |
||||||||
| Accounts receivable |
29,093 | 41,591 | ||||||
| Inventory |
500,717 | 279,054 | ||||||
| Biological assets |
— | (255,152 | ) | |||||
| Prepaids and advances |
1,296 | 28,705 | ||||||
| Deferred revenue |
91,368 | 3,891 | ||||||
| Due to related party |
670,110 | 786,378 | ||||||
| Accounts payable and accrued liabilities |
(45,881 | ) | (128,925 | ) | ||||
|
|
|
|
|
|||||
| Cash used in operating activities |
(2,627,901 | ) | (4,281,693 | ) | ||||
|
|
|
|
|
|||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
| Deposits |
— | (1,638 | ) | |||||
| Plant and equipment expenditures |
(88,375 | ) | (152,386 | ) | ||||
|
|
|
|
|
|||||
| Cash used in investing activities |
(88,375 | ) | (154,024 | ) | ||||
|
|
|
|
|
|||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
| Private placements, net of share issue costs |
395,000 | 2,036,599 | ||||||
| Proceeds from convertible debentures |
3,450,000 | — | ||||||
| Proceeds from exercise of warrants |
— | 200,000 | ||||||
| Proceeds from loans |
— | 1,000,000 | ||||||
| Payment of lease obligations |
(47,176 | ) | (42,000 | ) | ||||
| Deferred financing costs |
(40,143 | ) | — | |||||
|
|
|
|
|
|||||
| Cash provided by financing activities |
3,757,681 | 3,194,599 | ||||||
|
|
|
|
|
|||||
| Change in cash and cash equivalents during the year |
1,041,405 | (1,241,118 | ) | |||||
| Cash and cash equivalents, beginning of year |
103,660 | 1,344,778 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents, end of year |
1,145,065 | 103,660 | ||||||
|
|
|
|
|
|||||
| SUPPLEMENTAL INFORMATION |
||||||||
| Cash paid for interest |
196,057 | 131,250 | ||||||
| Property, plant and equipment costs included in accounts payable |
14,381 | 82,631 | ||||||
| Transfer from reserves to share capital on exercise of RSRs |
— | 208,687 | ||||||
| Amortization and depreciation capitalized to biological assets |
— | 20,000 | ||||||
| Shares issued for settlement of debt |
98,502 | — | ||||||
| Transfer from biological assets to inventory on harvest |
— | 275,152 | ||||||
| Transfer from reserves to deficit on expiry of options |
81,182 | 70,046 | ||||||
| Equity component of loans payable |
— | 104,000 | ||||||
| Residual value of warrants |
— | 303,163 | ||||||
| Deferred financing costs included in accounts payable |
767,793 | — | ||||||
| Recognition of right-of-use asset and lease liability |
190,257 | — | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Table of Contents
Optimi Health Corp.
Consolidated Statements of Changes in Shareholders’ Equity
(Expressed in Canadian Dollars)
| Common Shares |
Share Capital $ |
Reserves $ |
Deficit $ |
Total Equity $ |
||||||||||||||||
| Balance, October 1, 2023 |
2,901,281 | 28,698,155 | 2,157,756 | (17,645,018 | ) | 13,210,893 | ||||||||||||||
| Shares issued pursuant to private placement |
226,556 | 2,039,000 | — | — | 2,039,000 | |||||||||||||||
| Share issuance costs |
— | (2,401 | ) | — | — | (2,401 | ) | |||||||||||||
| Shares issued on exercise of warrants |
16,667 | 200,000 | — | — | 200,000 | |||||||||||||||
| Shares issued on conversion of RSRs |
9,275 | 208,687 | (208,687 | ) | — | — | ||||||||||||||
| Share-based compensation |
1,667 | 15,000 | 45,079 | — | 60,079 | |||||||||||||||
| Transfer from reserves to deficit on expiry of options |
— | — | (70,046 | ) | 70,046 | — | ||||||||||||||
| Equity component of mortgages payable |
— | — | 104,000 | — | 104,000 | |||||||||||||||
| Loss and comprehensive loss for the year |
— | — | — | (6,035,859 | ) | (6,035,859 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Balance, September 30, 2024 |
3,155,446 | 31,158,441 | 2,028,102 | (23,610,831 | ) | 9,575,712 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Balance, October 1, 2024 |
3,155,446 | 31,158,441 | 2,028,102 | (23,610,831 | ) | 9,575,712 | ||||||||||||||
| Shares issued pursuant to private placement |
43,889 | 395,000 | — | — | 395,000 | |||||||||||||||
| Shares issued for settlement of debt |
15,272 | 98,502 | — | — | 98,502 | |||||||||||||||
| Transfer from reserves to deficit on forfeiture of options |
— | — | (81,182 | ) | 81,182 | — | ||||||||||||||
| Share-based compensation |
15,272 | 40,000 | 173,478 | — | 213,478 | |||||||||||||||
| Loss and comprehensive loss for the year |
6,667 | — | — | (3,712,031 | ) | (3,712,031 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Balance, September 30, 2025 |
3,221,274 | 31,691,943 | 2,120,398 | (27,241,680 | ) | 6,570,661 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-8
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| 1. | Nature of Operations and Going Concern |
Optimi Health Corp. (the “Company”) was incorporated under the Business Corporations Act (British Columbia) on May 27, 2020, under the name 1251417 B.C. Ltd. The Company changed its name from 1251417 B.C. Ltd. to Optimi Health Corp. on August 17, 2020.
The Company is licensed by Health Canada to produce and supply natural GMP-grade psilocybin, psilocin, and other psychedelic substances, some being synthetically formulated, as well as functional mushrooms that focus on domestic and international health and wellness markets. Built with the purpose of producing scalable psychedelic and functional mushroom products for transformational human experiences, the Company’s products are grown at its two facilities comprising a total of 20,000 square feet in Princeton, British Columbia. Focused on being a compassionate supplier of safe drug and nutraceutical products, the Company works with consumers, health food distributors, and drug developers and patients regulated by Health Canada.
The registered and records office is located at 2054 Dowad Drive, Squamish, British Columbia, Canada, V8B 0Y8.
On XXX, the Company executed a 1 for 30 reverse stock split of all outstanding common shares, warrants, stock options, RSRs, and convertible debentures. All references to share and per-share information, warrants, stock options, RSRs, and convertible debentures in these financial statements have been adjusted to reflect the effects of the Reverse Stock Split. No fractional shares were issued, and all fractional balances were rounded (Note 21).
These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. During the year ended September 30, 2025, the Company incurred a net loss of $3,712,031 (2024 - $6,035,859) and has not yet achieved profitable operations. The Company has an accumulated deficit of $27,241,680 since its inception (2024 - $23,610,831). Without additional financing, the Company may not be able to fund its ongoing operations. The Company intends to finance its future requirements through a combination of debt and/or equity issuances. There is no assurance that the Company will be able to obtain such financings or obtain them on favorable terms. These uncertainties may cast significant doubt on the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments related to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.
| 2. | Basis of Presentation |
| a) | Statement of compliance |
These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).
The consolidated financial statements were authorized for issue by the Board of Directors on January 28, 2026.
| b) | Basis of presentation |
These consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments, which are measured at fair value. These consolidated financial statements are presented in Canadian dollars, which is the Company and its subsidiaries’ functional currency.
F-9
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
The Company has reclassified certain comparative information on the consolidated statements of loss and comprehensive loss to conform with current year presentation.
| c) | Basis of consolidation |
These consolidated financial statements include the accounts of the Company and its subsidiaries with intercompany balances and transactions eliminated on consolidation. Subsidiaries are those entities over which the Company has the power over the investee, is exposed, or has rights to variable returns from its involvement with the investee and has the ability to use its power. As at September 30, 2025 and 2024, the Company owns 100% of the issued and outstanding shares of Optimi Nutraceuticals Corp. and Optimi Labs Inc.
| d) | Significant accounting judgments and estimates |
The preparation of consolidated financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported revenues and expenses during the year. Actual results may differ from these estimates.
Significant estimates and judgments are evaluations and assumptions about the future and other sources of estimation uncertainty that management has made, which could result in a material adjustment to the carrying amounts of assets and liabilities. Significant estimates and judgments used in the preparation of these consolidated financial statements include, but are not limited to, the following:
Going concern
The assessment of whether the concern assumption is appropriate requires management to take into account all available information about the future, which is at least, but not limited to, twelve months from the end of the reporting period.
Provisions and contingencies
The amount recognized as a provision, including legal, contractual, constructive, and other exposures or obligations, is the best estimate of the consideration required to settle the related liability, including any related interest charges, taking into account the risks and uncertainties surrounding the obligation. In addition, contingencies will only be resolved when one or more future events occur or fail to occur. Therefore, assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events. The Company assesses its liabilities and contingencies based upon the best information available.
Impairment of plant and equipment
Management considers both external and internal sources of information in determining if there are any indications that the Company’s plant and equipment is impaired. Management considers the market,
F-10
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
economic and legal environment in which the Company operates, that are not within its control and affect the recoverable amount of its plant. Management considers the manner in which the plant and equipment is being used or is expected to be used an indication of economic performance of the assets.
Valuation of inventory
Inventories are valued at the lower cost and net realizable value except for biological inventory which includes a fair value component. Purchased inventory is accounted for using the weighted average purchase cost of the components that comprise finished goods inventory. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs to sell.
Valuation of share-based payments
The Company uses the Black-Scholes option pricing model for valuation of share-based compensation. Option pricing models require the input of subjective assumptions including expected price volatility, interest rate and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves. The Company estimates volatility based on the Company’s historical share prices, excluding specific time frames in which volatility was affected by specific transactions that are not considered to be indicative of the entities’ expected share price volatility.
Biological assets and inventory
In calculating the value of the biological assets, management is required to make a number of estimates, including estimating the stage of growth of the mushrooms up to the point of harvest, harvesting costs, selling costs, sales price, wastage and expected yields for the mushrooms. In calculating final inventory values, management is required to determine an estimate of spoiled or expired inventory and compare the inventory cost versus net realizable value. The cost and fair value of biological assets are capitalized to the extent that their cost and fair value will be recoverable.
Loans payable
The identification of loan components is based on interpretation of the substance of the contractual arrangement and therefore requires judgment from management. The separation of the components affects the initial recognition of the loans payable at issuance and the subsequent recognition of interest on the liability component. The determination of the fair value of the liability component is also based on a number of assumptions, including contractual future cash flows and discount rate.
Estimated useful lives of property, plant and equipment
Depreciation of property, plant and equipment is dependent upon estimates of useful lives which are determined through the exercise of judgment.
Convertible debentures
Convertible debentures are compound financial instruments which contain a separate financial liability and equity component. The identification of such components embedded within a convertible note
F-11
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
requires significant judgment given that it is based on the interpretation of the substance of the contractual arrangement at the time of issuance. The Company uses judgment to select the valuation methods and assumptions used in performing fair value calculations to determine the values attributed to each component of the financial instrument. These valuation estimates could be significantly different because of the use of judgement and the inherent uncertainty in estimating the fair value of these instruments that are not quoted in an active market.
| 3. | Material Accounting Policies |
| a) | Property Plant and equipment |
Expenditures for plant are capitalized to the consolidated statements of financial position and will be depreciated over the life of the asset commencing at the time the asset is ready for its intended use.
Plant and equipment are stated at cost less accumulated depreciation. The cost of an item of plant and equipment consists of the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use, and an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
Depreciation commences when an item of property and equipment is available for use and is provided at rates calculated to write-off the cost of plant and equipment over their estimated useful lives as follows:
| Equipment |
20% straight-line | |
| Plant |
4% straight-line |
Plant and equipment are derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising from disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss.
| b) | Revenue |
Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, which is upon the transfer of control of the contracted goods. Control is transferred when title and physical possession of the product has transferred to the customer, which is determined by respective shipping terms and certain additional considerations. The Company offers a 30-day satisfaction guarantee for its nutraceutical supplements products which are subject to refunds. Other than refunds, the Company does not have performance obligations subsequent to delivery on the sale of goods to customers and revenues from sale of goods are recognized at a “point in time”, which is upon passing of control to the customer.
| c) | Inventory |
Inventory is valued at the lower of cost and net realizable value. Purchased inventory is carried at cost and is determined using the weighted average method. The capitalized cost for produced inventory includes the direct and indirect costs initially capitalized to biological assets before the transfer to inventory. The capitalized cost also includes subsequent costs, such as materials, labour, and
F-12
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
depreciation expense on equipment involved in packaging, labelling, and inspection. The total cost of inventory also includes a fair value adjustment, which represents the fair value of the biological asset at the time of harvest. All direct and indirect costs related to inventory are capitalized as they are incurred, and they are subsequently recorded within production costs on the consolidated statements of loss and comprehensive loss. At the time the mushrooms are sold, the realized fair value amounts included in inventory sold are recorded as a separate line on the consolidated statements of loss and comprehensive loss.
| d) | Biological assets |
The Company’s biological assets consist of mushrooms that are not yet harvested. These biological assets are measured at fair value less costs to sell. The Company capitalizes all related direct costs of growing materials, as well as other indirect costs of production, such as utilities and supplies used in the growing process. Indirect labour for individuals involved in the growing and quality control process is also included, as well as depreciation on production equipment and overhead costs to the extent it is associated with the growing space. All direct and indirect costs of biological assets are capitalized as they are incurred, and subsequently transferred to inventory at the point of harvest. Unrealized fair value gains on growth of biological assets are recorded in a separate line on the face of the consolidated statements of loss and comprehensive loss, and subsequently transferred to inventory at the point of harvest.
| e) | Share-based compensation |
Stock options
Share-based compensation to employees is measured at the fair value of the instruments issued using the Black-Scholes option pricing model and amortized over the vesting periods. Share-based compensation to non-employees is measured at the fair value of the goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The amount recognized as an expense is adjusted to reflect the number of awards expected to vest. The offset to the recorded cost is to reserves. Consideration received on the exercise of stock options is recorded as share capital and the related amount originally recorded in reserves is transferred to share capital. For those unexercised options that expire, are cancelled or forfeited, the recorded value is transferred from reserves to deficit.
Warrants issued in connection with debt financing are considered financing costs and are valued based on the fair value of the goods or services received, unless such an amount cannot be determined, in which case the fair value is determined using the Black-Scholes option pricing model. Financing costs associated with debt are expensed over time as interest expense using the effective interest rate method.
Restricted share rights
The Company grants restricted share rights (the “RSRs”) to certain directors, officers, employees, and consultants to receive shares of the Company. The Company classifies RSRs as equity instruments since the Company has the ability and intent to settle the awards in common shares. The fair value of RSRs granted is recognized as an expense over the vesting period with a corresponding increase in
F-13
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
equity. The fair value is measured at grant date and recognized over the period during which the RSRs vest. The vesting of RSRs and issuance of common shares in the Company is recorded as share capital and the related value in reserves is transferred to issued capital.
| f) | Unit issuance |
Proceeds from the issuance of units are allocated between common shares and common share purchase warrants based on the residual value method. Under this method, the proceeds are allocated to common shares based on the fair value of a common share at the announcement date of the unit offering and any residual remaining is allocated to common share purchase warrants.
| g) | Loss per share |
Loss per share is calculated using the weighted average number of common shares outstanding. The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. The calculation of diluted earnings per share assumes that outstanding options and warrants are exercised and the proceeds are used to repurchase shares of the Company at the average market price of the shares for the year. Diluted loss per share is not presented if the effects are anti-dilutive.
| h) | Income taxes |
Income tax expense consisting of current and deferred tax expense is recognized in the consolidated statement of comprehensive loss. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end, adjusted for amendments to tax payable with regard to previous years.
Deferred tax is calculated using the financial position method on all temporary differences at the consolidated statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the reporting date.
Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.
F-14
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| i) | Impairment of non-financial assets |
The carrying amount of the Company’s assets is reviewed for an indication of impairment at the end of each reporting period. If an indication of impairment exists, the Company makes an estimate of the asset’s recoverable amount. Individual assets are grouped for impairment assessment purposes at the lowest level at which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. The recoverable amount of an asset group is the higher of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are adjusted for the risks specific to the asset group and are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money.
Where the carrying amount of an asset group exceeds its recoverable amount, the asset group is considered impaired and is written down to its recoverable amount. Impairment losses are recognized in profit or loss.
An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of amortization, if no impairment loss had been recognized.
| j) | Financial instruments |
Financial assets
| (a) | Recognition and measurement of financial assets |
The Company recognizes a financial asset when it becomes a party to the contractual provisions of the instrument.
| (b) | Classification of financial assets |
The Company classifies financial assets at initial recognition as financial assets: measured at amortized cost, measured at fair value through other comprehensive income, or measured at fair value through profit or loss.
Financial assets measured at amortized cost
A financial asset that meets both of the following conditions is classified as a financial asset measured at amortized cost.
| • | The Company’s business model for such financial assets is to hold the assets in order to collect contractual cash flows. |
| • | The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the amount outstanding. |
A financial asset measured at amortized cost is initially recognized at fair value plus transaction costs directly attributable to the asset. After initial recognition, the carrying amount of the financial asset measured at amortized cost is determined using the effective interest method, net of impairment loss, if necessary. The Company’s cash and cash equivalents and receivables (excluding goods and services taxes) are classified as amortized cost.
F-15
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
Financial assets measured at fair value through other comprehensive income (“FVTOCI”)
A financial asset measured at fair value through other comprehensive income is recognized initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, the asset is measured at fair value with changes in fair value in other comprehensive income.
Financial assets measured at fair value through profit or loss (“FVTPL”)
A financial asset measured at fair value through profit or loss is recognized initially at fair value with any associated transaction costs being recognized in profit or loss when incurred. Subsequently, the financial asset is re-measured at fair value, and a gain or loss is recognized in profit or loss in the reporting period in which it arises.
| (c) | Derecognition of financial assets |
The Company derecognizes a financial asset if the contractual rights to the cash flows from the asset expire, or the Company transfers substantially all the risks and rewards of ownership of the financial asset. Any interest in transferred financial assets that are created or retained by the Company are recognized as a separate asset or liability. Gains and losses on derecognition are generally recognized in profit or loss. However, gains and losses on derecognition of financial assets classified as FVTOCI remain within accumulated other comprehensive income.
Financial liabilities
(a) Recognition and measurement of financial liabilities
The Company recognizes financial liabilities when it becomes a party to the contractual provisions of the instruments.
(b) Classification of financial liabilities
The Company classifies financial liabilities at initial recognition as financial liabilities: measured at amortized cost or measured at fair value through profit or loss.
Financial liabilities measured at amortized cost
A financial liability at amortized cost is initially measured at fair value less transaction costs directly attributable to the issuance of the financial liability. Subsequently, the financial liability is measured at amortized cost based on the effective interest rate method. Accounts payable and accrued liabilities, due to related parties, deferred revenue, loans payable, lease liability and convertible debentures are measured at amortized cost.
Financial liabilities measured at fair value through profit or loss
A financial liability measured at fair value through profit or loss is initially measured at fair value with any associated transaction costs being recognized in profit or loss when incurred. Subsequently, the financial liability is re-measured at fair value, and a gain or loss is recognized in profit or loss in the reporting period in which it arises.
F-16
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
(c) Derecognition of financial liabilities
The Company derecognizes a financial liability when the financial liability is discharged, cancelled, or expired. Generally, the difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognized in the consolidated statement of loss and comprehensive loss.
Offsetting financial assets and liabilities
Financial assets and liabilities are offset and the net amount is presented in the consolidated statement of financial position only when the Company has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Impairment of financial assets at amortized cost
The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in profit or loss an impairment gain or loss equal to the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.
Fair value hierarchy
Fair value measurements of financial instruments are required to be classified using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The levels of the fair value hierarchy are defined as follows:
| Level 1 | – | Quoted prices (unadjusted) in active markets for identical assets or liabilities. | ||
| Level 2 | – | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. | ||
| Level 3 | – | Inputs for assets or liabilities that are not based on observable market data. | ||
| k) | Grants and Rebates |
Grants and rebates are recognized when there is reasonable assurance that the grant will be received and all attached conditions have been complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the period the expense cost, for which it is intended to compensate, are expensed. When the grant relates to an asset, the cost of the asset is reduced by the amount of the grant.
F-17
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| l) | Loans Payable |
The loans payable are separated into their liability and equity components on the consolidated statements of financial position. The liability component is initially recognized at fair value, calculated as the net present value of the liability based on market rates for comparable debt and accounted for at amortized cost using the effective interest rate method. The residual value is then allocated to the equity component.
| m) | Convertible debentures |
Convertible debentures are compound financial instruments which are accounted for separately by their components: a financial liability and an equity instrument. The financial liability, which represents the obligation to pay coupon interest on the convertible debenture in the future, is initially measured at its fair value and subsequently measured at amortized cost. The residual amount is accounted for as an equity instrument at issuance. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts. Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition. Upon conversion, the carrying value of the equity portion is transferred to common shares.
| n) | Standards issued but not yet effective |
IFRS 18, Presentation and Disclosure in Financial Statements (“IFRS 18”), which will replace IAS 1, Presentation of Financial Statements aims to improve how companies communicate in their financial statements, with a focus on information about financial performance in the statement of profit or loss, in particular additional defined subtotals, disclosures about management-defined performance measures and new principles for aggregation and disaggregation of information. IFRS 18 is accompanied by limited amendments to the requirements in IAS 7 Statement of Cash Flows. IFRS 18 is effective from January 1, 2027. Companies are permitted to apply IFRS 18 before that date.
The Company has not yet determined the impact of these amendments on its consolidated financial statements.
| 4. | Cash and Cash Equivalents |
Cash and cash equivalents consist of the following:
| Maturity | Classification | September 30, 2025 $ |
September 30, 2024 $ |
|||||||||||||
| Cash |
N/A | Cash | 1,140,065 | 8,660 | ||||||||||||
| Term deposit – 3.0% |
Demand | Cash equivalent | — | 70,000 | ||||||||||||
| Term deposit – 4.25% |
Demand | Cash equivalent | — | 25,000 | ||||||||||||
| Term deposit – 2% |
Demand | Cash equivalent | 5,000 | — | ||||||||||||
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|
|||||||||||||
| 1,145,065 | 103,660 | |||||||||||||||
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|
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During the period ended September 30, 2025, the Company earned $14,313 (2024 - $2,665) in interest income.
F-18
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| 5. | Inventory |
Inventory consists of the Company’s finished goods functional mushroom nutraceutical products, harvested mushrooms and raw materials.
| September 30, 2025 $ |
September 30, 2024 $ |
|||||||
| Finished goods drug products |
47,812 | 21,838 | ||||||
| Finished goods nutraceutical products |
— | 66,807 | ||||||
| Mushroom biomass |
262,576 | 770,143 | ||||||
| Raw materials |
— | 36,032 | ||||||
|
|
|
|
|
|||||
| 310,388 | 894,820 | |||||||
|
|
|
|
|
|||||
As at September 30, 2025, the Company holds 156kg (2024 – 210kg) in harvested mushroom biomass.
During the year ended September 30, 2025, the Company elected to take a provision against mushroom biomass inventory due to the aging of the inventory. The cost of inventory of $225,900 was recorded through cost of sales and the fair value component of $83,715 was recorded through the fair value adjustment of biological assets and inventory.
Cost of sales consists of the following:
| September 30, 2025 $ |
September 30, 2024 $ |
|||||||
| Finished goods drug products |
77,390 | 4,986 | ||||||
| Finished goods nutraceutical products |
102,838 | 226,426 | ||||||
| Impairment of inventory |
225,900 | — | ||||||
| Other |
4,588 | 6,976 | ||||||
|
|
|
|
|
|||||
| 410,716 | 238,388 | |||||||
|
|
|
|
|
|||||
| 6. | Biological Assets |
The Company grows psilocybin containing mushrooms at its plant located in Princeton, British Columbia. Biological assets consist of psilocybin mushrooms.
| Total $ |
||||
| Balance, September 30, 2023 |
— | |||
| Production costs capitalized |
119,007 | |||
| Unrealized gain in fair value of biological assets, less cost to sell |
156,145 | |||
| Transfer to inventory upon harvest |
(275,152 | ) | ||
|
|
|
|||
| Balance, September 30, 2024 and September 30, 2025 |
— | |||
F-19
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
During the year ended September 30, 2023, the Company commenced production and harvest of psilocybin mushrooms to be used for commercial purposes. As at September 30, 2025 (September 30, 2024—nil), the Company had no mushrooms in the growth stage due to the timing of harvests. Although the Company can sell its raw mushroom biomass, it will further process the raw mushroom biomass into psilocybin extract. The cost to process and extract psilocybin are considered costs to sell and are deducted from the fair value of mushroom biomass.
Determination of fair value of the biological assets requires the Company to make various estimates and assumptions. The fair value of biological assets is considered a Level 3 category in the IFRS fair value hierarchy. When applying IFRS 13 Fair Value Measurement to non-financial assets, in this case the biological asset and produce, the fair value considers a market participant’s ability to use that asset in its highest and best use. The highest and best use considers the use of the asset that is physically possible, legally permissible, and financially feasible, either in combination with other assets or on a standalone basis. The significant estimates and inputs used to assess the fair value of biological assets include the following assumptions for September 30, 2024:
| • | Selling price – calculated based on the expected selling price of psilocybin extract derived from processing the raw mushroom biomass, based on the Company’s purchase orders received to date. |
| • | Post-harvest costs – calculated as the cost per gram required to convert the raw mushroom biomass into psilocybin extract, consisting of labour, raw materials, and laboratory testing. |
| • | Psilocybin potency of raw mushroom inputs – calculated based on the percent psilocybin as a function of raw mushroom input biomass. |
| • | Recovery efficiency of psilocybin extract – calculated based on the weight of psilocybin extracted from raw mushroom biomass as a function of the input psilocybin weight. |
| September 30, 2024 $ |
||||
| Selling Price (per gram of psilocybin extract) |
$ | 1,000 | ||
| Post harvest costs (per gram of psilocybin extract) |
$ | 451 | ||
| Psilocybin potency (mg/g) |
12 | |||
| Recovery efficiency of psilocybin (%) |
55.24 | |||
During the period ended September 30, 2025, $nil (September 30, 2024—$20,000) in depreciation was capitalized to biological assets (Note 8).
| 7. | Prepaids and Advances |
Prepaids and advances consist of the following:
| September 30, 2025 $ |
September 30, 2024 $ |
|||||||
| Prepaid consulting fees |
17,708 | — | ||||||
| Prepaid insurance |
83,875 | 104,166 | ||||||
| Prepaid investor relation fees |
148,291 | — | ||||||
| Prepaid licensing fees |
13,415 | — | ||||||
| Prepaid transfer agent and filing fees |
12,431 | 5,794 | ||||||
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|
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|
|||||
| 275,720 | 109,960 | |||||||
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F-20
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| 8. | Plant and equipment |
Plant and equipment includes two cultivation and processing facilities located in Princeton, British Columbia (the “Princeton Facilities”).
| Equipment $ |
Plant $ |
Total $ |
||||||||||
| Cost |
||||||||||||
| September 30, 2023 |
1,608,962 | 13,369,549 | 14,978,511 | |||||||||
| Additions |
140,791 | 697 | 141,488 | |||||||||
|
|
|
|
|
|
|
|||||||
| September 30, 2024 |
1,749,753 | 13,370,246 | 15,119,999 | |||||||||
| Additions |
20,125 | — | 20,125 | |||||||||
|
|
|
|
|
|
|
|||||||
| September 30, 2025 |
1,769,878 | 13,370,246 | 15,140,124 | |||||||||
| Accumulated depreciation |
||||||||||||
| September 30, 2023 |
315,043 | 667,478 | 982,521 | |||||||||
| Additions |
322,339 | 536,256 | 858,595 | |||||||||
|
|
|
|
|
|
|
|||||||
| September 30, 2024 |
637,382 | 1,203,734 | 1,841,116 | |||||||||
| Additions |
384,007 | 534,811 | 918,818 | |||||||||
|
|
|
|
|
|
|
|||||||
| September 30, 2025 |
1,021,389 | 1,738,545 | 2,759,934 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net book value |
||||||||||||
| September 30, 2024 |
1,112,371 | 12,166,512 | 13,278,883 | |||||||||
| September 30, 2025 |
748,489 | 11,631,701 | 12,380,190 | |||||||||
|
|
|
|
|
|
|
|||||||
During the period ended September 30, 2025, $nil (September 30, 2024—$20,000) in depreciation was capitalized to biological assets (Note 6).
| 9. | Right-of-Use Assets and Lease Liabilities |
The Company has a lease agreement with BC Green Pharmaceuticals Inc. (“BC Green”), a company related by a common director and common officers, whereby the Company has leased industrial land from BC Green on which to build its Princeton Facilities (Note 15). During the year ended September 30, 2025, the Company renewed its lease with BC Green for a period of five years with a lease payment of $4,300 per month.
The continuity of the ROU assets and lease liability are as follows:
| ROU asset |
Total $ |
|||
| ROU asset as at September 30, 2023 |
51,374 | |||
| Amortization |
(29,357 | ) | ||
|
|
|
|||
| ROU asset as at September 30, 2024 |
22,017 | |||
| Additions |
190,257 | |||
| Amortization |
(31,530 | ) | ||
|
|
|
|||
| ROU asset as at September 30, 2025 |
180,744 | |||
|
|
|
|||
F-21
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| Lease liability |
Total $ |
|||
| Lease liability as at September 30, 2023 |
69,485 | |||
| Lease payments |
(42,000 | ) | ||
| Lease interest |
5,296 | |||
|
|
|
|||
| Lease liability as at September 30, 2024 |
32,781 | |||
| Additions |
190,257 | |||
| Lease payments |
(47,176 | ) | ||
| Lease interest |
8,557 | |||
|
|
|
|||
| Lease liability as at September 30, 2025 |
184,419 | |||
|
|
|
|||
| September 30, 2025 $ |
September 30, 2024 $ |
|||||||
| Current portion |
26,045 | 32,781 | ||||||
| Long-term |
158,374 | — | ||||||
|
|
|
|
|
|||||
| 184,419 | 32,781 | |||||||
|
|
|
|
|
|||||
| 10. | Accounts payable and accrued liabilities |
Accounts payable and accrued liabilities are composed of the following:
| September 30, 2025 $ |
September 30, 2024 $ |
|||||||
| Accounts payable |
1,185,684 | 749,376 | ||||||
| Accrued liabilities |
205,296 | 173,007 | ||||||
|
|
|
|
|
|||||
| 1,390,980 | 922,383 | |||||||
|
|
|
|
|
|||||
| 11. | Deferred Revenue |
Deferred revenue relates to deposits received in advance of fulfilling certain supply agreements:
| Deferred revenue |
$ | |||
| Deferred revenue as at September 30, 2023 |
112,500 | |||
| Deposits received |
9,968 | |||
| Revenue fulfilled |
(6,077 | ) | ||
|
|
|
|||
| Deferred revenue as at September 30, 2024 |
116,391 | |||
| Deposits received |
236,878 | |||
| Revenue fulfilled |
(145,510 | ) | ||
|
|
|
|||
| Deferred revenue as at September 30, 2025 |
207,759 | |||
|
|
|
|||
F-22
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| 12. | Loans payable |
During the year ended September 30, 2024, the Company received gross proceeds of $1,000,000 from loans with an interest rate of 7.5% and a term of one and a half years secured against the assets of the Company. In connection with this financing, the Company issued 3,333 common share purchase warrants with an exercise price of $15.0 and a term of one and a half years.
The interest rate of 7.5% was determined to be a below market rate of interest. The loans were recorded at fair value on initial recognition, which was determined to be $896,000 using a discount rate of 15%, resulting in a total discount of $100,000. As the loans were provided by shareholders of the Company, the discount was considered to a component of equity. The warrants were valued at $4,000 using the Black-Scholes option pricing model and were accounted for as debt issuance costs. The inputs to the Black-Scholes pricing model were as follows: stock price – $5.10, exercise price – $15.0, expected life – 1.5 years, volatility – 100% , and discount rate – 3.79%.
During the year ended September 30, 2025, the Company recorded $231,261 (2024—$225,000) in interest expense of which $131,250 (2024—$93,750) was accrued interest payable recorded in accounts payable and accrued liabilities, and recorded loan accretion of $166,000 (2024—$184,750) in relation to these loans.
| Loans |
$ | |||
| Loans as at September 30, 2023 |
1,637,750 | |||
| Loan proceeds received |
1,000,000 | |||
| Equity component of loans |
(104,000 | ) | ||
| Loan accretion |
184,750 | |||
|
|
|
|||
| Loans as at September 30, 2024 |
2,718,500 | |||
| Loan accretion |
166,000 | |||
|
|
|
|||
| Loans as at September 30, 2025 |
2,884,500 | |||
|
|
|
|||
| Classified as current |
2,884,500 | |||
|
|
|
|||
| Classified as long-term |
— | |||
|
|
|
|||
The maturity dates of these loans are as follows:
| Maturity date |
$ | |||
| April 30, 2026 (1) |
1,000,000 | |||
| August 4, 2026 |
1,000,000 | |||
| August 31, 2026 |
1,000,000 | |||
|
|
|
|||
| 3,000,000 | ||||
|
|
|
|||
| (1) | During the year ended September 30, 2025, the Company issued 13,333 common share purchase warrants to extend the maturity date of this loan to April 30, 2026 (Note 14). |
| 13. | Convertible debentures |
During the year ended September 30, 2025, the Company received $3,450,000 in cash proceeds through the issuance of convertible debentures bearing an interest rate of 15% per annum, maturing July 24, 2026. The
F-23
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
convertible debt was issued to two corporations controlled by directors of the Company (Note 16). The principal amount of the debt is convertible into common shares of the Company at a conversion price of $4.50 per share. The Company determined that the fair value of the liability component was equal to the face value of the debt, and that the equity portion of the convertible debt was valued at $nil using the residual value method. During the year ended September 30, 2025, the Company accrued interest of $96,175 which is recorded as due to related party at September 30, 2025.
| 14. | Share Capital |
| a) | Authorized |
Unlimited number of common shares without par value.
| b) | Issued and outstanding |
The total issued and outstanding share capital as at September 30, 2025 consisted of 3,221,274 common shares without par value.
During the year ended September 30, 2025, the Company:
| • | Issued 43,889 units pursuant to a private placement for gross proceeds of $395,000. Each Unit is comprised of one common share in the capital of the Company and one-half of one transferable Common Share purchase warrant (”Warrant”). Each Warrant entitles the holder to acquire one Common Share at $12.00 for two years from the date of issuance, subject to an accelerated expiry provision, whereby in the event the closing price of the Company’s Common Shares on the Canadian Securities Exchange exceeds $15.00 for a period of 20 consecutive trading days, at the Company’s election, the period within which the Warrants are exercisable, will be reduced and the holders of the Warrants will be entitled to exercise their Warrants for a period of 30 days commencing on the day the Company provides notice, any outstanding Warrants not exercised during the 30 day period will expire. |
| • | Issued 15,272 common shares valued at $98,502 for settlement of debt. |
| • | Issued 6,667 common shares valued at $40,000 for consulting services recorded as share-based compensation. |
During the year ended September 30, 2024, the Company:
| • | Issued 226,556 units pursuant to private placements for gross proceeds of $2,039,000. Each unit is composed of one common share and one-half common share purchase warrant. In connection with these private placements, the Company issued 113,278 warrants valued at $nil using the residual value method. Each warrant is exercisable at a price of $15.0 for a period of two years. The common shares issued on exercise are subject to a statutory hold period of four months. The Company incurred share issuance costs of $2,401 in connection with this private placement. |
| • | Issued 16,667 common shares on exercise of warrants for gross proceeds of $200,000. |
| • | Issued 9,275 common shares valued at $208,688 on exercise of RSRs. |
| • | Issued 1,667 common shares valued at $15,000 as share-based compensation for advisory services. |
F-24
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
Warrants
Warrant transactions are summarized as follows:
| Number of warrants |
Weighted average exercise price |
|||||||
| Balance, September 30, 2023 |
101,538 | $ | 15.00 | |||||
| Issued |
116,611 | $ | 12.09 | |||||
| Exercised |
(16,667 | ) | $ | 12.00 | ||||
| Expired |
(94,872 | ) | $ | 15.00 | ||||
|
|
|
|
|
|||||
| Balance, September 30, 2024 |
106,610 | $ | 12.28 | |||||
| Issued |
35,278 | $ | 10.30 | |||||
|
|
|
|
|
|||||
| Balance, September 30, 2025 |
141,888 | $ | 11.79 | |||||
|
|
|
|
|
|||||
The following is a summary of warrants as at September 30, 2025:
| Expiry date |
Exercise price |
Number of warrants |
Weighted average remaining contractual life (years) |
|||||||||
| August 4, 2026 |
$ | 15.00 | 3,333 | 0.84 | ||||||||
| August 29, 2026 |
$ | 15.00 | 3,333 | 0.91 | ||||||||
| November 1, 2026 |
$ | 15.00 | 3,333 | 1.09 | ||||||||
| February 23, 2026 |
$ | 12.00 | 25,278 | 0.40 | ||||||||
| May 10, 2026 |
$ | 12.00 | 11,111 | 0.61 | ||||||||
| May 29, 2026 |
$ | 12.00 | 30,277 | 0.66 | ||||||||
| August 15, 2026 |
$ | 12.00 | 29,945 | 0.87 | ||||||||
| January 24, 2027 |
$ | 12.00 | 21,945 | 1.32 | ||||||||
| July 17, 2027 |
$ | 7.50 | 13,333 | 1.79 | ||||||||
|
|
|
|
|
|
|
|||||||
| $ | 12.28 | 141,888 | 0.88 | |||||||||
|
|
|
|
|
|
|
|||||||
| c) | Equity incentive plan |
The Company has an equity incentive plan (“EIP”) under which the Board may, from time to time in its discretion, grant stock options, RSRs or deferred share units of the Company to its directors, officers, employees, consultants, and advisors. The aggregate number of common shares that may be subject to issuance under the EIP, together with any other securities-based compensation arrangements of the Company, shall not exceed 15% of the Company’s issued and outstanding share capital.
Stock options
The EIP authorizes the Board to grant options to eligible directors and employees (including officers). The number of options, the exercise price per option, the vesting period, and any other terms and conditions of options granted from time to time pursuant to the EIP, are determined by the Board at the time of the grant, subject to the defined parameters of the EIP. Unless otherwise determined by the
F-25
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
Board, stock options will have a term of five years and 25% of the options granted will vest immediately, and 25% will vest each six-month period thereafter.
During the year ended September 30, 2025, the Company:
| • | granted 23,333 stock options with an exercise price of $4.95 and a term of three years. These options vest immediately. |
| • | granted 20,000 stock options with an exercise price of $6.00 and a term of three years. These options vest after a period of four months. |
| • | granted 20,000 stock options with an exercise price of $9.00 and a term of three years. These options vest after a period of eight months. |
| • | The weighted average inputs to the Black-Scholes pricing model for the options issued above were as follows: stock price – $4.65, exercise price – $6.60, expected life – 3 years, volatility – 100%, and discount rate – 2.70%. |
| • | The total fair value of the options is $167,056 of which $148,291 is included in prepaids and advances, and $18,765 is recorded as investor relations expense. |
During the year ended September 30, 2024, the Company granted stock options as follows:
| • | 3,333 stock options with an exercise price of $19.50 per option with a term of five years. The options vest 25% six months after grant date and 25% every six months thereafter. |
| • | 500 stock options with an exercise price of $10.50 per option with a term of five years. The options vest 25% six months after grant date and 25% every six months thereafter. |
| • | The weighted average inputs to the Black-Scholes pricing model for the options issued above were as follows: stock price – $7.20, exercise price – $18.30, expected life – 5 years, volatility – 100%, and discount rate – 3.79%. |
Options transactions are summarized as follows:
| Number of options |
Weighted average exercise price |
|||||||
| Balance, September 30, 2023 |
131,667 | $ | 40.22 | |||||
| Expired |
(5,000 | ) | $ | 18.33 | ||||
| Granted |
3,883 | $ | 45.00 | |||||
|
|
|
|
|
|||||
| Balance, September 30, 2024 |
130,500 | $ | 39.39 | |||||
| Granted |
63,333 | $ | 6.56 | |||||
| Forfeited |
(5,833 | ) | $ | 45.00 | ||||
|
|
|
|
|
|||||
| Balance, September 30, 2025 |
188,000 | $ | 28.16 | |||||
|
|
|
|
|
|||||
F-26
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
The following is a summary of stock options as at September 30, 2025:
| Expiry date |
Exercise price |
Number of options |
Options exercisable |
Weighted average remaining contractual life (years) |
||||||||||||
| October 9, 2025 |
$ | 15.00 | 16,667 | (1) | 16,667 | 0.02 | ||||||||||
| January 26, 2026 |
$ | 18.00 | 1,333 | (1) | 1,333 | 0.32 | ||||||||||
| May 6, 2026 |
$ | 45.00 | 64,167 | 64,167 | 0.60 | |||||||||||
| January 31, 2026 |
$ | 45.00 | 1,667 | 1,667 | 0.34 | |||||||||||
| October 18, 2025 |
$ | 45.00 | 33,334 | (1) | 33,333 | 0.05 | ||||||||||
| March 29, 2028 |
$ | 19.50 | 333 | 333 | 2.50 | |||||||||||
| April 26, 2028 |
$ | 19.50 | 3,333 | 3,333 | 2.57 | |||||||||||
| November 1, 2028 |
$ | 19.50 | 3,333 | 3,333 | 3.09 | |||||||||||
| January 31, 2026 |
$ | 10.50 | 500 | 250 | 0.34 | |||||||||||
| August 20, 2028 |
$ | 4.95 | 23,333 | 23,333 | 2.89 | |||||||||||
| August 20, 2028 |
$ | 6.00 | 20,000 | — | 2.89 | |||||||||||
| August 20, 2028 |
$ | 9.00 | 20,000 | — | 2.89 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 28.16 | 188,000 | 146,917 | 1.30 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (1) | 51,334 stock options expired subsequent to the year ended September 30, 2025 (Note 21). |
Restricted share rights
The EIP authorizes the Board to grant RSRs, in its sole and absolute discretion, to any eligible employee or director. Each RSR provides the recipient with the right to receive common shares of the Company for no additional consideration as compensation for past services or as an incentive for future services. The terms, including the vesting period of the RSRs, are determined at the sole discretion of the Board.
During the year ended September 30, 2021, the Company granted 30,917 RSRs to directors, officers, consultants, and advisors valued at $695,625. These RSRs vest as follows: 10% on the grant date and 15% every six months thereafter. During the year ended September 30, 2025, the Company recorded $nil (September 30, 2024—$25,074) in share-based compensation related to the vesting of these RSRs. During the period ended September 30, 2025, nil (September 30, 2024 – 9,275) RSRs vested and were converted into common shares.
| 15. | Key Management Compensation and Related Party Transactions |
During the period ended September 30, 2025 and 2024, the Company incurred the following amounts charged by officers and directors (being key management personnel) and companies controlled and/or
F-27
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
owned by officers and directors of the Company in addition to the related party transactions disclosed elsewhere in these consolidated financial statements:
| September 30, 2025 $ |
September 30, 2024 $ |
|||||||
| Consulting fees |
593,234 | 748,689 | ||||||
| Share-based compensation |
— | 14,193 | ||||||
| Wages and benefits |
— | 185,417 | ||||||
|
|
|
|
|
|||||
| 593,234 | 948,299 | |||||||
|
|
|
|
|
|||||
During the year ended September 30, 2025, certain directors forgave $1,331,052 in accounts payable recorded as debt forgiveness.
The Company has entered into a lease agreement with BC Green, as described in Note 9.
As at September 30, 2025, there was $524,326 (September 30, 2024—$1,185,268) owing to key management, which is included in due to related parties. The amounts are unsecured, without interest and due on demand.
During the year ended September 30, 2023, the Company received $1,000,000 in loan proceeds from a company controlled by a director (Note 12). As at September 30, 2025, the Company owed $1,000,000 (September 30, 2024—$1,000,000) in principal and $131,250 in accrued interest in relation to this loan.
During the year ended September 30, 2025, the Company received $3,450,000 in loan proceeds from two companies controlled by directors (Note 13). As at September 30, 2025, the Company owed $3,450,000 (September 30, 2024—$nil) in principal and $96,175 in accrued interest in relation to this loan recorded in due to related parties.
| 16. | Financial Instruments |
| a) | Categories of financial instruments |
The classification of the financial instruments, as well as their carrying values, is shown below:
Fair value
The fair value recorded on initial recognition of financial assets and financial liabilities at amortized cost is determined in accordance with generally accepted pricing models based on discounted cash flow analysis or using prices from observable current market transactions.
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
Level 3 – Inputs that are not based on observable market data.
F-28
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
The Company’s financial instruments consist of cash and cash equivalents, accounts receivables, accounts payable and accrued liabilities, due to related parties, lease liabilities, loans payable, and convertible debentures. The fair values of these financial instruments approximate their carrying values due to the short-term nature of these instruments, with the exception of lease liabilities, loans payable and convertible debentures which are measured using Level 2 inputs.
| b) | Management of financial risks |
The Company examines the various financial instrument risks to which it is exposed and assesses the impact and likelihood of these risks. These risks arise from the normal course of operations and all transactions undertaken are to support the Company’s ability to continue as a going concern. Management manages and monitors these exposures to ensure appropriate measures are implemented in a timely and effective manner. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below.
Interest rate risk
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. Interest rate risk is limited to potential decreases in the interest rate offered on cash held with chartered Canadian financial institutions. The Company considers this risk to be limited, as it holds no assets or liabilities subject to variable rates of interest.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and trade receivables. The Company limits exposure by maintaining its cash with major Canadian commercial banks and credit unions.
Liquidity risk
Liquidity risk is the risk that the Company will be unable to meet its financial obligations as they become due. The Company is reliant upon equity issuances and loans as its main sources of cash. The Company manages liquidity risk by maintaining an adequate level of cash to meet its ongoing obligations. The Company continuously reviews its actual expenditures, forecasts cash flows and matches the maturity dates of its cash to capital and operating needs. All of the Company’s existing commitments are budgeted and funded as at the date of the consolidated financial statements. All financial liabilities have contractual maturities of less than one year and are subject to normal trade terms with the exception of the Company’s lease liabilities, which matures based on the lease agreement, and loans payable, which have terms ranging from one and a half to three years.
Currency risk
The Company is not exposed to financial risk related to the fluctuation of foreign exchange rates.
F-29
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| 17. | Capital Disclosure |
The capital structure of the Company consists of equity attributable to common shareholders comprising share capital, reserves, and deficit. The Company’s objectives when managing capital are to: (i) preserve capital; (ii) obtain the best available net return; and (iii) maintain liquidity. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt, or acquire or dispose of assets. The Company is not subject to externally imposed capital restrictions. There have been no changes in the Company’s capital management during the year ended September 30, 2025.
| 18. | Segment Reporting |
For the year ended September 30, 2025, the Company has one reportable operating segment, being that of farming, processing and distribution of raw mushroom biomass, mushroom extracts, manufacturing of drug products, and mushroom supplements. The Company’s non-current assets at September 30, 2025 are all in Canada.
| 19. | Commitments |
The Company has lease commitments for the Princeton Facilities (Note 9). Cash commitments for minimum lease payments in relation to the facility leases as at September 30, 2025, are payable as follows:
| $ | ||||
| Within 1 year |
51,987 | |||
| Between 1 year and 5 years |
209,072 | |||
|
|
|
|||
| 261,059 | ||||
|
|
|
|||
| 20. | Income taxes |
The following table reconciles the amount of income tax expense on application of the combined statutory Canadian federal and provincial income tax rates for the years ended September 30, 2025 and 2024:
| September 30, 2025 |
September 30, 2024 |
|||||||
| Net loss for the period |
$ | (3,712,031 | ) | $ | (6,035,859 | ) | ||
| Statutory rate |
27 | % | 27.00 | % | ||||
|
|
|
|
|
|||||
| Income tax recovery at statutory rate |
(1,002,000 | ) | (1,630,000 | ) | ||||
| Items not deductible for tax purpose |
14,000 | (14,000 | ) | |||||
| Adjustment to prior year versus statutory tax return |
— | 28,000 | ||||||
| Benefit of tax losses not recognized |
988,000 | 1,616,000 | ||||||
|
|
|
|
|
|||||
| Income tax expense |
$ | — | $ | — | ||||
|
|
|
|
|
|||||
The Company recognizes tax benefits on losses or other deductible amounts generated where it is probable the Company will generate future taxable income to be able to utilize those tax assets. The Company has
F-30
Table of Contents
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
unused tax losses for which no deferred tax asset is recognized that amounted to $7,430,000 (2024 - $6,442,000)
The Company has non-capital losses for Canadian tax purposes of approximately $24,673,000 (2024 - $21,794,000) available for carry-forward to reduce future years’ taxable income and will start to expire in 2039 (2024 - 2039).
| 21. | Events after the Reporting Period |
Subsequent to September 30, 2025, the Company:
| • | Had 51,334 stock options expire unexercised (Note 15) |
| • | Granted 28,333 stock options with an exercise price of $15.00 and a term of 5 years. These options vest one quarter on the grant date and one quarter every year thereafter. |
| • | Granted 18,500 RSRs that vest one quarter on the grant date and one quarter every year thereafter. |
| • | Issued 4,625 common shares on exercise of RSRs. |
| • | Is in the process of completing an initial public offering of its common shares on the Nasdaq Capital Market under the symbol “OPTH”. As at September 30, 2025, the Company classified costs related to this listing as deferred financing costs. |
| • | Completed a 1 to 30 reverse stock split (Note 1) |
F-31
Table of Contents
Table of Contents
Optimi Health Corp.
Condensed Interim Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
| Note | December 31, 2025 |
September 30, 2025 |
||||||||||
| $ | $ | |||||||||||
| ASSETS |
||||||||||||
| Current |
||||||||||||
| Cash and cash equivalents |
3 | 491,750 | 1,145,065 | |||||||||
| Accounts receivable |
118,852 | 95,054 | ||||||||||
| Inventory |
4 | 310,388 | 310,388 | |||||||||
| Prepaids and advances |
6 | 190,116 | 275,720 | |||||||||
|
|
|
|
|
|||||||||
| Total current assets |
1,111,106 | 1,826,227 | ||||||||||
| Deposits |
17,548 | 17,548 | ||||||||||
| Deferred financing costs |
807,936 | 807,936 | ||||||||||
| Plant and equipment |
7 | 12,128,382 | 12,380,190 | |||||||||
| Right-of-use assets |
8 | 171,231 | 180,744 | |||||||||
|
|
|
|
|
|||||||||
| Total assets |
14,236,203 | 15,212,645 | ||||||||||
|
|
|
|
|
|||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||
| Current |
||||||||||||
| Accounts payable and accrued liabilities |
9 | 1,549,202 | 1,390,980 | |||||||||
| Due to related parties |
14 | 917,869 | 524,326 | |||||||||
| Deferred revenue |
10 | 207,759 | 207,759 | |||||||||
| Current portion of lease liabilities |
8, 14 | 27,426 | 26,045 | |||||||||
| Current portion of loans payable |
11, 14 | 2,916,000 | 2,884,500 | |||||||||
| Convertible debentures |
12, 14 | 3,450,000 | 3,450,000 | |||||||||
|
|
|
|
|
|||||||||
| Total current liabilities |
9,068,256 | 8,483,610 | ||||||||||
| Lease liability |
8, 14 | 150,934 | 158,374 | |||||||||
|
|
|
|
|
|||||||||
| Total liabilities |
9,219,190 | 8,641,984 | ||||||||||
|
|
|
|
|
|||||||||
| Shareholders’ equity |
||||||||||||
| Share capital |
13 | 31,691,943 | 31,691,943 | |||||||||
| Reserves |
13 | 1,636,858 | 2,120,398 | |||||||||
| Accumulated deficit |
(28,311,788 | ) | (27,241,680 | ) | ||||||||
|
|
|
|
|
|||||||||
| Total shareholders’ equity |
5,017,013 | 6,570,661 | ||||||||||
|
|
|
|
|
|||||||||
| Total liabilities and shareholders’ equity |
14,236,203 | 15,212,645 | ||||||||||
|
|
|
|
|
|||||||||
| Approved and authorized by the Board on February 17, 2026 | ||||||
| “Jason Mosberian” |
Director | “John James Wilson” |
Director | |||
The accompanying notes are an integral part of these condensed interim consolidated financial statements
F-33
Table of Contents
Optimi Health Corp.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
(Expressed in Canadian Dollars)
| Note | Period Ended December 31, 2025 |
Period Ended December 31, 2024 |
||||||||
| $ | $ | |||||||||
| Revenue |
— | 232,700 | ||||||||
| Cost of sales |
4 | — | (62,473 | ) | ||||||
|
|
|
|
|
|||||||
| Gross margin |
— | 170,227 | ||||||||
| Expenses |
||||||||||
| Advertising, promotion and public relations |
1,949 | 30,503 | ||||||||
| Amortization and depreciation |
7, 8 | 264,749 | 228,917 | |||||||
| Bank charges and interest |
8, 11, 12 | 278,791 | 108,004 | |||||||
| Consulting |
14 | 279,193 | 219,734 | |||||||
| Consumables, supplies and overhead |
39,016 | 73,188 | ||||||||
| Insurance |
56,592 | 82,863 | ||||||||
| Investor relations |
184,670 | — | ||||||||
| Office, rent and administration |
32,313 | 57,690 | ||||||||
| Professional fees |
30,671 | 38,152 | ||||||||
| Research and development |
48,495 | 201,998 | ||||||||
| Share-based compensation |
13, 14 | 327 | 2,825 | |||||||
| Shipping |
7,629 | 26,849 | ||||||||
| Transfer agent and filing fees |
59,471 | 33,661 | ||||||||
| Travel and accommodation |
11,435 | 11,179 | ||||||||
| Wages and benefits |
264,087 | 320,893 | ||||||||
|
|
|
|
|
|||||||
| Total Expenses |
(1,559,388 | ) | (1,436,456 | ) | ||||||
|
|
|
|
|
|||||||
| Interest and other income |
3 | 5,413 | 7,249 | |||||||
|
|
|
|
|
|||||||
| Loss and comprehensive loss for the period |
(1,553,975 | ) | (1,258,980 | ) | ||||||
|
|
|
|
|
|||||||
| Loss per share |
||||||||||
| Basic and diluted |
$ | (0.48 | ) | $ | (0.40 | ) | ||||
|
|
|
|
|
|||||||
| Weighted average number of common shares outstanding |
||||||||||
| Basic and diluted |
3,221,274 | 3,155,446 | ||||||||
|
|
|
|
|
|||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
F-34
Table of Contents
Optimi Health Corp.
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
| Period Ended December 31, 2025 |
Period Ended December 31, 2024 |
|||||||
| $ | $ | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Net loss for the year |
(1,553,975 | ) | (1,258,980 | ) | ||||
| Add back non-cash items |
||||||||
| Amortization and depreciation |
264,749 | 228,917 | ||||||
| Share-based compensation |
327 | 2,825 | ||||||
| Loan accretion |
31,500 | 48,500 | ||||||
| Lease interest |
6,841 | 739 | ||||||
| Changes in non-cash working capital items |
||||||||
| Accounts Receivable |
(23,798 | ) | 16,819 | |||||
| Inventory |
— | 262,625 | ||||||
| Biological assets |
— | — | ||||||
| Deferred revenue |
— | 99,671 | ||||||
| Prepaids and advances |
85,604 | 30,998 | ||||||
| Due to related party |
393,543 | 216,793 | ||||||
| Accounts payable and accrued liabilities |
158,222 | 42,105 | ||||||
|
|
|
|
|
|||||
| Cash used in operating activities |
(636,987 | ) | (308,988 | ) | ||||
|
|
|
|
|
|||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
| Plant and equipment expenditures |
(3,428 | ) | (21,674 | ) | ||||
|
|
|
|
|
|||||
| Cash used in investing activities |
(3,428 | ) | (21,674 | ) | ||||
|
|
|
|
|
|||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
| Subscriptions received in advance |
— | 335,000 | ||||||
| Share issue costs |
— | (15,000 | ) | |||||
| Payment of lease obligations |
(12,900 | ) | (10,500 | ) | ||||
|
|
|
|
|
|||||
| Cash provided by financing activities |
(12,900 | ) | 309,500 | |||||
|
|
|
|
|
|||||
| Change in cash and cash equivalents during the period |
(653,315 | ) | (21,162 | ) | ||||
| Cash and cash equivalents, beginning of period |
1,145,065 | 103,660 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents, end of period |
491,750 | 82,498 | ||||||
|
|
|
|
|
|||||
| SUPPLEMENTAL INFORMATION |
||||||||
| Plant and equipment costs included in accounts payable |
$ | 14,381 | $ | 74,540 | ||||
| Deferred financing costs in accounts payable |
$ | 767,793 | — | |||||
| Equity component of loans payable |
— | — | ||||||
| Transfer from reserves to deficit on cancellation of options |
$ | 483,867 | $ | 34,429 | ||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
F-35
Table of Contents
Optimi Health Corp.
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
(Expressed in Canadian Dollars)
| Common Shares | Share Capital | Subscriptions received in advance |
Reserves | Deficit | Total Equity | |||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||||||
| Balance, October 1, 2024 |
3,155,446 | 31,158,441 | — | 2,028,102 | (23,610,831 | ) | 9,575,712 | |||||||||||||||||
| Subscriptions received in advance |
— | 335,000 | — | — | 335,000 | |||||||||||||||||||
| Share issue costs |
— | (15,000 | ) | — | — | — | (15,000 | ) | ||||||||||||||||
| Transfer from reserves to deficit on cancellation of options |
— | — | — | (34,429 | ) | 34,429 | — | |||||||||||||||||
| Share-based compensation |
— | — | — | 2,825 | — | 2,825 | ||||||||||||||||||
| Loss and comprehensive loss for the period |
— | — | — | — | (1,258,980 | ) | (1,258,980 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance, December 31, 2024 |
3,155,446 | 31,143,441 | 335,000 | 1,996,498 | (24,835,382 | ) | 8,639,557 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance, October 1, 2025 |
3,221,274 | 31,691,943 | — | 2,120,398 | (27,241,680 | ) | 6,570,661 | |||||||||||||||||
| Transfer from reserves to deficit on expiry of options |
— | — | — | (483,867 | ) | 483,867 | — | |||||||||||||||||
| Share-based compensation |
— | — | — | 327 | — | 327 | ||||||||||||||||||
| Loss and comprehensive loss for the period |
— | — | — | — | (1,553,975 | ) | (1,553,975 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance, December 31, 2025 |
3,221,274 | 31,691,943 | — | 1,636,858 | (28,311,788 | ) | 5,017,013 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
F-36
Table of Contents
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended December 31, 2025
(Expressed in Canadian Dollars)
| 1. | Nature of Operations and Going Concern |
Optimi Health Corp. (the “Company”) was incorporated under the Business Corporations Act (British Columbia) on May 27, 2020, under the name 1251417 B.C. Ltd. The Company changed its name from 1251417 B.C. Ltd. to Optimi Health Corp. on August 17, 2020.
The Company is licensed by Health Canada to produce and supply natural GMP-grade psilocybin, psilocin, and other psychedelic substances, some being synthetically formulated, as well as functional mushrooms that focus on domestic and international health and wellness markets. Built with the purpose of producing scalable psychedelic and functional mushroom products for transformational human experiences, the Company’s products are grown at its two facilities comprising a total of 20,000 square feet in Princeton, British Columbia. Focused on being a compassionate supplier of safe drug and nutraceutical products, the Company works with consumers, health food distributors, and drug developers and patients regulated by Health Canada.
The registered and records office is located at 2054 Dowad Drive, Squamish, British Columbia, Canada, V8B 0Y8.
These condensed interim consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. During the period ended December 31, 2025, the Company incurred a net loss of $1,553,975 and has not yet achieved profitable operations. The Company has an accumulated deficit of $28,311,788 since its inception. Without additional financing, the Company may not be able to fund its ongoing operations. The Company intends to finance its future requirements through a combination of debt and/or equity issuances. There is no assurance that the Company will be able to obtain such financings or obtain them on favorable terms. These uncertainties may cast significant doubt on the Company’s ability to continue as a going concern. These condensed interim consolidated financial statements do not include any adjustments related to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.
| 2. | Basis of Presentation |
| a) | Statement of compliance |
These condensed interim consolidated financial statements, including comparatives, have been prepared in accordance with IAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”) and the interpretations of the International Financial Reporting Interpretations Committee (“IFRIC“s). They do not include all disclosures required by IFRS Accounting Standards (“IFRS”) for annual financial statements, and, therefore, should be read in conjunction with the Company’s audited consolidated financial statements for the year ended September 30, 2025, prepared in accordance with IFRS as issued by the IASB. Material accounting policies not included in the audited consolidated financial statements for the year ended September 30, 2025 are described below.
These condensed interim consolidated financial statements were authorized by the Audit Committee and Board of Directors of the Company (the “Board”) on February 17, 2026.
| b) | Basis of presentation |
These condensed Interim consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments, which are measured at fair value. These condensed
F-37
Table of Contents
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended December 31, 2025
(Expressed in Canadian Dollars)
Interim consolidated financial statements are presented in Canadian dollars, which is the Company and its subsidiaries’ functional currency.
| c) | Basis of consolidation |
These condensed interim consolidated financial statements include the accounts of the Company and its subsidiaries’ with intercompany balances and transactions eliminated on consolidation. Subsidiaries are those entities over which the Company has the power over the investee, is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to use its power to affect its returns. As of December 31, 2025, the Company has 100% ownership interest in Optimi Labs Inc. and Optimi Nutraceuticals Corp.
| d) | Significant accounting judgments and estimates |
The preparation of condensed interim consolidated financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed interim consolidated financial statements and the reported revenues and expenses during the period. Actual results may differ from these estimates.
Significant estimates and judgments are evaluations and assumptions about the future and other sources of estimation uncertainty that management has made, which could result in a material adjustment to the carrying amounts of assets and liabilities. Significant estimates and judgments used in the preparation of these condensed interim consolidated financial statements include, but are not limited to, the following:
Going concern
The assessment of whether the concern assumption is appropriate requires management to take into account all available information about the future, which is at least, but not limited to, twelve months from the end of the reporting period.
Provisions and contingencies
The amount recognized as a provision, including legal, contractual, constructive, and other exposures or obligations, is the best estimate of the consideration required to settle the related liability, including any related interest charges, taking into account the risks and uncertainties surrounding the obligation. In addition, contingencies will only be resolved when one or more future events occur or fail to occur. Therefore, assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events. The Company assesses its liabilities and contingencies based upon the best information available.
Impairment of Plant and equipment
Management considers both external and internal sources of information in determining if there are any indications that the Company’s Plant and equipment is impaired. Management considers the market, economic and legal environment in which the Company operates that are not within its control and affect the recoverable amount of its plant. Management considers the manner in which the Plant and equipment is being used or is expected to be used an indication of economic performance of the assets.
Valuation of inventory
Inventories are valued at the lower cost and net realizable value except for biological inventory which includes a fair value component. Purchased inventory is accounted for using the weighted average
F-38
Table of Contents
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended December 31, 2025
(Expressed in Canadian Dollars)
purchase cost of the components that comprise finished goods inventory. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs to sell.
Valuation of share-based payments
The Company uses the Black-Scholes option pricing model for valuation of share-based compensation. Option pricing models require the input of subjective assumptions including expected price volatility, interest rate and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves. The Company estimates volatility based on the Company’s historical share prices, excluding specific time frames in which volatility was affected by specific transactions that are not considered to be indicative of the entities’ expected share price volatility.
Biological assets and inventory
In calculating the value of the biological assets, management is required to make a number of estimates, including estimating the stage of growth of the mushrooms up to the point of harvest, harvesting costs, selling costs, sales price, wastage and expected yields for the mushrooms. In calculating final inventory values, management is required to determine an estimate of spoiled or expired inventory and compare the inventory cost versus net realizable value. The cost and fair value of biological assets are capitalized to the extent that their cost and fair value will be recoverable.
Estimated useful lives of Plant and equipment
Depreciation of Plant and equipment is dependent upon estimates of useful lives which are determined through the exercise of judgment.
| 3. | Cash and Cash Equivalents |
Cash and cash equivalents consist of the following:
| Maturity | Classification | December 31, 2025 $ |
September 30, 2025 $ |
|||||||||||||
| Cash |
N/A | Cash | 486,750 | 1,140,065 | ||||||||||||
| Term deposit – 3.0% |
Demand | Cash equivalent | — | — | ||||||||||||
| Term deposit – 4.25% |
Demand | Cash equivalent | — | — | ||||||||||||
| Term deposit – prime – 2% |
Demand | Cash equivalent | 5,000 | 5,000 | ||||||||||||
|
|
|
|
|
|||||||||||||
| 491,750 | 1,145,065 | |||||||||||||||
|
|
|
|
|
|||||||||||||
During the period ended December 31, 2025, the Company earned $5,413 (December 30, 2024 - $7,249) in interest income.
F-39
Table of Contents
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended December 31, 2025
(Expressed in Canadian Dollars)
| 4. | Inventory |
Inventory consists of the Company’s finished goods functional mushroom nutraceutical products, drug products, harvested mushrooms and raw materials.
| December 31, 2025 $ |
September 30, 2025 $ |
|||||||
| Finished goods drug products |
47,812 | 47,812 | ||||||
| Mushroom biomass |
262,576 | 262,576 | ||||||
|
|
|
|
|
|||||
| 310,388 | 310,388 | |||||||
|
|
|
|
|
|||||
As at December 31, 2025, the Company holds 156kg (September 30, 2025 - 156kg) in harvested mushroom biomass.
Cost of sales consists of the following:
| December 31, 2025 $ |
December 31, 2024 $ |
|||||||
| Finished goods drug products |
— | 15,955 | ||||||
| Finished goods nutraceutical products |
— | 44,672 | ||||||
| Other |
— | 1,846 | ||||||
|
|
|
|
|
|||||
| — | 62,473 | |||||||
|
|
|
|
|
|||||
| 5. | Biological Assets |
The Company grows psilocybin containing mushrooms at its plant located in Princeton, British Columbia. Biological assets consist of psilocybin mushrooms.
During the year ended September 30, 2023, the Company commenced production and harvest of psilocybin mushrooms to be used for commercial purposes. As at September 30, 2025 and December 31, 2025 (September 30, 2024 - $nil), the Company had no mushrooms in the growth stage due to the timing of harvests. Although the Company can sell its raw mushroom biomass, it will further process the raw mushroom biomass into psilocybin extract. The cost to process and extract psilocybin are considered costs to sell and are deducted from the fair value of mushroom biomass.
Determination of fair value of the biological assets requires the Company to make various estimates and assumptions. The fair value of biological assets is considered a Level 3 category in the IFRS fair value hierarchy. When applying IFRS 13 Fair Value Measurement to non-financial assets, in this case the biological asset and produce, the fair value considers a market participant’s ability to use that asset in its highest and best use. The highest and best use considers the use of the asset that is physically possible, legally permissible, and financially feasible, either in combination with other assets or on a standalone basis. The significant estimates and inputs used to assess the fair value of biological assets include the following assumptions for September 30, 2024:
| • | Selling price – calculated based on the expected selling price of psilocybin extract derived from processing the raw mushroom biomass, based on the Company’s purchase orders received to date. |
| • | Post-harvest costs – calculated as the cost per gram required to convert the raw mushroom biomass into psilocybin extract, consisting of labour, raw materials, and laboratory testing. |
F-40
Table of Contents
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended December 31, 2025
(Expressed in Canadian Dollars)
| • | Psilocybin potency of raw mushroom inputs – calculated based on the percent psilocybin as a function of raw mushroom input biomass. |
| • | Recovery efficiency of psilocybin extract – calculated based on the weight of psilocybin extracted from raw mushroom biomass as a function of the input psilocybin weight. |
| September 30, 2024 $ |
||||
| Selling Price (per gram of psilocybin extract) |
$ | 1,000 | ||
| Post harvest costs (per gram of psilocybin extract) |
$ | 451 | ||
| Psilocybin potency (mg/g) |
12 | |||
| Recovery efficiency of psilocybin (%) |
55.24 | |||
| 6. | Prepaids and Advances |
Prepaids and advances consist of the following:
| December 31, 2025 $ |
September 30, 2025 $ |
|||||||
| Prepaid consulting fees |
17,708 | 17,708 | ||||||
| Prepaid insurance |
38,125 | 83,875 | ||||||
| Prepaid investor relation fees |
106,184 | 148,291 | ||||||
| Prepaid licensing fees |
6,708 | 13,415 | ||||||
| Prepaid transfer agent and filing fees |
21,391 | 12,431 | ||||||
|
|
|
|
|
|||||
| 190,116 | 275,720 | |||||||
|
|
|
|
|
|||||
| 7. | Plant and equipment |
The Company’s two cultivation and processing facilities located in Princeton, British Columbia (the “Princeton Facilities”). The Princeton Facilities were considered substantially complete on June 27, 2022 and depreciation commenced on the plant.
| Equipment $ |
Plant $ |
Total $ |
||||||||||
| Cost |
||||||||||||
| September 30, 2025 |
1,769,878 | 13,370,246 | 15,140,124 | |||||||||
| Additions |
3,428 | — | 3,428 | |||||||||
|
|
|
|
|
|
|
|||||||
| December 31, 2025 |
1,773,306 | 13,370,246 | 15,143,552 | |||||||||
| Accumulated depreciation |
||||||||||||
| September 30, 2025 |
1,021,389 | 1,738,545 | 2,759,934 | |||||||||
| Additions |
120,435 | 134,801 | 255,236 | |||||||||
|
|
|
|
|
|
|
|||||||
| December 31, 2025 |
1,141,824 | 1,873,346 | 3,015,170 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net book value |
||||||||||||
| September 30, 2025 |
748,489 | 11,631,701 | 12,380,190 | |||||||||
| December 31, 2025 |
631,482 | 11,496,900 | 12,128,382 | |||||||||
|
|
|
|
|
|
|
|||||||
F-41
Table of Contents
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended December 31, 2025
(Expressed in Canadian Dollars)
| 8. | Right-of-Use Assets and Lease Liabilities |
The Company has a lease agreement with BC Green Pharmaceuticals Inc. (“BC Green”), a company related by a common director and common officers, whereby the Company has leased industrial land from BC Green on which to build its Princeton Facilities (Note 14). During the year ended September 30, 2025, the Company renewed its lease with BC Green for a period of five years with a lease payment of $4,300 per month.
The continuity of the ROU assets and lease liability are as follows:
| ROU asset |
Total $ |
|||
| ROU asset as at September 30, 2024 |
22,017 | |||
| Additions |
190,257 | |||
| Amortization |
(31,530 | ) | ||
|
|
|
|||
| ROU asset as at September 30, 2025 |
180,744 | |||
| Amortization |
(9,513 | ) | ||
|
|
|
|||
| ROU asset as at December 31, 2025 |
171,231 | |||
|
|
|
|||
| Lease liability |
Total $ |
|||
| Lease liability as at September 30, 2024 |
32,781 | |||
| Additions |
190,257 | |||
| Lease payments |
(47,176 | ) | ||
| Lease interest |
8,557 | |||
|
|
|
|||
| Lease liability as at September 30, 2025 |
184,419 | |||
| Lease payments |
(12,900 | ) | ||
| Lease interest |
6,841 | |||
|
|
|
|||
| Lease liability as at December 31, 2025 |
178,360 | |||
|
|
|
|||
| December 31, 2025 $ |
September 30, 2025 $ |
|||||||
| Current portion |
27,426 | 26,045 | ||||||
| Long-term |
150,934 | 158,374 | ||||||
|
|
|
|
|
|||||
| 178,360 | 184,419 | |||||||
|
|
|
|
|
|||||
| 9. | Accounts payable and accrued liabilities |
Accounts payable and accrued liabilities are composed of the following:
| December 31, 2025 $ |
September 30, 2025 $ |
|||||||
| Accounts payable |
1,394,202 | 1,185,684 | ||||||
| Accrued liabilities |
155,000 | 205,296 | ||||||
|
|
|
|
|
|||||
| 1,549,202 | 1,390,980 | |||||||
|
|
|
|
|
|||||
F-42
Table of Contents
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended December 31, 2025
(Expressed in Canadian Dollars)
| 10. | Deferred Revenue |
Deferred revenue relates to deposits received in advance of fulfilling certain supply agreements:
| Deferred revenue |
$ | |||
| Deferred revenue as at September 30, 2024 |
116,391 | |||
| Deposits received |
236,878 | |||
| Revenue fulfilled |
(145,510 | ) | ||
|
|
|
|||
| Deferred revenue as at September 30 and December 31, 2025 |
207,759 | |||
|
|
|
|||
| 11. | Loans payable |
During the year ended September 30, 2024, the Company received gross proceeds of $1,000,000 from loans with an interest rate of 7.5% and a term of one and a half years secured against the assets of the Company. In connection with this financing, the Company issued 3,333 common share purchase warrants with an exercise price of $15.0 and a term of one and a half years.
The interest rate of 7.5% was determined to be a below market rate of interest. The loans were recorded at fair value on initial recognition, which was determined to be $896,000 using a discount rate of 15%, resulting in a total discount of $100,000. As the loans were provided by shareholders of the Company, the discount was considered to a component of equity. The warrants were valued at $4,000 using the Black-Scholes option pricing model and were accounted for as debt issuance costs. The inputs to the Black-Scholes pricing model were as follows: stock price – $5.10, exercise price – $15, expected life – 1.5 years, volatility – 100% , and discount rate – 3.79%.
During the period ended December 31, 2025, the Company recorded $103,779 (2024 - $56,250) in interest expense of which $66,279 (2024 - $56,250) was accrued interest payable recorded in accounts payable and accrued liabilities, and recorded loan accretion of $31,500 (2024 - $48,500) in relation to these loans.
| Loans |
$ | |||
| Loans as at September 30, 2024 |
2,718,500 | |||
| Loan accretion |
166,000 | |||
| Loans as at September 30, 2025 |
2,884,500 | |||
| Loan accretion |
31,500 | |||
| Classified as current |
2,916,000 | |||
| Classified as long-term |
— | |||
The maturity dates of these loans are as follows:
| Maturity date |
$ | |||
| April 30, 2026 |
1,000,000 | |||
| August 4, 2026 |
1,000,000 | |||
| August 31, 2026 |
1,000,000 | |||
|
|
|
|||
| 3,000,000 | ||||
|
|
|
|||
| 12. | Convertible debentures |
During the year ended September 30, 2025, the Company received $3,450,000 in cash proceeds through the issuance of convertible debentures bearing an interest rate of 15% per annum, maturing July 24, 2026. The
F-43
Table of Contents
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended December 31, 2025
(Expressed in Canadian Dollars)
convertible debt was issued to two corporations controlled by directors of the Company (Note 14). The principal amount of the debt is convertible into common shares of the Company at a conversion price of $4.50 per share. The Company determined that the fair value of the liability component was equal to the face value of the debt, and that the equity portion of the convertible debt was valued at $nil using the residual value method. During the period ended December 31, 2025, the Company accrued interest of $135,289 (2024 - $nil) which is recorded as due to related party at December 31, 2025.
| 13. | Share Capital |
| a) | Authorized |
Unlimited number of common shares without par value.
| b) | Issued and outstanding |
The total issued and outstanding share capital as at December 31, 2025 consisted of 3,221,274 common shares without par value.
The Company did not issue any common shares during the period ended December 31, 2025.
During the period ended December 31, 2024, the Company received $335,000 in share subscriptions received in advance which formed a portion of the proceeds a the private placement completed during the year ended September 30, 2025.
| c) | Warrants |
Warrant transactions are summarized as follows:
| Number of warrants |
Weighted average exercise price |
|||||||
| Balance, September 30, 2024 |
106,610 | $ | 12.28 | |||||
| Issued |
35,278 | $ | 10.30 | |||||
|
|
|
|
|
|||||
| Balance, September 30, 2025 and December 31, 2025 |
141,88 | $ | 11.79 | |||||
|
|
|
|
|
|||||
The following is a summary of warrants as at December 31, 2025:
| Expiry date |
Exercise price |
Number of warrants |
Weighted average remaining contractual life (years) |
|||||||||
| August 4, 2026 |
$ | 15.00 | 3,333 | 0.59 | ||||||||
| August 29, 2026 |
$ | 15.00 | 3,333 | 0.66 | ||||||||
| November 1, 2026 |
$ | 15.00 | 3,333 | 0.84 | ||||||||
| February 23, 2026 |
$ | 12.00 | 25,278 | 0.15 | ||||||||
| May 10, 2026 |
$ | 12.00 | 11,111 | 0.36 | ||||||||
| May 29, 2026 |
$ | 12.00 | 30,277 | 0.41 | ||||||||
| August 15, 2026 |
$ | 12.00 | 29,945 | 0.62 | ||||||||
| January 24, 2027 |
$ | 12.00 | 21,945 | 1.07 | ||||||||
| July 17, 2027 |
$ | 7.50 | 13,333 | 1.54 | ||||||||
|
|
|
|
|
|
|
|||||||
| $ | 11.79 | 141,888 | 0.63 | |||||||||
F-44
Table of Contents
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended December 31, 2025
(Expressed in Canadian Dollars)
| d) | Equity incentive plan |
The Company has an equity incentive plan (“EIP”) under which the Board may, from time to time in its discretion, grant stock options, RSRs or deferred share units of the Company to its directors, officers, employees, consultants, and advisors. The aggregate number of common shares that may be subject to issuance under the EIP, together with any other securities-based compensation arrangements of the Company, shall not exceed 15% of the Company’s issued and outstanding share capital.
Stock options
The EIP authorizes the Board to grant options to eligible directors and employees (including officers). The number of options, the exercise price per option, the vesting period, and any other terms and conditions of options granted from time to time pursuant to the EIP, are determined by the Board at the time of the grant, subject to the defined parameters of the EIP. Unless otherwise determined by the Board, stock options will have a term of five years and 25% of the options granted will vest immediately, and 25% will vest each six-month period thereafter.
During the periods ended December 31, 2025 and 2024, the Company granted no stock options.
During the period ended December 31, 2025, the Company recorded $327 (2024 - $2,825) in share-based compensation expense due to the vesting of options.
Options transactions are summarized as follows:
| Number of options |
Weighted average exercise price |
|||||||
| Balance, September 30, 2024 |
130,500 | $ | 39.39 | |||||
| Granted |
63,333 | $ | 6.56 | |||||
| Forfeited |
(5,833 | ) | $ | 45.00 | ||||
| Balance, September 30, 2025 |
188,000 | $ | 28.16 | |||||
| Expired |
(50,001 | ) | $ | 35.00 | ||||
| Balance, December 31, 2025 |
137,999 | $ | 25.68 | |||||
The following is a summary of stock options as at December 31, 2025:
| Expiry date |
Exercise price |
Number of options |
Options exercisable |
Weighted average remaining contractual life (years) |
||||||||||||
| January 26, 2026 |
$ | 18.00 | 1,333 | (1) | 1,333 | 0.07 | ||||||||||
| May 6, 2026 |
$ | 45.00 | 64,167 | 64,167 | 0.35 | |||||||||||
| January 31, 2026 |
$ | 45.00 | 1,667 | (1) | 1,667 | 0.08 | ||||||||||
| March 29, 2028 |
$ | 19.50 | 333 | 333 | 2.24 | |||||||||||
| April 26, 2028 |
$ | 19.50 | 3,333 | 3,333 | 2.32 | |||||||||||
| November 1, 2028 |
$ | 19.50 | 3,333 | 3,333 | 2.84 | |||||||||||
| January 31, 2026 |
$ | 10.50 | 500 | (1) | 375 | 0.08 | ||||||||||
| August 20, 2028 |
$ | 4.95 | 23,333 | 23,333 | 2.64 | |||||||||||
| August 20, 2028 |
$ | 6.00 | 20,000 | 20,000 | 2.64 | |||||||||||
| August 20, 2028 |
$ | 9.00 | 20,000 | — | 2.64 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 25.68 | 137,999 | 117,042 | 1.50 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (1) | 3,500 stock options expired subsequent to the per ended December 31, 2025 (Note 19). |
F-45
Table of Contents
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended December 31, 2025
(Expressed in Canadian Dollars)
Restricted share rights
The EIP authorizes the Board to grant RSRs, in its sole and absolute discretion, to any eligible employee or director. Each RSR provides the recipient with the right to receive common shares of the Company for no additional consideration as compensation for past services or as an incentive for future services. The terms, including the vesting period of the RSRs, are determined at the sole discretion of the Board.
As at December 31, 2025, the Company had nil (2024 – nil) outstanding RSRs.
| 14. | Key Management Compensation and Related Party Transactions |
During the period ended December 31, 2025 and 2024, the Company incurred the following amounts charged by officers and directors (being key management personnel) and companies controlled and/or owned by officers and directors of the Company in addition to the related party transactions disclosed elsewhere in these condensed interim consolidated financial statements:
| December 31, 2025 $ |
December 31, 2024 $ |
|||||||
| Consulting fees |
142,645 | 161,234 | ||||||
|
|
|
|
|
|||||
| 142,645 | 161,234 | |||||||
|
|
|
|
|
|||||
The Company has entered into a lease agreement with BC Green, as described in Note 8.
As at December 31, 2025, there was $917,869 (September 30, 2025 - $524,326) owing to key management, which is included in due to related parties. The amounts are unsecured, without interest and due on demand.
During the year ended September 30, 2023, the Company received $1,000,000 in loan proceeds from a company controlled by a director (Note 11). As at December 31, 2025, the Company owed $1,000,000 (September 30, 2025 - $1,000,000) in principal and $197,529 (September 30, 2025 - $131,250) in accrued interest in relation to this loan.
During the year ended September 30, 2025, the Company received $3,450,000 in loan proceeds from two companies controlled by directors (Note 12). As at December 31, 2025, the Company owed $3,450,000 (September 30, 2025 - $3,450,000) in principal and $218,919 (September 30, 2025 $96,175) in accrued interest in relation to this loan recorded in due to related parties.
| 15. | Financial Instruments |
| a) | Categories of financial instruments |
The classification of the financial instruments, as well as their carrying values, is shown below:
Fair value
The fair value recorded on initial recognition of financial assets and financial liabilities at amortized cost is determined in accordance with generally accepted pricing models based on discounted cash flow analysis or using prices from observable current market transactions.
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
F-46
Table of Contents
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended December 31, 2025
(Expressed in Canadian Dollars)
Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
Level 3 – Inputs that are not based on observable market data.
The Company’s financial instruments consist of cash and cash equivalents, trade receivables, accounts payable and accrued liabilities, due to related parties, lease liabilities and loans payable. The fair values of these financial instruments approximate their carrying values due to the short-term nature of these instruments, with the exception of lease liabilities and loans payable which are measured using Level 2 inputs.
| b) | Management of financial risks |
The Company examines the various financial instrument risks to which it is exposed and assesses the impact and likelihood of these risks. These risks arise from the normal course of operations and all transactions undertaken are to support the Company’s ability to continue as a going concern. Management manages and monitors these exposures to ensure appropriate measures are implemented in a timely and effective manner. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below.
Interest rate risk
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. Interest rate risk is limited to potential decreases in the interest rate offered on cash held with chartered Canadian financial institutions. The Company considers this risk to be limited, as it holds no assets or liabilities subject to variable rates of interest.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and trade receivables. The Company limits exposure by maintaining its cash with major Canadian commercial banks and credit unions.
Liquidity risk
Liquidity risk is the risk that the Company will be unable to meet its financial obligations as they become due. The Company is reliant upon equity issuances and loans as its main sources of cash. The Company manages liquidity risk by maintaining an adequate level of cash to meet its ongoing obligations. The Company continuously reviews its actual expenditures, forecasts cash flows and matches the maturity dates of its cash to capital and operating needs. All of the Company’s existing commitments are budgeted and funded as at the date of the condensed interim consolidated financial statements. All financial liabilities have contractual maturities of less than one year and are subject to normal trade terms with the exception of the Company’s lease liabilities, which matures based on the lease agreement, and loans payable, which have terms ranging from one and a half to three years.
Currency risk
The Company is not exposed to financial risk related to the fluctuation of foreign exchange rates.
F-47
Table of Contents
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended December 31, 2025
(Expressed in Canadian Dollars)
| 16. | Capital Disclosure |
The capital structure of the Company consists of equity attributable to common shareholders comprising share capital, reserves, and deficit. The Company’s objectives when managing capital are to: (i) preserve capital; (ii) obtain the best available net return; and (iii) maintain liquidity. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt, or acquire or dispose of assets. The Company is not subject to externally imposed capital restrictions. There have been no changes in the Company’s capital management during the period ended December 31, 2025.
| 17. | Segment Reporting |
For the period ended December 31, 2025, the Company has one reportable operating segment, being that of farming, processing and distribution of raw mushroom biomass, mushroom extracts, manufacturing of drug products, and mushroom supplements. The Company’s non-current assets at December 31, 2025 are all in Canada.
| 18. | Commitments |
The Company has lease commitments for the Princeton Facilities (Note 8). Cash commitments for minimum lease payments in relation to the facility leases as at December 31, 2025, are payable as follows:
| $ | ||||
| Within 1 year |
52,374 | |||
| Between 1 year and 5 years |
195,785 | |||
|
|
|
|||
| 248,159 | ||||
|
|
|
|||
| 19. | Events after the Reporting Period |
Subsequent to December 31, 2025, the Company:
| • | Had 3,500 stock options expire unexercised (Note 13) |
| • | Granted 28,333 stock options with an exercise price of $15.00 and a term of 5 years. These options vest one quarter on the grant date and one quarter every year thereafter. |
| • | Granted 18,500 restricted share rights that vest one quarter on the grant date and one quarter every year thereafter. |
| • | Issued 4,625 common shares on exercise of RSRs. |
| • | Is in the process of completing an initial public offering of its common shares on the Nasdaq Capital Market under the symbol “OPTH”. As at December 31, 2025, the Company classified costs related to this listing as deferred financing costs. |
| • | Completed a 1 to 30 reverse stock split (Note 1) |
F-48
Table of Contents
2,500,000 Units
Each Consisting of One Common Share and One
Warrant to Purchase One Common Share
PROSPECTUS
Sole Bookrunner
Joseph Gunnar & Co., LLC
, 2026
Table of Contents
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 6. Indemnification of Directors and Officers.
Division 5 of Part 5 of the Business Corporations Act (British Columbia) provides that a corporation may (a) indemnify an eligible party against all eligible penalties to which the eligible party is or may be liable and (b) after the final disposition of an eligible proceeding, pay the expenses (not including judgments, penalties, fines or amounts paid in settlement of a proceeding) actually and reasonably incurred by an eligible party in respect of that proceeding.
An “eligible party” means an individual who (a) is or was a director or officer of the corporation, (b) is or was a director or officer of another corporation (i) at a time when the corporation is or was an affiliate of the corporation, or (ii) at the request of the corporation, or (c) at the request of the corporation, is or was, or holds or held a position equivalent to that of, a director or officer of a partnership, trust, joint venture or other unincorporated entity. An “eligible proceeding” means a proceeding in which an eligible party or any of the heirs and personal or other legal representatives of the eligible party, by reason of the eligible party being or having been a director or officer of, or holding or having held a position equivalent to that of a director or officer of, the corporation or an associated corporation (a) is or may be joined as a party, or (b) is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding.
A corporation must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by the eligible party in respect of that proceeding if the eligible party (a) has not been reimbursed for those expenses, and (b) is wholly successful, on the merits or otherwise, in the outcome of the proceeding or is substantially successful on the merits in the outcome of the proceeding.
A corporation may pay, as they are incurred in advance of the final disposition of an eligible proceeding, the expenses actually and reasonably incurred by an eligible party in respect of that proceeding, provided the corporation first receives from the eligible party a written undertaking that, if it is ultimately determined that the payment of expenses is prohibited, the eligible party will repay the amounts advanced.
A corporation must not indemnify an eligible party or pay the expenses of an eligible party if any of the following circumstances apply:
| • | if the indemnity or payment is made under an earlier agreement to indemnify or pay expenses and, at the time that the agreement to indemnify or pay expenses was made, the corporation was prohibited from giving the indemnity or paying the expenses by its memorandum or articles; |
| • | if the indemnity or payment is made otherwise than under an earlier agreement to indemnify or pay expenses and, at the time that the indemnity or payment is made, the corporation is prohibited from giving the indemnity or paying the expenses by its memorandum or articles; |
| • | if, in relation to the subject matter of the eligible proceeding, the eligible party did not act honestly and in good faith with a view to the best interests of the corporation or the associated corporation, as the case may be; |
| • | in the case of an eligible proceeding other than a civil proceeding, if the eligible party did not have reasonable grounds for believing that the eligible party’s conduct in respect of which the proceeding was brought was lawful. |
If an eligible proceeding is brought against an eligible party by or on behalf of the corporation or by or on behalf of an associated corporation, the corporation must not (a) indemnify the eligible party in respect of the proceeding or (b) pay the expenses of the eligible party in respect of the proceeding.
II-1
Table of Contents
A corporation may purchase and maintain insurance for the benefit of an eligible party or the heirs and personal or other legal representatives of the eligible party against any liability that may be incurred by reason of the eligible party being or having been a director or officer of, or holding or having held a position equivalent to that of a director or officer of, the corporation or an associated corporation.
Optimi Health Corp.’s (the “Registrant”) articles provide that its directors must cause the Registrant to indemnify its directors former directors, or alternate directors and their respective heirs and personal or other legal representatives against all eligible penalties to which such person is or may be liable, and the Registrant must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding and each director is deemed to have contracted with the Registrant on this term.
The Underwriting Agreement, the form of which is to be filed as Exhibit 1.1 to this Registration Statement, will also provide for indemnification of the Registrant and its officers and directors.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”), may be permitted to directors, officers or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Item 7. Recent Sales of Unregistered Securities.
During the past three years, the Registrant has issued the following securities (including options to acquire its common shares) without registering the securities under the Securities Act. The Registrant believes that each of the following issuances was exempt from registration under the Securities Act in reliance on Regulation S under the Securities Act regarding sales by an issuer in offshore transactions, pursuant to Section 4(a)(2) of the Securities Act regarding transactions not involving a public offering and/or Rule 701 of the Securities Act. The discussion below reflects the reverse share split with a share split ratio of 1-for-30 the Registrant anticipates effecting immediately prior to the effectiveness of this registration statement.
On January 3, 2023, the Registrant issued 1,667 common shares at C$6.9 per share in connection with an advisory services agreement. The issuance was not made to a person who was in the United States and the Registrant reasonably believes that the purchaser was outside of the United States.
On February 23, 2023, the Registrant issued 2,500 common shares at C$6.6 per share due to the vesting of RSRs. The issuance was not made to persons who were in the United States and the Registrant reasonably believes that the purchasers were outside of the United States.
On March 29, 2023, the Registrant granted 333 stock options, subject to vesting provisions, to an employee of the Registrant. The stock options are exercisable at a price of C$19.50 per common share until March 29, 2028, unless earlier terminated in accordance with the terms of the Equity Plan. The issuance was not made to a person who was in the United States and the Registrant reasonably believes that the purchaser was outside of the United States.
On April 26, 2023, the Registrant granted 333 stock options, subject to vesting provisions, to an employee of the Registrant. The stock options are exercisable at a price of C$19.50 per common share until April 26, 2028, unless earlier terminated in accordance with the terms of the Equity Plan. The issuance was not made to a person who was in the United States and the Registrant reasonably believes that the purchaser was outside of the United States.
II-2
Table of Contents
On May 8, 2023, the Registrant issued 4,638 common shares at C$7.8 per share due to the vesting of RSRs. The issuance was not made to persons who were in the United States and the Registrant reasonably believes that the purchasers were outside of the United States.
On November 1, 2023, the Registrant granted 333 stock options, subject to vesting provisions, to an employee of the Registrant. The stock options are exercisable at a price of C$19.5 per common share until November 1, 2028, unless earlier terminated in accordance with the terms of the Equity Plan. The issuance was not made to a person who was in the United States and the Registrant reasonably believes that the purchaser was outside of the United States.
On November 6, 2023, the Registrant issued 4,638 common shares at C$4.8 per share due to the vesting of RSRs. The issuance was not made to persons who were in the United States and the Registrant reasonably believes that the purchasers were outside of the United States.
On January 2, 2024, the Registrant issued 1,667 common shares at C$7.35 per share in connection with an advisory services agreement. The issuance was not made to a person who was in the United States and the Registrant reasonably believes that the purchaser was outside of the United States.
On February 23, 2024, the Registrant issued 61,668 units at a price C$9.0 per unit, for gross proceeds of C$555,010. Each unit consisted of one common share and one-half of a common share purchase warrant. Each warrant entitles the holder to acquire one common share at C$12.0 for a period of two years from the date of issuance, subject to an accelerated expiry provision. Catcher Investments Ltd., a company controlled by John James Wilson and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 11,111 and 33,333 of these units, respectively. The offer and sale were not made to persons who were in the United States and the Registrant reasonably believes that the purchasers were outside of the United States.
On April 29, 2024, the Registrant granted 500 stock options, subject to vesting provisions, to an employee of the Registrant. The stock options are exercisable at a price of C$10.5 per common share until April 29, 2029, unless earlier terminated in accordance with the terms of the Equity Plan. The issuance was not made to a person who was in the United States and the Company reasonably believes that the purchaser was outside of the United States.
On May 6, 2024, the Registrant issued 4,638 common shares at C$10.2 per share due to the vesting of RSRs. The issuance was not made to persons who were in the United States and the Registrant reasonably believes that the purchasers were outside of the United States.
On May 10, 2024, the Registrant issued 44,444 units at a price C$9.0 per unit, for gross proceeds of C$400,000. Each unit consisted of one common share and one-half of a common share purchase warrant. Each warrant entitles the holder to acquire one common share at C$12.0 for a period of two years from the date of issuance, subject to an accelerated expiry provision. Catcher Investments Ltd., a company controlled by John James Wilson and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 22,222 of these units each. The offer and sale were not made to persons who were in the United States and the Registrant reasonably believes that the purchasers were outside of the United States.
On May 29, 2024, the Registrant issued 60,554 units at a price C$9.0 per unit, for gross proceeds of C$544,990. Each unit consisted of one common share and one-half of a common share purchase warrant. Each warrant entitles the holder to purchase one Common Share at a price of C$12.0 and is exercisable for two years from the date of issuance, subject to an accelerated expiry provision. There was no general solicitation or advertising to market the securities and the offer and sale were made to accredited investors.
On June 3, 2024, the Registrant issued 5,556 common shares at C$12.0 per share due to the exercise of warrants. The issuance was not made to persons who were in the United States and the Registrant reasonably believes that the purchasers were outside of the United States.
II-3
Table of Contents
On June 18, 2024, the Registrant issued 3,333 common shares at C$12.0 per share due to the exercise of warrants. The issuance was not made to persons who are in the United States and the Registrant reasonably believes that the purchasers were outside of the United States.
On July 9, 2024, the Registrant issued common shares at C$0.40 per share due to the exercise of warrants. The issuance was not made to persons who were in the United States and the Registrant reasonably believes that the purchasers were outside of the United States.
On August 15, 2024, the Registrant issued 59,889 units at a price of C$9.0 per unit, for gross proceeds of C$539,000. Each unit consisted of one common share and one-half of a common share purchase warrant. Each warrant entitles the holder to acquire one common share at C$12.0 for two years from the date of issuance, subject to an accelerated expiry provision. Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 11,111 of these units. There was no general solicitation or advertising to market the securities and the offer and sale were made to accredited investors.
On January 24, 2025, the Registrant issued 43,889 units at a price of C$9.0 per unit for gross proceeds of C$395,000. Each unit is comprised of one common share and one-half of a common share purchase warrant. Each warrant entitles the holder to acquire one common share at C$12.0 for two years from the date of issuance, subject to an accelerated expiry provision. Catcher Investments Ltd., a company controlled by John James Wilson and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 19,444 and 24,444 of these units, respectively. The offer and sale were not made to persons who were in the United States and the Registrant reasonably believes that the purchasers were outside of the United States.
On January 24, 2025, the Registrant issued 15,272 common shares at a price of C$6.45 per share to settle a debt of C$98,126 with two creditors. The debt relates to marketing and investor relations services previously rendered. The offer and sale were not made to persons who were in the United States and the Registrant reasonably believes that the purchasers were outside of the United States.
On July 24, 2025, the Registrant issued 3,450 unsecured convertible debentures at a price of C$1,000 per convertible debenture for gross proceeds of C$3,450,000. The convertible debentures bear interest at a rate of 15.0% per annum, calculated and payable quarterly in arrears in cash, maturing July 24, 2026, twelve months from the date of issuance, unless extended by and at the option of the holders for a further twelve months. The principal amount of each convertible debenture is convertible into common shares at a conversion price of C$4.5, being the closing price of the common shares on the CSE on July 16, 2025, the date preceding the execution by each holder of the subscription agreement for the convertible debentures. On maturity, any outstanding principal amount of the convertible debentures, plus any accrued and unpaid interest thereon, will be repaid by the Registrant in cash or, at the option of the holders, through the issuance of common shares. Catcher Investments Ltd., a company controlled by John James Wilson and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 3,000 convertible debentures and 450 convertible debentures, respectively. The offer and sale were not made to persons who were in the United States and the Registrant reasonably believes that the purchasers were outside of the United States.
On July 24, 2025, the Registrant issued 13,333 common shares purchase warrants as consideration for the entry into a loan amendment with an independent third party to an original loan agreement dated November 1, 2023. Each warrant is exercisable at C$7.5 for a period of two years from the date of issuance. Under the terms of the loan amendment the maturity date was extended from April 30, 2025 to April 30, 2026. The offer and sale were not made to a person who was in the United States and the Registrant reasonably believes that the purchaser was outside of the United States.
On August 20, 2025, the Registrant granted 63,333 stock options to MZHCI, LLC, a MZ Group Company, as partial consideration for investor relations consulting services. Of the 63,333 stock options granted, 23,333 stock options are exercisable at C$4.95 vesting immediately on date of grant, 20,000 stock options are exercisable at
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C$6.0 vesting on December 20, 2025 and 20,000 stock options are exercisable at C$9.0 vesting on April 20, 2026. The options expire on August 20, 2028. The options expire August 20, 2028. There was no general solicitation or advertising to market the securities and the issuance was made to an accredited investor.
On January 15, 2026, the Registrant granted an aggregate of 28,333 stock options and 18,500 restricted share rights, subject to vesting provisions, to certain directors, officers, employees and key individuals associated with the Registrant. The stock options are exercisable at a price of C$15.0 per common share until January 15, 2031, unless earlier terminated in accordance with the terms of the Equity Plan. The restricted share rights will vest and convert into common shares for no additional consideration, subject to applicable vesting provisions. The issuances were not made to persons who were in the United States and the Registrant reasonably believes that the purchasers were outside of the United States.
On January 30, 2026, the Registrant issued 4,625 common shares at C$8.7 per common share due to the vesting of RSRs. The issuances were not made to persons who were in the United States and the Registrant reasonably believes that the purchasers were outside of the United States.
Item 8. Exhibits and Financial Statement Schedules.
(a) Exhibits
See Exhibit Index for a complete list of all exhibits filed as part of this Registration Statement, which Exhibit Index is incorporated herein by reference.
(b) Financial Statement Schedules
Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or the notes thereto.
Item 9. Undertakings.
The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant under the provisions described in Item 6, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the Securities Act;
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(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2) that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offerings.
(4) to file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Securities Act need not be furnished, provided that the issuer includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements.
(5) that, for the purpose of determining liability under the Securities Act to any purchaser:
(i) if the issuer is relying on Rule 430B:
(A) each prospectus filed by the undersigned issuer pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(B) each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offerings described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or
(ii) if the issuer is relying on Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the
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registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(6) that, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) any preliminary prospectus or prospectus of the undersigned registrant relating to the offerings required to be filed pursuant to Rule 424;
(ii) any free writing prospectus relating to the offerings prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) the portion of any other free writing prospectus relating to the offerings containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) any other communication that is an offer in the offerings made by the undersigned registrant to the purchaser.
(b) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant under Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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EXHIBIT INDEX
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| Exhibit No. | Description | |
| 23.2 | Consent of Norton Rose Fulbright Canada LLP (included in Exhibit 5.1 and Exhibit 5.3) | |
| 23.3** | Consent of Norton Rose Fulbright US LLP (included in Exhibit 5.2) | |
| 24.1** | Powers of Attorney (included on signature page) | |
| 99.1** | Code of Business Conduct and Ethics of the Registrant | |
| 107 | Filing Fee Table | |
| * | To be filed by amendment |
| ** | Previously filed |
| † | Certain portions of this exhibit have been omitted because it is both not material and is the type that the registrant treats as private or confidential |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Vancouver, British Columbia, on April 16, 2026.
| Optimi Health Corp. | ||
| By: | /s/ Dane Stevens | |
| Name: | Dane Stevens | |
| Title: | Chief Executive Officer, Chief Marketing Officer and Director | |
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Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons on April 16, 2026 in the capacities indicated.
| Signature |
Title | |
| /s/ Dave Stevens | Chief Executive Officer, Chief Marketing Officer and Director (principal executive officer) | |
| Dane Stevens | ||
| * | Interim Chief Financial Officer and Director (principal financial and accounting officer) | |
| Jacob Safarik | ||
| * |
Chief Operating Officer and Director | |
| Bryan Safarik | ||
| * |
Chairman and Director | |
| John James Wilson | ||
| * |
Director | |
| Jason Mosberian | ||
| *By: | /s/ Dave Stevens | |
| Name: | Dane Stevens | |
| Title: | Attorney-in-fact |
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SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES
Pursuant to the Securities Act of 1933, the undersigned, the duly authorized representative in the United States of Optimi Health Corp. has signed this registration statement or amendment thereto in New York on April 16, 2026.
| Authorized U.S. Representative | ||
| By: | /s/ Colleen A. De Vries | |
| Name: | Colleen A. De Vries | |
| Title: | Sr. Vice President on behalf of Cogency Global Inc. | |
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Exhibit 1.1
OPTIMI HEALTH CORP.
[ ] UNITS
UNDERWRITING AGREEMENT
[ ], 2026
Joseph Gunnar & Co., LLC
As the Representative of the several Underwriters listed in Schedule A hereto
c/o Joseph Gunnar & Co., LLC
1000 RXR Plaza
Uniondale, New York 11556
Ladies and Gentlemen:
Optimi Health Corp., a corporation incorporated under the Business Corporations Act (British Columbia) (the “Company”), confirms its agreement with Joseph Gunnar & Co., LLC (“Joseph Gunnar”) and each of the other underwriters, if any, named in Schedule A hereto (collectively, the “Underwriters,” which term shall also include any underwriter substituted as hereinafter provided in Section 10 hereof), for which Joseph Gunnar acting as representative (in such capacity, the “Representative” and if there are no Underwriters other than Joseph Gunnar, references to multiple Underwriters shall be disregarded and the term Representative as used herein shall have the same meaning as Underwriters), with respect to the issue and sale by the Company and the purchase by the Underwriters, acting severally and not jointly, of the respective number of units of the Company set forth in Schedule A hereto, totaling [ ] units in the aggregate (“Units”) (said units to be issued and sold by the Company being hereinafter called the “Firm Securities”). Each Unit consists of one common share, no par value, in the capital of the Company (the “Common Shares”) and one warrant (the “Offering Warrant”) of the Company to purchase one Common Share (the “Offering Warrant Shares”).
The Company also proposes to grant to the Underwriters, acting severally and not jointly, an option described in Section 2(b) hereof to purchase all or part of [ ] additional Units to cover over-allotments, if any (the “Option Securities” and, the Option Securities, together with the Firm Securities, being hereinafter called the “Securities”).
The Company understands that the Underwriters propose to make a public offering of the Securities as soon as the Representative deems advisable after this Underwriting Agreement (this “Agreement”) has been executed and delivered. The parties shall take all steps required to ensure compliance, to the greatest extent possible, with Section 4 of BC Instrument 72-503 – Distribution of Securities outside British Columbia (“BCI 72-503”). For greater certainty, unless otherwise agreed to in writing by the Company and Joseph Gunnar and conducted in compliance with BCI 72-503 or any other available prospectus exemption under Canadian securities law, the Securities shall be distributed to (i) purchasers that are not resident in Canada or (ii) on or through the facilities of an exchange or market outside Canada and the Company or Underwriters have no reason to believe that the purchaser is resident in Canada.
The Company has filed with the U.S. Securities and Exchange Commission (the “SEC”) a registration statement on Form F-1 (File No. 333-290086), covering the public offering and sale of the Securities, the issuance of the Offering Warrant Shares, the issuance of the Underwriter Warrants (as hereinafter defined) and the issuance of the Underwriter Warrant Shares (as hereinafter defined) (the Securities, Offering Warrant Shares, Underwriter Warrants and Underwriter Warrant Shares, collectively, being hereinafter called the “Registered Securities”) under the Securities Act of 1933, as amended, including the rules and regulations of the SEC promulgated thereunder (collectively, the “Securities Act”). Such registration statement, as of any time, means such registration statement, as amended, on file with the SEC at the time the registration statement became effective (including the preliminary prospectus included in the registration statement, financial statements, schedules, exhibits and all other documents filed as a part thereof or incorporated therein and all information deemed to be a part thereof pursuant to paragraph (b) of Rule 430A of the Securities Act (the “Rule 430A Information”)), and is referred to herein as the “Registration Statement.” Any registration statement filed pursuant to Rule 462(b) of the Securities Act in connection with the offer and sale of the Registered Securities is herein called the “Rule 462(b) Registration Statement” and, after such filing,
the term “Registration Statement” shall include the Rule 462(b) Registration Statement. Each preliminary prospectus used in connection with the offering of the Registered Securities (including any preliminary prospectus that omitted the Rule 430A Information and used after effectiveness and prior to the execution and delivery of this Agreement) are collectively referred to herein as a “preliminary prospectus.” The preliminary prospectus, subject to completion, dated [●], 2026, that was included in the Registration Statement immediately prior to the Applicable Time is hereinafter called the “Pricing Prospectus.” Promptly after execution and delivery of this Agreement, the Company will prepare and file a final prospectus relating to the Registered Securities in accordance with the provisions of Rule 424(b) under the Securities Act (“Rule 424(b)”). The final prospectus, in the form first furnished or made available to the Underwriters for use in connection with the offering of the Securities, is referred to herein as the “Prospectus.” For purposes of this Agreement, all references to the Registration Statement, any preliminary prospectus, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the SEC pursuant to its Electronic Data Gathering, Analysis and Retrieval system (or any successor system) (“EDGAR”).
As used in this Agreement:
“Applicable Time” means [__:00 [P./A.]M.], New York City time, on [•], 2026 or such other time as agreed by the Company and the Representative.
“Canadian Disclosure Record” means the public disclosure of the Company filed on the System for Electronic Document Analysis and Retrieval +.
“Canadian Securities Regulators” means the securities commissions or other securities regulatory authorities in each of the provinces and territories of Canada.
“Canadian Securities Laws” means securities laws emanating from governmental authorities, including the respective rules and regulations made thereunder together with applicable published national and local instruments, policy statements, notices, blanket rules and orders of the Canadian Securities Regulators.
“Common Share Equivalents” means any securities of the Company or the Subsidiaries (as hereinafter defined) that would entitle the holder thereof to acquire at any time Common Shares, including, without limitation, any debt, preferred shares, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Shares.
“Company Equity Incentive Plan” means any employee benefit plan of the Company in effect on the date hereof.
“Exchanges” means Nasdaq (as hereinafter defined) and the Canadian Securities Exchange and, in each case, any predecessors or successors thereof.
“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433 of the Securities Act (“Rule 433”), including without limitation any “free writing prospectus” (as defined in Rule 405 of the Securities Act (“Rule 405”)) relating to the Registered Securities that is (i) required to be filed with the SEC by the Company, (ii) a “road show for an offering that is a written communication” within the meaning of Rule 433(d)(8)(i), whether or not required to be filed with the SEC, or (iii) exempt from filing with the SEC pursuant to Rule 433(d)(5)(i) because it contains a description of the Registered Securities or of the offering that does not reflect the final terms, in each case in the form filed or required to be filed with the SEC or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g).
“Pricing Disclosure Package” means any Issuer Free Writing Prospectuses issued at or prior to the Applicable Time, the Pricing Prospectus and the information included on Schedule B-3 hereto, all considered together.
“Testing-the-Waters Communication” means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Securities Act.
“Warrants” means the Offering Warrants and the Underwriter Warrants.
“Warrant Shares” means the Offering Warrant Shares and the Underwriter Warrant Shares.
“Written Testing-the-Waters Communication” means any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405.
All references in this Agreement to financial statements and schedules and other information which is “contained,” “included” or “stated” (or other references of like import) in the Registration Statement, any preliminary prospectus or the Prospectus shall be deemed to include all such financial statements and schedules and other information incorporated or deemed incorporated by reference in the Registration Statement, any preliminary prospectus or the Prospectus, as the case may be, prior to the execution and delivery of this Agreement; and all references in this Agreement to amendments or supplements to the Registration Statement, any preliminary prospectus or the Prospectus shall be deemed to include the filing of any document under, incorporated or deemed to be incorporated by reference in the Registration Statement, such preliminary prospectus or the Prospectus, as the case may be, at or after the execution and delivery of this Agreement.
SECTION 1. Representations and Warranties by the Company. The Company represents and warrants to each Underwriter as of the date hereof, the Applicable Time, the Closing Time (as defined below) and any Date of Delivery (as defined below), and agrees with each Underwriter, as follows:
(a) Registration Statement and Prospectuses. Each of the Registration Statement and any amendment thereto has become effective under the Securities Act. No stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued by the SEC under the Securities Act, no order preventing or suspending the use of any preliminary prospectus or the Prospectus has been issued by the SEC, and no Legal Actions (as hereinafter defined) for any of those purposes have been instituted by the SEC or are pending or, to the Company’s knowledge, contemplated by the SEC. The Company has complied with each request (if any) from the SEC for additional information.
Each of the Registration Statement and any post-effective amendment thereto, at the time of its effectiveness, complied in all material respects with the requirements of the Securities Act. Each preliminary prospectus, the Prospectus and any amendment or supplement thereto, at the time each was filed with the SEC, complied in all material respects with the requirements of the Securities Act. Each preliminary prospectus delivered to the Underwriters for use in connection with the offering and the Prospectus was or will be identical to the electronically transmitted copies thereof filed with the SEC pursuant to EDGAR, except to the extent permitted by Regulation S-T.
The Registration Statement, any preliminary prospectus and the Prospectus, and the filing of the Registration Statement, any preliminary prospectus and the Prospectus with the SEC, have been duly authorized by and on behalf of the Company, and the Registration Statement has been duly executed pursuant to such authorization.
(b) Accurate Disclosure. Neither the Registration Statement nor any amendment thereto, at its effective time, at the Closing Time or at any Date of Delivery, contained, contains or will contain an untrue statement of a material fact or omitted, omits or will omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. As of the Applicable Time, none of (i) the Pricing Disclosure Package, (ii) any individual Issuer Free Writing Prospectus, when considered together with the Pricing Disclosure Package, (iii) any individual Written Testing-the-Waters Communication, when considered together with the Pricing Disclosure Package, or (iv) any filing made or to be made in the Canadian Disclosure Record with respect to the offering of the Securities pursuant to this Agreement included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Neither the Prospectus nor any amendment or supplement thereto (including any prospectus wrapper), as of its issue date, at the time of any filing
with the SEC pursuant to Rule 424(b), at the Closing Time or at any Date of Delivery, included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
The representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement (or any amendment thereto), the Pricing Disclosure Package or the Prospectus (or any amendment or supplement thereto, including any prospectus wrapper) made in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representative expressly for use therein. For purposes of this Agreement, the only information so furnished shall be the names of the Underwriters and the information in the first paragraph under the caption “Discounts, Commissions and Expenses” and the statements under the captions “Passive Market Making,” “Price Stabilization, Short Positions and Penalty Bids” and “Electronic Distribution,” in each case, contained in the “Underwriting” section of the Prospectus (collectively, the “Underwriter Information”).
(c) Issuer Free Writing Prospectuses. No Issuer Free Writing Prospectus conflicts or will conflict with the information contained in the Registration Statement or the Prospectus and any preliminary or other prospectus deemed to be a part thereof that has not been superseded or modified. No filing of any “road show” (as defined in Rule 433(h)) is required in connection with the offering of the Securities. Any Issuer Free Writing Prospectus that the Company is required to file pursuant to Rule 433(d) under the 1933 Act has been, or will be, filed with the Commission in accordance with the requirements of the 1933 Act and the 1933 Act Regulations. Each Issuer Free Writing Prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under the 1933 Act or that was prepared by or on behalf of or used or referred to by the Company complies or will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations. Except for the Issuer Free Writing Prospectuses, if any, identified in Schedule B-3 hereto, and electronic road shows, if any, each furnished to the Representative before first use, the Company has not prepared, used or referred to, and will not, without the prior consent of the Representative, prepare, use or refer to, any Issuer Free Writing Prospectus.
(d) Testing-the-Waters Materials. The Company (i) has not engaged in any Testing-the-Waters Communication and (ii) has not authorized anyone other than the Representative to engage in Testing-the-Waters Communications. The Company reconfirms that the Representative has been authorized to act on its behalf in undertaking Testing-the-Waters Communications.
(e) Ineligible Issuer Status. At the time of filing the Registration Statement and any post-effective amendment thereto, at the time of effectiveness of the Registration Statement and any amendment thereto, at the earliest time thereafter that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the Securities Act) of the Securities and at the date hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405, without taking account of any determination by the SEC pursuant to Rule 405 that it is not necessary that the Company be considered an ineligible issuer.
(f) Emerging Growth Company Status. From the time of the initial filing of the Registration Statement with the SEC (or, if earlier, the first date on which the Company engaged directly or through any individual or entity authorized to act on its behalf in any Testing-the-Waters Communication) through the date hereof, the Company has been and is an “emerging growth company,” as defined in Section 2(a) of the Securities Act (an “Emerging Growth Company”).
(g) Foreign Private Issuer Status. The Company is a “foreign private issuer” within the meaning of Rule 405.
(h) Independent Accountants. Each of Davidson & Company LLP and Smythe LLP (each, an “Auditor” and, collectively, the “Auditors”), the accounting firms that certified the financial statements and supporting schedules of the Company that are included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, is an independent registered public accounting firm as required by the Securities Act, the Securities Exchange Act of 1934, as amended, and including the rules and regulations promulgated thereunder (collectively, the “Exchange Act”), and the Public Company Accounting Oversight Board (United States) (the “PCAOB”). The Auditors have not, during the periods covered by the financial statements included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, provided to the Company any non-audit services, as such term is used
in Section 10A(g) of the Exchange Act. No “reportable event” (within the meaning of National Instrument 51-102 – Continuous Disclosure Obligations (“NI 51-102”)) has occurred with either Auditor with respect to audits of the Company or its predecessors. To the Company’s knowledge, neither of the Auditors has been, and neither of the Auditors is currently, in violation of the auditor independence requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) with respect to the Company. The Auditors are independent in accordance with the auditors’ rules of professional conduct of the Chartered Professional Accountants of British Columbia, are independent public accountants as required under the Canadian Securities Laws of the Provinces of British Columbia, Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, and Saskatchewan. There has not been any disagreement (within the meaning of NI 51-102) with Auditor with respect to the audits of the Company.
(i) Disclosure. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under applicable United States securities laws and Canadian Securities Laws during the two (2) years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such materials), on a timely basis or has received a valid extension of such time of filing and has filed any such required materials prior to the expiration of any such extension. As of their respective dates, the materials filed by the Company in the Canadian Disclosure Record complied in all material respects with the requirements of applicable Canadian Securities Laws and, when filed, did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(j) Financial Statements. The financial statements of the Company included in the Registration Statement and the Prospectus, collectively with the related notes and schedules, present fairly, in all material respects, the consolidated financial position of the Company and its Subsidiaries as of the dates indicated, and the consolidated loss and other comprehensive loss, cash flows, and changes in equity of the Company for the periods specified, and have been prepared in compliance with the requirements of the Securities Act, and in conformity with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board, and audited in accordance with auditing standards generally accepted in the United States of America (“GAAS”) established by the PCAOB, applied on a consistent basis during the periods involved; there are no financial statements (historical or pro forma) that are required to be included in the Registration Statement or the Prospectus that are not included as required; the Company and its Subsidiaries do not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations), not described in the Registration Statement (excluding the exhibits thereto) and the Prospectus. The financial data set forth in each of the Registration Statement and the Prospectus under the captions “Prospectus Summary—Summary Consolidated Financial Information” and “Capitalization” fairly present the information set forth therein on a basis consistent with that of the audited financial statements contained in the Registration Statement and the Prospectus.
(k) No Material Adverse Change in Business. Except as otherwise stated therein, since the respective dates as of which information is given in the Registration Statement, the Pricing Disclosure Package or the Prospectus, (i) there has not been any material change in the capital of the Company (other than the issuance of Common Shares upon exercise of options and warrants described as outstanding in, and the grant of options and awards under each Company Equity Incentive Plan described in, and the issuance of any Common Shares upon the conversion of Company securities described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, and the repurchase or retirement of Common Shares pursuant to agreements providing for an option to repurchase or a right of first refusal on behalf of the Company pursuant to the Company’s repurchase rights), any material change in short-term debt or long-term debt of the Company, or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Company on any class of capital of the Company, or any material adverse change, or any development that would reasonably be expected to result in a material adverse change, in or affecting the business, properties, management, financial position, shareholders’ equity, or results of operations of the Company, whether or not arising in the ordinary course of business (a “Material Adverse Effect”); (ii) the Company has not entered into any transaction or agreement (whether or not in the ordinary course of business) that is material to the Company or incurred any liability or obligation, direct or contingent, that is material to the Company; (iii) the Company has not sustained any loss or interference with its business that is material to the Company and that is either from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or regulatory authority, except in each case as otherwise disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus; and (iv) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of capital of the Company; and (v) no officer or director of the Company has resigned from any position with the Company.
(l) Litigation. There is no action, claim, suit, investigation, inquiry, notice of violation, arbitration, enforcement, inspection, audit or proceeding (including, without limitation, an informal investigation or partial proceeding, including a deposition) pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, provincial, county, local or foreign) (collectively, a “Legal Action”) which (i) adversely affects or challenges the legality, validity or enforceability of this Agreement or the Securities; or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director or officer thereof, is or has been the subject of any Legal Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company or any current or former director or officer of the Company. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. None of the Canadian Securities Regulators has issued an order ceasing or suspending trading in any securities of the Company, or to the knowledge of the Company, ceasing or suspending trading by the directors or officers of the Company, or any of them, or prohibiting the trade or distribution of any the securities referred to herein (the “Cease Trade Order”) or has instituted or, to the Company’s knowledge, threatened to institute, any proceedings with respect to such an order.
(m) Good Standing of the Company. The Company has been duly organized and is validly existing and in good standing (or the foreign equivalent thereof) under the laws of its jurisdiction of organization, is duly qualified to do business and is in good standing in each jurisdiction in which its ownership or lease of property or the conduct of its business requires such qualification, and has all power and authority necessary to own or hold its properties and to conduct the business in which it is engaged, except where the failure to be so qualified or in good standing or have such power or authority would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and to the Company’s knowledge, no Legal Action has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
(n) Good Standing of the Company’s Subsidiaries. Each subsidiary of the Company (each, a “Subsidiary” and, collectively, the “Subsidiaries”) has been duly organized and is validly existing in good standing (or the foreign equivalent thereof) under the laws of the jurisdiction of its incorporation or organization, has corporate or similar power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to be so qualified or to be in good standing would not result in a Material Adverse Effect, and to the Company’s knowledge, no Legal Action has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification. Except as otherwise disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, all of the issued and outstanding capital of each Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and is owned by the Company, directly or through Subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. None of the outstanding shares of capital stock of any Subsidiary was issued in violation of the preemptive or similar rights of any securityholder of such Subsidiary. The only Subsidiaries of the Company are the entities listed on Exhibit 21.1 to the Registration Statement.
(o) Capitalization. The authorized, issued and outstanding shares of capital of the Company are as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus in the column entitled “Actual” under the caption “Capitalization” (except for subsequent issuances, if any, (i) pursuant to this Agreement, (ii) pursuant to reservations, agreements or employee benefit plans referred to in the Registration Statement, the Pricing Disclosure Package and the Prospectus; or (iii) pursuant to the conversion of convertible securities or exercise of warrants or options referred to in the Registration Statement, the Pricing Disclosure Package and the Prospectus). The outstanding shares of capital of the Company have been duly authorized and are validly issued, fully paid and
non-assessable. No Person (as defined below) has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by this Agreement. Except for the purchase and sale of the Securities and except as set forth in the Prospectus, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any Common Shares, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional Common Shares or Common Share Equivalents. The issuance and sale of the Securities will not obligate the Company to issue Common Shares or other securities to any Person (other than the Underwriters) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. There are no outstanding securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. The Company does not have any share appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement. All of the outstanding shares in the capital of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all applicable federal, state and provincial securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. The authorized shares of the Company conform in all material respects to all statements relating thereto contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus. The offers and sales of the Company’s securities were, at all relevant times, either registered under the Securities Act and the applicable state securities or U.S. state “blue sky” securities laws, qualified for distribution in Canada pursuant to a valid prospectus, or, based in part on the representations and warranties of the purchasers of such securities, exempt from such registration or prospectus requirements. No further approval or authorization of any shareholder, the Board of Directors of the Company (the “Board of Directors”) or others is required for the Company’s issuance and sale of the Securities as provided herein. There are no shareholder agreements, voting agreements or other similar agreements with respect to the Company’s share capital to which the Company is a party.
(p) Equity Incentive Plans. Each award granted by the Company under the applicable Company Equity Incentive Plan was granted (i) in accordance with the terms of such Company Equity Incentive Plan and (ii) in respect of each option award to purchase Common Shares, with an exercise price at least equal to the fair market value of a Common Share on the date such option would be considered granted under IFRS and applicable law. No award granted under any Company Equity Incentive Plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, awards prior to, or otherwise knowingly coordinate the grant of awards with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects. Each Company Equity Incentive Plan is accurately described in all material respects in the Registration Statement, the Pricing Disclosure Package and the Prospectus. The Company has not knowingly granted, and there is no and has been no policy or practice of the Company of granting, options to purchase Common Shares prior to, or otherwise coordinating the grant of options to purchase Common Shares with, the release or other public announcement of material information regarding the Company or its results of operations or prospects.
(q) Authorization. This Agreement has been duly authorized, executed and delivered by the Company. The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement and the Warrants will not contravene any provision of (i) applicable law, (ii) the articles of the Company, (iii) any agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole, or (iv) any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any subsidiary, except that, in the case of clauses (i) and (iii) as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or on the power and ability of the Company to perform its obligations under this Agreement or the Warrants, and no consent, approval, authorization or order of, or qualification with, any governmental body, agency or court is required for the performance by the Company of its obligations under this Agreement or the Warrants, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Securities.
(r) Authorization and Description of Securities. The Securities to be purchased by the Underwriters from the Company have been duly authorized for issuance and sale to the Underwriters pursuant to this Agreement and, when issued and delivered by the Company pursuant to this Agreement against payment of the consideration set
forth herein, will be duly and validly issued and, in the case of such Common Shares, fully paid and non-assessable. The Securities conform in all material respects to all statements relating thereto contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus and such description conforms in all material respects to the rights set forth in the instruments defining the same. No holder of Securities will be subject to personal liability by reason of being such a holder. The Warrants have been duly authorized and, when executed and delivered by the Company in accordance with this Agreement, will be valid and legally binding agreements of the Company, enforceable against the Company in accordance with their terms except as the enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles. The maximum number of Warrant Shares to be issued by the Company upon exercise of the Warrants in accordance therewith have been duly authorized and have been or will be reserved for issuance upon exercise of the Warrants in a number sufficient to meet the current exercise requirements. The Warrant Shares, when issued and delivered upon exercise of the Warrants in accordance therewith, will be validly issued, fully paid and non-assessable, and the issuance of the Warrant Shares is not subject to any preemptive or similar rights not otherwise validly waived or satisfied.
(s) Registration Rights. No Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.
(t) Absence of Violations, Defaults and Conflicts. Neither the Company nor any Subsidiary is (A) in violation of its charter, by-laws or similar organizational document, (B) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any Subsidiary is a party or by which either of them may be bound or to which any of the properties or assets of the Company or any Subsidiary is subject (collectively, “Agreements and Instruments”), except for such defaults that would not, individually or in the aggregate, result in a Material Adverse Effect, or (C) in violation of any law, statute, rule, regulation, judgment, order, writ or decree for which they have not received extension or exemption of any arbitrator, court, governmental body, regulatory body, administrative agency or other authority, body or agency having jurisdiction over the Company or its Subsidiaries or any of their respective properties, assets or operations (each, a “Governmental Entity”), except for such violations that would not, individually or in the aggregate, result in a Material Adverse Effect. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein and in the Registration Statement, the Pricing Disclosure Package and the Prospectus (including the issuance and sale of the Securities and the use of the proceeds from the sale of the Securities as described therein under the caption “Use of Proceeds”) and compliance by the Company with its obligations hereunder have been duly authorized by all necessary corporate action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any properties or assets of the Company or its Subsidiaries pursuant to, the Agreements and Instruments (except for such conflicts, breaches, defaults or Repayment Events or liens, charges or encumbrances that would not, individually or in the aggregate, result in a Material Adverse Effect), nor will such action result in any violation of the provisions of the charter, by-laws or similar organizational document of the Company or its Subsidiaries or any law, statute, rule, regulation, judgment, order, writ or decree of any Governmental Entity. As used herein, a “Repayment Event” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or its Subsidiaries.
(u) Pursuant to the Exchange Act. The Company has filed with the SEC a Form 8-A (File Number 001-[●]) providing for the registration pursuant to Section 12(b) under the Exchange Act of the Common Shares. The registration of the Common Shares under the Exchange Act has been declared effective by the SEC on or prior to the date hereof. The Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Shares under the Exchange Act, nor has the Company received any notification that the SEC is contemplating terminating such registration.
(v) Listing. The Common Shares (including the Warrant Shares issued pursuant to this Agreement) have been approved for listing on the Nasdaq Capital Market (“Nasdaq”), subject to notice of issuance.
(w) Absence of Labor Dispute. No labor dispute with the employees of the Company or its Subsidiaries exists or, to the knowledge of the Company, is imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its or its Subsidiaries’ principal suppliers, manufacturers, customers or contractors, which, in either case, would result in a Material Adverse Effect.
(x) Absence of Legal Actions. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, there is no Legal Action before or brought by any Governmental Entity (including, without limitation, any Legal Action before or brought by the U.S. Food and Drug Administration (the “FDA”), Health Canada, the Therapeutic Goods Administration of Australia (the “TGA”), or any comparable regulatory authority in any jurisdiction now pending or, to the knowledge of the Company, threatened, against or affecting the Company or its Subsidiaries, which would reasonably be expected to result in a Material Adverse Effect, or which would reasonably be expected to materially and adversely affect their respective properties or assets or the consummation of the transactions contemplated in this Agreement or the performance by the Company of its obligations hereunder; and the aggregate of all pending legal or governmental Legal Actions to which the Company or any such Subsidiary is a party or of which any of their respective properties or assets is the subject which are not described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, including ordinary routine litigation incidental to the business, would not reasonably be expected to result in a Material Adverse Effect.
(y) Accuracy of Exhibits. There are no contracts or documents that are required to be described in the Registration Statement, the Pricing Disclosure Package or the Prospectus or to be filed as exhibits to the Registration Statement that have not been so described and filed as required.
(z) No Consents Required. No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Governmental Entity or any stock exchange is necessary or required for the performance by the Company of its obligations hereunder, in connection with the offering, issuance, sale and delivery of the Securities hereunder or the consummation of the transactions contemplated by this Agreement, except such as have been already obtained or as may be required under the Securities Act, the rules of the Exchanges, U.S. state securities laws, Canadian Securities Laws or the rules of the Financial Industry Regulatory Authority, Inc. (“FINRA”).
(aa) Possession of Licenses and Permits. The Company and its Subsidiaries possess such permits, licenses, registrations, approvals, consents and other authorizations (collectively, “Governmental Licenses”) issued by the appropriate Governmental Entities necessary to conduct the business now operated by them (including, without limitation, all such Governmental Licenses required by the FDA, Health Canada, the TGA, or any other federal, state, provincial, local or foreign agencies or bodies engaged in the regulation of clinical or preclinical studies, pharmaceuticals, biologics, controlled substances, biohazardous substances or activities related to the business now operated by the Company and its Subsidiaries), except where the failure so to possess would not, individually or in the aggregate, result in a Material Adverse Effect. The Company and its Subsidiaries are in compliance with the terms and conditions of all Governmental Licenses, except where the failure so to comply would not, individually or in the aggregate, result in a Material Adverse Effect. The Company has fulfilled and performed all of its material obligations with respect to the Governmental Licenses and, to the knowledge of the Company, no event has occurred which allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other material impairment of the rights of the Company as a holder of any permit, except where the failure to so fulfill or perform, or the occurrence of such event, would not, individually or in the aggregate, result in a Material Adverse Effect. All of the Governmental Licenses are valid and in full force and effect, except where the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not, individually or in the aggregate, result in a Material Adverse Effect. Neither the Company nor its Subsidiaries has received any notice of Legal Actions relating to the revocation or modification of any Governmental Licenses which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect.
(bb) Title to Property. All of the leases and subleases material to the business of the Company and its Subsidiaries, considered as one enterprise, and under which the Company or its Subsidiaries holds properties described in the Registration Statement, the Pricing Disclosure Package or the Prospectus, are in full force and effect, and neither the Company nor any such Subsidiary has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any Subsidiary under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such Subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease.
(cc) Title to Intellectual Property. The Company and each of its Subsidiaries owns or possesses or has valid rights to use all patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses, inventions, trade secrets and similar rights (“Intellectual Property Rights”) necessary for the conduct of the business of the Company and its Subsidiaries as currently carried on and as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus. To the knowledge of the Company, no action or use by the Company or any of its Subsidiaries necessary for the conduct of its business as currently carried on and as described in the Registration Statement and the Prospectus will involve or give rise to any infringement of, or license or similar fees for, any Intellectual Property Rights of others. Neither the Company nor any of its Subsidiaries has received any written notice alleging any such infringement, fee or conflict with asserted Intellectual Property Rights of others. Except as described in the Registration Statement, the Pricing Disclosure Package or the Prospectus or as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect (i) to the knowledge of the Company, there is no infringement, misappropriation or violation by third parties of any of the Intellectual Property Rights owned by the Company; (ii) there is no pending or, to the knowledge of the Company, threatened Legal Action by others challenging the rights of the Company in or to any such Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any such claim, that would, individually or in the aggregate, together with any other claims in this Section 1(cc), reasonably be expected to result in a Material Adverse Effect; (iii) the Intellectual Property Rights owned by the Company and, to the knowledge of the Company, the Intellectual Property Rights licensed to the Company have not been adjudged by a court of competent jurisdiction invalid or unenforceable, in whole or in part, and there is no pending or, to the Company’s knowledge, threatened Legal Action by others challenging the validity or scope of any such Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any such claim that would, individually or in the aggregate, together with any other claims in this Section 1(cc), reasonably be expected to result in a Material Adverse Effect; (iv) there is no pending or, to the Company’s knowledge, Legal Action by others that the Company infringes, misappropriates or otherwise violates any Intellectual Property Rights or other proprietary rights of others, the Company has not received any written notice of such claim and the Company is unaware of any other facts which would form a reasonable basis for any such claim that would, individually or in the aggregate, together with any other claims in this Section 1(cc), reasonably be expected to result in a Material Adverse Effect; and (v) to the Company’s knowledge, no employee of the Company is in or has ever been in violation in any material respect of any term of any employment contract, patent disclosure agreement, invention assignment agreement, non-competition agreement, non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such employee’s employment with the Company, or actions undertaken by the employee while employed with the Company and could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect. To the Company’s knowledge, all material technical information developed by and belonging to the Company which has not been patented has been kept confidential. The Company is not a party to or bound by any options, licenses or agreements with respect to the Intellectual Property Rights of any other person or entity that are required to be set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus and are not described therein. The Registration Statement, the Pricing Disclosure Package and the Prospectus contain in all material respects the same description of the matters set forth in the preceding sentence. None of the technology employed by the Company has been obtained or is being used by the Company in violation of any contractual obligation binding on the Company or, to the Company’s knowledge, any of its officers, directors or employees, or otherwise in violation of the rights of any persons. The Company is in compliance with the terms of each agreement pursuant to which Intellectual Property Rights have been licensed to the Company, and all such agreements are in full force and effect.
(dd) Patents and Patent Applications. The Company does not currently own any patents or have any pending patent applications.
(ee) Health Canada and FDA Compliance. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company: (i) is and at all times has been in material compliance with all statutes, rules or regulations of Health Canada, the FDA, the TGA and other comparable Governmental Entities applicable to the ownership, handling, testing, development, manufacture, packaging, processing, use, distribution, marketing, labeling, promotion, sale, offer for sale, storage, import, export or disposal of any product, including any active pharmaceutical ingredients, under development, manufactured or distributed by the Company
(“Applicable Laws”); (ii) has not received any notice of adverse finding, warning letter, untitled letter or other correspondence or notice from Health Canada, the FDA, the U.S. Drug Enforcement Administration, the TGA, or any Governmental Entity alleging or asserting material noncompliance with any Applicable Laws or any licenses, certificates, approvals, clearances, exemptions, authorizations, permits and supplements or amendments thereto required by any such Applicable Laws (“Authorizations”); (iii) possesses all material Authorizations and such Authorizations are valid and in full force and effect and the Company is not in material violation of any term of any such Authorizations, and the Company does not and has never operated, including any importing or exporting activities, in any jurisdiction where it does not, or did not at the time of operations, have all Authorizations required for such activities; (iv) has not received notice of any Legal Action from Health Canada, the FDA, the TGA, or any other Governmental Entity or third party alleging that any product operation or activity is in material violation of any Applicable Laws or Authorizations and has no knowledge that Health Canada, the FDA, the TGA, any other Governmental Entity or third party is considering commencing any Legal Action; (v) has not received notice that Health Canada, the FDA, the TGA, or any other Governmental Entity has taken, is taking or intends to take action to limit, suspend, modify or revoke any material Authorizations and has no knowledge that Health Canada, the FDA, the TGA, or any Governmental Entity is considering such action; and (vi) has filed, obtained, maintained or submitted all material reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Applicable Laws or Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were materially complete and correct on the date filed (or were corrected or supplemented by a subsequent submission).
(ff) Compliance with Health Care Laws. The Company has operated and currently is in compliance with all applicable health care laws, rules and regulations (except where such failure to operate or non-compliance would not, individually or in the aggregate, result in a Material Adverse Effect), including, without limitation, (i) the U.S. Federal, Food, Drug and Cosmetic Act (21 U.S.C. §§ 301 et seq.) and any applicable equivalent laws in foreign jurisdiction, including the Canadian Food and Drugs Act (RSC 1985, c. F-27), including all rules and regulations promulgated thereunder; (ii) all applicable federal, state, provincial, local and all applicable foreign healthcare related fraud and abuse laws, including, without limitation, the U.S. Federal Anti-kickback Statute (42 U.S.C. § 1320a-7b(b)), the U.S. Physician Payments Sunshine Act (42 U.S.C. § 1320a-7h), the U.S. civil False Claims Act (31 U.S.C. §§ 3729 et seq.), the U.S. criminal False Claims Law (42 U.S.C. § 1320a-7b(a)), all criminal laws relating to healthcare fraud and abuse, including but not limited to 18 U.S.C. Sections 286 and 287, the healthcare fraud criminal provisions under the U.S. Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) (42 U.S.C. Section 1320d et seq.), the exclusion laws (42 U.S.C. § 1320a-7), and the civil monetary penalties law (42 U.S.C. § 1320a-7a); (iii) HIPAA, as amended by the U.S. Health Information Technology for Economic Clinical Health Act (42 U.S.C. Section 17921 et seq.) and all applicable laws and regulations governing the protection of human subjects and privacy of patient medical records and other personal information and data in the clinical trial context; (iv) all applicable state and federal controlled substance and drug diversion laws including the U.S. Controlled Substances Act (21 U.S.C. § 801 et seq.) and the Canadian Controlled Drugs and Substances Act (SC 1996, c. 19); (v) the regulations promulgated pursuant to such laws; and (vi) any other similar local, state, provincial, federal, or foreign laws (collectively, the “Health Care Laws”). Neither the Company, nor to the Company’s knowledge, any of its officers, directors, employees or agents have engaged in activities which are, as applicable, cause for false claims liability, civil penalties, or mandatory or permissive exclusion from Medicare, Medicaid, the FDA, or any other state or federal healthcare program. The Company has not received written notice or other correspondence of any Legal Action from any court or arbitrator or governmental or regulatory authority or third party alleging that any product operation or activity is in violation of any Health Care Laws, and, to the Company’s knowledge, no such Legal Action is threatened. The Company is not a party to and does not have any ongoing reporting obligations pursuant to any corporate integrity agreement, deferred prosecution agreement, monitoring agreement, consent decree, settlement order, plan of correction or similar agreement imposed by any governmental or regulatory authority. Additionally, neither the Company, nor to the Company’s knowledge, any of its employees, officers or directors, has been excluded, suspended or debarred from participation in any U.S. state or federal or Canadian federal or provincial health care program or human clinical research or, to the knowledge of the Company, is subject to a governmental inquiry or other Legal Action that could reasonably be expected to result in debarment, suspension, or exclusion.
(gg) Environmental Laws. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus or would not, individually or in the aggregate, result in a Material Adverse Effect, (A) neither the Company nor any Subsidiary is in violation of any federal, state, provincial, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products, asbestos-containing materials or mold (collectively, “Hazardous Materials”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”), (B) the Company and its Subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (C) there are no pending or, to the knowledge of the Company threatened, administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or other Legal Actions relating to any Environmental Law against the Company or any Subsidiary and (D) there are no events or circumstances that would reasonably be expected to form the basis of an order for clean-up or remediation, or an Legal Action by any private party or Governmental Entity, against or affecting the Company or any Subsidiary relating to Hazardous Materials or any Environmental Laws.
(hh) Accounting Controls and Disclosure Controls; Compliance with the Sarbanes-Oxley Act. The Company and each of its Subsidiaries maintains effective internal control over financial reporting (as defined under Rule 13-a15 and 15d-15 under the Exchange Act) as well as in compliance with IFRS and a system of internal accounting controls designed to provide reasonable assurances that (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with IFRS and in accordance with GAAS and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Since the date of the latest audited financial statements included in the Pricing Disclosure Package, (1) the Company has not been advised of (a) any significant deficiencies in the design or operation of internal controls that could adversely affect the ability of the Company or any of its Subsidiaries to record, process, summarize and report financial data, or any material weaknesses in the Company’s or its Subsidiaries internal controls over financial reporting (whether or not remediated), and (2) since that date, there has been no change in the Company’s internal control over financial reporting that has materially and adversely affected, or is reasonably likely to materially and adversely affect, the Company’s internal control over financial reporting. The Company and each of its Subsidiaries have established and currently maintain an effective system of disclosure controls and procedures (as defined in Rule 13a-15 and Rule 15d-15 under the Exchange Act) that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act will be made known on a timely basis to the individuals responsible for the preparation of the Company’s Exchange Act filings and other public disclosure documents. The Company is and, at the Applicable Time and on the Closing Time, will be in material compliance with the provisions of the Sarbanes-Oxley Act that are applicable to it and has implemented or will implement such programs and has taken reasonable steps to ensure the Company’s future compliance (not later than the relevant statutory and regulatory deadlines therefor) with all of the material provisions of the Sarbanes-Oxley Act at all times after the effectiveness of the Registration Statement (taking into account all exemptions and phase-in periods provided under the Jumpstart Our Business Startups Act and otherwise under applicable law).
(ii) Payment of Taxes. All income tax returns of the Company and its Subsidiaries required by law to be filed have been filed and all taxes shown by such returns or otherwise assessed, which are due and payable, have been paid, except assessments against which appeals have been or will be promptly taken and as to which adequate reserves have been provided in conformity with GAAS. The Company and its Subsidiaries have filed all other tax returns that are required to have been filed by them pursuant to applicable foreign, state, local or other law except insofar as the failure to file such returns would not result in a Material Adverse Effect, and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company and its Subsidiaries, except for such taxes, if any, as are being contested in good faith and as to which adequate reserves have been established by the Company. The charges, accruals and reserves on the books of the Company in respect of any income and corporation tax liability for any years not finally determined are, in conformity with GAAS, adequate to meet any assessments or re-assessments for additional income tax for any years not finally determined, except to the extent of any inadequacy that would not result in a Material Adverse Effect.
(jj) Insurance. The Company and its Subsidiaries carry or are entitled to the benefits of insurance, with financially sound and reputable insurers, in such amounts and covering such risks as is generally maintained by
companies of established repute engaged in the same or similar business, and all such insurance is in full force and effect. The Company has no reason to believe that it or its Subsidiaries will not be able (A) to renew its existing insurance coverage as and when such policies expire or (B) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Effect. Neither of the Company nor its Subsidiaries has been denied any insurance coverage which it has sought or for which it has applied.
(kk) Investment Company Act. The Company is not required and, upon the issuance and sale of the Securities as herein contemplated and the application of the net proceeds therefrom as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, will not be required to register as an “investment company” under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
(ll) Absence of Manipulation. Neither the Company nor any affiliate of the Company has taken, nor will the Company or any affiliate take, directly or indirectly, any action which is designed, or would be expected, to cause or result in, or which constitutes, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities or to result in a violation of Regulation M under the Exchange Act.
(mm) Foreign Corrupt Practices Act. None of the Company, its Subsidiaries or, to the knowledge of the Company, any director, officer, agent, employee, affiliate or other person acting on behalf of the Company or its Subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA and the Company has and, to the knowledge of the Company, its affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.
(nn) Money Laundering Laws. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Entity (collectively, the “Money Laundering Laws”); and no Legal Action by or before any Governmental Entity involving the Company or its Subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(oo) Sanctions. None of the Company, its Subsidiaries or, to the knowledge of the Company, any director, officer, agent, employee, affiliate or representative of the Company or its Subsidiaries is an individual or entity (“Person”) currently the subject or target of any sanctions administered or enforced by the United States government, including, without limitation, the U.S. Department of the Treasury’s Office of Foreign Assets Control, the United Nations Security Council, the European Union, His Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”), nor is the Company located, organized or resident in a country or territory that is the subject of Sanctions; and the Company will not directly or indirectly use the proceeds of the sale of the Securities, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partners or other Person, to fund any activities of or business with any Person, or in any country or territory, that, at the time of such funding, is the subject of Sanctions (each such country or territory, a “Sanctioned Country”) or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions. For the past five years, the Company has not engaged in, and it is not now engaging in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions or is or was a Sanctioned Country.
(pp) Statistical and Market-Related Data. Any statistical and market-related data included in the Registration Statement, the Pricing Disclosure Package or the Prospectus are based on or derived from sources that the Company believes, after reasonable inquiry, to be reliable and accurate and, to the extent required, the Company has obtained the written consent to the use of such data from such sources.
(qq) Privacy and Data Protection. The Company and its Subsidiaries have operated their business in a manner compliant in all material respects with all privacy, data security and data protection laws and regulations applicable to the Company’s collection, use, transfer, protection, disposal, disclosure, handling, storage and analysis of personal data. The Company and its Subsidiaries have been and are in compliance in all material respects with internal policies and procedures designed to ensure the integrity and security of the data collected, handled or stored in connection with its business; the Company and its Subsidiaries have been and are in compliance in all material respects with internal policies and procedures designed to ensure compliance with the Health Care Laws that govern privacy and data security and take, and have taken reasonably appropriate steps designed to assure compliance with such policies and procedures. The Company and its Subsidiaries have taken reasonable steps to maintain the confidentiality of its personally identifiable information, protected health information, consumer information and other confidential information of the Company, its Subsidiaries and any third parties in its possession (“Sensitive Company Data”). The tangible or digital information technology systems (including computers, screens, servers, workstations, routers, hubs, switches, networks, data communications lines, technical data and hardware), software and telecommunications systems used or held for use by the Company and its Subsidiaries (the “Company IT Assets”) are adequate and operational for, in accordance with their documentation and functional specifications, the business of the Company and its Subsidiaries as now operated and as currently proposed to be conducted as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus. The Company and its Subsidiaries have used reasonable efforts to establish, and have established, commercially reasonable disaster recovery and security plans, procedures and facilities for the business consistent with industry standards and practices in all material respects, including, without limitation, for the Company IT Assets and data held or used by or for the Company and its Subsidiaries. The Company and its Subsidiaries have not suffered or incurred any security breaches, compromises or incidents with respect to any Company IT Asset or Sensitive Company Data, except where such breaches, compromises or incidents would not reasonably be expected to, individually or in the aggregate, result in a Material Adverse Effect; and to the Company’s knowledge, there has been no unauthorized or illegal use of or access to any Company IT Asset or Sensitive Company Data by any unauthorized third party. The Company and its Subsidiaries have not been required to notify any individual of any information security breach, compromise or incident involving Sensitive Company Data.
(rr) No Broker Fees. Except as disclosed in the Pricing Disclosure Package, there are no contracts, agreements or understandings between the Company and any person that would give rise to a valid claim against the Company or any Underwriter for a brokerage commission, finder’s fee or other like payment in connection with the offering of the Securities contemplated hereby. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, to the Company’s knowledge, the Company and its affiliates have not entered into any other arrangements, agreements or understandings during the 180-day period prior to the initial filing date of the Registration Statement with the Commission, which arrangement or agreement provides for the receipt of any “underwriting compensation,” as defined in FINRA Rule 5110, by any underwriter. Without limiting the foregoing, except as set forth in the Prospectus, the Company has not made any direct or indirect payments (in cash, securities or otherwise) to: (i) any person, as a finder’s fee, consulting fee or otherwise, in consideration of such person raising capital for the Company or introducing to the Company persons who raised or provided capital to the Company; (ii) any FINRA member; or (iii) any person or entity that has any direct or indirect affiliation or association with any FINRA member, within the twelve months prior to the date of this Agreement, other than the prior payment of $15,000 to the Representative as provided hereunder in connection with the offering. None of the net proceeds of the offering hereunder will be paid by the Company to any participating FINRA member or its affiliates, except as specifically authorized herein
(ss) Transactions With Affiliates and Employees. Except as set forth in the Pricing Disclosure Package, none of the officers or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments to or from, any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including option agreements under any Company Equity Incentive Plan.
(tt) Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable as a result of the Underwriters and the Company fulfilling their obligations or exercising their rights under this Agreement, and any other documents or agreements executed in connection with the transactions contemplated hereunder.
(uu) No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions of any trading market or exchange on which any of the securities of the Company are listed or designated.
(vv) Solvency. Based on the consolidated financial condition of the Company as of the Closing Time, after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Time.
(ww) U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon the Representative’s request.
(xx) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or affiliates is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(yy) D&O Questionnaires. To the Company’s knowledge, all information contained in the questionnaires completed by each of the Company’s directors and officers immediately prior to the offering of the Securities and in the Lock-up Agreements (as defined below) provided to the Underwriters is true and correct in all material respects and the Company has not become aware of any information which would cause the information disclosed in such questionnaires become materially inaccurate and incorrect.
(zz) FINRA Affiliation. No officer, director or any beneficial owner of 10% or more of the Company’s unregistered securities has any direct or indirect affiliation or association with any FINRA member (as determined in accordance with the rules and regulations of FINRA) that is participating in the offering of the Securities. The Company will advise the Representative and Underwriters’ counsel if it learns that any officer, director or owner of 10% or more of (i) the Company’s outstanding Common Shares or (ii) any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Shares, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Shares is or becomes an affiliate or associated person of a FINRA member firm.
(aaa) Board of Directors. The Board of Directors is comprised of the persons set forth under the heading of the Prospectus captioned “Management.” The qualifications of the persons serving as board members and the overall composition of the Board of Directors comply with the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder applicable to the Company and the rules of Nasdaq. At least one member of the Board of Directors qualifies as a “financial expert” as such term is defined under the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder and the rules of Nasdaq.
(bbb) Cybersecurity. (i)(x) There has been no material security breach or other compromise of or relating to any of the Company’s or any Subsidiary’s information technology and computer systems, networks, hardware, software, data (including the data of its respective customers, employees, suppliers, vendors and any third party data maintained by or on behalf of it), equipment or technology (collectively, “IT Systems and Data”) and (y) the Company and the Subsidiaries have not been notified of, and has no knowledge of any event or condition that would reasonably be expected to result in, any security breach or other compromise to its IT Systems and Data; (ii) the Company and the Subsidiaries are presently in material compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Data and to the protection of such IT Systems and Data from unauthorized use, access, misappropriation or modification, except as would not, individually or in the aggregate, have a Material Adverse Effect; (iii) the Company and the Subsidiaries have implemented and maintained commercially reasonable safeguards to maintain and protect its material confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and Data; and (iv) the Company and the Subsidiaries have implemented backup and disaster recovery technology consistent with industry standards and practices.
(ccc) No Reliance. The Company has not relied upon the Underwriters or Underwriters’ Counsel (as hereinafter defined) for any legal, tax or accounting advice in connection with the offering of the Securities.
(ddd) Canadian Securities Laws.
(i) The Company is a reporting issuer in the Provinces of British Columbia, Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, and Saskatchewan; is not in default of any material requirement of the Canadian Securities Laws of the Province of British Columbia; and is not included on a list of defaulting reporting issuers maintained by the Canadian Securities Regulators.
(ii) The Company is in compliance in all material respects with its timely and continuous disclosure obligations under all applicable Canadian Securities Laws and the Company is not in default of its filings under, nor has it failed to file or publish any document required to be filed or published under all applicable Canadian Securities Laws and, without limiting the generality of the foregoing, there has not occurred any Material Adverse Change since the respective dates as of which information is given in the Canadian Disclosure Record which has not been publicly disclosed on a non-confidential basis and the Company has not filed any confidential material change reports since the date of such statements which remain confidential as at the date hereof.
(iii) Except as may have been corrected by subsequent disclosure, the Canadian Disclosure Record contain no untrue statement of a material fact as at the dates thereof nor do they omit to state a material fact which, at the date thereof, was required to have been stated or was necessary to prevent a statement that was made from being false or misleading in the circumstances in which it was made and were prepared in accordance with and comply with Canadian Securities Laws.
(iv) There are no reports or information that, in accordance with the requirements of the Canadian Securities Regulators or applicable Canadian Securities Laws, must be made publicly available in connection with the offering of the Securities that have not been made publicly available as required. There are no documents required to be filed with the Canadian Securities Regulators as of the date hereof in
connection with the offering the Securities that have not been filed as required, other than the filing of the Registration Statement and any post-closing filings required to be made by the Company pursuant to the Canadian Securities Laws.
Any certificate signed by any officer of the Company or any of its subsidiaries and delivered to any Underwriter or to counsel for the Underwriters in connection with the offering, or the purchase and sale, of the Securities shall be deemed a representation and warranty by the Company to each Underwriter as to the matters covered thereby.
The Company has a reasonable basis for making each of the representations set forth in this Section 1. The Company acknowledges that the Underwriters and, for purposes of the opinions to be delivered pursuant to Section 5 hereof, counsel to the Company and counsel to the Underwriters, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Firm Securities. On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company agrees to sell to each Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to purchase from the Company, at the price per Unit set forth in Schedule A, the respective number of Firm Securities as set forth in Schedule A opposite the name of such Underwriter, at the purchase prices set forth in Schedule B-1 hereto, plus any additional number of Firm Securities which such Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof, subject, in each case, to such adjustments among the Underwriters as the Representative in its sole discretion shall make to eliminate any sales or purchases of fractional shares. For greater certainty and notwithstanding anything to the contrary in this Agreement, no Firm Securities will be offered or sold in Canada.
(b) Option Securities. In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the Underwriters, severally and not jointly, to purchase up to an additional [ ] Units as Option Securities. The purchase price shall be (i) in the case of Offering Warrants, the price per Warrant set forth in Schedule B-1, and (ii) in the case of Common Shares and/or Units, the applicable price per Common Share and per Unit, respectively, as set forth in Schedule B-1, in each case less an amount per security equal to any dividends or distributions declared by the Company and paid or payable on the Firm Securities but not payable on such Option Securities. The option hereby granted may be exercised for 45 days after the date hereof and may be exercised in whole or in part at any time from time to time upon notice by the Representative to the Company setting forth the number of Option Securities as to which the several Underwriters are then exercising the option and the time and date of payment and delivery for such Option Securities. Upon any exercise of the option, the Representative may elect that some or all of the Option Securities be purchased as (i) Units, (ii) the Common Shares underlying such Units, (iii) the Warrants underlying such Units, or (iv) any combination of the foregoing, provided that in no event shall the option be exercised in respect of more than [ ] Units in the aggregate (whether delivered as Units or as the components thereof). Any such time and date of delivery (a “Date of Delivery”) shall be determined by the Representative, but any Date of Delivery after the Closing Time shall not be later than seven full business days nor earlier than two full business days after the exercise of said option, nor in any event prior to the Closing Time. If the option is exercised as to all or any portion of the Option Securities, each of the Underwriters, acting severally and not jointly, will purchase that proportion of the total number of Option Securities then being purchased which the number of Firm Securities set forth in Schedule A opposite the name of such Underwriter bears to the total number of Firm Securities, subject, in each case, to such adjustments as the Representative in its sole discretion shall make to eliminate any sales or purchases of fractional securities. For greater certainty and notwithstanding anything to the contrary in this Agreement, no Option Securities will be offered or sold in Canada.
(c) Payment. Payment of the purchase price for, and delivery of certificates or book-entry security entitlements for, the Firm Securities shall be made at the offices of Cozen O’Connor (the “Underwriters’ Counsel”), or at such other place as shall be agreed upon by the Representative and the Company, at 10:00 A.M. (New York City time) on the first (second, if the pricing occurs after 4:30 P.M. (New York City time) on any given day) business day after the date hereof (unless postponed in accordance with the provisions of Section 10), or such other time not later than ten business days after such date as shall be agreed upon by the Representative and the Company (such time and
date of payment and delivery being herein called “Closing Time” and “Closing Date”, respectively). Delivery of the Common Shares included in the Firm Securities at the Closing Time shall be made through the facilities of The Depository Trust Company, unless the Representative shall otherwise instruct. The signed Warrants included in the Firm Securities shall be delivered to the Representative (or its designees) in definitive form via electronic delivery (including in PDF format) and shall be made available for inspection by the Representative on the business day prior to the applicable Closing Date. The Company shall cause the original executed Warrants to be delivered to the Representative (or its designees) by reputable overnight courier as soon as practicable following the Closing Date.
(d) In addition, in the event that any or all of the Option Securities are purchased by the Underwriters, payment of the purchase price for, and delivery of certificates or security entitlements for, such Option Securities shall be made at the above-mentioned offices, or at such other place as shall be agreed upon by the Representative and the Company, on each Date of Delivery as specified in the notice from the Representative to the Company (the “Option Closing Date”). Delivery of the Common Shares included in the Option Securities on each such Date of Delivery shall be made through the facilities of The Depository Trust Company, unless the Representative shall otherwise instruct. The signed Warrants, if any, included in the Option Securities, shall be delivered to the Representative (or its designees) in definitive form via electronic delivery (including in PDF format) and shall be made available for inspection by the Representative on the business day prior to the applicable Option Closing Date. The Company shall cause the original executed Warrants, if any, included in the Option Securities, to be delivered to the Representative (or its designees) by reputable overnight courier as soon as practicable following the applicable Option Closing Date.
Payment shall be made to the Company by wire transfer of immediately available funds to a bank account designated by the Company, against delivery to the Representative for the respective accounts of the Underwriters of certificates or book-entry security entitlements for the Securities to be purchased by them. It is understood that each Underwriter has authorized the Representative, for its accounts, to accept delivery of, receipt for, and make payment of the purchase price for, the Securities which it has agreed to purchase. Joseph Gunnar, individually and not as representative of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Securities to be purchased by any Underwriter whose funds have not been received by the Closing Time or the relevant Date of Delivery, as the case may be, but such payment shall not relieve such Underwriter from its obligations hereunder.
(e) Underwriter Warrants. The Company hereby agrees to issue to the Representative (and/or its affiliates, employees or third-party designees) at the Closing Time and each Date of Delivery, if any, warrants (“Underwriter Warrants”) for the purchase of an aggregate of a number of Common Shares (the “Underwriter Warrant Shares”), representing 5.0% of Common Shares included in the Firm Securities sold at the Closing Time and 5.0% of the Common Shares included in the Option Securities sold at each Date of Delivery, if any. The Underwriter Warrants, in form and substance acceptable to the Representative, shall be exercisable, in whole or in part, during the period commencing one hundred eighty (180) days from the issuance and ending on the fifth anniversary of the date of issuance, at an initial exercise price per Common Share of $[_____].
SECTION 3. Covenants of the Company. The Company covenants with each Underwriter as follows:
(a) Compliance with Securities Regulations, Commission Requests and Canadian Securities Laws. The Company, subject to Section 3(b), will comply with the requirements of Rule 430A, and will notify the Representative as soon as practicable, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall become effective or any amendment or supplement to the Prospectus shall have been filed, (ii) of the receipt of any comments from the SEC, (iii) of any request by the SEC for any amendment to the Registration Statement or any amendment or supplement to the Prospectus (including any document incorporated by reference therein) or for additional information, (iv) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment or of any order preventing or suspending the use of any preliminary prospectus or the Prospectus, or of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any Legal Actions for any of such purposes or of any examination pursuant to Section 8(d) or 8(e) of the Securities Act concerning the Registration Statement, (v) if the Company becomes the subject of a proceeding under Section 8A of the Securities Act in connection with the offering of the Securities or (vi) the issuance by the Canadian Securities Exchange or any other market or exchange on which the Common Shares are then quoted or traded of any order preventing or suspending trading in the Common
Shares or the use of any prospectus in the Canadian Disclosure Record. The Company will effect all filings required under Rule 424(b), in the manner and within the time period required by Rule 424(b) (without reliance on Rule 424(b)(8)), and will take such steps as it deems necessary to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing by the SEC and, in the event that it was not, it will promptly file such prospectus. The Company will make every reasonable effort to prevent the issuance of any stop order, prevention or suspension and, if any such order is issued, to obtain the lifting thereof at the earliest possible moment. The Company shall comply with the requirements of Section 4 of BCI 72-503 with respect to the offering of the Securities made either to (i) a purchaser that is not resident in Canada or (ii) on or through the facilities of an exchange or market outside Canada and the Company or Underwriters have no reason to believe that the purchaser is resident in Canada. Notwithstanding the foregoing, if any offering or distribution of the Securities is made to purchasers resident in Canada, the Company covenants that such offering or distribution shall be conducted in compliance with applicable Canadian securities laws, including any applicable resale restrictions, and shall be effected pursuant to one or more prospectus exemptions available under Canadian securities law. The Underwriters and the Company agree to conduct the offering of the Securities in such a manner so as not to require registration thereof or the filing of a registration statement or a prospectus or similar document in any jurisdiction, other than the United States of America. To the extent that the Company and the Underwriters agree in writing that Securities will be offered to residents of Canada on a private placement basis exempt from the prospectus requirements of Canadian Securities Laws, the Company shall comply with the requirements relating to the prospectus exemptions under the Canadian Securities Laws with respect to the Offering that is made to a purchaser that is resident in Canada and the Underwriters shall comply with all reasonable requests in connection with such offering made by the Company and in such written agreement.
(b) Continued Compliance with Securities Laws. The Company will comply with the Securities Act, the Exchange Act and the Canadian Securities Laws so as to permit the completion of the distribution of the Securities as contemplated in this Agreement and in the Registration Statement, the Pricing Disclosure Package and the Prospectus. If at any time when a prospectus relating to the Securities is (or, but for the exception afforded by Rule 172 of the Securities Act (“Rule 172”), would be) required by the Securities Act to be delivered in connection with sales of the Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Company, to (i) amend the Registration Statement in order that the Registration Statement will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) amend or supplement the Pricing Disclosure Package or the Prospectus in order that the Pricing Disclosure Package or the Prospectus, as the case may be, will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser or (iii) amend the Registration Statement or amend or supplement the Pricing Disclosure Package or the Prospectus, as the case may be, in order to comply with the requirements of the Securities Act or the Securities Act, the Company will promptly (A) give the Representative notice of such event, (B) prepare any amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement, the Pricing Disclosure Package or the Prospectus comply with such requirements and, a reasonable amount of time prior to any proposed filing or use, furnish the Representative with copies of any such amendment or supplement and (C) file with the SEC any such amendment or supplement; provided that the Company shall not file or use any such amendment or supplement to which the Representative or counsel for the Underwriters shall object. The Company will furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request. The Company has given the Representative notice of any filings made pursuant to the Exchange Act within 48 hours prior to the Applicable Time; the Company will give the Representative notice of its intention to make any such filing from the Applicable Time to the Closing Time and will furnish the Representative with copies of any such documents a reasonable amount of time prior to such proposed filing, as the case may be, and will not file or use any such document to which the Representative or counsel for the Underwriters shall reasonably object.
(c) Delivery of Registration Statements. The Company has furnished or will deliver to the Representative and counsel for the Underwriters, without charge, signed copies of the Registration Statement as originally filed and each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed incorporated by reference therein) and signed copies of all consents and certificates of experts, and will also deliver to the Representative, without charge, a conformed copy of the Registration Statement as originally filed and each amendment thereto (without exhibits) for each of the Underwriters. The copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the SEC pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each Underwriter, without charge, as many copies of each preliminary prospectus as such Underwriter reasonably requested, and the Company hereby consents to the use of such copies for purposes permitted by the Securities Act. The Company will furnish to each Underwriter, without charge, during the period when a prospectus relating to the Securities is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the Securities Act, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the SEC pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(e) Blue Sky Qualifications. The Company will use its best efforts, in cooperation with the Underwriters, to qualify the Securities for offering and sale under the applicable securities laws of such U.S. states and other jurisdictions (domestic or foreign) as the Representative may reasonably designate and to maintain such qualifications in effect so long as required to complete the distribution of the Securities; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.
(f) Rule 158. The Company will timely file such reports pursuant to the Exchange Act as are necessary in order to make generally available to its securityholders as soon as practicable an earning statement for the purposes of, and to provide to the Underwriters the benefits contemplated by, the last paragraph of Section 11(a) of the Securities Act.
(g) Use of Proceeds; Investment Limitations; Sanctions. The Company will use the net proceeds received by it from the sale of the Securities in all material respects in the manner specified in the Registration Statement, the Pricing Disclosure Package and the Prospectus under the heading “Use of Proceeds.” Without limiting the foregoing, the Company will not invest or otherwise use the proceeds received by the Company from the sale of the Securities (i) in such a manner as would require the Company or any of its Subsidiaries to register as an investment company under the Investment Company Act, (ii) to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions or is a Sanctioned Country or (iii) in any other manner that will result in a violation of Sanctions by any Person (including any Person participating in the offering contemplated hereby, whether as an underwriter, advisor, investor or otherwise).
(h) Listing. The Company will use its commercially reasonable efforts to effect and maintain the listing of the Common Shares (including the Warrant Shares issued pursuant to this Agreement) on Nasdaq (or another market maintained by the Nasdaq Stock Market LLC).
(i) Restriction on Sale of Securities.
(i) During a period of 90 days from the date of the Prospectus (the “Restricted Period”), the Company will not, without the prior written consent of the Representative, (i) directly or indirectly, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any Common Shares or any securities convertible into or exercisable or exchangeable for Common Shares or file or confidentially submit any registration statement under the Securities Act with respect to any of the foregoing, (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Common Shares, whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of Common Shares or such other securities, in cash or otherwise, (iii) publicly announce an intention to effect any such swap, agreement or other transaction described in clauses (i) and (ii). The foregoing sentence shall not apply to (A) the Registered Securities; (B) the issuance of equity securities in connection with an acquisition or strategic relationship, which may include the sale of equity securities; (C) any Common Shares issued by the Company upon the exercise of an option or warrant or the conversion of a convertible security outstanding on the date hereof and referred to in the
Registration Statement, the Pricing Disclosure Package and the Prospectus; (D) any Common Shares issued or options to purchase Common Shares granted pursuant to existing employee benefit plans of the Company referred to in the Registration Statement, the Pricing Disclosure Package and the Prospectus; (E) any Common Shares issued pursuant to any existing non-employee director share plan or dividend reinvestment plan referred to in the Registration Statement, the Pricing Disclosure Package and the Prospectus; (F) the filing by the Company of any registration statement on Form S-8 or a successor form thereto; or (G) the filing of a resale registration statement with respect to existing registration rights of the Company, upon written consent of the Representative.
(ii) From the date hereof until 180 days after the Closing Date, without the prior consent of the Representative, the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Shares or Common Share Equivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional Common Shares either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the Common Shares at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Shares or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price regardless of whether shares pursuant to such agreement have actually been issued and regardless of whether such agreement is subsequently canceled. Any Underwriter shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
(j) Reporting Requirements. The Company, during the period when a Prospectus relating to the Securities is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the Securities Act, will file all documents required to be filed with the SEC pursuant to the Exchange Act within the time periods required by the Exchange Act. Additionally, the Company shall report the use of proceeds from the issuance of the Securities as may be required under Rule 463 under the Securities Act.
(k) Issuer Free Writing Prospectuses. The Company agrees that it will not make any offer relating to the Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus,” or a portion thereof, required to be filed by the Company with the SEC or retained by the Company under Rule 433.
(l) Testing-the-Waters Materials. If at any time following the distribution of any Written Testing-the-Waters Communication there occurred or occurs an event or development as a result of which such Written Testing-the-Waters Communication included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the Company will promptly notify the Representative and will promptly amend or supplement, at its own expense, such Written Testing-the-Waters Communication to eliminate or correct such untrue statement or omission.
(m) Emerging Growth Company Status. The Company will promptly notify the Representative if the Company ceases to be an Emerging Growth Company at any time prior to the later of (i) completion of the distribution of the Securities within the meaning of the Securities Act and (ii) completion of the Restricted Period referred to in Section 3(i) hereof.
(n) Reservation of Shares. The Company shall, at all times while any Offering Warrants or Underwriter Warrants are outstanding, reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Shares, solely for the purpose of enabling it to issue Warrant Shares upon exercise of such Offering Warrants or Underwriter Warrants, the number of Warrant Shares that are initially issuable and deliverable upon the exercise of the then-outstanding Offering Warrants and Underwriter Warrants.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company hereby agrees to pay on each of the Closing Date and each Option Closing Date, if any, to the extent not paid at the Closing Date, all expenses associated with the Offering or incident to the performance of the obligations of the Company under this Agreement, including, but not limited to: (a) all filing fees and communication expenses relating to the registration of the Securities to be sold in the Offering (including the Option Securities) with the SEC; (b) all FINRA Public Offering Filing System fees associated with the review of the Offering by FINRA; (c) the fees and expenses incurred in connection with the listing of the Common Shares on Nasdaq and such other stock exchanges as the Company and the Representative together determine; including any fees charged by The Depository Trust Company for new securities; (d) all fees, expenses and disbursements relating to background checks of the Company’s officers, directors and entities in an amount not to exceed $15,000 in the aggregate; (e) all fees, expenses and disbursements relating to the registration or qualification of such Securities under the “blue sky” securities laws of such U.S. states, the Canadian Securities Laws and such other foreign jurisdictions as the Representative may reasonably designate (including, without limitation, all filing and registration fees, and the fees and expenses of blue sky or other appropriate local counsel, it being agreed that such fees and expenses will be limited to $5,000 to such counsel upon the commencement of “blue sky” work by such counsel and an additional $5,000 at the Closing Time); (f) all fees, expenses and disbursements relating to the registration, qualification or exemption of such Securities under the securities laws of such foreign jurisdictions as Joseph Gunnar may reasonably designate; (g) the costs of all mailing and printing of the underwriting documents (including, without limitation, the Underwriting Agreement, any blue sky surveys and, if appropriate, any Agreement Among Underwriters, Selected Dealers’ Agreement, Underwriters’ Questionnaire and Power of Attorney), Registration Statements, Prospectuses and all amendments, supplements and exhibits thereto and as many preliminary and final Prospectuses as the Representative may reasonably deem necessary; (h) the costs and expenses of the Company’s public relations firm; (i) the costs of issuing and delivering the Securities; (j) the costs for “tombstones” and/or other commemorative items; (k) fees and expenses of the Transfer Agent for the Common Shares (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company); (l) stock transfer and/or stamp taxes, if any, payable upon the transfer of Securities from the Company to the Underwriters; (m) the costs associated with post-closing advertising the Offering in the national editions of the Wall Street Journal and New York Times; (n) the fees and expenses of the Auditors; (o) the fees and expenses of the Company’s legal counsel and other agents and representatives; (p) the Underwriters’ costs of mailing prospectuses to prospective investors; (q) up to $125,000 for the fees and expenses of Underwriters’ legal counsel; (r) the Company’s reasonable “road show” expenses for the offering; (s) the costs for bound volumes of the public offering materials as well as commemorative mementos and lucite tombstones, each of which the Company or its designee will provide within a reasonable time after the closing in such quantities as the Underwriters may reasonably request; (t) the $19,950 cost associated with the use of Ipreo’s book building, prospectus tracking and compliance software for the Offering; and (u) up to $10,000 of Joseph Gunnar’s actual accountable “road show” expenses for the offering. The Company also agrees to pay the Representative a non-accountable expense allowance in the amount of one percent (1%) of the gross proceeds of the sale of Firm Securities at the Closing Time and one percent (1%) of the gross proceeds of the sale of any Option Securities on each Date of Delivery, to be paid at the Closing Time and each Date of Delivery, if any, by deduction from the proceeds on such date. The Underwriters may also deduct from the net proceeds of the offering payable to the Company on the Closing Date, or each Option Closing Date, if any, the expenses set forth herein to be paid by the Company to the Underwriters; provided that in no event shall the amount reimbursed to the Representative pursuant to the foregoing provisions of this Section 4(a) exceed $200,000 in the aggregate.
(b) Termination of Agreement. If this Agreement is terminated by the Representative in accordance with the provisions of Section 5, Section 9(a)(i), Section 9(a)(iii) or Section 10 hereof, the Company shall reimburse the Underwriters for up to $75,000 of their reasonably documented out-of-pocket expenses, including the reasonable and documented fees and disbursements of counsel for the Underwriters; provided that if this Agreement is terminated by the Representative pursuant to Section 10 hereof, the Company will have no obligation to reimburse any defaulting Underwriter.
(c) Fee Tail. The Representative shall be entitled to compensation calculated in the manner set forth herein with respect to any public or private offering or other financing or capital-raising transaction of any kind (“Tail Financing”) unless the Company has terminated the Engagement Agreement (as defined below) for Cause (as defined in the Engagement Agreement), to the extent that such financing or capital is provided to the Company by investors whom the Representative introduced to the Company in connection with the Offering and with whom there was a
formal meeting between the Company and such investor (excluding President’s List investors provided to the Representative), during the period between the execution of the Engagement Agreement dated January 26, 2026 (the “Engagement Agreement”) between the Representative and the Company and the date of the Prospectus, if such Tail Financing is consummated at any time prior to the twelve (12) month anniversary of the Closing Date.
SECTION 5. Conditions of Underwriters’ Obligations. The obligations of the several Underwriters hereunder are subject to the accuracy of the representations and warranties of the Company contained herein or in certificates of any officer of the Company or any of its Subsidiaries delivered pursuant to the provisions hereof, to the performance by the Company of its covenants and other obligations hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration Statement has become effective and, at the Closing Time, no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the Securities Act, no order preventing or suspending the use of any preliminary prospectus or the Prospectus has been issued and no Legal Actions for any of those purposes have been instituted or are pending or, to the Company’s knowledge, contemplated; and the Company has complied with each request (if any) from the SEC for additional information to the reasonable satisfaction of counsel to the Underwriters.
(b) Opinion of Counsel for Company. At the Closing Time, the Representative shall have received the opinion and the negative assurance letter, each dated the Closing Time, of Norton Rose Fulbright US LLP, U.S. counsel for the Company, together with the opinion, dated the Closing Time, of Norton Rose Fulbright Canada LLP (collectively, “Company Counsel”), each in form and substance reasonably satisfactory to the Representative.
(c) Opinion of Counsel for Underwriters. At the Closing Time, the Representative shall have received the opinion and negative assurance letter, each dated the Closing Time, of Cozen O’Connor, each in form and substance satisfactory to the Representative.
(d) Officers’ Certificate. At the Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the Registration Statement, the Pricing Disclosure Package or the Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, and the Representative shall have received a certificate of the principal executive officer of the Company and of the principal financial officer of the Company, dated the Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties of the Company in this Agreement are true and correct with the same force and effect as though expressly made at and as of the Closing Time, (iii) the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement under the Securities Act has been issued, no order preventing or suspending the use of any preliminary prospectus or the Prospectus has been issued and no Legal Actions for any of those purposes have been instituted or are pending or, to their knowledge, contemplated.
(e) Comfort Letters. At the time of the execution of this Agreement, the Representative shall have received from each Auditor a letter, dated such date, in form and substance reasonably satisfactory to the Representative, together with signed or reproduced copies of such letter for each of the other Underwriters containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
(f) Bring-down Comfort Letters. At the Closing Time, the Representative shall have received from each Auditor a letter, dated as of the Closing Time, to the effect that they reaffirm the statements made in the letter furnished by such Auditor pursuant to subsection (e) of this Section, except that the specified date referred to shall be a date not more than three business days prior to the Closing Time.
(g) Approval of Listing. The Common Shares (including Warrant Shares issued pursuant to this Agreement) shall have been approved for listing on Nasdaq.
(h) Form of Warrant. The Representative shall have received a form of Warrant in form and substance reasonably acceptable to the Representative as attached on Exhibit B.
(i) No Objection. FINRA shall have raised no objection to the fairness and reasonableness of the underwriting terms and arrangements.
(j) No Cease Trade Order. On each of the Closing Date and any Option Closing Date, no Cease Trade Order shall have been issued by any Canadian Securities Regulator and no proceedings for such purpose, to the knowledge of the Company, will be pending or threatened.
(k) Lock-up Agreements. At the date of this Agreement, the Representative shall have received an agreement substantially in the form of Exhibit A hereto signed by each of the Company’s directors, executive officers and holders of more than 5% of any equity securities of the Company, including, without limitation, as listed on Schedule B-2 hereto (collectively, the “Lock-up Agreements”). The Company agrees to enforce the restrictions on transfer set forth in Lock-up Agreements.
(l) Conditions to Purchase of Option Securities. In the event that the Underwriters exercise their option provided in Section 2(b) hereof to purchase all or any portion of the Option Securities, the representations and warranties of the Company contained herein and the statements in any certificates furnished by the Company and any of its Subsidiaries hereunder shall be true and correct as of each Date of Delivery and, at the relevant Date of Delivery, the Representative shall have received:
(i) Officers’ Certificate. A certificate, dated such Date of Delivery, of the principal executive officer of the Company and of the principal financial officer of the Company confirming that the certificate delivered at the Closing Time pursuant to Section 5(d) hereof remains true and correct as of such Date of Delivery.
(ii) Opinion of Counsel for Company. If requested by the Representative, the opinion and negative assurance letter of Norton Rose Fulbright US LLP and the opinion of Norton Rose Fulbright Canada LLP , each in form and substance reasonably satisfactory to Underwriters’ Counsel, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion and negative assurance letter required by Section 5(b) hereof.
(iii) Opinion of Counsel for Underwriters. If requested by the Representative, the opinion and negative assurance letter of Cozen O’Connor, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinions and negative assurance letter required by Section 5(c) hereof.
(iv) Bring-down Comfort Letter. If requested by the Representative, a letter from each Auditor, in form and substance reasonably satisfactory to the Representative and dated such Date of Delivery, substantially in the same form and substance as the letter furnished to the Representative by such Auditor pursuant to subsection (f) of this Section, except that the “specified date” in the letter furnished pursuant to this paragraph shall be a date not more than three business days prior to such Date of Delivery.
(m) Additional Documents. At the Closing Time and at each Date of Delivery (if any), counsel for the Underwriters shall have been furnished with such other documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the issuance and sale of the Securities as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of the Securities as herein contemplated shall be reasonably satisfactory in form and substance to the Representative and counsel for the Underwriters.
(n) Termination of Agreement. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement, or, in the case of any condition to the purchase of Option Securities on a Date of Delivery which is after the Closing Time, the obligations of the several Underwriters to
purchase the relevant Option Securities, may be terminated by the Representative by notice to the Company at any time at or prior to Closing Time or such Date of Delivery, as the case may be, and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 1, 4, 6, 7, 8, 13, 14 and 15 shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company agrees to indemnify and hold harmless each Underwriter, its affiliates (as such term is defined in Rule 501(b) under the Securities Act (each, an “Affiliate”)), the directors, officers, employees and agents of such Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act as follows:
(i) against any and all loss, liability, claim, damage and expense whatsoever (including any and all investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement effected with the written consent of the Company of, any action, suit or proceeding between any of the indemnified parties and any indemnifying parties or between any indemnified party and any third party, or otherwise, or any claim asserted), as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), including any information deemed to be a part thereof pursuant to Rule 430B, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact included (A) in any preliminary prospectus, any Issuer Free Writing Prospectus, any Written Testing-the-Waters Communication, the Pricing Disclosure Package or the Prospectus (or any amendment or supplement thereto), or (B) in any materials or information provided to investors by, or with the approval of, the Company in connection with the marketing of the offering of the Securities (“Marketing Materials”), including any roadshow or investor presentations made to investors by the Company (whether in person or electronically), or the omission or alleged omission in any preliminary prospectus, any Issuer Free Writing Prospectus, any Written Testing-the-Waters Communication, the Pricing Disclosure Package, the Prospectus (or any amendment or supplement thereto) or in any Marketing Materials of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any Legal Action, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 6(d) below) any such settlement is effected with the written consent of the Company;
(iii) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by the Representative), reasonably incurred in investigating, preparing or defending against any Legal Action, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in the Registration Statement (or any amendment thereto), including any information deemed to be a part thereof pursuant to Rule 430B, the Pricing Disclosure Package or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with the Underwriter Information.
(b) Indemnification of Company, Directors and Officers. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, each of its officers who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), including any information deemed to be a part thereof pursuant to Rule 430B, the Pricing Disclosure Package or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with the Underwriter Information; provided, however, that in no case shall any Underwriter be liable or responsible for any amount in excess of the underwriting discount and commissions applicable to the Securities purchased by such Underwriter hereunder.
(c) Actions against Parties; Notification. Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. In the case of parties indemnified pursuant to Section 6(a) above, counsel to the indemnified parties shall be selected by the Representative, and, in the case of parties indemnified pursuant to Section 6(b) above, counsel to the indemnified parties shall be selected by the Company. An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying parties be liable for the reasonable fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any Legal Action, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such Legal Action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 6(a)(ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in Section 6 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and of the Underwriters, on the other hand, in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities pursuant to this Agreement (before deducting expenses) received by the Company, on the one hand, and the total underwriting discount received by the Underwriters, on the other hand, in each case as set forth on the cover of the Prospectus, bear to the aggregate public offering price of the Securities as set forth on the cover of the Prospectus.
The relative fault of the Company, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 7. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 7 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any Legal Action, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the underwriting discounts and commissions received by such Underwriter in connection with the Securities underwritten by it and distributed to the public.
No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and each Underwriter’s Affiliates and selling agents shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company. The Underwriters’ respective obligations to contribute pursuant to this Section 7 are several in proportion to the number of Securities set forth opposite their respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive. All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company or any of its Subsidiaries submitted pursuant hereto, shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of any Underwriter or its Affiliates or selling agents, any person controlling any Underwriter, its officers or directors or any person controlling the Company and (ii) delivery of and payment for the Securities.
SECTION 9. Termination of Agreement.
(a) Termination. The Representative may terminate this Agreement, by notice to the Company, at any time at or prior to the Closing Time (i) if there has been, in the judgment of the Representative, since the time of execution of this Agreement or since the respective dates as of which information is given in the Registration Statement, the Pricing Disclosure Package or the Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) if there has occurred any material adverse change in the financial markets in the United States or the international financial markets, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in U.S. or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of the Representative, impracticable or inadvisable to proceed with the completion of the offering or to enforce contracts for the sale of the Securities, or (iii) if trading in any securities of the Company has been suspended by Nasdaq, or (iv) if trading generally on the Exchanges, any other exchange or market maintained by the Nasdaq Stock Market LLC or any exchange or market maintained by the New York Stock Exchange has been suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by order of the SEC, FINRA or any other Governmental Entity, or (v) a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States or Canada (including at the federal, state or provincial level, as applicable), or (vi) if a banking moratorium has been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 1, 4, 6, 7, 8, 14, 15 and 16 and this Section 9 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of the Underwriters shall fail at the Closing Time or a Date of Delivery to purchase the Securities which it or they are obligated to purchase under this Agreement (the “Defaulted Securities”), the Representative shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Representative shall not have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the number of Securities to be purchased on such date, each of the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of Securities to be purchased on such date, this Agreement or, with respect to any Date of Delivery which occurs after the Closing Time, the obligation of the Underwriters to purchase, and the Company to sell, the Option Securities to be purchased and sold on such Date of Delivery shall terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of this Agreement or, in the case of a Date of Delivery which is after the Closing Time, which does not result in a termination of the obligation of the Underwriters to purchase and the Company to sell the relevant Option Securities, as the case may be, either the (i) Representative or (ii) the Company shall have the right to postpone Closing Time or the relevant Date of Delivery, as the case may be, for a period not exceeding seven days in order to effect any required changes in the Registration Statement, the Pricing Disclosure Package or the Prospectus or in any other documents or arrangements. As used herein, the term “Underwriter” includes any person substituted for an Underwriter under this Section 10.
SECTION 11. Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (i) the time of transmission, if such notice or communication is delivered via e-mail attachment at the email address set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a day on which the Nasdaq Stock Market LLC is open for trading (“Trading Day”), (ii) the next Trading Day after the time of transmission, if such notice or communication is delivered via e-mail attachment at the e-mail address as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth below:
if sent to the Representative or any Underwriter, shall be delivered personally, by e-mail, or sent by a nationally recognized overnight courier service to:
Joseph Gunnar & Co., LLC
1000 RXR Plaza
Uniondale, NY 11556
Attention: Stephan A. Stein,
Email: sstein@JGunnar.com
with a copy to Underwriters’ Counsel (which shall not constitute notice) at:
Cozen O’Connor LLP
40 Temperance Street, Suite 2700
Toronto, ON M5H 0B4 Canada
Attention: Alexander Katznelson
Email: AKatznelson@cozen.com
and to
Cozen O’Connor
3 WTC, 175 Greenwich Street 55th Floor
New York, NY 10007
Attention: Kevin J. Roggow
Email: KRoggow@cozen.com
if sent to the Company, shall be delivered personally, by e-mail, or sent by a nationally recognized overnight courier service to:
Optimi Health Corp.
21 Water St. #600
Vancouver, British Columbia, Canada, V6B 1A1
Attention: Dane Stevens
with a copy to the Company Counsel (which shall not constitute notice) at:
Norton Rose Fulbright US LLP
1045 W. Fulton Market, Suite 1200
Chicago, IL 60607
Attention: Kevin Friedmann
Email: kevin.friedmann@nortonrosefulbright.com
and to
Norton Rose Fulbright Canada LLP
510 West Georgia Street, Suite 1800
Vancouver, B.C. V6B0M3 Canada
Attention: Kristopher Miks
Email: kristopher.miks@nortonrosefulbright.com
SECTION 12. No Advisory or Fiduciary Relationship. The Company acknowledges and agrees that (a) the purchase and sale of the Securities pursuant to this Agreement, including the determination of the public offering price of the Securities and any related discounts and commissions, is an arm’s-length commercial transaction between the Company, on the one hand, and the several Underwriters, on the other hand, (b) in connection with the offering of the Securities and the process leading thereto, each Underwriter is and has been acting solely as a principal and is not the agent or fiduciary of the Company, any of its Subsidiaries or their respective shareholders, creditors, employees or any other party, (c) no Underwriter has assumed or will assume an advisory or fiduciary responsibility in favor of the Company with respect to the offering of the Securities or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company or any of its Subsidiaries on other matters) and no Underwriter has any obligation to the Company with respect to the offering of the Securities except the obligations expressly set forth in this Agreement, (d) the Underwriters and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company and (e) the Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to the offering of the Securities and the Company has consulted its own respective legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.
SECTION 13. Parties. This Agreement shall each inure to the benefit of and be binding upon the Underwriters and the Company and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriters and the Company and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Underwriters and the Company and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW. This agreement and any claim, controversy or dispute arising under or related to this agreement shall be governed by, and construed in accordance with the laws of, the state of New York without regard to its choice of law provisions to the extent that the same would result in the application of the laws of another jurisdiction.
SECTION 15. Waiver of Trial by Jury. The Company and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any Legal Action arising out of or relating to this Agreement or the transactions contemplated hereby.
SECTION 16. Consent to Jurisdiction; Waiver of Immunity. Any Legal Action arising out of or based upon this Agreement or the transactions contemplated hereby shall be instituted in (i) the federal courts of the United States of America located in the City and County of New York, Borough of Manhattan or (ii) the courts of the State of New York located in the City and County of New York, Borough of Manhattan (collectively, the “Specified Courts”), and each party irrevocably submits to the exclusive jurisdiction (except for Legal Actions instituted in regard to the enforcement of a judgment of any such court, as to which such jurisdiction is non-exclusive) of such courts in any such Legal Action. Service of any process, summons, notice or document by mail to such party’s address set forth above shall be effective service of process for any Legal Action brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any Legal Action in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such Legal Action brought in any such court has been brought in an inconvenient forum.
SECTION 17. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 18. Partial Unenforceability. The invalidity or unenforceability of any Section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.
SECTION 19. Counterparts. This Agreement may be executed in any number of counterparts (which may include counterparts delivered by any standard form of telecommunication), each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same agreement. Counterparts may be delivered via facsimile, electronic mail (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
SECTION 20. Effect of Headings. The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement.
SECTION 21. Entire Agreement. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the Underwriters, or any of them, with respect to the subject matter hereof.
SECTION 22. Authority of the Representative. Any action by the Underwriters hereunder may be taken by the Representative on behalf of the Underwriters, and any such action taken by the Representative shall be binding upon the Underwriters.
SECTION 23. Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by all the parties hereto. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after the waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise of any other right, remedy, power or privilege.
SECTION 24. Recognition of the U.S. Special Resolution Regimes. In the event that any Underwriter that is a Covered Entity becomes subject to a Legal Action under a U.S. Special Resolution Regime, the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.
In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a Legal Action under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.
For purposes of this Agreement, (A) “BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k); (B) “Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b); (C) “Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable; and (D) “U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
[SIGNATURE PAGES FOLLOW]
| Very truly yours, | ||
| OPTIMI HEALTH CORP. | ||
| By: |
| |
| Name: | ||
| Title: | ||
| Accepted as of the date hereof | ||
| JOSEPH GUNNAR & CO., LLC | ||
| By: |
| |
| Name: | ||
| Title: | ||
For itself and as Representative of the other Underwriters named in Schedule A hereto.
[Signature Page to Underwriting Agreement]
SCHEDULE A
Firm Securities: [ ] Units.
The public offering price for the Firm Securities shall be US$[ ] per Unit.
| Name of Underwriter |
Number of Firm Securities to be Purchased |
|||
| Joseph Gunnar & Co., LLC |
||||
|
|
|
|||
| Total |
||||
|
|
|
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SCHEDULE B-1
Pricing Terms
1. The Company is selling [ ] Units.
2. The Company has granted an option to the Underwriters, severally and not jointly, to purchase up to an additional [ ] Common Shares and [ ] Warrants.
3. The public offering price for the Units shall be US$[ ] per Unit.
4. Warrant Exercise Price: US$[ ] per Common Share.
5. Purchase Price of Units: US$[ ] per Unit.
6. Purchase Price of Common Share: US$[ ] per Common Share.
7. Purchase Price of Warrant: US$[ ] per Warrant.
8. Underwriters’ Discount per Unit: US$[ ] per Unit.
9. Underwriters’ Discount per Common Share: US$[ ] per Common Share.
10. Underwriters’ Discount per Warrant: US$[ ] per Warrant.
SCHEDULE B-2
Lock-Up Parties
Dane Stevens
Jacob Safarik
Bryan Safarik
John James Wilson
Jonathan Schintler
Edward Safarik
SCHEDULE B-3
Free-Writing Prospectuses
None
Exhibit A
FORM OF LOCK-UP AGREEMENT
Exhibit B
FORM OF WARRANT
Exhibit 4.2
Form of Common Warrant Agreement
WARRANT TO PURCHASE COMMON SHARES
OPTIMI HEALTH CORP.
Date of Issuance: [ ], 2026 (“Issuance Date”)
Certificate Number: [ ]
Optimi Health Corp., a corporation incorporated under the Business Corporations Act (British Columbia) (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, [ ], the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon exercise of this Warrant to Purchase Common Shares (including any Warrants to Purchase Common Shares issued in exchange, transfer or replacement hereof, the “Warrant”), at any time or times on or after the Issuance Date, but not after 11:59 p.m., Vancouver time, on the Expiration Date (as defined below), [ ] (subject to adjustment as provided herein) fully paid and non-assessable Common Shares (as defined below) (the “Warrant Shares”). Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 16. This Warrant is one of the Warrants to purchase Common Shares (the “Offered Warrants”) issued pursuant to that certain Underwriting Agreement, dated [ ], 2026 by and between the Company and Joseph Gunnar & Co., LLC (the “Underwriting Agreement”).
1. EXERCISE OF WARRANT.
(a) Mechanics of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(f)), this Warrant may be exercised by the Holder on any day on or after the Issuance Date in whole or in part, by delivery (whether via PDF submitted by e-mail, or otherwise electronically) of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant. Within one (1) Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the Company of an amount equal to the Exercise Price in effect on the date of such exercise multiplied by the number of Warrant Shares as to which this Warrant was so exercised (in respect of such specific exercise, the “Aggregate Exercise Price”) in cash or via wire transfer of immediately available funds. The Holder shall be required to deliver the original of this Warrant in order to effect an exercise hereunder. Execution and delivery of an Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original of this Warrant certificate and issuance of a new Warrant certificate evidencing the right to purchase the remaining number of Warrant Shares. Execution and delivery of an Exercise Notice for all of the then-remaining Warrant Shares shall have the same effect as cancellation of the original of this Warrant certificate after delivery of the Warrant Shares in accordance with the terms hereof. On or before the first (1st) Trading Day following the date on which the Company has received an Exercise Notice and the Aggregate Exercise Price, the Company shall transmit by PDF submitted by email or otherwise electronically an acknowledgment of confirmation of receipt of such Exercise Notice and the Aggregate Exercise Price, in the form attached hereto as Exhibit B, to the Holder and the Company’s transfer agent (the “Transfer Agent”). Upon delivery of an Exercise Notice and the Aggregate Exercise Price, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised. If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant is greater than the number of Warrant Shares being acquired upon an exercise, then, at the request of the Holder and upon surrender hereof by the Holder to the Company, the Company shall as soon as practicable and in no event later than three (3) Business Days after any exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant (in accordance with Section 7(d)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. No fractional Common Shares are to be issued upon the exercise of this Warrant, but rather the number of Common Shares to be issued shall be rounded up to the nearest whole number. The Company shall pay any and all fees which may be payable to the Transfer Agent with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.
(b) Exercise Price. For purposes of this Warrant, “Exercise Price” means $[ ], subject to adjustment as provided herein.
(c) Delivery of Securities via DTC. Upon the request of the Holder and receipt of the Exercise Notice, the Company shall direct the Transfer Agent credit such aggregate number of Common Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with The Depository Trust Company (”DTC”) through its Deposit/ Withdrawal at Custodian system on or before the second (2nd) Trading Day following the date on which the Company has received such Exercise Notice (the “Required Delivery Date”).
(d) Company’s Failure to Timely Deliver Securities. If the Company fails for any reason to issue and credit the balance account of Holder or Holder’s nominee with DTC for such number of Warrant Shares for which this Warrant is exercised by the Holder by the Required Delivery Date, other than a failure of the Holder to provide required information or particulars to allows the Company to issue and credit such Warrant Shares, then, in addition to all other remedies available to Holder, at the sole discretion of Holder, the Company shall pay in cash, as liquidated damages and not as penalty, to Holder for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Shares on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the third (3rd) Trading Day after the Required Delivery Date) for each Trading Day after such Required Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable.
To the extent permitted by law, the Company’s obligations to issue and deliver the Common Shares upon exercise of the Warrant in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other person, and irrespective of any other circumstance that might otherwise limit such obligation of the Company to the Holder in connection with the issuance of the Common Shares. Nothing herein shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver the Common Shares issuable upon exercise of this Warrant as required pursuant to the terms hereof.
(e) Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of Warrant Shares to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed, provided that following such issuance to Holder such dispute shall be resolved in accordance with Section 13.
(f) Limitations on Exercises and Exchanges. Notwithstanding anything to the contrary contained in this Warrant, this Warrant shall not be exercisable or exchangeable by the Holder hereof to the extent (but only to the extent) that:
(i) the Holder together with any of its affiliates would beneficially own in excess of 9.99% of the number of Common Shares outstanding after giving effect to the issuance of Common Shares issuable upon exercise of the Warrants calculated in accordance with Section 13(d) of the Exchange Act (the “Maximum Percentage”). By written notice to the Company, the Holder may from time to time decrease the Maximum Percentage to 4.99%; provided that (i) any such decrease will not be effective until the sixty-first (61st) day after such notice is delivered to the Company, and (ii) any such decrease will apply only to the Holder.
To the extent that the above limitation applies, the determination of whether this Warrant shall be exercisable or exchangeable (vis-à-vis other convertible, exercisable or exchangeable securities owned by the Holder or any of its affiliates or any other holders, as applicable) and of which such securities shall be exercisable or exchangeable (as among all such securities owned by the Holder or any other holders, as applicable) shall, subject to such Maximum Percentage limitation, be determined on the basis of the first submission to the Company for conversion, exercise or exchange (as the case may be). For the purposes of this paragraph, beneficial ownership and all determinations and
calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder. The provisions of this paragraph shall be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The limitation contained in this paragraph shall apply to a successor Holder of this Warrant. The holders of Common Shares shall be third party beneficiaries of this paragraph and the Company may not waive this paragraph without the consent of holders of a majority of its Common Shares. For any reason at any time, upon the written or oral request of the Holder, the Company shall within two (2) Business Days confirm orally and in writing to the Holder the number of Common Shares then outstanding or available for issuance, including by virtue of any prior conversion or exercise or exchange of convertible or exercisable or exchangeable securities into Common Shares, including, without limitation, pursuant to this Warrant or securities issued pursuant to the Underwriting Agreement. No prior inability to exercise or exchange this Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of exercisability or exchangeability.
(g) Cashless Exercise. If at the time of exercise hereof, there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder, then, subject to the limitations set forth in Section 1(f) hereof, this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Exercise Notice if such Exercise Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Exercise Notice or (z) the Bid Price of the Common Shares on the principal trading market as reported by Bloomberg as of the time of the Holder’s execution of the applicable Exercise Notice if such Exercise Notice is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 1(a) hereof or (iii) the VWAP on the date of the applicable Exercise Notice if the date of such Exercise Notice is a Trading Day and such Exercise Notice is both executed and delivered pursuant to Section 1(a) hereof after the close of “regular trading hours” on such Trading Day;
(B) = the Exercise Price of this Warrant, as adjusted hereunder; and
(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise. If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrant being exercised. The Company agrees not to take any position contrary to this Section 1(g).
(h) Activity Restrictions. For so long as Holder holds this Warrant or any Warrant Shares, Holder will not: engage or participate in any actions, plans or proposals which relate to or would result in acquiring additional securities of the Company, alone or together with any other Person, which would result in beneficially owning or controlling, or being deemed to beneficially own or control, more than 9.99% of the total outstanding Common Shares or other voting securities of the Company.
2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 2.
(a) Share Dividends and Splits. Without limiting any provision of Section 4, if the Company, at any time on or after the date of the Underwriting Agreement, (i) pays a share dividend on one or more classes of its then outstanding Common Shares or otherwise makes a distribution on any class of capital stock that is payable in Common Shares, (ii) subdivides (by any share split, share dividend, recapitalization or otherwise) one or more classes of its then outstanding Common Shares into a larger number of shares (iii) combines (by combination, reverse share split or otherwise) one or more classes of its then outstanding Common Shares into a smaller number of shares, or (iv) issues by reclassification of Common Shares any shares of capital stock of the Company, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares outstanding immediately before such event and of which the denominator shall be the number of Common Shares outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate effective Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution, and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. If any event requiring an adjustment under this paragraph occurs during the period that an Exercise Price is calculated hereunder, then the calculation of such Exercise Price shall be adjusted appropriately to reflect such event.
(b) Other Events. In the event that the Company shall take any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions (including, without limitation, the granting of share appreciation rights, phantom share rights or other rights with equity features),
then the Company’s board of directors shall in good faith determine and implement an appropriate adjustment in the Exercise Price and the number of Warrant Shares (if applicable) so as to protect the rights of the Holder, provided that no such adjustment pursuant to this Section 2(b) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2, provided further that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding and whose fees and expenses shall be borne by the Company. Notwithstanding anything to the contrary herein, no adjustments shall be made pursuant to this Section 2 with respect to issuances under Approved Share Plans.
3. RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Shares, by way of return of capital or otherwise (including, without limitation, any distribution of cash, shares or other securities, indebtedness, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction, other than a distribution of Common Shares covered by Section 2(a)) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, provision shall be made so that upon exercise of this Warrant, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of Common Shares acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Maximum Percentage) immediately before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of Common Shares are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distributions would result in the Holder exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent (or the beneficial ownership of any such Common Shares as a result of such Distribution to such extent) and such Distribution to such extent shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Maximum Percentage).
4. PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.
(a) Purchase Rights. Subject to compliance with applicable securities laws, in addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase shares, warrants, securities or other property pro rata to all or substantially all of the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Shares acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Maximum Percentage) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Shares are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such Common Stock as a result of such Purchase Right to such extent).
(b) Fundamental Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing all of the obligations of the Company under this Warrant and the other Transaction Documents related to this Warrant in accordance with the provisions of this Section 4(b) pursuant to written agreements in form and substance reasonably satisfactory to the Holder, including agreements confirming the obligations of the Successor Entity as set forth in this paragraph (b) and (c) and elsewhere in this Warrant and an obligation to deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant, including, without limitation, which is exercisable for a corresponding number of shares of capital stock equivalent to the Common Shares acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the Common Shares pursuant to such Fundamental Transaction and the value of such shares of capital stock, such adjustments to the number of shares of capital stock
and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction). Notwithstanding the foregoing, at the election of the Holder upon exercise of this Warrant following a Fundamental Transaction, the Successor Entity shall deliver to the Holder, in lieu of the Common Shares (or other securities, cash, assets or other property (except such items still issuable under Section 3 above, which shall continue to be receivable thereafter)) issuable upon the exercise of this Warrant prior to the applicable Fundamental Transaction, such shares of common stock (or its equivalent) of the Successor Entity (including its Parent Entity), or other securities, cash, assets or other property, which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction; provided, however, that such amount of reserved Common Shares shall be limited by the Maximum Percentage of Common Stock as set forth in Section 1(f).
(c) Black Scholes Value – FT. Notwithstanding the foregoing and the provisions of Section 4(b) above, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within the later of (i) ninety (90) days after announcement of the Fundamental Transaction, and (ii) thirty (30) days after, the consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value – FT of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction; provided, however, that, if the Fundamental Transaction is not within the Company’s control, including not approved by the Company’s Board of Directors, Holder shall only be entitled to receive from the Company or any Successor Entity the same type or form of consideration (and in the same proportion), valued at the Black Scholes Value - FT of the unexercised portion of this Warrant, that is being offered and paid to the holders of Common Shares of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, shares or any combination thereof, or whether the holders of Common Shares are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided, further, that if holders of Common Shares of the Company are not offered or paid any consideration in such Fundamental Transaction, such holders of Common Shares will be deemed to have received common stock of the Successor Entity (which Successor Entity may be the Company following such Fundamental Transaction) in such Fundamental Transaction.
(d) Application. The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and shall be applied as if this Warrant (and any such subsequent warrants issued hereunder) were fully exercisable and without regard to any limitations on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit of the Maximum Percentage, applied however with respect to shares of capital stock registered under the Exchange Act and thereafter receivable upon exercise of this Warrant (or any such other warrant)).
5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Articles or through any reorganization, transfer of assets, consolidation, merger, plan of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any Common Shares receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable Common Shares upon the exercise of this Warrant, and (iii) shall, so long as any of the Offered Warrants are outstanding, take all action necessary to reserve and keep available out of its authorized and unissued Common Shares, solely for the purpose of effecting the exercise of the Offered Warrants, the maximum number of Common Shares as shall from time to time be necessary to effect the exercise of the Offered Warrants then outstanding; provided, however, that such amount of reserved Common Shares shall be limited by the Maximum Percentage of Common Stock as set forth in Section 1(f).
6. WARRANT HOLDER NOT DEEMED A SHAREHOLDER. Except as otherwise specifically provided herein, the Holder, solely in its capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its capacity as the Holder of this Warrant, any of the rights of a shareholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive
dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a shareholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and other information given to the shareholders of the Company generally, contemporaneously with the giving thereof to the shareholders.
7. REISSUANCE OF WARRANTS.
(a) Transfer of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, provide to the Company an opinion of counsel selected by the Holder and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred securities under the Securities Act.
(b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.
(c) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder to the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, no warrants for fractional Common Shares shall be given.
(d) Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of Common Shares underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.
8. NOTICES. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance with the Underwriting Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description of such action and the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) as soon as practicable upon each adjustment of the Exercise Price and the number of Warrant Shares, setting forth in reasonable detail, and certifying, the calculation of such adjustment(s) and (ii) at least ten (10) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Shares, (B) with respect to any grants, issuances or sales of any Options, Convertible
Securities or rights to purchase shares, warrants, securities, indebtedness, or other property pro rata to holders of Common Shares or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information (to the extent it constitutes, or contains, material, non-public information regarding the Company shall be made known to the public prior to or in conjunction with such notice being provided to the Holder and (iii) at least ten (10) Trading Days prior to the consummation of any Fundamental Transaction. It is expressly understood and agreed that the time of execution specified by the Holder in each Exercise Notice shall be definitive and may not be disputed or challenged by the Company.
9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant (other than Section 1(f)) may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder or holders of Offered Warrants representing at least a majority of the Warrant Shares issuable upon exercise of the then outstanding Offered Warrants. The Holder shall be entitled, at its option, to the benefit of any amendment of any other Offered Warrant. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.
10. SEVERABILITY. If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
11. GOVERNING LAW. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the Province of British Columbia and the federal laws of Canada applicable therein, without giving effect to any choice of law or conflict of law provision or rule (whether of British Columbia or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of British Columbia. The Company hereby irrevocably submits to the exclusive jurisdiction of the Province of British Columbia located in the City of Vancouver, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
12. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant. Terms used in this Warrant but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date (as defined in the Underwriting Agreement) in such other Transaction Documents unless otherwise consented to in writing by the Holder.
13. DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Exercise Price, the Closing Sale Price, the Closing Bid Price, the Bid Price or fair market value or the arithmetic calculation of the Warrant Shares (as the case may be), the Company or the Holder (as the case may be) shall submit the disputed determinations or arithmetic calculations (as the case may be) via facsimile or PDF submitted by email (i) within two (2) Business Days
after receipt of the applicable notice giving rise to such dispute to the Company or the Holder (as the case may be) or (ii) if no notice gave rise to such dispute, at any time after the Holder or the Company (as the case may be) learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to agree upon such determination or calculation (as the case may be) of the Exercise Price, the Closing Sale Price, the Closing Bid Price, the Bid Price or fair market value or the number of Warrant Shares (as the case may be) within three (3) Business Days of such disputed determination or arithmetic calculation being submitted to the Company or the Holder (as the case may be), then the Company shall, within two (2) Business Days submit via facsimile or PDF submitted by email (a) the disputed arithmetic calculation of the Warrant Shares, the disputed determination of the Exercise Price, the Closing Sale Price, the Closing Bid Price, the Bid Price or fair market value (as the case may be) to an independent, reputable investment bank selected by the Holder, with the consent of the Company (which may not be unreasonably withheld, conditioned or delayed), or (b) if acceptable to the Holder, the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant. The Company shall cause the investment bank or the accountant (as the case may be) to perform the determinations or calculations (as the case may be) and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives such disputed determinations or calculations (as the case may be). Such investment bank’s or accountant’s determination or calculation (as the case may be) shall be binding upon all parties absent demonstrable error. The fees and expenses of such investment bank or accountant shall be borne by the parties in the same proportion as the respective amounts by which the investment bank’s or accountant’s determination differs from such party’s calculation.
14. REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, exercises and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Warrant (including, without limitation, compliance with Section 2 hereof). The issuance of shares as contemplated hereby upon the exercise of this Warrant shall be made without charge to the Holder or such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than the Holder or its agent on its behalf.
15. TRANSFER. This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.
16. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:
(a) “Approved Share Plans” means any equity incentive plan, employee stock purchase plan or other employee benefit plan which has been approved by the board of directors of the Company or a committee of directors established for such purpose for services rendered to the Company.
(b) “Bid Price” means, for any security as of the particular time of determination, the bid price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply, the bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination, the average of the bid prices of all of the market makers for such security as reported in the “Pink Open Market” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices) as of such time of determination. If the Bid Price cannot be calculated for a security as of the particular time of
determination on any of the foregoing bases, the Bid Price of such security as of such time of determination shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.
(c) “Black Scholes Value – FT” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s request pursuant to Section 4(c), which value is calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (A) the highest Closing Sale Price of the Common Shares during the period beginning on the Trading Day immediately preceding the earliest to occur of (1) the public disclosure of the applicable Fundamental Transaction, (2) the consummation of the applicable Fundamental Transaction and (3) the date on which the Holder first became aware of the applicable Fundamental Transaction and ending on the Trading Day of the Holder’s request pursuant to Section 4(c) and (B) the sum of the price per share being offered in cash in the applicable Fundamental Transaction (if any) plus the value of the non-cash consideration being offered in the applicable Fundamental Transaction (if any), (ii) a strike price equal to the Exercise Price in effect on the date of the Holder’s request pursuant to Section 4(c), (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (A) the remaining term of this Warrant as of the date of the Holder’s request pursuant to Section 4(c) and (B) the remaining term of this Warrant as of the date of consummation of the applicable Fundamental Transaction or as of the date of the Holder’s request pursuant to Section 4(c) if such request is prior to the date of the consummation of the applicable Fundamental Transaction and (iv) an expected volatility equal to the greater of 175% and the 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the earliest to occur of (A) the public disclosure of the applicable Fundamental Transaction, (B) the consummation of the applicable Fundamental Transaction and (C) the date on which the Holder first became aware of the applicable Fundamental Transaction.
(d) “Bloomberg” means Bloomberg, L.P.
(e) “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in Vancouver, British Columbia are authorized or required by law to remain closed.
(f) “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and the last closing trade price, respectively, for such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the average of the bid prices, or the ask prices, respectively, of all of the market makers for such security as reported in “Pink Open Market” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.
(g) “Common Shares” means the common shares, no par value, of the Company and any other shares of stock issued or issuable with respect thereto (whether by way of a share dividend or share split or in exchange
for or upon conversion of such shares or otherwise in connection with a combination of shares, distribution, recapitalization, merger, consolidation, other corporate reorganization or other similar event with respect to the Common Shares).
(h) “Convertible Securities” means any capital stock or other security of the Company that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stock or other security of the Company (including, without limitation, Common Shares).
(i) “Eligible Market” means the New York Stock Exchange (NYSE), the NYSE Amex, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market.
(j) “Expiration Date” means the date that is [ ], [2028] or, if such date falls on a day other than a Business Day or on which trading does not take place on the principal securities exchange or trading market where the Common Shares are listed (a “Holiday“), the next date that is not a Holiday.
(k) “Fundamental Transaction” means that (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company (or any Subsidiary), directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Shares are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Shares or 50% or more of the outstanding voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Shares or any compulsory share exchange pursuant to which the Common Shares are effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or plan of arrangement) with another Person or group of Persons whereby such other Person or group acquires 50% or more of the outstanding Common Shares or 50% or more of the voting power of the outstanding common equity of the Company.
(l) “Options” means any rights, warrants or options to subscribe for or purchase Common Shares or Convertible Securities.
(m) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(n) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(o) “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.
(p) “Trading Day” means, as applicable, (x) with respect to all price determinations relating to the Common Shares, any day on which the Common Shares are traded on the principal securities exchange or securities market on which the Common Shares are then traded, provided that “Trading Day” shall not include any day on which the Common Shares are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Shares are suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or (y) with respect to all determinations other than price determinations relating to the Common Shares, any day on which The NASDAQ Stock Market LLC (or any successor thereto) is open for trading of securities.
(q) “VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the principal securities exchange or securities market on which such security is then traded during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the three highest closing bid prices and the three lowest closing ask prices of all of the market makers for such security as reported in the “Pink Open Market” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices). If VWAP cannot be calculated for such security
on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.
[signature page follows]
IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Shares to be duly executed as of the Issuance Date set out above.
| OPTIMI HEALTH CORP. | ||
| By: |
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| Name: |
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| Title: |
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EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT TO PURCHASE COMMON SHARES
OPTIMI HEALTH CORP.
The undersigned holder hereby exercises the right to purchase ________ Common Shares (“Warrant Shares”) of Optimi Health Corp., a corporation incorporated under the Business Corporations Act (British Columbia) (the “Company”), evidenced by Warrant to Purchase Common Shares No. ___ (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
1. Payment of Exercise Price. The Holder shall pay the Aggregate Exercise Price in the sum of $________ to the Company in accordance with the terms of the Warrant.
2. Delivery of Warrant Shares and Net Number of Common Shares. The Company shall deliver to Holder, or its designee or agent as specified below, ________ Common Shares in respect of the exercise contemplated hereby. Delivery shall be made to Holder, or for its benefit, to the following address:
Account Number: (if electronic book entry transfer) Transaction Code Number:
Transaction Code Number: (if electronic book entry transfer)
IF WARRANT SHARES ARE TO BE ISSUED TO A PERSON OR PERSONS OTHER THAN THE UNDERSIGNED REGISTERED HOLDER, THE SIGNATURE OF THE UNDERSIGNED MUST BE MEDALLION GUARANTEED AND IT MUST PAY TO THE ISSUER ALL APPLICABLE TAXES AND OTHER DUTIES.
DATED the day of , 20 .
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INSTRUCTIONS:
| 1. | The registered holder of a Warrant may exercise it’s right to purchase Warrant Shares by completing and surrendering this Exercise Notice and the ORIGINAL Warrant certificate representing the Warrant being exercised to the Issuer, together with the aggregate amount of the exercise price for the Warrant Shares as provided for in the Warrant certificate. Certificates representing the Warrant Shares to be acquired on exercise will be sent by prepaid ordinary mail to the address(es) above within five business days after the receipt of all required documentation. |
| 2. | If this Exercise Notice indicates that Warrant Shares are to be issued to a person or persons other than the registered holder of the Warrants being exercised: (i) the signature of the registered holder on this Exercise Notice must be medallion guaranteed by an authorized officer of a chartered bank, trust company or an investment dealer who is a member of a recognized stock exchange, and (ii) the registered holder must pay to the Issuer all applicable taxes and other duties. |
| 3. | If this Exercise Notice is signed by a trustee, executor, administrator, custodian, guardian, attorney, officer of a corporation or any other person acting in a fiduciary or representative capacity, this Exercise Notice must be accompanied by evidence of authority to sign satisfactory to the Issuer. |
EXHIBIT B
ACKNOWLEDGMENT
The Company hereby acknowledges this Exercise Notice and hereby directs to issue the above indicated number of Common Shares in accordance with the Transfer Agent Instructions dated , 20 , from the Company and acknowledged and agreed to by .
| OPTIMI HEALTH CORP. | ||
| By: |
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| Name: |
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| Title: |
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Exhibit 5.1
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April 16, 2026 |
Barristers & Solicitors / Patent & Trade-mark Agents
Norton Rose Fulbright Canada LLP 222 Bay Street, Suite 3000, P.O. Box 53 Toronto, Ontario M5K 1E7 CANADA | |||
| Optimi Health Corp. | ||||
| 269 David Brown Way, | F: +1 416.216.3930 | |||
| Princeton, BC V0X 1W0 Canada | nortonrosefulbright.com |
Dear Sirs and Mesdames:
Optimi Health Corp. – Registration Statement on Form F-1
We have acted as Canadian counsel to Optimi Health Corp. (the “Company”), a company existing under the provincial laws of British Columbia, in connection with a registration statement on Form F-1, including all amendments and supplements thereto (the “Registration Statement”), as filed by the Company with the United States Securities and Exchange Commission under the United States Securities Act of 1933, as amended (the “Securities Act”), relating to the Company’s initial public offering of common shares, with no par value (the “Common Shares”) in connection with the Company’s offering of 2,500,000 units (the “Units”) comprised of one Common Share and one warrant (the “Common Warrants”), in the United States (the “Offering”).
In connection with the Offering, the Company is offering the number of Units set forth in the Registration Statement comprised of (i) the number of Common Shares set forth in the Registration Statement (the “Offered Shares”), (ii) the number of Common Warrants set forth in the Registration Statement (the “Offered Warrants”), and (iii) up to a number of Common Shares as set forth in the Registration Statement issuable upon the exercise of the Offered Warrants (the “Offered Warrant Shares”), and is also registering the issuance of (i) warrants to purchase up to a number of Common Shares as set forth in the Registration Statement (the “Underwriter Warrants”) to Joseph Gunnar & Co., LLC (the “Underwriter”), as well as (ii) up to a number of Common Shares as set forth in the Registration Statement issuable upon the exercise of the Underwriter Warrants to purchase Common Shares at a price per Common Share equal to 120% of the initial public offering price (the “Underwriter Warrant Shares”).
The Units, Offered Shares, the Offered Warrants, the Offered Warrant Shares, the Underwriter Warrants and the Underwriter Warrant Shares, together with any additional Offered Shares (the “Additional Offered Shares”), Offered Warrants issued to the Underwriter (the “Additional Offered Warrants”) to cover over-allotments, if any, and any Common Shares issuable upon the exercise of the Additional Offered Warrants (the “Additional Offered Warrant Shares”) are collectively referred to as the “Registerable Securities”. The Registerable Securities are to be sold pursuant to an underwriting agreement (the “Underwriting Agreement”) to be entered into between the Company and the Underwriter, as described in the Registration Statement. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Underwriting Agreement.
This opinion letter is being furnished to the Company in accordance with the requirements of Item 601(b)(5) of Regulation S-K.
Examination of Documents
As Canadian counsel to the Company, in giving the opinions expressed below, we have participated in the preparation of, and have examined executed copies of the Registration Statement, the Underwriting Agreement and the form of certificate representing the Offered Warrants and the Additional Offered Warrants (the “Warrant Certificate”).
For the purposes of the opinions expressed below, we have considered such questions of law, examined such statutes, regulations, public records and certificates of government officials and examined originals or copies certified, authenticated or otherwise identified to our satisfaction of such records of corporate proceedings, corporate documents attached to the public records, certificates, opinions and instruments and have made such other investigations as we have considered necessary or desirable in connection with the opinions hereinafter set forth, including, but not so as to limit the generality of the foregoing, the following:
| 1. | the articles and notice of articles of the Company; |
Norton Rose Fulbright Canada LLP is a limited liability partnership established in Canada.
Norton Rose Fulbright Canada LLP, Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright South Africa Inc and Norton Rose Fulbright US LLP are separate legal entities and all of them are members of Norton Rose Fulbright Verein, a Swiss verein. Norton Rose Fulbright Verein helps coordinate the activities of the members but does not itself provide legal services to clients. Details of each entity, with certain regulatory information, are at nortonrosefulbright.com.
| 2. | resolutions of the board of directors of the Company authorizing and approving, among other things, the Underwriting Agreement, the Registration Statement, and the creation, issue and sale of the Registerable Securities; |
| 3. | a certificate of compliance in respect of the Company issued under the Business Corporations Act (British Columbia) on April 15, 2026 (the “Certificate of Compliance”) and have assumed that such certificate continues to be complete, true and accurate as of the date of this opinion as if issued on this date; and |
| 4. | as to certain matters of fact relevant to the opinion expressed below, a certificate of an officer of the Company dated the date of this opinion addressed to Norton Rose Fulbright Canada LLP (the “Company Certificate”). |
We have not reviewed the minute books or, except as described above, any other corporate records of the Company.
Assumptions and Reliances
We have relied exclusively upon the certificates, documents and records we examined with respect to the accuracy of the factual matters contained in them and we have not performed any independent investigation or verification of those factual matters. We have assumed those factual matters were accurate on the date given and continue to be accurate as of the date of this opinion.
For the purposes of the opinions expressed below, we have assumed, without independent investigation or inquiry, that:
| 1. | with respect to all documents examined by us, the signatures are genuine, the individuals signing those documents had legal capacity at the time of signing, all documents submitted to us as originals are authentic, and all documents submitted to us as copies conform to the authentic original documents; |
| 2. | the indices and records in all filing systems maintained in all public offices where we have searched or inquired or have caused searches or inquiries to be conducted are accurate and current, and all certificates and information issued or provided under those searches or inquiries are and remain accurate and complete; |
| 3. | all information contained in all documents reviewed by us is true and correct; and |
| 4. | there is no foreign law that would affect the opinions expressed herein. |
We also have assumed the due authorization, execution and delivery of all documents where authorization, execution and delivery are prerequisites to the effectiveness of such documents. We have also assumed that at all relevant times:
| 1. | at the time of offer, issuance and sale of any Registerable Securities, the Registration Statement will have been declared effective under the Securities Act, and no stop order suspending its effectiveness will have been issued and remain in effect; |
| 2. | each purchase, underwriting or other agreement, indenture, certificate, instrument or other document relating to the Company’s creation, authentication, issuance, sale and/or delivery of the Registerable Securities to which the Company is party and/or the Offering: (i) has been duly authorized, executed and delivered by all parties thereto other than the Company and such parties have the capacity to do so; (ii) constitutes a legal, valid and binding obligation of all parties thereto, other than the Company; (iii) and is enforceable in accordance with its terms against all parties thereto, other than the Company; |
2
| 3. | all Registerable Securities will be offered and sold in compliance with applicable United States federal and state securities laws, the Underwriting Agreement and in the manner stated in the Registration Statement; |
| 4. | no order, ruling or decision of any court or regulatory or administrative body is in effect at any relevant time that restricts the issuance of the Registerable Securities or the Offering; and |
| 5. | if any obligation in connection with the Offering is required to be performed in a jurisdiction outside of the Province of British Columbia, the performance of that obligation will not be illegal under the laws of that jurisdiction. |
Where our opinion expressed herein refers to any of the Registerable Securities having been issued as “fully paid and non-assessable”, such opinion assumes that all required consideration (in whatever form) has been paid for such Registerable Securities. No opinion is expressed as to the adequacy of any consideration received.
With respect to our opinions below, we have relied, insofar as such opinions relate to questions of fact, upon the Company Certificate. In giving the opinion expressed in paragraph 1 below, we have relied solely on the Certificate of Compliance, which we have assumed continues to be accurate as of the date hereof.
Jurisdiction
We are solicitors qualified to express opinions only with respect to the laws of the Province of British Columbia and the opinion expressed herein relates only to the laws of the Province of British Columbia and the federal laws of Canada applicable therein as in effect on the date hereof.
This opinion letter is limited to the Province of British Columbia and the federal laws of Canada, including the rules and regulations, as in effect on the date hereof. We undertake no responsibility to monitor the Company’s future compliance with applicable laws, rules or regulations of the Commission or other governmental body.
Opinion
Based upon the foregoing, and subject to the qualifications, assumptions and limitations stated herein, we are of the opinion that:
| 1. | The Company is a corporation existing under the Business Corporations Act (British Columbia). |
| 2. | The Offered Shares and Additional Offered Shares have been duly authorized, validly issued, and, upon the payment of the consideration therefor in accordance with the terms of the Underwriting Agreement, will be fully paid and non-assessable common shares in the capital of the Company. |
| 3. | The Offered Warrants and Additional Offered Warrants have been duly authorized, and, upon the payment of the consideration therefor in accordance with the terms of the Underwriting Agreement, will be validly issued. |
| 4. | The Offered Warrant Shares and the Additional Offered Warrant Shares have been duly authorized, and, when issued and paid for upon exercise of the Offered Warrants or Additional Offered Warrants in accordance with the terms of the Warrant Certificate, including the payment of the exercise price, will be validly issued, fully paid and non-assessable common shares in the capital of the Company. |
| 5. | The Underwriter Warrants have been duly authorized, and, when issued in accordance with and in the manner described in the Registration Statement and the Underwriting Agreement, will be validly issued. |
| 6. | The Underwriter Warrant Shares have been duly authorized, and, when issued and paid for upon exercise of the Underwriter Warrants as contemplated by the Underwriter Warrants, will be validly issued, fully paid and non-assessable common shares in the capital of the Company. |
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Reliance
This opinion letter is given as of the date hereof and we disclaim any obligation or undertaking to advise you of any changes in law or fact affecting or bearing upon this opinion occurring after the date hereof which come, or are brought, to our attention.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to use of our name under the heading “Legal Matters” as regards Canadian law in the prospectus contained therein. In giving such consent we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act.
Yours very truly,
/s/ Norton Rose Fulbright Canada LLP
Norton Rose Fulbright Canada LLP
4
Exhibit 5.3
April 16, 2026
| Optimi Health Corp. 269 David Brown Way, Princeton, BC V0X 1W0 Canada |
Norton Rose Fulbright Canada LLP 222 Bay Street, Suite 3000, P.O. Box 53 Toronto, Ontario M5K 1E7 CANADA
F: +1 416.216.3930 nortonrosefulbright.com |
Dear Sirs and Mesdames:
Optimi Health Corp. – Warrants
We have acted as Canadian counsel to Optimi Health Corp. (the “Company”), a company existing under the provincial laws of British Columbia, in connection with a registration statement on Form F-1, including all amendments and supplements thereto (the “Registration Statement”), as filed by the Company with the United States Securities and Exchange Commission under the United States Securities Act of 1933, as amended (the “Securities Act”), relating to the Company’s initial public offering of units (the “Units”), with each Unit consisting of one (1) common share with no par value (each ,a “Common Share”) and one (1) warrant to purchase Common Shares (each, a “Common Warrant”) in the United Sates (the “Offering”).
In connection with the Offering, the Company is offering a number of (i) Units comprised of such number of Common Shares and Common Warrants as set forth in the Registration Statementand is also registering the issuance of (i) warrants to purchase up to a number of Common Shares as set forth in the Registration Statement to Joseph Gunnar & Co., LLC (the “Underwriter”), as well as (ii) up to a number of Common Shares as set forth in the Registration Statement issuable upon the exercise of the Underwriter Warrants to purchase Common Shares at a price per Common Share equal to 120% of the initial public offering price.
The Common Warrants together with any additional Common Warrants issued to cover over-allotments pursuant to an underwriting agreement (the “Underwriting Agreement”) to be entered into between the Company and the Underwriter, as described in the Registration Statement, are collectively referred to as the “Offered Warrants”.
Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Underwriting Agreement.
Examination of Documents
As Canadian counsel to the Company, in giving the opinions expressed below, we have participated in the preparation of, and have examined executed copies of the Registration Statement, the Underwriting Agreement and the form of certificate representing the Offered Warrants (the “Warrant Certificate”).
For the purposes of the opinions expressed below, we have considered such questions of law, examined such statutes, regulations, public records and certificates of government officials and examined originals or copies certified, authenticated or otherwise identified to our satisfaction of such records of corporate proceedings, corporate documents attached to the public records, certificates, opinions and instruments and have made such other investigations as we have considered necessary or desirable in connection with the opinions hereinafter set forth, including, but not so as to limit the generality of the foregoing, the following:
| 1. | the articles and notice of articles of the Company; |
| 2. | resolutions of the board of directors of the Company authorizing and approving, among other things, the Underwriting Agreement, the Registration Statement, and the creation, issue and sale of the Offered Warrants; |
| 3. | the Warrant Certificate; |
| 4. | a certificate of compliance in respect of the Company issued under the Business Corporations Act (British Columbia) on April 15, 2026 (the “Certificate of Compliance”) and have assumed that such certificate continues to be complete, true and accurate as of the date of this opinion as if issued on this date; and |
| 5. | as to certain matters of fact relevant to the opinion expressed below, a certificate of an officer of the Company dated the date of this opinion addressed to Norton Rose Fulbright Canada LLP (the “Company Certificate”). |
We have not reviewed the minute books or, except as described above, any other corporate records of the Company.
Assumptions and Reliances
We have relied exclusively upon the certificates, documents and records we examined with respect to the accuracy of the factual matters contained in them and we have not performed any independent investigation or verification of those factual matters. We have assumed those factual matters were accurate on the date given and continue to be accurate as of the date of this opinion.
For the purposes of the opinions expressed below, we have assumed, without independent investigation or inquiry, that:
| 1. | with respect to all documents examined by us, the signatures are genuine, the individuals signing those documents had legal capacity at the time of signing, all documents submitted to us as originals are authentic, and all documents submitted to us as copies conform to the authentic original documents; |
| 2. | the indices and records in all filing systems maintained in all public offices where we have searched or inquired or have caused searches or inquiries to be conducted are accurate and current, and all certificates and information issued or provided under those searches or inquiries are and remain accurate and complete; |
| 3. | all information contained in all documents reviewed by us is true and correct; and |
| 4. | there is no foreign law that would affect the opinions expressed herein. |
We also have assumed the due authorization, execution and delivery of all documents where authorization, execution and delivery are prerequisites to the effectiveness of such documents. We have also assumed that at all relevant times:
| 1. | each purchase, underwriting or other agreement, indenture, certificate, instrument or other document relating to the Company’s creation, authentication, issuance, sale and/or delivery of the Offered Warrants to which the Company is party and/or the Offering: (i) has been duly authorized, executed and delivered by all parties thereto other than the Company and such parties have the capacity to do so; (ii) constitutes a legal, valid and binding obligation of all parties thereto, other than the Company; and (iii) and is enforceable in accordance with its terms against all parties thereto, other than the Company; |
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| 2. | all Offered Warrants will be offered and sold in compliance with applicable United States federal and state securities laws, the Underwriting Agreement and in the manner stated in the Registration Statement; |
| 3. | no order, ruling or decision of any court or regulatory or administrative body is in effect at any relevant time that restricts the issuance of the Offered Warrants or the Offering; and |
| 4. | if any obligation in connection with the Offering is required to be performed in a jurisdiction outside of the Province of British Columbia, the performance of that obligation will not be illegal under the laws of that jurisdiction. |
Jurisdiction
We are solicitors qualified to express opinions only with respect to the laws of the Province of British Columbia and the opinion expressed herein relates only to the laws of the Province of British Columbia and the federal laws of Canada applicable therein as in effect on the date hereof.
This opinion letter is limited to the Province of British Columbia and the federal laws of Canada, including the rules and regulations, as in effect on the date hereof. We undertake no responsibility to monitor the Company’s future compliance with applicable laws, rules or regulations of the Commission or other governmental body.
Opinion
Based upon the foregoing and in reliance thereon, and subject to the assumptions, qualifications and limitations set forth herein, we are of the opinion that, when authorized, executed and delivered in accordance with the terms of the Underwriting Agreement, the Warrant Certificates will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.
Reliance
This opinion is furnished to you in connection with the filing of the Registration Statement and is not to be used, circulated, quoted or otherwise relied upon for any other purposes.
This opinion letter is given as of the date hereof and we disclaim any obligation or undertaking to advise you of any changes in law or fact affecting or bearing upon this opinion occurring after the date hereof which come, or are brought, to our attention.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to use of our name under the heading “Legal Matters” as regards Canadian law in the prospectus contained therein. In giving such consent we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act.
Yours very truly,
/s/ Norton Rose Fulbright Canada LLP
Norton Rose Fulbright Canada LLP
3
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Reverse Stock Split described in Note 1 to the consolidated financial statements has not been consummated at April 16, 2026. When it has been consummated and subsequent events through the date of the financial statements were available to be issued have been evaluated, we expect to be in a position to furnish the following consent.
/s/ DAVIDSON & COMPANY LLP
Chartered Professional Accountants
Vancouver, Canada
April 16, 2026
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form F-1 of our report dated [audit report date], relating to the consolidated financial statements, and financial statement schedules of Optimi Health Corp., which are part of this Registration Statement.
We also consent to the reference to us under the caption “Experts” in the Prospectus.
Chartered Professional Accountants
Vancouver, Canada
[Date]
| DAVIDSON & COMPANY LLP | 1200 - 609 Granville Street PO BOX 10372, Pacific Centre Vancouver, BC V7Y 1G6 |
604 687 0947 davidson-co.com |