Optimi Health Corp F-1, filed Aug 17, 2026
Optimi Health Corp. (OPTH)
As filed with the U.S. Securities and Exchange Commission on August 14, 2026.
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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. 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 |
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.
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold 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 or jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION, DATED AUGUST 14, 2026
Optimi Health
Corp.
Up to 21,943,260 Common Shares
This prospectus relates to the potential offer and sale from time to time by Seven Knots, LLC, a Montana limited liability company (“Seven Knots” or the “Selling Shareholder”), of up to 21,943,260 common shares, with no par value (“common shares”), of Optimi Health Corp., a corporation incorporated under the Business Corporations Act (British Columbia) (“we,” “our,” “us” or the “Company”). The common shares being offered by the Selling Shareholder are outstanding or issuable pursuant to a certain common shares purchase agreement, dated August 13, 2026, by and between us and the Selling Shareholder (the “Purchase Agreement”) and upon conversion of the Seven Knots Commitment Notes (as defined below). See “The Seven Knots Transaction” for a description of the Purchase Agreement, the Seven Knots Commitment Notes and the related transactions. Such common shares include (a) up to 21,276,593 common shares (the “Seven Knots Purchase Shares”) that we may elect, in our sole discretion, to issue and sell to Seven Knots, from time to time from and after the Seven Knots Commencement Date (as defined below) under the Purchase Agreement, and subject to applicable stock exchange rules (assuming a price of $4.68 per share, which was the closing price of the common shares on The Nasdaq Capital Market (“Nasdaq”) on August 11, 2026) and (b) up to 666,667 common shares (assuming the common shares to be issued and sold at the floor price of $3.00) (the “Seven Knots Commitment Shares”) issuable upon conversion of the Seven Knots Commitment Notes (as defined below) as consideration for it entering into the Purchase Agreement. Such registration does not mean that the Selling Shareholder will actually offer or sell any of these common shares. We will not receive any proceeds from the sales of the above common shares by the Selling Shareholder; however, we will receive proceeds under the Purchase Agreement if we sell common shares to the Selling Shareholder.
The Selling Shareholder is an “underwriter” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”). The Selling Shareholder is offering these common shares for resale. The Selling Shareholder may sell all or a portion of these common shares from time to time in market transactions through any market on which the common shares are then traded, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the then prevailing market price or at negotiated prices directly or through a broker or brokers, who may act as agent or as principal or by a combination of such methods of sale. The Selling Shareholder will receive all proceeds from the sale of the common shares. For additional information on the methods of sale, you should refer to the section entitled “Plan of Distribution.” We will pay certain expenses associated with the registration of the securities covered by this prospectus, as described in the section entitled “Plan of Distribution.”
We are not selling any securities under this prospectus and will not receive any of the proceeds from the sale of the common shares by the Selling Shareholder. Additionally, we will not receive any proceeds from the issuance or sale of common shares upon conversion of the Seven Knots Commitment Notes. As consideration for the Selling Shareholder’s commitment to purchase the Seven Knots Purchase Shares, upon the terms of and subject to satisfaction of the conditions set forth in the Purchase Agreement, we issued to Seven Knots a convertible note on August 13, 2026, in the principal amount of $1.5 million, which does not bear interest and matures 24 months after issuance (the “Initial Commitment Note”) and we have agreed to issue to Seven Knots a convertible note in the principal amount of $500,000, which does not bear interest and matures 24 months after issuance (the “Additional Commitment Note” and together with the Initial Commitment Note, the “Seven Knots Commitment Notes”), after the aggregate gross proceeds from the Selling Shareholder pursuant to the Purchase Agreement equal or exceed $7 million. We may receive up to $100 million in aggregate gross proceeds from the Selling Shareholder under the Purchase Agreement in connection with sales of the common shares to the Selling Shareholder pursuant to the Purchase Agreement from time to time after the date of this prospectus. However, the actual proceeds from the Selling Shareholder may be less than this amount depending on the number of common shares sold and the price at which the common shares are sold.
This prospectus provides you with a general description of such securities and the general manner in which the Selling Shareholder may offer or sell the securities. More specific terms of any securities that the Selling Shareholder may offer or sell may be provided in a prospectus supplement that describes, among other things, the specific amounts and prices of the securities being offered and the terms of the offering. The prospectus supplement may also add, update or change information contained in this prospectus.
Our common shares are listed on Nasdaq under the symbol “OPTH” and 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”. On August 11, 2026, the last reported sale price of the common shares on Nasdaq was $4.68 (rounded to the nearest hundredths place), on the CSE was C$6.57 (rounded to the nearest hundredths place), and on the FSE was €$4.05 (rounded to the nearest hundredths place).
The 21,943,260 common shares being offered for resale in this prospectus represent approximately 383.2% of our total outstanding common shares as of the date of this prospectus. The sale of all the securities being offered in this prospectus could result in a significant decline in the public trading price of the common shares and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that such sales may have on the prevailing market price of the common shares. Despite such a decline in the public trading price, the Selling Shareholder may still experience a positive rate of return on the securities it purchased due to the differences in the purchase prices of which it purchased the common shares above.
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 11 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.
Prospectus dated , 2026
TABLE OF CONTENTS
Neither we nor the Selling Shareholder have 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 and the Selling Shareholder 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 Selling Shareholder have not authorized any other person to provide you with different or additional information. Neither we nor the Selling Shareholder 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 Selling Shareholder 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.
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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 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.
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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 we 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 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. |
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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 Common Shares
| ● | The sale or issuance of the common shares to the Selling Shareholder will likely cause dilution and the sale of the common shares acquired by the Selling Shareholder, or the perception that such sales may occur, could cause the price of the common shares to fall. |
| ● | 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 are 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. |
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”), Optimi Nutraceuticals Corp., a company incorporated under the Business Corporations Act (British Columbia) (“Optimi Nutraceuticals”) and Optimi Australia Pty. Ltd., an Australian proprietary company limited by shares (“Optimi Australia”).
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 Australia acts as our operating subsidiary in Australia, assisting with distribution efforts, clinic education and management of customers and accounts in Australia. Optimi Nutraceuticals formerly acted as our retail subsidiary, providing consumers with high quality, natural, plant-based products; however, this business unit has been permanently wound down 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
Our Board of Directors approved a reverse share split with a share split ratio of 1-for-30 (“Reverse Share Split”) which became effective on May 19, 2026. The Reverse Share Split was 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 had occurred at the beginning of the earliest period presented.
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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:
| ● | 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. |
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 our initial public offering in the United States. 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
We 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 are permitted, and we 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 Common Shares — As a foreign private issuer, we are permitted, and we 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 Canadian 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; |
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| ● | “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; |
| ● | “Seven Knots” or “Selling Shareholder” refer to Seven Knots, LLC, a Montana limited liability company; |
| ● | “Seven Knots Commencement Date” refers to the time when all of the conditions to our right to commence sales of common shares to Seven Knots set forth in the Purchase Agreement have been satisfied; |
| ● | “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; |
| ● | “U.S. dollars,” “USD” or “US$” refer to the legal currency of the United States; and |
| ● | “VWAP” means, for a specified period, the dollar volume-weighted average price for the common shares on Nasdaq, for such period, as reported by Bloomberg through its “AQR” function. |
6
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 June 30, 2026. 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$1.4205 per US$1.00 as of June 30, 2026, 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 June 30, 2026, respectively. We make no representation that the Canadian dollar 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.
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.
7
| Issuer | Optimi Health Corp. | |
| Common Shares Offered by the Selling Shareholder | Up to 21,943,260 common shares, consisting of:
Up to 21,276,593 common shares that we may sell to the Selling Shareholder, from time to time at our sole discretion, pursuant to the Purchase Agreement (assuming a price of $4.68 per share, which was the closing price of the common shares on Nasdaq on August 11, 2026); and
Up to 666,667 common shares issuable upon conversion of the Seven Knots Commitment Notes that we may issue to the Selling Shareholder as consideration for its commitment to purchase common shares at our election under the Purchase Agreement (assuming the shares to be issued and sold at the floor price of $3.00 per share). |
|
| Common Shares Outstanding Prior to This Offering | 5,725,867 common shares.
|
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| Common Shares Outstanding After This Offering |
27,669,127 common shares.
|
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| Terms of this Offering | The Selling Shareholder will determine when and how it will dispose of any common shares that are registered under this prospectus for resale. See “Plan of Distribution.” | |
| Listing and Trading Symbols | Our common shares are currently traded on Nasdaq under the symbol “OPTH,” on the CSE under the symbol “OPTI” and on the FSE under the symbol “8BN.” | |
| Use of Proceeds | The Selling Shareholder will receive all of the proceeds from the sale of the common shares offered for sale by it under this prospectus. We will not receive proceeds from the sale of the common shares by the Selling Shareholder through this prospectus. However, we will incur expenses in connection with the registration of the common shares offered hereby. We may receive up to $100 million in gross proceeds from the sale of our common shares to the Selling Shareholder under the Purchase Agreement; however, the actual proceeds may be less than this amount depending on the number of common shares sold and the price at which the common shares are sold. We intend to use any proceeds from any sales of common shares to the Selling Shareholder under the Purchase Agreement for working capital and general corporate purposes, which may include, among other things, the acquisition of businesses, products, or technologies, and the repayment or refinancing of outstanding indebtedness. As of the date of this prospectus, we have no agreements or commitments with respect to any such acquisition, and we have not allocated a specific amount of proceeds toward the repayment of any particular indebtedness. Pending other uses, we intend to invest the net proceeds to us in investment-grade, interest-bearing securities such as money market funds, certificates of deposit, or direct or guaranteed obligations of the U.S. government, or hold as cash. See “Use of Proceeds.” |
8
| 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. | |
| 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 common shares, 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 number of our common shares to be issued and outstanding immediately after this offering is based on 5,725,867 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 and excludes:
| ● | 171,222 common shares issuable upon exercise of outstanding warrants with an average weighted exercise price of C$9.30 as of the date of this prospectus; |
| ● | 98,665 common shares issuable upon exercise of 98,665 share options granted and outstanding under the Equity Plan with an average weighted exercise price of C$9.90 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; |
| ● | 746,340 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; and |
| ● | 666,667 common shares issuable upon conversion of 3,000 convertible debentures outstanding convertible at the holders’ election into common shares at a conversion price of C$4.50 as of the date of this prospectus. |
9
Summary Consolidated Financial Information
The following tables set forth a summary of our unaudited consolidated financial information as at and for the nine months ended June 30, 2026 and 2025 and our audited consolidated financial information as at and for the fiscal years ended September 30, 2025 and 2024. The historical summary consolidated financial information set forth in the following tables has been derived from our consolidated financial statements included elsewhere in this prospectus. The following summary historical financial information should be read in conjunction with our consolidated financial statements and related notes included elsewhere in the prospectus and the information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our historical results for any period are not necessarily indicative of our future performance.
| Nine Months Ended June 30, | ||||||||||||
| 2026 | 2025 | |||||||||||
| Statements of Comprehensive Loss | C$ | US$ | C$ | |||||||||
| Revenue | 239,700 | 168,743 | 490,330 | |||||||||
| Cost of sales | (83,613 | ) | (58,862 | ) | (94,227 | ) | ||||||
| Expenses | (5,715,536 | ) | (4,023,608 | ) | (3,670,347 | ) | ||||||
| Loss and comprehensive loss | (5,552,091 | ) | (3,147,661 | ) | (2,362,664 | ) | ||||||
| As of June 30, | ||||||||||||
| 2026 | 2025 | |||||||||||
| Statements of Financial Position | C$ | US$ | C$ | |||||||||
| Assets: | ||||||||||||
| Current Assets | 13,967,209 | 9,832,600 | 1,052,507 | |||||||||
| Non-Current Assets | 11,893,955 | 8,373,076 | 13,083,358 | |||||||||
| Total Assets | 25,861,164 | 18,205,676 | 14,135,865 | |||||||||
| Liabilities: | ||||||||||||
| Current Liabilities | 8,087,930 | 5,693,720 | 3,622,375 | |||||||||
| Non-Current Liabilities | 135,195 | 95,174 | 2,761,000 | |||||||||
| Total Liabilities | 8,223,125 | 5,788,894 | 6,383,375 | |||||||||
| Shareholders’ Equity | 17,638,039 | 12,416,782 | 7,752,490 | |||||||||
| Total Liabilities and Shareholders’ Equity | 25,861,164 | 18,205,676 | 14,135,865 | |||||||||
| 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 | ) | ||||||
| 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 | |||||||||
10
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 are 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 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.
11
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 dependent 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 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 MDMA 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.
12
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-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 with such Therapeutics Good Standard. As data is currently being amalgamated based on the performance of the products, and competitor’s products for use by Authorised 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.
13
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.
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 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.
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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 nine months ended June 30, 2026 and the fiscal year ended September 30, 2025, we incurred a net loss of C$5,552,091 (US$3,147,661) 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 June 30, 2026 of C$31,360,001 (US$22,076,734) 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.
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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.
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. 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.
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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; |
| ● | 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.
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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 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 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.
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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.
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.
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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; |
| ● | 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; |
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| ● | 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 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 on 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.
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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.
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 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.
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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.
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.
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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 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.
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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 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; |
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| ● | 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; |
| ● | 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.
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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 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 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.
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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 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.
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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 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.
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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; |
| ● | 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.
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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, 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 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.
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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; |
| ● | 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. |
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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 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.
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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.
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.
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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.
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.
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.
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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.
Risks Related to This Offering and Ownership of Our Common Shares
The sale or issuance of common shares to the Selling Shareholder will likely cause dilution and the sale of the common shares acquired by the Selling Shareholder, or the perception that such sales may occur, could cause the price of the common shares to fall.
On August 13, 2026, we entered into the Purchase Agreement with Seven Knots, pursuant to which Seven Knots has committed to purchase up to $100 million of our common shares. Concurrently, we issued to Seven Knots the Initial Commitment Note in the principal amount of $1.5 million, as consideration for its commitment to purchase common shares under the Purchase Agreement. We also agreed to issue to Seven Knots the Additional Commitment Note in the principal amount of $500,000 after the aggregate gross proceeds from the Selling Shareholder pursuant to the Purchase Agreement equal or exceed $7 million. The Seven Knots Commitment Notes are convertible into the Seven Knots Commitment Shares, on the terms and conditions set forth therein. The purchase price for the common shares that we may sell to Seven Knots will fluctuate based on the price of the common shares, based on the terms and conditions set forth under the Purchase Agreement. Thus, the actual gross proceeds from the sale by us to Seven Knots of all the common shares being registered for resale hereunder may be substantially less than the $100 million total purchase commitment available to us under the Purchase Agreement, which could materially adversely affect our liquidity. In addition, depending on market liquidity at the time, sales of such common shares, or the anticipation of such sales, may cause the trading price of the common shares to fall.
We generally have the right to control the timing and amount of any future sales of our common shares to Seven Knots. Sales of our common shares, if any, to Seven Knots will depend upon market conditions and other factors to be determined by us. We may ultimately decide to sell to Seven Knots all, some or none of the additional common shares that may be available for us to sell pursuant to the Purchase Agreement. If and when we do sell common shares to Seven Knots, after Seven Knots has acquired the common shares, Seven Knots may resell all, some or none of those common shares at any time or from time to time in its discretion. Therefore, sales to Seven Knots by us could result in substantial dilution to the interests of other holders of the common shares. Additionally, the sale of a substantial number of common shares to Seven Knots, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales. The 21,943,260 common shares being offered for resale in this prospectus represent approximately 383.2% of our total outstanding common shares as of the date of this prospectus, and do not represent all of the common shares we may sell to Seven Knots pursuant to the Purchase Agreement.
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Furthermore, if we elect to issue and sell to Seven Knots more than the 21,276,594 common shares that we may elect to issue and sell to Seven Knots under the Purchase Agreement that are being registered for resale by Seven Knots hereunder, which we have the right, but not the obligation, to do, we must first file with the SEC one or more additional registration statements to register under the Securities Act for resale by Seven Knots such additional common shares we wish to sell from time to time under the Purchase Agreement, which the SEC must declare effective, in each case before we may elect to sell any additional common shares to Seven Knots under the Purchase Agreement. Any issuance and sale by us under the Purchase Agreement of a substantial amount of common shares in addition to the 21,276,594 common shares that we may elect to issue and sell to Seven Knots under the Purchase Agreement that are being registered for resale by Seven Knots hereunder could cause additional substantial dilution to our shareholders. The number of our common shares ultimately offered for sale by Seven Knots is dependent upon the number of common shares, if any, we ultimately sell to Seven Knots under the Purchase Agreement, and the sale of common shares under the Purchase Agreement may cause the trading price of our common shares to decline.
It is not possible to predict the actual number of common shares we will sell under the Purchase Agreement to Seven Knots, or the actual gross proceeds resulting from those sales.
Subject to certain limitations in the Purchase Agreement and compliance with applicable law, we have the discretion to deliver notices to Seven Knots at any time throughout the term of the Purchase Agreement. The actual number of common shares that are sold to Seven Knots may depend based on a number of factors, including the market price of the common shares during the sales period. Actual gross proceeds may be nominal, which may impact our future liquidity. Because the price per common share sold to Seven Knots will fluctuate during the sales period, it is not currently possible to predict the number of common shares that will be sold or the actual gross proceeds to be raised in connection with those sales.
Seven Knots will pay less than the then-prevailing market price for the common shares, which could cause the market price of the common shares to decline.
The purchase price of the common shares to be sold to Seven Knots pursuant to the Purchase Agreement is derived from the market price of the common shares on Nasdaq. Shares to be sold to Seven Knots pursuant to the Purchase Agreement will be purchased at a discounted price. As a result of this pricing structure, Seven Knots may sell the common shares they receive immediately after receipt of such shares, which could cause the market price of the common shares to decrease. See “The Seven Knots Transaction.”
Investors who buy shares at different times will likely pay different prices.
Pursuant to the Purchase Agreement, we will have discretion, subject to market demand, to vary the timing, prices, and numbers of common shares sold to Seven Knots. If and when we do elect to sell common shares to Seven Knots pursuant to the Purchase Agreement, after Seven Knots has acquired such shares, Seven Knots may resell all, some or none of such shares at any time or from time to time in its discretion and at different prices. As a result, investors who purchase shares from Seven Knots in this offering at different times will likely pay different prices for those shares, and so may experience different levels of dilution and in some cases substantial dilution and different outcomes in their investment results. Investors may experience a decline in the value of the common shares they purchase from Seven Knots in this offering as a result of future sales made by us to Seven Knots at prices lower than the prices such investors paid for their shares in this offering.
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.
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.
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; |
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| ● | 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. |
We are 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.
As a foreign private issuer, we are permitted, and we 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 rely on exemptions from the following Nasdaq corporate governance requirements:
| ● | We do not have a majority of our directors qualify as independent. This is not required under our home country practices. |
| ● | We do not hold regular scheduled meetings that independent directors exclusively attend. This is not required under our home country practices. |
| ● | We do not have a nomination committee. This is not required under our home country practices. |
| ● | We do not 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 have director nominees selected or recommended for the Board’s selection by independent directors. We also do not have 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. |
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| ● | 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 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.
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.
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.
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We are 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.
We currently qualify as an “emerging growth company” under the JOBS Act. As a result, we will be permitted to, and we 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 our initial public offering in the United States; (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 are 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 are 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.
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.
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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.
Management will have broad discretion as to the use of the proceeds from any sales of common shares we make to Seven Knots pursuant to the Purchase Agreement and may use them in ways that may not enhance our operating results or the price of our common shares.
Although we will not receive any proceeds from the offer of the common shares for resale by Seven Knots pursuant to this prospectus, we will receive proceeds from the sale of common shares to Seven Knots pursuant to the Purchase Agreement. Because we have not designated the amount of net proceeds from the sale of common shares to Seven Knots pursuant to the Purchase Agreement to be used for any particular purpose, our management will have broad discretion as to the application of such net proceeds and could use them for purposes other than those contemplated hereby. Our management may use the net proceeds for corporate purposes that may not improve our financial condition or market value.
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.
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We may not be able to maintain a listing of our common shares on the Nasdaq Capital Market.
We must meet certain financial and liquidity criteria to 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 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 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.
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 given 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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General
On August 13, 2026, we and Seven Knots entered into the Purchase Agreement, which provides that subject to the terms and conditions set forth therein, we may sell to Seven Knots up to $100 million of our common shares from time to time during the term of the Purchase Agreement (the “Total Purchase Commitment”). Capitalized terms used but not otherwise defined herein have the same meaning ascribed to them in the Purchase Agreement.
Under the terms and subject to the satisfaction of the conditions set forth in the Purchase Agreement, we have the right, but not the obligation, to sell to Seven Knots, and Seven Knots is obligated to purchase, up to the Total Purchase Commitment. Such sales of common shares by us, if any, will be subject to certain limitations as set forth in the Purchase Agreement, and may occur from time to time, at our sole discretion, during the Investment Period. The Investment Period commences on the effective date of this registration statement and expires on the date the Purchase Agreement is terminated. Seven Knots has no right to require us to sell any common shares to Seven Knots, but Seven Knots is obligated to accept each VWAP Purchase Notice prepared and delivered by us in accordance with the terms of and subject to the satisfaction of the conditions contained in the Purchase Agreement.
On any business day on which the prior trading day closing sale price of our common shares on Nasdaq is equal to or greater than $1.00 and on which we have directed Seven Knots to purchase common shares (the “VWAP Purchase Date” and such purchase, a “VWAP Purchase”), the purchase price per share (the “VWAP Purchase Price”) shall equal 97% of the lesser of (i) the lowest sale price of the common shares on the applicable VWAP Purchase Date and (ii) the VWAP during the applicable VWAP Purchase Period. Seven Knots’ maximum purchase obligation under any single VWAP Purchase shall not exceed 30% of the trading volume of the common shares during the applicable VWAP Purchase Period on the applicable VWAP Purchase Date (the “VWAP Purchase Maximum Amount”). In addition, Seven Knots’ aggregate committed obligation under any single VWAP Purchase shall not exceed $2 million in the aggregate for such VWAP Purchase. The Purchase Agreement also prohibits us from directing Seven Knots to purchase any common shares if those common shares, when aggregated with all other common shares then beneficially owned by Seven Knots and its affiliates, would result in Seven Knots having beneficial ownership of more than 4.99% of the outstanding common shares.
We also agreed to pay Seven Knots up to $35,000 for its reasonable out-of-pocket expenses, including the legal fees and disbursements of Seven Knots’ legal counsel, incurred in connection with the preparation, negotiation, execution and delivery of the transaction documents and Seven Knots’ due diligence investigation of us.
The Purchase Agreement contains customary representations, warranties, covenants, indemnification and termination provisions. Seven Knots has covenanted not to engage, directly or indirectly, in any short sales involving our securities or in any hedging of the common shares. The Purchase Agreement includes restrictions on our ability to make certain dilutive issuances during reference periods relating to VWAP Purchases, and restrictions on our ability to enter into “variable rate transactions” or other similar continuous offerings during the term of the Purchase Agreement.
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The Purchase Agreement may be terminated by us at any time, at our sole discretion, upon one trading day’s prior written notice to Seven Knots, provided that we shall have paid all fees and amounts required to be paid prior to such termination, and provided further that prior to issuing any press release or making any public statement with respect to such termination, we shall consult with Seven Knots and its counsel on the form and substance of such disclosure. Seven Knots shall also have the right to terminate the Purchase Agreement upon ten trading days’ prior written notice to us in certain circumstances, including our material breach of the Purchase Agreement.
Upon entering into the Purchase Agreement, we agreed to issue Seven Knots the Initial Commitment Note, as consideration for Seven Knots’ execution and delivery of the Purchase Agreement and commitment to purchase common shares upon our direction thereunder. The Initial Commitment Note is a convertible promissory note in the principal amount of $1.5 million. No interest shall accrue on the unpaid principal balance of the Initial Commitment Note. We also agreed to issue to Seven Knots the Additional Commitment Note, which is a convertible note in the principal amount of $500,000, which does not bear interest, after the aggregate gross proceeds from the Selling Shareholder pursuant to the Purchase Agreement equal or exceed $7 million. The entire unpaid principal balance of the Seven Knots Commitment Notes shall be due and payable 24 months after their respective issuance dates (the “Maturity Date”).
Seven Knots may, in its sole discretion and upon written notice to us (a “Conversion Notice”), convert all or a portion of the entire unpaid principal balance of the Seven Knots Commitment Notes into a number of common shares (the “Seven Knots Commitment Shares”) equal to the conversion amount divided by an amount equal to 95% of the average VWAP of the common shares on Nasdaq during the 20 consecutive trading days ending on the trading day immediately preceding the date of the Conversion Notice (the “Conversion Price”), provided that in no event will the Conversion Price be less than the last closing price of the Common Shares on the Canadian Securities Exchange less the maximum permitted discount permitted by the Canadian Securities Exchange. Notwithstanding the foregoing, the Conversion Price shall not be less than $3.00 per share (the “Floor Price”). At the Floor Price of $3.00 per share, the Seven Knots Commitment Notes would be convertible into 666,667 common shares.
The conversion of the Initial Commitment Note and the Additional Commitment Note, respectively, will be limited to the extent that, upon such conversion, Seven Knots, together with its affiliates, would beneficially own more than 2.99% of the common shares issued and outstanding immediately after giving effect to such conversion (the “Beneficial Ownership Limitation”), provided that the Beneficial Ownership Limitation calculation is limited to common shares issuable upon such conversion and shall not be aggregated with any other common shares then beneficially owned Seven Knots, together with its affiliates.
On August 13, 2026, we and Joseph Gunnar & Co., LLC entered into a placement agency agreement (the “Agency Agreement”) in connection with the proposed transactions under the Purchase Agreement. Under the Agency Agreement, we agreed to pay a fee equal to 3% of the gross proceeds received from purchases by Seven Knots under the Purchase Agreement, and agreed that if we conduct any other fundraising activities involving Seven Knots or its affiliates within 12 months after our initial public offering in the U.S., we must pay a cash fee of 3% of the gross proceeds from that transaction.
On August 13, 2026, we and Seven Knots entered into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which we agreed to file a registration statement with the SEC covering the resale of common shares issuable upon conversion of the Seven Knots Commitment Notes and a portion of the shares issuable to Seven Knots pursuant to the Purchase Agreement.
Effect of Performance of the Purchase Agreement on Shareholders
All common shares that may be issued or sold by us to Seven Knots under the Purchase Agreement are expected to be freely tradable. The resale by Seven Knots of a significant amount of common shares at any given time, or the perception that these sales may occur, could cause the market price of the common shares to decline and be highly volatile. Sales of common shares to Seven Knots will depend upon market conditions and other factors to be determined by us. We may ultimately decide to sell to Seven Knots all, some or none of the common shares available for sale pursuant to the Purchase Agreement. If and when we do sell common shares to Seven Knots, after Seven Knots has acquired the common shares, Seven Knots may resell all, some or none of those common shares at any time or from time to time in its discretion. Therefore, sales to Seven Knots by us under the Purchase Agreement may result in substantial dilution to the interests of other holders of the common shares.
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Pursuant to the terms of the Purchase Agreement, we have the right, but not the obligation, to direct Seven Knots to purchase up to $100 million of our common shares, subject to certain limitations. We have registered only a portion of the common shares issuable under the Purchase Agreement and, therefore, we may seek to issue and sell to Seven Knots under the Purchase Agreement more common shares than are offered under this prospectus. If we choose to do so, we must first register for resale under the Securities Act any such additional common shares, which could cause additional substantial dilution to our shareholders. The number of common shares ultimately offered for resale under this prospectus is dependent upon the number of common shares we direct Seven Knots to purchase under the Purchase Agreement.
The following table sets forth the amount of gross proceeds we would receive from Seven Knots from our sale of common shares to Seven Knots under the Purchase Agreement at varying purchase prices:
| Assumed Purchase Price Per Share ($)(4) | Number of Registered Shares to be Purchased if Full Purchase (1) |
Percentage of Outstanding Shares After Giving Effect to the Issuance to Seven Knots (2) |
Gross Proceeds from the Sale of Shares to Seven Knots Under the Purchase Agreement ($) |
|||||||||||
| $ | 2.00 | 21,276,593 | 78.8 | % | 42,553,188 | |||||||||
| $ | 3.00 | 21,276,593 | 78.8 | % | 63,829,782 | |||||||||
| $ | 4.00 | 21,276,593 | 78.8 | % | 85,106,376 | |||||||||
| $ | 4.68 | (3) | 21,276,593 | 78.8 | % | 99,574,455 | ||||||||
| $ | 5.00 | 20,000,000 | 77.7 | % | 100,000,000 | |||||||||
| $ | 6.00 | 16,666,667 | 74.4 | % | 100,000,000 | |||||||||
| $ | 7.00 | 14,285,715 | 71.4 | % | 100,000,000 | |||||||||
| (1) | Although the Purchase Agreement provides that we may sell up to $100 million of our common shares to Seven Knots, we are only registering 21,943,260 common shares for resale under the registration statement of which this prospectus forms a part, including the 666,667 common shares underlying the Seven Knots Commitment Notes issued or issuable to Seven Knots in consideration of Seven Knots’ commitment to purchase the common shares at our direction under the Purchase Agreement, for which we will receive no cash proceeds. Therefore, only 21,276,593 of such common shares represent common shares that we may issue and sell to Seven Knots for cash consideration in purchases under the Purchase Agreement from time to time, at our sole discretion, during the Investment Period commencing on the Seven Knots Commencement Date, which may or may not cover all the common shares we ultimately sell to Seven Knots under the Purchase Agreement, if any, depending on the purchase price per common share. We have included in this column only the 21,276,593 common shares that we may issue and sell to Seven Knots for cash consideration in purchases under the Purchase Agreement that are being registered for resale in the offering made by this prospectus (excluding the 666,667 common shares underlying Seven Knots Commitment Notes), without regard for the Beneficial Ownership Cap. |
| (2) | The denominator is based on 5,725,867 common shares outstanding as of the date of this prospectus adjusted to include the issuance of the number of common shares set forth in the adjacent column that we would have sold to Seven Knots, assuming the average purchase price in the first column. The numerator is based on the number of common shares issuable under the Purchase Agreement at the corresponding assumed average purchase price set forth in the first column. |
| (3) | The closing sale price of our common shares on August 11, 2026. |
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This prospectus relates to the common shares that may be offered and sold from time to time by the Selling Shareholder pursuant to the Purchase Agreement. The Selling Shareholder will receive all of the proceeds from the sale of the common shares offered for sale by it under this prospectus. We will not receive proceeds from the sale of the common shares by the Selling Shareholder through this prospectus. However, we will incur expenses in connection with the registration of the common shares offered hereby.
We may receive up to $100 million in gross proceeds pursuant to the Purchase Agreement. See “Plan of Distribution” elsewhere in this prospectus for more information. However, the actual proceeds may be less than this amount depending on the number of common shares sold and the price at which the common shares are sold.
We intend to use proceeds from any sales of common shares to Seven Knots under the Purchase Agreement for working capital and general corporate purposes, which may include, among other things, the acquisition of businesses, products, or technologies, and the repayment or refinancing of outstanding indebtedness. As of the date of this prospectus, we have no agreements or commitments with respect to any such acquisition, and we have not allocated a specific amount of proceeds toward the repayment of any particular indebtedness. Pending other uses, we intend to invest the net proceeds to us in investment-grade, interest-bearing securities such as money market funds, certificates of deposit, or direct or guaranteed obligations of the U.S. government, or hold as cash. We cannot specify with certainty all of the particular uses for the net proceeds that we will have from the sale of common shares pursuant to the Purchase Agreement. Therefore, our management will have broad discretion to determine the specific use for the net proceeds, and we may use the proceeds for purposes that are not contemplated at the time of this offering.
The Selling Shareholder will pay any underwriting fees, discounts, selling commissions, stock transfer taxes and certain legal expenses incurred by such Selling Shareholder in disposing of its common shares, and we will incur all costs associated with this prospectus and the registration statement of which it is a part.
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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 sale of common shares to the Selling Shareholder pursuant to the Purchase Agreement will have a dilutive impact on our shareholders. In addition, the lower the price of the common shares is at the time we exercise our right to issue and sell common shares to Selling Shareholder, the more of the common shares we will issue to raise our desired amount of proceeds from the sale, and the greater the dilution to our existing shareholders.
The price that the Selling Shareholder will receive for the common shares when resold pursuant to this prospectus will depend upon the timing of sales and will fluctuate based on the trading price of the common shares.
We calculate net tangible book value per common share by dividing our net tangible book value, which is tangible assets less total liabilities, by the number of our outstanding common shares. Dilution represents the difference between the portion of the amount per common share paid by purchasers of common shares in this offering and the as adjusted net tangible book value per common share immediately after giving effect to this offering. As of June 30, 2026, our net tangible book value was C$17,638,039 (US$12,416,782), or C$3.08 (US$2.17) per common share.
After giving effect to the assumed sale of 21,276,594 common shares for the Seven Knots Purchase Shares and after deducting estimated offering expenses payable by us, including the 3% fee payable to Joseph Gunnar & Co., LLC as placement agent in connection with the Purchase Agreement, the as adjusted net tangible book value as of June 30, 2026 would have been approximately $109 million, or $4.04 per common share. This represents an immediate increase in net tangible book value of $1.87 per common share to existing shareholders and an immediate dilution of $0.64 per common share to new investors purchasing common shares in this offering. The following table illustrates this substantial and immediate per share dilution to new investors.
The following table illustrates this dilution on a per common share basis:
| Assumed offering price per common share for the Seven Knots Purchase Shares (which was the closing price of the common shares on Nasdaq on August 11, 2026) | $ | 4.68 | ||
| Historical net tangible book value per common share as of June 30, 2026 | $ | 2.17 | ||
| Increase in historical net tangible book value per common share attributable to the sale of common shares in this offering | $ | 1.87 | ||
| As adjusted net tangible book value per common share after giving effect to this offering(1) | $ | 4.04 | ||
| Dilution in net tangible book value per common share to new investors on an as adjusted basis | $ | 0.64 |
| (1) | A $1.00 increase or decrease in the assumed offering price per common share of $4.68, which was the last reported sale price of the common shares on Nasdaq on August 11, 2026, would increase the as adjusted net tangible book value by $0.76 per share and increase the dilution to investors participating in this offering by $0.24 per share, 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 estimated expenses payable by us. An increase of 100,000 in the number of common shares offered, as set forth on the cover page of this prospectus, would increase the as adjusted net tangible book value by $0.00 per common share and the dilution to investors participating in this offering by $0.00 per common share, assuming an offering price per common share of $4.68, which was the last reported sale price of the common shares on Nasdaq on August 11, 2026, remains the same and after deducting estimated offering expenses payable by us. Conversely, a decrease of 100,000 in the number of common shares offered, as set forth on the cover page of this prospectus, would increase the as adjusted net tangible book value by $0.00 per common share and increase the accretion to investors participating in this offering by $0.00 per common share, assuming an offering price per common share of $4.68, which was the last reported sale price of the common shares on Nasdaq on August 11, 2026, remains the same and after deducting estimated offering expenses payable by us. |
The discussion and table above assume no exercise of outstanding options or warrants. To the extent that options or warrants are exercised, you may experience further dilution. In addition, we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our shareholders.
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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”), Optimi Nutraceuticals Corp., a company incorporated under the Business Corporations Act (British Columbia) (“Optimi Nutraceuticals”) and Optimi Australia Pty. Ltd., an Australian proprietary company limited by shares (“Optimi Australia”). 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 Australia acts as our operating subsidiary in Australia, assisting with distribution efforts, clinic education and management of customers and accounts in Australia. Optimi Nutraceuticals formerly acted as our retail subsidiary, providing consumers with high quality, natural, plant-based products; however, this business unit has been permanently wound down to focus our efforts on our pharmaceutical grade manufacturing business.
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 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 of 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.
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On May 10, 2024, we issued 1,333,334 units at a price of 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 of 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.
Our Board of Directors approved a reverse share split with a share split ratio of 1-for-30 (“Reverse Share Split”), which became effective on May 19, 2026. The Reverse Share Split was intended to allow us to meet the minimum share price requirement of Nasdaq.
On May 21, 2026, we completed our initial public offering in the United States, which was conducted in connection with the uplisting of our common shares to the Nasdaq Capital Market. We issued 2,400,000 common shares at a price of US$6.25 per share. The aggregate gross proceeds to us from the offering were US$15 million, before deducting underwriting discounts and offering expenses.
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.
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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.
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.
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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”).
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.
In June 2026, we completed our first export of naturally derived psilocybin to the United Kingdom in support of a planned Phase 2 clinical trial. The shipment comprises psilocybin biomass and finished 5mg psilocybin capsules — the same formulation currently prescribed to patients in Australia for TRD.
In June 2026, we completed our third commercial shipment of 5mg psilocybin capsules to Australia since the September 2025 launch of our psilocybin commercial program, comprising 1,000 capsules of 5mg psilocybin being prescribed in Australia for TRD.
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 nine month period ended June 30, 2026 and 2025 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 nine month period ended June 30, 2026 and 2025 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 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.
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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 produce 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.
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.
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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.
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.
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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.
| Nine Months Ended June 30, | ||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| Revenue | C$ | US$ | % | C$ | % | |||||||||||||||
| Drug products and licensing revenue | 239,700 | 168,743 | 100 | 359,753 | 73 | |||||||||||||||
| Nutraceutical products | - | - | - | 130,577 | 27 | |||||||||||||||
| Total | 237,700 | - | 100 | 490,330 | 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.
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.
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.
| Nine Months Ended June 30, | ||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| Revenue | C$ | US$ | % | C$ | % | |||||||||||||||
| Australia and New Zealand | 136,000 | 95,741 | 62.2 | 280,253 | 57 | |||||||||||||||
| Canada | - | - | - | 208,807 | 43 | |||||||||||||||
| United Kingdom | 103,700 | 73,002 | 37.8 | - | - | |||||||||||||||
| United States | - | - | - | 1,270 | - | |||||||||||||||
| Total | 239,700 | 168,743 | 100 | 490,330 | 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 | |||||||||||||||
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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.
| Nine Months Ended June 30, | ||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| Cost of Sales | C$ | US$ | % | C$ | % | |||||||||||||||
| Finished goods drug products | 83,613 | 58,862 | 100 | 24,318 | 26 | |||||||||||||||
| Finished goods nutraceutical products | - | - | - | 65,741 | 70 | |||||||||||||||
| Other | - | - | - | 4,168 | 4 | |||||||||||||||
| Total | 83,613 | 58,862 | 100 | 94,227 | 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$60,110) was recorded through the fair value adjustment of biological assets and inventory.
Expenses
The following table sets forth a breakdown of our expenses by nature, each expressed in the absolute amount and as a percentage of our total expenses, for the periods indicated.
| Nine Months Ended June 30, | ||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| Expenses | C$ | US$ | % | C$ | % | |||||||||||||||
| Advertising, promotion and public relations | 34,531 | 24,309 | 0.60 | % | 41,148 | 1.12 | % | |||||||||||||
| Amortization and depreciation | 721,386 | 507,839 | 12.62 | % | 679,622 | 18.52 | % | |||||||||||||
| Bank charges and interest | 787,245 | 554,203 | 13.77 | % | 329,192 | 8.97 | % | |||||||||||||
| Consulting | 940,620 | 662,175 | 16.46 | % | 614,887 | 16.75 | % | |||||||||||||
| Consumables, supplies and overhead | 154,488 | 108,756 | 2.70 | % | 149,736 | 4.08 | % | |||||||||||||
| Insurance | 271,917 | 191,423 | 4.76 | % | - | 0.00 | % | |||||||||||||
| Investor relations | 1,166,558 | 821,231 | 20.41 | % | 136,430 | 3.72 | % | |||||||||||||
| Office, rent and administration | 137,973 | 97,130 | 2.41 | % | 97,305 | 8.45 | % | |||||||||||||
| Professional fees | 82,505 | 58,082 | 1.44 | % | 309,977 | 2.65 | % | |||||||||||||
| Research and development | 204,801 | 144,175 | 3.58 | % | 203,498 | 5.54 | % | |||||||||||||
| Share-based compensation | 151,454 | 106,620 | 2.65 | % | 45,940 | 1.25 | % | |||||||||||||
| Shipping | 55,981 | 39,409 | 0.98 | % | 62,189 | 1.69 | % | |||||||||||||
| Transfer agent and filing fees | 197,827 | 139,266 | 3.46 | % | 115,184 | 3.14 | % | |||||||||||||
| Travel and accommodation | 54,983 | 38,707 | 0.96 | % | 26,305 | 0.72 | % | |||||||||||||
| Wages and benefits | 753,267 | 530,283 | 13.18 | % | 858,934 | 23.40 | % | |||||||||||||
| Total | 5,715,536 | 4,023,608 | 100 | 3,670,347 | 100 | |||||||||||||||
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| 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.
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.
| Nine Months Ended June 30, | ||||||||||||
| 2026 | 2025 | |||||||||||
| Statements of Comprehensive Loss | C$ | US$ | C$ | |||||||||
| Revenue | 239,700 | 168,743 | 490,330 | |||||||||
| Cost of sales | (83,613 | ) | (58,862 | ) | (94,227 | ) | ||||||
| Gross margin | 156,087 | 109,881 | 396,103 | |||||||||
| Expenses | (5,715,536 | ) | (4,023,608 | ) | (3,670,347 | ) | ||||||
| Interest and other income | 7,358 | 5,180 | 7,629 | |||||||||
| Loss and comprehensive loss | (5,552,091 | ) | (3,908,547 | ) | (2,362,664 | ) | ||||||
Nine-Month Period Ended June 30, 2026 Compared to Nine-Month Period Ended June 30, 2025
Nine-Month Period Ended June 30, 2026
During the nine-month period ended June 30, 2026, the Company generated a net loss of $5,552,091 (US$3,908,547). The main factors that contributed to the loss in the fiscal period were amortization expense of $721,386 (US$507,839), bank charges and interest of $787,245 (US$554,203), consulting of $940,620 (US$662,175), investor relations of $1,166,558 (US$821,231), and wages and benefits of $753,267 (US$530,283).
During the period ended June 30, 2026, the Company issued 2,400,000 common shares in relation to an underwritten public offering to list its common shares on the Nasdaq Capital Market. for gross proceeds of $20,700,000 (USD$15,000,000), before deducting underwriting discounts and offering expenses. In connection with the offering, the Company issued 96,000 warrants to the underwriter exercisable into a common share at $10.35 (USD$7.5) per warrant.
During the period ended June 30, 2026, the Company repaid $1,000,000 (US$703,977) in loans and settled $450,000 (US$316,790) in convertible debt through issuance of 100,000 common shares.
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Nine-Month Period Ended June 30, 2025
During the nine-month period ended June 30, 2025, the Company generated revenue of $490,330 and a net loss of $2,362,664. The main factors that contributed to the loss in the fiscal period were amortization expense of $679,622, consulting of $614,887, research and development costs of $203,498, and wages and benefits of $858,934 offset by debt forgiveness recovery of $903,951 related to certain directors forgiving debts owed from the Company.
During the period ended June 30, 2025, the Company received $395,000 in proceeds from a private placement and received $908,000 in proceeds related to a convertible debt financing completed subsequent to the period ended June 30, 2025.
| Year Ended September 30, | ||||||||||||
| 2025 | 2024 | |||||||||||
| Statements of Comprehensive Loss | C$ | 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 $1,667,152.
Liquidity and Capital Resources
The Company’s future capital requirements will depend upon many factors including, without limitation, its ability to produce, market and sell its products, consumer demand for its products, the Company’s ability to secure required financing, and in the event consumer demand is strong for its products, the Company’s ability to expand its business to facilitate this demand. The Company has limited capital resources and has historically relied upon the sale of equity securities for cash required for research and development purposes, for acquisitions and to fund the administration of the Company. The Company intends to finance its future requirements through a combination of debt and/or equity issuances. There is no assurance that the Company will be able to obtain such financings or obtain them on favorable terms. These uncertainties cast significant doubt on the Company’s ability to continue as a going concern. The condensed interim consolidated financial statements do not include any adjustments related to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.
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The following table sets forth a summary of our cash flows for the periods presented.
| Nine Months Ended June 30, | ||||||||||||
| 2026 | 2025 | |||||||||||
| C$ | US$ | C$ | ||||||||||
| Cash used in operating activities | 3,822,124 | 2,690,690 | 1,249,866 | |||||||||
| Cash used in investing activities | 36,859 | 25,948 | 15,551 | |||||||||
| Cash provided by financing activities | 15,787,251 | 11,113,870 | 1,250,290 | |||||||||
| Changes in cash and cash equivalents | 11,928,268 | 8,397,232 | (15,127 | ) | ||||||||
| Cash and cash equivalents, beginning of period | 1,145,065 | 806,100 | 103,660 | |||||||||
| Cash and cash equivalents, end of period | 13,073,333 | 9,203,332 | 88,533 | |||||||||
Nine-Month Period Ended June 30, 2026 and June 30, 2025
Operating Activities
Net cash used in operating activities was C$3,822,124 (US$2,609,690) for the nine-months ended June 30, 2026, primarily due to net loss of C$5,552,091 (US$3,908,547), 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$721,386 (US$507,839) and loan accretion of C$94,500 (US$66,526). 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$1,059,852 (US$746,112).
Net cash used in operating activities was C$1,249,866 for the nine-months ended June 30, 2025, primarily due to net loss of C$2,362,664, 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$679,522 and loan accretion of C$134,500. 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$507,421.
Investing Activities
Net cash used in investing activities was C$36,859 (US$25,948) for the nine-months ended June 30, 2026, which was attributed to plant and equipment expenditures of lab equipment purchased for the Facilities.
Net cash used in investing activities was C$15,551 for the nine-months ended June 30, 2025, 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$15,787,251 (US$11,113,870) for the nine-months ended June 30, 2026, which related to financing of $20,700,000 (US$15,000,000) in gross proceeds from its public offering, less share issue costs of $3,874,049 (US$2,727,243), repayment of $1,000,000 (US$703,977) in loans, and $38,700 (US$27,244) on payments of lease obligations.
Net cash provided by financing activities was C$1,250,290 for the nine-months ended June 30, 2025, which was primarily attributed to shares issued for private placement of C$395,000, subscriptions received in advance of $908,000, less deferred financing costs of (C$21,210) and payment of lease obligations of (C$31,500).
| Year Ended September 30, | ||||||||||||
| 2025 | 2024 | |||||||||||
| C$ | 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 | |||||||||
| 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$200,000.
Capital Commitments and Contractual Obligations
We have lease commitments for the Industrial Ground. Cash commitments for minimum lease payments in relation to the Industrial Ground leases as at June 30, 2026 were payable as follows:
| C$ | ||||
| Within 1 year | 53,148 | |||
| Between 1 year and 5 years | 169,211 | |||
| 222,359 | ||||
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 assess 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.
63
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.
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, forecast cash flows and match the maturity dates of our 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 of 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 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 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.
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.
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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. |
| ● | 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. |
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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.
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.
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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.
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.
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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.
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.
In May 2026, we completed a production run of naturally derived psilocybin extract measuring approximately 6% psilocybin content, representing the highest purity achieved to date. The milestone reflects sustained gains across our cultivation program, drawing on a proprietary library of more than 200 distinct mushroom genetics maintained at our facilities. 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.
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In June 2026, we completed a GMP production run of our 5mg psilocybin finished drug product — the same formulation already prescribed to patients in Australia for the treatment of TRD, with an updated bottling configuration to improve ease of use for prescribers and patients in the Australian market. 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 COA 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 (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. |
| ● | 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.
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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’s 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.
We also hold a Controlled Substances 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-DIMETHOXYBENZENE 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 (25I-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 GLP 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.
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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.
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 our drug candidates to reference our material without having to disclose DMF contents. DMFs 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 remaining 75% within twenty business days of product delivery. Mind Medicine guarantees the payment obligations of KMT Pharmaceuticals under the Supply Agreement.
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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 Matai Medical Research Institute (“Matai”), on behalf of the Tu Wairua Project, whereby we agreed to provide Matai with a quantity of our validated GMP full spectrum natural psilocybin extract. We completed our initial shipment to Matai 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.
In June 2026, we completed our third commercial shipment of 5mg psilocybin capsules to Australia since the September 2025 commercial launch, comprising 1,000 capsules currently prescribed for TRD under the Authorized Prescriber Scheme. The capsules were produced start to finish in-house at our wholly owned GMP facility in Princeton, British Columbia, under our Health Canada DEL, and shipped under a Health Canada export authorization.
Also in June 2026, we completed our first export of naturally derived psilocybin to the United Kingdom, comprising psilocybin biomass and finished 5mg psilocybin capsules — the same formulation prescribed in Australia for TRD — in support of a planned Phase 2 clinical trial.
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.
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.
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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 June 30, 2026, 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 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.
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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.
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 formerly 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.
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The Precursor Control Regulations, SOR/2002-359 (“PCR”) set 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 of 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.
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 for ensuring 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).
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For a 1,000,000-patient PTSD population, the total capsule demand would equate to approximately 9,000,000 capsules per year.
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).
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.
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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 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.
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.
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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 entry 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.
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 upon our obtaining and maintaining (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.
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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 compliance with 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 June 30, 2026.
| Location | Approximate 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 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.
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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 be 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.
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 be 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.
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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 evaluated the independence of each director in accordance with the Nasdaq Listing Rules. 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 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. |
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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 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$1,000 per Audit Committee or Compensation Committee meeting. The independent directors are also eligible for equity-based compensation at the discretion of the Board.
Our directors do not have service contracts with us relating to their position as a director that provide for benefits upon termination of their position as a member of the Board.
The following tables set forth all compensation paid or accrued, payable, awarded, granted, given or otherwise provided, directly or indirectly, by the Company or any subsidiary thereof, to each executive officer and director of the Company, for each of the two most recently completed fiscal years ended September 30, 2025 and 2024.
| Table of compensation excluding compensation securities | ||||||||||||||||||
| Name and position | Year | Salary, consulting fee, retainer or commission (C$) | Bonus (C$) | Committee or meeting fees (C$) | Value of perquisites (C$) | Value of all other compensation (C$) | Total compensation (C$) | |||||||||||
| CIPRICK, William | 2025 | 17,234 | Nil | Nil | Nil | Nil | 17,234 | |||||||||||
| Former Chief Executive Officer | 2024 | 350,000 | Nil | Nil | Nil | Nil | 350,000 | |||||||||||
| SAFARIK, Jacob | 2025 | 150,000 | Nil | Nil | Nil | Nil | 150,000 | |||||||||||
| Interim Chief Financial Officer and Director | 2024 | 150,000 | Nil | 1,000 | Nil | Nil | 151,000 | |||||||||||
| SAFARIK, Bryan | 2025 | 150,000 | Nil | Nil | Nil | Nil | 150,000 | |||||||||||
| Chief Operating Officer and Director | 2024 | 150,000 | Nil | Nil | Nil | Nil | 150,000 | |||||||||||
| STEVENS, Dane | 2025 | 75,000 | Nil | Nil | Nil | Nil | 75,000 | |||||||||||
| Chief Executive Officer, Chief Marketing Officer and Director | 2024 | 75,000 | Nil | 2,000 | Nil | Nil | 77,000 | |||||||||||
| WILSON, John James | 2025 | 165,000 | Nil | Nil | Nil | Nil | 165,000 | |||||||||||
| Director | 2024 | 165,000 | Nil | 3,000 | Nil | Nil | 168,000 | |||||||||||
| SCHINTLER, Jonathan | 2025 | 36,000 | Nil | Nil | Nil | Nil | 36,000 | |||||||||||
| Former Director | 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 | Restricted Share Rights | 525 | November 6, 2023 | |||||
| Chief Executive Officer, Chief Marketing Officer and Director | 525 | May 6, 2024 | ||||||
| SAFARIK, Jacob | Restricted Share Rights | 525 | November 6, 2023 | |||||
| Interim Chief Financial Officer and Director | 525 | May 6, 2024 | ||||||
| SAFARIK, Bryan | Restricted Share Rights | 525 | November 6, 2023 | |||||
| Chief Operating Officer and Director | 525 | May 6, 2024 | ||||||
| WILSON, John James | Restricted Share Rights | 525 | November 6, 2023 | |||||
| Director | 525 | May 6, 2024 | ||||||
| SCHINTLER, Jonathan | Restricted Share Rights | 525 | November 6, 2023 | |||||
| Former Director | 525 | 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.
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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 advance 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 outstanding 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 | |||||||||
| Jason Mosberian | Share Options | 11,667 | January 15, 2026 | $ | 15.00 | January 15, 2031 | ||||||||
| Director | ||||||||||||||
| Jason Mosberian | RSRs | 2,625 | January 15, 2026 | N/A | January 15, 2029 | |||||||||
| Director | ||||||||||||||
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 our 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 5,725,867 common shares outstanding as of the date of this prospectus.
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 | ||||||||
| Number | Percent of Class(1) | |||||||
| Directors and Executive Officers: | ||||||||
| Dane Stevens(2) | 474,124 | 8.3 | % | |||||
| Jacob Safarik(3) | 103,636 | 1.8 | % | |||||
| Bryan Safarik(4) | 115,112 | 2.0 | % | |||||
| John James Wilson(5) | 287,639 | 5.0 | % | |||||
| Jason Mosberian(6) | 12,541 | 0.2 | % | |||||
| All directors and executive officers as group | 993,052 | 17.2 | % | |||||
| Principal Shareholders | ||||||||
| Dane Stevens(2) | 474,124 | 8.3 | % | |||||
| Edward and Diana Safarik(7) | 326,133 | 5.7 | % | |||||
| YA II PN, LTD.(8) | 400,000 | 7.0 | % | |||||
| (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) 5,725,867, being the number of common shares outstanding as of the date of this prospectus 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 456,347 common shares and options and warrants exercisable for 17,777 common shares held by Cathay Visions Enterprises Ltd., a British Columbia corporation that is wholly-owned by Dane Stevens. The business address of Cathay Visions Enterprises Ltd. is 215-4800 No 3 Road, Richmond, British Columbia, V6X 3A6, Canada. |
| (3) | Represents 3,636 common shares held by Jacob Safarik; and 100,000 common shares held by BC Green Pharmaceuticals Inc., a British Columbia 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 10,446 common shares held by Bryan Safarik; 1,333 common shares held by Vancouver ATM Corp., a British Columbia corporation that is wholly-owned by Bryan Safarik; 3,333 common shares held by Skaag Fisheries Inc., a British Columbia corporation where Bryan Safarik serves as a director; and 100,000 common shares held by BC Green Pharmaceuticals Inc., a British Columbia 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. |
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| (5) | Represents 22,533 common shares held by John James Wilson; and 252,050 common shares and options and warrants exercisable for 13,056 common shares held by Catcher Investments Limited, a British Columbia 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 and options exercisable for 11,666 common shares held by Jason Mosberian. |
| (7) | Represents 105,367 common shares held jointly by Edward and Diana Safarik; 116,700 common shares held by Diana Safarik; 733 common shares held by Edward Safarik; 3,333 common shares held by Skaag Fisheries Inc., a British Columbia corporation that is wholly-owned by Edward and Diana Safarik; and 100,000 common shares held by BC Green Pharmaceuticals Inc., a British Columbia 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. |
| (8) | Information based solely on the most recently available Schedule 13G filed with the SEC on May 27, 2026, by YA II PN, Ltd. (“YA II”), YA Global Investments II (U.S.), LP (the “YA Feeder”), YAII GP, LP (the “YA GP”), YAII GP II, LLC (the “Yorkville GP”), Yorkville Advisors Global, LP (the “YA Advisor”), Yorkville Advisors Global II, LLC (the “YA Advisor GP”), Mark Angelo, and SC-Sigma Global Partners, LP (“SC-Sigma”) (collectively, the “YA II Persons”). Each of the YA II Persons has shared voting power and shared dispositive power with respect to the 400,000 common shares. YA II is beneficially owned by the YA Feeder. YA Advisor is the investment manager to YA II. YA Advisor GP is the general partner to the YA Advisor. YA GP is the general partner to the YA Feeder. Yorkville GP is the general partner to the YA GP. Mark Angelo makes the investment decisions on behalf of YA II. Accordingly, each of YA II, YA Feeder, the YA Advisor, the YA Advisor GP, the YA GP, the Yorkville GP and Mark Angelo may be deemed affiliates and therefore may be deemed to beneficially own the same number of common shares. YA GP is the general partner of SC-Sigma, which is an investor in YA II. Yorkville GP is the general partner of YA GP. The YA Advisor is the investment manager to SC-Sigma. Accordingly, SC-Sigma, the YA GP, the Yorkville GP, the YA Advisor, and Mark Angelo may be deemed affiliates and therefore may be deemed to beneficially own the same number of common shares. Each YA II Person disclaims beneficial ownership of any securities beneficially owned by each other YA II Person. The address for each of these entities and individuals is c/o 1012 Springfield Ave., Mountainside, NJ 07092. |
None of the major shareholders have different voting rights from other shareholders. As of August 13, 2026, a total of 2,471,561 common shares are held by registered holders in the United States, representing approximately 43.2% 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 remuneration 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.
On June 29, 2026, Cathay Visions Enterprises Ltd. converted 450 convertible debentures into 100,000 common shares valued at $450,000, and we issued the shares as directed to Alexander Wimmer and Keith Seabrook.
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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 fiscal 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$318,281 in compensation for his services as a director and executive officer.
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Common Shares
Our authorized capital consists of an unlimited number of Common Shares, with no par value, of which 5,725,867 common shares are issued and outstanding as at the date of this prospectus as fully paid and non-assessable. Holders of the Common Shares are entitled to vote at all meetings of the holders of the Common Shares and, subject to the rights of holders of any shares ranking in priority to or on a parity with the Common Shares, to participate ratably in any distribution of our property or assets upon liquidation or wind-up. There are no pre-emptive, redemption, purchase or conversion rights attaching to our Common Shares. There are no sinking fund provisions applicable to our Common Shares. Holders of our Common Shares have equal rights of participation in the dividends and other distributions of our cash, stock or property when, as and if declared thereon by our Board from time to time out of our assets or funds legally available therefor and shall have equal rights to receive our assets and funds available for distribution to shareholders in the event of any liquidation, dissolution or winding up of our affairs, whether voluntary or involuntary.
The Board is authorized to issue additional Common Shares on such terms and conditions and for such consideration as the Board may deem appropriate without further security holder action.
Warrants
As at the date of this prospectus, there are 171,222 warrants outstanding, each exercisable for one Common Share, the terms of which are set out below.
| Date of Issuance | Date of Expiry | Number of Warrants | Exercise Price per Common Share | |||||
| August 4, 2023 | August 4, 2026 | 3,333 | C$ | 15.00 | ||||
| August 29, 2023 | August 29, 2026 | 3,333 | C$ | 15.00 | ||||
| November 1, 2023 | November 1, 2026 | 3,333 | C$ | 15.00 | ||||
| August 15, 2024 | August 15, 2026 | 29,945 | C$ | 12.00 | ||||
| January 24, 2025 | January 24, 2027 | 21,945 | C$ | 12.00 | ||||
| July 17, 2025 | July 17, 2027 | 13,333 | C$ | 7.50 | ||||
| May 21, 2026 | May 21, 2031 | 96,000 | C$ | 7.50 | ||||
Share Options and RSRs
As at the date of this prospectus, there are 98,665 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 | |||
| 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 | January 15, 2026 | April 19, 2028 | |||
| 28,333 | C$15.00 | November 1, 2023 | 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.
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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 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 nor 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 do 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.
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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 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 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.
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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).
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.
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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
The common shares are listed on Nasdaq Capital Market under the symbol “OPTH,” on the CSE under the symbol “OPTI,” and on the FSE under the symbol “8BN”.
Transfer Agent and Registrar
The transfer agent and registrar for our common shares is Endeavor Trust Corporation with its principal office at Suite 702 - 777 Hornby Street, Vancouver, British Columbia, V6Z 1S4.
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 the date of this prospectus.
| 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) | 858,880 | (2) | C$ | 9.90 | (3) | 746,340 | ||||||
| Equity compensation plans not approved by securityholders | - | - | - | |||||||||
| Total | 858,880 | C$ | 9.90 | 746,340 | ||||||||
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 the date of this prospectus, there were 5,725,867 Common Shares issued and outstanding with the result that 858,888 were reserved for issuance under the Equity Plan. |
| 2. | Comprised of Share Options and no RSRs. |
| 3. | Representative of Share Options only. |
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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 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 advance 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.
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History of Securities Issuances
The following is a summary of our securities issuances in the past three years.
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 7,778 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.
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.
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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, an 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.
On May 21, 2026, the Company issued 2,400,000 common shares in its initial public offering in the United States.
On June 29, 2026, Cathay Visions Enterprises Ltd. converted 450 convertible debentures into 100,000 common shares valued at $450,000, and the Company issued the shares as directed to Alexander Wimmer and Keith Seabrook.
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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The following discussion of Canadian and U.S. federal income tax consequences of an investment in the common shares 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, 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 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 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 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. You should consult with your own tax advisors about tax consequences of an investment in common shares 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 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 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.
Dispositions of Common Shares
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), 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 net of any reasonable costs of disposition, is greater (or are less) than the adjusted cost base of the common share to the Non-Resident Holder.
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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 unless the common share 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 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 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 by a Non-Resident Holder that are or are deemed to be taxable Canadian property.
Non-Resident Holders whose common shares 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 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 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 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 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 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.
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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 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; |
| ● | 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 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 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 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. 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. 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 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 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.
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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. 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 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.
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.
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.
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Sale or Other Taxable Disposition of Common Shares
Upon the sale or other taxable disposition of common shares, 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 plus the fair market value of any property received and such U.S. Holder’s tax basis in such common shares 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 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 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 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 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 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 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. 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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This prospectus relates to the possible resale from time to time by Seven Knots, LLC of any or all of the common shares that may be issued by us to Seven Knots, LLC under the Purchase Agreement. For additional information regarding the issuance of common shares covered by this prospectus, see the section titled “The Seven Knots Transaction”. We are registering the shares of common shares pursuant to the provisions of the Registration Rights Agreement we entered into with Seven Knots, LLC on August 13, 2026 in order to permit the Selling Shareholder to offer the shares for resale from time to time. Except for the transactions contemplated by the Purchase Agreement and the Registration Rights Agreement, Seven Knots, LLC has not had any material relationship with us within the past three years. As used in this prospectus, the term “Selling Shareholder” means Seven Knots, LLC.
The table below presents information regarding the Selling Shareholder and the common shares that it may offer from time to time under this prospectus. This table is prepared based on information supplied to us by the Selling Shareholder, and reflects holdings as of August 13, 2026. The number of shares in the column “Maximum Number of Common Shares to be Offered Pursuant to this Prospectus” represents all of the common shares that the Selling Shareholder may offer under this prospectus. The Selling Shareholder may sell some, all or none of its shares in this offering. We do not know how long the Selling Shareholder will hold the shares before selling them, and we currently have no agreements, arrangements or understandings with the Selling Shareholder regarding the sale of any of the shares.
Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Exchange Act, and includes common shares with respect to which the Selling Shareholder has voting and investment power. The percentage of common shares beneficially owned by the Selling Shareholder prior to the offering shown in the table below is based on 5,725,867 common shares outstanding as of the date of this prospectus. Because the purchase price of the common shares issuable under the Purchase Agreement is determined on the applicable VWAP Purchase Date, with respect to a VWAP Purchase, the number of shares that may actually be sold by us to Seven Knots, LLC under the Purchase Agreement may be fewer than the number of shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the Selling Shareholder pursuant to this prospectus.
| Number of Common Shares Owned Prior to Offering | Maximum Number of Common Shares to be Offered Pursuant to this | Number of Common Shares Owned After Offering | ||||||||||||||||||
| Name of Selling Shareholder | Number(1) | Percent(2) | Prospectus | Number(3) | Percent(2) | |||||||||||||||
| Seven Knots, LLC(4) | 666,667 | 11.6 | % | 21,943,260 | 0 | -- | ||||||||||||||
| (1) | This number represents the 666,667 common shares into which the Seven Knots Commitment Notes we may issue to Seven Knots, LLC in consideration for entering into the Purchase Agreement with us may be converted. In accordance with Rule 13d-3(d) under the Exchange Act, we have excluded from the number of shares beneficially owned prior to the offering all of the shares that Seven Knots, LLC may be required to purchase under the Purchase Agreement, because the issuance of such shares is solely at our discretion and is subject to conditions contained in the Purchase Agreement, the satisfaction of which are entirely outside of Seven Knots, LLC’s control, including the registration statement that includes this prospectus becoming and remaining effective. Furthermore, the VWAP Purchase of common shares are subject to certain agreed upon maximum amount limitations set forth in the Purchase Agreement. Also, the Purchase Agreement prohibits us from issuing and selling any common shares to Seven Knots, LLC to the extent such shares, when aggregated with all other common shares then beneficially owned by Seven Knots, LLC, would cause Seven Knots, LLC’s beneficial ownership of our common shares to exceed the 4.99% Beneficial Ownership Cap. |
| (2) | Applicable percentage ownership is based on 5,725,867 common shares outstanding as of the date of this prospectus. |
| (3) | Assumes the sale of all shares being offered pursuant to this prospectus. |
| (4) | The business address of Seven Knots, LLC is 400 E 66th Street, New York, NY 10065. Seven Knots, LLC’s principal business is that of a private investor. Marissa J. Welner is the beneficial owner of 50% of the membership interests in Seven Knots, LLC. Marissa J. Welner has sole voting control and investment discretion over securities beneficially owned directly by Seven Knots, LLC. We have been advised that neither Ms. Welner nor Seven Knots, LLC is a member of the Financial Industry Regulatory Authority, or FINRA, or an independent broker-dealer, or an affiliate or associated person of a FINRA member or independent broker-dealer. The foregoing should not be construed in and of itself as an admission by Ms. Welner as to beneficial ownership of the securities beneficially owned directly by Seven Knots, LLC. |
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The common shares offered by this prospectus are being offered by the Selling Shareholder, Seven Knots, LLC. The shares may be sold or distributed from time to time by the Selling Shareholder directly to one or more purchasers or through brokers, dealers, or underwriters who may act solely as agents at market prices prevailing at the time of sale, at prices related to the prevailing market prices, at negotiated prices, or at fixed prices, which may be changed. The sale of our common shares offered by this prospectus could be effected in one or more of the following methods:
| ● | ordinary brokers’ transactions; |
| ● | transactions involving cross or block trades; |
| ● | through brokers, dealers, or underwriters who may act solely as agents; |
| ● | “at the market” into an existing market for our common shares; |
| ● | in other ways not involving market makers or established business markets, including direct sales to purchasers or sales effected through agents; |
| ● | in privately negotiated transactions; or |
| ● | any combination of the foregoing. |
In order to comply with the securities laws of certain states, if applicable, the shares may be sold only through registered or licensed brokers or dealers. In addition, in certain states, the shares may not be sold unless they have been registered or qualified for sale in the state or an exemption from the state’s registration or qualification requirement is available and complied with.
Seven Knots, LLC is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act.
Seven Knots, LLC has informed us that it intends to use one or more registered broker-dealers to effectuate all sales, if any, of our common shares that it has acquired and may in the future acquire from us pursuant to the Purchase Agreement. Such sales will be made at prices and at terms then prevailing or at prices related to the then current market price. Each such registered broker-dealer will be an underwriter within the meaning of Section 2(a)(11) of the Securities Act. Seven Knots, LLC has informed us that each such broker-dealer will receive commissions from Seven Knots, LLC that will not exceed customary brokerage commissions.
Brokers, dealers, underwriters or agents participating in the distribution of our common shares offered by this prospectus may receive compensation in the form of commissions, discounts, or concessions from the purchasers, for whom the broker-dealers may act as agent, of the shares sold by the selling shareholder through this prospectus. The compensation paid to any such particular broker-dealer by any such purchasers of our common shares sold by the selling shareholder may be less than or in excess of customary commissions. Neither we nor the Selling Shareholder can presently estimate the amount of compensation that any agent will receive from any purchasers of our common shares sold by the Selling Shareholder.
We know of no existing arrangements between the Selling Shareholder or any other shareholder, broker, dealer, underwriter or agent relating to the sale or distribution of our common shares offered by this prospectus.
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We may from time to time file with the SEC one or more supplements to this prospectus or amendments to the registration statement of which this prospectus forms a part to amend, supplement or update information contained in this prospectus, including, if and when required under the Securities Act, to disclose certain information relating to a particular sale of shares offered by this prospectus by the Selling Shareholder, including the names of any brokers, dealers, underwriters or agents participating in the distribution of such shares by the Selling Shareholder, any compensation paid by the Selling Shareholder to any such brokers, dealers, underwriters or agents, and any other required information.
We will pay the expenses incident to the registration under the Securities Act of the offer and sale of our common shares covered by this prospectus by the Selling Shareholder. As consideration for its irrevocable commitment to purchase our common shares under the Purchase Agreement, we have issued or will issue to Seven Knots, LLC the Seven Knots Commitment Notes in accordance with the Purchase Agreement. We have also paid to Seven Knots, LLC $35,000 in cash as reimbursement for the reasonable, out-of-pocket expenses incurred by Seven Knots, LLC, including the legal fees and disbursements of Seven Knots, LLC’s legal counsel, in connection with its due diligence investigation of us and in connection with the preparation, negotiation and execution of the Purchase Agreement.
We also have agreed to indemnify Seven Knots, LLC and certain other persons against certain liabilities in connection with the offering of our common shares offered hereby, including liabilities arising under the Securities Act or, if such indemnity is unavailable, to contribute amounts required to be paid in respect of such liabilities. Seven Knots, LLC has agreed to indemnify us against liabilities under the Securities Act that may arise from certain written information furnished to us by Seven Knots, LLC specifically for use in this prospectus or, if such indemnity is unavailable, to contribute amounts required to be paid in respect of such liabilities. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons, we have been advised that in the opinion of the SEC this indemnification is against public policy as expressed in the Securities Act and is therefore, unenforceable.
We estimate that the total expenses for the offering will be approximately $3.0 million, including the fee payable to Joseph Gunnar & Co., LLC as placement agent in connection with the Purchase Agreement.
Seven Knots, LLC has represented to us that at no time prior to the date of the Purchase Agreement has Seven Knots, LLC or its agents, representatives or affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any short sale (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of our common shares or any hedging transaction, which establishes a net short position with respect to our common shares. Seven Knots, LLC has agreed that during the term of the Purchase Agreement, neither Seven Knots, LLC, nor any of its agents, representatives or affiliates will enter into or effect, directly or indirectly, any of the foregoing transactions.
We have advised the Selling Shareholder that it is required to comply with Regulation M promulgated under the Exchange Act. With certain exceptions, Regulation M precludes the Selling Shareholder, any affiliated purchasers, and any broker-dealer or other person who participates in the distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete. Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security. All of the foregoing may affect the marketability of the securities offered by this prospectus.
This offering will terminate on the date that all of our common shares offered by this prospectus have been sold by the Selling Shareholder.
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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.
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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 years 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 that 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 a registration statement on Form F-1 to register the resale of the securities described elsewhere in this prospectus. This prospectus is a part of that registration statement. As permitted by SEC rules, this prospectus does not contain all of the information included in the registration statement and the accompanying exhibits and schedules we file with the SEC. You may refer to the registration statement and the exhibits and schedules for more information about us and our securities.
Information and statements contained in this prospectus or any annex to this prospectus are qualified in all respects by reference to the copy of the relevant contract or other annex filed as an exhibit to the registration statement of which this prospectus forms a part.
Statements made in this prospectus concerning the contents of any contract, agreement or other document are not complete descriptions of all terms of these documents. If a document has been filed as an exhibit to the registration statement, we refer you to the copy of the document that has been filed for a complete description of its terms. Each statement in this prospectus relating to a document filed as an exhibit is qualified in all respects by the filed exhibit. You should read this prospectus and the documents that we have filed as exhibits to the registration statement of which this prospectus is a part in their entirety.
We are 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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F-1
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
May 19, 2026
1200 – 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, B.C., Canada V7Y 1G6
Telephone (604) 687-0947 Davidson-co.com
F-2
Consolidated financial statements
Year Ended September 30, 2025
(Expressed in Canadian Dollars)
F-3
Optimi Health Corp.
Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
| Note | September 30, 2025 $ | September 30, 2024 $ | ||||||||
| 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-4
Optimi Health Corp.
Consolidated Statements
of Loss and Comprehensive Loss
(Expressed in Canadian Dollars)
| Note | Year Ended September 30, 2025 $ | Year Ended September 30, 2024 $ | ||||||||
| 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-5
Optimi Health Corp.
Consolidated Statements of Cash Flows
(Expressed
in Canadian Dollars)
| Year Ended September 30, 2025 $ | Year Ended September 30, 2024 $ | |||||||
| 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-6
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-7
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 May 19, 2026, 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.
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.
F-8
Optimi Health Corp.
Notes to
the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| 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 going 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 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.
F-9
Optimi
Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
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 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.
F-10
Optimi Health Corp.
Notes to
the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| 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 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.
F-11
Optimi Health Corp.
Notes to
the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
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 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-12
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.
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.
F-13
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 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.
| (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.
F-14
Optimi
Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
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.
| 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.
F-15
Optimi Health Corp.
Notes to
the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| 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 | — | ||||||||
| 1,145,065 | 103,660 | |||||||||||
During the period ended September 30, 2025, the Company earned $14,313 (2024 - $2,665) in interest income.
| 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 | |||||||
F-16
Optimi Health Corp.
Notes to
the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| 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 | — | |||
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).
F-17
Optimi Health Corp.
Notes to
the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| 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 | ||||||
| 275,720 | 109,960 | |||||||
| 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.
F-18
Optimi Health Corp.
Notes to
the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
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 | |||
| 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-19
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 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.
F-20
Optimi Health Corp.
Notes to
the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| 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. |
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 | |||||
F-21
Optimi Health Corp.
Notes to
the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
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 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. |
F-22
Optimi Health Corp.
Notes to
the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| ● | 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 | |||||
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.
F-23
Optimi Health Corp.
Notes to
the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| 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 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-24
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.
| 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.
F-25
Optimi Health Corp.
Notes to the Consolidated Financial Statements
Year ended September 30, 2025
(Expressed in Canadian Dollars)
| 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 | 27.00 | % | 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 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-26
Condensed interim consolidated financial statements
Nine Month Period Ended June 30, 2026
(Expressed in Canadian Dollars)
Unaudited
F-27
Condensed Interim Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
| June 30, | September 30, | |||||||||
| 2026 | 2025 | |||||||||
| Note | $ | $ | ||||||||
| ASSETS | ||||||||||
| Current | ||||||||||
| Cash and cash equivalents | 3 | 13,073,333 | 1,145,065 | |||||||
| Accounts receivable | 49,472 | 95,054 | ||||||||
| Inventory | 4 | 293,052 | 310,388 | |||||||
| Prepaids and advances | 5 | 551,352 | 275,720 | |||||||
| Total current assets | 13,967,209 | 1,826,227 | ||||||||
| Deposits | 17,548 | 17,548 | ||||||||
| Deferred financing costs | - | 807,936 | ||||||||
| Plant and equipment | 6 | 11,724,202 | 12,380,190 | |||||||
| Right-of-use assets | 7 | 152,205 | 180,744 | |||||||
| Total assets | 25,861,164 | 15,212,645 | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Current | ||||||||||
| Accounts payable and accrued liabilities | 8 | 1,411,900 | 1,390,980 | |||||||
| Due to related parties | 13 | 1,584,178 | 524,326 | |||||||
| Deferred revenue | 9 | 82,505 | 207,759 | |||||||
| Current portion of lease liabilities | 7, 13 | 30,347 | 26,045 | |||||||
| Current portion of loans payable | 10, 13 | 1,979,000 | 2,884,500 | |||||||
| Convertible debentures | 11, 13 | 3,000,000 | 3,450,000 | |||||||
| Total current liabilities | 8,087,930 | 8,483,610 | ||||||||
| Lease liability | 7, 13 | 135,195 | 158,374 | |||||||
| Total liabilities | 8,223,125 | 8,641,984 | ||||||||
| Shareholders’ equity | ||||||||||
| Share capital | 12 | 47,593,324 | 31,691,943 | |||||||
| Reserves | 12 | 1,404,716 | 2,120,398 | |||||||
| Accumulated deficit | (31,360,001 | ) | (27,241,680 | ) | ||||||
| Total shareholders’ equity | 17,638,039 | 6,570,661 | ||||||||
| Total liabilities and shareholders’ equity | 25,861,164 | 15,212,645 | ||||||||
Approved and authorized by the Board on August 14, 2026 |
|||
| “Jason Mosberian” | Director | “John James Wilson” | Director |
The accompanying notes are an integral part of these condensed interim consolidated financial statements
F-28
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
(Expressed in Canadian Dollars)
| 9 – month Period Ended June 30, 2026 | 9 – month Period Ended June 30, 2025 | 3 – month period ended June 30, 2026 | 3 – month period ended June 30, 2025 | |||||||||||||||
| Note | $ | $ | $ | $ | ||||||||||||||
| Revenue | 239,700 | 490,330 | 140,200 | 196,389 | ||||||||||||||
| Cost of sales | 4 | (83,613 | ) | (94,227 | ) | (73,577 | ) | (14,456 | ) | |||||||||
| Gross margin | 156,087 | 396,103 | 66,623 | 181,933 | ||||||||||||||
| Expenses | ||||||||||||||||||
| Advertising, promotion and public relations | 34,531 | 41,148 | 24,496 | 1,729 | ||||||||||||||
| Amortization and depreciation | 6, 7 | 721,386 | 679,622 | 229,859 | 226,601 | |||||||||||||
| Bank charges and interest | 7,10,11 | 787,245 | 329,192 | 271,680 | 109,744 | |||||||||||||
| Consulting | 13 | 940,620 | 614,887 | 403,093 | 198,383 | |||||||||||||
| Consumables, supplies and overhead | 154,488 | 149,736 | 59,523 | 17,572 | ||||||||||||||
| Insurance | 271,917 | - | 146,627 | - | ||||||||||||||
| Investor relations | 1,166,558 | 136,430 | 708,042 | 38,036 | ||||||||||||||
| Office, rent and administration | 137,973 | 97,305 | 45,487 | 18,348 | ||||||||||||||
| Professional fees | 82,505 | 309,977 | 48,372 | 171,871 | ||||||||||||||
| Research and development | 204,801 | 203,498 | 117,507 | 1,500 | ||||||||||||||
| Share-based compensation | 12, 13 | 151,454 | 45,940 | 37,823 | 1,120 | |||||||||||||
| Shipping | 55,981 | 62,189 | 41,043 | 16,765 | ||||||||||||||
| Transfer agent and filing fees | 197,827 | 115,184 | 83,785 | 40,450 | ||||||||||||||
| Travel and accommodation | 54,983 | 26,305 | 32,425 | 7,408 | ||||||||||||||
| Wages and benefits | 753,267 | 858,934 | 223,236 | 239,931 | ||||||||||||||
| (5,715,536 | ) | (3,670,347 | ) | (2,472,998 | ) | (1,089,458 | ) | |||||||||||
| Interest and other income | 3 | 7,358 | 7,629 | 1,945 | 207 | |||||||||||||
| Debt forgiveness | 13 | - | 903,951 | - | - | |||||||||||||
| Loss and comprehensive loss for the period | (5,552,091 | ) | (2,362,664 | ) | (2,404,430 | ) | (907,318 | ) | ||||||||||
| Loss per share | ||||||||||||||||||
| Basic and diluted | $ | (1.55 | ) | $ | (0.74 | ) | $ | (0.56 | ) | (0.28 | ) | |||||||
| Weighted average number of common shares outstanding | ||||||||||||||||||
| Basic and diluted | 3,577,147 | 3,192,117 | 4,296,801 | 3,221,272 | ||||||||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
F-29
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
9-month Period Ended | 9-month Period Ended | |||||||||
| $ | $ | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||
| Net loss for the period | (5,552,091 | ) | (2,362,664 | ) | ||||||
| Add back non-cash items | ||||||||||
| Amortization and depreciation | 721,386 | 679,622 | ||||||||
| Share-based compensation | 151,454 | 45,940 | ||||||||
| Loan accretion | 94,500 | - | ||||||||
| Lease interest | 19,823 | 134,500 | ||||||||
| Debt forgiveness | - | 1,472 | ||||||||
| (903,951 | ) | |||||||||
| Changes in non-cash working capital items | ||||||||||
| Accounts Receivable | 45,582 | 130,626 | ||||||||
| Inventory | 17,336 | 235,881 | ||||||||
| Deferred revenue | (125,254 | ) | 59,698 | |||||||
| Prepaids and advances | (275,632 | ) | 175,610 | |||||||
| Due to related party | 1,059,852 | 507,421 | ||||||||
| Accounts payable and accrued liabilities | 20,920 | 307,231 | ||||||||
| Cash used in operating activities | (3,822,124 | ) | (1,249,866 | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||
| Plant and equipment expenditures | (36,859 | ) | (15,551 | ) | ||||||
| Cash used in investing activities | (36,859 | ) | (15,551 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||
| Shares issued for public offering | 20,700,000 | - | ||||||||
| Share issue costs | (3,874,049 | ) | - | |||||||
| Repayment of loans payable | (1,000,000 | ) | ||||||||
| Shares issued for private placement | - | 395,000 | ||||||||
| Subscriptions received in advance | - | 908,000 | ||||||||
| Payment of lease obligations | (38,700 | ) | (31,500 | ) | ||||||
| Deferred financing costs | - | (21,210 | ) | |||||||
| Cash provided by financing activities | 15,787,251 | 1,250,290 | ||||||||
| Change in cash and cash equivalents during the period | 11,928,268 | (15,127 | ) | |||||||
| Cash and cash equivalents, beginning of period | 1,145,065 | 103,660 | ||||||||
| Cash and cash equivalents, end of period | 13,073,333 | 88,533 | ||||||||
| SUPPLEMENTAL INFORMATION | ||||||||||
| Plant and equipment costs included in accounts payable | $ | 14,381 | $ | 82,631 | ||||||
| Deferred financing costs reclassified to share-issue costs | $ | 807,936 | - | |||||||
| Shares issued for settlement of debt | 450,000 | $ | 98,502 | |||||||
| Transfer from reserves to deficit on cancellation of options | $ | 1,433,770 | $ | 34,429 | ||||||
| Transfer from reserves to share capital on exercise of RSRs | $ | 40,238 | - | |||||||
| Deferred financing costs included in accounts payable | - | $ | 407,771 | |||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
F-30
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
(Expressed in Canadian Dollars)
| Common | Share Capital | Reserves | Accumulated Deficit | Total Equity | ||||||||||||||||
| Shares | $ | $ | $ | $ | ||||||||||||||||
| Balance, October 1, 2024 | 3,155,446 | 31,158,441 | 2,028,102 | (23,610,831 | ) | 9,575,712 | ||||||||||||||
| Shares issued for 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 cancellation of options | - | - | (34,429 | ) | 34,429 | - | ||||||||||||||
| Share-based compensation | 6,667 | 40,000 | 5,940 | - | 45,940 | |||||||||||||||
| Loss and comprehensive loss for the period | - | - | - | (2,362,664 | ) | (2,362,664 | ) | |||||||||||||
| Balance, June 30, 2025 | 3,221,274 | 31,691,943 | 1,999,613 | (25,939,066 | ) | 7,752,490 | ||||||||||||||
| Balance, October 1, 2025 | 3,221,274 | 31,691,943 | 2,120,398 | (27,241,680 | ) | 6,570,661 | ||||||||||||||
| Rounding partial shares – share consolidation | (32 | ) | - | - | - | - | ||||||||||||||
| Shares issued for public offering | 2,400,000 | 20,700,000 | - | - | 20,700,000 | |||||||||||||||
| Share-issue costs | - | (5,288,857 | ) | 606,872 | - | (4,681,985 | ) | |||||||||||||
| Shares issued on conversion of RSRs | 4,625 | 40,238 | (40,238 | ) | - | - | ||||||||||||||
| Shares issued on conversion of convertible debt | 100,000 | 450,000 | - | - | 450,000 | |||||||||||||||
| Transfer from reserves to deficit on cancellation of options | - | - | (1,433,770 | ) | 1,433,770 | - | ||||||||||||||
| Share-based compensation | - | - | 151,454 | - | 151,454 | |||||||||||||||
| Loss and comprehensive loss for the period | - | - | - | (5,552,091 | ) | (5,552,091 | ) | |||||||||||||
| Balance, June 30, 2026 | 5,725,867 | 47,593,324 | 1,404,716 | (31,360,001 | ) | 17,638,039 | ||||||||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
F-31
Notes to the Condensed interim consolidated financial statements
Period ended June 30, 2026
(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.
On May 19, 2026, the Company executed a 1 for 30 reverse stock split (the “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.
The registered and records office is located at 2054 Dowad Drive, Squamish, British Columbia, Canada, V8B 0Y8.
Management has assessed the Company’s ability to continue as a going concern and has concluded that the Company has sufficient cash resources and expected cash flows to continue its operations and meet its obligations as they become due for at least the next twelve months from the date of these financial statements. 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.
| 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 August 14, 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 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 June 30, 2026, the Company has 100% ownership interest in Optimi Labs Inc. and Optimi Nutraceuticals Corp.
F-32
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended June 30, 2026
(Expressed in Canadian Dollars)
| 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 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.
F-33
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended June 30, 2026
(Expressed in Canadian Dollars)
Inventory
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 | June 30, 2026 $ | September 30, 2025 $ | |||||||||
| Cash | N/A | Cash | 13,068,333 | 1,140,065 | ||||||||
| Term deposit – prime – 2% | Demand | Cash equivalent | 5,000 | 5,000 | ||||||||
| 13,073,333 | 1,145,065 | |||||||||||
During the period ended June 30, 2026, the Company earned $7,358 (June 30, 2025 - $7,629) in interest income.
| 4. | Inventory |
Inventory consists of the Company’s finished goods functional mushroom nutraceutical products, drug products, harvested mushrooms and raw materials.
| June 30, 2026 $ | September 30, 2025 $ | |||||||
| Finished goods drug products | 37,776 | 47,812 | ||||||
| Mushroom biomass | 242,576 | 262,576 | ||||||
| Raw materials | 12,700 | - | ||||||
| 293,052 | 310,388 | |||||||
As at June 30, 2026, the Company holds 156kg (September 30, 2025 - 156kg) in harvested mushroom biomass.
Cost of sales consists of the following:
| June 30, 2026 $ | June 30, 2025 $ | |||||||
| Finished goods drug products | 83,613 | 24,318 | ||||||
| Finished goods nutraceutical products | - | 65,741 | ||||||
| Other | - | 4,168 | ||||||
| 83,613 | 94,227 | |||||||
F-34
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended June 30, 2026
(Expressed in Canadian Dollars)
| 5. | Prepaids and Advances |
Prepaids and advances consist of the following:
| June 30, 2026 $ | September 30, 2025 $ | |||||||
| Prepaid consulting fees | - | 17,708 | ||||||
| Prepaid insurance | - | 83,875 | ||||||
| Prepaid inventory deposit | 126,000 | - | ||||||
| Prepaid investor relation fees | 452,352 | 148,291 | ||||||
| Prepaid licensing fees | - | 13,415 | ||||||
| Prepaid transfer agent and filing fees | - | 12,431 | ||||||
| 551,352 | 275,720 | |||||||
| 6. | 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 | 36,859 | - | 36,859 | |||||||||
| June 30, 2026 | 1,806,737 | 13,370,246 | 15,176,983 | |||||||||
| Accumulated depreciation | ||||||||||||
| September 30, 2025 | 1,021,389 | 1,738,545 | 2,759,934 | |||||||||
| Additions | 292,840 | 400,007 | 692,847 | |||||||||
| June 30, 2026 | 1,314,229 | 2,138,552 | 3,452,781 | |||||||||
| Net book value | ||||||||||||
| September 30, 2025 | 748,489 | 11,631,701 | 12,380,190 | |||||||||
| June 30, 2026 | 492,508 | 11,231,694 | 11,724,202 | |||||||||
| 7. | 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 13). 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 | (28,539 | ) | ||
| ROU asset as at June 30, 2026 | 152,205 | |||
F-35
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended June 30, 2026
(Expressed in Canadian Dollars)
| 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 | (38,700 | ) | ||
| Lease interest | 19,823 | |||
| Lease liability as at June 30, 2026 | 165,542 | |||
| June 30, 2026 $ | September 30, 2025 $ | |||||||
| Current portion | 30,347 | 26,045 | ||||||
| Long-term | 135,195 | 158,374 | ||||||
| 165,542 | 184,419 | |||||||
| 8. | Accounts payable and accrued liabilities |
Accounts payable and accrued liabilities are composed of the following:
| June 30, 2026 $ | September 30, 2025 $ | |||||||
| Accounts payable | 1,344,400 | 1,185,684 | ||||||
| Accrued liabilities | 67,500 | 205,296 | ||||||
| 1,411,900 | 1,390,980 | |||||||
| 9. | 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, 2025 | 207,759 | |||
| Deposits received | 120,000 | |||
| Revenue fulfilled | (245,254 | ) | ||
| Deferred revenue as at June 30, 2026 | 82,505 | |||
F-36
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended June 30, 2026
(Expressed in Canadian Dollars)
| 10. | Loans payable |
The Company owes $2,000,000 loans payable with an interest rate of 7.5% secured against the assets of the Company.
During the period ended June 30, 2026, the Company repaid $1,000,000 in loans, recorded $281,643 (2025 - $168,750) in interest expense of which $322,050 (2025 - $168,750) was accrued interest payable recorded in accounts payable and accrued liabilities, and recorded loan accretion of $94,500 (2025 - $134,500) in relation to these loans. Subsequent to June 30, 2026, the Company repaid an additional $1,000,000 in loans (Note 18).
| Loans | $ | |||
| Loans as at September 30, 2024 | 2,718,500 | |||
| Loan accretion | 166,000 | |||
| Loans as at September 30, 2025 | 2,884,500 | |||
| Loan repayment | (1,000,000 | ) | ||
| Loan accretion | 94,500 | |||
| Loans as at June 30, 2026 | 1,979,000 | |||
| Classified as current | 1,979,000 | |||
| Classified as long-term | - | |||
The maturity dates of these loans are as follows:
| Maturity date | $ | |||
| August 4, 2026 | 1,000,000 | |||
| August 31, 2026 | 1,000,000 | |||
| 2,000,000 | ||||
| 11. | 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 convertible debt was issued to two corporations controlled by directors of the Company (Note 13). 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 June 30, 2026, the Company settled $450,000 in convertible debt through issuance of 100,000 common shares (Note 12). During the period ended June 30, 2026, the Company accrued interest of $387,062 (2025 - $nil) which is recorded as due to related party at June 30, 2026.
| 12. | 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 June 30, 2026 consisted of 5,725,867 common shares without par value.
During the period ended June 30, 2026, the Company:
| ● | Issued 4,625 common shares valued at $40,238 on exercise of restricted share rights (“RSRs”). |
| ● | Issued 2,400,000 common shares in relation to an underwritten public offering to list its common shares on the Nasdaq Capital Market for gross proceeds of $20,700,000 (USD$15,000,000), before deducting underwriting discounts and offering expenses. In connection with the offering, the Company issued 96,000 warrants to the underwriter exercisable into a common share at $10.35 (USD$7.5) per warrant. |
| ● | Issued 100,000 common shares on settlement of $450,000 in convertible debt (Note 11). |
F-37
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended June 30, 2026
(Expressed in Canadian Dollars)
During the period ended June 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. |
| c) | Warrants |
During the period ended June 30, 2026, the Company issued 96,000 warrants valued at $606,872 recorded as share-issue costs in relation to the underwritten public offering. The weighted average inputs to the Black-Scholes pricing model for the options issued above were as follows: stock price – $8.63, exercise price – $10.35, expected life – 5 years, volatility – 100%, and discount rate – 3.14%.
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 | 141,888 | $ | 11.79 | |||||
| Issued | 96,000 | $ | 10.35 | |||||
| Expired | (66,666 | ) | $ | 12.00 | ||||
| Balance, June 30, 2026 | 171,222 | $ | 10.90 | |||||
The following is a summary of warrants as at June 30, 2026:
| Expiry date | Exercise price | Number of warrants | Weighted average remaining contractual life (years) | |||||||||
| August 4, 2026 (1) | $ | 15.00 | 3,333 | 0.10 | ||||||||
| August 29, 2026 | $ | 15.00 | 3,333 | 0.16 | ||||||||
| November 1, 2026 | $ | 15.00 | 3,333 | 0.34 | ||||||||
| August 15, 2026 | $ | 12.00 | 29,945 | 0.13 | ||||||||
| January 24, 2027 | $ | 12.00 | 21,945 | 0.57 | ||||||||
| July 17, 2027 | $ | 7.50 | 13,333 | 1.05 | ||||||||
| May 21, 2031 | $ | 10.35 | 96,000 | 4.89 | ||||||||
| $ | 10.90 | 171,222 | 2.93 | |||||||||
| (1) | 3,333 warrants expired subsequent to the period ended June 30, 2026 (Note 18). |
| 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.
F-38
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended June 30, 2026
(Expressed in Canadian Dollars)
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 period ended June 30, 2026, the Company granted 28,333 stock options with an exercise price of $15.00 per option and a term of 5 years. These options vest 25% on the grant date and 25% every year thereafter. The weighted average inputs to the Black-Scholes pricing model for the options issued above were as follows: stock price – $8.70, exercise price – $15.00, expected life – 5 years, volatility – 100%, and discount rate – 2.95%.
During the period ended June 30, 2025, the Company granted no stock options.
During the period ended June 30, 2026, the Company recorded $77,672 (2025 - $1,120) 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 | |||||
| Granted | 28,333 | $ | 15.00 | |||||
| Expired | (117,668 | ) | $ | 40.30 | ||||
| Balance, June 30, 2026 | 98,665 | $ | 9.90 | |||||
The following is a summary of stock options as at June 30, 2026:
| Expiry date | Exercise price | Number of options | Options exercisable | Weighted average remaining contractual life (years) | ||||||||||||
| March 29, 2028 | $ | 19.50 | 333 | 333 | 1.75 | |||||||||||
| April 26, 2028 | $ | 19.50 | 3,333 | 3,333 | 1.82 | |||||||||||
| November 1, 2028 | $ | 19.50 | 3,333 | 3,333 | 2.34 | |||||||||||
| August 20, 2028 | $ | 4.95 | 23,333 | 23,333 | 2.14 | |||||||||||
| August 20, 2028 | $ | 6.00 | 20,000 | 20,000 | 2.14 | |||||||||||
| August 20, 2028 | $ | 9.00 | 20,000 | 20,000 | 2.14 | |||||||||||
| January 15, 2031 | $ | 15.00 | 28,333 | 7,083 | 4.55 | |||||||||||
| $ | 9.90 | 98,665 | 77,415 | 2.83 | ||||||||||||
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 period ended June 30, 2026, the Company granted 18,500 RSRs to directors, officers, consultants, and advisors valued at $160,950. These RSRs vest as follows: 25% on the grant date and 25% every year thereafter. During the period ended June 30, 2026, the Company recorded $73,782 (June 30, 2025 - $nil) in share-based compensation related to the vesting of these RSRs. During the period ended June 30, 2026, 4,625 (June 30, 2025 – nil) RSRs vested and were converted into common shares.
F-39
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended June 30, 2026
(Expressed in Canadian Dollars)
| 13. | Key Management Compensation and Related Party Transactions |
During the period ended June 30, 2026 and 2025, 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:
| June 30, 2026 $ | June 30, 2025 $ | |||||||
| Consulting fees | 431,779 | 449,234 | ||||||
| Share-based compensation | 45,742 | - | ||||||
| 477,521 | 449,234 | |||||||
The Company has entered into a lease agreement with BC Green, as described in Note 7.
As at June 30, 2026, there was $1,584,178 (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 period ended March 31, 2025, the Company received debt forgiveness of $903,951 from related parties.
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 June 30, 2026, the Company owed $1,000,000 (September 30, 2025 - $1,000,000) in principal and $322,050 (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 11). During the period ended June 30, 2026, the Company settled $450,000 in convertible debt through issuance of 100,000 common shares.
As at June 30, 2026, the Company owed $3,000,000 (September 30, 2025 - $3,450,000) in principal and $470,692 (September 30, 2025 $96,175) in accrued interest in relation to this loan recorded in due to related parties.
| 14. | 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.
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.
F-40
Optimi Health Corp.
Notes to the Condensed interim consolidated financial statements
Period ended June 30, 2026
(Expressed in Canadian Dollars)
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.
| 15. | 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 June 30, 2026.
| 16. | Segment Reporting |
For the period ended June 30, 2026, 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 June 30, 2026 are all in Canada.
| 17. | Commitments |
The Company has lease commitments for the Princeton Facilities (Note 7). Cash commitments for minimum lease payments in relation to the facility leases as at June 30, 2026, are payable as follows:
| $ | ||||
| Within 1 year | 53,148 | |||
| Between 1 year and 5 years | 169,211 | |||
| 222,359 | ||||
| 18. | Events after the Reporting Period |
Subsequent to June 30, 2026, the Company:
| ● | Had 3,333 warrants expire unexercised (Note 12) |
| ● | Repaid $1,000,000 in loans (Note 10) |
F-41
Up to 21,943,260 Common Shares
PROSPECTUS
, 2026
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.
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.
II-1
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.
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.
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.
II-2
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.
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.
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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, an 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 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.
On June 29, 2026, Cathay Visions Enterprises Ltd. converted 450 convertible debentures into 100,000 common shares valued at $450,000, and the Registrant issued the shares as directed to Alexander Wimmer and Keith Seabrook. 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 |
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| (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 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
| * | Filed herewith |
| † | 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 |
II-7
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 August 14, 2026.
| Optimi Health Corp. | ||
| By: | /s/ Dane Stevens | |
| Name: | Dane Stevens | |
| Title: | Chief Executive Officer, Chief Marketing Officer and Director | |
POWER OF ATTORNEY AND SIGNATURES
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Dane Stevens and Jacob Safarik, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign the Registration Statement on Form F-8 of Optimi Health Corp., and any or all amendments (including post-effective amendments), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite or necessary to be done in connection therewith and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement on Form F-1 has been signed by the following persons on August 14, 2026 in the capacities indicated.
| Signature | Title | |
| /s/ Dane Stevens | Chief Executive Officer, Chief Marketing Officer and Director | |
| Dane Stevens | (principal executive officer) | |
| /s/ Jacob Safarik | Interim Chief Financial Officer and Director | |
| Jacob Safarik | (principal financial and accounting officer) | |
| /s/ Bryan Safarik | Chief Operating Officer and Director | |
| Bryan Safarik | ||
| /s/ John James Wilson | Chairman and Director | |
| John James Wilson | ||
| /s/ Jason Mosberian | Director | |
| Jason Mosberian |
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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 August 14, 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 5.1
 | |
| August 14, 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 potential resale from time to time of up to 21,943,260 common shares, with no par value, of the Company (the “Common Shares”) by Seven Knots, LLC, a Montana limited liability company (the “Selling Shareholder”). The Common Shares being offered by the Selling Shareholder are outstanding or issuable pursuant to a certain common shares purchase agreement, dated August 13, 2026, by and between the Company and the Selling Shareholder (the “Purchase Agreement”), and certain convertible promissory notes representing an aggregate principal amount of US$2,000,000 issued or to be issued to the Selling Shareholder (the “Promissory Note”).
Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Registration Statement.
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 Purchase Agreement and the Promissory Note.
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 Purchase Agreement, the Promissory Note, the Registration Statement, and the issue and sale of the Common Shares to the Selling Shareholder; and |
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.
| |
| 3. | a certificate of good standing in respect of the Company issued under the Business Corporations Act (British Columbia) on August 14, 2026 (the “Certificate of Good Standing”). |
| 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 Common Shares, 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 issuance, sale and/or delivery of the Common Shares to which the Company is party: (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; |
| 3. | all Common Shares will be offered and sold in compliance with applicable United States federal and state securities laws, the Purchase 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 Common Shares; and |
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| 5. | if any obligation in connection with the offer and sale of the Common Shares 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 Common Shares having been issued as “fully paid and non-assessable”, such opinion assumes that all required consideration (in whatever form) has been paid for such Common Shares. 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 Good Standing, 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 Common Shares to be sold by the Selling Shareholder pursuant to the Purchase Agreement have been duly authorized, and, when issued to the Selling Shareholder in accordance with and in the manner described in the Registration Statement and the Purchase Agreement, will be validly issued, fully paid and non-assessable common shares in the capital of the Company. |
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 the use of our name under the heading “Legal Matters” insofar as it relates to 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
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Exhibit 10.14
COMMON Shares PURCHASE AGREEMENT
This COMMON SHARES PURCHASE AGREEMENT is made and entered into as of August 13, 2026 (this “Agreement”), by and among Seven Knots, LLC, a Montana limited liability company (the “Investor”), and Optimi Health Corp., a corporation incorporated under the Business Corporation Act (British Columbia) (the “Company”).
RECiTALS
WHEREAS, the parties desire that, upon the terms and subject to the conditions and limitations set forth herein, the Company may issue and sell to the Investor, from time to time as provided herein, and the Investor shall purchase from the Company, up to $100 million of the Company’s common shares, no par value (the “Common Shares”);
WHEREAS, in consideration for the Investor’s execution and delivery of this Agreement, the Company shall issue to the Investor the Commitment Notes in accordance with the terms and subject to the conditions of this Agreement; and
WHEREAS, the parties hereto are concurrently entering into a Registration Rights Agreement in the form attached as Exhibit A hereto (the “Registration Rights Agreement”), pursuant to which the Company shall provide Investor with certain registration rights related to the shares issued under this Agreement, upon the terms and subject to the conditions set forth therein.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:
I.
PURCHASE AND SALE OF COMMON SHARES
Section 1.1. Purchase and Sale of Shares. Upon the terms and subject to the conditions of this Agreement, during the Investment Period, the Company, in its sole discretion, shall have the right, but not the obligation, to issue and sell to the Investor, and the Investor shall purchase from the Company, up to $100 million of the Company’s Common Shares (the “Total Purchase Commitment”), to the extent applicable under Section 2.4, by the delivery to the Investor of VWAP Purchase Notices as provided in Article II.
Section 1.2. Closing Date; Settlement Dates. This Agreement shall become effective and binding (the “Closing”) upon (a) the issuance by the Company of the Initial Commitment Note to the Investor or its designees as provided in Sections 6.1 and 9.1, (b) the delivery of counterpart signature pages of this Agreement and the Registration Rights Agreement executed by each of the parties hereto and thereto, and (c) the delivery of all other documents, instruments and writings required to be delivered at the Closing, in each case as provided in Section 6.1, by electronic communication, at 1:00 p.m., New York City time, on the Closing Date, or such other time and place as the parties hereto shall agree. In consideration of, and in express reliance upon, the representations, warranties and covenants contained in, and upon the terms and subject to the conditions of, this Agreement, during the Investment Period the Company, at its sole option and discretion, may issue and sell to the Investor, and, if the Company elects to so issue and sell, the Investor shall purchase from the Company, the Shares in respect of each VWAP Purchase (each, a “Settlement”). The payment for the Shares in respect of each VWAP Purchase shall occur (i) on the third (3rd) Trading Day following delivery of the Shares by the Company, and (ii) in accordance with Article II hereof; provided, that all of the conditions precedent in Article VII shall have been fulfilled at the applicable times set forth in Article VII.
Section 1.3. Initial Public Announcements and Required Filings. The Company shall issue a press release upon the entering into of the Transaction Documents and upon the issuance of the Shares and file a material change report, if and when required, and within four business days following the date hereof, file with the Commission a Current Report on Form 6-K describing the material terms of the transactions contemplated by the Transaction Documents, including, without limitation, the issuance to the Investor of two (2) convertible promissory notes, in substantially the form attached as Exhibit D (the “Commitment Notes”), each of which shall be convertible into Common Shares (such Common Shares, the “Conversion Shares”) on the terms and subject to the conditions set forth therein, pursuant to the terms of this Agreement, and attaching as exhibits thereto copies of each of this Agreement, the Registration Rights Agreement, and, if applicable, any press release issued by the Company disclosing the execution of this Agreement by the Company (including all exhibits thereto, the “Current Report”). The Company shall provide the Investor a reasonable opportunity to comment on a draft of the Current Report prior to filing the Current Report with the Commission and shall give due consideration to all such comments. From and after the filing of the Current Report with the Commission, the Company shall have publicly disclosed all material, nonpublic information delivered to the Investor (or the Investor’s representatives or agents) by the Company, any of its Subsidiaries, or any of their respective officers, directors, employees, agents or representatives (if any) in connection with the transactions contemplated by the Transaction Documents. The Investor covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company as described in this Section 1.3, the Investor shall maintain the confidentiality of all disclosures made to it in connection with the transactions contemplated by the Transaction Documents (including the existence and terms of the transactions), except that the Investor may disclose the terms of such transactions to its financial, accounting, legal and other advisors (provided that the Investor directs such Persons to maintain the confidentiality of such information). The Company shall use its commercially reasonable efforts to prepare and, as soon as practicable, but in no event later than the applicable Filing Deadline, file with the Commission the Registration Statement covering only the resale by the Investor of the Registrable Securities in accordance with the Securities Act and the Registration Rights Agreement. At or before 8:30 a.m. (New York City time) on the Trading Day immediately following the Effective Date of the Registration Statement, the Company shall use its commercially reasonable efforts to file with the Commission in accordance with Rule 424(b) under the Securities Act the final Prospectus to be used in connection with sales pursuant to such Registration Statement (or post-effective amendment thereto).
II.
PURCHASE TERMS
Subject to the satisfaction or (to the extent permitted by applicable law) waiver of the conditions set forth in this Agreement, the parties agree (unless otherwise mutually agreed upon by the parties in writing) as follows:
Section 2.1. Reserved.
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Section 2.2. VWAP Purchases. Upon the initial satisfaction of all of the conditions set forth in set forth in Section 6.2 (the “Commencement” and the date of initial satisfaction of all of such conditions, the “Commencement Date”) and from time to time thereafter, and on any business day selected by the Company where the Closing Sale Price on the applicable national market, or quotation service is equal to or greater than $1.00, subject to the satisfaction of all of the conditions set forth in Section 6.3, in addition to purchases of Shares as described in Section 2.1, the Company shall also have the right, but not the obligation, to direct the Investor, by its delivery to the Investor of a VWAP Purchase Notice, to purchase the applicable VWAP Purchase Share Amount, not to exceed the applicable VWAP Purchase Maximum Amount, at the applicable VWAP Purchase Price therefor on the applicable VWAP Purchase Date in accordance with this Agreement (each such purchase, a “VWAP Purchase”); provided, however, that the Investor’s aggregate committed obligation under a VWAP Purchase shall not exceed $2,000,000 in the aggregate for such VWAP Purchase. The Company may deliver a VWAP Purchase Notice, in the Form attached hereto as Annex 2.2, to the Investor only if all Shares subject to all prior VWAP Purchase Notices have theretofore been received by the Investor as DWAC Shares. The Investor is obligated to accept each VWAP Purchase Notice prepared and delivered by the Company in accordance with the terms of and subject to the satisfaction of the conditions contained in this Agreement. If the Company delivers any VWAP Purchase Notice directing the Investor to purchase a VWAP Purchase Share Amount in excess of the applicable VWAP Purchase Maximum Amount that the Company is then permitted to include in such VWAP Purchase Notice, such VWAP Purchase Notice shall be void ab initio to the extent of the amount by which the VWAP Purchase Share Amount set forth in such VWAP Purchase Notice exceeds such applicable VWAP Purchase Maximum Amount, and the Investor shall have no obligation to purchase such excess Shares in respect of such VWAP Purchase Notice; provided, however, that the Investor shall remain obligated to purchase the applicable VWAP Purchase Maximum Amount in such VWAP Purchase at or prior to 9:30 a.m., New York City time, on the Trading Day immediately following the VWAP Purchase Date for each VWAP Purchase, the Investor shall provide to the Company a written confirmation of such VWAP Purchase setting forth the applicable VWAP Purchase Share Amount and VWAP Purchase Price for such VWAP Purchase (each, a “VWAP Purchase Confirmation”).
Section 2.3. Reserved.
Section 2.4. Compliance with Rules of Trading Market.
(a) Reserved.
(b) General. The Company shall not issue or sell any Common Shares pursuant to this Agreement if such issuance or sale would reasonably be expected to result in (A) a violation of the Securities Act or (B) a breach of the rules of the Trading Market or the Canadian Securities Exchange. The provisions of this Section 2.4 shall be implemented in a manner otherwise than in strict conformity with the terms of this Section 2.4 only if necessary to ensure compliance with the Securities Act and the applicable rules of the Trading Market and the Canadian Securities Exchange.
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Section 2.5. Beneficial Ownership Limitation. Notwithstanding anything to the contrary contained in this Agreement, the Company shall not issue or sell, and the Investor shall not purchase or acquire, any Common Shares under this Agreement which, when aggregated with all other Common Shares then beneficially owned by the Investor and its Affiliates (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder), would result in the beneficial ownership by the Investor of more than 4.99% of the outstanding Common Shares (the “Beneficial Ownership Limitation”). Upon the written or oral request of the Investor, the Company shall promptly (but not later than the next business day on which the Transfer Agent is open for business) confirm orally or in writing to the Investor the number of Common Shares outstanding as of the most recent date for which the Transfer Agent has such information. The Investor and the Company shall each cooperate in good faith in the determinations required under this Section 2.5 and the application of this Section 2.5. The Investor’s written certification to the Company of the applicability of the Beneficial Ownership Limitation, and the resulting effect thereof hereunder at any time, shall be conclusive with respect to the applicability thereof and such result absent manifest error. The provisions of this Section 2.5 shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2.5 to the extent necessary to properly give effect to the limitations contained in this Section 2.5.
Section 2.6. Commitment Notes. In consideration for the Investor’s execution and delivery of this Agreement, the Company shall issue (i) an initial convertible promissory note (the “Initial Commitment Note”) with a principal amount of $1,500,000 to the Investor or its designee not later than 4:00 p.m. (New York City time) on the Trading Day immediately following the date hereof and prior to the delivery of the initial VWAP Purchase Notice, and (ii) an additional convertible promissory note (the “Additional Commitment Note”) with a principal amount of $500,000 to the Investor or its designee within two (2) Trading Days after the aggregate VWAP Purchase amounts paid by the Investor under this Agreement equal or exceed $7,000,000. Each Commitment Note shall mature twenty-four (24) months after its respective date of issuance. The Conversion Shares shall be included in the Registration Statement. For the avoidance of doubt, each Commitment Note shall be fully earned as of its respective date of issuance, regardless of whether any VWAP Purchases are effected hereunder and regardless of any subsequent termination of this Agreement.
III.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR
The Investor hereby makes the following representations, warranties and covenants to the Company:
Section 3.1. Organization and Standing of the Investor. The Investor is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Montana.
Section 3.2. Authorization and Power. The Investor has the requisite limited liability company power and authority to enter into and perform its obligations under this Agreement and the Registration Rights Agreement and to purchase or acquire the Securities in accordance with the terms hereof. The execution, delivery and performance by the Investor of this Agreement and the Registration Rights Agreement and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary limited liability company action, and no further consent or authorization of the Investor, its Board of Directors or its members is required. Each of this Agreement and the Registration Rights Agreement has been duly executed and delivered by the Investor and constitutes a valid and binding obligation of the Investor enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership, or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application (including any limitation of equitable remedies).
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Section 3.3. No Conflicts. The execution, delivery and performance by the Investor of this Agreement and the Registration Rights Agreement and the consummation by the Investor of the transactions contemplated hereby and thereby do not and shall not (i) result in a violation of such Investor’s certificate of formation, limited liability company agreement or other applicable organizational instruments, (ii) conflict with, constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give rise to any rights of termination, amendment, acceleration or cancellation of, any material agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Investor is a party or is bound, (iii) create or impose any lien, charge or encumbrance on any property of the Investor under any agreement or any commitment to which the Investor is party or under which the Investor is bound or under which any of its properties or assets are bound, or (iv) result in a violation of any federal, state, local or foreign statute, rule, or regulation, or any order, judgment or decree of any court or governmental agency applicable to the Investor or by which any of its properties or assets are bound or affected, except, in the case of clauses (ii), (iii) and (iv), for such conflicts, defaults, terminations, amendments, acceleration, cancellations and violations as would not, individually or in the aggregate, prohibit or otherwise interfere with, in any material respect, the ability of the Investor to enter into and perform its obligations under this Agreement and the Registration Rights Agreement. The Investor is not required under any applicable federal, state, local or foreign law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement and the Registration Rights Agreement or to purchase or acquire the Securities in accordance with the terms hereof; provided, however, that for purposes of the representation made in this sentence, the Investor is assuming and relying upon the accuracy of the relevant representations and warranties and the compliance with the relevant covenants and agreements of the Company in the Transaction Documents to which it is a party.
Section 3.4. Investment Purpose. The Investor is acquiring the Securities for its own account, for investment purposes and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered under or exempt from the registration requirements of the Securities Act; provided, however, that by making the representations herein, the Investor does not agree, or make any representation or warranty, to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with, or pursuant to, a registration statement filed pursuant to the Registration Rights Agreement or an applicable exemption under the Securities Act. The Investor does not presently have any agreement or understanding, directly or indirectly, with any Person to sell or distribute any of the Securities.
Section 3.5. Accredited Investor Status. The Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.
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Section 3.6. Reliance on Exemptions. The Investor understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of U.S. federal and state securities laws and from the prospectus requirements of applicable Canadian securities laws, including BC Instrument 72-503 – Distribution of Securities outside of British Columbia, and that the Company is relying upon the truth and accuracy of, and the Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Investor set forth herein in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Securities and the Investor understand that it is restricted from using most of the protections, rights and remedies available under Canadian securities legislation, (ii) the Investor may not receive information that would otherwise be required to be provided to it under Canadian securities legislation, and (iii) the Company is relieved from certain obligations that would otherwise apply under Canadian securities legislation
Section 3.7. Information. All materials relating to the business, financial condition, management and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Investor have been furnished or otherwise made available to the Investor or its advisors, including, without limitation, the Commission Documents. The Investor understands that its investment in the Securities involves a high degree of risk. The Investor is able to bear the economic risk of an investment in the Securities and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of a proposed investment in the Securities. The Investor and its advisors have been afforded the opportunity to ask questions of and receive answers from representatives of the Company concerning the financial condition and business of the Company and other matters relating to an investment in the Securities. Neither such inquiries nor any other due diligence investigations conducted by the Investor or its advisors, if any, or its representatives shall modify, amend or affect the Investor’s right to rely on the Company’s representations and warranties contained in this Agreement or in any other Transaction Document to which the Company is a party or the Investor’s right to rely on any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby (including, without limitation, the opinions of the Company’s counsel delivered pursuant to Section 6.2(xvi)). The Investor has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities. The Investor understands that it (and not the Company) shall be responsible for its own tax liabilities that may arise as a result of this investment or the transactions contemplated by this Agreement. The Investor has determined based on its own independent review and such professional advice as it deems appropriate that its purchase of the Securities and participation in the transactions contemplated by this Agreement (i) are fully consistent with its financial needs, objectives and condition, (ii) comply and are fully consistent with all investment policies, guidelines and other restrictions applicable to it, (iii) have been duly authorized and approved by all necessary action, (iv) do not and will not violate or constitute a default under its charter, by-laws or other constituent document or under any law, rule, regulation, agreement or other obligation by which it is bound and (v) are a fit, proper and suitable investment for the Investor, notwithstanding the substantial risks inherent in investing in or holding the Securities.
Section 3.8. No Governmental Review. The Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
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Section 3.9. No General Solicitation. The Investor is not purchasing or acquiring the Securities as a result of any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities.
Section 3.10. Not an Affiliate. The Investor is not an officer, director or an Affiliate of the Company. As of the date of this Agreement, the Investor does not beneficially own any Common Shares or securities exercisable for or convertible into Common Shares, and during the Restricted Period, Investor will not acquire beneficial ownership of any shares of the Company’s capital stock (including Common Shares or securities exercisable for or convertible into Common Shares) other than pursuant to this Agreement; provided, however, that nothing in this Agreement shall prohibit or be deemed to prohibit the Investor from purchasing, in an open market transaction or otherwise, Common Shares necessary to make delivery by the Investor in satisfaction of a sale by the Investor of Shares that the Investor anticipated receiving from the Company in connection with the settlement of a VWAP Purchase if the Company or the Transfer Agent shall have failed for any reason to electronically transfer all of the Shares subject to such VWAP Purchase to the Investor by crediting the Investor’s or its designated Broker-Dealer’s account at DTC through its Deposit/Withdrawal at Custodian (“DWAC”) delivery system, at or prior to the applicable time required by and otherwise in compliance with Section 2.4 of this Agreement.
Section 3.11. No Prior Short Sales. At no time prior to the date of this Agreement has any of the Investor, its agents, representatives or Affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any (i) “short sale” (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of the Common Shares or (ii) hedging transaction, which establishes a net short position with respect to the Common Shares.
Section 3.12. Statutory Underwriter Status. The Investor acknowledges that it will be disclosed as an “underwriter” and a “selling shareholder” in the Registration Statement and in any Prospectus contained therein to the extent required by applicable law.
Section 3.13. No “Bad Actor” Disqualification. The Investor has not taken any of the actions set forth in, and is not subject to, the disqualification provisions of Rule 506(d)(1) of the 1933 Act. Neither such Buyer nor any of its Rule 506(d) Related Parties is a “bad actor” within the meaning of Rule 506(d) of the Securities Act. For purposes of this Agreement, a “Rule 506(d) Related Party” shall mean a person or entity covered by the “Bad Actor disqualification” provision of Rule 506(d) of the Securities Act.
Section 3.14. Disclosure. The Investor acknowledges that this Agreement requires the Investor to provide certain personal information to the Company. Such information is being collected by the Company for the purposes of completing the transactions contemplated hereby, which includes, without limitation, determining the Investor's eligibility to purchase the Common Shares under applicable Canadian securities laws, preparing and registering certificates representing the Common Shares to be issued to the Investor (if applicable), and completing filings required by any stock exchange or securities regulatory authority in Canada. The Investor’s personal information will be included in closing books prepared in connection with the transactions contemplated hereby and may be disclosed by the Company to: (i) stock exchanges and/or securities regulatory authorities (including, without limitation, the Canadian Securities Exchange and the British Columbia Securities Commission); (ii) the Company’s registrar and transfer agent; (iii) Canadian tax authorities; (iv) any of the other parties involved in the transactions contemplated hereby, including legal counsel; and (v) other parties subsequent to the transactions contemplated hereby, including legal counsel, reviewing closing books prepared in connection with the transactions contemplated hereby. By executing this Agreement, the Investor:
(a) consents to the foregoing collection, use and disclosure of the Investor's personal information;
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(b) consents to the filing of copies or originals of any of the Investor's documents delivered in connection with this Agreement as may be required to be filed with any stock exchange or securities regulatory authority in Canada connection with the transactions contemplated hereby and expressly consents to the collection, use and disclosure of the Investor's personal information by the Canadian Securities Exchange for the purposes identified by such exchange, from time to time; and
(c) acknowledges that it has been notified by the Company: (i) of the requirement to deliver to the relevant securities regulatory authorities or regulators the full name, residential address, telephone number and email address of the Investor, the number and type of securities purchased, the total purchase price, the date of distribution, whether or not the Investor is an insider of the Company or a registrant and the exemption relied upon; (ii) that this information is being collected by the various securities regulatory authorities or regulators under the authority granted in Canadian securities legislation; and (iii) that this information is being collected for the purposes of the administration and enforcement of the securities legislation of the local jurisdiction.
IV.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the Company to the Investor (which is hereby incorporated by reference in, and constitutes an integral part of, this Agreement) (the “Disclosure Schedule”), the Company hereby makes the following representations, warranties and covenants to the Investor:
Section 4.1. Organization, Good Standing and Power. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing (to the extent such concept exists in the relevant jurisdiction) under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in a Material Adverse Effect and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
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Section 4.2. Authorization, Enforcement. Each of the Company and its Subsidiaries has the requisite corporate or other power and authority to enter into and perform its obligations under each of the Transaction Documents to which it is a party and, in the case of the Company, to issue the Securities in accordance with the terms hereof and thereof. Except for approvals of the Company’s Board of Directors or a committee thereof as may be required in connection with any issuance and sale of Shares to the Investor hereunder (which approvals shall be obtained prior to the delivery of any VWAP Purchase Notice), the execution, delivery and performance by the Company of each of the Transaction Documents to which it is a party and the consummation by it of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate or other action (as applicable) on the part of the Company, and no further consent or authorization of the Company or its Board of Directors or its shareholders, or any other Person is required in order for the Company to execute, deliver and perform its respective obligations under the Transaction Documents to which it is a party. Each of the Transaction Documents to which the Company is a party has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application (including any limitation of equitable remedies).
Section 4.3. Capitalization. All of the outstanding shares of capital stock of the Company and each of its Subsidiaries have been duly and validly authorized and issued and are fully paid and non-assessable, and, except as otherwise set forth in the Commission Documents, all outstanding shares of capital stock or membership interests of the Subsidiaries are owned by the Company either directly or through wholly owned Subsidiaries and are free and clear of any perfected security interest or any other security interests, claims, liens or encumbrances. Except as set forth in the Commission Documents and this Agreement, there are no agreements or arrangements under which the Company is obligated to register the sale of any securities under the Securities Act, other than those that have or may be issued or granted in the ordinary course of business pursuant to the Company’s equity incentive and/or compensatory plans or arrangements. Except as set forth in the Commission Documents, no shares of capital stock of the Company are entitled to preemptive rights and there are no outstanding debt securities and no contracts, commitments, understandings, or arrangements by which the Company is or may become bound to issue additional shares of the capital stock of the Company or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, any shares of capital stock of the Company other than those issued or granted in the ordinary course of business pursuant to the Company’s equity incentive and/or compensatory plans or arrangements. Except for customary transfer restrictions contained in agreements entered into by the Company to sell restricted securities or as set forth in the Commission Documents, the Company is not a party to, and it has no Knowledge of, any agreement restricting the voting or transfer of any shares of the capital stock of the Company. Except as set forth in the Commission Documents, there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by this Agreement or any of the other Transaction Documents or the consummation of the transactions described herein or therein. The Company has made available via EDGAR true and correct copies of the Company’s Articles as in effect on the Commencement Date (the “Charter”).
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Section 4.4. Issuance of Securities. The Shares to be issued under this Agreement have been, or with respect to Shares to be purchased by the Investor pursuant to a particular VWAP Purchase Notice, will be, prior to the delivery to the Investor hereunder of such VWAP Purchase Notice, duly authorized by all necessary corporate action on the part of the Company. The Commitment Shares, when issued to the Investor in accordance with this Agreement, and the Shares, when issued and sold against payment therefor in accordance with this Agreement, shall be validly issued and outstanding, fully paid and non-assessable and free from all liens, charges, taxes, security interests, encumbrances, rights of first refusal, preemptive or similar rights and other encumbrances with respect to the issue thereof, and the Investor shall be entitled to all rights accorded to a holder of Common Shares. As of the date of this Agreement, the Company’s authorized capital consists of an unlimited number of Common Shares.
Section 4.5. No Conflicts. The execution, delivery and performance by the Company of each of the Transaction Documents to which it is a party and the consummation by the Company of the transactions contemplated hereby and thereby do not and shall not (i) result in a violation of any provision of the Company’s Charter, (ii) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give rise to any rights of termination, amendment, acceleration or cancellation of, any material agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Company or of the Company’s Subsidiaries is a party or is bound, (iii) create or impose a lien, charge or encumbrance on any property or assets of the Company or of the Company’s Subsidiaries under any agreement or any commitment to which the Company or of the Company’s Subsidiaries is a party or by which the Company or of the Company’s Subsidiaries is bound or to which any of their respective properties or assets is subject, or (iv) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree applicable to the Company or of the Company’s Subsidiaries or by which any property or asset of the Company or of the Company’s Subsidiaries are bound or affected (including federal and state securities laws and regulations and the rules and regulations of the Trading Market), except, in the case of clauses (ii), (iii) and (iv), for such conflicts, defaults, terminations, amendments, acceleration, cancellations, liens, charges, encumbrances and violations as would not, individually or in the aggregate, have a Material Adverse Effect. Except as specifically contemplated by this Agreement or the Registration Rights Agreement and as required under the Securities Act and any applicable state securities laws, the Company is not required under any federal, state, local or foreign law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency (including, without limitation, the Trading Market) in order for it to execute, deliver or perform any of its respective obligations under the Transaction Documents to which it is a party, or to issue the Securities to the Investor in accordance with the terms hereof and thereof (other than such consents, authorizations, orders, filings or registrations as have been obtained or made prior to the Closing Date); provided, however, that, for purposes of the representation made in this sentence, the Company is assuming and relying upon the accuracy of the representations and warranties of the Investor in this Agreement and the compliance by it with its covenants and agreements contained in this Agreement and the Registration Rights Agreement.
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Section 4.6. Commission Documents, Financial Statements; Disclosure Controls and Procedures; Internal Controls Over Financial Reporting; Accountants.
(a) The Company has timely filed (giving effect to permissible extensions in accordance with Rule 12b-25 under the Exchange Act) all Commission Documents for the twelve months preceding the date of this Agreement required to be filed by it (the “Filed Commission Documents”). The Company has delivered or made available to the Investor via EDGAR or otherwise true and complete copies of the Filed Commission Documents prior to the Closing Date. As of its filing date, each Commission Document complied in all material respects with the requirements of the Securities Act or the Exchange Act, as applicable, and other federal, state and local laws, rules and regulations applicable to it, and, as of its filing date (or, if amended or superseded by a filing prior to the Closing Date, on the date of such amended or superseded filing). Each Registration Statement, on the date it is filed with the Commission, on the date it is declared effective by the Commission, on each VWAP Purchase Date, shall comply in all material respects with the requirements of the Securities Act (including, without limitation, Rule 415 under the Securities Act) and shall 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 not misleading, except that this representation and warranty shall not apply to statements in or omissions from such Registration Statement made in reliance upon and in conformity with information relating to the Investor furnished to the Company in writing by or on behalf of the Investor expressly for use therein. The Prospectus and each Prospectus Supplement required to be filed pursuant to this Agreement or the Registration Rights Agreement after the Closing Date, when taken together, on its date, on each VWAP Purchase Date, shall comply in all material respects with the requirements of the Securities Act (including, without limitation, Rule 424(b) under the Securities Act) and shall 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 light of the circumstances under which they were made, not misleading, except that this representation and warranty shall not apply to statements in or omissions from the Prospectus or any Prospectus Supplement made in reliance upon and in conformity with information relating to the Investor furnished to the Company in writing by or on behalf of the Investor expressly for use therein. Each Commission Document to be filed with or furnished to the Commission after the Closing Date and filed as part of or incorporated by reference in the Registration Statement, or the Prospectus included therein or any Prospectus Supplement thereto required to be filed pursuant to this Agreement or the Registration Rights Agreement (including, without limitation, the Current Report), when such document is filed with or furnished to the Commission and, if applicable, when such document becomes effective, as the case may be, shall comply in all material respects with the requirements of the Securities Act or the Exchange Act, as applicable, and other federal, state and local laws, rules and regulations applicable to it. There are no outstanding or unresolved comments or undertakings in such comment letters received by the Company from the Commission. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Securities Act or the Exchange Act. To the Company’s Knowledge, the Commission has not commenced any enforcement proceedings against the Company or any of its Subsidiaries.
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(b) The financial statements and schedules of the Company and its consolidated Subsidiaries to be filed as part of or incorporated by reference in the Registration Statement, or the Prospectus included therein or any Prospectus Supplement thereto, present fairly in all material respects the financial condition, results of operations and cash flows of the Company and its consolidated Subsidiaries as of the dates and for the periods indicated, comply as to form with the applicable accounting requirements of Regulation S-X, and have been prepared in conformity with the International Financial Reporting Standards developed by the International Accounting Standards Board (“IFRS”), applied on a consistent basis throughout the periods involved (except as otherwise noted therein). The interactive data in eXtensible Business Reporting Language included or incorporated by reference in the Commission Documents, the Registration Statement fairly presents the information called for in all material respects and have been prepared in accordance with the Commission’s rules and guidelines applicable thereto. The statistical and market-related data included or incorporated by reference in the Commission Documents or any Registration Statement 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 source.
(c) The Company and the Subsidiaries have established and maintain disclosure controls and procedures (as such term is defined in Rule 13a-15 and 15d-15 under the Exchange Act). Except as disclosed in Commission Documents, such disclosure controls and procedures are designed to ensure that material information relating to the Company and its Subsidiaries is made known to the Company’s Chief Executive Officer and its Chief Financial Officer by others within those entities, and such disclosure controls and procedures are effective to perform the functions for which they were established. The Company and the Subsidiaries have established and maintain internal control over financial reporting (as such term is defined in Rule 13a-15 and 15d-15 under the Exchange Act). Except as disclosed in Commission Documents, such internal control over financial reporting is designed to provide reasonable assurance 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 to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; (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; and (E) the interactive data in eXtensible Business Reporting Language in the Commission Documents fairly presents the information called for in all material respects and are prepared in accordance with the Commission’s rules and guidelines applicable thereto. The Company’s auditors and the Audit Committee of the Board of Directors of the Company have been advised of: (i) any significant deficiencies and material weaknesses in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize, and report financial data; and (ii) any fraud, whether or not material, that involves management or other employees who have a role in the Company’s internal controls. Since the date of the most recent evaluation of such disclosure controls and procedures, except as disclosed in Commission Documents, there have been (A) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (B) no significant changes in internal controls or in other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies.
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(d) The Company is in compliance with all applicable provisions of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations thereunder, which are applicable to it as of the date hereof.
(e) The Company’s accountants are set forth in the Commission Documents and, to the Knowledge of the Company, such accountants are an independent registered public accounting firm as required by the Securities Act.
Section 4.7. Subsidiaries. The Filed Commission Documents set forth each subsidiary (each, a “Subsidiary,” and collectively, the “Subsidiaries”), of the Company as of the Commencement Date, other than those that may be omitted pursuant to Item 601 of Regulation S-K, showing its jurisdiction of incorporation or organization, and the Company does not have any other significant subsidiaries as of the Commencement Date. No Subsidiary of the Company is currently prohibited, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such Subsidiary’s capital stock, from repaying to the Company any loans or advances to such Subsidiary from the Company or from transferring any of such Subsidiary’s property or assets to the Company or any other Subsidiary of the Company, except as described or incorporate by reference in, or contemplated by, the Registration Statement and the Prospectus, or as would not reasonably be expected to have a Material Adverse Effect.
Section 4.8. No Material Adverse Effect or Material Adverse Change, No Undisclosed Liabilities. Except as otherwise disclosed in any Commission Document, since the end of the Company’s most recent audited fiscal year: (i) the Company has not experienced or suffered any Material Adverse Effect, and, to the Company’s Knowledge, there exists no current state of facts, condition or event which would have a Material Adverse Effect; (ii) there has not occurred any material adverse change, or any development that would reasonably be expected to result in a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company from that set forth in the Commission Documents, including, without limitation, as a result of the outbreak of COVID-19, or as a result of any measures intended to contain the outbreak of COVID-19 imposed by any federal, state, local or foreign government or government agency in any country or region in which the Company, or any of its agents, consultants, advisors or vendors, has assets or properties or conducts business, including, without limitation, any limitations, curtailments, suspensions or closures of businesses, business offices or establishments, schools, properties and other public areas due to quarantines, curfews, travel restrictions, workplace controls, “stay-at-home” orders, social distancing requirements or guidelines or other public gathering restrictions or limitations; (iii) neither the Company nor any of its Subsidiaries has incurred any material liability or obligation, direct or contingent, nor entered into any material transaction; (iv) the Company has not purchased any of its outstanding capital stock, nor declared, paid or otherwise made any dividend or distribution of any kind on its capital stock other than ordinary and customary dividends; and (v) there has not been any material change in the capital stock, short-term debt or long-term debt of the Company.
Neither the Company nor any of its Subsidiaries has any liabilities, obligations, claims or losses (whether liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise) that would be required to be disclosed on a balance sheet of the Company or any Subsidiary (including the notes thereto) in conformity with IFRS and are not disclosed in the Commission Documents, other than those incurred in the ordinary course of the Company’s or its Subsidiaries respective businesses and which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
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Section 4.9. No Undisclosed Events or Circumstances. No event, liability, development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of its Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws in the Registration Statement or the Prospectus, which has not been disclosed or incorporated by reference in the Filed Commission Documents, or (ii) would reasonably be expected to have a Material Adverse Effect.
Section 4.10. Indebtedness. The Filed Commission Documents set forth all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments through such date. For the purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess of $100,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements, indemnities and other contingent obligations in respect of Indebtedness of others in excess of $100,000, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $100,000 due under leases required to be capitalized in accordance with IFRS. There is no existing or continuing default or event of default in respect of any Indebtedness of the Company or any of its Subsidiaries. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to Title 11 of the United States Code or any similar federal or state bankruptcy law or law for the relief of debtors, nor does the Company have any Knowledge that its creditors intend to initiate involuntary bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for relief under Title 11 of the United States Code or any other federal or state bankruptcy law or any law for the relief of debtors. The Company is financially solvent and is generally able to pay its debts as they become due.
Section 4.11. Title to Assets. The Company and each of its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company, in each case free and clear of all liens, encumbrances and defects except such as are described or incorporated by reference in the Registration Statement and the Prospectus or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its Subsidiaries; and any real property and buildings held under lease by the Company and its Subsidiaries are held by it under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere in any material respect with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries, in each case except as described or incorporated by reference in the Registration Statement and the Prospectus
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Section 4.12. Actions Pending. Except as disclosed in Commission Documents, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the Knowledge of the Company, threatened against or affecting the Company or any of the Subsidiaries, or any of their respective officers or directors in their capacities as such, which would reasonably be expected to have a Material Adverse Effect.
Section 4.13. Compliance With Laws. During the 12-month period immediately preceding the date hereof, except as described in the Filed Commission Documents, the Company and each of its Subsidiaries is and at all times has been in material compliance with all applicable U.S. and foreign statutes, rules, or regulations applicable to Company and its Subsidiaries (“Applicable Laws”), except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
Section 4.14. Certain Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company or of the Subsidiaries to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Investor shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section 4.14 incurred by the Company or of the Subsidiaries that may be due or payable in connection with the transactions contemplated by the Transaction Documents.
Section 4.15. Operation of Business. The Company and the Subsidiaries possess or have obtained, all licenses, certificates, consents, orders, approvals, permits and other authorizations issued by, and have made all declarations and filings with, the appropriate federal, state, local or foreign governmental entity that are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses as currently conducted, as described or incorporated by reference in the Registration Statement and the Prospectus (the “Permits”), except where the failure to possess, obtain or make the same would not, individually or in the aggregate, have a Material Adverse Effect. Neither the Company nor any Subsidiary has received written notice of any proceeding relating to revocation or modification of any such Permit or has any reason to believe that such Permit will not be renewed in the ordinary course, except where the failure to obtain any such renewal would not, individually or in the aggregate, have a Material Adverse Effect. This Section 4.15 does not relate to environmental matters, such items being the subject of Section 4.16.
Section 4.16. Environmental Compliance. To the Knowledge of the Company, the Company and its Subsidiaries are not in violation of any statute, any rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances (collectively, “Environmental Laws”), owns or operates any real property contaminated with any substance that is subject to any Environmental Laws, is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and the Company is not aware of any pending investigation which might lead to such a claim. Other than as set forth or incorporated by reference in the Registration Statement and the Prospectus, there is no judgment, decree, injunction, rule, writ or order of any governmental entity under any Environmental Laws outstanding against the Company and its Subsidiaries which would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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Section 4.17. Material Agreements. Except as set forth in the Commission Documents, neither the Company nor any Subsidiary of the Company is a party to any written or oral contract, instrument, agreement commitment, obligation, plan or arrangement (collectively, “Material Agreements”). Each of the Material Agreements described in the Commission Documents conform in all material respects to the descriptions thereof contained or incorporated by reference therein. The Company and each of its Subsidiaries have performed in all material respects all the obligations then required to be performed by them under the Material Agreements, have received no notice of default or an event of default by the Company or any of its Subsidiaries thereunder and are not aware of any basis for the assertion thereof, and neither the Company or any of its Subsidiaries nor, to the Knowledge of the Company, any other contracting party thereto are in default under any Material Agreement now in effect, the result of which would have a Material Adverse Effect. Each of the Material Agreements is in full force and effect, and constitutes a legal, valid and binding obligation enforceable in accordance with its terms against the Company and/or any of its Subsidiaries and, to the Knowledge of the Company, each other contracting party thereto, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.
Section 4.18. Transactions With Affiliates. Except as disclosed in the Commission Documents, none of the Company’s, officers or directors, or to the Company’s Knowledge, none of the Company’s shareholders or any family member or Affiliate of any of the foregoing, has either directly or indirectly an interest in, or is a party to, any transaction that would be required to be disclosed as a related party transaction pursuant to Form 20-F under the Securities Act.
Section 4.19. Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all material trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted, except as would not reasonably be expected to have a Material Adverse Effect. None of the Company’s material trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations, trade secrets or other intellectual property rights have expired or terminated, or, by the terms and conditions thereof, will expire or terminate within two years from the date of this Agreement, except as would not reasonably be expected to have a Material Adverse Effect. The Company has no Knowledge of any infringement by the Company or the Subsidiaries of any material trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret or other similar rights of others, or of any such development of similar or identical trade secrets or technical information by others, and there is no claim, action or proceeding being made or brought against, or to the Company’s Knowledge, being threatened against, the Company or the Subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other infringement, which would reasonably be expected to have a Material Adverse Effect.
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Section 4.20. Use of Proceeds. The proceeds from the sale of the Shares by the Company to the Investor shall be used by the Company in the manner as will be set forth in the Prospectus included in any Registration Statement (and any post-effective amendment thereto) and any Prospectus Supplement thereto filed pursuant to the Registration Rights Agreement.
Section 4.21. Investment Company Act Status. The Company is not required to be registered as, and immediately after receipt of payment for the Shares will not be required to be registered as, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
Section 4.22. Benefit Plans; Labor Matters. Each benefit and compensation plan, agreement, policy and arrangement that is maintained, administered or contributed to by the Company for current or former employees or directors of, or independent contractors with respect to, the Company has been maintained in material compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations, and the Company has complied in all material respects with all applicable statutes, orders, rules and regulations in regard to such plans, agreements, policies and arrangements. Each share option granted under any equity incentive plan of the Company (each, a “Stock Plan”) was granted with a per share exercise price no less than the market price per common share on the grant date of such option in accordance with the rules of the Trading Market, and no such grant involved any “back-dating,” “forward-dating” or similar practice with respect to the effective date of such grant; each such option (i) was granted in compliance in all material respects with Applicable Laws and with the applicable Stock Plan(s), (ii) was duly approved by the Company’s Board of Directors, and (iii) has been properly accounted for in the Company’s financial statements and disclosed, to the extent required, in the Company’s filings or submissions with the Commission, and the Trading Market. Neither the Company nor any Subsidiary is in violation of or has received written notice of any violation with respect to any federal or state law, regulation or rule relating to discrimination in the hiring, termination, promotion, employment or pay of employees, nor any applicable federal or state wages and hours law, nor any state law, regulation or rule precluding the denial of credit due to the neighborhood in which a property is situated, the violation of any of which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. There are no existing or, to the Knowledge of the Company, threatened labor disputes with the employees of the Company or any of the Subsidiaries that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 4.23. Taxes. Each of the Company and the Subsidiaries has filed on a timely basis (including in accordance with any applicable extensions) all material necessary federal, state, local and foreign income and franchise tax returns required to be filed through the date hereof or have properly requested extensions thereof, and have paid all taxes shown as due thereon, and if due and payable, any related or similar assessment, fine or penalty levied against the Company or of the Subsidiaries. Except as disclosed in the Commission Documents, no material tax deficiency has been asserted against any such entity, and the Company has no Knowledge of any tax deficiency that is likely to be asserted against any such entity that, individually or in the aggregate, if determined adversely to any such entity, would reasonably be expected to have a Material Adverse Effect. All material tax liabilities are adequately provided for on the respective books of the Company and the Subsidiaries.
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Section 4.24. Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged, including, but not limited to, insurance covering real and personal property owned or leased by the Company and the Subsidiaries against theft, damage, destruction, environmental liabilities, acts of vandalism, terrorism, earthquakes, flood and all other risks customarily insured against, all of which insurance is in full force and effect. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for and neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not reasonably be expected to have a Material Adverse Effect.
Section 4.25. Dilutive Effect. The Company is aware and acknowledges that issuance of the Securities could cause dilution to existing shareholders and could significantly increase the outstanding number of Common Shares. The Company further acknowledges that its obligation to issue the Shares pursuant to the terms of a VWAP Purchase in accordance with this Agreement and to issue the Conversion Shares pursuant to conversions of the Commitment Notes is, in each case, unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
Section 4.26. Manipulation of Price. The Company has not, and to its Knowledge no Person acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company. Neither the Company nor any of its officers, directors or Affiliates will during the term of this Agreement, and, to the Knowledge of the Company, no Person acting on their behalf will during the term of this Agreement, take any of the actions referred to in the immediately preceding sentence.
Section 4.27. Securities Act. The Company has complied and shall comply with all applicable federal and state securities laws in connection with the offer, issuance and sale of the Securities hereunder, including, without limitation, the applicable requirements of the Securities Act. Each Registration Statement, upon filing with the Commission and at the time it is declared effective by the Commission, shall satisfy all of the requirements of the Securities Act to register the resale of the Registrable Securities included therein by the Investor in accordance with the Registration Rights Agreement on a delayed or continuous basis under Rule 415 under the Securities Act at then-prevailing market prices, and not fixed prices. The Company is not, and has not previously been at any time, an issuer identified in, or subject to, Rule 144(i).
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Section 4.28. Listing and Maintenance Requirements; DTC Eligibility. The Common Shares are registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to its Knowledge is likely to have the effect of, terminating the registration of the Common Shares pursuant to the Exchange Act nor has the Company received any notification that the Commission is currently contemplating terminating such registration. Except as disclosed in the Filed Commission Documents, the Company has not, in the twelve (12) months preceding the date hereof, received any written notice from any Person to the effect that the Company is not in compliance with the listing or maintenance requirements of the Trading Market. Except as disclosed in the Commission Documents, the Company is in compliance with all such listing and maintenance requirements of the Trading Market. The Common Shares are eligible for participation in the DTC book entry system and has shares on deposit at DTC for transfer electronically to third parties via DTC through its DWAC delivery system. The Company has not received notice from DTC to the effect that a suspension of, or restriction on, accepting additional deposits of the Common Shares, electronic trading or book-entry services by DTC with respect to the Common Shares is being imposed or is contemplated.
Section 4.29. Application of Takeover Protections. The Company and its 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 Charter or the laws of the Province of British Columbia that is or could become applicable to the Investor as a result of the Investor and the Company fulfilling their respective obligations or exercising their respective rights under the Transaction Documents (as applicable), including, without limitation, as a result of the Company’s issuance of the Securities and the Investor’s ownership of the Securities.
Section 4.30. Foreign Corrupt Practices. Neither the Company or Subsidiary, nor to the Knowledge of the Company, any agent or other Person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any Person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”).
Section 4.31. 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 jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”); and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the Knowledge of the Company, threatened.
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Section 4.32. OFAC. Neither the Company nor any of its Subsidiaries nor, to the Knowledge of the Company, any director, officer, agent, employee or Affiliate of the Company or any of its Subsidiaries (i) is currently subject to any sanctions administered by the U.S. government, including the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”) or the U.S. Department of State, the United Nations Security Council, the European Union, or the United Kingdom (including sanctions administered or controlled by Her Majesty’s Treasury) (collectively, “Sanctions” and such persons, “Sanctioned Persons”) or other relevant sanctions authority, and (ii) will use the proceeds of this offering, directly or indirectly, to fund or facilitate the activities of any Sanctioned Persons or entity or any country, region or territory that is, at the time of such funding or facilitation, subject to Sanctions or any person or entity located in a country, region or territory subject to Sanctions (including any administered or enforced by OFAC or the U.S. Department of State), the United Nations Security Council, the European Union, or the United Kingdom (including sanctions administered or controlled by Her Majesty’s Treasury). Neither the Company nor any of its Subsidiaries nor, to the Knowledge of the Company, any director, officer, agent, employee or Affiliate of the Company or any of its Subsidiaries, is a Person that is, or is 50% or more owned or otherwise controlled by a Person that is: (i) the subject of any Sanctions; or (ii) located, organized or resident in a country, region or territory that is, or whose government is, the subject of Sanctions that broadly prohibit dealings with that country, region or territory (including at the time of this agreement, Cuba, Iran, North Korea, Syria and Crimea) (collectively, “Sanctioned Countries” and each, a “Sanctioned Country”). The Company and its Subsidiaries have not engaged in any dealings or transactions with or for the benefit of Sanctioned Persons, or with or in a Sanctioned Country, in the preceding 3 years, nor does the Company or any of its Subsidiaries have any plans to deal or transact with Sanctioned Persons, or with or in Sanctioned Countries.
Section 4.33. Information Technology; Compliance with Data Privacy Laws. To the best of the Company’s knowledge, (i) there have been no material breaches or violations of (or unauthorized access to) the Company, or the Subsidiaries’ information technology assets and equipment, computers, systems, networks, hardware, software, websites, applications and databases (collectively, the “IT Systems”) or any personal, personally identifiable, sensitive, confidential or regulated data (collectively, “Personal Data”) processed or stored by or on behalf of the Company or the Subsidiaries, except for those that have been remedied without material cost or liability or the duty to notify any regulator, nor are there any pending internal investigations of the Company or the Subsidiaries relating to the same and (ii) the Company and the Subsidiaries are presently in compliance in all material respects with all Applicable Laws, statutes and regulations and contractual obligations relating to the privacy and security of IT Systems and Personal Data.
Section 4.34. No Disqualification Events. None of the Company, any of their predecessors, any affiliated issuer, any director, general partner executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) under the Securities Act. The Company have exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event.
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Section 4.35. ERISA. Except as set forth in the Commission Documents, the Company is not a party to an “employee benefit plan,” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), which: (i) is subject to Title IV of ERISA and (ii) is or was at any time maintained, administered or contributed to by the Company or any of its ERISA Affiliates (as defined hereafter). These plans are referred to collectively herein as the “Employee Plans.” An “ERISA Affiliate” of any person or entity means any other person or entity which, together with that Person or entity, could be treated as a single employer under Section 414(b), (c), (m) or (o) of the Code. Each Employee Plan has been maintained in material compliance with its terms and the requirements of Applicable Law. Except as set forth or incorporated by reference in the Registration Statement and the Prospectus, there is no liability in respect of post-retirement health and medical benefits for retired employees of the Company or any of its ERISA Affiliates, other than medical benefits required to be continued under Applicable Law. No “prohibited transaction” (as defined in either Section 406 of ERISA or Section 4975 of the Code) has occurred with respect to any Employee Plan; and each Employee Plan that is intended to be qualified under Section 401(a) of the Code is so qualified, and nothing has occurred, whether by action or by failure to act, which could cause the loss of such qualification.
Section 4.36. No Other Similar Agreement. Except as disclosed in the Commission Documents, other than the Transaction Documents to which it is a party, the Company is not a party to any agreement that is (or that contains any term, obligation or restriction that is) in effect on the date hereof with any Person, other than the Investor, relating to any “at the market offering,” “equity line of credit” or any other similar continuous offering in which the Company may offer, issue or sell Common Shares or Common Shares Equivalents at a future determined price.
Section 4.37. Acknowledgement Regarding Investor’s Acquisition of Securities. The Company acknowledges and agrees that the Investor is acting solely in the capacity of an arm’s-length purchaser with respect to this Agreement and the transactions contemplated by the Transaction Documents. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated by the Transaction Documents, and any advice given by the Investor or any of its representatives or agents in connection therewith is merely incidental to the Investor’s acquisition of the Securities. The Company further represents to the Investor that the Company’s decision to enter into the Transaction Documents to which it is a party has been based solely on the independent evaluation of the transactions contemplated thereby by the Company, respectively, and their respective representatives. The Company acknowledges and agrees that the Investor has not made and does not make any representations or warranties with respect to the transactions contemplated by the Transaction Documents other than those specifically set forth in Article IV.
V.
ADDITIONAL COVENANTS
The Company covenants with the Investor, and the Investor covenants with the Company, as follows, which covenants of one party are for the benefit of the other party during the Investment Period (and with respect to the Company for the period following the termination of this Agreement specified in Section 8.3 pursuant to and in accordance with Section 8.3):
Section 5.1. Securities Compliance. The Company shall notify the Commission and the Trading Market, if and as applicable, in accordance with their respective rules and regulations, of the transactions contemplated by the Transaction Documents, and shall take all necessary action, undertake all proceedings and obtain all registrations, permits, consents and approvals for the legal and valid issuance of the Securities to the Investor in accordance with the terms of the Transaction Documents, as applicable.
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Section 5.2. Reservation of Common Shares. The Company has available and the Company shall keep available at all times, free of preemptive and other similar rights of stockholders, an unlimited number of authorized but unissued Common Shares to enable the Company to timely effect the issuance, sale and delivery of all Shares pursuant to this Agreement.
Section 5.3. Registration and Listing. The Company shall use its commercially reasonable efforts to cause the Common Shares to continue to be registered as a class of securities under Sections 12(b) of the Exchange Act, and to comply with its reporting and filing obligations under the Exchange Act, and shall not take any action or file any document (whether or not permitted by the Securities Act or the Exchange Act) to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations under the Exchange Act or Securities Act, except as permitted herein. The Company shall use its commercially reasonable efforts to continue the listing and trading of its Common Shares and the listing of the Securities purchased by the Investor hereunder on the Trading Market and to comply with the Company’s reporting, filing and other obligations under the rules and regulations of the Trading Market. The Company shall not take any action which could be reasonably expected to result in the delisting or suspension of the Common Shares on the Trading Market. If the Company receives any final and non-appealable notice that the listing or quotation of the Common Shares on the Trading Market shall be terminated on a date certain, the Company shall promptly (and in any case within 24 hours) notify the Investor of such fact in writing and shall use its commercially reasonable efforts to cause the Common Shares to be listed or quoted on another Eligible Market.
Section 5.4. Compliance with Laws.
(i) During the Investment Period, (a) the Company shall comply, and the Company shall cause each Subsidiary to comply, with all laws, rules, regulations and orders applicable to the business and operations of the Company and the Subsidiaries, except as would not have a Material Adverse Effect, and (b) the Company shall comply with all applicable provisions of the Securities Act and the Exchange Act, including Regulation M thereunder, applicable state securities or “Blue Sky” laws, and applicable listing rules of the Trading Market or Eligible Market, except as would not, individually or in the aggregate, prohibit or otherwise interfere with the ability of the Company to enter into and perform its obligations under this Agreement in any material respect or for Investor to conduct resales of Securities under the Registration Statement in any material respect. Without limiting the foregoing, none of the Company, or any of the Subsidiaries, nor to the Knowledge of the Company, any of their respective directors, officers, agents, employees or any other Persons acting on their behalf shall, in connection with the operation of the respective businesses of the Company and the Subsidiaries, (1) use any corporate funds for unlawful contributions, payments, gifts or entertainment or to make any unlawful expenditures relating to political activity to government officials, candidates or members of political parties or organizations, (2) pay, accept or receive any unlawful contributions, payments, expenditures or gifts, or (3) violate or operate in noncompliance with any export restrictions, anti-boycott regulations, embargo regulations or other applicable domestic or foreign laws and regulations, including, without limitation, the FCPA and the Money Laundering Laws.
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(ii) The Investor shall comply with all laws, rules, regulations and orders applicable to the performance by it of its obligations under this Agreement and its investment in the Securities, except as would not, individually or in the aggregate, prohibit or otherwise interfere with the ability of the Investor to enter into and perform its obligations under this Agreement in any material respect. Without limiting the foregoing, the Investor shall comply with all applicable provisions of the Securities Act and the Exchange Act, including Regulation M thereunder, and all applicable state securities or “Blue Sky” laws.
Section 5.5. Keeping of Records and Books of Account; Due Diligence.
(i) The Investor and the Company shall each maintain records showing the remaining Total Purchase Commitment, and the dates and VWAP Purchase Share Amount for each VWAP Purchase.
(ii) The Investor shall have the right, from time to time as the Investor may reasonably deem appropriate, and upon reasonable advance notice to the Company, to perform reasonable due diligence on the Company during normal business hours; provided, however, that after the Closing Date, the Investor’s continued due diligence of the Company shall not be a condition precedent to, or otherwise impair, delay or modify in any respect, the Company’s right to deliver to the Investor any VWAP Purchase Notice, or the Investor’s obligation to purchase the Shares subject thereto, pursuant to this Agreement. The Company and its officers and employees shall provide information on a reasonably timely basis and otherwise reasonably cooperate with the Investor in connection with any reasonable request by the Investor related to the Investor’s due diligence of the Company.
Section 5.6. No Frustration; Prohibition of Certain Issuances Before Settlement of Purchases; No Similar Transactions.
(i) No Frustration. The Company shall not enter into, announce or recommend to the Company’s shareholders any agreement, plan, arrangement or transaction in or of which the terms thereof would restrict, materially delay, conflict with or impair the ability or right of the Company to perform its obligations under the Transaction Documents to which it is a party, including, without limitation, the obligation of the Company to deliver the Shares to the Investor in respect of a VWAP Purchase as DWAC Shares not later than 10:00 a.m., New York City time, on the Trading Day immediately following the applicable VWAP Purchase Date for such VWAP Purchase in accordance with Section 2.2 of this Agreement. For the avoidance of doubt, nothing in this Section 5.6(i) shall in any way limit the Company’s right to terminate this Agreement in accordance with Section 7.2 (subject in all cases to Section 7.3).
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(ii) No Dilutive Issuances During Reference Periods. Neither the Company nor or any Subsidiary shall issue, sell or grant any right, option or warrant to purchase, or issue, sell or grant any right to reprice (or reset the purchase price therefor), or otherwise dispose of for cash (or enter into any agreement, plan or arrangement contemplating any of the foregoing, or seek to utilize any existing agreement, plan or arrangement to effect any of the foregoing), or announce any offer, issuance, sale or grant of any option or warrant to purchase or other disposition for cash (or any agreement, plan or arrangement therefor), at any time during the following periods: with respect to each VWAP Purchase under this Agreement for which the Company has delivered to the Investor a VWAP Purchase Notice, the period beginning on the third (3rd) Trading Day immediately preceding the applicable VWAP Purchase Date for such VWAP Purchase and ending on the third (3rd) Trading Day next following the Trading Day on which the Investor has delivered to the Company the applicable total purchase price for all of the Shares to be purchased by the Investor in such VWAP Purchase, pursuant to Section 2.2 (a “Reference Period”), any Common Shares or Common Shares Equivalents, at an effective price per Common Share less than the applicable VWAP Purchase Price (as applicable) per Share (such price, the “Reference Price”) to be sold to the Investor in the applicable VWAP Purchase to which such Reference Period relates (each such issuance, a “Dilutive Issuance”), other than an Exempt Issuance (it being understood and agreed that if the holder of the Common Shares or Common Shares Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive Common Shares at an effective price per Common Share that is less than the applicable Reference Price, such issuance shall be deemed to have occurred for less than the applicable Reference Price on such date of the Dilutive Issuance at such effective price) and the applicable VWAP Purchase Price shall be reduced to equal the Reference Price. If the Company enters into a Variable Rate Transaction, the Company shall be deemed to have issued Common Shares or Common Shares Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised. The Investor shall be entitled to seek injunctive relief against the Company and the Subsidiaries to preclude any such Dilutive Issuance that does not constitute an Exempt Issuance, which remedy shall be in addition to any right to collect damages, without the necessity of showing economic loss and without any bond or other security being required.
(iii) Reserved.
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(iv) No Other Similar Transactions. From and after the date of this Agreement until the termination of this Agreement pursuant to Section 7 (the “Similar Transaction Restricted Period”), none of the Company or any Subsidiary shall issue, sell or grant any, or otherwise dispose of or issue (or enter into any agreement, plan or arrangement contemplating any of the foregoing, or seek to utilize any existing agreement, plan or arrangement to effect any of the foregoing), or announce any offer, issuance, sale or grant or other disposition or issuance of (or any agreement, plan or arrangement therefor) any Common Shares or Common Shares Equivalents (or a combination of units thereof) in any “equity line of credit,” “at the market offering” or other similar continuous offering in which the Company may offer, issue or sell Common Shares or Common Shares Equivalents (or any combination of units thereof) at a future determined price, other than (a) Securities issued to the Investor pursuant to this Agreement and any of the other Transaction Documents or pursuant to any other agreement entered into by the Company and the Investor at any time after the date of this Agreement, and (b) any securities of the Company issued upon the exercise or exchange of or conversion of any Common Shares or Common Shares Equivalents held by the Investor at any time (such similar transaction other than those referred to clauses (a) and (b) hereof, a “Similar Transaction”). From and after the date immediately following the last day of the Similar Transaction Restricted Period, the Company and/or any Subsidiary shall be permitted to enter into an agreement, plan or arrangement to effect a Similar Transaction (and may publicly announce the same), and the Company and/or any Subsidiary shall be permitted to take all such actions necessary or as contemplated thereby in order to satisfy any conditions required thereunder to be satisfied by the Company and/or any Subsidiary in order to commence issuances and sales of Common Shares or Common Shares Equivalents (or a combination of units thereof) thereunder, including, without limitation, preparing and filing with the Commission one or more registration statements to register under the Securities Act the offer, issuance and sale by the Company of Common Shares or Common Shares Equivalents (or a combination of units thereof) thereunder, or to register the resale by any Person or Persons of Common Shares or Common Shares Equivalents (or a combination of units thereof) that may be issued or sold by the Company and/or any Subsidiary to such Person or Persons thereunder; provided, however, that none of the Company or Subsidiary may issue, sell or otherwise dispose of any Common Shares or Common Shares Equivalents (or a combination of units thereof) to or through any Person or Persons thereunder prior to the date of termination of this Agreement pursuant to Section 7. The Investor shall be entitled to seek injunctive relief against the Company and the Subsidiaries to preclude any such issuance, which remedy shall be in addition to any right to collect damages, without the necessity of showing economic loss and without any bond or other security being required.
Section 5.7. Corporate Existence. The Company shall take all steps necessary to preserve and continue the corporate existence of the Company; provided, however, that, except as provided in Section 5.8, nothing in this Agreement shall be deemed to prohibit the Company from engaging in any Fundamental Transaction with another Person. For the avoidance of doubt, nothing in this Section 5.7 shall in any way limit the Company’s right to terminate this Agreement in accordance with Section 7.2 (subject in all cases to Section 7.3).
Section 5.8. Fundamental Transaction. If a VWAP Purchase Notice has been delivered by the Company to the Investor under Article II and the applicable VWAP Purchase has or have not yet been fully settled in accordance with this Agreement (including, without limitation, the delivery by the Investor to the Company of the applicable total purchase price for all of the Shares to be purchased by the Investor in such VWAP Purchase as contemplated by Article II), the Company shall not effect any Fundamental Transaction until the expiration of three (3) Trading Days following the Trading Day on which the Investor has delivered to the Company the applicable total purchase price for all of the Shares to be purchased by the Investor in such VWAP Purchase.
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Section 5.9. Selling Restrictions.
(i) Except as expressly set forth below, the Investor covenants that from and after the Closing Date through and including the Trading Day next following the expiration or termination of this Agreement (the “Restricted Period”), neither the Investor nor any of its Affiliates nor any entity managed or controlled by the Investor (collectively, the “Restricted Persons” and each of the foregoing is referred to herein as a “Restricted Person”) shall, directly or indirectly, (x) engage in any Short Sales involving the Company’s securities or (y) grant any option to purchase, or acquire any right to dispose of or otherwise dispose for value of, any Common Shares or any securities convertible into or exercisable or exchangeable for any Common Shares, or enter into any swap, hedge or other similar agreement that transfers, in whole or in part, the economic risk of ownership of the Common Shares. Notwithstanding the foregoing, it is expressly understood and agreed that nothing contained herein shall (without implication that the contrary would otherwise be true) prohibit any Restricted Person during the Restricted Period from: (1) selling “long” (as defined under Rule 200 promulgated under Regulation SHO) the Securities; or (2) selling a number of Common Shares equal to the number of Shares that such Restricted Person is or may be obligated to purchase under a pending VWAP Purchase Notice but has not yet taken possession of so long as such Restricted Person (or the Broker-Dealer, as applicable) delivers the Shares purchased pursuant to such VWAP Purchase Notice to the purchaser thereof or the applicable Broker-Dealer upon such Restricted Person’s receipt of such Common Shares from the Company pursuant to this Agreement.
(ii) In addition to the foregoing, in connection with any sale of Securities (including any sale permitted by paragraph (i) above), the Investor shall comply in all respects with all applicable laws, rules, regulations and orders, including, without limitation, the requirements of the Securities Act and the Exchange Act.
Section 5.10. Effective Registration Statement. During the Investment Period, the Company shall use its commercially reasonable efforts to maintain the continuous effectiveness of each Registration Statement filed with the Commission under the Securities Act for the applicable Registration Period pursuant to and in accordance with the Registration Rights Agreement.
Section 5.11. Blue Sky. The Company shall take such action, if any, as is necessary by the Company in order to obtain an exemption for or to qualify the Securities for sale by the Company to the Investor pursuant to the Transaction Documents, and at the request of the Investor, the subsequent resale of Registrable Securities by the Investor, in each case, under applicable state securities or “Blue Sky” laws and shall provide evidence of any such action so taken to the Investor from time to time following the Closing Date; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 5.11, (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction.
Section 5.12. Non-Public Information. None of the Company or of the Subsidiaries, nor any of their respective directors, officers, employees or agents shall disclose any material non-public information about the Company or the Subsidiaries to the Investor, unless a simultaneous public announcement thereof is made by the Company.
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Section 5.13. Broker/Dealer. The Investor shall use one or more broker-dealers to effectuate all sales, if any, of the Shares that it may purchase or otherwise acquire from the Company pursuant to the Transaction Documents, as applicable, which (or whom) shall be unaffiliated with the Investor and not then currently engaged or used by the Company, and a DTC participant (collectively, the “Broker-Dealer”). The Investor shall, from time to time, provide the Company and the Transfer Agent with all information regarding the Broker-Dealer reasonably requested by the Company. The Investor shall be solely responsible for all fees and commissions of the Broker-Dealer, which shall not exceed customary brokerage fees and commissions and shall be responsible for designating only a DTC participant eligible to receive DWAC Shares.
Section 5.14. Disclosure Schedules.
(i) The Company may, from time to time, update the Disclosure Schedules as may be required to satisfy the conditions set forth in Section 6.2(i) and Section 6.3 (to the extent such condition set forth in Section 6.3 relates to the condition in Section 6.2(i) as of a specific Notice Delivery Time). For purposes of this Section 5.14, any disclosure made in a schedule to the Compliance Certificate shall be deemed to be an update of the Disclosure Schedule. Notwithstanding anything in this Agreement to the contrary, no update to the Disclosure Schedule pursuant to this Section 5.14 shall cure any breach of a representation or warranty of the Company contained in this Agreement and made prior to the update and shall not affect any of the Investor’s rights or remedies with respect thereto.
(ii) Notwithstanding anything to the contrary contained in the Disclosure Schedule or in this Agreement, the information and disclosure contained in any Schedule of the Disclosure Schedule shall be deemed to be disclosed and incorporated by reference in any other Schedule of the Disclosure Schedule as though fully set forth in such Schedule for which applicability of such information and disclosure is reasonably apparent. The fact that any item of information is disclosed in the Disclosure Schedule shall not be construed to mean that such information is required to be disclosed by this Agreement. Except as expressly set forth in this Agreement, such information and the thresholds (whether based on quantity, qualitative characterization, dollar amounts or otherwise) set forth herein shall not be used as a basis for interpreting the terms “material” or “Material Adverse Effect” or other similar terms in this Agreement.
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Section 5.15. Delivery of Compliance Certificates Upon Occurrence of Certain Events. Within three (3) Trading Days immediately following the (i) filing of (A) a post-effective amendment to the Prospectus Supplement required to be filed by the Company with the Commission pursuant to the Registration Rights Agreement, (B) a New Registration Statement required to be filed by the Company with the Commission pursuant to Section 2(c) of the Registration Rights Agreement, or (C) a post-effective amendment to a New Registration Statement required to be filed by the Company with the Commission pursuant to Section 2(c) of the Registration Rights Agreement, in each case with respect to a fiscal year ending after the Commencement Date, to register the resale of Securities by the Investor under the Securities Act pursuant to this Agreement and the Registration Rights Agreement, and (ii) the date the Company files with the Commission (A) a Prospectus Supplement to the Prospectus contained in the Registration Statement under the Securities Act, (B) an annual report on Form 20-F under the Exchange Act with respect to a fiscal year ending after the Commencement Date, (C) an amendment on Form 20-F/A to an annual report on Form 20-F under the Exchange Act with respect to a fiscal year ending after the Commencement Date, which contains amended material financial information (or a restatement of material financial information) or an amendment to other material information contained in a previously filed Form 20-F, and (D) a Commission Document under the Exchange Act (other than those referred to in clauses (ii)(A) and (ii)(B) of this Section 5.15), which contains amended material financial information (or a restatement of material financial information) or an amendment to other material information contained or incorporated by reference in the Registration Statement, or the Prospectus or any Prospectus Supplement contained in the Registration Statement (it being hereby acknowledged and agreed that the filing by the Company with the Commission of a periodic financial report that includes only updated financial information as of the end of such period shall not, in and of itself, constitute an “amendment” or “restatement” for purposes of clause (ii) of this Section 5.15), in each case of this clause (ii) if the Company is not also then required under the Securities Act to file a post-effective amendment to the Registration Statement or a post-effective amendment to any New Registration Statement, in each case with respect to a fiscal year ending after the Commencement Date, to register the resale of Securities by the Investor under the Securities Act pursuant to this Agreement and the Registration Rights Agreement, and in any case of this clause (ii), not more than once per calendar quarter, the Company shall (I) deliver to the Investor a Compliance Certificate, dated such date, and (II) cause to be furnished to the Investor an opinion “bring down” from outside counsel to the Company substantially in the form mutually agreed to by the Company and the Investor prior to the date of this Agreement, modified, as necessary, to relate to such Registration Statement or post-effective amendment, or the Prospectus contained therein as then amended or supplemented by such Prospectus Supplement, as applicable (each such opinion, a “Bring Down Opinion”).
Section 5.16. DTC Chill. If the Common Shares are chilled for deposit at DTC, become chilled, or receive a Stop Sign or other trading restrictions at any point while this Agreement remains outstanding, the Company's right to deliver VWAP Purchase Notices shall be suspended until such chill, Stop Sign, or trading restriction is lifted, and the Investor shall be entitled to deduct from any payment for Shares an amount equal to $1,500 per VWAP Purchase to cover documented costs associated with the deposit of chilled or otherwise trade restricted stocks for each issuance.
Section 5.17. Resale Restrictions. The Investor covenants and agrees that it shall not knowingly offer, sell or otherwise dispose of any Securities issued to the Investor pursuant to this Agreement to any Person who is a resident of Canada or to any Person on behalf of, or for the account or benefit of, any Person who is a resident of Canada. The Investor further covenants and agrees that it shall not offer, sell or otherwise dispose of any Securities through the facilities of the Canadian Securities Exchange or any other Canadian marketplace. The Investor shall ensure that all sales or other dispositions of Securities by the Investor are made (a) to Persons who are “U.S. persons” as defined in Regulation S promulgated under the Securities Act or (b) through the facilities of the Trading Market, in each case in compliance with all applicable securities laws. The provisions of this Section 5.17 shall apply to all Securities acquired by the Investor pursuant to this Agreement, including, without limitation, the Shares and the Conversion Shares.
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VI.
CONDITIONS TO CLOSING AND CONDITIONS TO THE SALE AND
PURCHASE OF THE SHARES
Section 6.1. Conditions Precedent to Closing. The Closing is subject to the satisfaction of each of the conditions set forth in this Section 6.1 on the Closing Date.
(i) Accuracy of the Investor’s Representations and Warranties. The representations and warranties of the Investor contained in this Agreement (a) that are not qualified by “materiality” shall be true and correct in all material respects as of the Closing Date, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct in all material respects as of such other date and (b) that are qualified by “materiality” shall be true and correct as of the Closing Date, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct as of such other date.
(ii) Accuracy of the Company’s Representations and Warranties. The representations and warranties of the Company contained in this Agreement (a) that are not qualified by “materiality” or “Material Adverse Effect” shall be true and correct in all material respects as of the Closing Date, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct in all material respects as of such other date and (b) that are qualified by “materiality” or “Material Adverse Effect” shall be true and correct as of the Closing Date, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct as of such other date.
(iii) Reserved.
(iv) Closing Deliverables. At the Closing, counterpart signature pages of this Agreement and the Registration Rights Agreement executed by each of the parties hereto shall be delivered as provided in Section 1.2. Simultaneously with the execution and delivery of this Agreement and the Registration Rights Agreement, the Investor’s counsel shall have received the closing certificate from the Company, dated as of the Closing Date, in the form of Exhibit B hereto.
Section 6.2. Conditions Precedent to Commencement. The right of the Company to commence delivering VWAP Purchase Notices under this Agreement, and the obligation of the Investor to accept VWAP Purchase Notices delivered to the Investor by the Company under this Agreement, are subject to the initial satisfaction, at the time of Commencement, of each of the conditions set forth in this Section 6.2.
(i) Accuracy of the Company’s Representations and Warranties. The representations and warranties of the Company contained in this Agreement (a) that are not qualified by “materiality” or “Material Adverse Effect” shall have been true and correct in all material respects when made and shall be true and correct in all material respects as of the Commencement Date with the same force and effect as if made on such date, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct in all material respects as of such other date and (b) that are qualified by “materiality” or “Material Adverse Effect” shall have been true and correct when made and shall be true and correct as of the Commencement Date with the same force and effect as if made on such date, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct as of such other date.
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(ii) Performance of the Company. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement and the Registration Rights Agreement to be performed, satisfied or complied with by the Company at or prior to the Commencement. The Company shall deliver to the Investor on the Commencement Date the compliance certificate substantially in the form attached hereto as Exhibit C (the “Compliance Certificate”).
(iii) No Material Notices. None of the following events shall have occurred and be continuing: (a) receipt of any request by the Commission or any other federal or state governmental authority for any additional information relating to the Prospectus Supplement, or the Prospectus contained therein or any Prospectus Supplement thereto, or for any amendment of or supplement to the Prospectus Supplement, the Prospectus contained therein or any Prospectus Supplement thereto; (b) the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the Prospectus Supplement or prohibiting or suspending the use of the Prospectus contained therein or any Prospectus Supplement thereto, or of the suspension of qualification or exemption from qualification of the Securities for offering or sale in any jurisdiction, or the initiation or contemplated initiation of any proceeding for such purpose; or (c) the occurrence of any event or the existence of any condition or state of facts, which makes any statement of a material fact made in the Prospectus Supplement, the Prospectus contained therein or any Prospectus Supplement thereto untrue or which requires the making of any additions to or changes to the statements then made in the Prospectus Supplement, the Prospectus contained therein or any Prospectus Supplement thereto in order to state a material fact required by the Securities Act to be stated therein or necessary in order to make the statements then made therein (in the case of the Prospectus or any Prospectus Supplement, in light of the circumstances under which they were made) not misleading, or which requires an amendment to the Prospectus Supplement or a supplement to the Prospectus contained therein or any Prospectus Supplement thereto to comply with the Securities Act or any other law. The Company shall not have any Knowledge of any event that would reasonably be expected to have the effect of causing the suspension of the effectiveness of the Prospectus Supplement or the prohibition or suspension of the use of the Prospectus contained therein or any Prospectus Supplement thereto in connection with the resale of the Registrable Securities by the Investor.
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(iv) Other Commission Filings. The Current Report shall have been filed with the Commission as required pursuant to Section 1.3. The final Prospectus included in any post-effective amendment to the Prospectus Supplement, and any Prospectus Supplement thereto, required to be filed by the Company with the Commission pursuant to Section 1.3 and the Registration Rights Agreement after the Commencement Date and prior to the applicable VWAP Purchase Date, shall have been filed with the Commission in accordance with Section 1.3 and the Registration Rights Agreement. The final Prospectus included in any New Registration Statement and in any post-effective amendment thereto, and any Prospectus Supplement thereto, required to be filed by the Company with the Commission pursuant to Section 1.3 and the Registration Rights Agreement after the Commencement Date and prior to the applicable VWAP Purchase Date (as applicable), shall have been filed with the Commission in accordance with Section 1.3 and the Registration Rights Agreement. All reports, schedules, registrations, forms, statements, information and other documents required to have been filed by the Company with the Commission pursuant to the reporting requirements of the Exchange Act, including all material required to have been filed pursuant to Section 13(a) or 15(d) of the Exchange Act, after the Commencement Date and prior to the applicable VWAP Purchase Date, shall have been filed with the Commission and, if any Registrable Securities are covered by a Registration Statement on Form S-3, such filings shall have been made within the applicable time period prescribed for such filing under the Exchange Act.
(v) No Suspension of Trading in or Notice of Delisting of Common Shares. Trading in the Common Shares shall not have been suspended by the Commission, the Trading Market or the FINRA (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Commencement Date), the Company shall not have received any final and non-appealable notice that the listing or quotation of the Common Shares on the Trading Market shall be terminated on a date certain (unless, prior to such date certain, the Common Shares are listed or quoted on any other Eligible Market), nor shall there have been imposed any suspension of, or restriction on, accepting additional deposits of the Common Shares, electronic trading or book-entry services by DTC with respect to the Common Shares that is continuing, the Company shall not have received any notice from DTC to the effect that a suspension of, or restriction on, accepting additional deposits of the Common Shares, electronic trading or book-entry services by DTC with respect to the Common Shares is being imposed or is contemplated (unless, prior to such suspension or restriction, DTC shall have notified the Company in writing that DTC has determined not to impose any such suspension or restriction).
(vi) Compliance with Laws. The Company shall have complied in all material respects with all applicable federal, state and local governmental laws, rules, regulations and ordinances in connection with the execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby, including, without limitation, the Company shall have obtained all permits and qualifications required by any applicable state securities or “Blue Sky” laws for the offer and sale of the Securities by the Company to the Investor and the subsequent resale of the Registrable Securities by the Investor (or shall have the availability of exemptions therefrom).
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(vii) No Injunction. No statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated, threatened or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of, or which would materially modify or delay any of the transactions contemplated by, the Transaction Documents.
(viii) No Proceedings or Litigation. No action, suit or proceeding before any arbitrator or any court or governmental authority shall have been commenced, and no inquiry or investigation by any governmental authority shall have been commenced, against the Company or any Subsidiary, or any of the officers, directors or Affiliates of the Company or any Subsidiary, seeking to restrain, prevent or change the transactions contemplated by the Transaction Documents, or seeking material damages in connection with such transactions.
(ix) Underwriter Consent. With respect to any VWAP Purchase to be effected during the period of any standstill, lock-up, or variable rate transaction prohibition contained in any underwriting agreement, placement agency agreement, or engagement letter between the Company and any underwriter, placement agent, or other financial advisor in connection with any registered offering of the Company's securities (the "Underwriter Standstill Period"), the Company shall have obtained the prior written consent of the applicable underwriter, placement agent, or financial advisor to such VWAP Purchase, to the extent such consent is required under the applicable agreement.
(x) Listing of Securities. All of the Securities that have been and may be issued pursuant to this Agreement shall have been approved for listing or quotation on the Trading Market as of the Commencement Date, subject only to notice of issuance.
(xi) No Material Adverse Effect. No condition, occurrence, state of facts or event constituting a Material Adverse Effect shall have occurred and be continuing.
(xii) No Bankruptcy Proceedings. No Person shall have commenced a proceeding against the Company pursuant to or within the meaning of any Bankruptcy Law. The Company shall not have, pursuant to or within the meaning of any Bankruptcy Law, (a) commenced a voluntary case, (b) consented to the entry of an order for relief against it in an involuntary case, (c) consented to the appointment of a Custodian of the Company for all or substantially all of the Company’s property, or (d) made a general assignment for the benefit of its creditors. A court of competent jurisdiction shall not have entered an order or decree under any Bankruptcy Law that (I) is for relief against the Company in an involuntary case, (II) appoints a Custodian of the Company for all or substantially all of the Company’s property, or (III) orders the liquidation of the Company or of the Subsidiaries.
(xiii) Reserved.
(xiv) Delivery of Commencement Irrevocable Transfer Agent Instructions and Notice of Effectiveness. The Commencement Irrevocable Transfer Agent Instructions shall have been executed by the Company and delivered to and acknowledged in writing by the Transfer Agent, and the Notice of Effectiveness relating to the Registration Statement shall have been executed by the Company’s outside counsel and delivered to the Transfer Agent.
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(xv) Reserved.
(xvi) Opinions of Company Counsel. On the Commencement Date, the Investor shall have received the opinion from counsel to the Company, dated the Commencement Date, in the forms mutually agreed to by the Company and the Investor prior to the date of this Agreement.
Section 6.3. Conditions Precedent to Purchases by Investor. The right of the Company to deliver VWAP Purchase Notices under this Agreement after the Commencement Date, and the obligation of the Investor to accept VWAP Purchase Notices under this Agreement after the Commencement Date, are subject to the satisfaction of each of the conditions set forth in this Section 6.3: with respect to each VWAP Purchase after the Commencement Date, (A) at the time of delivery of the applicable VWAP Purchase Notice to the Investor and (B) immediately prior to the applicable VWAP Purchase Commencement Time on the applicable VWAP Purchase Date for such VWAP Purchase (each such time referred to in clauses (i) and (ii) hereof, a “Notice Delivery Time”).
(i) Satisfaction of Certain Prior Conditions. Each of the conditions set forth in subsections (i), (ii), and (vii) through (xv) set forth in Section 6.2 shall be satisfied at the applicable Notice Delivery Time after the Commencement Date (with the terms “Commencement” and “Commencement Date” in the conditions set forth in subsections (i) and (ii) of Section 6.2 replaced with “applicable Notice Delivery Time”); provided, however, that the Company shall not be required to deliver the Compliance Certificate after the Commencement Date, except as provided in Section 5.1 and Section 6.2(ii).
(ii) Any Required New Registration Statement Effective. Any New Registration Statement covering the resale by the Investor of the Registrable Securities, included therein, and any post-effective amendment thereto, required to be filed by the Company with the Commission pursuant to the Registration Rights Agreement after the Commencement Date and prior to the applicable VWAP Purchase Date (as applicable), in each case shall have been declared effective under the Securities Act by the Commission and shall remain effective for the applicable Registration Period, and the Investor shall be permitted to utilize the Prospectus therein, and any Prospectus Supplement thereto, to resell (a) all of the Shares included in such New Registration Statement, and any post-effective amendment thereto, that have been issued and sold to the Investor hereunder pursuant to all VWAP Purchase Notices (as applicable) delivered by the Company to the Investor prior to such applicable VWAP Purchase Date, and (b) all of the Shares included in such new Registration Statement, and any post-effective amendment thereto, that are issuable pursuant to the applicable VWAP Purchase Notice delivered by the Company to the Investor with respect to a VWAP Purchase, to be effected hereunder on such applicable VWAP Purchase Date.
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(iii) Delivery of Subsequent Irrevocable Transfer Agent Instructions and Notice of Effectiveness. With respect to any post-effective amendment to the Registration Statement or any post-effective amendment to any Registration Statement, in each case declared effective by the Commission after the Commencement Date, the Company shall have delivered or caused to be delivered to the Transfer Agent (a) irrevocable instructions in the form substantially similar to the Commencement Irrevocable Transfer Agent Instructions executed by the Company and acknowledged in writing by the Transfer Agent and (b) the Notice of Effectiveness, in each case modified as necessary to refer to such Registration Statement or post-effective amendment and the Registrable Securities included therein, to issue the Registrable Securities included therein as DWAC Shares in accordance with the terms of this Agreement and the Registration Rights Agreement.
(iv) No Material Notices. None of the following events shall have occurred and be continuing: (a) receipt of any request by the Commission or any other federal or state governmental authority for any additional information relating to the Registration Statement or any post-effective amendment thereto, or any New Registration Statement or any post-effective amendment thereto, or the Prospectus contained in any of the foregoing or any Prospectus Supplement thereto; (b) the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of any Registration Statement or any post-effective amendment thereto, or prohibiting or suspending the use of the Prospectus contained in any of the foregoing or any Prospectus Supplement thereto, or of the suspension of qualification or exemption from qualification of the Securities for offering or sale in any jurisdiction, or the initiation or contemplated initiation of any proceeding for such purpose; or (c) the occurrence of any event or the existence of any condition or state of facts, which makes any statement of a material fact made in the Registration Statement or any post-effective amendment thereto, or the Prospectus contained in any of the foregoing or any Prospectus Supplement thereto untrue or which requires the making of any additions to or changes to the statements then made in the Registration Statement or any post-effective amendment thereto, or the Prospectus contained in any of the foregoing or any Prospectus Supplement thereto in order to state a material fact required by the Securities Act to be stated therein or necessary in order to make the statements then made therein (in the case of the Prospectus or any Prospectus Supplement, in light of the circumstances under which they were made) not misleading, or which requires an amendment or any post-effective amendment thereto, any New Registration Statement or any post-effective amendment thereto, or the Prospectus contained in any of the foregoing or any Prospectus Supplement thereto to comply with the Securities Act or any other law (other than the transactions contemplated by the applicable VWAP Purchase Notice delivered by the Company to the Investor with respect to a VWAP Purchase, to be effected hereunder on such applicable VWAP Purchase Date, and the settlement thereof). The Company shall not have any Knowledge of any event that would reasonably be expected to have the effect of causing the suspension of the effectiveness of the Registration Statement or any post-effective amendment thereto, or the prohibition or suspension of the use of the Prospectus contained in any of the foregoing or any Prospectus Supplement thereto in connection with the resale of the Registrable Securities by the Investor.
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(v) Other Commission Filings. The final Prospectus included in any post-effective amendment to any Prospectus required to be filed by the Company with the Commission pursuant to Section 1.3 and the Registration Rights Agreement after the Commencement Date and prior to the applicable VWAP Purchase Date, shall have been filed with the Commission in accordance with Section 1.3 and the Registration Rights Agreement. The final Prospectus included in any New Registration Statement and in any post-effective amendment thereto, and any Prospectus Supplement thereto, required to be filed by the Company with the Commission pursuant to Section 1.3 and the Registration Rights Agreement after the Commencement Date and prior to the applicable VWAP Purchase Date, shall have been filed with the Commission in accordance with Section 1.3 and the Registration Rights Agreement. All reports, schedules, registrations, forms, statements, information and other documents required to have been filed by the Company with the Commission pursuant to the reporting requirements of the Exchange Act, including all material required to have been filed pursuant to Section 13(a) or 15(d) of the Exchange Act, after the Commencement Date and prior to the applicable VWAP Purchase Date, shall have been filed with the Commission and, if any Registrable Securities are covered by a Registration Statement on Form S-3, such filings shall have been made within the applicable time period prescribed for such filing under the Exchange Act.
(vi) No Suspension of Trading in or Notice of Delisting of Common Shares. Trading in the Common Shares shall not have been suspended by the Commission, the Trading Market or FINRA (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the applicable VWAP Purchase Date, the Company shall not have received any final and non-appealable notice that the listing or quotation of the Common Shares on the Trading Market shall be terminated on a date certain (unless, prior to such date certain, the Common Shares are listed or quoted on any other Eligible Market), nor shall there have been imposed any suspension of, or restriction on, accepting additional deposits of the Common Shares, electronic trading or book-entry services by DTC with respect to the Common Shares that is continuing, the Company shall not have received any notice from DTC to the effect that a suspension of, or restriction on, accepting additional deposits of the Common Shares, electronic trading or book-entry services by DTC with respect to the Common Shares is being imposed or is contemplated (unless, prior to such suspension or restriction, DTC shall have notified the Company in writing that DTC has determined not to impose any such suspension or restriction).
(vii) Certain Limitations. The issuance and sale of the Shares issuable pursuant to the applicable VWAP Purchase Notice shall not (a) exceed the applicable VWAP Purchase Maximum Amount, or (b) cause the Beneficial Ownership Limitation to be exceeded.
(viii) Shares Authorized and Delivered. All of the Shares issuable pursuant to the applicable VWAP Purchase Notice shall have been duly authorized by all necessary corporate action of the Company. All Shares relating to all prior VWAP Purchase Notices required to have been received by the Investor as DWAC Shares under this Agreement prior to the applicable Notice Delivery Time for the applicable VWAP Purchase (as applicable) shall have been delivered to the Investor as DWAC Shares in accordance with this Agreement.
(ix) Bring Down Opinions of Company Counsel. The Investor shall have received (a) all Bring Down Opinions from outside counsel to the Company for which the Company was obligated to instruct their outside counsel to deliver to the Investor prior to the applicable Notice Delivery Time for the applicable VWAP Purchase (as applicable) and (b) all Compliance Certificates from the Company that the Company was obligated to deliver to the Investor prior to the applicable Notice Delivery Time for the applicable VWAP Purchase, in each case in accordance with Section 5.15.
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VII.
TERMINATION
Section 7.1. Automatic Termination; Termination by Consent. Unless earlier terminated as provided hereunder, this Agreement shall terminate automatically, without any further action or notice by any Person, on the earliest to occur of (i) the expiration of the Registration Statement pursuant to Rule 415(a)(5) of the Securities Act, (ii) the date on which the Common Shares shall have failed to be listed or quoted on the Trading Market or any Eligible Market, (iii) the thirtieth (30th) Trading Day next following the date on which, pursuant to or within the meaning of any Bankruptcy Law, the Company commences a voluntary case or any Person commences a proceeding against the Company, in each case that is not discharged or dismissed prior to such thirtieth (30th) Trading Day, and (iv) the date on which, pursuant to or within the meaning of any Bankruptcy Law, a Custodian is appointed for the Company or for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors. Subject to Section 7.3, this Agreement may be terminated at any time by the mutual written consent of the parties, effective as of the date of such mutual written consent unless otherwise provided in such written consent.
Section 7.2. Other Termination. Subject to Section 7.3, the Company may terminate this Agreement after the Commencement Date effective upon one (1) Trading Day’s prior written notice to the Investor in accordance with Section 9.4; provided, however, that (i) the Company shall have paid all fees and amounts to the Investor’s counsel required to be paid pursuant to Section 9.1 of this Agreement prior to such termination, and (ii) prior to issuing any press release, or making any public statement or announcement, with respect to such termination, the Company shall consult with the Investor and its counsel on the form and substance of such press release or other disclosure, which consent shall not be unreasonably delayed or withheld. Subject to Section 7.3, this Agreement may be terminated at any time by the mutual written consent of the parties, effective as of the date of such mutual written consent unless otherwise provided in such written consent. Subject to Section 7.3, the Investor shall have the right to terminate this Agreement effective upon ten (10) Trading Days’ prior written notice to the Company in accordance with Section 9.4, if: (a) any condition, occurrence, state of facts or event constituting a Material Adverse Effect has occurred and is continuing; (b) a Fundamental Transaction shall have occurred; (c) the Registration Statement is not filed by the applicable Filing Deadline therefor or declared effective by the Commission by the applicable Effectiveness Deadline (as defined in the Registration Rights Agreement) therefor, or the Company is otherwise in breach or default in any material respect under any of the other provisions of the Registration Rights Agreement, and, if such failure, breach or default is capable of being cured, such failure, breach or default is not cured within 10 Trading Days after notice of such failure, breach or default is delivered to the Company pursuant to Section 9.4; (d) while a Registration Statement, or any post-effective amendment thereto, is required to be maintained effective pursuant to the terms of the Registration Rights Agreement and the Investor holds any Registrable Securities, the effectiveness of such Registration Statement, or any post-effective amendment thereto, lapses for any reason (including, without limitation, the issuance of a stop order by the Commission) or such Registration Statement or any post-effective amendment thereto, the Prospectus contained therein or any Prospectus Supplement thereto otherwise becomes unavailable to the Investor for the resale of all of the Registrable Securities included therein in accordance with the terms of the Registration Rights Agreement, and such lapse or unavailability continues for a period of 20 consecutive Trading Days, other than due to acts of the Investor; (e) trading in the Common Shares on the Trading Market (or if the Common Shares are then listed on an Eligible Market, trading in the Common Shares on such Eligible Market) shall have been suspended and such suspension continues for a period of three (3) consecutive Trading Days; or (f) the Company is in material breach or default of this Agreement, and, if such breach or default is capable of being cured, such breach or default is not cured within 10 Trading Days after notice of such breach or default is delivered to the Company (as applicable) pursuant to Section 9.4. Unless notification thereof is required elsewhere in this Agreement (in which case such notification shall be provided in accordance with such other provision), the Company shall promptly (but in no event later than 24 hours) notify the Investor (and, if required under Applicable Law, including, without limitation, Regulation FD promulgated by the Commission, or under the applicable rules and regulations of the Trading Market (or if the Common Shares are then listed on an Eligible Market, the rules and regulations of such Eligible Market), the Company shall publicly disclose such information in accordance with Regulation FD and the applicable rules and regulations of the Trading Market, or the applicable rules and regulations of such Eligible Market, as applicable) upon becoming aware of any of the events set forth in the immediately preceding sentence.
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Section 7.3. Effect of Termination. In the event of termination by the Company or the Investor (other than by mutual termination) pursuant to Section 7.2, written notice thereof shall forthwith be given to the other party as provided in Section 9.4 and the transactions contemplated by this Agreement shall be terminated without further action by either party. If this Agreement is terminated as provided in Section 7.1 or Section 7.2, this Agreement shall become void and of no further force and effect, except that (i) the provisions of Article IV (Representations and Warranties of the Company), Article VIII (Indemnification), Article IX (Miscellaneous) and this Article VII (Termination) shall remain in full force and effect indefinitely notwithstanding such termination and (ii) so long as the Investor owns any Securities, the covenants and agreements of the Company contained in Article V (Covenants) shall remain in full force and effect for a period of six (6) months following such termination. Notwithstanding anything in this Agreement to the contrary, no termination of this Agreement by any party shall (i) become effective prior to the first Trading Day immediately following the settlement date related to any pending VWAP Purchase Notice that has not been fully settled in accordance with the terms and conditions of this Agreement (it being hereby acknowledged and agreed that no termination of this Agreement shall limit, alter, modify, change or otherwise affect any of the parties’ respective rights or obligations under the Transaction Documents with respect to any pending VWAP Purchase, and that the parties shall fully perform their respective obligations with respect to any such pending VWAP Purchase under the Transaction Documents, provided all of the conditions to the settlement thereof set forth in Article VI are timely satisfied), (ii) limit, alter, modify, change or otherwise affect the parties’ respective rights or obligations under the Registration Rights Agreement, all of which shall survive any such termination, or (iii) affect the Investor Expense Reimbursement paid to the Investor, all of which shall be non-refundable when paid as of the Closing Date pursuant to Section 9.1(i), regardless of whether any VWAP Purchases are made or settled hereunder or any subsequent termination of this Agreement. Nothing in this Section 7.3 shall be deemed to release the Company or the Investor from any liability for any breach or default under this Agreement or any of the other Transaction Documents to which it is a party, or to impair the respective rights of the Company and the Investor to compel specific performance by the other party of its obligations under the Transaction Documents to which it is a party.
VIII.
INDEMNIFICATION
Section 8.1. Indemnification of Investor. In consideration of the Investor’s execution and delivery of this Agreement and acquiring the Securities hereunder and in addition to all of the other respective obligations of the Company under the Transaction Documents to which it is a party, subject to the provisions of this Section 8.1, the Company shall indemnify and hold harmless the Investor, each of its directors, officers, shareholders, members, partners, employees, representatives, agents and advisors (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title), each Person, if any, who controls the Investor (within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act), and the respective directors, officers, shareholders, members, partners, employees, representatives, agents and advisors (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) of such controlling Persons (each, an “Investor Party”), from and against all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses (including all judgments, amounts paid in settlement, court costs, reasonable attorneys’ fees and costs of defense and investigation) (collectively, “Damages”) that any Investor Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents to which it is a party or (b) any action, suit, claim or proceeding (including for these purposes a derivative action brought on behalf of the Company) instituted against such Investor Party arising out of or resulting from the execution, delivery, performance or enforcement of the Transaction Documents, other than claims for indemnification within the scope of Section 6 of the Registration Rights Agreement; provided, however, that (x) the foregoing indemnity shall not apply to any Damages to the extent, but only to the extent, that such Damages resulted directly and primarily from any acts or failures to act, undertaken or omitted to be taken by such Investor Party through its fraud, bad faith, gross negligence, or willful or reckless misconduct.
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The Company shall reimburse any Investor Party promptly upon demand (with accompanying presentation of documentary evidence) for all legal and other costs and expenses reasonably incurred by such Investor Party in connection with (i) any action, suit, claim or proceeding, whether at law or in equity, to enforce compliance by the Company with any provision of the Transaction Documents to which it is a party or (ii) any other any action, suit, claim or proceeding, whether at law or in equity, with respect to which it is entitled to indemnification under this Section 8.1; provided that the Investor shall promptly reimburse the Company for all such legal and other costs and expenses to the extent a court of competent jurisdiction determines that any Investor Party was not entitled to such reimbursement.
An Investor Party’s right to indemnification or other remedies based upon the representations, warranties, covenants and agreements of the Company set forth in the Transaction Documents to which it is a party shall not in any way be affected by any investigation or knowledge of such Investor Party. Such representations, warranties, covenants and agreements shall not be affected or deemed waived by reason of the fact that an Investor Party knew or should have known that any representation or warranty might be inaccurate or that the Company failed to comply with any agreement or covenant. Any investigation by such Investor Party shall be for its own protection only and shall not affect or impair any right or remedy hereunder.
To the extent that the foregoing undertakings by the Company set forth in this Section 8.1 may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Damages which is permissible under Applicable Law.
Section 8.2. Indemnification Procedures. Promptly after an Investor Party receives notice of a claim or the commencement of an action for which the Investor Party intends to seek indemnification under Section 8.1, the Investor Party will notify the Company in writing of the claim or commencement of the action, suit or proceeding; provided, however, that failure to notify the Company will not relieve the Company from liability under Section 8.1, except to the extent it has been materially prejudiced by the failure to give notice. The Company will be entitled to participate in the defense of any claim, action, suit or proceeding as to which indemnification is being sought, and if the Company acknowledges in writing the obligation to indemnify the Investor Party against whom the claim or action is brought, the Company may (but will not be required to) assume the defense against the claim, action, suit or proceeding with counsel satisfactory to it. After the Company notifies the Investor Party that the Company wishes to assume the defense of a claim, action, suit or proceeding, the Company will not be liable for any further legal or other expenses incurred by the Investor Party in connection with the defense against the claim, action, suit or proceeding except that if, in the opinion of counsel to the Investor Party, it would be inappropriate under the applicable rules of professional responsibility for the same counsel to represent both the Company and such Investor Party. In such event, the Company will pay the reasonable fees and expenses of no more than one separate counsel for all such Investor Parties promptly as such fees and expenses are incurred. Each Investor Party, as a condition to receiving indemnification as provided in Section 8.1, will cooperate in all reasonable respects with the Company in the defense of any action or claim as to which indemnification is sought. The Company will not be liable for any settlement of any action effected without its prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned. The Company will not, without the prior written consent of the Investor Party, effect any settlement of a pending or threatened action with respect to which an Investor Party is, or is informed that it may be, made a party and for which it would be entitled to indemnification, unless the settlement includes an unconditional release of the Investor Party from all liability and claims which are the subject matter of the pending or threatened action.
The remedies provided for in this Article VIII are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Investor Party at law or in equity.
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IX.
MISCELLANEOUS
Section 9.1. Certain Fees and Expenses; Commencement Irrevocable Transfer Agent Instructions.
(i) Certain Fees and Expenses. Each party shall bear its own fees and expenses related to the transactions contemplated by this Agreement; provided, however, that immediately following the execution of this Agreement, the Company shall pay, by wire transfer of immediately available funds to an account designated by the Investor, an amount equal to $35,000 to be applied against the Investor’s reasonable out-of-pocket expenses, including the legal fees and disbursements of the Investor’s legal counsel, incurred by the Investor in connection with the preparation, negotiation, execution and delivery of the Transaction Documents by the Investor and its due diligence investigation of the Company (such amount, the “Investor Expense Reimbursement”). For the avoidance of doubt, the Investor Expense Reimbursement, shall be non-refundable when paid as of the Closing Date, regardless of whether any VWAP Purchases are made or settled hereunder or any subsequent termination of this Agreement. The Company shall pay all U.S. federal, state and local stamp and other similar transfer and other taxes and duties levied in connection with issuance of the Securities pursuant hereto.
(ii) Commitment Notes. In consideration for the Investor’s execution and delivery of this Agreement, the Company shall issue (i) the Initial Commitment Note to the Investor or its designee not later than 4:00 p.m. (New York City time) on the Trading Day immediately following the date hereof and prior to the delivery of the initial VWAP Purchase Notice and (ii) the Additional Commitment Note to the Investor or its designee within two (2) Trading Days after the aggregate VWAP Purchase amounts paid by the Investor under this Agreement equal or exceed $7,000,000. Each Commitment Note shall mature twenty-four (24) months after its respective date of issuance. The Conversion Shares shall be included in the Registration Statement. For the avoidance of doubt, each of the Commitment Notes shall be fully earned as of its respective date of issuance, regardless of whether any VWAP Purchases are effected hereunder and regardless of any subsequent termination of this Agreement. The Conversion Shares shall constitute Registrable Securities and shall be included in the Registration Statement and any post-effective amendment thereto, in each case in accordance with this Agreement and the Registration Rights Agreement.
(iii) Irrevocable Transfer Agent Instructions; Notice of Effectiveness. Upon the effectiveness of the Registration Statement, the Company shall deliver or cause to be delivered to the Transfer Agent (and thereafter, shall deliver or cause to be delivered to any subsequent transfer agent of the Company), (i) irrevocable instructions executed by the Company and acknowledged in writing by the Transfer Agent (the “Commencement Irrevocable Transfer Agent Instructions”) and (ii) the notice of effectiveness in the form attached as an exhibit to the Registration Rights Agreement (the “Notice of Effectiveness”), in each case directing the Transfer Agent to issue to the Investor or its designee all of the Commitment Shares as DWAC Shares in accordance with this Agreement and the Registration Rights Agreement. With respect to any post-effective amendment to the Registration Statement or any post-effective amendment to any New Registration Statement, in each case declared effective by the Commission after the Commencement Date, the Company shall deliver or cause to be delivered to the Transfer Agent (and thereafter, shall deliver or cause to be delivered to any subsequent transfer agent of the Company) (i) irrevocable instructions in the form substantially similar to the Commencement Irrevocable Transfer Agent Instructions executed by the Company and acknowledged in writing by the Transfer Agent and (ii) the Notice of Effectiveness, in each case modified as necessary to refer to such Registration Statement or post-effective amendment and the Registrable Securities included therein. For the avoidance of doubt, all Shares and Commitment Shares to be issued from and after Commencement to or for the benefit of the Investor pursuant to this Agreement shall be issued to the Investor or its designee only as DWAC Shares. The Company represents and warrants to the Investor that, while this Agreement is effective, no instruction other than those referred to in this Section 9.1(iii) will be given by the Company to the Transfer Agent, or any successor transfer agent of the Company, with respect to the Shares and Commitment Shares from and after Commencement, and the Shares and Commitment Shares (as applicable) covered by any New Registration Statement or post-effective amendment thereof, as applicable, shall otherwise be freely transferable on the books and records of the Company and no stop transfer instructions shall be maintained against the transfer thereof. The Company agrees that if the Company fails to fully comply with the provisions of this Section 9.1(iii) within three (3) Trading Days after the date on which the Investor has provided the deliverables referred to above that the Investor is required to provide to the Company or the Transfer Agent, the Company shall, at the Investor’s written instruction, purchase from the Investor all Common Shares purchased or acquired by the Investor pursuant to this Agreement that contain restrictive legends at the greater of (i) the purchase price paid for such Common Shares (as applicable) and (ii) the Closing Sale Price of the Common Shares on the date of the Investor’s written instruction.
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Section 9.2. Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial.
(i) The Company and the Investor acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Company, on the one hand, and the Investor, on the other hand, shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement by the other party and to enforce specifically the terms and provisions hereof (without the necessity of showing economic loss and without any bond or other security being required), this being in addition to any other remedy to which either party may be entitled by law or equity.
(ii) Each of the Company and the Investor (a) hereby irrevocably submits to the jurisdiction of the U.S. District Court and other courts of the United States sitting in the State of New York for the purposes of any suit, action or proceeding arising out of or relating to this Agreement, and (b) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of the Company and the Investor consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 9.2 shall affect or limit any right to serve process in any other manner permitted by law.
(iii) EACH OF THE COMPANY AND THE INVESTOR HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR DISPUTES RELATING HERETO. EACH OF THE COMPANY AND THE INVESTOR (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.2.
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Section 9.3. Entire Agreement. The Transaction Documents set forth the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, negotiations and understandings between the parties, both oral and written, with respect to such matters. There are no promises, undertakings, representations or warranties by either party relative to subject matter hereof not expressly set forth in the Transaction Documents. The Disclosure Schedule and all exhibits to this Agreement are hereby incorporated by reference in, and made a part of, this Agreement as if set forth in full herein.
Section 9.4. Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery or electronic mail delivery at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The address for such communications shall be:
If to the Company:
Optimi Health Corp.
269 David Brown Way
Princeton, B.C. V0X 1W0
Canada
Attention: Dane Stevens
Email: dane@optimihealth.ca
With a copy (which shall not constitute notice) to:
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
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If to the Investor:
Seven Knots, LLC
400 E. 66th Street
New York, NY 10065
Telephone Number: (516) 946-1288
Email: mjw@7-knots.com
Attention: Marissa J. Welner
With a copy (which shall not constitute notice) to:
Pryor Cashman LLP
7 Times Square
New York, NY 10036
Attention: M. Ali Panjwani, Esq.
Either party hereto may from time to time change its address for notices by giving at least five (5) days’ advance written notice of such changed address to the other party hereto.
Section 9.5. Waivers. No provision of this Agreement may be waived by the parties from and after the date that is one (1) Trading Day immediately preceding the filing of the Registration Statement with the Commission. Subject to the immediately preceding sentence, no provision of this Agreement may be waived other than in a written instrument signed by the party against whom enforcement of such waiver is sought. No failure or delay in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercises thereof or of any other right, power or privilege.
Section 9.6. Amendments. No provision of this Agreement may be amended by the parties from and after the date that is one (1) Trading Day immediately preceding the filing of the Registration Statement with the Commission. Subject to the immediately preceding sentence, no provision of this Agreement may be amended other than by a written instrument signed by both parties hereto.
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Section 9.7. Headings. The article, section and subsection headings in this Agreement are for convenience only and shall not constitute a part of this Agreement for any other purpose and shall not be deemed to limit or affect any of the provisions hereof. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.
Section 9.8. Construction. The parties agree that each of them and their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents. In addition, each and every reference to share prices and number of Common Shares in any Transaction Document shall, in all cases, be subject to adjustment for any stock splits, stock combinations, stock dividends, recapitalizations, reorganizations and other similar transactions that occur on or after the date of this Agreement. Any reference in this Agreement to “Dollars” or “$” shall mean the lawful currency of the United States of America. Any references to “Section” or “Article” in this Agreement shall, unless otherwise expressly stated herein, refer to the applicable Section or Article of this Agreement.
Section 9.9. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors. Neither the Company nor the Investor may assign this Agreement or any of their respective rights or obligations hereunder to any Person.
Section 9.10. No Third Party Beneficiaries. Except as expressly provided in Article VIII, this Agreement is intended only for the benefit of the parties hereto and their respective successors, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
Section 9.11. Governing Law. This Agreement shall be governed by and construed in accordance with the internal procedural and substantive laws of the State of New York, without giving effect to the choice of law provisions of such state that would cause the application of the laws of any other jurisdiction.
Section 9.12. Survival. The representations, warranties, covenants and agreements of the Company and the Investor contained in this Agreement shall survive the execution and delivery hereof until the termination of this Agreement; provided, however, that (i) the provisions of Article IV (Representations and Warranties of the Company), Article VII (Termination), Article VIII (Indemnification) and this Article IX (Miscellaneous) shall remain in full force and effect indefinitely notwithstanding such termination, and, (ii) so long as the Investor owns any Securities, the covenants and agreements of the Company and the Investor contained in Article V (Covenants), shall remain in full force and effect notwithstanding such termination for a period of six (6) months following such termination.
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Section 9.13. Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature or signature delivered by e-mail in a “.pdf” format data file, including any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com, www.echosign.adobe.com, etc., shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original signature.
Section 9.14. Publicity. The Company shall afford the Investor and its counsel with a reasonable opportunity to review and comment upon, shall consult with the Investor and its counsel on the form and substance of, and shall give due consideration to all such comments from the Investor or its counsel on, any press release, Commission filing or any other public disclosure made by or on behalf of the Company relating to the Investor, its purchases hereunder or any aspect of the Transaction Documents or the transactions contemplated thereby, prior to the issuance, filing or public disclosure thereof. For the avoidance of doubt, the Company shall not be required to submit for review any such disclosure (i) contained in periodic reports filed with the Commission under the Exchange Act if it shall have previously provided the same disclosure to the Investor or its counsel for review in connection with a previous filing or (ii) any Prospectus Supplement if it contains disclosure that does not reference the Investor, its purchases hereunder or any aspect of the Transaction Documents or the transactions contemplated thereby.
Section 9.15. Severability. The provisions of this Agreement are severable and, in the event that any court of competent jurisdiction shall determine that any one or more of the provisions or part of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement, and this Agreement shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part of such provision, had never been contained herein, so that such provisions would be valid, legal and enforceable to the maximum extent possible.
Section 9.16. Further Assurances. From and after the Closing Date, upon the request of the Investor or the Company, each of the Company and the Investor shall execute and deliver such instrument, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officer as of the date first above written.
| THE COMPANY: | ||
| OPTIMI HEALTH CORP.: | ||
| By: | ||
| Name: | ||
| Title: | ||
| THE INVESTOR: | ||
| SEVEN KNOTS, LLC: | ||
| By: | ||
| Name: | ||
| Title: | ||
ANNEX I TO THE
COMMON Shares PURCHASE AGREEMENT
DEFINITIONS
“Additional Commitment Note” shall have the meaning assigned to such term in Section 2.6.
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with a Person, as such terms are used in and construed under Rule 144. With respect to the Investor, without limitation, any Person owning, owned by, or under common ownership with the Investor, and any investment fund or managed account that is managed on a discretionary basis by the same investment manager as the Investor will be deemed to be an Affiliate.
“Agreement” shall have the meaning assigned to such term in the preamble of this Agreement.
“Applicable Laws” shall have the meaning assigned to such term in Section 4.13.
“Bankruptcy Law” means Title 11, U.S. Code, or any similar U.S. federal or state law for the relief of debtors.
“Beneficial Ownership Limitation” shall have the meaning assigned to such term in Section 2.5.
“Bloomberg” means Bloomberg, L.P.
“Bring Down Opinion” shall have the meaning assigned to such term in Section 5.15.
“Broker-Dealer” shall have the meaning assigned to such term in Section 5.13.
“Charter” shall have the meaning assigned to such term in Section 3.3.
“Closing” shall have the meaning assigned to such term in Section 1.2
“Closing Date” means the date of this Agreement.
“Closing Sale Price” means, for the Common Shares as of any date, the greater of (i) the then current book value of the Common Shares, and (ii) the last closing trade price for the Common Shares on the Trading Market (or, if the Common Shares are then listed on an Eligible Market, on such Eligible Market), as reported by Bloomberg, or, if the Trading Market (or such Eligible Market, as applicable) begins to operate on an extended hours basis and does not designate the closing trade price for the Common Shares, then the last trade price for the Common Shares prior to 4:00 p.m., New York City time, as reported by Bloomberg. All such determinations shall be appropriately adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions during such period.
“Code” means the Internal Revenue Code of 1986, as amended.
I-1
“Commencement” shall have the meaning assigned to such term in Section 2.1
“Commencement Date” shall have the meaning assigned to such term in Section 2.1.
“Commencement Irrevocable Transfer Agent Instructions” shall have the meaning assigned to such term in Section 9.1(iii).
“Commission” means the U.S. Securities and Exchange Commission or any successor entity.
“Commission Documents” shall mean (1) all reports, schedules, registrations, forms, statements, information and other documents filed with or furnished to the Commission by the Company pursuant to the reporting requirements of the Exchange Act, including all material filed with or furnished to the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, and which hereafter shall be filed with or furnished to the Commission by the Company, including, without limitation, the Current Report, (2) each Registration Statement, as the same may be amended from time to time, the Prospectus contained therein and each Prospectus Supplement thereto and (3) all information contained in such filings and all documents and disclosures that have been and heretofore shall be incorporated by reference therein.
“Commitment Notes” shall have the meaning assigned to such term in Section 2.6 and shall mean, collectively, the Initial Commitment Note and the Additional Commitment Note.
“Common Shares” shall have the meaning assigned to such term in the recitals of this Agreement.
“Common Shares Equivalents” means 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.
“Company” shall have the meaning assigned to such term in the preamble of this Agreement.
“Compliance Certificate” shall have the meaning assigned to such term in Section 6.2(ii).
“Current Report” shall have the meaning assigned to such term in Section 1.3.
“Custodian” shall mean any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.
“Damages” shall have the meaning assigned to such term in Section 8.1.
“Dilutive Issuance” shall have the meaning assigned to such term in Section 5.6(ii).
“Disclosure Schedule” shall have the meaning assigned to such term in Section 4.1.
“Disqualification Event” shall have the meaning assigned to such term in Section 4.37.
I-2
“DTC” means The Depository Trust Company, a subsidiary of The Depository Trust & Clearing Corporation, or any successor thereto.
“DWAC” shall have the meaning assigned to such term in Section 3.10.
“DWAC Shares” means Common Shares issued pursuant to this Agreement that are (i) issued in electronic form, (ii) freely tradable and transferable and without restriction on resale and without stop transfer instructions maintained against the transfer thereof and (iii) timely credited by the Company to the Investor’s or its designated Broker-Dealer at which the account or accounts to be credited with the Securities being purchased by Investor are maintained specified DWAC account with DTC under its Fast Automated Securities Transfer (FAST) Program, or any similar program hereafter adopted by DTC performing substantially the same function.
“EDGAR” means the Commission’s Electronic Data Gathering, Analysis and Retrieval System.
“Effective Date” means, with respect to the Registration Statement filed pursuant to Section 2(a) of the Registration Rights Agreement (or any post-effective amendment thereto) or any New Registration Statement filed pursuant to Section 2(c) of the Registration Rights Agreement (or any post-effective amendment thereto), as applicable, the date on which the Registration Statement (or any post-effective amendment thereto) is declared effective by the Commission.
“Effectiveness Deadline” shall have the meaning assigned to such term in the Registration Rights Agreement.
“Eligible Market” means The Over The Counter Market, The New York Stock Exchange American, The Nasdaq Capital Market, The Nasdaq Global Market, or The Nasdaq Global Select Market (or any nationally recognized successor to any of the foregoing).
“Environmental Laws” shall have the meaning assigned to such term in Section 4.16 hereof.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder.
“Exempt Issuance” means the issuance of (a) Common Shares, options or other equity incentive awards to employees, officers, directors or vendors of the Company pursuant to any equity incentive plan duly adopted for such purpose, by the Company’s Board of Directors or a majority of the members of a committee of the Board of Directors established for such purpose, (b) (1) any Securities issued to the Investor pursuant to this Agreement, (2) any securities issued upon the exercise or exchange of or conversion of any Common Shares or Common Shares Equivalents held by the Investor at any time, or (3) any securities issued upon the exercise or exchange of or conversion of any Common Shares Equivalents that are issued and outstanding on the date of this Agreement, provided that such securities referred to in this clause (3) have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities, (c) securities issued pursuant to acquisitions, divestitures, licenses, partnerships, collaborations or strategic transactions approved by the Company’s Board of Directors or a majority of the members of a committee of directors established for such purpose, which acquisitions, divestitures, licenses, partnerships, collaborations or strategic transactions can have a Variable Rate Transaction component, provided that any such issuance shall only be to a Person (or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company or an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, or (d) Common Shares issued by the Company by any method deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act, exclusively through a registered broker-dealer, as the Company’s sales agent, pursuant to one or more written agreements between the Company and such registered broker-dealer.
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“FCPA” shall have the meaning assigned to such term in Section 4.33.
“Filed Commission Document” shall have the meaning assigned to such term in Section 4.6.
“Filing Deadline” shall have the meaning assigned to such term in the Registration Rights Agreement.
“FINRA” means the Financial Industry Regulatory Authority.
“Floor Price” means, with respect to any VWAP Purchase, (i) the price designated by the Company in the applicable VWAP Purchase Notice, if any, or (ii) if no such price is designated, a price equal to 85% of the Closing Sale Price on the Trading Day the applicable VWAP Purchase Notice is delivered to the Investor.
“Fundamental Transaction” means that (i) the Company shall, directly or indirectly, in one or more related transactions, (1) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person, with the result that the holders of the Company’s capital stock immediately prior to such consolidation or merger together beneficially own less than 50% of the outstanding voting power of the surviving or resulting corporation, or (2) sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, or (3) take action to facilitate a purchase, tender or exchange offer by another Person that is accepted by the holders of the Company’s Voting Stock representing more than 50% of the total voting power of the Company’s Voting Stock (excluding any Voting Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (4) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires Voting Stock of the Company representing more than 50% of the total voting power of the Company’s Voting Stock (not including any Voting Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), or (5) reorganize, recapitalize or reclassify its Common Shares, or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Stock of the Company representing more than 50% of the total voting power of the Company’s Voting Stock.
“Initial Commitment Note” shall have the meaning assigned to such term in Section 2.6.
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“Investment Period” means the period commencing on the Effective Date of the Registration Statement and expiring on the date this Agreement is terminated pursuant to Article VII.
“Investor” shall have the meaning assigned to such term in the preamble of this Agreement.
“Investor Expense Reimbursement” shall have the meaning assigned to such term in Section 9.1(i).
“Investor Party” shall have the meaning assigned to such term in Section 8.1.
“Issuer Covered Person” shall have the meaning assigned to such term in Section 4.37.
“IT Systems” shall have the meaning assigned to such term in Section 4.36.
“Knowledge” means, with respect to the Company, the actual knowledge of the Company’s Chief Executive Officer and its Chief Financial Officer, in each case after reasonable inquiry of all officers, directors and employees of the Company and its Subsidiaries under their direct supervision who would reasonably be expected to have knowledge or information with respect to the matter in question.
“Material Adverse Effect” means any material adverse effect on (i) the enforceability of any Transaction Document, (ii) the results of operations, assets, business or financial condition of the Company and its Subsidiaries, taken as a whole, other than any material adverse effect that resulted primarily from (A) any change in the United States or foreign economies or securities or financial markets in general, (B) any change that generally affects the industry in which the Company and its Subsidiaries operate, (C) any change arising in connection with earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions existing as of the date hereof, (D) any action taken by the Investor, its Affiliates or its or their successors and assigns with respect to the transactions contemplated by this Agreement and the Registration Rights Agreement, (E) the effect of any change in applicable laws or accounting rules, or (F) any change resulting from compliance with terms of this Agreement or the Registration Rights Agreement or the consummation of the transactions contemplated by this Agreement and the Registration Rights Agreement, or (iii) the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document to which it is a party to be performed as of the date of determination.
“Material Agreements” shall have the meaning assigned to such term in Section 4.17.
“Money Laundering Laws” shall have the meaning assigned to such term in Section 4.34.
“New Registration Statement” shall have the meaning assigned to such term in the Registration Rights Agreement.
I-5
“Notice Delivery Time” shall have the meaning assigned to such term in Section 6.3.
“Notice of Effectiveness” shall have the meaning assigned to such term in Section 9.1(iv).
“OFAC” shall have the meaning assigned to such term in Section 4.35.
“Person” means any person or entity, whether a natural person, trustee, corporation, partnership, limited partnership, limited liability company, trust, unincorporated organization, business association, firm, joint venture, governmental agency or authority.
“Personal Data” shall have the meaning assigned to such term in Section 4.36.
“Prospectus” means the prospectus in the form included in a Registration Statement, as supplemented from time to time by any Prospectus Supplement, including the documents incorporated by reference therein.
“Prospectus Supplement” means any prospectus supplement to the Prospectus filed with the Commission from time to time pursuant to Rule 424(b) under the Securities Act, including the documents incorporated by reference therein.
“Reference Period” shall have the meaning assigned to such term in Section 5.6(ii).
“Reference Price” shall have the meaning assigned to such term in Section 5.6(ii).
“Registrable Securities” shall have the meaning assigned to such term in the Registration Rights Agreement, and shall include the Commitment Shares.
“Registration Rights Agreement” shall have the meaning assigned to such term in the recitals hereof.
“Regulation D” shall have the meaning assigned to such term in the recitals of this Agreement.
“Restricted Period” shall have the meaning assigned to such term in Section 5.9(i).
“Restricted Person” shall have the meaning assigned to such term in Section 5.9(i).
“Restricted Persons” shall have the meaning assigned to such term in Section 5.9(i).
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect.
“Sale Price” means any trade price for an Common Share executed on the Trading Market (or if the Common Shares are then traded on an Eligible Market, on such Eligible Market) between 9:30 a.m., New York City time, or such other time publicly announced by the Trading Market or such other Eligible Market, as the case may be, and ending at 4:00 p.m., New York City time, on the applicable Purchase Date, as reported by Bloomberg.
I-6
“Sanctioned Countries” shall have the meaning assigned to such term in Section 4.35.
“Sanctioned Country” shall have the meaning assigned to such term in Section 4.35.
“Sanctioned Persons” shall have the meaning assigned to such term in Section 4.35.
“Sanctions” shall have the meaning assigned to such term in Section 4.35.
“Section 4(a)(2)” shall have the meaning assigned to such term in the recitals of this Agreement.
“Securities” means, collectively, the Shares and the Commitment Shares.
“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder.
“Shares” shall mean the Common Shares that are and/or may be purchased by the Investor under this Agreement pursuant to one or more VWAP Purchase Notices, but not including the Commitment Shares.
“Short Sales” shall mean “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act.
“Stock Plan” shall have the meaning assigned to such term in Section 4.22.
“Subsidiary” and “Subsidiaries” shall have the meanings assigned to such terms in Section 4.7.
“Total Purchase Commitment” shall have the meaning assigned to such term in Section 1.1.
“Trading Day” shall mean any day on which the Trading Market or, if the Common Shares are then listed on an Eligible Market, such Eligible Market is open for trading, including any day on which the Trading Market (or such Eligible Market, as applicable) is open for trading for a period of time less than the customary time.
“Trading Market” means The Nasdaq Stock Market LLC or, if the Common Shares are not then listed on The Nasdaq Stock Market LLC, then the Canadian Securities Exchange, or if the Common Shares are not then listed on the Canadian Securities Exchange, then any other national securities exchange or trading system on which the Common Shares are then listed or quoted.
“Transaction Documents” means, collectively, this Agreement (as qualified by the Disclosure Schedule) and the exhibits hereto, the Registration Rights Agreement, the Commitment Notes, and each of the other agreements, documents, certificates and instruments entered into or furnished by the parties hereto in connection with the transactions contemplated hereby and thereby.
I-7
“Transfer Agent” means Endeavor Trust Corporation, or such other Person who is then serving as the transfer agent for the Company in respect of the Common Shares.
“Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any equity or debt securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional Common Shares or Common Shares Equivalents either (A) at a conversion price, exercise price, 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 equity or debt 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 equity or debt 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 (including, without limitation, any “full ratchet” or “weighted average” anti-dilution provisions, but not including any standard anti-dilution protection for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction), (ii) issues or sells any equity or debt securities, including without limitation, Common Shares or Common Shares Equivalents, either (A) at a 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 (other than standard anti-dilution protection for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction), or (B) that are subject to or contain any put, call, redemption, buy-back, price-reset or other similar provision or mechanism (including, without limitation, a “Black-Scholes” put or call right, other than in connection with a “fundamental transaction”) that provides for the issuance of additional equity securities of the Company or the payment of cash by the Company, or (iii) enters into any agreement with any Person other than the Investor or an Affiliate of the Investor, including, but not limited to, an “equity line of credit” or “at the market offering” or other continuous offering or similar offering of Common Shares or Common Shares Equivalents, whereby the Company may sell Common Shares or Common Shares Equivalents at a future determined price.
“Voting Stock” means securities of any class or kind having the power to vote generally for the election of directors, managers or other voting members of the governing body of the Company or any successor thereto.
“VWAP” means, for the Common Shares for a specified period, the dollar volume-weighted average price for the Common Shares on the Trading Market (or, if the Common Shares are then listed on an Eligible Market, on such Eligible Market), for such period, as reported by Bloomberg through its “AQR” function. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period.
“VWAP Purchase” shall have the meaning assigned to such term in Section 2.2.
“VWAP Purchase Commencement Time” means, with respect to a VWAP Purchase made pursuant to Section 2.2, 4:00 a.m., New York City time, on the applicable VWAP Purchase Date, or such other time publicly announced by the Trading Market (or, if the Common Shares are then listed on an Eligible Market, by such Eligible Market) as the official open (or commencement) of trading on the Trading Market (or such Eligible Market, as applicable) on such applicable VWAP Purchase Date.
“VWAP Purchase Confirmation” shall have the meaning assigned to such term in Section 2.2 and shall be in the form attached hereto as Annex 2.2B.
I-8
“VWAP Purchase Date” means, subject to compliance with the policies of the Canadian Securities Exchange, with respect to a VWAP Purchase made pursuant to Section 2.2, the Trading Day on which the Investor receives, after 6:00 a.m. (New York City time) but prior to 9:00 a.m. (New York City time) on such VWAP Purchase Date, a valid VWAP Purchase Notice for such VWAP Purchase in accordance with this Agreement.
“VWAP Purchase Maximum Amount” means, with respect to a VWAP Purchase made pursuant to Section 2.2, subject to the Beneficial Ownership Limitation, a number of Common Shares equal to 30% of the trading volume in the Company’s Common Shares on the applicable Eligible Market during the applicable VWAP Purchase Period on the applicable VWAP Purchase Date.
“VWAP Purchase Notice” means, with respect to a VWAP Purchase made pursuant to Section 2.2, an irrevocable written notice delivered by the Company to the Investor directing the Investor to purchase a VWAP Purchase Share Amount (such specified VWAP Purchase Share Amount subject to adjustment as set forth in Section 2.2 as necessary to give effect to the VWAP Purchase Maximum Amount), at the applicable VWAP Purchase Price therefor on the applicable VWAP Purchase Date for such VWAP Purchase in accordance with this Agreement.
“VWAP Purchase Period” means, with respect to a VWAP Purchase made pursuant to Section 2.2, the period on the applicable VWAP Purchase Date for such VWAP Purchase beginning at the applicable VWAP Purchase Commencement Time and ending at the applicable VWAP Purchase Termination Time.
“VWAP Purchase Price” means, in each case subject to the rules and regulations of The Nasdaq Stock Market LLC and the Canadian Securities Exchange (if the Company’s securities are still then listed on the Canadian Securities Exchange), with respect to a VWAP Purchase made pursuant to Section 2.2, the purchase price per Share to be purchased by the Investor in such VWAP Purchase equal to the lesser of ninety-seven percent (97%) of (i) the lowest sale price of the Common Shares on the applicable VWAP Purchase Date and (ii) the VWAP during the applicable VWAP Purchase Period, provided that in no event will the VWAP Purchase Price be less than the closing price of the Common Shares on the Canadian Securities Exchange less the maximum permitted discount permitted by the Canadian Securities Exchange on the trading day the applicable VWAP Purchase Notice is delivered to Investor (if the Company’s securities are still then listed on the Canadian Securities Exchange).
“VWAP Purchase Share Amount” means, with respect to a VWAP Purchase made pursuant to Section 2.2, the number of Shares to be purchased by the Investor in such VWAP Purchase as specified by the Company in the applicable VWAP Purchase Notice, which number of Shares shall not exceed the applicable VWAP Purchase Maximum Amount.
“VWAP Purchase Share Percentage” means, with respect to a VWAP Purchase made pursuant to Section 2.2, thirty percent (30%).
“VWAP Purchase Share Volume Maximum” means, with respect to a VWAP Purchase made pursuant to Section 2.2, a number of Common Shares equal to (i) the number of Shares specified by the Company in the applicable VWAP Purchase Notice as the VWAP Purchase Share Amount to be purchased by the Investor in such VWAP Purchase, divided by (ii) the VWAP Purchase Share Percentage (to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction).
“VWAP Purchase Termination Time” means, with respect to a VWAP Purchase made pursuant to Section 2.2, the earliest of (i) 2:00 p.m., New York City time, on the applicable VWAP Purchase Date, or such other time publicly announced by the Trading Market (or, if the Common Shares are then listed on an Eligible Market, by such Eligible Market) as the official close of trading on the Trading Market on such applicable VWAP Purchase Date, (ii) such time, from and after the VWAP Purchase Commencement Time for such VWAP Purchase, that the trading volume of Common Shares traded on the Trading Market (or, if the Common Shares are then listed on an Eligible Market, on such Eligible Market) has exceeded the applicable VWAP Purchase Share Volume Maximum and (iii) such time, from and after the VWAP Purchase Commencement Time for such VWAP Purchase, that any sale price of the Common Shares traded on the Trading Market (or, if the Common Shares are then listed on an Eligible Market, on such Eligible Market) has fallen below the applicable Floor Price for such applicable VWAP Purchase.
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EXHIBIT A TO THE
COMMON Shares PURCHASE AGREEMENT
REGISTRATION RIGHTS AGREEMENT
[TO BE FURNISHED SEPARATELY]
A-1
EXHIBIT B TO THE
COMMON Shares PURCHASE AGREEMENT
CERTiFICATE OF THE COMPANY
CLOSING CERTIFICATE
__, 2026
The undersigned, the Chief Executive Officer of Optimi Health Corp., a corporation incorporated under the Business Corporation Act of British Columbia (the “Company”), delivers this certificate in connection with the Common Shares Purchase Agreement, dated as of August 13, 2026 (the “Agreement”), by and between the Company and Seven Knots, LLC, a Montana limited liability company (the “Investor”), and hereby certifies on the date hereof that (capitalized terms used herein without definition have the meanings assigned to them in the Agreement):
1. Attached hereto as Exhibit A is a true, complete and correct copy of the Articles of the Company, as amended through the date hereof, , which is in full force and effect on the date hereof, and no action has been taken by the Company in contemplation of any such amendment or the dissolution, merger or consolidation of the Company.
2. The Board of Directors of the Company has approved the transactions contemplated by the Transaction Documents; said approval has not been amended, rescinded or modified and remains in full force and effect as of the date hereof. Attached hereto as Exhibit B are true, correct and complete copies of the resolutions duly adopted by the Board of Directors of the Company via unanimous written consent on [●], 2026.
3. Each person who, as an officer of the Company, or as attorney-in-fact of an officer of the Company, signed the Transaction Documents to which the Company is a party, was duly elected, qualified and acting as such officer or duly appointed and acting as such attorney-in-fact, and the signature of each such person appearing on any such document is his genuine signature.
IN WITNESS WHEREOF, I have signed my name as of the date first above written.
| Name: | Dane Stevens | |
| Title: | Chief Executive Officer | |
B-1
EXHIBIT C TO THE
COMMON Shares PURCHASE AGREEMENT
COMPLIANCE CERTIFICATE
The undersigned, the [●] of Optimi Health Corp., a corporation incorporated under the Business Corporation Act of British Columbia (the “Company”), delivers this certificate in connection with the Common Shares Purchase Agreement, dated as of August 13, 2026 (the “Agreement”), by and between the Company and Seven Knots, LLC, a Montana limited liability company (the “Investor”), and hereby certifies on the date hereof that, to the best of his knowledge after reasonable investigation, on behalf of the Company (capitalized terms used herein without definition have the meanings assigned to them in the Agreement):
1. The undersigned is the duly appointed [●] of the Company.
2. Except as set forth in the attached Disclosure Schedule, the representations and warranties of the Company set forth in Article IV of the Agreement (i) that are not qualified by “materiality” or “Material Adverse Effect” are true and correct in all material respects as of [the Commencement Date] [the date hereof] with the same force and effect as if made on [the Commencement Date] [the date hereof], except to the extent such representations and warranties are as of another date, in which case, such representations and warranties are true and correct in all material respects as of such other date and (ii) that are qualified by “materiality” or “Material Adverse Effect” are true and correct as of [the Commencement Date] [the date hereof] with the same force and effect as if made on [the Commencement Date] [the date hereof], except to the extent such representations and warranties are as of another date, in which case, such representations and warranties are true and correct as of such other date.
3. Each of the Company has performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Agreement and the Registration Rights Agreement to be performed, satisfied or complied with by the Company, respectively, [at or prior to Commencement][on or prior to the date hereof].
4. The Shares issuable in respect of each VWAP Purchase Notice effected pursuant to the Agreement shall be delivered to the Investor electronically as DWAC Shares, and shall be freely tradable and transferable and without restriction on resale and without any stop transfer instructions maintained against such Shares.
5. As of [the Commencement Date][the date hereof], the Company does not possess any material non-public information.
6. As of [the Commencement Date][the date hereof], the Company has reserved out of its authorized and unissued Common Shares, [●] Common Shares solely for the purpose of effecting VWAP Purchases under the Agreement.
7. No stop order suspending the effectiveness of the Registration Statement or the use of the Prospectus under the Securities Act has been issued and no proceedings for such purpose or pursuant to Section 8A of the Securities Act are pending before or, to the Knowledge of the Company, threatened by the Commission.
The undersigned has executed this Certificate this [●] day of [●], 2026.
| By: | ||
| Name: | ||
| Title: |
C-1
EXHIBIT D TO THE
COMMON Shares PURCHASE AGREEMENT
Form OF COMMITMENT NOTE
DISCLOSURE SCHEDULEs
RELATING TO THE COMMON SHARES
PURCHASE AGREEMENT, DATED AS OF AUGUST 13, 2026
BY AND AMONG Optimi Health Corp. AND SEVEN KNOTS, LLC
This disclosure schedules are made and given pursuant to Article IV of the Common Shares Purchase Agreement, dated as of August 13, 2026 (the “Agreement”), by and between Optimi Health Corp., a corporation incorporated under the Business Corporation Act of British Columbia (the “Company”), and Seven Knots, LLC, a Montana limited liability company (the “Investor”). Unless the context otherwise requires, all capitalized terms are used herein as defined in the Agreement. The numbers below correspond to the section numbers of representations and warranties in the Agreement most directly modified by the below exceptions.
ANNEX 2.2 TO THE
COMMON SHARES PURCHASE AGREEMENT FORM OF VWAP PURCHASE NOTICE
| To: | E-mail: |
Reference is made to the Common Shares Purchase Agreement dated as of August 13, 2026, (the “Purchase Agreement”) between Optimi Health Corp., a corporation incorporated under the Business Corporation Act of British Columbia (the “Company”), and Seven Knots, LLC, a Montana limited liability company. Capitalized terms used and not otherwise defined herein shall have the meanings given such terms in the Purchase Agreement.
In accordance with and pursuant to Section 2.2 of the Purchase Agreement, the Company hereby issues this VWAP Purchase Notice to exercise a VWAP Purchase for the VWAP Purchase Share Amount indicated below.
| VWAP Purchase Share Amount (number of Shares): | ||
| VWAP Purchase Exercise Date: | ||
| VWAP Purchase Date: | ||
| VWAP Purchase Share Delivery Date: | ||
| VWAP Purchase Settlement Date: |
| Dated: | Optimi Health Corp. | ||||
| By: | |||||
| Name: | |||||
| Title: | |||||
| Address: | |||||
| Email: | |||||
| AGREED AND ACCEPTED: | ||
| Seven Knots, LLC | ||
| By: | ||
| Name: | ||
| Title: | ||
ANNEX 2.2B TO THE
COMMON SHARES PURCHASE AGREEMENT FORM OF VWAP PURCHASE CONFIRMATION
| To: |
Reference is made to the Common Shares Purchase Agreement dated as of August 13, 2026, (the “Purchase Agreement”) between Optimi Health Corp., a corporation incorporated under the Business Corporation Act of British Columbia (the “Company”), and Seven Knots, LLC, a Montana limited liability company. Capitalized terms used and not otherwise defined herein shall have the meanings given such terms in the Purchase Agreement.
In accordance with and pursuant to Section 2.2 of the Purchase Agreement, the Investor hereby issues this VWAP Purchase Confirmation for the VWAP Purchase Share Amount indicated below.
| VWAP Purchase Share Amount (number of Shares): | ||
| VWAP Purchase Exercise Date: | ||
| VWAP Purchase Date: | ||
| VWAP Purchase Commencement Time: | ||
| VWAP Purchase Termination Time: | ||
| VWAP during the VWAP Purchase Period: | ||
| Lowest Sale Price on the VWAP Purchase Date: | ||
| VWAP Purchase Price (per Share) (97% of lower of two line items immediately above): |
||
| Total Aggregate VWAP Purchase Price: | ||
| VWAP Purchase Share Delivery Date: | ||
| VWAP Purchase Settlement Date: |
| Dated: | Seven Knots, LLC | ||||
| By: | |||||
| Name: | |||||
| Title: | |||||
| Address: | |||||
| Email: | |||||
| AGREED AND ACCEPTED: | ||
| Optimi Health Corp. | ||
| By: | ||
| Name: | ||
| Title: | ||
Exhibit 10.15
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE DECEMBER 14, 2026.
THIS CONVERTIBLE PROMISSORY NOTE (AS MAY BE AMENDED FROM TIME TO TIME, THE “NOTE”) AND THE SECURITIES INTO WHICH IT MAY BE CONVERTED HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE. THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF REGISTRATION OF THE RESALE THEREOF OR EXEMPTION UNDER THE SECURITIES ACT.
INITIAL CONVERTIBLE PROMISSORY NOTE
| Aggregate Principal Amount: $1,500,000 | Dated as of August 13, 2026 |
FOR VALUE RECEIVED, and subject to the terms and conditions set forth herein, Optimi Health Corp., a corporation incorporated under the Business Corporation Act (British Columbia) (the “Company”), hereby promises to pay to the order of Seven Knots, LLC, a Montana limited liability company (the “Holder”), the principal sum of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000) or such lesser amount as shall remain unpaid under this Convertible Promissory Note (this “Note”) on the Maturity Date (as defined herein). Subject to Section 10, all cash payments on this Note, if any, shall be made by check or wire transfer of immediately available funds to such account as the Holder may from time to time designate by written notice in accordance with the provisions of this Note. Any reference in this Note to “Dollars” or “$” shall mean the lawful currency of the United States of America.
1. Principal. Subject to Sections 9 and 10, the entire unpaid principal balance of this Note shall be due and payable on the date that is twenty-four (24) months after the date of this Note (the “Maturity Date”). Under no circumstances shall any individual, including but not limited to any officer, director, employee or equityholder of the Company, be obligated personally for any obligations or liabilities of the Company hereunder.
2. Prepayment. The Company may, at its sole option and at any time prior to the Maturity Date, upon five (5) business days’ prior written notice to the Holder, prepay all or any portion of the outstanding principal balance of this Note in cash at one hundred percent (100%) of the principal amount being prepaid, without premium, penalty, or make-whole. Upon delivery of a prepayment notice by the Company, the Holder’s right to convert the principal amount specified in such notice shall terminate at the end of such notice period; provided that the Holder may deliver a Conversion Notice with respect to the prepaid principal amount during the notice period in accordance with Section 10.
3. No Interest. No interest shall accrue on the unpaid principal balance of this Note.
4. Reserved.
5. Security. This Note is a general unsecured obligation of the Company.
6. Representations and Warranties of the Company. The Company hereby represents and warrants to the Holder as of the date hereof as follows:
a. Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of British Columbia, Canada, and has all requisite corporate power and authority to carry on its business as now conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties.
b. Due Authorization. All corporate action on the part of the Company’s directors and shareholders necessary for the authorization, execution, delivery of, and the performance of all obligations of the Company under this Note has been taken and this Note constitutes the valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting the enforcement of creditor’s rights generally and (ii) general principles of equity.
c. Corporate Power. The Company has the requisite corporate power and authority to execute and deliver this Note to the Holder and to issue, and carry out and perform all of its obligations under, this Note.
d. Valid Issuance.
i. The Conversion Shares, when issued in accordance with the terms of this Note, will be duly and validly issued, fully paid and nonassessable and will be free of any liens, encumbrances, or restrictions on transfer other than restrictions imposed under applicable state and federal securities laws or as contemplated thereby.
ii. Assuming the accuracy of the representations made by the Holder in Section 7, the offer and sale of the Note and the Conversion Shares to the Holder in accordance with this Note are exempt from the registration and prospectus delivery requirements of the Securities Act, and the securities registration and qualification requirements of the currently effective provisions of the securities laws of the states in which the Holder is resident based upon its addresses set forth on the signature page, and neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemption.
7. Representations, Warranties and Certain Agreements of the Holder. The Holder hereby represents and warrants to the Company as of the date hereof as follows:
a. Organization, Good Standing and Qualification. The Holder is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Montana.
b. Authorization. This Note constitutes the Holder’s valid and legally binding obligation, enforceable in accordance with its terms except as may be limited by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting the enforcement of creditor’s rights generally and (ii) general principles of equity. The Holder represents that it has full power and authority to enter into this Note.
c. Purchase for Own Account. This Note and the Conversion Shares, if and when acquired, are being acquired for investment for the Holder’s own account, not as a nominee or agent, and not with a view to the public resale or distribution thereof within the meaning of the Securities Act, and the Holder has no present intention of selling, granting any participation in, or otherwise distributing the same.
d. Disclosure of Information. The Holder has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to this Note and the Conversion Shares. The Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Note and the Conversion Shares and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to the Holder or to which the Holder had access. The foregoing, however, does not in any way limit or modify the representations and warranties made by the Company in Section 6.
e. Investment Experience. The Holder understands that the purchase of this Note and the Conversion Shares involves substantial risk. The Holder also understands that there can be no assurances that the Company will be able to repay this Note. The Holder has experience as an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment in this Note and the Conversion Shares and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of this investment in this Note and the Conversion Shares and protecting its own interests in connection with this investment.
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f. Accredited Investor Status. The Holder is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act.
g. Restricted Securities. The Holder understands that this Note and the Conversion Shares are characterized as “restricted securities” under the Securities Act and Rule 144 promulgated thereunder inasmuch as they are being acquired from the Company in a transaction not involving a public offering, and that under the Securities Act and applicable regulations thereunder such securities may be resold without registration under the Securities Act only in certain limited circumstances. In this connection, the Holder represents that it is familiar with Rule 144 of the SEC, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act. The Holder understands that the Company is under no obligation to register this Note or the Conversion Shares.
h. No Solicitation. At no time was the Holder presented with or solicited by any publicly issued or circulated newspaper, mail, radio, television or other form of general advertising or solicitation in connection with the offer, sale and purchase of this Note or the Conversion Shares.
i. Legends. It is understood that the certificates or book entries evidencing the Conversion Shares will bear (1) any legend required by the laws of British Columbia, including any legend required by the Business Corporations Act (British Columbia), or any other applicable securities law and (2) the following legends:
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [INSERT THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE DISTRIBUTION DATE].
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
j. No “Bad Actor” Disqualification. No “bad actor” disqualifying event as defined in Rule 506 of Regulation D is applicable to the Holder. The Holder has exercised reasonable care to determine whether any disqualification event is applicable to the Holder.
k. Further Limitations on Disposition. Without in any way limiting the representations set forth above, the Holder further agrees not to make any disposition of all or any portion of this Note or the Conversion Shares, and acknowledges and agrees that the legends included in this Note and the legends described in Section 7.i to be applied to the Conversion Shares will not be removed by the Company from any certificate or book entry evidencing this Note and/or the Conversion Shares, unless there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement or the Holder will have notified the Company of the proposed disposition, and will have furnished the Company with a statement of the circumstances surrounding the proposed disposition, and, at the expense of the Holder or its transferee, with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such securities under the Securities Act; provided, that, notwithstanding the foregoing, no such registration statement will be required: (x) for any transfer of this Note or the Conversion Shares in reliance on an exemption from the registration requirements under the Securities Act; or (y) for any transfer of this Note or the Conversion Shares by the Holder to its “affiliates” (as such term is defined in Rule 405 under the Securities Act), or by the Holder to (A) one or more of partners of the Holder as of the time of such transfer, (B) one or more retired partners of the Holder who retires after the date hereof, or (C) the estate of any such partner; provided, further, that in each of the foregoing cases such transfer is made in compliance with the Securities Act and the transferee agrees in writing to be subject to the terms hereof to the same extent as if the transferee were the Holder hereunder, to the extent the terms continue to be applicable following such transfer.
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8. Events of Default. Each of the following shall constitute an event of default (“Event of Default”):
a. Failure to Pay. The Company’s failure to pay all or a portion of the unpaid principal balance of this Note to the Holder when due, whether at maturity, as a result of acceleration or otherwise.
b. Voluntary Bankruptcy. The commencement by the Company or any of its Significant Subsidiaries (as defined below) of a voluntary case under any applicable bankruptcy, insolvency, reorganization, rehabilitation or other similar law, or the consent by it to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Company or any of its Significant Subsidiaries or for any substantial part of its property, or the making by it of any assignment for the benefit of creditors, or the failure of the Company or any of its Significant Subsidiaries generally to pay its debts as such debts become due, or the taking of corporate action by the Company or any of its Significant Subsidiaries in furtherance of any of the foregoing. As used herein, “Significant Subsidiary” shall have the meaning set forth in Article I, Rule 1-02(w) of Regulation S-X promulgated by the SEC (or any successor rule); provided, that in each instance in such definition in which the term “10 percent” is used, the term “5 percent” shall be substituted therefor.
c. Involuntary Bankruptcy. The entry of a decree or order for relief by a court having jurisdiction in the premises in respect of the Company or any of its Significant Subsidiaries in an involuntary case under any applicable bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Company or any of its Significant Subsidiaries or for any substantial part of its property, or ordering the winding-up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of sixty (60) consecutive days.
d. Change of Control. (i) Any merger, consolidation, recapitalization, tender offer, reverse merger, or other transaction in which the Company’s shareholders immediately prior thereto cease to hold a majority of the aggregate voting power immediately thereafter or (ii) the Company consummates a sale, lease or transfer of all or substantially all of the assets, lines of business or divisions of the Company and its subsidiaries in a single transaction or series of related transactions, taken as a whole, to any person or persons, other than solely to one or more of the Company’s wholly owned subsidiaries; provided, that, in no event shall the consummation of any transaction with the Holder or any of its affiliates constitute an Event of Default pursuant to this Section 8.d.
e. Delisting of the Company’s Common Shares. At any time after the date hereof, the common shares, no par value, of the Company (“Common Shares”) are no longer listed, or are suspended from trading for a period of five (5) or more consecutive trading days, on any national securities exchange.
f. Representations and Warranties. Any representation or warranty made by the Company in this Note shall be untrue or incorrect in any material respect as of the date when made or deemed made.
g. Breach. The Company’s failure to observe or perform in all material respects any covenant or agreement contained in this Note.
9. Remedies.
a. Upon the occurrence of an Event of Default specified in Section 8.a, Section 8.f or Section 8.g, the Holder may, by written notice to the Company, declare this Note to be due immediately and payable, whereupon the unpaid principal balance of this Note shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the documents evidencing the same to the contrary notwithstanding.
b. Upon the occurrence of an Event of Default specified in Section 8.b, Section 8.c or Section 8.d, or Section 8.e, the unpaid principal balance of this Note shall automatically and immediately become due and payable, in all cases without any action on the part of the Holder.
c. The Company will furnish to the Holder prompt written notice of the occurrence of any Event of Default.
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10. Conversion.
a. Conversion Price. Subject to the rules and regulations of The Nasdaq Stock Market LLC and the Canadian Securities Exchange (if the Company’s securities are still then listed on the Canadian Securities Exchange), the Holder may, in its sole discretion and upon written notice to the Company (a “Conversion Notice”), convert all or a portion of the entire unpaid principal balance of this Note (the “Conversion Amount”) into a number of Conversion Shares equal to (x) the Conversion Amount divided by an amount equal to ninety-five percent (95%) of the average VWAP of the Common Shares on the principal Trading Market during the 20 consecutive Trading Days ending on the Trading Day immediately preceding the date of the Conversion Notice (the “Conversion Price”), provided that in no event will the Conversion Price be less than last closing price of the Common Shares on the Canadian Securities Exchange less the maximum permitted discount permitted by the Canadian Securities Exchange on the trading day the applicable VWAP Purchase Notice is delivered to Investor (if the Company’s securities are still then listed on the Canadian Securities Exchange).
b. Floor Price. Notwithstanding anything to the contrary in this Note, the Conversion Price shall not be less than $3.00 per share (the “Floor Price”), subject to equitable adjustment for stock splits, reverse stock splits, stock dividends, recapitalizations and similar transactions affecting the Common Shares.
c. Beneficial Ownership Limitation. The Company shall not effect any conversion of this Note, and the Holder shall not have the right to convert any portion of this Note, to the extent that after giving effect to such conversion, the Holder, together with its Affiliates and any other persons acting as a group together with the Holder or any of its Affiliates, would beneficially own (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 promulgated thereunder) Common Shares in excess of 2.99% of the Common Shares issued and outstanding immediately after giving effect to such conversion (the “Beneficial Ownership Limitation”). For the avoidance of doubt, the Beneficial Ownership Limitation calculation is limited to Common Shares issuable upon conversion under this Note and shall not be aggregated with any other Common Shares then beneficially owned by the Holder together with its Affiliates and any other persons acting as a group together with the Holder or any of its Affiliates.
d. Restrictions on Short Sales and Hedging. During the period commencing on the date hereof and ending on the date that this Note is no longer outstanding, neither the Holder nor any of its Affiliates shall, directly or indirectly, (i) engage in any “short sale” of the Common Shares as defined in Rule 200 of Regulation SHO under the Securities Exchange Act of 1934, as amended, (ii) enter into any put option, swap, hedge, collar, or similar arrangement with respect to the Common Shares, or (iii) engage in any other transaction that has the effect of establishing a net short position in the Common Shares. The foregoing shall not prohibit the Holder from selling Conversion Shares received upon conversion of this Note in ordinary course transactions following such conversion.
e. Adjustment Events. If at any time during the period between the date of this Note and any conversion of all or any portion of the unpaid principal balance of this Note in accordance with this Section 9, any change in the outstanding Common Shares shall occur by reason of any stock split, reverse stock split, stock dividend, cash dividend, reorganization, recapitalization, reclassification, combination, exchanges of shares, rights, options, warrants, distributions, spin-off, tender offer, exchange offer or other change or transaction with respect to the Common Shares (each, an “Adjustment Event”), any number or amount contained in this Section 9 that is based on the price of a share of Common Shares or a number of shares of Common Shares shall be equitably adjusted to the extent necessary to provide the Holder the same economic effect with respect to the Common Shares as contemplated by this Section 10 with respect to such conversion as of immediately prior to such Adjustment Event.
f. Conversion Mechanics. Upon any conversion of the principal balance of this Note, (i) the Holder shall surrender and deliver this Note, duly endorsed, to the Company against delivery of the Conversion Shares, (ii) in exchange for, and within five (5) business days following the receipt of, the surrendered Note, the Company shall, at the direction of the Holder, deliver (or cause to be delivered) to the Holder the Conversion Shares, which shall bear such legends as are required in the opinion of counsel to the Company, by applicable state and federal securities laws or by any other agreement between the Company and the Holder and the Company will pay any documentary, stamp or similar issue or transfer tax or duty due on the issue or delivery of any Conversion Share upon such conversion. Upon such delivery of the Conversion Shares to the Holder, the converted portion of this Note shall automatically become fully paid and satisfied.
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g. Definitions. For purposes of this Note: (i) “Conversion Shares” means any Common Shares issued upon conversion of the principal balance of this Note in accordance with this Section 10; (ii) “VWAP” means, as of any day or multi-day period, the dollar volume-weighted average price for a share of Common Shares on the principal securities exchange or securities market on which the Common Shares 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 “VWAP” function (set to weighted average); (iii) “Trading Day” means any day on which the principal Trading Market is open for trading; and (iv) “Trading Market” means the principal national securities exchange on which the Common Shares are then listed or quoted.
11. Notices. Any notice or communication by the Company or the Holder to the other will be deemed to have been duly given if in writing and delivered in person or by first class mail (registered or certified, return receipt requested), electronic transmission or other similar means of unsecured electronic communication or overnight air courier guaranteeing next day delivery, or to the other’s address included on the signature page hereto. The Company or the Holder, by notice to the other, may designate additional or different addresses (including facsimile numbers and electronic addresses) for subsequent notices or communications. All notices and communications will be deemed to have been duly given: (a) at the time delivered by hand, if personally delivered; (b) five (5) business days after being deposited in the mail, postage prepaid, if mailed; (c) when transmitted, if transmitted by facsimile, electronic transmission or other similar means of unsecured electronic communication; and (d) the next business day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.
12. Governing Law. THIS NOTE AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS PROMISSORY NOTE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH OF THE COMPANY, AND THE HOLDER BY ITS ACCEPTANCE THEREOF IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED BY THIS NOTE. EACH OF THE COMPANY AND THE HOLDER (A) HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE U.S. DISTRICT COURT AND OTHER COURTS OF THE UNITED STATES SITTING IN THE STATE OF NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND (B) HEREBY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER.
13. Severability. Any provision contained in this Note that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
14. Amendment; Waiver. Any amendment hereto or waiver of any provision hereof may be made with, and only with, the written consent of the Company and the Holder. No failure to exercise or delay in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any further exercise thereof or of any other right, power or privilege. The rights and remedies herein provided are cumulative and are not exclusive of rights available in law or in equity. Each party hereto acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the other party hereto and that the remedy at law for any such breach would be inadequate. Each party hereto therefore agrees that, in the event of any such breach or threatened breach, the other party hereto shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required.
15. Assignment. No assignment or transfer of this Note or any rights or obligations hereunder may be made by any party hereto (by operation of law or otherwise) without the prior written consent of the other party hereto (such consent not to be unreasonably withheld, conditioned or delayed) and any attempted assignment without the required consent shall be void.
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16. Transfer Procedures. If this Note is to be transferred as permitted under this Note, in whole or in part, the Holder shall surrender this Note to the Company, whereupon the Company will issue and deliver a new Note to the transferee and, if less than the entire unpaid principal balance of this Note held by the Holder is being transferred, a new Note to the Holder, representing the portion of the unpaid principal balance not being transferred.
17. Lost, Stolen, Destroyed or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a replacement Note.
18. Issuance of Replacement Notes. Whenever the Company is required to issue a new or replacement Note (a “Replacement Note”) pursuant to the terms of this Note, such Replacement Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such Replacement Note, the outstanding principal balance of this Note (or, in the case of a Replacement Note being issued pursuant to Section 17, the outstanding principal balance of this Note designated by the Holder which, when added to the aggregate outstanding principal balance represented by the other Replacement Notes issued in connection with such issuance, does not exceed the outstanding principal balance under this Note immediately prior to such issuance of Replacement Notes), (iii) shall have an issuance date, as indicated on the face of such Replacement Note, which is the same as the issuance date of this Note, (iv) shall have the same rights and conditions as this Note and (v) shall be timely prepared and issued by the Company, but in any event the Company shall issue such Replacement Note not later than five (5) business days after surrender of this Note or the receipt of the evidence reasonably satisfactory to the Company in accordance with Section 17, as the case may be.
19. Counterparts. This Note may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument. The exchange of copies of this Note and signature pages by email in .pdf or .tif format (and including any electronic signature complying with the U.S. ESIGN Act of 2000, e.g., www.docusign.com), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, or by combination of such means, shall constitute effective execution and delivery of this Note as to the parties hereto and may be used in lieu of the original Note for all purposes. Such execution and delivery shall be considered valid, binding and effective for all purposes.
[Signature page follows]
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IN WITNESS WHEREOF, the parties to this Note have caused this Note to be duly executed as of the date first written above.
| OPTIMI HEALTH CORP. | |||
| By: | |||
| Name: | Dane Stevens | ||
| Title: | Chief Executive Officer | ||
| Address: | 269 David Brown Way, Princeton, BC, Canada | ||
| Email: | dane@optimihealth.ca | ||
Accepted and agreed as of the date first written above.
| SEVEN KNOTS, LLC | |||
| By: | |||
| Name: | |||
| Title: | |||
| Address: | |||
| Email: | |||
[Signature Page to Initial Convertible Promissory Note]
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Exhibit 10.16
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of August 13, 2026, is by and between Seven Knots, LLC, a Montana limited liability company (the “Investor”), and Optimi Health Corp., a corporation incorporated under the Business Corporation Act (British Columbia) (the “Company”).
RECITALS
A. The Company and the Investor have entered into that certain common shares purchase agreement, dated as of the date hereof (the “Purchase Agreement”), pursuant to which the Company may issue to the Investor, from time to time, up to $100 million of the Company’s common shares, no par value (the “Common Shares”).
B. Pursuant to the terms of, and in consideration for the Investor entering into, the Purchase Agreement, the Company shall cause to be issued to the Investor the Commitment Notes in accordance with the terms of the Purchase Agreement.
C. Pursuant to the terms of, and in consideration for the Investor entering into, the Purchase Agreement, and to induce the Investor to execute and deliver the Purchase Agreement, the Company has agreed to provide the Investor with certain registration rights with respect to the Registrable Securities (as defined herein) as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained herein and in the Purchase Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, intending to be legally bound hereby, the Company and the Investor hereby agree as follows:
| 1. | Definitions. |
Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
(a) “Agreement” shall have the meaning assigned to such term in the preamble of this Agreement
(b) “Allowable Grace Period” shall have the meaning assigned to such term in Section 3(n).
(c) “Blue Sky Filing” shall have the meaning assigned to such term in Section 6(a).
(d) “Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in New York, New York or Canada are authorized or required by law to remain closed.
(e) “Claims” shall have the meaning assigned to such term in Section 6(a).
(f) “Commission” means the U.S. Securities and Exchange Commission or any successor entity.
(g) “Commitment Notes” shall have the meaning assigned to such term in the Purchase Agreement.
(h) “Common Shares” shall have the meaning assigned to such term in the recitals to this Agreement.
(i) “Company” shall have the meaning assigned to such term in the preamble of this Agreement.
(j) “Conversion Shares” means the Common Shares issuable upon conversion of the Commitment Notes.
(k) “Effective Date” means the date that the applicable Registration Statement has been declared effective by the Commission.
(l) “Effectiveness Deadline” means (i) with respect to any Registration Statement that may be required to be filed by the Company pursuant to this Agreement, the earlier of (A) the seventy-fifth (75th) calendar day following the date on which the Company files such Registration Statement, if such Registration Statement is subject to review by the Commission, and (B) the fifth (5th) Business Day following the date the Company is notified (orally or in writing, whichever is earlier) by the Commission that such Registration Statement will not be reviewed.
(m) “Filing Deadline” means (i) with respect to the Initial Registration Statement required to be filed pursuant to Section 2(c), the 30th Business Day after the Closing Date and (ii) with respect to any New Registration Statements that may be required to be filed by the Company pursuant to this Agreement,), the fifteenth (15th) Business Day following the sale of substantially all of the Registrable Securities covered by, as applicable, the Initial Registration Statement or the most recent prior New Registration Statement.
(n) “Indemnified Damages” shall have the meaning assigned to such term in Section 6(a).
(o) “Investor” shall have the meaning assigned to such term in the preamble of this Agreement.
(p) “Investor Party” and “Investor Parties” shall have the meaning assigned to such terms in Section 6(a).
(q) “Legal Counsel” shall have the meaning assigned to such term in Section 2(b).
(r) “New Registration Statement” shall have the meaning assigned to such term in Section 2(a).
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(s) “Person” means any person or entity, whether a natural person, trustee, corporation, partnership, limited partnership, limited liability company, trust, unincorporated organization, business association, firm, joint venture, governmental agency or authority.
(t) “Prospectus” means the prospectus in the form included in the Registration Statement, as supplemented from time to time by any Prospectus Supplement, including the documents incorporated by reference therein.
(u) “Prospectus Supplement” means any prospectus supplement to the Prospectus filed with the Commission from time to time pursuant to Rule 424(b) under the Securities Act, including the documents incorporated by reference therein.
(v) “Purchase Agreement” shall have the meaning assigned to such term in the recitals to this Agreement.
(w) “register,” “registered,” and “registration” refer to a registration effected by preparing and filing one or more Registration Statements in compliance with the Securities Act and pursuant to Rule 415 and the declaration of effectiveness of such Registration Statement(s) by the Commission.
(x) “Registrable Securities” means all of (i) the Shares and (ii) any securities of the Company issued or issuable with respect to such Shares or Conversion Shares, including, without limitation, (1) as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise and (2) shares of capital stock of the Company into which the Common Shares are converted or exchanged and shares of a successor entity into which the Common Shares are converted or exchanged, in each case until such time as such securities cease to be Registrable Securities pursuant to Section 2(f).
(y) “Registration Period” shall have the meaning assigned to such term in Section 3(a).
(z) “Registration Statement” means any registration statement on Form F-1 or Form F-3 (or any successor form) required to be filed by the Company under the Securities Act that registers the Registrable Securities, as such registration statement or registration statements may be amended and supplemented from time to time, including all documents filed as part thereof or incorporated by reference therein.
(aa) “Rule 144” means Rule 144 promulgated by the Commission under the Securities Act, as such rule may be amended from time to time, or any other similar or successor rule or regulation of the Commission that may at any time permit the Investor to sell securities of the Company to the public without registration.
(bb) “Rule 415” means Rule 415 promulgated by the Commission under the Securities Act, as such rule may be amended from time to time, or any other similar or successor rule or regulation of the Commission providing for offering securities on a delayed or continuous basis.
(cc) “Staff” shall have the meaning assigned to such term in Section 2(e).
(dd) “Violations” shall have the meaning assigned to such term in Section 6(a).
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| 2. | Registration. |
(a) Mandatory Registration. The Company shall prepare and, as soon as practicable, but in no event later than the Filing Deadline, file with the Commission a Registration Statement covering (i) all of the Shares and Conversion Shares and (ii) the maximum number of additional Registrable Securities as shall be permitted to be included thereon in accordance with applicable Commission rules, regulations and interpretations, and Nasdaq rules, so as to permit the resale of such Registrable Securities by the Investor under Rule 415 under the Securities Act at then prevailing market prices (and not fixed prices) (the “Initial Registration Statement”). The Prospectus included in the Initial Registration Statement shall contain the “Selling Shareholder” and “Plan of Distribution” sections in substantially the form attached hereto as Exhibit B.
(b) Legal Counsel. Subject to Section 5 hereof, the Investor shall have the right to select one legal counsel to review and oversee, solely on its behalf, any registration pursuant to this Section 2 (“Legal Counsel”), which shall be Pryor Cashman LLP, or such other counsel as thereafter designated by the Investor. Except as provided under Section 9.1(i) of the Purchase Agreement, the Company shall have no obligation to reimburse the Investor for any and all legal fees and expenses of the Legal Counsel incurred in connection with each registration contemplated hereby.
(c) Sufficient Number of Shares Registered. If at any time all Registrable Securities are not covered by the Initial Registration Statement filed pursuant to Section 2(a) as a result of Section 2(e) or otherwise, and if the Company desires to sell additional Shares to the Investor under the Agreement, the Company shall then use its best efforts to file with the Commission one or more additional Registration Statements on Form F-1 or Form F-3 (or any successor form) so as to cover all of the Registrable Securities not covered by such Initial Registration Statement (each, a “New Registration Statement”), in each case, as soon as practicable (taking into account any position of the staff of the Commission (“Staff”) with respect to the date on which the Staff will permit such additional New Registration Statement(s) to be filed with the Commission and the rules and regulations of the Commission). The Company shall use its commercially reasonable efforts to cause each such New Registration Statement to become effective as soon as practicable following the filing thereof with the Commission, but in no event later than the applicable Effectiveness Deadline for such New Registration Statement.
(d) No Inclusion of Other Securities. In no event shall the Company include any securities other than Registrable Securities on any Registration Statement pursuant to Section 2(a) or Section 2(c) without consulting the Investor and Legal Counsel prior to filing such Registration Statement with the Commission.
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(e) Offering. If the Staff or the Commission seeks to characterize any offering pursuant to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities that does not permit such Registration Statement to become effective and be used for resales by the Investor on a delayed or continuous basis under Rule 415 at then-prevailing market prices (and not fixed prices), or if after the filing of any Registration Statement pursuant to Section 2(a) or Section 2(c), the Company is otherwise required by the Staff or the Commission to reduce the number of Registrable Securities included in such Registration Statement, then the Company shall reduce the number of Registrable Securities to be included in such Registration Statement (after consultation with the Investor and Legal Counsel as to the specific Registrable Securities to be removed therefrom) until such time as the Staff and the Commission shall so permit such Registration Statement to become effective and be used as aforesaid. Notwithstanding anything in this Agreement to the contrary, if after giving effect to the actions referred to in the immediately preceding sentence, the Staff or the Commission does not permit such Registration Statement to become effective and be used for resales by the Investor on a delayed or continuous basis under Rule 415 at then-prevailing market prices (and not fixed prices), the Company shall not request acceleration of the Effective Date of such Registration Statement, the Company shall promptly (but in no event later than 48 hours) request the withdrawal of such Registration Statement pursuant to Rule 477 under the Securities Act. In the event of any reduction in Registrable Securities pursuant to this paragraph, if the Company desires to sell any Shares to the Investor that are not covered by an Initial Registration Statement or New Registration Statement, the Company shall then use its commercially reasonable efforts to file one or more New Registration Statements with the Commission in accordance with Section 2(c) until such time as all Registrable Securities have been included in Registration Statements that have been declared effective and the Prospectuses contained therein are available for use by the Investor.
(f) Any Registrable Security shall cease to be a “Registrable Security” at the earliest of the following: (i) when a Registration Statement covering such Registrable Security becomes or has been declared effective by the Commission and such Registrable Security has been sold or disposed of pursuant to such effective Registration Statement; (ii) when such Registrable Security is held by the Company or one of its subsidiaries; and (iii) the date that is the later of (A) the first (1st) anniversary of the date of termination of the Purchase Agreement in accordance with Article VII of the Purchase Agreement and (B) the first (1st) anniversary of the date of the last sale of any Registrable Securities to the Investor pursuant to the Purchase Agreement.
| 3. | Related Obligations. |
The Company shall use its commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the terms of this Agreement and the intended method of disposition thereof, and, pursuant thereto, during the term of this Agreement, the Company shall have the following obligations:
(a) The Company shall promptly prepare and file with the Commission the Initial Registration Statement pursuant to Section 2(a) hereof and, as required, one or more New Registration Statements pursuant to Section 2(c) hereof with respect to the Registrable Securities, but in no event later than the applicable Filing Deadline therefor, and the Company use its commercially reasonable efforts to cause each such Registration Statement to become effective as soon as practicable after such filing, but in no event later than the applicable Effectiveness Deadline therefor. Subject to Allowable Grace Periods (as defined below), the Company shall keep each Registration Statement effective (and the Prospectus contained therein available for use) pursuant to Rule 415 for issuances and sales of the Registrable Securities by the Company to the Investor and for resales by the Investor on a continuous basis at then-prevailing market prices (and not fixed prices) at all times until the earlier of (i) the date on which the Investor shall have sold all of the Registrable Securities covered by such Registration Statement and (ii) the date of termination of the Purchase Agreement if as of such termination date the Investor holds no Registrable Securities (or, if applicable, the date on which such securities cease to be Registrable Securities after the date of termination of the Purchase Agreement) (the “Registration Period”). Notwithstanding anything to the contrary contained in this Agreement (but subject to the provisions of Section 3(o) hereof), the Company shall ensure that, when filed and at all times while effective, each Registration Statement (including, without limitation, all amendments and supplements thereto) and the Prospectus (including, without limitation, all amendments and supplements thereto) used in connection with such Registration Statement shall not contain any 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 (in the case of Prospectuses, in the light of the circumstances in which they were made) not misleading. The Company shall submit to the Commission, as soon as reasonably practicable after the date that the Company learns that no review of a particular Registration Statement will be made by the Staff or that the Staff has no further comments on a particular Registration Statement (as the case may be), a request for acceleration of effectiveness of such Registration Statement to a time and date as soon as reasonably practicable in accordance with Rule 461 under the Securities Act.
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(b) Subject to Section 3(c) of this Agreement, the Company shall use its commercially reasonable efforts to prepare and file with the Commission such amendments (including, without limitation, post-effective amendments) and supplements to each Registration Statement and the Prospectus used in connection with each such Registration Statement, which Prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may be necessary to keep each such Registration Statement effective (and the Prospectus contained therein current and available for use) at all times during the Registration Period for such Registration Statement, and, during such period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company required to be covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the Investor. Without limiting the generality of the foregoing, the Company covenants and agrees that (i) at or before 5:30 p.m. (New York City time) on the second (2nd) Trading Day immediately following the Effective Date of the Initial Registration Statement and any New Registration Statement (or any post-effective amendment thereto), the Company shall file with the Commission in accordance with Rule 424(b) under the Securities Act the final Prospectus to be used in connection with sales pursuant to such Registration Statement (or post-effective amendment thereto), and (ii) if the transactions contemplated by any VWAP Purchase, the consummation of which has not previously been reported in any Prospectus filed with the Commission under Rule 424(b) under the Securities Act or in any report, statement or other document filed by the Company with the Commission under the Exchange Act, or if otherwise required under the Securities Act (or the interpretations of the Commission thereof), in each case as reasonably determined by the Company and the Investor, then, within the time period prescribed under Rule 424(b) under the Securities Act, the Company shall file with the Commission a Prospectus pursuant to Rule 424(b) under the Securities Act with respect to the applicable VWAP Purchase(s), disclosing the total number of Shares that are to be (and, if applicable, have been) issued and sold to the Investor pursuant to such purchase(s), the total purchase price for the Shares subject to such purchase(s), the applicable purchases price(s) for such Shares and the net proceeds that are to be (and, if applicable, have been) received by the Company from the sale of such Shares. To the extent not previously disclosed in the Prospectus or a Prospectus Supplement, the Company shall disclose in on a quarterly basis on Reports on Form 6-K and in its Annual Reports on Form 20-F the information described in the immediately preceding sentence relating to all purchase(s) consummated during the relevant fiscal quarter and shall file such reports with the Commission within the applicable time period prescribed for such report under the Exchange Act. In the case of amendments and supplements to any Registration Statement or Prospectus related thereto which are required to be filed pursuant to this Agreement (including, without limitation, pursuant to this Section 3(b)) by reason of the Company filing a report on Form 6-K or Form 20-F or any analogous report under the Exchange Act, the Company shall have incorporated such report by reference into such Registration Statement and Prospectus, if applicable, or shall file such amendments or supplements to the Registration Statement or Prospectus with the Commission within one trading day after the Exchange Act report is filed which created the requirement for the Company to amend or supplement such Registration Statement or Prospectus, for the purpose of including or incorporating such report into such Registration Statement and Prospectus. The Company consents to the use of the Prospectus (including, without limitation, any supplement thereto) included in each Registration Statement in accordance with the provisions of the Securities Act and with the securities or “Blue Sky” laws of the jurisdictions in which the Registrable Securities may be sold by the Investor, in connection with the resale of the Registrable Securities and for such period of time thereafter as such Prospectus (including, without limitation, any supplement thereto) (or in lieu thereof, the notice referred to in Rule 173(a) under the Securities Act) is required by the Securities Act to be delivered in connection with resales of Registrable Securities.
(c) The Company shall (A) permit Legal Counsel an opportunity to review and comment upon (i) each Registration Statement at least two (2) Business Days prior to its filing with the Commission and (ii) all amendments and supplements to each Registration Statement (including, without limitation, the Prospectus contained therein) (except for Annual Reports on Form 20-F, Current Reports on Form 6-K, and any similar or successor reports the contents of which is limited to that set forth in such reports) within a reasonable number of days prior to their filing with the Commission, and (B) shall reasonably consider any comments of the Investor and Legal Counsel on any such Registration Statement or amendment or supplement thereto or to any Prospectus contained therein. The Company shall promptly furnish to Legal Counsel, without charge, (i) electronic copies of any correspondence from the Commission or the Staff to the Company or its representatives relating to each Registration Statement (which correspondence shall be redacted to exclude any material, non-public information regarding the Company or any of its Subsidiaries), (ii) after the same is prepared and filed with the Commission, one (1) electronic copy of each Registration Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and schedules, all documents incorporated therein by reference, if requested by the Investor, and all exhibits and (iii) upon the effectiveness of each Registration Statement, one (1) electronic copy of the Prospectus included in such Registration Statement and all amendments and supplements thereto; provided, however, the Company shall not be required to furnish any document (other than the Prospectus, which may be provided in .PDF format) to Legal Counsel to the extent such document is available on EDGAR).
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(d) Without limiting any obligation of the Company under the Purchase Agreement, if requested by an Investor, the Company shall promptly furnish to such Investor, without charge, (i) after the same is prepared and filed with the Commission, at least one (1) electronic copy of each Registration Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and schedules, all documents incorporated therein by reference, if requested by the Investor, all exhibits thereto, (ii) upon the effectiveness of each Registration Statement, one (1) electronic copy of the Prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as the Investor may reasonably request from time to time) and (iii) such other documents, including, without limitation, copies of any final Prospectus and any Prospectus Supplement thereto, as the Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by the Investor; provided, however, the Company shall not be required to furnish any document (other than the Prospectus, which may be provided in .PDF format) to the Investor to the extent such document is available on EDGAR).
(e) The Company shall take such action as is reasonably necessary to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by the Investor of the Registrable Securities covered by a Registration Statement under such other securities or “Blue Sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions, such amendments (including, without limitation, post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be reasonably necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(e), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify Legal Counsel and the Investor of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “Blue Sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.
(f) The Company shall notify Legal Counsel and the Investor in writing of the happening of any event, as promptly as reasonably practicable after becoming aware of such event, as a result of which the Prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, non-public information regarding the Company or any of its Subsidiaries), and, subject to Section 3(c), promptly prepare a supplement or amendment to such Registration Statement and such Prospectus contained therein to correct such untrue statement or omission and, if requested by such Legal Counsel or Investor, deliver one (1) electronic copy of such supplement or amendment to Legal Counsel and the Investor (or such other number of copies as Legal Counsel or the Investor may reasonably request). The Company shall also promptly notify Legal Counsel and the Investor in writing (i) when a Prospectus or any Prospectus Supplement or post-effective amendment has been filed, when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Legal Counsel and the Investor by facsimile or e-mail on the same day of such effectiveness and by overnight mail), and when the Company receives written notice from the Commission that a Registration Statement or any post-effective amendment will be reviewed by the Commission, (ii) of any request by the Commission for amendments or supplements to a Registration Statement or related Prospectus or related information, (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate and (iv) of the receipt of any request by the Commission or any other federal or state governmental authority for any additional information relating to the Registration Statement or any amendment or supplement thereto or any related Prospectus. The Company shall respond as promptly as reasonably practicable to any comments received from the Commission with respect to a Registration Statement or any amendment thereto. Nothing in this Section 3(f) shall limit any obligation of the Company under the Purchase Agreement.
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(g) The Company shall (i) use its commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement or the use of any Prospectus contained therein, or the suspension of the qualification, or the loss of an exemption from qualification, of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible time and (ii) notify Legal Counsel and the Investor of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding.
(h) The Company shall hold in confidence and not make any disclosure of information concerning the Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required to be disclosed in such Registration Statement pursuant to the Securities Act, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction Document. The Company agrees that it shall, upon learning that disclosure of such information concerning the Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to the Investor and allow the Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.
(i) The Company shall cooperate with the Investor and, to the extent applicable, facilitate the timely preparation and delivery of Registrable Securities, as DWAC Shares, to be offered pursuant to a Registration Statement and enable such DWAC Shares to be in such denominations as the Investor may reasonably request from time to time and registered in such names as the Investor may request. Investor hereby agrees that it shall cooperate with the Company, its counsel and Transfer Agent in connection with any issuances of DWAC Shares, and hereby represents, warrants and covenants to the Company that that it will resell such DWAC Shares only pursuant to the Registration Statement in which such DWAC Shares are included, in a manner described under the caption “Plan of Distribution” in such Registration Statement, and in a manner in compliance with all applicable U.S. federal and state securities laws, rules and regulations, including, without limitation, any applicable prospectus delivery requirements of the Securities Act. DWAC Shares shall be free from all restrictive legends and may be transmitted by the transfer agent to the Investor by crediting an account at DTC as directed in writing by the Investor.
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(j) Upon the written request of the Investor, the Company shall as soon as reasonably practicable after receipt of notice from the Investor and subject to Section 3(n) hereof, (i) incorporate in a Prospectus Supplement or post-effective amendment such information as the Investor reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings of such Prospectus Supplement or post-effective amendment after being notified of the matters to be incorporated in such Prospectus Supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement or Prospectus contained therein if reasonably requested by the Investor.
(k) The Company shall use its commercially reasonable efforts to cause the Registrable Securities covered by a Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.
(l) The Company shall otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission in connection with any registration hereunder.
(m) Within one (1) Business Day after each Registration Statement which covers Registrable Securities is declared effective by the Commission, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Investor) confirmation that such Registration Statement has been declared effective by the Commission in substantially the form attached hereto as Exhibit A.
(n) Notwithstanding anything to the contrary contained herein (but subject to the last sentence of this Section 3(n)), at any time after the Effective Date of a particular Registration Statement, the Company may, upon written notice to Investor, suspend Investor’s use of any prospectus that is a part of any Registration Statement (in which event the Investor shall discontinue sales of the Registrable Securities pursuant to such Registration Statement contemplated by this Agreement, but may, in its sole discretion, settle any previously made sales of Registrable Securities) if the Company (x) is pursuing an acquisition, merger, tender offer, reorganization, disposition or other similar transaction and the Company determines in good faith that (A) the Company’s ability to pursue or consummate such a transaction would be materially adversely affected by any required disclosure of such transaction in such Registration Statement or other registration statement or (B) such transaction renders the Company unable to comply with Commission requirements, in each case under circumstances that would make it impractical or inadvisable to cause any Registration Statement (or such filings) to be used by Investor or to promptly amend or supplement any Registration Statement contemplated by this Agreement on a post effective basis, as applicable, or (y) has experienced some other material non-public event the disclosure of which at such time, in the good faith judgment of the Company, would materially adversely affect the Company (each, an “Allowable Grace Period”); provided, however, that in no event shall the Investor be suspended from selling Registrable Securities pursuant to any Registration Statement for a period that exceeds twenty-five (25) consecutive Trading Days or an aggregate of sixty (60) days in any 365-day period; and provided, further, the Company shall not effect any such suspension during (A) the first 10 consecutive Trading Days after the Effective Date of the particular Registration Statement or (B) the five-Trading Day period following each settlement date for a VWAP Purchase. Upon disclosure of such information or the termination of the condition described above, the Company shall provide prompt notice, but in any event within one Business Day of such disclosure or termination, to the Investor and shall promptly terminate any suspension of sales it has put into effect and shall take such other reasonable actions to permit registered sales of Registrable Securities as contemplated in this Agreement (including as set forth in the first sentence of Section 3(f) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable). Notwithstanding anything to the contrary contained in this Section 3(n), if the Company is obligated in accordance with the terms of the Purchase Agreement to deliver DWAC Shares to a transferee of the Investor in connection with any resale of Registrable Securities with respect to which the Investor has entered into a contract for sale, and delivered a copy of the Prospectus included as part of the particular Registration Statement to the extent applicable, in each case prior to the Investor’s receipt of the notice of an Allowable Grace Period and for which the Investor has not yet settled, the Company shall deliver DWAC Shares to such transferee in accordance with the terms of the Purchase Agreement.
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| 4. | Obligations of the Investor. |
(a) At least two (2) Business Days prior to the first anticipated filing date of each Registration Statement (or such shorter period to which the parties agree), the Company shall notify the Investor in writing of the information the Company requires from the Investor with respect to such Registration Statement. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of the Investor that the Investor shall promptly furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect and maintain the effectiveness of the registration of such Registrable Securities, and shall promptly execute such documents in connection with such registration as the Company may reasonably request, including any customary Investor questionnaire.
(b) The Investor agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of each Registration Statement hereunder, unless the Investor has notified the Company in writing of the Investor’s election to exclude all of the Investor’s Registrable Securities from such Registration Statement.
(c) The Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(l) or the first sentence of 3(f), the Investor shall immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until the Investor’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(l) or the first sentence of Section 3(f) or receipt of notice that no supplement or amendment is required. Notwithstanding anything to the contrary in this Section 4(c), the Company shall cause its transfer agent to deliver DWAC Shares to a transferee of the Investor in accordance with the terms of the Purchase Agreement in connection with any sale of Registrable Securities with respect to which the Investor has entered into a contract for sale prior to the Investor’s receipt of a notice from the Company of the happening of any event of the kind described in Section 3(l) or the first sentence of Section 3(f) and for which the Investor has not yet settled.
(d) The Investor covenants and agrees that it shall comply with the prospectus delivery and other requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to a Registration Statement.
| 5. | Expenses of Registration. |
Except as provided in the Purchase Agreement, all reasonable expenses incurred by the Company in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements of counsel for the Company, shall be paid by the Company, except that sales or brokerage commissions and fees and disbursements of counsel for, and other expenses of, the Investor shall be paid by the Investor.
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| 6. | Indemnification. |
(a) In the event any Registrable Securities are included in any Registration Statement under this Agreement, to the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend the Investor, each of its directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) and each Person, if any, who controls the Investor within the meaning of the Securities Act or the Exchange Act and each of the directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) of such controlling Persons (each, an “Investor Party” and collectively, the “Investor Parties”), against any losses, obligations, claims, damages, liabilities, contingencies, judgments, fines, penalties, charges, costs (including, without limitation, court costs, reasonable attorneys’ fees, costs of defense and investigation), amounts paid in settlement or expenses, joint or several, (collectively, “Claims”) reasonably incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the Commission, whether pending or threatened, whether or not an Investor Party is or may be a party thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “Blue Sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (as amended or supplemented) or in any Prospectus Supplement or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading (the matters in the foregoing clauses (i) and (ii) being, collectively, “Violations”). Subject to Section 6(c), the Company shall reimburse the Investor Parties, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by an Investor Party arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Investor Party for such Investor Party expressly for use in connection with the preparation of such Registration Statement, Prospectus or Prospectus Supplement or any such amendment thereof or supplement thereto (it being hereby acknowledged and agreed that the written information set forth on Exhibit C attached hereto is the only written information furnished to the Company by or on behalf of the Investor expressly for use in any Registration Statement, Prospectus or Prospectus Supplement); (ii) shall not be available to the Investor to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered the Prospectus (as amended or supplemented) made available by the Company (to the extent applicable), including, without limitation, a corrected Prospectus, if such Prospectus (as amended or supplemented) or corrected Prospectus was timely made available by the Company pursuant to Section 3(d) and then only if, and to the extent that, following the receipt of the corrected Prospectus no grounds for such Claim would have existed; and (iii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Investor Party and shall survive the transfer of any of the Registrable Securities by the Investor pursuant to Section 9.
(b) In connection with any Registration Statement in which the Investor is participating, the Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (each, an “Company Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case, to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information relating to the Investor furnished to the Company by the Investor expressly for use in connection with such Registration Statement, the Prospectus included therein or any Prospectus Supplement thereto (it being hereby acknowledged and agreed that the written information set forth on Exhibit C attached hereto is the only written information furnished to the Company by or on behalf of the Investor expressly for use in any Registration Statement, Prospectus or Prospectus Supplement); and, subject to Section 6(c) and the below provisos in this Section 6(b), the Investor shall reimburse a Company Party any legal or other expenses reasonably incurred by such Company Party in connection with investigating or defending any such Claim; provided, however, the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Investor, which consent shall not be unreasonably withheld or delayed; and provided, further that the Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to the Investor as a result of the applicable sale of Registrable Securities pursuant to such Registration Statement, Prospectus or Prospectus Supplement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Company Party and shall survive the transfer of any of the Registrable Securities by the Investor pursuant to Section 9.
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(c) Promptly after receipt by an Investor Party or Company Party (as the case may be) under this Section 6 of notice of the commencement of any action or proceeding (including, without limitation, any governmental action or proceeding) involving a Claim, such Investor Party or Company Party (as the case may be) shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Investor Party or the Company Party (as the case may be); provided, however, an Investor Party or Company Party (as the case may be) shall have the right to retain its own counsel with the fees and expenses of such counsel to be paid by the indemnifying party if: (i) the indemnifying party has agreed in writing to pay such fees and expenses; (ii) the indemnifying party shall have failed promptly to assume the defense of such Claim and to employ counsel reasonably satisfactory to such Investor Party or Company Party (as the case may be) in any such Claim; or (iii) the named parties to any such Claim (including, without limitation, any impleaded parties) include both such Investor Party or Company Party (as the case may be) and the indemnifying party, and such Investor Party or such Company Party (as the case may be) shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Investor Party or such Company Party and the indemnifying party (in which case, if such Investor Party or such Company Party (as the case may be) notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, then the indemnifying party shall not have the right to assume the defense thereof on behalf of the indemnified party and such counsel shall be at the expense of the indemnifying party, provided further that in the case of clause (iii) above the indemnifying party shall not be responsible for the reasonable fees and expenses of more than one (1) separate legal counsel for all Investor Parties or Company Parties (as the case may be). The Company Party or Investor Party (as the case may be) shall reasonably cooperate with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Company Party or Investor Party (as the case may be) which relates to such action or Claim. The indemnifying party shall keep the Company Party or Investor Party (as the case may be) reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent; provided, however, the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Company Party or Investor Party (as the case may be), consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Company Party or Investor Party (as the case may be) of a release from all liability in respect to such Claim or litigation, and such settlement shall not include any admission as to fault on the part of the Company Party. For the avoidance of doubt, the immediately preceding sentence shall apply to Sections 6(a) and 6(b) hereof. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Company Party or Investor Party (as the case may be) with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Investor Party or Company Party (as the case may be) under this Section 6, except to the extent that the indemnifying party is materially and adversely prejudiced in its ability to defend such action.
(d) No Person involved in the sale of Registrable Securities who is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with such sale shall be entitled to indemnification from any Person involved in such sale of Registrable Securities who is not guilty of fraudulent misrepresentation.
12
(e) The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred; provided that any Person receiving any payment pursuant to this Section 6 shall promptly reimburse the Person making such payment for the amount of such payment to the extent a court of competent jurisdiction determines that such Person receiving such payment was not entitled to such payment.
(f) The indemnity and contribution agreements contained herein shall be in addition to (i) any cause of action or similar right of the Company Party or Investor Party against the indemnifying party or others, including any rights under the Purchase Agreement, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.
| 7. | Contribution. |
To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6 of this Agreement, (ii) no Person involved in the sale of Registrable Securities which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with such sale shall be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the amount of net proceeds received by such seller from the applicable sale of such Registrable Securities pursuant to such Registration Statement. Notwithstanding the provisions of this Section 7, the Investor shall not be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by the Investor from the applicable sale of the Registrable Securities subject to the Claim exceeds the amount of any damages that the Investor has otherwise been required to pay, or would otherwise be required to pay under Section 6(b), by reason of such untrue or alleged untrue statement or omission or alleged omission.
| 8. | Reports Under the Exchange Act. |
With a view to making available to the Investor the benefits of Rule 144, the Company agrees to:
(a) so long as the Investor owns Registrable Securities, use its reasonable best efforts to make and keep public information available, as those terms are understood and defined in Rule 144;
(b) so long as the Investor owns Registrable Securities, use its reasonable best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act so long as the Company remains subject to such requirements (it being understood that nothing herein shall limit any of the Company’s obligations under the Purchase Agreement) and the filing of such reports and other documents is required for the applicable provisions of Rule 144;
(c) furnish to the Investor so long as the Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company, if true, that it has complied with the reporting, submission and posting requirements of Rule 144 and the Exchange Act, if applicable (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company with the Commission if such reports are not publicly available via EDGAR, and (iii) such other information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration; and
(d) take such additional action as is reasonably requested by the Investor to enable the Investor to sell the Registrable Securities pursuant to Rule 144, including, without limitation, delivering all such legal opinions, consents, certificates, resolutions and instructions to the Company’s Transfer Agent as may be reasonably requested from time to time by the Investor and otherwise fully cooperate with Investor and Investor’s broker to effect such sale of securities pursuant to Rule 144.
13
| 9. | Assignment of Registration Rights. |
The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor; provided, however, that any transaction, whether by merger, reorganization, restructuring, consolidation, financing or otherwise, whereby the Company remains the surviving entity immediately after such transaction shall not be deemed an assignment. The Investor may not assign its rights under this Agreement without the prior written consent of the Company, other than to an affiliate of the Investor controlled by Marissa Welner, in which case the assignee must agree in writing to be bound by the terms and conditions of this Agreement.
| 10. | Amendment or Waiver. |
No provision of this Agreement may be amended or waived by the parties from and after the date that is one (1) Trading Day immediately preceding the filing of the New Registration Statement with the Commission. Subject to the immediately preceding sentence, no provision of this Agreement may be (i) amended other than by a written instrument signed by both parties hereto or (ii) waived other than in a written instrument signed by the party against whom enforcement of such waiver is sought. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.
| 11. | Miscellaneous. |
(a) Solely for purposes of this Agreement, a Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from such record owner of such Registrable Securities.
(b) Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement shall be given in accordance with Section 9.4 of the Purchase Agreement.
(c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. The Company and the Investor acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that either party shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement by the other party and to enforce specifically the terms and provisions hereof (without the necessity of showing economic loss and without any bond or other security being required), this being in addition to any other remedy to which either party may be entitled by law or equity.
(d) All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the federal courts sitting in The City of New York, Borough of Manhattan, 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. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY 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 HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
14
(e) The Transaction Documents set forth the entire agreement and understanding of the parties solely with respect to the subject matter thereof and supersedes all prior and contemporaneous agreements, negotiations and understandings between the parties, both oral and written, solely with respect to such matters. There are no promises, undertakings, representations or warranties by either party relative to subject matter hereof not expressly set forth in the Transaction Documents. Notwithstanding anything in this Agreement to the contrary and without implication that the contrary would otherwise be true, nothing contained in this Agreement shall limit, modify or affect in any manner whatsoever (i) the conditions precedent to a VWAP Purchase contained in the Purchase Agreement or (ii) any party’s obligations under the Purchase Agreement.
(f) This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors. This Agreement is not for the benefit of, nor may any provision hereof be enforced by, any Person, other than the parties hereto, their respective successors and the Persons referred to in Sections 6 and 7 hereof.
(g) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.
(h) This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature or signature delivered by e-mail in a “.pdf” format data file, including any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com, www.echosign.adobe.com, etc., shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original signature.
(i) Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(j) The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.
[Signature Pages Follow]
15
IN WITNESS WHEREOF, Investor and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.
| COMPANY: | |||
| OPTIMI HEALTH CORP. | |||
| By: | |||
| Name: | |||
| Title: | |||
16
IN WITNESS WHEREOF, Investor and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.
| INVESTOR: | |||
| SEVEN KNOTS, LLC | |||
| By: | |||
| Name: | |||
| Title: | |||
17
EXHIBIT A
FORM
OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[●]
[●]
[●]
| Re: | Optimi Health Corp. |
Ladies and Gentlemen:
We are counsel to Optimi Health Corp., a corporation incorporated under the Business Corporation Act (British Columbia) (the “Company”), and have represented the Company in connection with that certain common shares purchase agreement, dated July 31, 2026 (the “Purchase Agreement”), entered into by and between the Company and the Investor named therein (the “Holder”) pursuant to which the Company will issue to the Holder from time to time the Company’s common shares (the ”Common Shares”). Pursuant to the Purchase Agreement, the Company also has entered into a certain registration rights agreement, dated July 31, 2026, with the Holder (the “Registration Rights Agreement”), pursuant to which the Company agreed, among other things, to register the offer and sale by the Holder of the Registrable Securities (as defined in the Registration Rights Agreement) under the Securities Act of 1933, as amended (the “Securities Act”). In connection with the Company’s obligations under the Registration Rights Agreement, on July 31, 2026, the Company filed a Registration Statement on Form F-1 (File No. 333-[●]) (the “Registration Statement”) with the Securities and Exchange Commission (the “Commission”) relating to the Registrable Securities which names the Holder as an underwriter and a selling shareholder thereunder.
In connection with the foregoing, based solely on our review of the Commission’s EDGAR website, we advise you that the Registration Statement became effective under the Securities Act on [●], 2026. In addition, based solely on our review of the information made available by the Commission at http://www.sec.gov/litigation/stoporders.shtml, we confirm that the Commission has not issued any stop order suspending the effectiveness of the Registration Statement as of the date hereof. To our knowledge, based solely on our participation in the conferences mentioned above regarding the Registration Statement and our review of the information made available by the Commission at http://www.sec.gov/litigation/stoporders.shtml, no proceedings for that purpose are pending or have been instituted or threatened by the Commission as of the date hereof.
This letter shall serve as our standing opinion to you that the Common Shares are freely transferable by the Holder pursuant to the Registration Statement, provided the Registration Statement remains effective, and shall expire on the earlier of the date that the Company is required to file its next annual report on Form 20-F and the date that we otherwise inform you that there has been a fundamental change such that the prospectus included in the Registration Statement is no longer current.
This opinion letter is limited to the federal securities laws of the United States of America. We express no opinion as to matters relating to state securities laws or Blue Sky laws.
We assume no obligation to update or supplement this opinion letter to reflect any facts or circumstances which may hereafter come to our attention with respect to the opinion and statements expressed above, including any changes in applicable law that may hereafter occur.
This opinion letter is being delivered solely for the benefit of the person to whom it is addressed; accordingly, it may not be quoted, filed with any governmental authority or other regulatory agency or otherwise circulated or utilized for any purposes without our prior written consent.
| Very truly yours, | ||
| [_________________________] | ||
| By: | ||
A-1
EXHIBIT B
SELLING ShareHOLDER
This prospectus relates to the possible resale from time to time by Seven Knots, LLC of any or all of the common shares that may be issued by us to Seven Knots, LLC under the Purchase Agreement. For additional information regarding the issuance of common shares covered by this prospectus, see the section titled “The Seven Knots Transaction”. We are registering the shares of common shares pursuant to the provisions of the Registration Rights Agreement we entered into with Seven Knots, LLC on July 31, 2026 in order to permit the Selling Shareholder to offer the shares for resale from time to time. Except for the transactions contemplated by the Purchase Agreement and the Registration Rights Agreement, Seven Knots, LLC has not had any material relationship with us within the past three years. As used in this prospectus, the term “Selling Shareholder” means Seven Knots, LLC.
The table below presents information regarding the Selling Shareholder and the common shares that it may offer from time to time under this prospectus. This table is prepared based on information supplied to us by the Selling Shareholder, and reflects holdings as of [●], 2026. The number of shares in the column “Maximum Number of Common Shares to be Offered Pursuant to this Prospectus” represents all of the common shares that the Selling Shareholder may offer under this prospectus. The Selling Shareholder may sell some, all or none of its shares in this offering. We do not know how long the Selling Shareholder will hold the shares before selling them, and we currently have no agreements, arrangements or understandings with the Selling Shareholder regarding the sale of any of the shares.
Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Exchange Act, and includes common shares with respect to which the Selling Shareholder has voting and investment power. The percentage of common shares beneficially owned by the Selling Shareholder prior to the offering shown in the table below is based on an aggregate of [●] common shares outstanding on [●], 2026. Because the purchase price of the common shares issuable under the Purchase Agreement is determined on the applicable VWAP Purchase Date, with respect to a VWAP Purchase, the number of shares that may actually be sold by us to Seven Knots under the Purchase Agreement may be fewer than the number of shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the Selling Shareholder pursuant to this prospectus.
B-1
| Number of Common Shares Owned Prior to Offering | Maximum Number of Common Shares to be Offered Pursuant to this | Number of Common Shares Owned After Offering | ||||||||||||||||||
| Name of Selling Shareholder | Number(1) | Percent(2) | Prospectus | Number(3) | Percent(2) | |||||||||||||||
| Seven Knots, LLC(4) | [_________] | * | [●] | 0 | — | |||||||||||||||
| * | Represents beneficial ownership of less than [_]% of our outstanding common shares. |
| (1) | This number represents the [________] common shares into which the Commitment Notes we may issue to Seven Knots, LLC in consideration for entering into the Purchase Agreement with us may be converted. In accordance with Rule 13d-3(d) under the Exchange Act, we have excluded from the number of shares beneficially owned prior to the offering all of the shares that Seven Knots, LLC may be required to purchase under the Purchase Agreement, because the issuance of such shares is solely at our discretion and is subject to conditions contained in the Purchase Agreement, the satisfaction of which are entirely outside of Seven Knots LLC’s control, including the registration statement that includes this prospectus becoming and remaining effective. Furthermore, the VWAP Purchase of common shares are subject to certain agreed upon maximum amount limitations set forth in the Purchase Agreement. Also, the Purchase Agreement prohibits us from issuing and selling any common shares to Seven Knots, LLC to the extent such shares, when aggregated with all other common shares then beneficially owned by Seven Knots, LLC, would cause Seven Knots’s beneficial ownership of our common shares to exceed the 4.99% Beneficial Ownership Cap. |
| (2) | Applicable percentage ownership is based on [●] common shares outstanding as of [●], 2026. |
| (3) | Assumes the sale of all shares being offered pursuant to this prospectus. |
| (4) | The business address of Seven Knots, LLC is 400 E 66th Street, New York, NY 10065. Seven Knots, LLC’s principal business is that of a private investor. Marissa J. Welner is the beneficial owner of 50% of the membership interests in Seven Knots, LLC. Marissa J. Welner has sole voting control and investment discretion over securities beneficially owned directly by Seven Knots, LLC. We have been advised that neither Ms. Welner nor Seven Knots, LLC is a member of the Financial Industry Regulatory Authority, or FINRA, or an independent broker-dealer, or an affiliate or associated person of a FINRA member or independent broker-dealer. The foregoing should not be construed in and of itself as an admission by Ms. Welner as to beneficial ownership of the securities beneficially owned directly by Seven Knots, LLC. |
B-2
PLAN OF DISTRIBUTION
The common shares offered by this prospectus are being offered by the Selling Shareholder, Seven Knots, LLC. The shares may be sold or distributed from time to time by the Selling Shareholder directly to one or more purchasers or through brokers, dealers, or underwriters who may act solely as agents at market prices prevailing at the time of sale, at prices related to the prevailing market prices, at negotiated prices, or at fixed prices, which may be changed. The sale of our common shares offered by this prospectus could be effected in one or more of the following methods:
| ● | ordinary brokers’ transactions; | |
| ● | transactions involving cross or block trades; | |
| ● | through brokers, dealers, or underwriters who may act solely as agents; | |
| ● | “at the market” into an existing market for our common shares; | |
| ● | in other ways not involving market makers or established business markets, including direct sales to purchasers or sales effected through agents; | |
| ● | in privately negotiated transactions; or | |
| ● | any combination of the foregoing. |
In order to comply with the securities laws of certain states, if applicable, the shares may be sold only through registered or licensed brokers or dealers. In addition, in certain states, the shares may not be sold unless they have been registered or qualified for sale in the state or an exemption from the state’s registration or qualification requirement is available and complied with.
Seven Knots, LLC is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act.
Seven Knots, LLC has informed us that it intends to use one or more registered broker-dealers to effectuate all sales, if any, of our common shares that it has acquired and may in the future acquire from us pursuant to the Purchase Agreement. Such sales will be made at prices and at terms then prevailing or at prices related to the then current market price. Each such registered broker-dealer will be an underwriter within the meaning of Section 2(a)(11) of the Securities Act. Seven Knots, LLC has informed us that each such broker-dealer will receive commissions from Seven Knots, LLC that will not exceed customary brokerage commissions.
Brokers, dealers, underwriters or agents participating in the distribution of our common shares offered by this prospectus may receive compensation in the form of commissions, discounts, or concessions from the purchasers, for whom the broker-dealers may act as agent, of the shares sold by the Selling Shareholder through this prospectus. The compensation paid to any such particular broker-dealer by any such purchasers of our common shares sold by the Selling Shareholder may be less than or in excess of customary commissions. Neither we nor the Selling Shareholder can presently estimate the amount of compensation that any agent will receive from any purchasers of our common shares sold by the Selling Shareholder.
We know of no existing arrangements between the Selling Shareholder or any other shareholder, broker, dealer, underwriter or agent relating to the sale or distribution of our common shares offered by this prospectus.
B-3
We may from time to time file with the SEC one or more supplements to this prospectus or amendments to the registration statement of which this prospectus forms a part to amend, supplement or update information contained in this prospectus, including, if and when required under the Securities Act, to disclose certain information relating to a particular sale of shares offered by this prospectus by the selling shareholder, including the names of any brokers, dealers, underwriters or agents participating in the distribution of such shares by the selling shareholder, any compensation paid by the selling shareholder to any such brokers, dealers, underwriters or agents, and any other required information.
We will pay the expenses incident to the registration under the Securities Act of the offer and sale of our common shares covered by this prospectus by the Selling Shareholder. As consideration for its irrevocable commitment to purchase our common shares under the Purchase Agreement, we have or will issue to Seven Knots, LLC the Commitment Notes in accordance with the Purchase Agreement. We have also paid to Seven Knots, LLC $35,000 in cash as reimbursement for the reasonable, out-of-pocket expenses incurred by Seven Knots, LLC, including the legal fees and disbursements of Seven Knots, LLC’s legal counsel, in connection with its due diligence investigation of us and in connection with the preparation, negotiation and execution of the Purchase Agreement.
We also have agreed to indemnify Seven Knots, LLC and certain other persons against certain liabilities in connection with the offering of our common shares offered hereby, including liabilities arising under the Securities Act or, if such indemnity is unavailable, to contribute amounts required to be paid in respect of such liabilities. Seven Knots, LLC has agreed to indemnify us against liabilities under the Securities Act that may arise from certain written information furnished to us by Seven Knots, LLC specifically for use in this prospectus or, if such indemnity is unavailable, to contribute amounts required to be paid in respect of such liabilities. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons, we have been advised that in the opinion of the SEC this indemnification is against public policy as expressed in the Securities Act and is therefore, unenforceable.
We estimate that the total expenses for the offering will be approximately $[●].
Seven Knots, LLC has represented to us that at no time prior to the date of the Purchase Agreement has Seven Knots, LLC or its agents, representatives or affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any short sale (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of our common shares or any hedging transaction, which establishes a net short position with respect to our common shares. Seven Knots, LLC has agreed that during the term of the Purchase Agreement, neither Seven Knots, LLC, nor any of its agents, representatives or affiliates will enter into or effect, directly or indirectly, any of the foregoing transactions.
We have advised the Selling Shareholder that it is required to comply with Regulation M promulgated under the Exchange Act. With certain exceptions, Regulation M precludes the Selling Shareholder, any affiliated purchasers, and any broker-dealer or other person who participates in the distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete. Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security. All of the foregoing may affect the marketability of the securities offered by this prospectus.
This offering will terminate on the date that all of our common shares offered by this prospectus have been sold by the Selling Shareholder.
Our common shares are currently listed on the Nasdaq Capital Market under the symbol “OPTH”.
B-4
EXHIBIT C
[ ]
C-1
Exhibit 10.17
PLACEMENT AGENCY AGREEMENT
August 13, 2026
Optimi Health Corp.
269 David Brown Way,
Princeton, BC, Canada V0X 1W0
Attention: Dane Stevens
This letter (the “Agreement”) constitutes the agreement between Joseph Gunnar & Co., LLC (the “Placement Agent”) and Optimi Health Corp., a British Columbia corporation (the “Company”), pursuant to which the Placement Agent shall act as the exclusive placement agent for the Company in connection with the proposed equity line of credit financing (the “Placement”) contemplated by that certain Common Shares Purchase Agreement (the “Purchase Agreement”) to be entered into between the Company and Seven Knots, LLC (the “Investor”), pursuant to which the Company may, from time to time, issue and sell common shares of the Company (the “Common Shares”) to the Investor. The Placement Agent agrees to solicit offers for the Placement on a “reasonable best efforts” basis. The terms of the Placement shall be mutually agreed upon by the Company, the Placement Agent and the Investor, and nothing herein shall be construed as granting the Placement Agent the power or authority to bind the Company or the Investor or as constituting an obligation of the Company to issue any securities or complete the Placement. The Purchase Agreement, the Registration Rights Agreement, the Commitment Note and the other documents executed and delivered by the Company and the Investor in connection with the Placement are referred to collectively herein as the “Transaction Documents”. Each date on which the Company receives cash proceeds from a sale of Common Shares to the Investor pursuant to the Purchase Agreement shall be referred to herein as a “Closing Date”.
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement. Prior to the execution of the Purchase Agreement, officers of the Company shall be reasonably available during normal business hours to respond to inquiries from the Placement Agent and the Investor.
Notwithstanding anything herein to the contrary, in the event Placement Agent determines that any of the terms provided for hereunder shall not comply with a FINRA rule, including but not limited to FINRA Rule 5110, then the Company shall agree to amend this Agreement in writing upon the request of Placement Agent to comply with any such rules; provided that any such amendments shall not provide for terms that are less favorable to the Company.
SECTION 1. COMPENSATION.
As compensation for the services provided by Placement Agent hereunder, the Company agrees to pay to Placement Agent:
| (A) | A cash fee payable in dollars equal to three percent (3.0%) of the gross proceeds actually received by the Company from the Investor pursuant to the Purchase Agreement in connection with sales of Common Shares thereunder (the “Cash Compensation”). The Cash Compensation shall be paid to the Placement Agent by wire transfer concurrently with each receipt by the Company of such proceeds. |
| (B) | The Company also agrees to reimburse the Placement Agent for all reasonable, documented out-of-pocket expenses actually incurred by the Placement Agent in connection with the Placement, including, without limitation, the reasonable fees and disbursements of Placement Agent’s counsel, provided that such reimbursement shall not exceed US$10,000 in the aggregate. |
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| (C) | If within twelve (12) months following the date of the closing of the Company’s initial public offering in the U.S., the Company completes any public or private offering, financing or capital-raising transaction involving the Investor or any affiliate thereof (other than transactions completed pursuant to the Purchase Agreement), then the Company shall pay to the Placement Agent upon the closing thereof a cash fee equal to three percent (3.0%) of the gross proceeds actually received by the Company in connection therewith. |
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Each of the representations and warranties (together with any related disclosures in any disclosure schedules appended thereto) made by the Company in the Transaction Documents is hereby incorporated herein by reference (as though fully restated herein) and, as of the date of this Agreement, is hereby made to, and in favor of, the Placement Agent. In addition to the foregoing, the Company represents and warrants to the Placement Agent that:
(A) (i) the Company has full right, power and authority to enter into this Agreement and the Transaction Documents and to perform all of its obligations hereunder and thereunder; (ii) each of this Agreement and the Transaction Documents has been duly authorized and executed and constitutes a legal, valid and binding agreement of such party enforceable in accordance with its terms; and (iii) the execution and delivery of this Agreement and the Transaction Documents and the consummation of the transactions contemplated hereby and thereby do not conflict with or result in a breach of, in any material respect, (y) the Company’s notice of articles, articles or other organizational documents or (z) any agreement to which the Company is a party or by which any of its property or assets is bound.
(B) All written disclosure provided by the Company to the Placement Agent specifically for use in connection with the Placement, taken together with all reports, schedules, forms, statements and other documents filed by the Company with the Securities and Exchange Commission prior to the date hereof, is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each filing made by the Company with the Securities and Exchange Commission prior to the date hereof did not, at the time of filing, contain any 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, in the light of the circumstances under which they were made, not misleading. To the Company’s knowledge, other than the transactions contemplated by the Transaction Documents, no event or circumstance has occurred or information exists with respect to the Company or its business, properties, prospects, operations or financial conditions which, under applicable laws, rules or regulations, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed.
(C) The Company has not taken and will not take any action, directly or indirectly, so as to cause the transactions contemplated by the Transaction Documents to fail to be entitled to rely upon any available exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”). In effecting the transactions contemplated thereby, the Company agrees to comply in all material respects with applicable provisions of the Securities Act and any regulations thereunder and any applicable laws, rules, regulations and requirements (including, without limitation, all U.S. state law and all national, provincial, city or other legal requirements).
(D) The Company has the power to submit, and pursuant to Section 10 of this Agreement has legally, validly, effectively and irrevocably submitted, to the jurisdiction of the courts specified therein. The Company has the power to designate, appoint and authorize, and pursuant to Section 10 of this Agreement has legally, validly, effectively and irrevocably designated and appointed an authorized agent for service of process in any action arising out of or relating to this Agreement or the transactions contemplated hereby, and service of process effected on such authorized agent shall be effective as provided in Section 10 of this Agreement.
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SECTION 3. REPRESENTATIONS OF PLACEMENT AGENT.
Placement Agent represents and warrants that it (i) is a member in good standing of FINRA, (ii) is registered as a broker/dealer under the Securities Exchange Act of 1934, as amended, (iii) is licensed as a broker/dealer under the laws of the states applicable to the offers and sales of the Securities by Placement Agent, (iv) is and will be a corporate body validly existing under the laws of its place of incorporation; (v) has full power and authority to enter into and perform its obligations under this Agreement, (vi) has not taken and will not take any action, directly or indirectly, that would cause the transactions contemplated by the Transaction Documents to violate applicable securities laws; and (vii) in effecting the transactions contemplated by the Transaction Documents, the Placement Agent agrees to comply in all material respects with applicable securities laws and regulations, (viii) this Agreement has been duly authorized and executed and constitutes a legal, valid and binding agreement of Placement Agent enforceable in accordance with its terms, and (ix) neither the Placement Agent, any person compensated for soliciting investors in the Placement, nor any general partner, managing member, executive officer, director or officer of the Placement Agent participating in the Placement is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(l)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2). The Placement Agent will immediately notify the Company in writing of any change in its status as such. Placement Agent covenants that it will use its reasonable best efforts to conduct the Placement hereunder in compliance with the provisions of this Agreement and the requirements of applicable law.
SECTION 4. INDEMNIFICATION.
The Company agrees to the indemnification and other agreements set forth in the Indemnification Provisions (the “Indemnification”) attached hereto as Addendum A, the provisions of which are incorporated herein by reference and shall survive the termination or expiration of this Agreement.
SECTION 5. ENGAGEMENT TERM.
The Placement Agent’s engagement hereunder shall continue until the earlier of (i) the termination of the Purchase Agreement and (ii) the date on which the parties mutually agree to terminate this Agreement (the period of time during which this Agreement remains in effect is referred to herein as the “Term”). Notwithstanding anything to the contrary contained herein, the provisions concerning confidentiality and indemnification and contribution contained herein and the Company’s obligations contained in the Indemnification Provisions shall survive any expiration or termination of this Agreement. The Placement Agent agrees not to use or disclose any confidential information concerning the Company provided to the Placement Agent by the Company for any purpose other than those contemplated by this Agreement.
SECTION 6. PLACEMENT AGENT INFORMATION.
The Company agrees that any information or advice rendered by the Placement Agent in connection with this engagement is for the confidential use of the Company and its representatives only in its evaluation of the Placement and, except as otherwise required by law, the Company will not disclose such advice or information in any manner without the Placement Agent’s prior written consent.
SECTION 7. NO FIDUCIARY RELATIONSHIP; SECURITIES AND OTHER LAW COMPLIANCE.
(A) This Agreement does not create, and shall not be construed as creating, rights enforceable by any person or entity not a party hereto, except those entitled hereto by virtue of the Indemnification Provisions hereof. The Company acknowledges and agrees that the Placement Agent is not and shall not be construed as a fiduciary of the Company and shall have no duties or liabilities to the equity holders or the creditors of the Company or any other person by virtue of this Agreement or the retention of Placement Agent hereunder, all of which are hereby expressly waived.
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(B) The Company, at its own expense, will use its reasonable best efforts to obtain and maintain any registration, qualification, approval or exemption required in connection with the issuance and sale of Common Shares pursuant to the Transaction Documents under applicable securities laws (including U.S. federal securities laws, U.S. state “blue sky” laws and applicable Canadian securities laws).
SECTION 8. RESERVED.
SECTION 9. CLOSING.
The obligations of the Placement Agent hereunder and each Closing pursuant to the Purchase Agreement are subject to the accuracy, when made and on the Closing Date, of the representations and warranties on the part of the Company and its subsidiaries contained herein and in the Purchase Agreement, to the accuracy of the statements of the Company and its subsidiaries made in any certificates pursuant to the provisions hereof, to the performance by the Company and its subsidiaries of their obligations hereunder, and to each of the following additional terms and conditions, except as otherwise disclosed publicly or disclosed to and acknowledged by the Placement Agent:
(A) All corporate proceedings and other legal matters incident to the authorization, form, execution, delivery and validity of each of this Agreement, the Transaction Documents and the Common Shares (including and any Conversion Shares) issuable pursuant to the Transaction Documents and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the Placement Agent, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters.
(B) RESERVED.
(C) (i) Neither the Company nor any of its subsidiaries shall have sustained, since the date of the latest audited or unaudited financial statements included or incorporated by reference in its reports publicly filed with the Securities and Exchange Commission, any material loss or interference with its business from fire, explosion, flood, terrorist act or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth in or contemplated by the Purchase Agreement and disclosure schedules thereto and (ii) since such date there shall not have been any material change in the capital stock or Jong-term debt of the Company or any of its subsidiaries or any material change, or any development involving a prospective material change, in or affecting the business, general affairs, management, financial position, stockholders’ equity or results of operations or prospects of the Company and its subsidiaries, otherwise as set forth in or contemplated by the Purchase Agreement and disclosure schedules thereto, the effect of which, in any such case described in clause (i) or (ii), is, in the reasonable judgment of the Placement Agent, so material and adverse as to make it impracticable or inadvisable to proceed with the applicable closing under the Purchase Agreement on the terms and in the manner contemplated by the Purchase Agreement and disclosure schedules thereto.
(D) Subsequent to the execution and delivery of this Agreement and up to the Closing Date, there shall not have occurred any of the following: (i) trading in the Company’s securities generally on the applicable trading market shall have been suspended or minimum or maximum prices or maximum ranges for prices shall have been established on any such exchange or such market by the Securities and Exchange Commission or by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by federal or state authorities or a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States, (iii) the United States shall have become engaged in hostilities in which it is not currently engaged, the subject of an act of terrorism, there shall have been an escalation in hostilities involving the United States, or there shall have been a declaration of a national emergency or war by the United States, or (iv) there shall have occurred any other calamity or crisis or any material change in general economic, political or financial conditions in the United States or elsewhere, if the effect of any such event in clauses (i)-(iv) makes it, in the sole and reasonable judgment of the Placement Agent, impracticable or inadvisable to proceed with the issuance and sale of Common Shares pursuant to the Transaction Documents on the terms and in the manner contemplated by the Purchase Agreement.
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(E) No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency or body which would, as of the Closing Date, prevent the issuance or sale of Common Shares pursuant to the Transaction Documents or materially and adversely affect the business or operations of the Company; and no injunction, restraining order or order of any other nature by any federal or state court of competent jurisdiction shall have been issued as of the Closing Date which would prevent the issuance or sale of Common Shares pursuant to the Transaction Documents or materially and adversely affect the business or operations of the Company.
(F) The Company shall have entered into the Transaction Documents, each of which shall be in full force and effect.
(G) Subsequent to each Closing Date, the Company shall provide written notice to the Placement Agent of the delivery of any VWAP Purchase Notice (or other purchase notice delivered pursuant to the Purchase Agreement) within one (1) Business Day following delivery thereof to the Investor.
(H) On or prior to the Closing Date, the Company shall have furnished to the Placement Agent such further information, certificates and documents as the Placement Agent may reasonably request, including a secretary certificate and officer certificate in form and substance reasonably acceptable to the Placement Agent.
SECTION 10. GOVERNING LAW.
This Agreement will be governed by, and construed in accordance with, the laws of the State of New York applicable to agreements made and to be performed entirely in such State. This Agreement may not be assigned by either party without the prior written consent of the other party. This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns. Any right to trial by jury with respect to any dispute arising under this Agreement or any transaction or conduct in connection herewith is waived. Each of the Placement Agent and the Company: (i) agrees that any legal suit, action or proceeding arising out of or relating to this Agreement and/or the transactions contemplated hereby shall be instituted exclusively in New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, (ii) waives any objection which it may have or hereafter to the venue of any such suit, action or proceeding, and (iii) irrevocably consents to the jurisdiction of the New York Supreme Court, County of New York, and the United States District Court for the Southern District of New York in any such suit, action or proceeding. Each of the Placement Agent and the Company further agrees to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York and agrees that service of process upon the Company mailed by certified mail to the Company’s address shall be deemed in every respect effective service of process upon the Company, in any such suit, action or proceeding, and service of process upon the Placement Agent mailed by certified mail to the Placement Agent’s address shall be deemed in every respect effective service process upon the Placement Agent, in any such suit, action or proceeding. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If either party shall commence an action or proceeding to enforce any provisions of a Transaction Document, the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorney’s fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
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SECTION 11. ENTIRE AGREEMENT/MISC.
This Agreement (including the attached Indemnification Provisions) embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings, relating to the subject matter hereof. If any provision of this Agreement is determined to be invalid or unenforceable in any respect, such determination will not affect such provision in any other respect or any other provision of this Agreement, which will remain in full force and effect. This Agreement may not be amended or otherwise modified or waived except by an instrument in writing signed by both Placement Agent and the Company. The representations, warranties, agreements and covenants contained herein shall survive each Closing and the consummation of the transactions contemplated by the Transaction Documents. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or a .pdf format file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or .pdf signature page were an original thereof. The Company agrees that the Placement Agent may rely upon, and is a third-party beneficiary of, the representations, warranties and applicable covenants set forth in the Transaction Documents. In the event of any conflict between this Agreement and the Underwriting Agreement, dated May 19, 2026, between the Company and the Placement Agent, this Agreement shall govern solely with respect to the transactions contemplated by the Transaction Documents, and the Underwriting Agreement shall otherwise remain in full force and effect.
SECTION 12. 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 (a) the date of transmission, if such notice or communication is sent to the email address specified on the signature pages attached hereto prior to 6:30 p.m. (New York City time) on a business day, (b) the next business day after the date of transmission, if such notice or communication is sent to the email address on the signature pages attached hereto on a day that is not a business day or later than 6:30 p.m. (New York City time) on any business day, (c) the third business day following the date of mailing, if sent by an internationally recognized air courier service, or (d) 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 on the signature pages hereto.
SECTION 13. PRESS ANNOUNCEMENTS.
The Company agrees that the Placement Agent shall, from and after the Closing, have the right to reference the Placement and the Placement Agent’s role in connection therewith in the Placement Agent’s marketing materials and on its website and to place advertisements in financial and other newspapers and journals, in each case at its own expense; provided that no such disclosure shall include confidential information of the Company other than information that is publicly available.
SECTION 14. SECURITIES AND OTHER LAW COMPLIANCE.
The Company, at its own expense, will use its reasonable best efforts to obtain and maintain any registration, qualification, approval or exemption required in connection with the issuance and sale of Common Shares pursuant to the Transaction Documents under applicable securities laws, including U.S. federal securities laws, U.S. state “blue sky” laws and applicable Canadian securities laws.
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Please confirm that the foregoing correctly sets forth our agreement by signing and returning to Placement Agent the enclosed copy of this Agreement.
| Very truly yours, | ||
| JOSEPH GUNNAR & CO. LLC | ||
| By: | ||
| Name: Stephan A. Stein | ||
| Title: President | ||
| Address for notice: | ||
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Joseph Gunnar & Co., LLC 1000 RXR Plaza Uniondale, NY 11556 | ||
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Attention: Stephan A. Stein, President Email: sstein@jgunnar.com | ||
Accepted and Agreed to as of
the date first written above:
OPTIMI HEALTH CORP.
| By: | ||
| Name: Dane Stevens | ||
| Title: Chief Executive Officer |
Address for notice:
Optimi Health Corp.
269 David Brown Way,
Princeton, BC, Canada V0X 1W0
Attention: Dane Stevens, Chief Executive Officer
Email: dane@optimihealth.ca
ADDENDUM A
INDEMNIFICATION PROVISIONS
Capitalized terms used in this Addendum shall have the meanings ascribed to such terms in the Agreement to which this Addendum is attached.
In addition to and without limiting any other right or remedy available to the Placement Agent and the Indemnified Parties (as hereinafter defined), the Company agrees to indemnify and hold harmless the Placement Agent and each of the other Indemnified Parties from and against any and all losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements, and any and all actions, suits, proceedings and investigations in respect thereof and any and all legal and other costs, expenses and disbursements in giving testimony or furnishing documents in response to a subpoena or otherwise (including, without limitation, the reasonable costs, expenses and disbursements, as and when incurred, of investigating, preparing, pursuing or defending any such action, suit, proceeding or investigation (whether or not in connection with litigation in which any Indemnified Party is a party)) (collectively, “Losses”), directly or indirectly, caused by, relating to, based upon, arising out of, or in connection with this Agreement, the Transaction Documents or the transactions contemplated thereby, including, without limitation, any material breach by the Company of any representation, warranty, covenant or agreement contained in this Agreement or any Transaction Document, or the enforcement by the Placement Agent of its rights under this Agreement or these indemnification provisions, except to the extent that any such Losses are found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from the gross negligence, willful misconduct or bad faith of the Indemnified Party seeking indemnification hereunder.
The Company also agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with the engagement of the Placement Agent by the Company or for any other reason, except to the extent that any such liability is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from such Indemnified Party’s gross negligence, willful misconduct or bad faith.
These Indemnification Provisions shall extend to the following persons (collectively, the “Indemnified Parties”): the Placement Agent, its present and former affiliated entities, managers, members, officers, employees, legal counsel, agents and controlling persons (within the meaning of the federal securities laws), and the officers, directors, partners, stockholders, members, managers, employees, legal counsel, agents and controlling persons of any of them. These Indemnification Provisions shall be in addition to any liability which the Company may otherwise have to any Indemnified Party.
If any action, suit, proceeding or investigation is commenced as to which an Indemnified Party proposes to demand indemnification, it shall notify the Company with reasonable promptness; provided, however, that any failure by an Indemnified Party to notify the Company shall not relieve the Company from its obligations hereunder unless the Indemnified Party’s ability to defend such action, suit, proceeding or investigation is materially impaired by such failure. If counsel for an Indemnified Party reasonably determines that it would be inappropriate under the applicable rules of professional responsibility for the same counsel to represent both the Company and the Indemnified Party, the Indemnified Party shall have the right to retain separate counsel of its choice to represent it, and the fees, expenses and disbursements of no more than one such separate counsel shall be borne by the Company. Any such counsel shall, to the extent consistent with its professional responsibilities, cooperate with the Company and any counsel designated by the Company. The Company shall be liable for any settlement of any claim against any Indemnified Party approved in writing by the Company, such approval not to be unreasonably withheld, conditioned or delayed. The Company shall not, without the prior written consent of the Placement Agent, settle or compromise any claim, or permit a default or consent to the entry of any judgment in respect thereof, unless such settlement, compromise or consent (i) includes, as an unconditional term thereof, the giving by the claimant to all of the Indemnified Parties of an unconditional release from all liability in respect of such claim, and (ii) does not contain any factual or legal admission by or with respect to an Indemnified Party or an adverse statement with respect to the character, professionalism, expertise or reputation of any Indemnified Party or any action or inaction of any Indemnified Party.
In order to provide for just and equitable contribution, if a claim for indemnification pursuant to these Indemnification Provisions is made but it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) that such indemnification may not be enforced in such case, even though the express provisions hereof provide for indemnification in such case, then the Company shall contribute to the Losses to which any Indemnified Party may be subject (i) in accordance with the relative benefits received by the Company and its stockholders, subsidiaries and affiliates, on the one hand, and the Indemnified Party, on the other hand, and (ii) if (and only if) the allocation provided in clause (i) of this sentence is not permitted by applicable law, in such proportion as to reflect not only the relative benefits, but also the relative fault of the Company, on the one hand, and the Indemnified Party, on the other hand, in connection with the statements, acts or omissions which resulted in such Losses as well as any relevant equitable considerations. No person found liable for fraudulent misrepresentation shall be entitled to contribution from any person who is not also found liable for fraudulent misrepresentation. The relative benefits received (or anticipated to be received) by the Company and its stockholders, subsidiaries and affiliates shall be deemed to be equal to the aggregate consideration payable or receivable by such parties in connection with the transactions contemplated by this Agreement and the Transaction Documents relative to the amount of fees actually received by the Placement Agent in connection therewith. Notwithstanding the foregoing, in no event shall the amount contributed by all Indemnified Parties exceed the amount of fees previously received by the Placement Agent pursuant to this Agreement.
Neither termination nor completion of this Agreement or the consummation of the transactions contemplated by the Transaction Documents shall affect these Indemnification Provisions, which shall remain operative and in full force and effect. The Indemnification Provisions shall be binding upon the Company and its successors and assigns and shall inure to the benefit of the Indemnified Parties and their respective successors, assigns, heirs and personal representatives.
Exhibit 16.1
August 14, 2026
Private and Confidential
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C 20549
Dear Sirs/Madams:
Re: Optimi Health Corp.
We have read the “Change in Registrant’s Certifying Accountant” section of Optimi Health Corp.’s Registration Statement on Form F-1 filed on or about August 14, 2026, and we agree with the statements made therein.
Yours truly,
/s/ Smythe LLP
Smythe LLP
Chartered Professional Accountants
Exhibit 21.1
Principal Subsidiaries of Optimi Health Corp.
| Subsidiaries | Place of Incorporation | |
| Optimi Labs Inc. | British Columbia, Canada | |
| Optimi Nutraceuticals Corp. | British Columbia, Canada | |
| Optimi Australia Pty. Ltd. | Australia |
Exhibit 23.1
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 May 19, 2026, 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.
/s/ DAVIDSON & COMPANY LLP
Chartered Professional Accountants
Vancouver, Canada
August 14, 2026
| DAVIDSON & COMPANY LLP | 1200 - 609 Granville Street PO BOX 10372, Pacific Centre Vancouver, BC V7Y 1G6 |
604 687 0947 davidson-co.com |